PROJECT REPORT

ON
INVESTMENT
IN
EQUITIES
CONDUCTED AT
VENTURA SECURITIES
BY
AJAY KUMAR PATEL
ROLL.NO: 08708102
Submitted in partial fulfillment of award of Degree of

MASTER OF BUSINESS ADMINISTRATION

VIVEK VARDHINI SCHOOL OF BUSINESS MANAGEMENT,

KOTI, HYDERABAD.
2008-2010.

CERTIFICATE

This is to certify that the project entitled INVESTMENT IN EQUITIES WITH

REFERENCE TO VENTURA SECURITIES submitted to the Osmania University in partial
fulfillment for the award of degree of Master of Business Administration has been carried out
by Mr. AJAY KUMAR PATEL, Hall-Ticket Number 087-08-102, who is a bonafide student of
Vivek Vardhini School Of Business Management (VVSBM), Koti, Hyderabad for the academic
year 2008-10.

HEAD

PRINCIPAL

CERTIFICATE
This is to certify that the project report titled INVESTMENT IN EQUITIES WITH
REFERENCE TO VENTURA SECURITIES submitted in partial fulfillment for the
award of MBA Programme of Department of Business Management, Osmania
University, Hyderabad, was carried out by Mr. AJAY KUMAR PATEL, under my
guidance. This has not been submitted to any other university or institution for the award
of any degree / diploma / certificate.

Name and Address of the Guide

Signature of the Guide

DECLARATION
I hereby declare that this project report titled INVESTMENT IN
EQUITIES WITH REFERENCE TO VENTURA SECURITIES
submitted by me to the Department of Business Management, Osmania
University, Hyderabad, is a bonafide work undertaken by me and it is not
submitted to any other university or institution for the award of any degree /
diploma / certificate or published any time before.

Place:
Date:

(AJAY KUMAR PATEL)

ACKNOWLEDGEMENT

I express my gratitude to Mr. Shiva Kumar for giving me this opportunity to

carry out the project work on INVESTMENT IN EQUITIES in Ventura Securities.

I also express my sincere thanks to the Staff Of Ventura Securities who were of
ready help in answering my various quires related to the project work.

It is with great pleasure that I Express my gratitude to Ms.Soumya, under whose

inspiring guidance and advice this study has been carried out.

Ajay Kumar Patel

TABLE OF CONTENTS
TOPIC
INTRODUCTION TO THE STUDY
NEED FOR THE STUDY
LITERATURE REVIEW
COMPANY PROFILE
DATA ANALYSIS
SUMMARY
FINDINGS
SUGGESTIONS
CONCLUSIONS
BIBILIOGRAPHY

PAGE No.
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78

Introduction

INTROUDCTION
Investment management once seemed a simple process. Well-heeled investors
would hold portfolios composed of stocks and bonds of blue chip industrial companies,
treasury bonds, notes and bills. The choices available to less well-off investors were
much more limited, confirmed primarily to passbook savings accounts. If the investment

environment can be thought of as an ice cream parlor, then the customers of past decades
were offered only chocolate and vanilla.
Mirroring the diversity of modern society, the investment ice cream parlor now
makes available a myriad of flavors to the investing public. Investors face a dizzying
array of choices. The ability to purchase different securities has become both less
expensive and more convenient with the advent of advanced communications and
computer networks, along with the proliferating market for mutual funds that has
developed to serve large or small investors.
Investment environment encompasses the kinds of marketable securities that
exist and where and how they are bought and sold. Investment process is concerned with
how an investor should proceed in making decisions about what marketable securities to
invest in, how extensive the investments should be and when the investments should
made.
Investment means the sacrifice of current rupees for future rupees. Two different
attributes are involved time and risk. The sacrifice takes place in the present and is
certain. The reward comes later and the magnitude is uncertain. In some cases, risk is the
dominant attribute. These are two types of investments. They are:
1) Real Investments
2) Financial Investments
Real investments involve some kind of tangible assets such as land, machinery,
factories.

Financial investments involve contracts written on pieces of paper such as

common stocks and bonds.
Investment in securities such as shares, debentures and bonds is profitable
as well as exciting, but it involves great deal of risk. Investing in financial
securities is considered to be one of the best avenues for investing ones savings
while it is acknowledged to be one of the most risky avenues of investment. Even
Indian government wants to encourage people in rural areas to invest in
equities. This will help the markets to stabilize by tapping the rural areas and
decreases the dependency on foreign institutional investors.

NEED FOR THE STUDY

PURPOSE OF THE STUDY
The purpose of the study is to know about stock markets in India, how they work,
fundamental requirements before entering the stock market, how to enter the stock market,

market design, stock selection, when to buy or sell a stock, how to invest and knowing about
market intermediaries.

OBJECTIVES OF THE STUDY

The objective of the study is to look into the scientific approach for selecting a stock
where Fundamental Analysis and Technical Analysis are looked into.
For that purpose the most happening software sector was taken for study and from that
sector, three stocks were picked up and analyzed.
The study deals with analysis of performance of the company, share price fluctuations
and comparing it with another company from same sector.
The purpose of the study is to locate a stock which gives good returns with minimum
risk.

SCOPE OF THE STUDY

For the purpose of study, one sector software is selected. Wipro, Satyam and TCS are
the three companies that are taken for analysis.

INTRODUCTION TO STOCKS
The first step for you to understand the stock market is to understand stocks.
A share of stock is the smallest unit of ownership in a company. If you own a share
of a companys stock, you are a part owner of the company.

You have the right to vote on members of the board of directors and other important
matters before the company. If the company distributes profits to shareholders, you will
likely receive a proportionate share.
One of the unique features of stock ownership is the notion of limited liability. If the
company loses a lawsuit and must pay a huge judgment, the worse that can happen is
your stock becomes worthless. The creditors cant come after your personal assets.
Thats necessarily true in private-held companies.
There are two types of stock:

Common stock

Preferred stock

Most of the stock held by individuals is common stock.

Common Stock:
Common stock represents the majority of stock held by the public. It has voting
rights, along with the right to share in dividends.

Preferred Stock:
Despite its name, preferred stock has fewer rights than common stock, except in
one important are dividends. Companies that issue preferred stocks usually pay
consistent dividends and preferred stock has first call on dividends over common stock.

Investors buy preferred stock for its current income from dividends, so look for
companies that make big profits to use preferred stock to return some of those profits via
dividends.

