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K.L.E.

S’S
INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH,
HUBLI – 580031

MASTERS OF BUSINESS ADMINISTRATION
(Recognized by AICTE, New Delhi and Affiliated to Karnataka University, Dharwad)

A PROJECT REPORT ON
“A Study on Fundamental and Technical Analysis of
Common Shares”

Submitted By:
Shivaprasad N Abaloor
MBA 4th Semester
MBA06002076

Company guide: Institute guide:
Mr. Sadanand Hiremath Prof. Rahul Kavishwar
Manager Faculty
Karvey Phinophilis KLES’s IMSR
Dharwad Hubli

K.L.E.SOCIETY’S

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INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH
VIDYANAGAR
HUBLI-31
(Recognised by A.I.C.T.E, New Delhi and affiliated to Karnataka
University, Dharwad.)

Certificate
This is to certify that Mr. Shivaprasad N
Abaloor, K.U.D Examination No. MBA06002076
of MBA IV semester has successfully completed
his Major Concurrent Project.

Project Guide: Director:
Mr. Rahul Kavishwar Dr. M. M. Bagali
KLES’s IMSR Director, KLES’s IMSR
Hubli-31 Hubli-31

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Declaration
I, Shivaprasad N Abaloor, hereby
declare that this project entitled “A STUDY ON
FUNDAMENTAL AND TECHNICAL ANALYSIS OF COMMON

SHARES”, has been prepared by me under the
valuable guidance and supervision of Mr.
Rahul Kavishwar, Faculty Member, KLES’s
Institute Of Management Studies And
Research, Hubli, in partial fulfillment of the
requirements for the award of the Master’s
Degree in Business Administration during
the academic year 2007-2008.

I also declare that this project report
has not been submitted to any other university
for the award of any other degree, fellowship,
associate ship or any other similar title.

Countersigned:-

Mr.Rahul Kavishwar Shivaprasad N Abaloor.
(Faculty Member) Register No. MBA06002076
(M.B.A. Student)

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DATE : PLACE: Hubli -4- .

M. Shivaprasad N. Karvy Stock Broking Ltd.Sadand Hiremath. Dharwad. encouraging and supporting me during this project and special thanks to himbecause who guided me to choose this immensely productive topic and it was because of his confidence in me that I have been able to carry out such a beautiful study report. for the guidance he has given to me in the conduction of my project work. Abaloor KLES’s IMSR . I express my profound thanks to Mr Rahul Kavishwar.. Branch Manager. my teacher and guide. for giving me an opportunity to do a project for their esteemed organisation and for extending his valuable guidance and patient support throughout my project . Director of KLES’s Institute Of Management Studies And Research. -5- . Hubli. Hubli. M Bagali. My sincere thanks goes to Mr.. who has been magnanimous in guiding. Acknowledgement I would like to thank Dr.

Contents Sl. No Particulars Page no. 1 Executive summary 01 2 Objectives 05 3 About Indian stock market 07 4 About Karvy securities 12 5 Introduction to the topic 37 6 Company Analysis 59 7 Findings 93 8 Recommendation 94 9 Conclusion 95 10 Bibliography 96 -6- .

The stock exchange comes in the secondary market. INDUSTRY: The equity stock (Indian Hotels) selected is from hotel industry. The thriving economy and increased business opportunities in India have acted as a boon for Indian hotel industry. Hotel Industry is inextricably linked to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of Indian hotel industry. So the study has also not overlooked the analysis of stock market in fact I have considered it as an integral part of security analysis. EXECUTIVE SUMMARY: TITLE OF THE PROJECT: “A Study On Fundamental and Technical Analysis of Common Shares” SCOPE OF THE STUDY: This study is of utmost importance because of its utility in estimating the future trends of the stock prices and to make a decent profit out of it. The arrival of low cost airlines and the associated price wars have given domestic tourists a host of options. And security analysts are much sought after chief economists in any DP and AMCs. At the macro-level Broking firms undertake this security analysis and also trading facility and trading advice. -7- . The 'Incredible India' destination campaign and the recently launched 'Atithi Devo Bhavah' (ADB) campaign have also helped in the growth of domestic and international tourism and consequently the hotel industry. securities. as more and more people are attracted towards stock exchanges with the hope of making profits. bonds. So is the importance of Broking firms which (industry) is growing at an enormous rate. analysis and valuation of which can be a model for other common shares valuation. The performance of benchmark Stock exchanges is directly influencing the prices of the individual scrip. The project is done taking single equity stock. mutual fund & commodities. Stock exchange performs activities such as trading in share. Hotel Industry in India has witnessed tremendous boom in recent years.

163 and 176 rupees. Next support has been established at 110- 115 • Long term resistance for scrip: 160-165 • Long term support is at 65 level. over the next two years. hotel rates in India are likely to rise by 25% annually and occupancy by 80%. FINDINGS For stock: • First. Technical analysts are sometimes referred to as chartists because they rely almost exclusively on charts for their analysis. With demand- supply disparity. Technical analysis is the examination of past price movements to forecast future price movements. Hotel Industry in India currently has supply of 110. Five- star hotels in metro cities allot same room. receiving almost 24-hour rates from both guests against 6-8 hours usage.000 rooms and there is a shortage of 150. industry reports. PROJECT: Fundamental analysis The approach of evaluating the information contained in financial statements. • Short term support for scrip: 130-140. the projected MPS using fundamental approach for the stock for next three years are 144. This will affect the competitiveness of India as a cost- effective tourist destination. more than once a day to different guests. • Now the scrip is slightly on the down trend(short term) and settling down to the intermediate support of 110-115 -8- .000 rooms fueling hotel room rates across India. According to estimates demand is going to exceed supply by at least 100% over the next 2 years. and economic factors to determine the intrinsic value of a firm and its stock.According to a report.

• Short term investors (traders) need not be worried about the fundamentals of the company but should have a close eye on various supports and resistances of scrip and market to buy/ sell and book the profit. • Technical analysis is more useful in identifying the identification of buying points and selling points.7020. For market: • Short term support or intermediate support: 4500-4600. • Combination of both approaches will give a investor right guidance in taking decisions regarding buying and selling points. • Long term target by technical analysis is 225 but this is unlikely to happen in the medium term because short term trend has been bearish and long term trend has been flat and undergoing long consolidation. Recommendations • The long term investors should buy the scrip at key support levels at which the price is lower or almost equal to the fair value found out by fundamental approach. Conclusion • Technical analysis can be used as a reliable tool for investing in to stocks. But the same -9- . next long term support lies at3100-3150 • Resistance for Nifty is at present is at 6000 • Short term and intermediate trend has been bearish and long term trend is still bullish • Long term nifty target is a 6980. • Short term traders should buy or sell whenever there is break outs from the various levels of resistance and support with expansion in volume.

• Market is very much sentiment driven. • So investors are advised to try to discount every happening or news which affects market and stock before they see its effect on the market or stock so that they get more benefit out of it. OBJECTIVES OF THE STUDY: Objectives • To forecast the future price movements (2-3 years) of selected common share. does not apply to long term investors unless the break out is from key support/resistance levels. so investors are advised to concentrate more on technicals then being worried about fundamentals which is very difficult some times.10 - . .

• To identify right ‘entry’ and ‘exit’ (buy and sell points) points for both long term and short term perspective. . oscillators (Relative Strength Index). • In technical analysis we have charting for short term and long term time period. 2nd and 3rd year) using fundamental approach. • In fundamental analysis we have in tern adopted Top-Down approach.11 - . Sub Objectives • To determine the key support and resistance levels for the market as well as selected scrip. and hence exit and entry levels. • Identification of trends and simple equation of resistance and support are used as barometers in technical analysis. • We have two approaches fundamental (EIC) and Technical analysis combined together to arrive at future price targets. • Trying to forecast the performance of market (Nifty). relevant text books on the subject matter and company’s official website. • To determine short-term and long-term trends for both market and selected stocks. The Secondary data is collected from the annual reports of the company. • To arrive at fair values for these scrip in future (for 1st. Data collection Primary data is collected through direct interactions with the clients of Karvy Securities. METHODOLOGY: . • The tools used in the technical analysis are Moving averages (SMA & EMA). wherein macro-economic analysis is followed by industry analysis (hotel) and finally company analysis. DURATION OF THE PROJECT: The project was done for duration of eight weeks.

LIMITATIONS OF THE STUDY:

1. The study (valuation) is done for only one scrip and sector.
2. Here, an attempt is made to predict the future movement of stock. It contains an
element of guess work.
3. No agjact timing is mentioned while giving target price for scrip using technical
analysis.
4. Here, I have used only 2 Technical tools to predict the movement of Scrip’s.
They are moving averages and relative strength index.

Sample used

Both for market and company I have used 2 and half to 3 years data to do technical
analysis.

OVERVIEW OF EQUITY MARKET IN INDIA

(STOCK MARKET)
With over 20 million shareholders, India has the third largest investor base in the
world after the USA and Japan. Over 9,000 companies are listed on the stock exchanges,

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which are serviced by approximately 7,500 stockbrokers. The Indian capital market is
significant in terms of the degree of development, volume of trading and its tremendous
growth potential.
There are 23 recognized stock exchanges in India, including the Over the Counter
Exchange of India (OTCEI) for small and new companies and the National Stock
Exchange (NSE) which was set up as a model exchange to provide nation-wide services
to investors. NSE, which in the recent past has accounted for the largest trading volumes,
has a fully automated screen based system that operates in the wholesale debt market
segment as well as the capital market segment.
India's market capitalization was amongst the highest among the emerging markets. Total
market capitalization of the BSE as on July 31, 1997 was Rs 5,573.07 billion growing by
18 percent over a period of twelve months and as of August 2005 was over $500 billion
(about Rs 22 lakh crores).

BSE (Bombay Stock Exchange)

SENSEX - THE BAROMETER OF INDIAN CAPITAL MARKETS

Introduction:

For the premier Stock Exchange that pioneered the stock broking activity in India,
128 years of experience seems to be a proud milestone. A lot has changed since 1875
when 318 persons became members of what today is called "The Stock Exchange,
Mumbai" by paying a princely amount of Re1.Since then, the country's capital markets
have passed through both good and bad periods.

In 1956, the BSE obtained permanent recognition from the Government of India -- the
first stock exchange to do so -- under the Securities Contracts (Regulation) Act, 1956.

JOURNEY OF SENSEX FROM 1K TO 16K:

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Robust portfolio investments and heavy fund buying lifted the Bombay Stock
Exchange's benchmark 30-share Sensex past the magical 12,000 mark. The Sensex finally
closed at an all-time high of 12,040 points.

