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A project report

On

Sectoral Study of Stock Market

Submitted to :

Submitted by:

Kotak Securities Ltd.

Prachi Jain


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Summer Trainee

Employee Id- ITO995

MBA- Lucknow University

(2011-2013)

DECLARATION

I, Ms Prachi Jain do hereby declare that the project report titled Sec-toral study of Stock market is a genuine research work undertakenby me and it has not been published anywhere earlier and thereby I takefull responsibility of the report.

Signature

Name of the student


3/98

Date

Department of business Administration

Lucknow University, Lucknow

ACKNOWLEDGEMENT

I would like to thank Kotak Securities, Lucknow for giving me an opportunity to

undergo summer training in their company.

My deep-rooted respect and sincere gratitude to Mr. Saurabh Agarwal (Vice Presi-

dent), Mr. Sameer Agarwal, who in-spite of their busy schedule listened to my

problems and suggested prompt solution.

For the success of the project, other than efforts of parents, guidance as a crucial

input is required. This acknowledgement is an attempt at expressing my sincere


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gratitude to the person without whom this study would not have been the success it

has turned to be.

I wish to express our sincere thanks to my mentor who helped me in planning and

executing the work in time. His valuable suggestions during the course of summer

internship are greatly acknowledged.

EXECUTIVE SUMMARY


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CHAPTER - 1

INTRODUCTION

This project is done to study different sector of the stock market and how the companies under

the sector are affected by various factors, like, union budget, current market position, demand

and etc. This is done with reference to an analytical study of Indian stock market.

This project was done during summer training in Kotak Securities, Lucknow, is an Indias best

broking house. It has focused on strengthening its presence in the rapidly expanding retail bro-

king market.

India is a developing country. Nowadays many people are interested to invest in financial mar-

kets especially on equities to get high returns, and to save tax in honest way. Equities are playing


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a major role in contribution of capital to the business from the beginning. Since the introduction

of shares concept, large numbers of investors are showing interest to invest in stock market.

MEANING OF SCRIP

In language of stock market, scrip means the name of the company by which the company rec-

ognizes into the stock market. There were 23 stock exchanges in security market. In all these

stock exchanges, there were number of scrip in the stock market. But in present these all stock

exchanges are merged with NSE AND BSE. So that all scripts are listed only under two stock

changes.In NSE around 1830 scripts of equity are listed and overall 11360 scrip are listed. There

is one another stock exchange otcel (Over the Counter Exchange of India).

It is used only for over the counter trading. Before a year, when all exchange were separate; then

rules and regulation of listing agreement were different in stock exchanges such as for the listing

in NSE, company has to require more than Rs 10 crores net worth and also company has to paid

dividend to their shareholder continuously for last three years.

MEANING OF SECTOR

There are many companies or scrip that manufacturer the same products and provide services

are specified under the particular name that called Industry or Sector.

There are many other different kinds of industries, and often organized into different classes or

variety of industrial classifications its called Sector.

Example-. HLL specified under the FMCG sector, Infoysys, Wipro under the IT sector.

There are many sectors in which many types of scrip are listed. Few sectors among these are as

follows.

Automobiles

Bank

Consumer durables

Capital goods FMCG

Health care

IT

Metal

Oil & gas

Power


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PSU

Realty

In this report, I have studied on five sectors which are :-

Automobile sector Banking sector

Oil & Gas sector

FMCG sector

I.T sector

NEED OF THE STUDY

To start any business capital plays major role. Capital can be acquired in two ways by issuing

shares or by taking debt from financial institutions or borrowing money from financial institu-

tions. The owners of the company have to pay regular interest and principal amount at the end.

Stock is ownership in a company, with each share of stock representing a tiny piece of owner-

ship. The more shares you own, the more of the company you own. The more shares you own,

the more dividends you earn when the company makes a profit. In the financial world, ownership

is called Equity.

Investors invest the money in stock market, especially in sector indices, and gain more profits.


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The sector investments and funds have received attention and more popularity in the recent. Per-

formance of the economy influences industry sector returns differently and changes over time

periods. This study attempts to contribute to this specific area of diversification and optimization

using data from the Indian capital market. This study focuses on BSE and NSE Sector Indices.

OBJECTIVE OF THE STUDY

The objective of this project is to deeply analyze different sector of stock market for

investment purpose by monitoring the growth rate and performance on the basis of

historical data.

Primary objectives:-

Detailed analysis of 5 sector selected, i.e, FMCG, Bank, Automobile, Oil & Gas

and I.T.

Suggesting as to which companys shares would be best for an investor to invest.

To forecast the future direction of prices through the study of past market data.


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Understanding, analyzing and providing a valid explanation both theoreti-

cally and technically.

I had keen interest to enrich my knowledge in stock market.

Giving conclusion and recommendation.

Secondary Objectives :-

To find out the current position of the company of the selected sector

Understand the capital market and its functioning

To compare theoretical knowledge with actual industry practice.

To improve the investor knowledge and market proficiency

SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The project is based

on tools like fundamental analysis and ratio analysis. Further, the study is based on information

of last quarterly and yearly performance.

The analysis is made by taking into consideration five companies i.e. TATA Motors,

HDFC bank, Infosys, ONGC, HUL.

The scope is limited to only the fundamental analysis of the chosen stocks. It helped me in learning the market dynamics, study the movement of share prices and to

give a proper justification for the same, theoretically and technically.


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CHAPTER2 INDUSTRY PROFILE

INDIAN SECURITIES MARKET- OVERVIEW

The Indian Securities Market, considered one of the most promising emerging markets, is among

the top eight markets of the world. Transfer of resources from those with idle resources to other

who have a productive need can be achieved through the securities markets.

Securities Markets is a place where buyers and sellers of securities can enter into transactions to

purchase and sell shares, bonds, debentures etc. Further, it performs an important role of ena-

bling corporate, entrepreneurs to raise resources for their companies and business ventures

through public issues. Transfer of resources from those having idle resources (investors) to oth-

ers who have a need for them (corporates) is most efficiently achieved through the securities

market.


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Stated formally, securities markets provide channels for reallocation of savings to investments

and entrepreneurship. Savings are linked to investments by a variety of intermediaries, through a

range of financial products, called Securities.

Securities are defined in the Securities Contract (Regulation) Act, 1956 as:

Shares, scrips stocks, bonds, debentures, debenture stock .

Government securities

Rights or interest in securities.

Component of securities market

Securities

shares, bonds, debentures, futures, options, mutual fund units

Intermediaries-brokers, sub- brokers, custodians, share transfer agents, merchant

bankers

Issuers of securities- companies, bodies corporate, government, financial institu-

tions, mutual funds, banks

Investors- individual, companies, mutual funds, financial institution, financial institu-

tion investors(FII),

Market regulators- SEBI, RBI( to some extent), Department of companies affairs

Market Segments

The securities market has two interdependent and inseparable segments, namely,

the new issues (primary) market and

the stock (secondary) market.

The primary market provides the channel for the creation and sale of new securities, while the

secondary market deals in the securities that were issued previously. The securities issued in the

primary market are issued by public limited companies or by government agencies. The re-

sources in this kind of market are mobilized either through a public issue or through a private

placement route. If anybody can subscribe for the issue, it is a public issue; if the issue is madeavailable only to a select group of people, it is known as private placement. There are two major

types of issuers of securitiescorporate entities, who issue mainly debt and equity instruments,

and the government (central as well as state), which issues debt securities (dated securities and

treasury bills).The secondary market enables participants who hold securities to adjust their

holdings in response to changes in their assessment of risks and returns.


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Once new securities are issued in the primary market, they are traded in the stock (secondary)

market. The secondary market operates through two mediums, namely, the over-the-counter

(OTC) market and the exchange-traded market. The OTC markets are informal markets where

trades are negotiated. Most of the trades in government securities take place in the OTC market.

All the spot trades where securities are traded for immediate delivery and payment occur in the

OTC market.

The other option is to trade using the infrastructure provided by the stock exchanges. The ex-

changes in India follow a systematic settlement period. All the trades taking place over a trading

cycle (day = T) are settled together after a certain time (T + 2 day). The trades executed on ex-

changes are cleared and settled by a clearing corporation. The clearing corporation acts as a

counterparty and guarantees settlement. A variant of the secondary market is the forward mar-

ket, where securities are traded for future delivery and payment. A variant of the forward market

is the Futures and Options market. Presently, only two exchanges in Indiathe National Stock

Exchange of India Ltd. (NSE) and the Bombay Stock Exchange (BSE)provide trading in Fu-

tures and Options.

Regulators in Securities Market

Few key agencies have a significant regulatory influence, direct or indirect, over the securities

markets are currently as follows:

The Company Law Board(CLB), which is responsible for the of the companies act, 1956

The Reserve Bank of India (RBI), which is primarily responsible for the supervision of

banks, money market, and government securities market.