DEMAT ACCOUNT
What is Demat account and why it is required?
Securities and Exchange Board of India (SEBI) is a board (corporate body)
appointed by the Government of India in 1992 with its head office at Mumbai. Its one of
the function is helping the business in stock exchanges and any other securities markets.
Demat (short form of Dematerialization) is the process by which an investor can get
stocks (also called as physical certificates) converted into electronic form maintained in
an account with the Depository Participant (DP).
DP could be organizations involved in the business of providing financial
services like banks, brokers, financial institutions etc. DPs are like agents of
Depository.
Depository is an organization responsible to maintain investor's securities
(securities can be stocks or any other form of investments) in the electronic form. In
India there are two such organizations called NSDL (National Securities Depository
Ltd.) and CDSL (Central Depository Services India Ltd.)
Investors wishing to open Demat account has to go DP and open the account.
Opening the Demat account is as simple as opening the bank account with any bank. As
we need bank account to save our money, make cheque payments etc, likewise we need

to open a demat account if we want to buy or sell stocks. All stocks what we possess will
show in our demat account. So we don't have to possess any physical certificates. They
are all held electronically in our demat account. As we buy and sell the stocks,
accordingly our stocks will get adjusted in our account.
Is a demat account must?
The market regulator, the Securities and Exchange Board of India (SEBI), has
made it compulsory to open the demat account if you want to buy and sell stocks.
So a demat account is a must for trading and investing.
How to start to open a Demat account?
We have to approach a DP to open a Demat account. Most banks are DP
participants so we may approach them.
A broker and a DP are two different people. A broker is a member of the stock
exchange, who buys and sells stocks on his behalf and also on behalf of his customers.
Following are the documents required to open Demat account.
When we approach any DP, we will be guided through the formalities of opening
an account. The DP will ask to provide some documents as proof of our identity and
address. Below is a list but we may not require all of them.
PAN card, Voter's ID, Passport, Ration card, Driver's license, Photo credit card
Employee ID card, IT returns, Electricity/ Landline phone bill etc.
Do we need any stocks to open a Demat account?

No. We need not need any stocks to open a demat account. A demat account can
be opened with no balance of stocks. And there is no minimum balance to be maintained
either. You can have a zero balance in your account.
How much it cost to open a Demat account?
The charges for account opening, annual account maintenance fees and
transaction charges vary between various DPs.
Finally
After successfully opening the demat account, the DP will allot Beneficial
Owner Identification Number, which will be needed to mention for all our future
transactions.
If we want to sell our stocks, we need to place an order with our broker and give
a 'Delivery Instruction' to your DP. The DP will debit our account with the number of
stocks sold. We will receive the payment from our broker.
If we want to buy stocks, inform our broker about our Depository Account
Number, so that the stocks bought are credited into our account.

Points to remember while opening online account

a) Make multiple enquiries and try get low brokerage trading and demat account.
b) Also discuss about the margin they provide for day trading.
c) Discuss about fund transfer. The fund transfer should be reliable and easy. Fund
transfer from our bank account to trading account and visa versa. Some online share
trading account has integrated savings account which makes easy for us to transfer funds
from our saving account to trading account.
d) Very important is about service they provide, the research calls, intraday or daily

trading tips.
e) Also enquire about their services charges and any other hidden charges if any.
f) And also see how reliable and easy is to contact them in case if any emergency.

Literature
Review
Investment process
Fundamental

analysis

Technical analysis

INVESTMENT PROCESS
Investment process describes how an investor should go about making decisions
with regard to what marketable securities to invest in, how extensive the investment
should be and when the investment should be made. An eight-step procedure for making
these decisions forms the basis for the investment process.
1) What is Investment
2) Understanding stocks
3) Finding a broker
4) Evaluation of stocks
5) Research tools
6) Investing strategy
7) Investing technique
8) What moves the market
Step 1: What is investment?
Investing is making your money work for you without taking any more risks than
necessary for your comfort.

Investing is the proactive use of your money to make more money.

How to calculate Risk Premium?

Risk premium is what a stock should return over a risk-free investment. It is your

reward for taking a risk with your money.

Weak demand is the important factor in stock pricing:

Despite high crude oil prices, its weak demand for gasoline that holds back oil stock
prices. Supply and demand is an important factor in determining price of stocks.

Corrections are natural part of stock market cycle.

Dont be too conservative with stocks in retirement:

There is a danger you can be too conservative in your investment strategy as you
approach retirement dont back off stocks too soon.
Step 2: Understanding stocks

Stocks are the basic units of ownership in publicly traded companies. There are two
basic types of stocks.
a. Common Stock: Common stock represents the majority of stock held by the
public. It has voting rights, along with the right to share in dividends.
b. Preferred Stock: Companies that issue preferred stocks usually pay
consistent dividends and preferred stock has first call on dividends over
common stock.

Bull and Bear stock markets are the two sides of same coin:
Bull and bear markets go together and are necessary for an efficient market.

Poll results show confidence in stocks:

The results of a poll on where the sensex be at the end of 2008 show stock investors

are positive.

Step 3: Finding a Broker

To decide which type of broker is right for you, you need to use these resources to
find the brokerage arrangement that best fits your needs.

Thirteen of the top online stock trading sites offer investors a wide variety of
services including research and advice.

Brokers offer different levels of service. A broker fills in the gaps in knowledge and
experience.

Broker explains what types of accounts are available and how to open an account.

Financial advisers can map a blue print that will get you from where you are to your
financial goals.

Financial advisers come in a variety of flavors. Finding the one right for you
involves knowing how each is compensated and what they do.

The new year poses many challenges for stocks, including high oil prices, the credit
crisis, and a potential recession.

Stock prices are driven by the relationship between buyers and sellers. Attractive
stocks have more buyers than sellers, which drives up prices, while less attractive
stocks feel the reverse effect.

Step 4: Evaluating stocks for investment

Fundamental analysis relies on several tools to give investors an accurate picture
of the financial health of a company and how the market values the stock. The following
are the most popular tools of fundamental analysis. They focus on earnings, growth, and
value in the market.

a) Earnings per Share EPS

b) Price to Earnings Ratio P/E
c) Projected Earning Growth PEG
d) Price to Sales P/S
e) Price to Book P/B
f) Dividend Payout Ratio
g) Dividend Yield
h) Book Value
i) Return on Equity
Step 5: Research Tools
The internet is a gold mine of information, but youll need some tools to get to the
nuggets. Research tools make the job easier if you know where to find them and how to
use them.

The better stock screens offer similar characteristics that give you greater flexibility
when looking for investment candidates and eliminate other companies.

Stock screens will save time and help to build a thoughtful portfolio by focusing on
those companies that meet your investing requirements.

Stock screens can help any investor make better stock selections by reducing the
number of companies to research.

Dividend ratios can tell much about a stock and its future payout prospects.

One of the best sources of information on companies is free and as near as your
computer.

Step 6: Investing Strategies

What strategy to use as an investor? The different investment strategies and how
to develop personal investment strategy is explained below:

When and how to sell a winning stock?

Knowing when and how to sell a winning stock is as important as knowing when to

sell a losing stock.

Dont be too conservative with stocks:

Following a too conservative investment strategy in retirement may not protect you

from outliving your money.

Bottom-up investors focus on strong companies and believe they will perform well
in any market conditions.

Top-down investing looks at big picture before narrowing in on individual stocks.

Step 7: Investing Techniques

Investing techniques offer powerful ways for investors to execute their strategies.
These techniques provide a structure for investing.

After-hours trading of stocks may seem like a great idea, but it is full of risks for the
average investor.

Diversify stocks by industry to avoid across-the-board losses on bad economic news.

Investments should not be correlated to achieve diversity.

Investing with expectations of high returns is not investing but gambling. Dont try
to double or triple your money quickly in the stock market youll be disappointed
and perhaps poorer.

Step 8: What moves the market?

What makes the market rise or fall? Sometimes it seems to have a mind of its
own that reacts poorly to good news and with enthusiasm to bad news. One should learn
the factors that are the major influences on the markets and how to use this information.