This is the fastest 1,000-point gain by the Sensex. It only took 15 trading sessions
for the index to cross from 11,000 to 12,000. Interestingly, the Sensex has taken only 10
months to gain 5,000 points!

The unprecedented Bull Run started on May 6, 2003 when the Sensex was at
3,001.21 level. In took just 67 trading sessions to cross the 4,000-mark and touch
4,026.27 points on August 19, 2003.

Thereafter, it pierced through the 6,000 mark on January 2, 2004 in another 43
trading sessions. The market then seemed to pause for breath as it took a whopping 370
trading sessions to cross the 7,000 mark, at 7001.55 on June 20, 2005.

From 7,000-mark, the sentiment turned distinctly firm following good liquidity
that played a significant role to determine the market direction and Sensex crossed 8,000-
mark in just 55 trading sessions at 8, 060.26 on September 8, 2005 and 54 trading days to
cross 9,000-mark at 9, 005.63 on November 28, 2005.

From 9K to 10K, it took just 48 trading sessions. The index crossed 10,000-mark
on February 6, 2006 at 10,002.83.
Then mostly it’s the robust Indian economic growth, liberalized norms, upliftment
of FDI and FII limits in almost all sectors which made the Sensex to sore to the level of
16000.
The journey from 16000 to 2000 and sudden fall from that peak is one of the heart
rending mile stone in the history of stock market. The US sub prime crisis and issue of P-
notes and also slow down in IIP and soaring inflation are directly attributed to this slump.

NSE (NATIONAL STOCK EXCHANGE)
The Organization:

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Based on the recommendations. The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. public sector unit bonds. treasury bills. NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. There are two kinds of players in NSE: (a) Trading members and (b) Participants. which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. 1956 in April 1993. it was found inevitable to lift the Indian stock market trading system on par with the international standards.institutions and corporate bodies enter into high value transactions in financial instruments such as government securities. Trading at NSE can be classified under two broad categories: (a) Wholesale debt market and (b) Capital market. commercial paper. With the liberalization of the Indian economy.15 - . . The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000. Industrial Finance Corporation of India. On the basis of the recommendations of high powered Pherwani Committee. all Insurance Corporations. etc. selected commercial banks and others. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. Wholesale debt market operations are similar to money market operations . the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India. certificate of deposit. Industrial Credit and Investment Corporation of India. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act.

NIFTY: . Trading members can stay at their offices and execute the trading. Participants include trading members and large players like banks who take direct settlement responsibility. When the prices match the transaction will be completed and a confirmation slip will be printed at the office of the trading member. NSE has several advantages over the traditional trading exchanges. Unless stock markets provide professionalized service.Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. In this regard NSE gains vital importance in the Indian capital market system. Trading at NSE takes place through a fully automated screen-based trading mechanism which adopts the principle of an order-driven market. since they are linked through a communication network. • Delays in communication. • Investors can trade at the same price from anywhere in the country since inter- market operations are streamlined coupled with the countrywide access to the securities. They are as follows: • NSE brings an integrated stock market trading network across the nation. The prices at which the buyer and seller are willing to transact will appear on the screen. India cannot afford to damage the capital market path. small investors and foreign investors will not be interested in capital market operations. And capital market being one of the major sources of long-term finance for industrial projects. late payments and the malpractice’s prevailing in the traditional trading mechanism can be done away with greater operational efficiency and informational transparency in the stock market operations. with the support of total computerized network.16 - .

(IISL). S&P CNX Nifty is a 50 stock index accounting for 23 sectors of the economy. S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. The base value of index was set at 1000. It is used for purposes such as benchmarking fund portfolios. The Nifty is relatively a new comer in the Indian market. About KARVY . index based derivatives and index funds. which marked the completion of one-year of operations of NSE's capital market segment. 1995. The base period selected for Nifty is the close of prices on November 3. which is a joint venture between NSE and CRISIL. IISL is a specialized company focused upon the index as a core product.17 - . IISL have a consulting and licensing agreement with Standard & Poor's (S&P). who are world leaders in index services.

managing over 2 crore accounts. V. Registered with AMFI as a corporate Agent. to provide new ones.18 - . 5. and carved inroads into the field of registry and share accounting by 1985.000 crores under management. Over 9.000 active accounts.Mr. Karvy Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5 insurance agent in the country.Mr. M S Ramakrishna V . Karvy Stock Brokers Limited. Karvy ranks among the top player in almost all the fields it operates. With over 6. Karvy COM trade. 00. Karvy Computer share Limited is India’s largest Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate. to innovate. Member of NCDEX and MCX ranks among the top 3 commodity brokers in the country. registered with NSDL and CDSL. ranks among the top 5 stock brokers in India. India. Vikram Singh Y . diversify and . Kutumba Rao A .Mr. member of National Stock Exchange of India and the Bombay Stock Exchange. K Ajay Kumar R . Karvy have utilized its experience and superlative expertise to go from strength to strength…to better its services. Karvy Global offers niche off shoring services to clients in the US.Mr. in the realty sector. Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York. it ranks among the top 5 Depositary Participant in India.The Karvy group was formed in 1983 at Hyderabad. Since then. Karvy started with consulting and financial accounting automation.000 highly qualified people staff Karvy. M Yugandhar The birth of Karvy was on a modest scale in 1979. It began with the vision and enterprise of a small group of practicing Chartered Accountants who founded the flagship company …Karvy Consultants Limited. Karvy – Early Days Karvy the name comes from the names of the directors: K . Karvy is also among the top Mutual Fund mobilizer with over Rs. which started in 2006. Karvy Realty Services. has quickly established itself as a broker who adds value.Mr.

its various companies. And today. cutting-edge technology. towards building a reputation as an integrated financial services provider. With the experience of years of holistic financial servicing behind it and years of complete expertise in the industry to look forward to. versatility in service and finally…totality in service. Karvy’s highly qualified manpower. path breaking innovations in service. . comprehensive infrastructure and total customer-focus has secured for Karvy the position of an emerging financial services giant enjoying the confidence and support of an enviable clientele across diverse fields in the financial world. And Karvy have made this journey by taking the route of quality service. which stands solid on its fortresses of financial strength . offering a wide spectrum of services.in the process. GROWTH AND DEVELOPMENT OF KARVY Over the last 20 years Karvy has traveled the success route. Karvy can look with pride at the fruits of its mastery and experience comprehensive financial services that are competently segregated to service and manage a diverse range of customer requirements.19 - . evolved Karvy as one of India’s premier integrated financial service enterprise. Karvy have now emerged as a premier integrated financial services provider. Karvy’s values and vision of attaining total competence in its servicing has served as the building block for creating a great financial enterprise.

among others. IPOs. equities. Personal Finance Advisory Services. First ISO - 9002 Certified Registrar in India. Largest Distributor of Financial Products are -- The Finapolis. Market analysis and market predictions are done by professional management team. and The Hyderabad Stock Exchange (HSE). Among the top 3 Depository Participants. 1 Registrar & Securities Transfer Agents (Ranked as “The Most Admired Registrar" by MARG). placement of equity. It is the largest mobiliser of funds as per PRIME DATABASE. monthly magazine & Karvy Bazaar Baatein.20 - . a weekly report cover stock market analysis and other financial matters. . Among top 10 Investment bankers.KARVY-Milestones AT PRESENT STATUS OF KARVY Presently Karvy is a member of National Stock Exchange (NSE). Depository Participants. Distribution of financial products . KARVY is covering the entire spectrum of financial services such as Stock Broking Services. Largest Network of Branches & Business Associates. India's No.mutual funds. Advisory Services. It is among the top 5 stock brokers in India (4% of NSE volumes). Commodities Broking. fixed deposit. Stock broking. Merchant Banking & Corporate Finance. bonds. the Bombay Stock Exchange (BSE). Insurance Broking.

Every 6th Investor in India invests through KARVY India's No.Every 50th Indian is serviced by KARVY Every 20th trade in stock market is done through KARVY.1 Registrars and Transfer agent : KARVY Every 10th Demat Account is held at KARVY. .21 - .

Broking Private Pvt. Limited Private Limited Limited Karvy Regional HQs / Branches . MD.22 - . & other Directors Karvy Karvy Karvy Karvy Global Stock Investor Consultants Service Broking Service Limited Limited Limited Limited Karvy Karvy Karvy Insurance Karvy Commodities Computershare Broking Inc.ORGANISATION STRUCTURE OF KARVY LEVEL-I Board of Directors CMD.

DP PURCHASE.23 - .Level-II Regional Branch Head ISO CELL Operations Support Branches Divisions Functions ACCOUNTS RIS SYSTEM FPD HRD BROKING ADMN. & STORES BRANCHES Operations Support Divisions Functions STUDY OF COMPANY PROFILE WITH RESPECT TO .

Quality Objectives are to: • Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services. by combining its human and technological resources. to provide superior quality financial services. Karvy will strive to exceed Customer's expectations. In the context of a business concern. Quality Policy To achieve and retain leadership. strategy indicates specific program of action for achieving the organization objectives by employing the firm’s resources efficiently and economically.Mc KINSEY’S 7S MODEL STRATEGY: In modern times the word strategy has found its way into the management field. . Karvy shall aim for complete customer satisfaction. In the process.24 - . It involves preparing oneself for meeting unforeseen factor. It is also concerned with meeting the challenges posed by the policies and actions of other competitors in the market.

Mr. • Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients. M S Ramakrishna (Director ). clients. Mr. employees. C Parthasarathy (Chairman and Managing Director). M Yugandhar (Managing Director ).25 - . STRUCTURE: Board of Directors Mr.). • Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in business ethics.). William Stuart Crosby (Chairman – Karvy Computershare Pvt Ltd. suppliers and regulatory authorities) proud and satisfied.Karvy Inc. Prasad V Potluri (Director). investors. Mr. • Strive to be a reliable source of value-added financial products and services and constantly guide the individuals and institutions in making a judicious choice of same. Mr. • Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer's needs. Mark Davis(Director– Karvy Computershare Pvt Ltd. . • Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers. ) Karvy’s organization structure can be viewed as accomplishing departments Operations Divisions and Support Function Division. • Strive to keep all stake-holders (shareholders. Chandra Balaraman(Director– Karvy Computershare Pvt Ltd. Uday Raval(Director .).