The Securities and Exchange Board of India (SEBI), which is responsible for the regula-

tion of capital market

The Department of Economic Affairs (DEA), an arm of the government, which is con-

cerned with the orderly functioning of the financial market as whole

The Department of Company Affair (DCA), an arm of the government, which is respon-

sible for the administration of corporate bodies.

The securities market includes:

Equity

Debt ,and

Derivatives

Indian Equity Market


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The market in which shares are issued and traded, either though exchanges or over- the- counters

markets. Also known as the stock market, it is one the most vital area of the market economy be-

cause it give company access to capital and investor a slice of ownership in a company with the

potential to realize gains based on its future performance.

Publicly traded equities form the significant source of capital for the firms, and equity market arethe key part of the processing of allocating capital among competing uses in our economy.

Through issuances of equities, companies enable a broad set of investors to share in the risk and

reward of economic activities.

EQUITY INVESTMENT

Equity investments generally refers to the buying and holding of shares of stock on a stock mar-

ket by individuals and firms in anticipation of income from dividends and capital gain as the val-

ue of the stock rises. It also sometimes refers to the acquisition of equity (ownership) participa-

tion in a private (unlisted) company or a startup (a company being created or newly created).When the investment is in infant companies, it is referred to as venture capital investing and is

generally understood to be higher risk than investment in listed going-concern situations.

How to invest in Equity Shares?

Investors can buy equity shares of a company from Security market that is from Primary market

or Secondary market. The primary market provides the channel for sale of new securities. Prima-

ry market provides opportunity to issuers of securities; Government as well as corporate, to raise

resources to meet their requirements of investment and/or discharge some obligation. Investors

can buy shares of a company through IPO (Initial Public Offering) when it is first time issued tothe public. Once shares are issued to the public it is traded in the secondary market. Stock ex-

change only acts as facilitator for trading of equity shares. Anyone who wishes to buy shares of a

company can buy it from an existing shareholder of a company.

Why should one invest in Equity in particular?

When you buy a share of a company you become a shareholder in that Company .Equities have

the potential to increase in value over time. It also provides your portfolio with the growth neces-

sary to reach your long term investment goals. Research studies have proved that the equities

have outperformed most other forms of investments in the long term.

Equities are considered the most challenging and the rewarding, when compared to other invest-

ment options. Research studies have proved that investments in some shares with a longer tenure

of investment have yielded far superior returns than any other investment. However, this does

not mean all equity investments would guarantee similar high returns. Equities are high risk in-

vestments. One needs to study them carefully before investing.


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It is important for investors to note that while equity shares give highest return as compared to

other investment avenues it also carries highest risk therefore it is important to find real value

or intrinsic value of the security before investing in it. The intrinsic value of a security being

higher than the securitys market value represents a time to buy. If the value of the security is

lower than its market price, investors should sell it.

Advantages of investing in equity :

Good alternative investment

Lends diversification to the portfolio

Investment with high return over a longer period

Tax efficient

Dividend income from shares is tax free

Stock Exchanges

A stock exchange is an entity which provides "trading" facilities for stock brokers and traders, to

trade stocks and other securities.

Stock Exchanges are an organised marketplace, either corporation or mutual organisation, where

members of the organisation gather to trade company stocks or other securities.

Stock exchanges also provide facilities for the issue and redemption of securities as well as other

financial instruments and capital events including the payment of income and dividends.

The securities traded on a stock exchange include: shares issued by companies, unit trusts, deriv-

atives, pooled investment products and bonds. To be able to trade a security on a certain stock

exchange, it has to be listed there. Usually there is a central location at least for recordkeeping,

but trade is less and less linked to such a physical place, as modern markets are electronic net-

works, which gives them advantages of speed and cost of transactions. Trade on an exchange is

by members only. The initial offering of stocks and bonds to investors is by definition done in

the primary market and subsequent trading is done in the secondary market.

A stock exchange is often the most important component of a stock market. Supply and demand

in stock markets is driven by various factors which, as in all free markets, affect the price of

stocks. There is usually no compulsion to issue stock via the stock exchange itself, nor muststock be subsequently traded on the exchange. Such trading is said to be off exchange or over-

the-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock

exchanges are part of a global market for securities.

List of Stock Exchanges in India:


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National Stock Exchange of India Limited (NSE).

Bombay Stock Exchange Limited (BSE) and

Regional stock exchanges (23)

National Stock Exchange of India Limited (NSE)

The National Stock Exchange of India Limited (NSE), is a Mumbai based stock exchange. It

is the largest stock exchange in India in terms of daily turnover and number of trades, for both

equities and derivative trading. NSE was set up by leading institutions to provide a modern, fully

automated screen-based trading system with national reach.

NSE has a market capitalization of around US$985 billion and over 1,646 listings as of Decem-

ber 2011. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are

the two most significant stock exchanges in India, and between them are responsible for the vast

majority of share transactions.

The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National Stock Ex-

change Fifty), an index of fifty major stocks weighted by market capitalization. The Futures and

Options trading system of NSE, called NEAT-F&O trading system, provides a fully automated

screen based trading for S&P CNX Nifty futures on a nationwide basis and an online monitoringand surveillance mechanism. It supports an order-driven market and provides complete transpar-

ency of trading operations.

Currently, NSE has the following major segments of the capital market:

Equities

Equities

Indices

Mutual Funds

Exchange Traded Funds

Initial Public Offerings

Security Lending and Borrowing Scheme

Derivatives

Equity Derivatives

Currency Derivatives
http://www.nseindia.com/products/content/equities/equities/equities.htmhttp://www.nseindia.com/products/content/equities/indices/indices.htmhttp://www.nseindia.com/products/content/equities/mutual_funds/mutual_funds.htmhttp://www.nseindia.com/products/content/equities/etfs/etfs.htmhttp://www.nseindia.com/products/content/equities/ipos/ipos.htmhttp://www.nseindia.com/products/content/equities/slbs/slbs.htmhttp://www.nseindia.com/products/content/derivatives/equities/fo.htmhttp://www.nseindia.com/products/dynaContent/derivatives/currency/fxdownload.jsphttp://www.nseindia.com/products/dynaContent/derivatives/currency/fxdownload.jsphttp://www.nseindia.com/products/content/derivatives/equities/fo.htmhttp://www.nseindia.com/products/content/equities/slbs/slbs.htmhttp://www.nseindia.com/products/content/equities/ipos/ipos.htmhttp://www.nseindia.com/products/content/equities/etfs/etfs.htmhttp://www.nseindia.com/products/content/equities/mutual_funds/mutual_funds.htmhttp://www.nseindia.com/products/content/equities/indices/indices.htmhttp://www.nseindia.com/products/content/equities/equities/equities.htm


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Interest Rate Futures

Debt

Retail Debt Market

Wholesale Debt Market

Corporate Bonds

Indices of NSE

NSE also set up as index services firm known as India Index Services &

Products Limited (IISL) and has launched several stock indices, including:

Major indices-

S&P CNX Nifty

CNX Nifty Junior

CNX 100

CNX 200

S&P CNX 500

CNX Midcap

Nifty Midcap 50

CNX Smallcap Index

S&P CNX Defty

S&P CNX Nifty Divident

CNX Midcap 200 India Vix

Sectoral Indices-

CNX Auto Index

CNX Bank Index

CNX Energy Index

CNX Finance Index

CNX FMCG Index

CNX IT Index

CNX Media Index

CNX Metal Index

CNX MNC Index

CNX Pharma Index

CNX PSU Bank Index

CNX Realty Index

S&P CNX Industry Indice
http://www.nseindia.com/products/content/debt/rdm/rdm.htmhttp://www.nseindia.com/products/content/debt/wdm/wdm.htmhttp://www.nseindia.com/products/content/debt/corp_bonds/cbm.htmhttp://www.nseindia.com/products/content/debt/corp_bonds/cbm.htmhttp://www.nseindia.com/products/content/debt/wdm/wdm.htmhttp://www.nseindia.com/products/content/debt/rdm/rdm.htm


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Bombay Stock Exchange Limited (BSE)

BSE is a stock exchange located on Dalal Street, Mumbai and is the oldest stock exchange in

Asia. The equity market capitalization of the companies listed on the BSE was US$1 trillion as

of December 2011, making it the 6th largest stock exchange in Asia and the 14th largest in the

world. The BSE has the largest number of listed companies in the world.

BSE is widely recognized due to its pivotal and pre-eminent role in the development of the Indi-

an capital market.