Basic steps in how stock trading works

Trade = Buy or Sell
To trade means to buy and sell in the jargon of the financial markets. How a
system that can accommodate one billion shares trading in a single day works is a
mystery to most people. No doubt, our financial markets are marvels of technological
efficiency.
We dont need to know all of the technical details of how to buy or sell stocks,
however it is important to have a basic understanding of how the markets work.
Important terms in stock market and in stock trading
Open - The first price at which the stock opens when market opens in the
morning.
High - The stock price reached at the highest level in a day.
Low - The stock price reached the lowest level in a day.

Close - The stock price at which it remains after the end of market timings or the final
price of the stock when the market closes for a day.
Volume - Volume is nothing but quantity.
Bid - The Buying price is called as Bid price.
Offer - The selling price is called offer price.
Bid Quantity - The total number of stocks available for buying is called Bid Quantity.
Offer Quantity - The total number of stocks available for selling is called Offer
Quantity.
Buying and selling of stocks - Buy is also called as demand or bid and selling is also
called as supply or offer. First selling and then buying (this only happens in day trading)
is called as shorting of stocks or short sell.
Stock Trading - Buying and Selling of stocks is called stock trading.
Transaction - One complete cycle of buying and selling of stocks is called One
Transaction.
Squaring off - This term is used to complete one transaction. Means if we buy then we
have to sell (means square-off) and if we sell then we have to buy (means square-off).
Limit Order - In limit order the buying or selling price has to be mentioned and when
the stock price comes to that price then our order will get executed with the mentioned
price by us.
Market Order- When we put buy or sell price at market rate then the price get executes
at the current rate of market. The market order get immediately executed at the current
available price.

Success Mantra
There are two steps to achieve success in the stock market.
1) How not to loose
When you learn what to do and what not to do in order to loose nothing means you
have won the half battle. Only then you can learn how to gain or what to do in order to
win. A new investor should do paper trading in order to get the market knowledge before
actually entering into the market.
2) How to gain
How to gain requires deep understanding about the market trends and fluctuations.
A new investor can take the route of mutual fund.
The average person generally falls into one of two categories.
The first believe investing is a form of gambling; they are certain that if you
invest, you will more than likely end up losing your money.
The second category consists of those who know they should invest for the
long-run, but dont know where to begin.

Their characteristics.

feel investing in some sort of black-magic that only a few people hold the key
to

they leave their financial decisions up to professionals

cannot tell you why they own a particular stock / mutual fund.

investment style is blind faith or limited to this stock is going up. We should
but it.
This group is in far more danger than the first. They invest like the

masses and then wonder why their results are mediocre [or in some cases,
devastating.

FUNDAMENTAL ANALYSIS
To determine the intrinsic value of an equity share, the security analyst must forecast the
earnings and dividends expected from the stock and choose a discount rate which
reflects the riskness of the stock. This is what is involved in fundamental analysis,
perhaps the most popular method used by investment professionals. The earnings
potential and riskness of a firm are linked to the prospects of the industry to which it
belongs. The prospects of various industries, in turn, are largely influenced by the
developments in the macro economy.
Researchers have found that stock price changes can be attributed to the
following factors:

Economy-wide factors: 30-35 percent

Industry factors: 15-20 percent

Company factors: 30-35 percent

Others factors: 15-25 percent

Based on the above evidence, a commonly advocated procedure of fundamental

analysis involves a three-step examination, which calls for:

1) Understanding of the macro-economic environment and developments.
2) Analyzing the prospects of the industry to which the firm belongs.
3) Assessing the projected performance of the company and the intrinsic
value of its shares.

A. MACRO-ECONOMIC ANALYSIS
The macro-economy is the overall economic environment in which all firms
operate. The key variables commonly used to describe the state of the macro-economy
are:

a) Growth Rate of Gross Domestic Product (GDP)

The gross domestic product (GDP) is a measure of the total production of final goods
and services in the economy during a specified period usually a year. The growth rate of
GDP is the most important indicator of the performance of the economy. Firm estimates
of GDP growth rate are available with a time lag of one to two years or so, but
preliminary estimates are made from time to time by various bodies like CMIE,
NCAER, and the RBI. The higher the growth rate of GDP, other things being equal, the
more favorable it is for the stock market.

b) Industrial Growth Rate

The GDP growth rate represents the average of the growth rates of the three principal
sectors of the economy, viz. the services sector, the industrial sector and the agricultural
sector.
Publicly listed companies play a major role in the industrial sector but only a minor
role in the services sector and the agricultural sector. Hence stock market analysts focus
more on the industrial sector. They look at the overall industrial growth rate as well as

the growth rates of different industries. The higher the growth rate of the industrial
sector, other things being equal, the more favourable it is for the stock market.

c) Agriculture and Monsoons

Agriculture accounts for about a quarter of the Indian economy and has important
linkages, direct and indirect, with industry. Companies using agricultural raw materials
as inputs or supplying inputs to agriculture are directly affected by the changes in
agricultural production. Other companies also tend to be affected due to indirect
linkages.
A spell of good monsoons imparts dynamism to the industrial sector and buoyancy to
the stock market. Likewise, a streak of bad monsoons casts its shadow over the industrial
sector and the stock market.

d) Savings and Investment

The demand for corporate securities has an important bearing on stock price
movements. So investment analysts should know what is the level of investment in the
economy and what proportion of that investment is directed toward the capital market.
The level of investment in the economy is equal to:
Domestic savings + Inflow of foreign capital Investment made abroad.
In India, as in many other countries, the domestic savings is the dominant
component in this expression. In addition to knowing what the savings are we should

also know how the same are allocated over various instruments like equities, bonds,
bank deposits, small savings schemes, and bullion.
Other things being equal, the higher the level of savings and investments and the
greater the allocation of the same to equities, the more favourable it is for the stock
market.

e) Government Budget and Deficit

Governments play an important role in most economies, including the Indian
economy. The central budget as well as the state budgets prepared annually provides
information on revenues, expenditures, and deficit or surplus.
In India, governmental revenues come more from indirect taxes such as excise duty
and customs duty and less from direct taxes such as income tax. The bulk of the
governmental expenditures goes toward administration, interest payment, defence, and
subsidies, leaving very little for public investment. The excess of governmental
expenditures over governmental revenues represents the deficit. While there are several
measures of deficit, the most popular measure is the fiscal deficit.
The fiscal deficit has to be financed with government borrowings which is done in
three ways. First, the government can borrow from the Reserve Bank of India. This leads
to increase in money supply which has an inflationary impact on the economy. Second,
the government can resort to borrowing in domestic capital market. This tends to push
up domestic interest rates and crowd out private sector investment. Third, the
government may borrow from abroad.

Investment analysts examine the government budget to assess how it is likely to

impact on the stock market.

f) Money Supply
There are several definitions of money. The two more commonly used ones are:
M1

currency

with

public

demand

deposits

with

bank

other

deposits with RBI.