Insurance Broking. Broking Services. Board of Directors directly appoints department heads. Karvy’s highly skilled research team. comprising of technical analysts as well as fundamental specialists. The departmental heads does locations of responsibilities among various positions. The Mid-session Report. Financial Product Distribution (FPD). IPOs. Below the Support Functions. Majority of decisions are taken by the top management. Karvy publish a monthly magazine The Finapolis. where market scenario for the day is predicted. Purchase & Stores. While taking important decision the department managers are also consulted and their suggestions are also considered. These department heads are directly reports to the director.26 - . the final report for the day. and Administration.Below the Operations Divisions there are sub divisions namely Registry and Investor Services (RIS). market analysis and market predictions. which analyzes the latest stock market trends and takes a close look at the various investment options. In Karvy Departments are inter related. To add to this repository of information. Commodities Broking. SYSTEM: KARVY covers the entire spectrum of financial services such as Stock broking. These department heads controls the day-to-day affairs of the company. The Pre-session Report. called Karvy Bazaar . timed to arrive during lunch break. while a weekly report. devoted solely to research. Merchant Banking & Corporate Finance. Depository Participants. Human Resource Development. A link called ‘Resource Center’. This crucial information is given as a constant feedback to its customers.mutual funds. Hence Participative style of management is followed in Karvy. System. where the market forecast for the rest of the day is given and The Post-session Report. where the market and the report itself is reviewed. Depository Participant (DP). Personal Finance Advisory Services. Distribution of financial products . equities. there are sub divisions namely Accounts. and products available in the market. secure result-oriented information on market trends. fixed deposit. placement of equity. bonds. through daily reports delivered thrice daily.

This has propelled Karvy to a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized. Major policies and plans are made by top management and it is implemented and administered by employees. secure result-oriented information on market trends. STYLE: An activity like forecasting and planning are made by top level managers. In the organization the style of informal communication and meetings with employees has created workers to a friendly environment. SKILLS: The managers and workers in each department are skilled to the extent of functions they perform.Baatein.27 - . SMS. motivation and morale. A link called ‘Resource Center’. phone calls etc. devoted solely to research. chat. STAFF: The term staff refers to manpower planning. Directors of the company are skilled in every activities and disciplines of organization. recruitment. its specific industry reports give comprehensive information on various industries. To empower the investor further Karvy have made serious efforts to ensure that its research calls are disseminated systematically to all our stock broking clients through various delivery channels like email. performance appraisal. besides being established as the leading procurer in all public issues. Karvy’s Stock Broking services are widely networked across India. Karvy’s highly skilled research team. market analysis and market predictions. Achievements • Largest mobiliser of funds as per PRIME DATABASE . with the number of trading terminals providing retail stock broking facilities. A 1600 team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. gives more information on the immediate trends in the stock market. comprising of technical analysts as well as fundamental specialists. In addition.

• Among the top 5 stock brokers in India (4% of NSE volumes)
• India's No. 1 Registrar & Securities Transfer Agents (Ranked as " The Most
Admired Registrar" by MARG)
• A Category- I -Merchant banker.
• Among the to top 3 Depository Participants
• Largest Network of Branches & Business Associates
• First ISO - 9002 Certified Registrar in India
• Among top 10 Investment bankers
• Largest Distributor of Financial Products
• Full Fledged IT driven operations
• Handled the largest- ever Public Issue - IDBI
• Handled over 500 Public issues as Registrars.
• Handling the Reliance Account which accounts for nearly 10 million account
holders

Major issues managed as arrangers

• Kerala State Electricity Board.
• Power Finance Corporation
• A.P. Water Resources Development Corporation.
• A.P. Roads Development Corporation.
• A.P. State Electricity Board.
• Haldia Petrochemicals Ltd.

Major issues managed as Co-Managers

• IndusInd Bank Ltd
• ICICI Bonds – March 97
• ICICI Bonds – Dec 97

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• ICICI Safety Bonds March 98
• ICICI Safety Bonds – April 98. July 98, Oct 98, Dec 98, Jan 99.
• The Jammu and Kashmir Bank Ltd

Major issue handled as Registrars to Issues

• IDBI Equity
• Morgan Stanley Mutual Fund
• Bank of Baroda
• Bank of Punjab Ltd
• Corporation Bank
• IndusInd Bank Ltd
• Jammu and Kashmir Bank Ltd
• Housing and Urban Development Corporation (HUDCO) Ltd
• Madras Refineries Ltd
• Tamil Nadu Newsprint & Paper Ltd
• BPL Ltd
• Birla 3M Ltd
• Essar Shipping Ltd
• Essar Steels Ltd.
• Hindustan Petroleum Corporation Ltd.
• Infosys Technologies Ltd.
• Jindal Vijayanagar Steels Ltd.
• Nagarjuna Fertilizers & Chemicals Ltd.
• Rajshree Polyfil Ltd.

Karvy Securities Ltd.

Karvy has secured over Rs. 500 crore in the following debt issues.

• Andhra Pradesh Road Development Corporation Ltd
• ICICI Bonds ( Private Placement)

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• ICICI Bonds – 96
• ICICI Bonds – 97- I
• ICICI Bonds – 97 – II
• ICICI Safety Bonds March 98.
• IDBI Bonds 96.
• IDBI Flexi Bonds I
• IDBI Flexi Bonds II
• IDBI Flexi Bonds III
• Kerala State Electricity Board
• Krishna Bhagya Jala Nigam Ltd
• Power Finance Corporation Ltd
• Andhra Pradesh Water Resources Development Corporation
• Andhra Pradesh State Electricity Board

SHARED VALUES:
Employees at each level of organization are conscious about delivering customer value
for his money. Each and every employee understands the mission and vision of the
company. Employees of company are committed towards the quality aspects in service.
The employees of Karvy themselves put forward in fulfilling the organizational principles
for betterment of organization.

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Stock Broking Services and Depository Participant (DP). bonds.STUDY OF FUNCTIONAL DEPARTMENTS OF KARVY In Karvy the functions are mainly divided into two parts namely Operational Functions and the Supporting Functions. fixed deposits. and Registrar to the Issues. which are explained in Service Profile of the Karvy group of companies.Purchase and Stores Department HOD Assistant HOD Administration Team Responsibilities • To ensure preventive breakdown of equipment/accessories including computer hardware • To ensure speedy breakdown maintenance • To ensure that the maintenance status of all equipment/ accessories is entered in the service . OPERATING FUNCTIONS: Registry and Investor Services (RIS) in which Karvy carry out functions as Registrar & transfer Agent (RTA). SUPPORTING FUNCTIONS: 2. etc.31 - .61 Administration . Insurance. Financial Product Distribution (FPD). Here financial products include Mutual Funds. Fixed income securities. Tax-saving Products.

the administrative team shall maintain a record of all maintenance done.32 - . But all cheques and such instruments would be signed by the local regional manager. 2. Both the parties meet to their requirements and enter into agreement. • To ensure that the maintenance is carried out efficiently Maintenance includes preventive.62 Accounts Department Finance operations in Karvy are centralized at the Head Office Account. advertisements. On receipt of the same. Subcontractors are appointed for providing services Preventive maintenance. Breakdown maintenance. In Breakdown / General maintenance admi9nistration team receive information regarding any breakdown or general repairs. word of mouth. . Periodic fund requirement at the regional level will be sort as and when required. breakdown and general maintenance. The Procedure involves identification of subcontractors which will be done through Newspaper. Courier services and any other services. Preventive maintenance shall be done as per the prefixed time schedule by the subcontractors for the purpose. The administration incharge shall make necessary arrangements for this purpose.

personal contacts.64 Human resource Department The human resource Department (HRD) caters to the entire recruitment and employee upbringing in the company. private employment agencies.2. Performance Appraisal: The HOD of the department. desktop queries. Software and Hardware problems. Manpower planning is being done in the company in order to secure a confidence and capability Recruitment: Advertising in newspaper and other media.63 System Administration Department Dy. to be appraised. 2.33 - . to which the employees belongs. are: Manpower Planning: The departmental heads are entrusted with the responsibility of assessing the present and the future manpower requirement in their departments. presents a report of the employees. General Manager Dy. The HR functions and practices. Network problems. . In addition to that other managers to whom the employee is associated is also evaluating the performance of the employee. Training: The personnel department gives training for all new employees. colleges and universities are the sources used by Karvy. creating new networks. which are practiced at the Karvy. Manager In this department the functions include Trouble shooting.Manager Asst. Installation of new systems.

Morale: For improving employee’s morale positive measures like job rotation. Job rotation is undertaken to reduce the monitoring and burden of the employees. building responsibility into job etc are introduced. Both upward and downward communication takes place within the company. holiday’s etc.34 - . participation are the examples. praise. responsibility. Intrinsic motivation is concerned with the feeling of having accomplished something worthwhile i. Extrinsic motivation is considered with external motivators which employees get through pay.e. Participation is the key to commitment. the satisfaction one gets after doing one’s work well. promotion. fringe benefits.Motivation: The Company provides both extrinsic and intrinsic motivation to the employees. recognition. .