As of March 2012, there are over 5,133 listed Indian companies and over 8,196 scrips on the

stock exchange, the Bombay Stock Exchange has a significant trading volume. The BSE

SENSEX, also called "BSE 30", is a widely used market index in India and Asia.

Though many other exchanges exist, BSE and the National Stock Exchange of India account for

the majority of the equity trading in India. While both have similar total market capitalization

(about USD 1.6 trillion), share volume in NSE is typically two times that of BSE.

Indices of BSE

Major indices-

SENSEX

MIDCAP

SMLCAP

BSE-100

BSE-200

BSE-500

Sectoral indices-

HC CD

OIL&GAS

BANKEX

FMCG

PSU

AUTO


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POWER

CG

TECK

REALTY

METAL

IT

FACTORS AFFECTING THE STOCK MARKET

1. DEMAND AND SUPPLY

The price is directly affected by the trend of stock market trading. When more people are buying

a certain stock, the price of that stock increases and when more people are selling he stock, the

price of that particular stock falls. Now it is difficult to predict the trend of the market but your

stock broker can give you fair idea of the ongoing trend of the market but be careful before you

blindly follow the advice.

2. NEWS

News is undoubtedly a huge factor when it comes to stock price. Positive news about a company

can increase buying interest in the market while a negative press release can ruin the prospect of


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a stock. Having said that, you must always remember that often times, despite amazingly good

news, a stock can show least movement. It is the overall performance of the company that mat-

ters more than news. It is always wise to take a wait and watch policy in a volatile market or

when there is mixed reaction about a particular stock.

3. MARKET CAPITAL

If you are trying to guess the worth of a company from the price of the stock, you are making a

huge mistake. It is the market capitalization of the company, rather than the stock, that is more

important when it comes to determining the worth of the company. You need to multiply the

stock price with the total number of outstanding stocks in the market to get the market cap of a

company and that is the worth of the company.

4. EARNING PER SHARE

Earning per share is the profit that the company made per share on the last quarter. It is manda-

tory for every public company to publish the quarterly report that states the earning per share of

the company. This is perhaps the most important factor for deciding the health of any company

and they influence the buying tendency in the market resulting in the increase in the price of that

particular stock. So, if you want to make a profitable investment, you need to keep watch on the

quarterly reports that the companies and scrutinize the possibilities before buying stocks of par-

ticular stock.

5.

PRICE/EARNING RATIO

Price/Earning ratio or the P/E ratio gives you fair idea of how a companys share price compares

to its earnings. If the price of the share is too much lower than the earning of the company, the

stock is undervalued and it has the potential to rise in the near future. On the other hand, if the

price is way too much higher than the actual earning of the company and then the stock is said to

overvalued and the price can fall at any point.

6. ECONOMIC FACTORS

: Corporate earnings and news, political news, and general market sentiment can all move the

market. But economic factors have the most influence on long-term market performance. Of all

the economic indicators, the three most significant to stock market investors are inflation, gross

domestic product (GDP), and labor market data.

Inflation- Inflation is a significant indicator for securities markets because it determines


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how much of the real value of an investment is being lost, and the rate of return you need to

compensate for that erosion.

For example, if inflation is at 3% this year, and your investment also increases by 3%, in real

terms you have just managed to stay even. And to take on market risk, most individuals require a

risk premium above and beyond the inflation rate. So investors who buy stocks do so expect-

ing they will get a return equal to (or better than) that risk premium adjusted by the inflation rate.

So the higher the inflation rate, the higher nominal return is needed for a stock price to remain

the same.

There are many causes of inflation. From a supply-demand standpoint, it can be due to increased

demand for a particular product, from an increase in a companys cost of supplies, orfrom lim-

ited supplies (like OPEC members restricting oil supplies), or even just due to fear that supplies

might be limited at some point in the future. But the single most important determinant of infla-

tion is the output gap, which is the balance between supply and demand in the economy.

But the effect inflation has on the stock market is even more complicated than that. The main

impact of inflation on stock prices actually comes from the effect it has on a companys earnings.

Low inflation keeps a companys costs down, and increases profits. So all otherthings being

equal, (a favorite phrase of all economists), low inflation is better for the market than high infla-

tion.

Gross Domestic Product(GDP) While GDP is an important component in inflation, it is

also important as an economic indicator in its own right. When compared to the previous yearsreading, it tells you how fast the economy is growing (or contracting).

GDP is the dollar value of all goods and services produced by a given country during a certain

period. It is measured by either adding all of the income earned in an economy, or by all the

spending in an economy. Both measures should be roughly equal. Gross domestic income in-

cludes wages and salaries, corporate profits, interest collected by lenders, and taxes collected by

governments.GDP domestic expenditures includes consumer spending, housing investment, gov-

ernment spending, business spending (investment in factories, equipment, and inventory), as well

as foreign spending on our exports minus our spending on their imports.

Any significant change in the GDP, either up or down, can have a major effect on investing sen-

timent. If investors believe the economy is improving (and corporate earnings along with it) they

are more likely to pay more for a given stock. If there is a decline in GDP (or investors expect a

decline) they would be willing to pay less for a given stock, leading to a decline in the stock

market.


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The Labour Market: The final major factor influencing the economy is the

labour market. The key indicators most investors focus on are total employment and the unem-

ployment rate. US citizens who are already working represent the employed, while those who are

actively looking for work, but havent found it yet, are the unemployed.

The unemployment rate does not include people without jobs who are not looking for jobs, such

are tirees or just people who are discouraged and have given up trying to find a job. Before we

conclude this discussion on share prices, I would say that that there are so many other reasons

behind the fall or rise of the share price. Especially there are stock specific factors that also play

its part in the price of the stock.

So, it is always important that you do your research well and stock trading on the basis of your

research and information that you get from your broker.

CHAPTER3

COMPANY PROFILE

The Kotak Mahindra Group:-

Kotak Mahindra is one of India's leading banking and financial services organizations,

offering a wide range of financial services that encompass every sphere of life.

Kotak Mahindra Finance Ltd became the first non-ban


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From commercial banking, to stock broking, to mutual funds, to life insurance, to in-

vestment banking, the group caters to the diverse financial needs of individuals and cor-

porate sector.

Consolidated net worth of approximately US$ 2.5 billion as on June 30, 2011

The group has a net worth of over Rs. 100.6 billion and has a distribution network of

branches, franchisees, representative offices and satellite offices across cities and towns

in India, and offices in New York, London, San Francisco, Dubai, Mauritius and Singa-

pore servicing around 8 million customer accounts.

Kotak Group Products & Services:

Bank

Life Insurance

Mutual Fund

Car Finance

Securities

Institutional Equities

Investment Banking

Kotak Mahindra International

Kotak Private Equity

Kotak Realty Fund

Milestone of Kotak


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Kotak Securities Limited, a 100 % subsidiary of Kotak Mahindra Bank, is the stock

broking and distribution arm of the Kotak Mahindra Group. One of the oldest broking

houses in India, its operations include stock broking and distribution of various financial

products. It is a corporate member of both the Bombay Stock Exchange and the National

Stock Exchange of India. Kotak Securities was founded in 1994 and is headquartered in

Mumbai, India.

The firm has a wide network of more than 1400 branches, franchisees representative of-

fices, and satellite offices across 448 cities in India and offices in New York, London,

Dubai, Mauritius and Singapore.

Kotak Securities Limited has Rs. 1,202 crore of Assets Under Management (AUM) as of

31st Dec, 2011.

Kotak Securities offerings include stock broking through the branch and Internet, In-

vestments in IPO, Mutual funds and Portfolio management service.

Vision statement

The global Indian financial services brand- our customer will enjoy the benefits of

dealing with a global Indian brand that best understands their needs and delivers custom-

ized pragmatic solution across multiple platforms. We will be a world class Indian finan-

cial service group. Our technology and best practices will be benchmarked along interna-

tional lines while our understanding of customers will be uniquely Indian. We will be

more than repository of our customers savings. We the group will be a single window to

every financial services in a customers universe.

The most preferred employer in financial services- a culture of empowerment and a

spirit of enterprise attracts bright minds with an entrepreneurial streak to join us. Working

with a home grown, professionally managed company, which has partnerships with inter-

national leaders, give our people a perspective that is universal as well as unique.

The most trusted financial service companywe will create an ethos of trust across all

our constituents. Adhering to high standards of compliance and corporate governance

will be an integral part of building trust.

Value creation- value creation rather than size alone will be our business driver.