M3 = M1 + time deposits with banks
When we talk of money supply, we usually refer to M3. The growth rate of M3 in
India has been around 15 percent per year. This growth can be explained by three
factors in the main: growth in the real economy, monetization of a portion of deficit
financing and financial deepening of the economy. Monetization of a portion of
deficit financing means the RBI buys the securities issued by the government.

g) Price Level and Inflation

The price level measures the degree to which the nominal rate of growth in GDP is
attributable to the factor of inflation. The effect of inflation on the corporate sector tends
to be uneven. While certain industries may benefit, others tends to suffer. Industries that
enjoy a strong market for their products and which do not come under the purview of

price control may benefit. On the whole, it appears that a mild level of inflation is good
for the stock market.

h) Interest Rate
Interest rates vary with maturity, default risk, inflation rate, productivity of capital
and so on. The interest rates on money market instruments which are virtually risk free
tend to be the lowest. Long dated government securities generally carry slightly higher
interest rates. Corporate debentures which have some default risk associated with them
carry still higher interest rates.
A rise in interest rates depresses corporate profitability and also leads to an increase
in the discount rate applied by equity investors, both of which have an adverse impact on
stock prices.
h) Foreign Investment
Foreign investment in India comes in two forms: foreign direct investment and
foreign portfolio investment. The former represents investment for setting up new
projects and hence is long term in nature; the latter is in the form of purchase of
outstanding securities in the capital market and hence can be reversed easily.
i) Infrastructural Facilities and Arrangements
Infrastructural facilities and arrangements significantly influence industrial
performance. More specifically, the following are important:

Adequate and regular supply of electric power at a reasonable tariff.

A well-developed transportation and communication system.

An assured supply of basic industrial raw materials like steel, coal, petroleum
products and cement.

Responsive financial support for fixed assets and working capital.

j) Sentiments
The sentiments of consumers and businessmen can have an important bearing on
economic performance. Higher consumer confidence leads to higher expenditure on big
ticket items. Higher business confidence gets translated into greater business investment
that has a stimulating effect on the economy. Thus, sentiments influence consumption
and investment decisions and have a bearing on the aggregate demand for goods and
services.

B. INDUSTRY ANALYSIS
The objective of industry analysis is to assess the prospects of various industrial
groupings. It is almost impossible to forecast exactly which industrial groupings will
appreciate the most. Yet careful analysis can suggest which industries have a brighter
future than others and which industries are plagued with problems that are likely to
persist for a while.
Industrial analysis is divided into three parts namely,
I. Industry life cycle analysis
II. Structure and characteristics of an industry
III. Profit potential of industries: Porter model.

I. Industry Life Cycle Analysis

Many industrial economists believe that the development of almost every

industry may be analyzed in terms of a life cycle with four well-defined stages:
a. Pioneering Stage
b. Rapid Growth Stage
c. Maturity and Stabilization Stage
d. Decline Stage
a. Pioneering Stage: During this stage, the technology and or the product is relatively
new. Lured by promising prospects, many entrepreneurs enter this field. As a result,
there is keen, and often chaotic, competition. Only a few entrants may survive this
stage.
b. Rapid Growth Stage: Once the period of chaotic developments is over, the rapid
growth stage arise. Firms which survive the intense competition of the pioneering
stage, witness significant expansion in their sales and profits.
c. Maturity and Stabilization Stage: During this stage, when the industry is more or
less fully developed, its growth rate is comparable to that of the economy as a whole.
d. Decline Stage: With the satiation of demand, encroachment of new products, and
changes in consumer preferences, the industry enters the decline stage, relative to the
economy as a whole. In this stage, the industry may grow slightly during prosperous
periods, stagnate during normal periods and decline during recessionary periods.
The experience of most industries suggest that they go through the 4 phases
of the industry life cycle though there are considerable variations in terms of the
relative duration of various stages and the rates of growth during these stages.
II. Structure and Characteristics of an Industry

Since each industry is unique, a systematic study of its specific features and
characteristics must be an integral part of the investment decision process. Industry
analysis should focus on the following:

a. Structure of the industry and nature of competition:

The number of the firms in the industry and market share of

the top few firms in the industry.

Licensing policy of the government.

Entry barriers, if any.

Pricing policies of the firm.

Differentiation among products.

Competition from foreign firms.

b. Nature and prospects of demand:

Major customers and their requirements.

Key determinants of demand.

Degree of cyclicality in demand.

Expected rate of growth in the foreseeable future.

c. Cost, efficiency and profitability:

Proportions of the key cost elements raw materials, labour,

utilities and fuel.

Productivity of labour.

Turnover of inventory, receivables and fixed assets.

Control over prices of outputs and inputs.

Gross profit, operating profit and net profit margins.

Return on assets, earning power and return on equity.

d. Technology and research:

Degree of technological stability.

Important technological changes on the horizon and their

implications.

Research and development outlays as a percentage of industry

sales.

Proportion of sales growth attributable to new products.

III. Profit Potential of Industries: Porter Model

Michael Porter has argued that the profit potential of an industry depends
on the combined strength of the following five basic competitive forces:
a. Threat of new entrants
b. Rivalry among the existing firms
c. Pressure from substitute products
d. Bargaining power of buyers
e. Bargaining power of sellers

Following figure shows the forces that drive competition and

determine industry profit potential:

a. Threat of new entrance

New entrants add capacity, inflate costs, push prices down, and reduce profitability.
If an industry faces the threat of new entrants, its profit potential would be limited. The
threat of new entrants is low if the entry barriers confer an advantage on existing firms
and deter new entrants. Entry barriers are high when:

The new entrants have to invest substantial resources to enter the industry.

Economies of scale are enjoyed by the industry.

Existing firms control the distribution channels, benefit from product

differentiation in the form of brand image and customer loyalty.

Switching costs these are essentially one time cost of switching from the
products of one supplier to another-are high.

b. Rivalry between existing firms

Firms in an industry compete on the basis of price quality, promotion, service,
warranties, and so on if the rivalry between the firms in an industry is strong,
competitive moves and counter moves dampen the average profitability of the industry.
The intensity of rivalry in an industry tends to be high when:

The number of competitors in an industry is large.

At least a few firms are relatively balanced and capable of engaging in a

sustained competitive battle.

The industry growth is sluggish, prodding firms to strive for a higher market
share.

There is chronic over capacity in the industry.

The industry confronts high exit barriers.

c. Pressure from substitute products

All firms in an industry face competition from industries producing substitute
products. Substitute products may limit a profit potential of the industry by imposing a
ceiling on the prices that can be charged by the firms in the industry. The threat from
substitute products is high when:

The price- performance trade off offered by the substitute products is attractive.

The switching costs for prospective buyers are minimal

The substitute products are being produced by industries earning superior profits.

d. Bargaining power of buyers

Buyers are competitive force. They can bargain for price cut, ask for superior
quality and better service and induce rivalry among competitors. If they are powerful,
they can depress the profitability of the supplier industry. The bargaining power of a
buyer group is high when:

Its purchases are large relative to the sales of the seller.

Its switching costs are low.

It poses a strong threat of back ward integration.

e. Bargaining power of suppliers:

Suppliers can exert a competitive force in an industry as they can raise prices, lower
quality and curtail the range of free services they provide. Suppliers have strong
bargaining power when;

There are hardly any viable substitute for the products supplied.

Few suppliers dominate and the supplier group is more concentrated than the
buyer group.

The switching cost for the buyers are high.

Suppliers do present a real threat of forward integration.