To add to this repository of information. Bombay Stock Exchange and Hyderabad Stock Exchange. planning with foresight and choosing one & other options with care. The difference between unpredictability and a safety anchor in the market is provided by in-depth knowledge of market functioning and changing trends. it’s specific industry reports give comprehensive information on . Karvy offer trading on a vast platform.35 - . Karvy publish a monthly magazine The Finapolis. one of the cornerstones of the Karvy edifice. Karvy’s highly skilled research team. This crucial information is given as a constant feedback to its customers. gives more information on the immediate trends in the stock market. In addition. The Mid-session Report. while a weekly report. called Karvy Bazaar Baatein. Karvy Stock Broking Limited. where market scenario for the day is predicted. The Pre-session Report. the Bombay Stock Exchange (BSE). the final report for the day. where the market and the report itself is reviewed. National Stock Exchange. SERVICE PROFILE OF THE KARVY GROUP OF COMPANIES Karvy Stock Broking Limited Member . comprising of technical analysts as well as fundamental specialists.National Stock Exchange (NSE). Stock Broking Services It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate as a wealth management and wealth accumulation option. secure result-oriented information on market trends. flows freely towards attaining diverse goals of the customer through varied services. where the market forecast for the rest of the day is given and The Post- session Report. through daily reports delivered thrice daily. and the Hyderabad Stock Exchange (HSE). which analyzes the latest stock market trends and takes a close look at the various investment options. and products available in the market. market analysis and market predictions. timed to arrive during lunch break.

various industries. A wide national network makes its efficiencies accessible to all. The service is backed by a team of dedicated and expert professionals with varied experience and background in handling investment portfolios. Distribution of Financial Products A 1600 team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. Advisory Services Under its retail brand ‘Karvy – the Finapolis'. Karvy’s Stock Broking services are widely networked across India. This has propelled Karvy to a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized. Karvy have established live DPMs. Internet access to accounts and an easier transaction process in order to offer more convenience to individual and corporate investors. They are continually engaged in designing the right investment portfolio for each customer according to individual needs and budget considerations with a comprehensive support system that focuses on trading customers' portfolios and providing valuable inputs.36 - . it delivers advisory services to a cross- section of customers. chat. phone calls etc. . besides being established as the leading procurer in all public issues. Depository Participants The onset of the technology revolution in financial services Industry saw the emergence of Karvy as an electronic custodian registered with National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in 1998. with the number of trading terminals providing retail stock broking facilities. Karvy set standards enabling further comfort to the investor by promoting paperless trading across the country and emerged as the top 3 Depository Participants in the country in terms of customer serviced. To empower the investor further Karvy have made serious efforts to ensure that its research calls are disseminated systematically to all our stock broking clients through various delivery channels like email. Offering a wide trading platform with a dual membership at both NSDL and CDSL. monitoring and managing the portfolio through varied technological initiatives. SMS.

creating a galaxy of customer advantages. Mutual Fund Services Karvy has attained a position of immense strength as a provider of across-the-board transfer agency services to AMCs. Karvy has been with the AMCs every step of the way. Karvy’s service enhancements such as ‘Karvy Converz'.com).37 - . Nearly 40% of the top- notch AMCs including prestigious clients like Deutsche AMC and UTI swear by the quality and range of services that Karvy offers. Distributors and Investors. investment schemes and research-based opinions from experts in various financial fields.karvymfs. covers the latest of market news. Carrying the ‘limitless' ideology forward. including services to the distributor. a top- line website (www. efficient back-office and front-office operations to customized service. the prime channel in this operation. The ‘first to market' approach that is Karvy’s anthem has earned the reputation of an innovative service provider with a visionary bent of mind.the Finapolis'. helping them serve their investors better by offering them a diverse and customized range of services. delivery in the least turnaround time.‘Karvy . the ‘m-investor' and many more. Karvy has explored new dimensions in every aspect of Mutual Fund servicing right from volume management. a full-fledged call center. Karvy Consultants Limited . Besides providing the entire back office processing. trends. cost effective pricing. Karvy provides the link between various Mutual Funds and the investor.

With a growing secondary market presence. State Governments. public and private sector companies and banks. in Indian and global markets. divestitures.38 - . who include leading corporates. privatization and takeover defense mechanisms have elevated its relationship with the client to one based on unshakable trust and confidence. Karvy have transferred this business to Karvy Stock Broking Limited (KSBL). Karvy’s quality professional team and our work-oriented dedication have propelled it to offer value-added corporate financial services and act as a professional navigator for long term growth of its clients. pioneering business policies. acquisitions. de-mergers. Karvy Global Services Limited . mergers and acquisitions and corporate restructuring. Karvy Consultants Limited has always remained at the helm of organizational affairs. Its financial advice and assistance in restructuring. spin-offs. This reputation was built by capitalizing on opportunities in corporate consolidations. Today. Karvy service over 6 lakhs customer accounts in this business spread across over 250 cities/towns in India and are ranked amongst the largest Depository Participants in the country. work ethic and channels of progress. joint ventures. Karvy’s associate and a member of NSE. Karvy Investor Service Merchant Banking Recognized as a leading merchant banker in the country.As the flagship company of the Karvy Group. BSE and HSE. Karvy registered with SEBI as a Category I merchant banker. foreign institutional investors.

cost savings. Energy and Utility and Healthcare. Karvy’s wide market coverage includes Banking. and domain expertise. Providing productivity improvements. improved accountability and a whole gamut of other advantages. Karvy’s outsourcing models are designed for the global customer and are backed by sound corporate and operations philosophies. Retail and Merchandising. Financial and Insurance Services (BFIS). Here Karvy offer several delivery models on the understanding that business needs are unique and therefore only a customized service could possibly fit the bill.The specialist Business Process Outsourcing unit of the Karvy Group.39 - . operational cost control. Be it in re-engineering and managing processes or delivering new efficiencies. Karvy’s service meets up to the most stringent of international standards. Leisure and Entertainment. .

Excellence has to be the order of the day when two companies with such similar ideologies of growth. Karvy is the first Registry Company to receive ISO 9002 certification in India that stands testimony to its stature. has the ability to execute voluminous transactions and hard-core expertise in technology applications have gained the No. Karvy today. CDSL) services during an IPO.40 - . Issue Registry Karvy has emerged as the largest transaction-processing house for the Indian Corporate sector.1 slot in the business. The company that services more than 75 million shareholders across 7000 corporate clients and makes its presence felt in over 12 countries across 5 continents has entered into a 50-50 joint venture with Karvy. It is actively coordinating with both the main depositories to develop special models to enable the customer to access depository (NSDL. With an experience of handling over 700 issues. . get together. Computershare Limited. Karvy Computershare Pvt. Limited Karvy have traversed wide spaces to tie up with the world’s largest transfer agent. vision and competence. the leading Australian company.

. Karvy is focused on taking commodities trading to new dimensions of reliability and profitability. spanning the length and breadth of India. Karvy has made commodities trading. Karvy is in a position to provide tailor made policies for different segments of customers. With Indian markets seeing a sea change.Karvy Insurance Broking Private Limited At Karvy Insurance Broking Pvt. further supports these advantages. into a sophisticated and scientific investment option. Karvy’s commitment to excel in this sector stems from the immense importance that commodity broking has to a cross-section of investors – farmers.41 - . With the opening up of the insurance sector and with a large number of private players in the business. Regular trading workshops and seminars are conducted to hone trading strategies to perfection. personalized service is provided here by a dedicated team committed in giving hassle-free service to the clients. Further. manufacturers and the Government of India itself. exporters. high net-worth clients and corporates. it provide both life and non-life insurance products to retail individuals. an essentially age-old practice. Karvy Commodities Broking Private Limited At Karvy Commodities. Here Karvy enable trade in all goods and products of agricultural and mineral origin that include lucrative commodities like gold and silver and popular items like oil. Ltd. . Karvy’s wide national network. By setting up a separate entity. both in terms of investment pattern and attitude of investors. importers. insurance is no more seen as only a tax saving product but also as an investment product. pulses and cotton through a well-systematized trading platform. Karvy would be positioned to provide the best of the products available in this business to its customers.

in the US located in New York to provide various financial products and information on Indian equities to potential Foreign Institutional Investors (FIIs) in the region. outsourcing of various assignments for the multiple streams of business in Karvy Global Services Ltd (KGSL). Karvy’s has set up Karvy Inc. This entity soon would be ACC registered and would also become a member of various important stock exchanges in the US. stock broking (Indian equities). With its growing ambitions of reaching out to investors across the shores of this country. This entity would extensively facilitate various businesses of Karvy viz.Karvy Inc.. FUNDAMENTAL AND TECHNICAL ANALYSIS FUNDAMENTAL ANALYSIS: . research and investment by (Qualified Institutional Buyer) QIBs in Indian markets for both secondary and primary offerings.42 - .

• At the company level. Economy analysis The economy is the overall economic environment in which all firms operate. earnings. The key strategy for the fundamentalist is to buy when prices are at or below this intrinsic value and sell when they got overpriced. return on equity and profit margins to determine a company’s underlying value and potential for future growth.43 - . business concept and competition. management. The method utilizes items such as revenues. Fundamental analysis is the method of evaluating securities by attempting to measure the intrinsic value of a particular stock. This seems to be a reasonable bet considering the long upward march of quality stocks in general despite regular setbacks and periods of irrational exuberance.e. to the financial condition and management of specific companies (i. even though things get mis priced in the market from time to time. Fundamental analysis is the examination of the underlying forces that affect the well being of the economy. the price of an asset will eventually gravitate toward its true value. It is the study of everything from the overall economy and industry conditions. industry groups. Fundamental analysis consists of: • For the national economy we focus on economic data to assess the present and future growth of the economy.. • At the industry level. One of the major assumptions under fundamental analysis is that. may involve examination of financial data. and companies. there might be an examination of supply and demand forces for the products offered. The key variables used to describe the state of economy are: . using real data to evaluate a stock’s value). The goal is to derive the forecasted earning growths for future price movements.

China. Mexico and Australia. • World economy • Asian economy • Indian economy 1. Korea. Agriculture and monsoons 4. France.3. Industry growth rate 3. Canada. UK. .44 - . Japan. Infrastructure World economy According to the recent statistics. Brazil. Percentage share of USA to the total world GDP is 28.747 Billions. Balance of payments 8. Germany. Savings and investment 5. Inflation 6. Spain. Top 15 contributors to the world GDP are USA. Italy. Russia. Growth rate of GDP 2. the world GDP (comprising 180 economies) has reached at a sum of US $ 46. Interest rates 7. India.

Find below the top 15 contributors to the world GDP. while economic growth in India’s Economy is near to 10 percent. Asian Economy Asian Economies have brought tremendous success in the recent years. Indonesia and Malaysia are growing at a faster pace. . Apart from those two emerging Asian Economic giants. Find below various economic indicators on the Asian Economies.45 - . economies such as Philippines.While both the emerging economies such as India and China have a share of 1.41 respectively. Economic growth rate in China crossed a two-digit number.82 and 5.