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COMPANY PROFILE OF KOTAK

REGISTERED OFFICE


1st Floor, Bakhtawar

Nariman Point

Mumbai - 400021

Phone No.:02266341100

CORPORATE OFFICE

Kotak Securities Ltd.2nd Floor, Nirlon House

Dr. Annie Besant Road, Worli

Mumbai - 400025

Phone No.: 022 - 66529191

BRANCH OFFICE


1-2 Gr. Floor, Commerce house,

Habibullah Estate

11 M.G. Marg, Hazratganj

Lucknow-226001

Phone no.: 05224102813

Kotak securities website:www.kotaksecurities.com

CHAIRMAN

Mr Uday S. Kotak

DIRECTORS
http://www.kotaksecurities.com/http://www.kotaksecurities.com/http://www.kotaksecurities.com/http://www.kotaksecurities.com/


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MrShivaji Dam

Mr C. Jayaram

MANAGING DIRECTOR

D. Kannan

RISK MANAGEMENT COMMITTEE (BOARD)

Mr C. Jayaram (Chairman)

Mr Narayan S.A.

Mr D. Kannan

RISK MANAGEMENT COMMITTEE (OPERATIONS)

Mr. D. Kannan

Mr.TrivikramKamath

Mr.MukulRathi

Milestones

1995: The brokerage and distribution businesses of Kotak Mahindra Bank are incorpo-

rated into a separate company named Kotak Securities. 2000: Kotak Securities launches its online broking site (wwww.kotaksecurities.com).

Also, the company commences private equity activity by setting up Kotak Mahindra

Venture Capital Fund.

2006: Kotak Securities Launches Kotak Flat

2007: Kotak lines up PMS based on small caps.

2008: Kotak Securities launches a GEMS portfolio.


27/98

2009: Kotak Securities launches online trading in currency derivatives

Awards :

Best Broker in India by Finance Asia for 2010 and 2009

Best Brokerage Firm in India by Asia money in 2009, 2008, 2007 & 2006

UTI MF CNBC TV18 Financial Advisor Awards - Best Performing Equity Broker

(National) for the year 2009 and 2008

Best Brokerage Firm in India by Asia money three times in a row from 2006 to 2008

Best Performing Equity Broker in India in the CNBC Financial Advisor Awards 2008

Leading Equity House in India in Thomson Extel Surveys Awards, 2007

Prime Ranking Award forLargest Distributor of IPOs in 2004

Euro moneyAward for Best Equities House In India in 2005

Financial Report of Kotak Securities


28/98

Benefits of Kotak Securities

Caters to the investment need of the employees by providing tailor made investment solu-

tion

Provides exclusive offers to the employees

Dedicated Relationship Manager- means they provide fast and well organized response

Dedicated Call Centre means faster access

Organize Investment and tax planning seminar(on request)

Why Kotak Securities :


29/98

Right partner-

Stability: We are a subsidiary of Kotak Mahindra Bank and one of the oldest and largest

stock broking firms in the Industry. We have been the first and only NBFC to receive the

license to be converted into a bank.

Innovators in the Industry: We have been the first in providing many products and

services which have now become industry standards.

First to provide Margin Financing to the customers

First to enable investing in IPOs and Mutual Funds on the phone Providing SMS alerts before execution of depository transactions

Launching of Mobile application to track portfolio

AutoInvest - A systematic investing plan in Equities and Mutual fund

Provision of margin against securities automatically against shares in your Demat

account

kotaksecurities

stability

innovators

value

servicerobust

technology

centralisedriskmanagement

exceptionalresearch


30/98

Value: Whether you are a customer with a small or large wallet size, you can expect us

to bring value to you in every form.

Quality Research

Quick trade execution

Low brokerages

Accounts that suit your investment profile

Risk Profiler

Superior Customer Service

Service: We believe in high standards of service and that's precisely what we offer. It's

an honour to be awarded the most customer responsive company award in the Financial

Institution sector by AVAYA GlobalConnect Award both in 2006 and 2007.

Robust Technology: We have developed our own proprietary trading platform which is

robust and among the best in the industry. We have more than 150 technology profes-

sionals constantly working on upgrading and speeding up all our systems.

Centralised Risk Management System: Unlike many other players we have a central-

ised risk management system. This allows us to offer the same levels of service to cus-

tomers across all locations.

Exceptional Research: Unlike most other competitors we have our own in house re-

search team. Our in house research team is among the best in the industry and they have

years of experience in the financial markets. They scan through the plethora of stocks and

find the scrips that have a high potential of providing you good returns.

Competitors of Kotak Securities

India Bulls

AnandRathi Securities

ICICI Securities

Sharekhan

India Infoline

Religare Securities


31/98

Offering of Kotak Securities

Instrument types:-

Equity

Derivatives: future & option, Foreign indices

Mutual fund

Currency derivatives

Fixed deposits and bonds

Share trading platforms:- Every investor has own style of investing is comfortablewith different type of trading tools. Understanding the investor need and available tech-

nologies Kotak Securities creates and provides multiple platforms that would enhance

trading experience of every investor. Below are the various platforms that our customers

can use as per their convenience:

Instrumenttype

Derivatives:f&o,foreign indices

Equity

Mutual fundCurrency

derivatives

Fixed depositsand bonds


32/98

Value added trading services:- Going above and beyond your basic need of of trans-

actions in equities, we offer you a plethora of Value Added Services. When you choose any

of Kotak Securities Trading accounts, the combination of our research, trading platforms and

communication channels enable us to deliver a higher value to you.

Our specialised services like TradeSmart,Research on SMS and E-mail subscription con-

stantly gives you stock ideas that you can benefit from. Our services ensure that your end-to-

end trading needs are satisfied.

Below are the various Value Added Services we have for you:

Super Mutliple

Twin Advantage

BSNT

Portfolio Tracker SMS Alert Subsciption

Trade Smart


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Product Portfolio of Kotak Securities

I. Offline

II. Online

Offline product

Customers who require personalized assistance and services for their investments should open an

offline account.

Types of offline accounts :-

Type of Account Nature of Services Demat Holding

Type

NORMAL AC-

COUNT

Only dealer assisted

Trading a/c services

offered

Demat with K-Sec

or any other deposi-

tory participant


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SECURITY

MARGIN A/C

Ability to leverage

existing stock hold-

ings to avail limits

Dmat with K-Sec

with POA on Demat

in Favor of K-Sec

SEBI MARGIN

FUNDING

Ability to leverage

cash position to

purchase greater

buying limit

Dmat with K-Sec

with POA on Dmat

in favor of K-Sec

Online product

TRINITY ACCOUNT :-

Trinity Account is a unique integrated account that helps to enjoy the benefits of an

Online Trading Account

Bank Account

Demat Account

on a single platform for your securities transaction. This account gives you a convenience offund transfer and online trading with our multiple logins. The investors get all the three dif-

ferent account with single entity.


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BENEFITS OF TRINITY ACCOUNT:

Single application to open three different account i.e. Bank Account, Demat A/c &

Online Trading Account.

Get all the three different account with single entity.

2 in 1 Account 3 in 1 ( Trinity ) Ac-

count

Banks to Link Kotak , Axis , HDFC , Citi, IndusInd,

ICICI , SBI

Kotak Mahindra Bank

Fund transfer fa-

cility

Manual transfer done via payment

gateway

No manual transfer re-

quired

Payment Gateway Fund transfer through payment gate-

way

Direct fund transfer pos-

sible

Limits on fund

transfer

Limited transfer Unlimited transfer

VARIOUS PLANS OFFERED BY KOTAK SECURITIES

Gateway- Flat

Gateway Green channel- Flexi

Advance fee

Autoinvest

KPC


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GREENWAY- FLAT

It is an ideal plan for beginners in the stock market that gives beginners the flexibility to trade

from anywhere at any time through the internet or call and trade facility

GatewayFlat

750 a/copening

fee

0.049%intra - day

10000initial

margin

0.49%deliver

brokerage


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GATEWAY GREEN CHANNEL- FLEXI

It is an ideal for seasoned investors. This is a flexible plan where charges reduce proportion-

ally based on the monthly volume traded.

They provide SMS alerts, research report, free news and market updates. Best feature of

Kotak gateway is call and trade facility.

GatewayGreen

Channel

750 a/copening

fee

0.059%intra -day

10000initial

margin

0.59%delivery

brokerage


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ADVANCE FEE

It is a plan for those who trade quite often, which offers benefit of low brokerage rates and

helps in maximizing the validity period.

AUTO- INVEST PLAN

It is a plan based on SIP (systematic investment plan) in Gold ETFs, equities and MF. It is a

unique form of general SIP in a way that it assesses the risk profile and investment objec-

tives of the investors, an important practice that MFs fail to carry.

Invest in up to 5 stocks in one order

Choose Amount based or Quantity based investments

Choose the date of choice to start the SIP

Register once for your SIP, then the subsequent investments will happen automatically

Separate list of recommended scrip for Auto invest made available

Option to sell the stocks anytime


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KPC ( KOTAK PRIVILEDGED CIRCLE) PLAN

It is a unique plan which understand customers customer investing needs and makes sure that they get

to enjoy premium and top of the line trading services.