C. COMPANY ANALYSIS
Company analysis is concerned with fundamental analysis of equity shares.
Fundamental analysts take two somewhat different approaches in their search for
mispriced securities. The first approach involves estimating the intrinsic value and
comparing the same with the prevailing market price to determine whether the
security is underpriced or fairly priced or overpriced. The second approach involves
estimating a securitys expected return, given its current price and intrinsic value,
and then comparing it with the appropriate return for securities with similar
characteristics.
Company analysis is the last leg in the economy-industry-company analysis
sequence. It may be organized into two parts (a) a study of financials, and (b) a study
of other factors.
Investment analysts start with a historical analysis of earning (and dividends),
growth, risk, and valuation and use company analysis as a foundation for developing
the forecasts required for estimating the intrinsic value.

TECHNICAL ANALYSIS
Technical analysis is radically different from fundamental analysis. While the
fundamental analyst believes that the market is 90 percent logical and 10 percent
psychological, the technical analyst assumes that it is 90 percent psychological and 10
percent logical. Technical analysts dont evaluate a large number of fundamental factors
relating to the company, the industry and the economy. Instead, they analyze internal
market data with the help of charts and graphs. Subscribing to the castles-in-the-air
approach, they view the investment game as an exercise in anticipating the behaviour of
market participants. They look at charts to understand what the market participants have
been doing and believe that this provides a basis for predicting future behaviour.
The technical approach is the oldest approach to equity investment, dating back
to the late 19th century. It continues to flourish in modern times as well. As an investor,
we will often encounter technical analysis because newspapers cover it, television
programmes routinely call technical experts for their comments, and investment advisory

services circulate technical reports. Technical analysis can be applied to commodities,

currencies, bonds, and equity stocks, our studies is restricted to equity stocks.
Technical analysis involves a study of market generated data like prices and
volumes to determine the future direction of price movement.
Martin J. Pring explains: The technical approach to investing is essentially a
reflection of the idea that prices move in trends which are determined by the changing
attitudes of investors toward a variety of economic, monetary, political and
psychological forces. The art of technical analysis--for it is artis to identify trend
changes at an early stage and to maintain an investment posture until the weight of the
evidence indicates that the trend has been reversed.

THE DOW THEORY

Originally proposed in the late nineteenth century by Charles H. Dow, the editor
of the Wall Street Journal, the Dow theory is perhaps the oldest and best known theory
of technical analysis.
In the words of Charles Dow:
The market is always considered as having three movements, all going at the
same time. The first is the narrow movement from day to day. The second is the short
swing, running from two weeks to a month or more; the third is the main movement,
covering at least four years in its duration.
Proponents of the Dow Theory refer to the three movements as: (a) daily
fluctuations that are random day-to-day wiggles; (b) secondary movements or

corrections that may last for a few weeks to some months; and (c) primary trends
representing bull and bear phases of the market.
An upward primary trend represents a bull market, whereas a downward primary
trend represents a bear market. A major upward move is said to occur when the high
point of each rally is higher than the low point of the preceding decline. Likewise, a
major downward move is said to occur when the high point of each rally is lower than
the low point of the preceding decline.
The secondary movements represent technical correction. They represent
adjustments to the excesses that may have occurred in the primary movements. These
movements are considered quite significant in the application of the Dow Theory.
The daily fluctuations are considered to be minor significance. Even zealous
technical analysts do not usually try to forecast day-to-day movements in the market.
Bar and Line Charts
The bar chart, one of the simplest and most commonly used tool of technical
analysis, depicts the daily price range along with the closing price. In addition, it may
show the daily volume of transactions. The upper end of each bar represents the days
highest price and the lower end the days lowest price. The small cross across the bar
marks the days closing price.
Technical analysts believe that certain formations or patterns observed on the bar
char or line chart have predictive value. The more important formations and their
indications are described below:

Head and Shoulders Top (HST) Pattern: As the name suggests, the HST formation
has a left shoulder, a head, and a right shoulder. The HST formation represents a bearish
development. It the price falls below the neckline (the line drawn tangentially to the left
and right shoulders), a price decline is expected. Hence, it is a signal to sell.
Inverse Head and Shoulders Top (IHST) Pattern: As the name indicates, the IHST
formation is the inverse of the HST formation. Hence, it reflects a bullish development.
It the price rises above the neck line, a price rise is expected. Hence, it is a signal to buy.
Triangle or Coil Formation: This formation represents a pattern of uncertainty. Hence,
it is difficult to predict which way the price will break out.
Flags and Pennants Formation: It typically signifies a pause after which the previous
price trend is likely to continue.
Double Top Formation: It represents a bearish development, signaling that the price is
expected to fall.
Double Bottom Formation: It reflects a bullish development, signaling that the price is
expected to rise.
Point and Figure Chart
More complex than a bar chart, a point and figure chart (PFC) has the following
features:

Company
Profile

COMPANY PROFILE

Ventura Securities Ltd., is a leading stock broking organization

Promoted and managed by professionals having exceptional knowledge of Capital

Market.

Ventura believes in philosophy that the key to their business is service which will
result in total satisfaction to the clients.

Ventura PROMOTERS
Sajid Malik, Director, is a member of the Institute of Chartered Accountants of
India.He has nearly fifteen years of varied experience in corporate advisory structured
finance and private equity transaction. He has an international exposure to developed
markets in Europe, US and the Far East and has been personally involved in
international equity offerings and cross border acquisitions. He is the CEO of Genesys
International, a company focused on outsourcing of GIS and engineering design
services. He is a non-executive director of Ventura Securities.
Hemant Majethia, Director is member of the Institute of Chartered Accountant
of India. He has nearly fifteen years of rich experience in the capital markets

intermediation, equity research and has a wide cross section of market relationships. Mr.
Majethia is the CEO of Ventura Securities. It was his vision to create an all India
network of brokers relationship and build the distribution strength of Ventura.

Company's Goal

We aim to add value and provide our clients with an unrivalled and specialized
service which reflects the expertise and efficiency of our dedicated support teams.

History
FOUNDATION OF VENTURA
Founded in 1994 by Chartered Accountants Sajid Malik and Hemant Majethia. They
are the first generation entrepreneurs and are the principal promoters of Ventura.
A dedicated and efficient team of senior managers assists Mr. Majethia the CEO of
the company.
Ventura is a full-service domestic brokerage house providing value-based advisory
services to Institutions (Foreign and Domestic), High Net Worth and Retail Investors
with its core area of operations being stock-broking.
Ventura

have considerable strength and domain knowledge in the booming

derivatives market.
Ventura has achieved a reputation for innovative and unbiased research along with
excellent technical analysis and execution capabilities.

 Not only has Ventura provided value-added services to the gamut of India-based
funds, it has also developed the advice-driven business of high net worth and
corporate clients.

Why Ventura?

Venturas services are offered under total confidentiality and integrity with the sole
purpose of maximizing returns for their clients.

Equity Broking - Corporate Member of The Stock Exchange, Mumbai (BSE) and
National Stock Exchange of India Ltd. (NSE).

Pan India reach - 380 terminals spread across 75 different locations, in semi urban,
urban and metropolitan areas.

More than 100,000 retail clients serviced from the above locations

Ventura have heavily invested in technology (customized and ready to use software)
involving front and back end operations offering seamless process and flawless
execution and raising our service levels.

Ventura operate on an alert and well-defined system in risk management and

settlement mechanism

OFFERINGS

Research competency

Market Outlooks and Strategy Analysis Market research at Ventura is structured to

meet a wide variety of customer needs.