3 Malaysia 5. China and Russia. The level of exports and imports over the world has reached at $10.5 4. Present world economy is experiencing higher economic growth with some inflationary pressure. The stabilized countries have the inflation level ranging between 1-3% and the developing countries have inflation between 3-6%. The largest contributors of the world output were India. The Gross World Product (in purchasing power parity) as to the 2005 estimated data has reached at $ 60.33 trillion and 10. Fast rising oil prices over the world has pressurized the general price level in countries of the world.9 Hong Kong SAR 5.4 Singapore 5.5 5.7 China 10. which can be simply stated to be a state of economic activities with rising price level and falling purchasing power of money. as to 2004 estimation.8 5.b.8 The output over the world increased by 4. has become global phenomenon.3 1.8 Indonesia 6. the services sector accounted for 64% followed by industries at 32% and Agriculture 4%.0 9.3 trillions f.46 - .GDP growth projections among various Asian Economies over years are as follows: GDP Growth Projection on Asian Economies Country Name 2007 2008 Japan 2.0 6.8 Thailand 4.7%.71 trillions with a real growthrateof4.4% in the year 2005.5 5.8 Philippines 5. .4 4.5 India 8.0 Korea 4.o. The services sector contributes a largest share to the world GDP.5 5. World inflation: Inflation. As to the 2004 estimated data.4 7.

suggests that the . till November 2007.4 per cent in 1982-83 to 17 per cent in 2007-08. The share of agriculture in the gross domestic product has registered a steady decline from 36. Though at present India is experiencing slowdown in growth of industry production. At present industry sector is contributing 28% to country’s GDP. in the 10th plan we could achive growth rate of 8-9%. the 9.November 2006. Growth pattern of Indian agriculture has been so irregular. Sector contribution to GDP Indian primary sector Agriculture is the mainstay of Indian economy because of its high share in employment and livelihood creation notwithstanding its reduced contribution to the nation’s GDP. witnessed a moderate slowdown in the growth of the industrial sector. when seen against the backdrop of the robust growth during the preceding four years. because of over dependency on the monsoon. Industrial sector (secondary sector) Industrial growth in India has been inspired by the LPG in 1991. Nonetheless. Yet this sector continues to support more than half a billion people providing employment to 52 per cent of the workforce. This is first time after green revolution that the India has become dependent in satisfying its own food need.2 per cent growth achieved during April-November 2007 by the industrial sector. The first eight months of the current fiscal. agricultural implements and a variety of consumer goods. This year we could achieve dismal growth of 2.47 - . while the growth in electricity remained unchanged from April. It is also an important source of raw material and demand for many industrial products.5%. The slowdown has mainly been on account of the manufacturing sector. particularly fertilizers. The mining and quarrying sector grew at a faster pace. pesticides.India is expecting its agriculture to grow at least 4% (CAGR) in the 11th plan to have sustainable and consistent growth of overall GDP. the long term growth of 8-10% is still intact.

Higher the growth rate. the other things being equal. despite reasonable growth in the non- durables. The growth rate of GDP is more important indicator of the performance of the economy. thereby forcing a visible decline in the growth of the total consumer goods basket.7 and estimated to cross 9%. Dimension of Indian Economy Gross domestic product: Measure of the total production of final goods and services in the economy during a specified period usually a year. Secondly.buoyancy in this sector has continued. Two important changes have occurred in the growth pattern of the use-based industrial categories: First. albeit with a degree of moderation.5% in real terms. . In 1980 it was 5% and 6. At present it is 8. over a high base attained in the previous years.48 - . the more favorable it is for the stock market. The average growth rate of Indian economy during 1950-1980 was around 3.2% in 2004. capital goods have grown at an accelerated pace. the consumer durables basket that forms part of the Index of Industrial Production (IIP) showed a negative growth during the period. which augurs well for the required industria capacity addition.

49 - . The growth of 9 per cent during April-December 2007. leather. There has been a loss of dynamism in the agriculture and allied sectors in recent years. Public investment in agriculture has declined and this sector has not been able to attract private investment because of lower/unattractive returns. The industrial sector witnessed a slowdown in the first nine months of the current financial year. more favorable is the things for stock market. Industries like chemicals. while basic metals.Industrial growth rate: Stock market analysts mainly focus on the industrial sector. At the product group level. plastic and petroleum products and beverages and tobacco recorded lower but strong growth during April-December 2007. food products. rubber. . the moderation in growth has been selective. Higher the growth rate. machinery and equipments. suggests that there is a certain degree of moderation in the momentum of the industrial sector. wood products and miscellaneous manufacturing products witnessed acceleration in growth. when viewed against the back drop of the robust growth witnessed in the preceding four years. Agriculture and monsoons: Agriculture accounts for about a quarter of the Indian economy and has important linkages both direct and indirect with the industry. A gradual degradation of natural resources through overuse and inappropriate use of chemical fertilizers has affected the soil quality resulting in stagnation in the yield levels. jute textiles.

6 per cent during the Ninth Five Year Plan. Money supply: For policy purposes for 2007-08.50 - .5 per cent with inflation close to 5 per cent.5 per cent and credit expansion in the range of 20 to 24 per cent as consistent with envisaged growth and inflation. while the average saving rate was also 31. Savings and investment: A notable feature of the recent GDP growth has been a sharply rising trend in gross domestic investment and saving.4 per cent was higher than that for the Ninth Five Year Plan.4 per cent of GDP higher than the average ratio of 23. and targeted the monetary expansion in the range of 17-17. with the former rising by 13. the RBI assumed a real GDP growth of 8.1 per cent of GDP and the latter by 11. The average investment ratio for the Tenth Five Year Plan at 31. Interest rates: .3 per cent of GDP over five years till 2006-07.

rising to a surplus of over 2 per cent of GDP in . April 1997 11 April 1998 10 March 1999 8 March 2001 7 April 2003 6 Inflation: The Wholesale Price Index (WPI). lower the cost and more will be the profitability. sustainable external debt levels with elongated maturity profile and an increase in capital inflows. continues to be the most popular measure of headline inflation in India. resilience and stability ofthe country’s external sector is reflected by various indicators. Balance of payments: The strength. moderate levels of current account deficit. higher will be the cost and if lower. Below table shows that interest rates are decreasing year after year which is a good sign for the growth. Interest rates affect the cost of financing to the firms. flexibility in exchange rates.51 - . Higher the interest rates. changing composition of capital inflows. These include a steady accretion to reserves. Year Interest(bank) rates % p. which is available on a weekly basis. The current account has followed an inverted “U” shaped pattern during the period from 2001-02 to 2006-07.a.

1 billion in 2005-06 and US$ 36.Capital inflows. .1 per cent of GDP in 2006-07.2 per cent in 2005-06 and 1. with a current account deficit of 1. have been on a clear uptrend during the six years (2001- 02 to 2006-07) of this decade. They reached a high of 5.2003-04.1 per cent in 2005-06.1 per cent of GDP in 2006-07 after a somewhat modest growth rate of 3. With capital inflows exceeding financing requirements. As a proportion of GDP. Thereafter it has returned close to its post-1990s reform average.52 - . external debt was 17.The net result of these two trends has been a gradual rise in reserve increase to reach 4 percent of GDP in 2006- 07 (Figure 6.2 per cent and 17. foreign exchange reserve increase was of the order of US$ 15. as a proportion of GDP.2).9 per cent In 2005-06 and 2006-07 respectively.1).6 billion in 2006-07 (Table 6.

airports and telecommunications were the exclusive domain of the government. power. Policy has changed gradually over the past two decades under the pressure of rising gaps between demand and supply of infrastructure and deteriorating quality of assets. railways. . ports.Infrastructure: With the rapid growth of the economy in recent years the importance and the urgency of removing infrastructure constraints have increased. Traditionally.53 - . roads.

The upgrading of national highways connecting various parts of India has opened new avenues for the development of budget hotels in India. The 'Incredible India' destination campaign and the recently launched 'Atithi Devo Bhavah' (ADB) campaign have also helped in the growth of domestic and international tourism and consequently the hotel industry. Factors considered: • Growth of industry • Industry life cycle • Current situation analysis . The opening up of the aviation industry in India has exciting opportunities for hotel industry as it relies on airlines to transport 80% of international arrivals. Substantial investments in tourism infrastructure are essential for Indian hotel industry to achieve its potential. The government's decision to substantially upgrade 28 regional airports in smaller towns and privatization & expansion of Delhi and Mumbai airport will improve the business prospects of hotel industry in India. Hotel Industry is inextricably linked to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of Indian hotel industry. The thriving economy and increased business opportunities in India have acted as a boon for Indian hotel industry. INDUSTRY ANALYSIS Introduction Hotel Industry in India has witnessed tremendous boom in recent years. Taking advantage of this opportunity Tata group and another hotel chain called 'Homotel' have entered this business segment. The arrival of low cost airlines and the associated price wars have given domestic tourists a host of options.54 - .

Southeast Asia and Australia. This will affect the competitiveness of India as a cost-effective tourist destination.  According to a report. the foreign exchange earnings increased from Rs.429 crore to 21.000 rooms fueling hotel room rates across India.  The tourism traffic has been growing between 20-28 % every year for the last four years and this rate of growth is expected to continue for the next few years.000 rooms and there is a shortage of 150.55 - . hotel rates in India are likely to rise by 25% annually and occupancy by 80%. Africa. • Investment • Competition • Regulations • Budget impact • Budget measures • Swot analysis Growth of tourism industry The year 2004-05 saw tourism emerging as one of the major sectors for growth of Indian economy.3% in foreign tourist arrivals. Five-star hotels in metro cities allot same room. . With demand-supply disparity. According to estimates demand is going to exceed supply by at least 100% over the next 2 years. which has been the highest in last 10 years. a phenomenon never seen in desert climates. receiving almost 24-hour rates from both guests against 6-8 hours usage. India's tourism industry is thriving due to an increase in foreign tourists arrivals and greater than before travel by Indians to domestic and abroad destinations.828 crore up to December. 16. Similarly in the last year. Hotel Industry in India currently has supply of 110. Some tourists come from Middle East countries to witness the drenching monsoon rains in India. more than once a day to different guests. At the same time. Foreign exchange earnings grew at an even higher rate 30. the number of Indians traveling has also increased. tourism industry registered a growth rate of 17. The visitors are pouring in from all over the world: Europe. over the next two years.2%.

airlines.  Unmet demand for hotel rooms: 150 000 rooms. transport.  Increase in average room rent for the entire hotel industry over the last year: 35 %. tourism. Hotel Trident Hilton. and sparking new interest among overseas travelers. All service sector industries like hotel. hospitality are realising a higher growth rate. Reasons for this boom there could be several reasons for the buoyancy in the Indian tourism industry. shipping lines.57 % occupancy.  The constant boom and the resultant demand-supply mismatch has led to sharp increases in the average room rates and thus pushing up revenues of industry players (hotels. Indian hotels are witnessing mindblowing occupancy rates. The hotel industry is now in the rapid growth stage.3 % occupancy.56 - .  Most of the five-star hotels are seeing more than 80 % occupancy and some of the lesser-known five-star hotels are overbooked. prompting more people to spend money on vacations abroad or at home. tour operators. India is booming in the information technology industry and has become the IT center.  First.Gurgaon (suburban Delhi): 98. Aggressive advertising campaign “Incredible India" by the government has also had contribution in changing India's image from that of a land of snake charmers. etc)  The tourism sector is expected to perform very well in futureand the industry offers an interesting investment opportunity for long-term investors. Current situation of India’s hotels  Hotel Imperial New Delhi: 99.  Third.  Second. Additional demand this year: 15 000 rooms. . the upward trend observed in the growth rate of Indian economy has raised middle class incomes. Industry life cycle stage: Services sector is growing at a higher rate and is now contributing 55% to the country GDP.