This is the premium account for its users. Along with Kotak gateway account benefits they provides in-

dependent market expertise and support through a dedicated relationship manager and a dedicated

customer service desk which provides assistance in opening accounts, handling day-to-day problems,

and more. They provides KEAT premium which is an exclusive online tool that lets you monitor what is

happening in the market and view your gains and losses in real-time.

PRIVILEGEDACCOUNT

750 a/copening

fee

As per theslab 0.03%intra - day

500000initial

margin

As per theslab 0.18%

deliverybrokerage


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FACILITIES PROVIDED BY KOTAK SECURITIES

KEAT Pro X, software with high speed trading platform free of cost

FASTLANE, a java applet through which you can access stock market on your mobiles

without installation

SMS Alerts on fundamental, technical and derivative research calls for 1 month at no ex-

tra charge

Simplified online SIP (systematic investment plan) in Stocks

Premium Research Reports absolutely free

7 day free trial period for Trade Smart, a service which helps to spot the bullish or bearish

trends of stocks

After Market Orders: Place orders even after market hours and the orders will be execut-

ed next day after the market reopens

First year Annualized Maintenance Charges (AMC) waiver for bank account

Availability of trading in Currency Derivative segment

It is the first broking house which enables investment in IPO and mutual fund on the

phone.


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CHAPTER - 4

RESEARCH METHODOLOGY

Research Methodology is a systematic and objective study of a particular problem. The Research

Methodology process involves a number of inter-related activities.

Research design or research methodology is the procedure of collecting, analyzing and interpret-ing the data to diagnose the problem and react to the opportunity in such a way where the costs

can be minimized and the desired level of accuracy can be achieved to arrive at a particular con-

clusion.

Title of the study

Sectoral study of stock market

Research Design

In my topic I have selected exploratory research design because my study is based on past data

and data are collected from secondary sources and need to be describing these data.

Sources of Data Collection

To meet the objective of the project, a lot of data was required to be collected from varied

sources.

Primary sources


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Those data which are collected at first hand by the researcher especially for the purpose of the

study, are known as primary data.

Primary data was collected with the help of the Equity Advisors.

Secondary sources

In my topic I have use past data which are available at secondary sources. Secondary data means

data that are already available.

The secondary data was collected through :-

Corporate resources,

Journal,

Books

Internet sources

Statistical reports etc

Sample size

One company from selected five sector are taken for study

FMCG sector- HUL

I.T sector- Infosys

Banking sector- HDFC bank

Automobile sector- Tata Motors

Oil & Gas sector- ONGC

Statistical tools used

Simple tools like

Bar graph

Tabulation

Line diagram


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CHAPTER- 5

Sectoral Study of Stock Market

As a part of this project, I am assigned the work to study any 5 sectors in the Indian Stock Mar-

ket, for the time period between 1st May 2012 to 31st May 2012.

I have selected to study the following sectors:

1. Automobile Sector

2. Information Technology (IT) Sector

3. Fast Moving Consumer Goods (FMCG) Sector

4. Banking Sector

5. Infrastructure Sector

These sectors are chosen on the basis of:

The popularity among investors

Their sensitivity to economic scenario

These sectors are among major sectors of Indian Economy

Economic overview for 1QFY 2013 :-

Domestically, apart from earnings, progression of the monsoon season will be closely

tracked for assessing the outlook on GDP growth and food inflation and the consequential

impact on monetary policy.

Globally, outcome of the EU summit has corroborated that policymakers over there are

committed to handling sovereign debt crisis in an orderly fashion.


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I have concentrated on one company of each sector for the month of May. Following are the selected

companies :

Automobile Sector Tata Motors

Information Technology (IT) Sector - Infosys

Fast Moving Consumer Goods (FMCG) Sector - HUL Banking Sector - HDFC Bank

Oil and Gas - ONGC

These companies have been chosen on the basis of their:

Earnings growth

Price/earnings ratio

Dividends Market cap or size

Industry

Relative strength

volume of shares traded daily


45/98

Automobile sector in India

The automotive industry in India is one of the largest in the world and one of the fastest grow-

ing globally. India's passenger car and commercial vehicle manufacturing industry is the sixth

largest in the world, with an annual production of more than 4.7 million units in 2010

The automobile sector of India is the seventh largest in the world. In a year, the country manu-

factures about 2.6 million cars making up an identifiable chunk in the worlds annual production

of about 73 million cars in a year. The country is the largest manufacturer of motorcycles and the

fifth largest producer of commercial vehicles.

According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projectedto increase to 5 million by 2015 and more than 9 million by 2020.[6]By 2050, the country is ex-

pected to top the world in car volumes with approximately 611 million vehicles on the nation's

roads.

Major Manufacturers in Automobile Industry

Maruti Udyog Ltd.

General Motors India

Ford India Ltd.

Eicher Motors

Bajaj Auto

Daewoo Motors India

Hero Motors

Hindustan Motors

Hyundai Motor India Ltd.

Royal Enfield Motors

Tata Motors

TVS Motors

DC Designs

Swaraj Mazda Ltd
http://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Automotive_industry_in_Indiahttp://en.wikipedia.org/wiki/Automotive_industry_in_Indiahttp://en.wikipedia.org/wiki/Automotive_industry_in_Indiahttp://en.wikipedia.org/wiki/Indian_Road_Networkhttp://en.wikipedia.org/wiki/Indian_Road_Networkhttp://en.wikipedia.org/wiki/Indian_Road_Networkhttp://en.wikipedia.org/wiki/Indian_Road_Networkhttp://en.wikipedia.org/wiki/Automotive_industry_in_Indiahttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Automotive_industry


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Sector outlook for 2012 :-

Positive

Going forward we expect sales growth for two wheelers to moderate on account of a de-

manding base effect. We expect a recovery in car demand in the second half of CY2012as interest rates and inflationary pressures begin to moderate. Improvement in CV typi-

cally lags consumer driven sectors such as cars and hence we do not expect any meaning-

ful improvement in M&H CV demand during CY2012.

Top Pick :- Tata Motors, Maruti .

The automobile sector is likely to witness a muted performance in the first quarter of the

current fiscal, with the volume growth of most manufacturers having taken a hit during

the April-June 12 period. High fuel costs and expensive loans have kept buyers at bay

and the same is reflected in the quarterly sales figures reported by various automobile

manufacturers, especially in passenger car and two-wheeler segments.

Union budget 2012-2013 : impact analysis

Increase in the excise duty on diesel-driven cars with length exceeding 4,000 mm and en-

gine capacity under 1,500 cc from 22% to 24%, and on diesel-driven vehicles having

length exceeding 4,000 mm and engine capacity exceeding 1,500 cc from 22% plus `

15,000 to 27%.

Increase in the excise duty on petrol/LPG/CNG-driven cars, with length not exceeding

4,000 mm and engine capacity not exceeding 1,200 cc from 10% to 12% and on diesel-

driven vehicles having length not exceeding 4,000 mm and engine capacity not exceeding

1,500 cc from 10% to 12%.

Reduction in the excise duty from 10% to 6% on replacement batteries for supply to

electric vehicle manufacturers who are registered with IREDA or any State Nodal Agen-

cy notified for the purpose by the Ministry of New & Renewable Energy for Central fi-

nance assistance till March 31, 2013.

Building of commercial vehicle bodies to attract an ad valorem duty of 3% as against the

earlier specific rate of ` 10,000 on chassis.

Reduction in the excise duty from 10% to 6% on specified parts of hybrid vehicles in-

cluding battery pack, battery charger, AC/DC motor, AC/DC motor controller, engine for

HV, transaxle for HV, power control unit, control ECU for HV, generator, brake systemfor recovering, energy monitor and electric compressor.

Increase in the basic customs duty from 60% to 75% on completely built units of large

cars/MUVs/SUVs with engine capacity exceeding 3,000 cc for petrol and 2,500 cc for

diesel, and whose value exceeds US$ 40,000 per vehicle.


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Lithium ion batteries imported for the manufacture of battery packs for supply to electricor hybrid vehicle manufacturers to enjoy full exemption from basic customs duty and

special CVD with concessional excise duty/CVD of 6%.

1QFY 2013 RESULT :-

Tata Motors to drive the otherwise tepid performance for the sector; monsoon progres-sion to be tracked for two wheeler companies and MM sales: Auto numbers need to be

looked at, ex-Tata Motors, where Jaguar remains a huge swing factor. On the back of

healthy volume growth (8-10% during 1QFY2013 in the domestic auto industry) and in-

creased net average realization, we expect our auto coverage companies ex-Tata Motors

to report 16.4% yoy revenue growth. Earnings are, however, expected to grow by only

6.3% yoy, dragged down by Maruti.