Services in this area range from the intra-day analysis of the most recent
fundamental and technical developments affecting pricing to longer-term strategic
research of supply, demand, and inventory trends.

Along with its price forecasting capability, the Team undertakes analytical research
on hedging and trading strategies.

The Team also publishes monographs on topics of broad interest to its customers,
such as the impact of changing accounting standards, developments in risk
management, and current hedge activities and strategic thought in the various sectors
of the market.

Data
Analysis

ANALYSIS
WIPRO
FUNDAMENTAL ANALYSIS:
COMPANY ANALYSIS:
Wipro is a global IT services company. It has been acknowledged as an offshore
provider of technology services by Gartner, Forrester and other research and advisory firms.
Wipro provides a comprehensive range of IT services, software solutions, IT consulting,
business process outsourcing, or BPO, services and research and development services in the
areas of hardware and software design to companies worldwide. The company combines
business knowledge and industry expertise of its domain specialists and the technical knowledge
and implementation skills of its delivery team in the development centers located in India and
around the world, to develop and integrate solutions which enables its clients to leverage IT for
achieving their business objectives.
The range of its services includes IT consulting, custom application design,
development, re-engineering and maintenance, systems integration, package implementation,
technology infrastructure outsourcing, BPO services and research and development services in
the areas of hardware and software design.
The market for IT services is highly competitive and rapidly changing. India and
AsiaPac IT Services and Products segment focuses primarily on meeting the IT products and
services requirements of companies in India, Asia-Pacific and the Middle East region.

Wipros revenue has grown by an average of 26% a year while profits have grown by
69%.
The company sells and markets its consumer care products primarily through
distribution network in India, which has access to 2 million retail outlets throughout the country.
The primary raw materials for many of its soap and hydrogenated oil products are agricultural
commodities, such as vegetable oils.
As of March 31, 2006, Wipro had over 53,700 employees. Wipro Limited, which had
$1.2 billion in revenue for FY04, also has other interests in fluid power, lighting, medical
equipment products, and financial services. Wipro Technologies makes up around 67% of the
companys total revenue and is Wipros fastest-growing business.
Wipro Technologies achieved $617 million in revenue for the fiscal year ending March
31, 2003, and has over 18,500 employees.
Wipro Technologies has emerged as the second-largest software exporter from India
and has a high-powered client base, including GM, Lehman Brothers, Sony, NYSE,
Weyerhaeuser, Thames Water, Lucent Technologies, Nike, and Nortel.

Vision: To offer services based on world-class infrastructure, industry expert skills, proven
process-oriented service operations that are backed by principals to ensure the worlds best
way of delivering IT infrastructure management solution.

Mission: To serve customers with integrity through innovative, value for money solutions,
by applying thought day after day

Values: Human values, integrity, innovation drives us.

INDUSTRY ANALYSIS:
Information Communication Technology (ICT), the fastest growing industry of the
present era, has not only captured the imagination of the people but also contributed to foster the
pace of globalization and bringing together humanity as has never been before by breaking
geographical, territorial and man made barriers. In the process, it has generated economic
opportunities, social-closeness and contributed to the overall growth process of the whole world.
Within a short span, ICT related exports have become the largest export item of India
surpassing a large number of traditional products and services including dynamic ones.
Information technology (IT) refers to the collection of products and services that turn data into
useful, meaningful, accessible information.
The U.S. is the world leader in information and communications technology (ICT)
products and services, representing almost 40 percent of global spending. U.S. spending on ICT
has increased almost 21 percent since 2000, to almost $1.13 trillion in 2005. Between 2000 and
2005, ICT in the U.S. has achieved a compound annual growth rate of 4 percent, compared to 6.3
percent for all global economies.
To put U.S. ICT spending into context, member nations of the G-8 experienced CAGR
of 4.5 percent for the same years. At $3,800, the U.S. is also one of the worlds largest per capita
ICT spending nations. The Information Technology Sector has grown in size from Rs. 5,450
crores in 1994-95 to about Rs. 64,200 crores in 2001-02 contributing 0.59% and 2.87% to G.D.P.
growth respectively in the corresponding periods.

WIPRO LIMITED CONSOLIDATED BALANCE SHEET

(Rs. In Million)
As of March 31,
Particulars

Schedule 2009

2008

2,928

2,923

15

40

136,356

113,991

136,299

116,954

SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share capital
Share application money pending allotment
Reserves and surplus

LOAN FUNDS
Secured loans

1,858

2,072

Unsecured loans

55,034

42,778

Monthly Intrest

237

116

TOTAL

193,428

161,920

56,521

42,209

75,353

56,280

Less: Accumulated depreciation

36,342

28,067

Net block

39,011

28,213

Capital work-in-progress and advances

13,552

13,370

109,084

83,792

18,096

16,022

APPLICATION OF FUNDS
FIXED ASSETS
Goodwill
Gross block

INVESTMENTS

DEFERRED TAX ASSETS (Net)

684

529

CURRENT ASSETS, LOANS AND ADVANCES

Inventories

7,586

6,664

Sundry debtors

48,859

40,453

Cash and bank balances

49,117

39,270

Loans and advances

10

45,673

29,610

151,235

115,997

85,671

54,420

NET CURRENT ASSETS

65,564

61,577

TOTAL

193,428

161,920

Less: CURRENT LIABILITIES AND PROVISIONS

Liabilities & Provisions

11

Miscellaneous expenditure (to the extent

Not written off or adjusted)

CASH FLOW STATEMENT

(Rs. in Million)
Year ended March 31,
2006

2005

23,404.30

17,570.23

Depreciation and amortization

2,922.56

1,859.00

Amortization of stock compensation

621.88

334.41

Unrealized exchange difference - Net

65.06

(92.45)

Interest on borrowings

31.33

55.68

Dividend / Interest - Net

(1,078.86)

(674.60)

(Profit)Loss on sale of mutual fund units

(237.72)

(35.59)

Gain on sale of fixed assets

(6.33)

(107.47)

Trade and other receivable

(6,360.22)

(3,951.12)

Loans and advances

(1,533.89)

24.14

Inventories

(212.77)

(252.95)

Trade and other payables

5,812.81

4,177.81

Net cash generated from operations

23,428.15

18,907.09

Direct taxes paid

(4,305.66)

(2,242.93)

Net cash generated from operating activities

19,122.49

16,664.16

(including advances)

(7,342.71)

(5,541.10)

Proceeds from sale of fixed assets

156.98

163.02

Purchase of investments

(59,017.77)

(46,128.04)

A. Cash flows from operating activities:

Profit before tax
Adjustments:

Working Capital Changes:

B. Cash flows from investing activities:

Acquisition of property, fixed assets, plant and equipment

Proceeds on sale / from maturities on investments

51,641.00

43,374.01

Investment in subsidiaries

(3,300.73)

(1,268.15)

Dividend / interest income received

919.02

710.19

Net cash generated by / (used) investing activities

(16,994.21)

(8,690.07)

Proceeds from exercise of Employee Stock Option

4,704.46

2,577.38

Share application money pending allotment

62.81

12.05

Interest paid

(31.33)

(55.68)

Dividends paid (including distribution tax)

(4,018.65)

7,653.86)

Repayment of short term borrowings - Net

(119.31)

(385.96)

Net cash provided by/(used in) financing activities

597.98

(5,506.07)

cash equivalents during the period

2,776.26

2,468.02

Cash and cash equivalents at the beginning of the period

5,368.96

2,900.94

Cash acquired on merger

90.34

Effect of translation of cash balance

(5.54)

Cash and cash equivalents at the end of the period

8,230.02

5,368.96)

C. Cash flows from financing activities:

Net increase/(decrease) in cash and

TECHNICAL ANALYSIS

Sales and Other Income

106.3
81.7
58.8

12.9

1995-96

2003-04

2004-05

2005-06

In the FY1995-96, Wipros sales was US$ 12.9 billion and now it is US$ 106.3 billion.