including the Marriott group.joining the battle  The country has been flooded by some of the world's leading hotel brands.” says Unitech managing director Sanjay Chandra. Satinwoods. Thé Compétition The world's leading hotel brands . Several others are racing to increase their presence in India. Banana Tree. We are investing around 700 crore rupees to set up these hotels.  Currently Marriott has over 1.has announced that it is seed-funding a non-luxury hotel chain in India. which are expected to start operations by 2008.  Unitech. Berggruen Holdings India. ranging from Starwood and Mariott to Four Seasons and ShangriLa.Lemon Tree. Scandium By Hilt and Mandarin Oriental are planning to enter the Indian hospitality industry in joint ventures with domestic hotel majors.has already formed a joint venture with Marriott International to run its three new hotels in India. has entered India and is now devising aggressive plans for expansion in the market. which is setting up two hotels in Delhi. “The three new hotels will be located in Kolkata. Inversement  Now besides hotel companies.2 million. New brands such as Amanda.  Private equity firm Warburg Pincus has picked up around 27 % stake in Delhi- based mid-price hotel chain. The largest hotel company in the world.57 - . for $ 60. even the investment firms and private equity companies are beginning to get excited about India. Hampton Inns.  The boom has attracted several global players. a subsidiary of New York-based investment company Berggruen Holdings. .French chain Accor.000 rooms spread across four properties in Mumbai and Goa. Gurgaon and Noida.

Holiday Inn. there is a definite pressure on ARR and operating margins. allowing the government to provide critical funding for the large capital investment that may be required has also fuelled the demand for hotel rooms. The government's recent decision to treat convention centers as part of core infrastructure.  All other major including Marriott. Regulations: In recent years government has taken several steps to boost travel & tourism which have benefited hotel industry in India. Accor. Hyatt. . Radisson. Hyatt. New privately owned international airports are expected to be commissioned at Hyderabad (2008) and Bangalore (2009). and removal of a number of restrictions on outbound chartered flights. Meridien.  The result of the industry's success.  Established hotel chains : A number of global players are already well established in India. These include the abolishment of the inland air travel tax of 15%. InterContinental and Crowne Plaza. Mariott. which will give a large boost to the economic growth of these areas. The industry market will definitely shift from being demand-driven to supply-driven and that the hotel companies will need to revisit their strategies and. Shangri-La. Hilton. As competition increases. Sheraton. and work has commenced on modernisation. Challenges to face  The lack of adequate infrastructure development: The airports at the primary gateway cities of Delhi and Mumbai have been privatised. including those relating to frequency and size of aircraft.  There is still need to improve air connectivity : rail and road connections as well as general infrastructure like power and water. Four Seasons etc are briskly reinforcing their presence in India.58 - . These include Hilton. reduction in excise duty on aviation turbine fuel to 8%. of course. their prices.

exorbitant room tariffs took a toll on occupancy rates in five-star hotels. The funds allocated for the common wealth games would help bring in additional supply of rooms in the North India region. estimated 4. 2013. Though the demand supply mismatch continued to exist.4 m tourists visited the country. As a result of the high room rates in branded hotels. However. The hotel should be constructed and start functioning during the period April 1. the Indian hospitality sector aspires to become the forerunner of India's economic growth albeit with a fair amount of support required from the government. surcharge and dividend distribution tax kept unchanged Budget Impact The development of hotels in world heritage sites will help promote tourism in the country.  Some players are already preparing for the difficult times when the ARRs are expected to fall by 30-40 percent in the next 3-4 years and then the distinguishing factor for the hotels will be the offer in its entirety rather than just the price or the facilities that the hotels offer. With room rates ruling at around Rs 13. on account of the strong economic growth and rising propensity to spend.59 - .000- 17. During the year. Corporate income tax rates.6 bn to be allocated for the Commonwealth Games Five year holiday from income tax is granted to two. unregulated. Budget measures An amount of Rs 0. . Budget 2008-09 India continued to witness robust trends in the tourism sector in 2007.000 per night. 2008 to March 31. registering a growth of 14% YoY. three or four star hotels established in specified districts having UNESCO-declared 'World Heritage Sites'. occupancy levels in most metro markets except Mumbai witnessed a dip. unorganized hotels and guesthouse segments have reared their heads.

• The tax benefit given to the two-star. Further. three-star and four-star category (constructed and start functioning within the period 1st April 2007 to 31st March 2010 in the National Capital Territory of Delhi and districts of Faridabad. as it is one of the prime foreign exchange earners.60 - . Gurgaon. which was reduced to 10% in 2003. the tax stimulus of a 100% tax holiday benefit for ten years instead of five years should also be given as it involves huge investments and high risk in terms of uncertainty of revenues after the Commonwealth Games. • Hotels should be exempted from paying service tax on services received from Foreign Tour Operators. then it will go a long way in promoting India with well-connected tourist destinations Company Impact No major impact on the large five star hotel players Industry Wish list FICCI's wish list • The hotel industry to be treated at par with other infrastructure sectors such as roads.The measures taken on the infrastructure front will also help improve the prospects of the Indian hospitality sector. ports and telecommunications and be granted full tax benefits. refurbished and refurnished on a continuous basis and should be treated differently from other buildings. they had to be renovated. • The industry is also seeking rollback of the depreciation rate for hotel buildings to 20%. If these measures are implemented. Gautam Budh Nagar and Ghaziabad) should also be extended to newly constructed hotels of five-star category. It said that a hotel's building were the main plant and machinery for the hotel and because of the nature of the business. .

The room occupancy perishes on the expiry of the day. Strengths ¥ India's rich cultural heritage ¥ Second largest foreign exchange earner . home entertainment. Some hotels have to face modernization at huge costs often especially in cyber city like Bangalore where technology up-gradation is swift and the inflows of customers require multi dimensional facilities ranging from full-fledged business center to high grade video conferencing. competition from producers of other services and commodities and other trends like rising operating costs. • Also.61 - . The increased competition has lead to Up market self-catering. proper infrastructure development is needed. Hotels seeking a balance between achieving high occupancies and high average room rates may have higher long term profit. Budget 2006-07 and 2007-08 No major impact on the large five star hotel players Swot analysis Every business with the global prospects in the multi dimensional. The peculiar nature of the hotel business may compel the management to think short term about day-to-day problems or the next-meal periods. time sharing. It is estimated that approximately a lull of 2%-10% of the previous year business in all categories of hotels. high interest and too many hotel in many areas. Private sector participation needed to upgrade infrastructure in several identified tourist circuits. weaknesses. opportunities and threats. volatile atmosphere has to introspect its strategies taking into consideration the strengths. as the ROOM DAY is a PERISHABLE ITEM. The hotel industry also tags along the line and has to undertake smart and innovative moves to woo its clientele who expect best possible service at competitive rates.

¥ Demand far exceeds Supply ¥ Global economical turn-up ¥ Inclusion in EPCG* scheme ¥ New business opportunities Weaknesses ¥ Capital intensive ¥ Lack of adequate Man power ¥ Non-availability of land ¥ Regional imbalance of hotels ¥ Long gestation period ¥ Poor infrastructure and cleanliness ¥ Huge labor turnover ¥ Less corporate ownership Opportunities ¥ Boom in tourism ¥ Privatization of airlines ¥ Tie ups with international hotel chains ¥ Increase in disposable incomes ¥ Boost in tax concessions Threats ¥ Sensitive to disturbances in the country ¥ Competition from other Asian countries whose official currencies have fallen drastically ¥ High service & luxury taxes may render India as an unviable destination. ¥ Lack of trained entrepreneurs .62 - .

with top-end hotels experiencing high room occupancy rates even in the lean season.63 - . Trident Hilton. surge in domestic travel and growth in spending among middle-class Indians. The good times for the Indian hospitality industry are here to stay. . general manager. Our room occupancy rate has been around 89 per cent and we are looking at over 95 per cent occupancy for the period September to December.  There was an increase of 15 % in the number of international tourist arrivals in India and 14 % in the foreign exchange earnings in the first quarter of 2006 as compared to the same period last year.  “ The lean season has been exceptionally good for us.THE FUTURE GROWTH  Hospitality experts believe that the Indian hotel industry will witness higher than usual growth in the coming peak season. Gurgaon.” says Kapil Chopra.  The non-luxury segment in particular has been perking up with more and more investors spotting the demand supply imbalance.

A part of the Tata Group of companies www. and wildlife destinations. Africa and middle east. uk. Australia. spanning the length and breadth of the country. COMPANY ANALYSIS INDIAN HOTELS Introduction It began on December 16.com. 1903. It comprises hotels with 9400 rooms and 280 food and beverage outlets.64 - . the first licensed bar. This grand hotel epitomized a philosophy that still holds true today: provide impeccable service and unparalleled facilities so every stay is a memorable one. and gracing important industrial towns and cities. Over the years. . when Jamshetji Nusserwanji Tata opened Taj’s first hotel. personalized service. interiors. over the years.tata. historical and pilgrim centres. the company operates internationally in usa. the Taj Mahal Palace & Tower. the first air-conditioned ballroom to cool things down. beautiful beaches. Taj has won international acclaim for its quality hotels and its excellence in dining. mauritious. “Professors of Dance’ Mademoiselle Singy to raise temperatures and a few eyebrows with the Tango. and more. business facilities. the first cold storage. Taj is recognized as the premier hospitality provider. Company operates its hotels under “the taj hotels and resorts” umberella brand and is the largest hotel chain in south asia. malashiya. the Taj brought into Bombay. srilanka. In India. The company now owns or manages 82 hotels as against 75 in 2005-06. and world-class. Mumbai.

within six months of its launch. 1 Man Singh Road and then prepared India for the Asian Games by setting up Taj Palace. Bombay (Mumbai) – India’s first Luxury hotel 1971-72: Pioneered the concept of authentic Palace Hotels in the country with the Rambagh Palace in Jaipur. Maldives. branded as Taj Residency hotels 2000: Consolidated its position as the largest chain in India with hotels in Ahmedabad and Hyderabad. 1974: Conceptualized the unique beach resort at Fort Aguada. London. the Palace of the Maharajah of the esrtswhile state of Jaipore. was awarded the title of "The Best Resort in the World" in the first ever Harpers and Queen Travel Awards. Delhi with the largest convention centre in the country 1982: Taj established a presence in the Western Hemisphere with the historic St. James Court Hotel near Buckingham Palace. Taj expanded to Kerala and Sri Lanka 1992-97: Rolled out Business Hotels in key cities and towns across the country.Important Milestones: 1903: Created history with the opening of The Taj Mahal Palace Hotel. Goa built within the walls of a Portuguese fort overlooking the Arabian Sea 1978-82: Taj launched in Delhi with its luxury hotel . 1984-92: Well before these destinations became world renown for their beauty. the latter city being a joint venture with GVK Hotels resulting in a dominant position in the market for premium and luxury hotel rooms 2002: The new Taj Exotica Resort & Spa.Taj Mahal Hotel on No.65 - . .