In any case, apart from earnings trends, markets will also continue to track the monsoonprogression for assessing the outlook for two-wheeler and tractor sales, and any disap-

pointment on this front (too early to take a call yet) is likely to weigh down on two-

wheeler stocks and Mahindra & Mahindra (MM). The domestic automotive industry witnessed healthy volume growth of ~10% YTD in

FY2013 despite unrelenting macro headwinds (mainly slowdown in economic activity

and high fuel prices), which continued to hamper overall growth. Volume growth during

the period was driven by strong momentum in the light commercial vehicle (LCV) and

utility vehicle (UV) segments, which registered robust growth of ~20% and ~27%

yoy, respectively. However, other industry segments viz. passenger cars (PC), tractorsand medium and heavy commercial vehicles (MHCV) continued to reel under the

pressure of demand slowdown. While domestic MHCV volumes declined by 11% yoy

during the period, led by slowdown in industrial activity, PC volumes grew moderately

by ~3% yoy, impacted by a steep increase in taxes by various state governments and

hike in petrol prices (effective hike of2.7/liter) since April 2012.

Growth ahead

Passenger vehicles: We expect lower 10.9% CAGR for PVs over the next two years. Thegrowth would be driven by:

New launchesas witnessed from the XUV500 from M&M, the good response to the

New Swift and the New Dzire, as well as expected positive response for Marutis Ertiga.

New launches/ refreshed launches are expected from all the major OEMs.

Dieselizationthe demand for diesel vehicles is likely to remain strong, as long as the

differential between diesel and petrol prices in India sustains. Petrol vehicle sales are ex-


48/98

pected to stagnate, while diesel vehicle growth would continue, subject to capacity con-

straints.

Exports launches of export-oriented models are expected to increase. Hence, overall

production for PVs is likely to register a higher growth rate than domestic demand.

Constraining factorshigh fuel prices, higher cost of ownership, high penetration in

urban regions and postponement of purchases due to poor economic conditions are fac-

tors that are responsible for the lowering of the growth rate.

Two wheelers: We estimate lower CAGR of 11.16% for two wheelers over the next two years.

The growth is expected to be driven by:

New launchesas witnessed from the good growth of Hero Motocorps monthly vol-

umes in 2H FY12 on refreshed launches (Glamour, Karizma, Passion Pro) will also be

helped by the new Impulse, Maestro (scooter) and Ignitor, going forward. Bajajs upcom-

ing New Pulsar and New Discover should help improve its volume growth rates and mar-

ket share. Exportslikely to be driven by the foray into new regions globally, particularly in re-

gions with low per-capita penetration.

Commercial vehicles: We expect lower CAGR of 12.4% for commercial vehicles, mainly driv-

en by good LCV volume growth over the next two years. The growth in CVs would be driven

by:

Road infra projectsThe National Highway Authority of Indias (NHAI) FY12 target

is the awarding of 7,300km. Till Feb 12 FY12 ytd, ~4,382km had been awarded (ytd

~`410bn). Some of this will spill over, providing some visibility. Demand for CVs fromroadbuilding and infrastructure activities is a crucial component currently, considering

the mining ban in Karnataka and Goa as well as the general economic activity slowdown

and delayed capex programs.

ExportsExport orders are expected to be steady on the ongoing fleet renewal in Eu-

rope.

New launches and entry of new players an improved product mix has helped Ei-

chers market share, the New Prima has generated increasing sales for Tata Motors and

The Dost has helped AshokLeylands volumes markedly. Dealers expect players like

MAN, Scania and Bharat Forge to make their presence felt, going forward.

Tractors: We expect tractors to grow at a CAGR of 5% over the next two years. This growth

would be driven by:


49/98

Labour shortage shortage of cheap labour is a key factor expected to drive farm

mechanization and is expected to arise mainly from a choice of alternative professions

due to higher rural income from non-agricultural sources.

Increased availability of power availability of adequate farm power is crucial for

timely farm operations, as well as to increase productivity. Hence, the government has

increased its emphasis to enhance food production through higher minimum support pric-

es for crops, higher allocation of power for farm purposes, productivity-awareness pro-

grammes and farm subsidies.

Additional usages increased use of tractors for haulage and nonagricultural applica-

tions.

Better finance penetration tractor financing attracts lower interest rates and higher

bank participation, as it continues to enjoy priority lending status.


50/98

TATA MOTORS

Tata Motors Limited formerly TELCO, is an Indian multinational automotive corporation head-

quartered in Mumbai, India. It is the eighteenth largest motor vehicle manufacturing company in

the world by volume. Part of the Tata Group. Its products include passenger cars, trucks, vans

and coaches. Tata Motors has been ranked 314th in the Fortune Global 500 rankings of the

world's biggest corporations for the year 2012.

Tata Motors Limited is India's largest automobile company, with consolidated revenues of INR

1,65,654 crores (USD 32.5 billion) in 2011-12. It is the leader in commercial vehicles in each

segment, and among the top three in passenger vehicles with winning products in the compact,

midsize car and utility vehicle segments. It is the world's fourth largest truck and bus manufac-turer.

Originally a manufacturer oflocomotives, the company manufactured its first commercial vehi-cle in 1954 in collaboration with Daimler-Benz AG, which ended in 1969. In 2010, Tata Motorssurpassed Reliance to win the coveted title of 'India's most valuable brand' in an annual surveyconducted by Brand Finance and The Economic Times. Tata Motors was ranked as India's 3rdMost Reputed Car manufacturer in the Reputation Benchmark Study - Auto (Cars) Sector,launched in April 2012.
http://en.wikipedia.org/wiki/Locomotiveshttp://en.wikipedia.org/wiki/Daimler-Benzhttp://en.wikipedia.org/wiki/Brand_Financehttp://en.wikipedia.org/wiki/Brand_Financehttp://en.wikipedia.org/wiki/Daimler-Benzhttp://en.wikipedia.org/wiki/Locomotives


51/98

Tata Motors is a cross-listed company. Its stock trades on:

Bombay Stock Exchange

New York Stock Exchange.

National stock exchange

Public Traded as:

NSE:TATAMOTORS

BSE:500570

NYSE:TTM

CNX AUTO : 52 week high- 4,505.15

52 week low- 3,292.70

TATA MOTORS : 52 week high- 1,081.50

52 week low- 137.55

Type Public

Industry Automotive

Founded 1945

Founder(s) Jamshed ji TataHeadquarter Mumbai, Maharastra, India

Area served Worldwide

Key people Ratan Tata( Chairman)Ravi Kant( Vice-chairman)

Products AutomobileCommercial vehiclesAutomotive parts

Parents TATA group

Subsidiaries Jaguar Land Rover (JLR)Tata Daewoo Commercial vehicle company

(TDCV )TATA Hispano
http://en.wikipedia.org/wiki/Cross_listinghttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Ticker_symbolhttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=TATAMOTORS&section=7http://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=TATAMOTORS&section=7http://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=TATAMOTORS&section=7http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/scripsearch/scrips.aspx?myScrip=500570http://www.bseindia.com/scripsearch/scrips.aspx?myScrip=500570http://www.bseindia.com/scripsearch/scrips.aspx?myScrip=500570http://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://www.nyse.com/about/listed/quickquote.html?ticker=ttmhttp://www.nyse.com/about/listed/quickquote.html?ticker=ttmhttp://www.nyse.com/about/listed/quickquote.html?ticker=ttmhttp://www.nyse.com/about/listed/quickquote.html?ticker=ttmhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://www.bseindia.com/scripsearch/scrips.aspx?myScrip=500570http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=TATAMOTORS&section=7http://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Ticker_symbolhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Cross_listing


52/98

Share holding pattern (%) :-

Domestic

Promoters 34.71General Public 7.39

others 1.73

Total 43.83

Institution 10.40

Foreign 44.86

Others .91

Total 100 %

Pie chart

Domestic,

43.83

Institution, 10.4

Foreign, 44.86

Others, 0.91

Share Holding %

Domestic

Institution

Foreign

Others


53/98

Stock price and volume movement

Key fundamentals

Fundamentals

Market Capitalization ( Rscr ) 71593

Book Value/ Share 60.74

Debt / Equity 0.79

P/E 60.47

Dividend Yield % 1.82

EPS 6.74

Return on Net Worth 9.46

Current Ratio 0.77

Quick Ratio 0.53

Interest Cover3.70


54/98

1Q FY 2013:- update

TTMT reported a 3% yoy (flat mom) decline in total volumes to 64,341 units, led by a20.9% yoy (14.4% mom) decrease in PV sales. The CV segment grew by 6.3% yoy (7% mom), driven by continued buoyancy in the

LCV segment, which registered strong 24.9% yoy (7.4% mom) growth. The MHCVsegment, however, registered a steep decline of 21.5% yoy (up 5.9% mom) mainly due toslowdown in industrial activity.