Profit after Tax

20.7
16.3
10.3

0.5
1995-96

2003-04

2004-05

2005-06

In FY1995-96, the profit after tax was US$ 0.5 billion and in FY2005-06 it has increased to
US$ 20.7 billion.

Market Capitalization
798

466
304

7
1995-96

2003-04

2004-05

2005-06

Capitalization is a measure of corporate size. The invested capital in the FY1995-96 was
US$ 7 billion and in FY2005-06, it has increased to US$ 798 billions.

Operating Cash Flows

18.1

19.6

10.0
7.4

1995-96

2003-04

2004-05

2005-06

Operating cash flows is the income before depreciation and taxes. In the FY1995-96, the
operating income was Rs.7.4 billions and in FY2005-06 it has increased to Rs. 19.6 billions.

Revenues from Global IT Services & Products

1,815
1,353
943

50
1995-96

2003-04

2004-05

2005-06

Wipros global revenues have increased from US$ 50 million to US$ 1,815 million.

APPLICATION OF DOW THEORY:

DATE
12-Feb
13-Feb
14-Feb
15-Feb
19-Feb
20-Feb
21-Feb
22-Feb
26-Feb
27-Feb
28-Feb
29-Feb

CLOSING
PRICE
422.65
423.15
410
416.35
415.05
412.35
411
426.8
439.4
445.25
440.65
447.4

INFERENCE:
The above graph represents the daily fluctuations in the market which is one of the major
proponent in Dow Theory. It is difficult to forecast day-to-day movements in the market. In the
above 12 days of trading, the share price of wipro was highest on 29TH Feb. - Rs.447.4 and the
lowest was on 14th Feb. Rs. 410.

DATE

CLOSING
PRICE

SUM OF THREE
YEAR
AVERAGE

12-Feb
13-Feb
14-Feb
15-Feb
19-Feb
20-Feb
21-Feb
22-Feb
26-Feb
27-Feb
28-Feb
29-Feb

422.65
423.15
410
416.35
415.05
412.35
411
426.8
439.4
445.25
440.65
447.4

1255.8
1249.5
1241.4
1243.75
1238.4
1250.15
1277.2
1311.45
1325.3
1333.33

418.6
416.5
413.8
414.58
412.8
416.72
425.73
437.15
441.77
444.44

INFERENCES:
A 10-day moving average of daily prices may be used to detect a short term trend. This stock
price line stands as an indicator to an investor whether to buy the share or to sell it. In the above
10-day average the highest 3-year moving average is on 28 th feb.

TATA CONSULTANCY SERVICES (TCS)

Organizations must continuously innovate and transform themselves to stay ahead of

competition. TCS helps enterprises stay agile and respond better to changing market conditions
by optimizing business processes, making their IT infrastructure resilient and ensuring faster
business results. TCS partners with enterprises worldwide to help them achieve business
transformation. Leveraging its industry insight and technology expertise, TCS enables success in
essential strategic initiatives by aligning IT strategies with business objectives. By aligning IT
with their business needs, TCS helps enterprises experience real business results.
TCS provides solutions globally to help enterprises realize their product development,
production management and asset management strategies, using best-in-class technologies,
processes and competencies. TCS leverages its years of domain and IT experience to bring in
process improvements, process automation and platform based solutions to enterprises across
industries.

COMPANY ANALYSIS:
The company has seen strong and profitable growth across all markets driven by good
performance in existing and new areas of business.
For the year ended march 31, 2007, the company earned a total income of Rs.15156.52
crores an increase of 34.20% over previous years Rs.11,293.76 crores. TCS total income is
18914.26 crores. The net profit increased by 24.79% of the total income. The company is
amongst the leading IT companies in the world and continues to retain its leadership position in
the Indian IT industry. The company has provided effective business solutions to Global and
Indian companies by leveraging its domain knowledge across industry verticals, excellence in
technology and robust processes. The companys continued investments in innovation and
technology have enabled it to undertake a number of large, end-to-end, mission critical projects

in diverse business areas and technology domains. The company has 148 offices globally. TCS
also has delivery centers in a number of countries.

BALANCE SHEET AS AT MARCH 31, 2007

Schedule

As at

As at

March 31,
2007

March
31, 2006

Rs.
crores

Rs.
crores

in

SOURCES OF FUNDS:
1. SHAREHOLDERS' FUND
(a) Share Capital

97.86

48.93

(b) Reserves and Surplus

7961.13

5560.4

(a) Secured Loans

41.76

26.52

(b) Unsecured Loans

8.98

8.98

50.74

35.5

60.61

64.69

8170.34

5709.52

2315.36

1695.13

(b) Less:- Accumulated Depreciation

854.75

525.35

(c) Net Block

1460.61

1169.78

(d) Capital Work-in-Progress

757.85

280

2218.46

1449.78

2. LOAN FUNDS

3. DEFERRED TAX LIABILITIES

(NET)

4. TOTAL FUNDS EMPLOYED

APPLICATION OF FUNDS:
5. FIXED ASSETS
(a) Gross Block

in

6. INVESTMENTS

3252.04

1963.52

7. DEFERRED TAXASSETS (NET)

37.61

25.81

0.51

0.33

12.06

22.94

523.88

353.91

8. CURRENT ASSETS, LOANS AND

ADVANCES
(a) Interest Accrued on Investments
(b) Inventories

(c) Unbilled Revenues

(d) Sundry Debtors

2799.8

2325.83

(e) Cash and Bank Balances

557.14

171.17

(f) Loans and Advances

1363.74

1116.91

5257.13

3991.09

9. CURRENT
PROVISIONS

LIABILITIES

AND

(a) Current Liabilities

1689.85

1180.14

(b) Provisions

905.05

540.54

2594.9

1720.68

2662.23

2270.41

8170.34

5709.52

10. NET CURRENT ASSETS [ (8) less

(9) ]
11. TOTAL ASSETS (NET)
12. NOTES TO ACCOUNTS

Therefore, the TCS total assets are Rs. 8170.34 crores in March 31, 2007 whereas Rs.
5709.52 crores in March 31, 2006. The assets has been increased by 43.1% in the year
March 31, 2006.

TECHNICAL ANALYSIS
Exports from India:

US$ Billion

20
18
16
14
12
10
8
6
4
2
0
IT Services

BPO

2004-05

S/W Prod. &

Engg. Svcs
2005-06

H/W

2006-07(E)

The Total Indian IT Exports (including hardware & software in addition to services) were
US$ 24.2 billion in 2005-06 with services exports at 97.5% of the total IT exports. The
major components of Services exports were IT Services exports (55%), BPO exports (26%)
and software products and engineering services exports (16.5%). NASSCOM estimates that
in FY2006-07 Indian IT exports will grow to US$ 31.9 billion from US$ 24.2 billion in
2005-06.