66 - .Factors considered:  Management review  Earnings  Growth rate  Human resources  Capital structure  Infrastructure  Financial performance Management review: Factors considered: • Future expansion plans • Product upgradation • Risk factors • High operating leverage • Foreign exchange fluctuation risks • Human resources • Internal control systems and their adequacy • Risk mitigation initiatives Future expansion plans During the year company added 383 rooms to its portfolio by continuing its expansion in international destinations and within India. Divided into two parts: • Abroad • Domestic .

hyderabead. panjim. race course road. • Formed a joint venture with Tata South Africa in South Africa. goa and bekal. Mumbai. and Thimpu • Work on palm island. Bangalore • Continued projects in Nagpur.67 - . Dubai continues • During the year company has signed construction of 150 rooms for Taj Exotica golf resorts. coimbatore. Bangalore. • Allotted a site in Noida and planning to construct a 500 room premium business with hotel convention center • Company has a lease agreement to operate 350 room premium business hotel in yeshwantpur. resort and spa on the island. north Kerla • Management contract with gateway hotels has been signed in Raipur and Jallundur . Falaknuma Palace.Expansion plan in abroad: • Company has acquired erstwhile and ritz carlton in Ap2007 this is its I phase of of investment in US • Now company has made commitment to get into South Africa and it’s key market for hospitality ventures • Company is on verge of completion of management contracts signed in Malashiya. Trivandrum. Lankawi. Doha and completion of acquisition of kho Lon phuket for the construction of 80 villa Taj Exotica. Santa Cruz. Taj international South Africa Expansion plan in domestic destinations: • Company continued its project work in whitefeild.

• Dependence on high and luxury segment that contributes significant revenues of the company affected from international events and travel behavior and suffers from high operating leverage • Competition from international hotel chains and have announced expansion plans in south east Asia with high growth rates High operating leverage Company and industry both are enjoying high operating leverage Foreign exchange rate fluctuation risks: because most of it’s revenues is realized in US dollar ($) it’s prone to be hit.68 - . Risk mitigation initiatives: . • The Company also over saw and supported renovation in some of the key properties of Associate companies as part of its ongoing programme of investing in renovation and product upgradation. the Company has been renovating rooms and suites in several of its hotels which included Taj Mahal Palace and Tower. Risk factors: • Dependence on India. Mumbai. Fort Aguada Beach Resort. Delhi. Goa. Taj Palace. Jaipur.Product upgradation: • Continuing with its ongoing programme of investing in renovation and upgradation of its properties.it’s significant revenues come from Indian markets making it susceptible to domestic social and political conditions. Goa and Jai Mahal Palace. Taj Holiday Village.

10018 – during 2006-07 8553 – 2005-06 Financial performance analysis: . • To reduce geographical and economic risks by looking at increasing presence in gateway cities and resorts in South east Asia and Indian ocean rim • To reduce the dependence on high and luxury segment by entering mid market segment which is completely insulated from socio-political changes • To control operating and financial leverage by expansion through management contracts and leveraging the strengths of the associates • Company is currently pursuing foreign currency hedging to counter the effect of fluctuation in currency Internal control systems and their adequacy: Company has reviewed its internal control systems and its effectiveness through internal audit process. The focus of this review: • Compliance with various policies • Compliance with Tata code of conduct • Management of business and financial risks • Identifying weakness and areas of improvement Human resources: Employees are the important asset of the company.69 - .

88 Interpretation: .70 - .89 38.25 gross profit margin 30.52 0.72 9.98 16.54 0.47 2.43 2.09 43.60 dividend payout ratio 29.9 23.36 total asset turnover ratio 0.84 5.31 0.53 22.64 41.09 40.50 2. Industry ratio year Ratios 2007 2006 2005 current ratio 1.60 1.32 19.38 quick ratio 0.45 0.64 Net profit margin 19.94 10.71 Debt equity ratio 0.57 return on equity 17.38 20.98 0.624 P/E 26.31 0.46 15.324 inventory turnover ratio 33.63 29.742 operating profit ratio 36.76 189.82 29.696 price to book value ratio 4.54 capital turnover ratio 0.55 27.76 4.062 1.49 2.568 dividend yield 184.36 0.34 0.39 2.87 27.28 183.58 32.87 20.024 earning yield 2.07 11.49 1.54 0.68 3.93 7.936 1.

71 - . Leverage ratios: Company is in the comfortable zone. change in the sales over years is 27. Valuation ratios: P/E of company is slightly higher than industry average. Profitability ratios: These ratios are on par with industry average and have shown consistent improvement over the year. and 42% but the corresponding change in OP is 88. . 67 and 75% respectively. These ratios are even better than industry average that shows a good sign and company is consistently moving upwards. It is also evident in the turnover ratios which have shown consistent improvement in sales thereby getting the benefit of OPL ie non proportionately high improvement in OP. NPM and GPM are lower than industry average but still company is enjoying higher P/E and price to BV ratios. 27.41. So that it can still use more Financial Leverage in future. Even the DY and EY for scrip is also lower than industry average. Company is consistently improving its OPL that is evident in the COGS over the years.But still CR and QR for the company are little higher than industry average.91.Liquidity ratios: The company’s current ratio is coming down year by year now it is almost matching with industry average of just more than 1. perhaps it is because of the company brand and almost derisked business operations. Turnover ratios: All turnover ratios are improving year by year. Summary: So I can conclude company’s scrip is over valued. Coming to price to BV ratio company higher ratio than industry average but proportionately it is not having any higher earnings and profit as compared to industry average so in this respect scrip seems to have over been valuated.

Adjustment factor for price to BV ratio: Though the company’s earnings and business risks are almost comparable to its competitors.72 - .568.Note: Adjustment factor for P/E: After considering all financial ratios and data I would like to adjust P/E multiple to 22 which is at present 26.54. So we think bit conservative and try to discount the factor by readjusting its price to BV ratio to industry average ie 4. the company is enjoying higher price to BV ratio. Adjusted factor for DYR: Company’s DYR is very low so it is adjusted to industry average ie 1. .

58 38.90 264.51 23.22 35.90 486.67 -10.50 32.22 35.83 763.72 no of shares 58.797 47.82 19.44 65.48 1.6 1.87 31.1 -0.79 8.Period & months 2007/03 2006/03 2005/03 2004/03 2003/03 2007-08 2008-09 2009-10 CAGR INCOME Net Operating Income 1.34 18.95 152.82 53.89 0.51 Eps 5.22 -0.9 2302.57 Reported PBDIT 568.41 163.81 92.41 1.9 76.28 200.81 73.009.70 415.81 12.52 6.50 313.05 1.082.20 177.01 -20.98 108.95 36.22 Manufacturing Expenses 315.08 30.9 15.10 234.21 1.42 609.9 Other Recurring Income 68.6 48.91 26.97 -1.80 320.21 115.44 87.60 152.06 823.6 1.07 130.23 569.17 56.25 88.92 249.98 43.39 183.59 76.23 420.89 56.85 1.16 Selling Expenses 64.67 -1.64 4.67 4.14 .29 148.398.19 240.77 56.35 408.55 12.53 1.321.5 1.489.5 1.44 128.06 110.27 191.44 84.963 1.99 656.8 Financial Expenses 102.52 147.6 Tax Charges 152.084.28 -8.39 668.26 154.123.544.39 1.68 12.94 477.16 Personal Expenses 278.15 377.87 1.66 5.23 1.71 109.64 21.21 70.45 396.03 181.03 178.4 1.95 364.78 105.77 48.293.71 476.76 Non-recurring Items 31.20 Administrative Expenses 320.13 456.33 25.04 Adjusted PBDIT 636.78 954.51 1.14 58.29 563.51 4.72 130.04 360.65 176.27 250.95 324.63 724.66 123.46 40.423 41.86 57.15 REPORTED PAT 322.41 22.83 455.61 833.40 762.1 1.7 222.34 101.21 133.19 Adjusted PBIT 545.22 1.52 92.64 Adjusted PAT 290.83 42.75 7.35 1.14 429.245.73 - .94 379.74 7.54 53.63 665.14 279.3 Depreciation 91.72 240.13 Adjusted PBT 442.27 1885.27 40.00 404.01 438.73 Cost of Sales 975.50 359.098.2 847.49 1.12 Capitalized Expenses -2.9 56.6 2811.

65 2.397.5 Number of Equity shares outstanding 58.9 2.95 50.657.8 844.67 46.54.39 183. the company is enjoying higher price to BV ratio.23 40.25 36.3 1.51 4.60 150.17 2022.41 45.5 2.995.08 09 2009-10 R Dividend 96.83 65.74 37.026.EPS forecast: Book value 2008.25 REPORTED PAT 322.94 477.68 1.32 196.74 - .83 65.64 4.78 105.05 2003-04 2002-03 2007.7 Equity Share Capital 58.46 77.3 1183.738. CAG Calculation 2006-07 2005-06 2004. So we think bit conservative and try to discount the factor by readjusting its price to BV ratio to near industry average i.67 56.17 68.081.38 243.8 1.58 120.45 396. .66 5.77 188.17 56.568.99 907.5 1.86 57.15 197.397.12 61.79 842.51 61.026.1 2.e.67 4.49 302.17 68.09 31. Adjustment factor for price to BV ratio: Though the company’s earnings and business risks are almost comparable to its competitors.02 book value 34.68 Net worth 2022.12 45.25 Note: Adjustment factor for P/E: After considering all financial ratios and data I would like to adjust P/E multiple to 22 which is at present 26.05 42. 4 Adjusted factor for DYR: Company’s DYR is very low so it is adjusted to industry average ie 1.05 Reserves & Surplus 1.1 2.82 910.9 1820.13 456.