The PV segment witnessed a steep decline, led by a 35% and 46% yoy dip inIndica andIndigo sales, respectively. The Sumo/Safari/Aria/Venture range performed better, posting5% yoy growth. Nano sales increased by 3% yoy during the month.

Meanwhile, TTMT suspended production of trucks at its Jamshedpur plant for three daysin June to avoid piling up of inventory.

Tata Motorssales trend

CV segmentmonthly sales trend


55/98

PV segmentmonthly sales trend

Investment argument

Downside risks

Global growth slowdown: Our base-case scenario assumes slow and steady GDPgrowth in Europe and the United States. If either economic growth in developed econo-mies is weaker than expected or economies slip into recession, there could be significantdownside risks to our earnings estimates.

Slower-than-expected growth in China: Slower-than-expected growth in China vol-umes could lead to downside risks to our earnings estimates.

Sharper-than-expected slowdown in MHCV industry volumes: If MHCV industryvolumes slow more sharply than our expectation of flat volumes in FY13, there could bedownside risks to our estimates.

Increase in petrol prices impacts PC demand

Upside risks

Success of new launches: There are quite a few new launches planned over the next twoto three years. We have not factored any significant increases in volumes from thesemodels in our estimates. If the models are successful, there could be upside risks to ourestimates.

Favourable currency movements: JLR is a net importer of raw materials from Europe,and therefore, it gains if the euro depreciates vis--vis the GBP. Similarly, due to exports,JLR gains if the CNY and USD appreciate against the GBP. There could be upside risksto our margin estimates if either the euro depreciates or the USD/CNY appreciatesagainst the GBP.

Demand for LCVs in India is likely to remain robust, despite slowdown in M&HCV de-mand. We model volume growth of 14% for the CV business in FY13.


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Passenger vehicle segment is expected to continue its growth momentum. With low carpenetration levels in India, the upside potential for growth is tremendous.

M&CV volumes in domestic business are also expected to be under pressure for at leastanother 6 months, impact of which would be diluted by strong LCV volume growth.

JLR volumes are expected to remain strong over long term driven by strong growth in

US, China and Russia.

Outlook :-

We believe long-term structural growth drivers of the Indian automobile industry such asGDP growth (leading to increasing affluence of rural and urban consumers), favorabledemographics, low penetration levels, entry of global players and easy availability of fi-nance are intact, which should support a 12-14% CAGR in auto volumes over FY2012-14E.

Prefer stocks that have strong fundamentals, high exposure to rural and exports markets

and command superior pricing power.

Reccomondation

BUY

CMP :- 243

Target Price :- 305

Investment Period :- 12 months


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Information Technology Sector in India

The Information technology industry in India has gained a brand identity as a knowledge econo-my due to its IT and ITES sector. The ITITES industry has two major components: IT Servicesand business process outsourcing (BPO).

The growth in the service sector in India has been led by the ITITES sector, contributing sub-stantially to increase in GDP, employment, and exports. The sector has increased its contributionto India's GDP from 1.2% in FY1998 to 7.5% in FY2012.

According to NASSCOM, the ITBPO sector in India aggregated revenues of US$100 billion inFY2012, where export and domestic revenue stood at US$69.1 billion and US$31.7 billion re-spectively, growing by over 9%.

The major cities that account for about nearly 90% of this sectors exports are Bangalore,Delhi,Mumbai, Chennai, Hyderabad, Pune, Kolkata and Coimbatore.

Export dominate the ITITES industry, and constitute about 77% of the total industry revenue.Though the ITITES sector is export driven, the domestic market is also significant with a robustrevenue growth.

The industrys share of total Indian exports (merchandise plus services) increased from less than

4% in FY1998 to about 25% in FY2012.

Major informational technology service provider

Tata Consultancy Services Infosys Cognizant Wipro HCL Technologies

Sector Outlook for 2012 :-

Cautiously positive

Lot would depend on how the global economies shape up. A deeper crisis in Euro zonecan lead to significant pressure for Indian IT services companies. Demand in US has re-mained strong so far but any macro shock to the slowly recovering economy will have a


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detrimental impact on IT demand. While weakening currency will provide some cushionto the profits, strength in demand will remain the main catalyst.

Top pick:- TCS, KPIT Cummins

Our IT coverage universe witnessed subdued revenue growth during 4QFY2012 due tothe cyclical soft nature of the quarter coupled with additional macro uncertainties. All this

led to delay in project ramp-ups and slowdown in the near-term demand scenario. Mutedvolume growth, stable pricing environment and slightly negative cross-currency move-ment led to subdued USD revenue growth of -1.9% to 2.5%.


Introduction of advance pricing agreement (APA) in the Finance Bill of 2012. Central plan outlay by the Department of Information Technology (DIT) increased by

86.7% to Rs 53.6 bn. Rs 391.1 bn to be spent on modernisation of signaling system of railways. A National Information Utility (NIU) for the computerisation of Public Distribution Sys-

tem (PDS) is being created. It is expected to become operational by December 2012. Marginally Positive :- Provision regarding implementation of APAs to be introduced

in Finance Bill 2012 will help in addressing concerns over the certainty of transfer pric-ing arrangements.

Proposal to improve service tax refunds process as well as enhance the scope for inputcredits for service tax will benefit the IT-ITeS sector since substantial amount of cashflow is tied up in refund claims. The central plan outlay for DIT growing by 86.7%, allo-cation of funds for modernising signaling system of railways and creating a NIU forcomputerisation of PDS will have a positive impact on the IT sector. The industry wasexpecting to see the revival of tax benefits under the STPI scheme. However, there wasno mention in respect of extension of this clause.

Thus, the overall Budget has a marginally positive impact on the sector.

1QY FY 2013 Result

Cyclically a healthy quarter with modest volume growth - Traditionally, 1Q is astrong quarter for IT companies as client budgets on the kind of discretionary, operationaland capital spending freeze by 4Q and budget flush start happening in 1Q. However, weexpect 1QFY2013 to be better than 4QFY2012, but not as good as traditionally 1Q is,due to unstable macros and economic uncertainty across developed economies because ofwhich clients are delaying the incremental budget flush from their end.

INR revenue growth to stand tall, courtesy INR depreciation- 1QFY2013 witnessedone of the most volatile seasons as far as the currency is concerned. During 1QFY2013,INR depreciated by ~8% qoq against USD, which will result in a surge in INR revenuegrowth vs. USD revenue growth and boost the operating margins of IT players by 100-250bp qoq.

USD revenue to grow, but at a slower pace- The cross-currency movement, which hadproved to be a boon during 2QFY2011-1QFY2012, has turned into a bane since the lastcouple of quarters. In 1QFY2013 again, it turned negative for IT companies with the


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USD appreciating by 2.0% against Euro. This will have an impact of 0.4-0.7% qoq onUSD revenue of tier-I IT companies.

Margins to enhance - We expect EBITDA margin of all Indian IT companies to improvebecause of sharp INR depreciation against USD. Infosys and HCL Tech are expected torecord 181bp and 248bp qoq expansion in their EBITDA margin to 34.4% and 20.9%, re-

spectively. On the other hand, EBITDA margin of TCS is expected to slip by 28bp qoq to29.2% due to negative impact of wage hikes given during the quarter effective from April2012. Wipro is expected to show a marginal rise of 18bp qoq in its EBITDA margin, de-spite huge gains from INR depreciation, to24.0% because of wage hikes given from June2012


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INFOSYS

Infosys Limited formerly Infosys Technologies Limited, is an Indian provider of business con-sulting, technology, engineering and outsourcing services.

Its headquartered in Bangalore, India. It has offices in 30 countries and development centers inIndia, US, China, Australia, UK, Canada, Japan and many other countries.

Infosys takes pride in building strategic long-term client relationships. 99.1% of our revenues

come from existing customers (Q1 FY 13).Infosys gives back to the community through the In-

fosys Foundation that funds learning and education.

The company services more than 650 clients across various verticals, such as financial services,manufacturing, telecom, retail and healthcare. Infosys has the widest portfolio of service offer-ings amongst Indian IT companies, spanning across the entire IT service value chain - from tradi-

tional application development and maintenance to consulting and package implementation toproducts and platforms.

Infosys is a cross-listed company. Its stock trades on:

Bombay Stock Exchange

New York Stock Exchange.