Domestic IT-BPO market

8
7
US$ Billion

6
5
4
3
2
1
0
IT Services

BPO

2004-05

S/W Prod. &

Engg. Svcs
2005-06

H/W

2006-07(E)

In FY 2005-06, the domestic IT-BPO market was at US$ 13.2 billion and was estimated to
grow at 20% to exceed US$ 15.9 billion in FY 2006-07. The IT services segment in the
domestic market is expected to reach US$ 5.6 billion in FY 2006-07, exhibiting a 24.2%
growth over FY 2005-06. The domestic BPO segment is estimated to grow by 29.6% in
2006-07 and is expected to be about US$ 1.2 billion in FY 2006-07.

The Industry Verticals where the Company has a sizable presence are:
a. Banking & Financial Services
b. Insurance

c. Manufacturing
d. Telecommunications
e. Life Sciences and Health Care
f.

Retail

g. Transportation
h. Utilities
i.

Entertainment and Media

15.30%

17.00%
4.30%
7.10%

3.20%
42.20%

2.40%
8.50%

Telecom

Life Sciences & HealthCare

Retail & Distribution

Transportation

Energy & Utilities

Others

BFSI

Manufacturing

The companys major revenues come from BFSI i.e., 42.20% and the next from
manufacturing 15.30%.

APPLICATION OF DOW THEORY:

DATE
12-Feb

CLOSING
PRICE
906.1

13-Feb
14-Feb
15-Feb
19-Feb
20-Feb
21-Feb
22-Feb
26-Feb
27-Feb
28-Feb
29-Feb

864.65
758.1
873.8
853.2
875.45
886.1
900.55
900.75
898.4
877.55
880.9

INFERENCES:

TCS share prices lie between Rs.750 to Rs.900. in the beginning of the week, the share prices of
TCS was decreasing and in the middle of the week it increased to the maximum and by the end
of the week in declined due to the changes in the market.

DATE

SUM
CLOSING THREE
PRICE
YEAR

OF
AVERAGE

12-Feb
13-Feb
14-Feb
15-Feb
19-Feb
20-Feb
21-Feb
22-Feb
26-Feb
27-Feb
28-Feb
29-Feb

906.1
864.65
758.1
873.8
853.2
875.45
886.1
900.55
900.75
898.4
877.55
880.9

2528.85
2496.55
2485.1
2602.45
2614.75
2662.1
2687.4
2699.7
2676.7
2656.3

842.95
832.18
828.37
867.48
871.58
887.37
895.8
899.9
892.2
885.62

INFERENCES:
The share price of TCS has an increasing trend. It has reached its highest average at the end of
the week that is on 26th feb.

Summary

SUMMARY

Investing in financial securities is now considered to be one of the best avenues

for investing ones savings while it is acknowledged to be one of the most risky avenues
of investment. Even Indian Government is planning to to encourage people in rural areas
to invest in equity. This will help the markets to stabilize by tapping the rural areas and
decreases the dependency on Foreign Institutional Investors.
The factors which were studied under this are to know about stock markets in
India, how they work, prerequisites to enter the stock markets, market design, stock
selection, when to buy or sell a stock, how to invest, knowing about market
intermediaries.
For successful investment factors like timing, selection, setting targets, avoiding
speculation and constant review of portfolio is advised.

Findings

FINDINGS
From the above analysis, it is found that:
WIPRO has the worlds best way of delivering IT infrastructure management
solution. Due to this, its sales in FY 2006-07 have increased by 30.1% and PAT has
increased by 27%.
TCS gets it majority of income from Telecom industry and banking industry.
Telecom industry contributes 42.20% to its total income.
In comparison to WIPRO and TCS share price analysis, it is found out that TCS has
the highest share price value because of its diversification. TCS is into Banking,
Manufacturing, Telecommunication, Entertainment and Media.
If the stock price line falls below the moving average line, the investor should
purchase the stock because the intrinsic value is more than the market price. That
means the stock is undervalued.
If the stock price line rises above the moving average line, the investor should sell
the stock as the intrinsic value is more than the market price. Therefore, the stock is
overvalued.

Suggestions

SUGGESTIONS
Suggestions to an investor for reaping good returns in Equity Investment
Proper scientific way of investigation should be undertaken about sector and its
players before investment
Clear targets should be set before investment
Stock pickup should be always selective and should not depend on rumors of the
market
Define price range first before buying and selling shares
Before buying and selling shares latest price movement trends should be
analyzed
Speculation is not advised in the market
Individual Risk tolerance should be known and then be ready for unexpected
Constant proper review of portfolio should be done and wherever required
buying and selling of shares should be done.

Conclusions

CONCLUSIONS
Economic liberalization has accelerated the pace of development in the securities
market. In India, the role of securities market has undergone structural transformation
with the introduction of computerized online trading and interconnected market system.
Investment in securities such as shares, debentures and bonds is profitable, but
also involves great deal of risk. Even Indian Government wants to encourage Equity
Investment.
According to Fundamental Analysis:
Economy:

While analyzing stock, investor should consider GNP, Price conditions, Economy,
Housing, Construction Activity, Employment, Accumulation of inventories, Personal
Disposable Income, Personal savings, Interest rates, Balance of Trade, Strength of the
Rupee in Forex market and Corporate Taxation (Direct and Indirect)
Sector Analysis:
It is advised to invest in a sector that is either in a pioneering stage or in its expansion
stage. It is advisable to quickly get out of sectors which are in the stagnation stage prior
to its lapse into the decline stage. The particular phase or stage of a sector can be
determined in terms of sales, profitability and their growth rates amongst other factors.
Company Analysis:
In company analysis, history of the company and line of business, Product portfolios
strength, Market share, Top Management, Intrinsic Values like Patents and Trademarks
held, Foreign collaboration, its need and availability for future, Quality of competition in
the market, present and future, Future business plans and projects, Level of trading of the
companys listed scrip, EPS, its growth and rating vis--vis other companies in the
industry, P/E Ratio, Growth in Sales are analyzed.
According to technical analysis:
The fundamental analysis is the determination of price based on future earnings, where
as the price of a security represents a consensus. The price at which an investor is willing
to buy or sell depends primarily on his expectations. For this purpose technical analysis

also forms a strong tool in analyzing a company where the price movements are
recorded in charts and analyzed.

LIMITATIONS OF THE STUDY

The study is confined to only one sector.
All the limitations of Fundamental Analysis, Technical Analysis are applicable to the
study.
The factors which affect the markets and intangible are not considered.
Risk perception is considered to be moderate which may not be acceptable to all.
The data for the study considered is of past two years, so analysis is restricted to that
period only.

 In the application of Dow theory, only daily price fluctuations were considered due to
time constraint.

Bibliography

BIBILIOGRAPHY
BOOKS REFFERED:
Security Analysis and Portfolio Management
- Prasanna Chandra.
Investments
- William, Sharpe
WEBSITES:
www.about.stocks.com

www.nseindia.com
www.buzzingstocks.com
www.moneycontrol.com