NASDAQ

Public Traded as:

NSE: INFY

BSE:500209

NASDAQ: INFY
http://en.wikipedia.org/wiki/Cross_listinghttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Ticker_symbolhttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Ticker_symbolhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Cross_listing


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CNX IT : 52 week high-

52 week low-

Infosys : 52 week high- 2990.00

52 week low- 2163.00

Type Public

Industry IT Services, IT Consultancy

Founder(s) N.R Narayana MurtyNandan NilekaniN.S RaghavanS.Gopalakrishnan

S.D ShibulalK DineshAshok Arora

Headquarter Bangalore, India

Area served Worldwide

Services IT, Business Consulting and outsourc-ing services

Divisions Infosys BPO, Infosys China

Share holding pattern :-

Domestic

Promoters 16.04

General Public 12.96

Others

Total 34.23

Institutions 11.88

Foreign 53.37

Others .52Total 100


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stock price and volume movement

Domestic,

34.23

Institutions,

11.88

Foreign,

53.37

Others, 0.52

Share Holding %

Domestic

Institutions

Foreign

Others


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Key fundamentals

Fundamentals

Market Capitalization ( Rscr ) 127341.50

Book Value/ Share 518.2

Debt / Equity 0.00

P/E 14.91826

Dividend Yield % 2.11946

EPS 148.65

Return on Net Worth 31.22

Current Ratio 5.11

Quick Ratio 5.02

Interest Cover9523.00

1Q FY 2013:- update

For 1QFY2013, Infosys reported revenue of US$1,752mn, down 1.1% qoq, impacted dueto 3.7% qoq decline in pricing and a hit of US$15mn as a one-time reversal in a trans-formation project from a European utilities client. EBITDA margin declined by 181bpqoq to 30.8%, despite having benefits from ~8% qoq INR depreciation against USD be-cause operating margins were impacted adversely by pricing decline (co-attributing thedecline to change in business mix with some sporadic pricing resets in FSI) and

US$15mn of revenue reversal on account of a project cancellation.

In the constant currency terms also, the company has not been able to meet its dollar rev-enue guidance of 0-1% qoq growth. Revenue in constant currency (CC) terms came in atUS$1,763mn, down 0.4% qoq. Billing rates in CC terms decreased by 3.2% qoq as off-shore pricing declined 3.2% qoq, while onsite CC billing rates were down 2.8% qoq.

One key positive thing was that the companys volumes grew at a modest pace by 2.7%qoq led by 2.9% offshore volume growth and 2.3% onsite volume growth. In INR terms,revenue came in at `9,616cr, up 8.6% qoq, aided by ~8% qoq INR depreciation against

the USD in 1QFY2013.


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In terms of geographies, revenue decline was primarily led by Europe, which posted7.2% qoq decline in revenues in CC terms. Revenue from North America grew by 1.7%qoq in CC terms, while revenues from India and Rest of the World declined by 5.0% and2.2% qoq, respectively in CC terms.


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The companys EBITDA and EBIT margin declined by 181bp and 190bp qoq to 30.8%and 28.0%, respectively, despite having considerable benefits from ~8% qoq INR depre-

ciation against USD. Operating margins of the company were impacted adversely by~3.7% qoq decline in revenue productivity (3.1% qoq in CC terms, with co attributing thedecline to change in business mix with some sporadic pricing resets in BFSI) andUS$15mn of revenue reversal on account of a project cancellation. Management indicat-ed that they expect EBIT margin to go down by 50-100bp in FY2013 which does not fac-tor any wage hike.

Investment argument:-

Management commentary has turned extremely cautious for the next years budget flushpattern. Also, the company is witnessing delays in ramp-ups of the deals being signed.This is clearly reflected in managements disappointing FY2013 guidance of atleast 5%yoy growth from 8-10% earlier, tad lower than our estimate of 6-8%.


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In addition, the management has stopped issuing quarterly guidance citing uncertainly indemand environment which clearly indicates challenging visibility in business volumesand managements future expectation. Post 1.1% decline in USD revenue in 1QFY2012,the company requires ~3% ask rate in 2Q-4QFY2013 to achieve 5% growth in FY2013,

which at current scenario of companys performance, looks a bit stretched

Hence, we have assumed moderation in demand going forward in FY2013 and have builtin a USD revenue growth of 4.8% for FY2013. Over FY2012-14E, we expect USD andINR revenue CAGR of 7.1% and 11.2%, respectively. On the EBIT margin front, forFY2013, the management expects it to go down by 50-100bp yoy in FY2013 which doesnot factor in the wage hike.

Despite giving no salary hikes, the company posted 190bp cut on the EBIT margin. If thecompany announces wage hike later in this year, there will be further pressure on themargin but currently we are not factoring wage hike impact in our estimates of FY2013.

We expect EBIT margin to decline by 17bp yoy to 28.8% for FY2013. Over FY201214E, we expect a CAGR of 11.4% and 9.5% in EBIT and PAT, respectively.

At the CMP of `2,265, the stock is trading at 14.0x FY2013E and 13.0x FY2014E EPS.We value the company at 14.5x FY2014E of `174.5 which is significant discounts to itspeak valuations as well as to Sensex.

Outlook

Indian offshoring has been vindicated with global clients and service providers making

India their base for IT enabled solutions. India still has less than 5% of the global IT mar-ket. We are positive on the sector from a long term perspective.

With developed economies slowing, attrition and sharper currency appreciation is a keyconcern.

Niche IT/ITeS services companies with strong business models are likely to be betterplaced to face uncertainties in the near term.

Reccomondation

ACCUMULATE

CMP :- 2265

Target Price :- 2530

Investment Period :- 12 months


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Oil and Gas sector in India

The country is Asia's third-largest oil consumer and world's fifth largest energy consumer. Ac-cording to the International Energy Agency (IEA), hydrocarbons account for the majority of In-dia's energy consumption while coal and oil satisfy about two-thirds of the same. Natural gas ac-counts for 7 per cent share, which is expected to increase with the discovery of new gas deposits.

The Indian oil and gas sector is one of the six core industries and has very substantial forwardintegration with the entire economy.

Major Oil and Gas companies in India

Indian Oil Corporation India (IOL)

Oil and Natural Gas Corporation Limited (ONGC)

Bharat Petroleum

Reliance Petroleum Limited

Hindustan Petroleum Corporation

Oil India Limited

Sector outlook for 2012

Negative The under-recoveries on subsidized fuels remain high due to a sharp depreciation of the

rupee which has made imports costlier. A weak government fiscal situation has meantthat Rs 300 billion of cash reimbursements promised to Oil Marketing Companies are yetto be disbursed, which has caused the working capital requirements (and hence interestcosts) to balloon.

While the government has stuck to 33% sharing by upstream firms for H1FY12, with theONGC FPO being delayed there is the likelihood of a higher share being borne byONGC/Oil India/GAIL in H2FY12E, which could hurt net realizations. A push towardsreforms may be the catalyst needed for stocks to re-rate.


Increase in cess from the current level of Rs 2,500/tonne to Rs 4,500/tonne.


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This would be negative for Indian crude oil producers (mainly Cairn India and ONGC) as cess isdeducted from the realized crude price.

Rs43,737cr of petroleum subsidies have been provided for FY2013.

Would be insufficient if crude oil stays at current levels (above US$115/bbl) or retail prices arenot revised upwards. Under recoveries are expected to amount to Rs 130,000cr in FY2013. Itcould also mean higher subsidy burden for upstream oil companies (ONGC and Oil India).

Customs duty on LNG import has been abolished from the current level of 5%.

This would be marginally positive for city gas distributors such as Gujarat Gas.

Union Budget 2012-13 is negative for the oil and gas sector. The budget pegged the gov-

ernment's share of petroleum subsidy at only Rs 43,737cr for FY2013, which would beinsufficient if Brent crude stays at current levels (above US$115/bbl) or diesel and LPGcylinder prices are not revised upwards. The government's share of subsidy for FY2012 isexpected to be `68,533cr, which is in-line with our expectation of `65,000cr, although it issignificantly above the government's target of Rs 23,696cr.

The budget proposes to increase cess for oil producers from Rs2,500/tonne to Rs4,500/tonne, which will be negative for Cairn India and ONGC.

In light of this event, we lower Cairn India's FY2013 EPS estimate by 10.7% to `46.3.Thus, our target price stands reduced to Rs 332 (previous target price `367). We recom-

mend Neutral on the stock.

For ONGC, we lower our FY2013 EPS estimate by 10.3% to Rs 30.2 and lower our tar-get price to Rs 316 (previous target price Rs 324). However, we note that any increase inprices of diesel and LPG will lower its share of subsidy burden and as such it will be pos-itive for ONGC. We maintain our Buy view on the stock.

1QY FY 2013 Result

During 1QFY2013, average Brent c

sip prachi

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