64 .568 BV for 2007=30.6(FV=Rs 1) DPS CAGR = 20.35 179 yield(DYR) Data: Adjusted P/E multiple = 22 Adjusted Price to BV ratio = 4 Adjusted DYR = 1.8 175.95 anchor method) Price to BV BV * 148.02 148.38 178.41 %( CAGR) DPS 2007 = Rs1.2 169 price to BV ratio Dividend DPS/DYR 123.59 Fair value of stock: Weight age assigned to different basis for calculating MPS of stock: • For P/E basis: 1.39 163.5 171.92 160.63 BV growth rate = 27.75 - .Projection of MPS Basis Formula MPS 2008 2009 2010 P/E(value EPS * P/E 148.5 • For price to BV basis: 1 • For DYR:0.5 Particular Formula 2008 2009 2010 Fair Value (1.5*P/E MPS + 144.

76 - . whilst the latter . 1* P to BV MPS +0. The former approach considers the cause of market behavior.5*DYRMPS) TECHNICAL ANALYSIS: Technical analysis is the examination of past price movements to forecast future price movements. Stock market prediction analyses can generally be classified as either Fundamental or technical. Technical analysts are sometimes referred to as chartists because they rely almost exclusively on charts for their analysis.

. Pring (2002). and psychological forces. Prices move in trends. two technical indicators have been used to analyse the patterns on the chart. The art of technical analysis.77 - . time of year. it could easily be extended to cater for fundamental data types. for it is an art. It should be noted. monetary. Company prospects and so forth. however. 3. Market action discounts everything. volume. • Another popular way is to smooth the price data with the help of moving averages.studies the effect. Trend lines do help as we have already seen. Thus. However. political. and open interest. whilst fundamental analysis includes data related to the market situation. a leading technical Analyst provides a more specific definition: “The technical approach to investment is essentially a reflection of the idea that prices move in trends that are determined by the changing Attitudes of investors toward a variety of economic. technical analysis is based only on quantifiable market data. They are explained in detail as below: Moving Average: • Zigzag movement of prices often makes it difficult to judge the underlying trend. They are moving averages both simple and exponential moving averages and relative strength index. History repeats itself. is Testing of Technical Analysis Tools”. 2. Technical stock analysis is based on three basic principles namely: 1. Technical analysis is a forecasting method of price movements using past Prices. The technique developed in this paper has focused solely on technical analysis. Technical analysis has attracted a large following amongst trading practitioners but has been criticized in the past by theoreticians. that more recent studies in the literature have given some support to the technical approach.

something that is especially helpful in volatile markets. • Technical analysts use three different types of moving averages - simple moving average. They smooth a data series and make it easier to spot trends. most moving averages are created using the closing price. 10+ 11 + 12 + 13 + 14 = 60 (60 / 5) = 12 . The two most popular types of moving averages are the Simple Moving Average (SMA) and the Exponential Moving Average (EMA).78 - . They also form the building blocks for many other technical indicators and overlays. Moving averages are one of the most popular and easy to use tools available to the technical analyst. For example: a 5-day simple moving average is calculated by adding the closing prices for the last 5 days and dividing the total by 5. the High. exponential moving average and weighted moving average. While it is possible to create moving averages from the Open. and the Low data points. • We will discuss only the simple moving average because it is the easiest to compute and interpret. • The moving average system of trading is also known as the trend following system because the trader waits for the trend to be established before initiating a trade. They are described below: Simple Moving Average (SMA) A simple moving average is formed by computing the average (mean) price of a security over a specified number of periods.

the old days will be subtracted and the moving average will continue to move over time.79 - . . The averages are then joined to form a smooth curving line . would be dropped. then this new period would be added and the oldest day. In the example above. The averaging process then moves on to the next day where the 10-day SMA for day 12 is calculated by adding the prices of day 3 through day 12 and dividing by 10. As the calculation continues. As new days are added. Continuing our example. using closing prices from Eastman Kodak (EK). which is 10. The new 5-day simple moving average would be calculated as follows: 11 + 12 + 13 + 14 +15 = 65 (65 / 5) = 13 Over the last 2 days.The calculation is repeated for each price bar on the chart. the newest day is added and the oldest day is subtracted. day 10 is the first day possible to calculate a 10-day simple moving average. if the next closing price in the average is 15.the moving average line. the SMA moved from 12 to 13. The 10-day SMA for day 11 is calculated by adding the prices of day 2 through day 11 and dividing by 10.

A percent-based EMA has a percentage as it's single parameter while a period-based EMA has a parameter that represents the duration of the EMA. it will react quicker to recent price changes than a simple moving average. The weighting applied to the most recent price depends on the specified period of the moving average. . the calculating and EMA is much harder than calculating an SMA. The important thing to remember is that the exponential moving average puts more weight on recent prices.1818 (18.18%) This means that a 10-period EMA is equivalent to an 18. For example: a 10-period exponential moving average weighs the most recent price 18. Here's the calculation formula. Exponential Moving Average (EMA) In order to reduce the lag in simple moving averages. For a period-based EMA.as a percent-based EMA or as a period-based EMA. The simple moving average begins on day 10 and continues. As we'll see. technicians often use exponential moving averages (also called exponentially weighted moving averages).80 - .EMA(prev) ) x Multiplier) + EMA(prev) For a percentage-based EMA. The formula for an exponential moving average is: EMA(current) = ( (Price(current) . For example.The chart above is a plot that contains the data sequence in the table.18% EMA. As such.52%. the more weight that will be applied to the most recent price. Exponential Moving Average Calculation Exponential Moving Averages can be specified in two ways . a 10-period EMA's Multiplier is calculated like this: (2 / (Time periods + 1) ) = (2 / (10 + 1) ) = 0. EMA's reduce the lag by applying more weight to recent prices relative to older prices. The shorter the EMA's period.18% while a 20-period EMA weighs the most recent price 9. "Multiplier" is equal to 2 / (1 + N) where N is the specified number of periods. "Multiplier" is equal to the EMA's specified percentage.

289 x . This is true regardless of the EMA's . the simple moving average was used as the previous period's exponential moving average (yellow highlight for the 10th period). For the first period's exponential moving average. the previous period's EMA was used.439 = 59.023 *The 10-period simple moving average is used for the first calculation only.4162 ( (C .439) = -2.com only support period-based EMA's. The calculation in period 11 breaks down as follows: (C . it never fully disappears. Note that.4162 + 59.81 - . From period 11 onward. While the impact of older data points diminishes over time.P) x K) + P = -0.181818 = -0. every previous closing price in the data set is used in the calculation of each EMA that makes up the EMA line.P) x K = -2.289 (C .59. in theory.P) = (57. After that the previous period's EMA is used. Below is a table with the results of an exponential moving average calculation for Eastman Kodak.15 .Note: StockCharts.

Some traders prefer to use exponential moving averages for shorter time periods to capture changes quicker. Some investors prefer simple moving averages over long time periods to identify long-term trend changes.82 - . but the exponential moving average may be prone to quicker breaks. Each investor or trader should experiment with different moving average lengths and types to examine the trade-off between sensitivity and signal reliability. but they also may come late. again. there will also be an increase in the number of false signals and whipsaws. Uses: There are many uses for moving averages. will also be likely to generate more signals. Shorter moving averages will be more sensitive and generate more signals.specified period. which is generally more sensitive than the SMA. The EMA. In addition. Longer moving averages will move slower and generate fewer signals. the same dilemma applies. Trend identification/confirmation 2. Moving average type and length of time will depend greatly on the individual security and how it has reacted in the past. These signals will likely prove more reliable. but three basic uses stand out: 1. Which is better: Which moving average you use will depend on your trading and investing style and preferences. they never completely disappear. The effects of older data diminish rapidly for shorter EMA's. than for longer ones but. A 50-day SMA might work great for identifying support levels in the NASDAQ. Support and Resistance level identification/confirmation . but a 100-day EMA may work better for the Dow Transports. The simple moving average obviously has a lag. However. much will depend on the individual security in question. For moving averages.

If the moving average is rising. If the price is below the moving average. the trend is considered down. In either case. If the shorter moving average is above the longer moving average. If the moving average is declining. location and crossovers. The direction of a moving average can be determined simply by looking at a plot of the moving average or by applying an indicator to the moving average. the trend is considered up. the trend is considered up. 2. the trend is considered down. The first trend identification technique uses the direction of the moving average to determine the trend. As . the trend is considered down.83 - . Trading Systems 1. If the price is above the moving average. but rather look at general directional movement and changes. Support and Resistance Levels Another use of moving averages is to identify support and resistance levels. we would not want to act on every subtle change. This is usually accomplished with one moving average and is based on historical precedent. The second technique for trend identification is price location. the trend is considered up. The location of the price relative to the moving average can be used to determine the basic trend. If the shorter moving average is below the longer moving average. Trend Identification/Confirmation There are three ways to identify the direction of the trend with moving averages: direction. The third technique for trend identification is based on the location of the shorter moving average relative to the longer moving average. 3.

. If the moving average is still rising. • In an uptrend. players who missed the earlier move usually enter leading to resumption of the underlying trend. Interpretation • A moving average smoothens the underlying price data and represents the trend for the period used to calculate the average. If the price were now to move below the moving average while the moving average is still rising. intersection of the price with the moving average signals at least a pause in the trend by way of a correction and possibly a trend reversal. • However. However.with trend identification. caution is indicated if the moving average has begun to move sideways.84 - . A trend reversal is now more likely and is signalled when the price again crosses below the moving average. it acts as a curved trendline providing support in an uptrend and resistance in a downtrend. support and resistance level identification through moving averages works best in trending markets. both the price and the moving average are rising and price is above the moving average. This happens after a sharp upmove or a downmove when profit-taking sets in a countertrend move in the opposite direction. • Penetration of a very short term average such as the 5-day average occurs often in long lasting trends and often signals temporary pauses in the trend by way of correction or consolidation. when prices retrace 50 to 60% of the previous move. it would probably signal just a correction. • After a while renewed buying usually pushes the price again over the moving average. • More importantly. such a crossover of the price over the moving average indicates resumption of the uptrend. • Since the moving average reflects the trend.

penetration of say 20-day average accompanied by a change in the direction of the moving average itself. Wilder recommends using 14 periods. New Concepts in Technical Trading Systems. • On the other hand.85 - . It takes a single parameter. . the Relative Strength Index (RSI) is an extremely useful and popular momentum oscillator. would usually confirm trend reversal or prolonged and deep correction.-------- 1 + RS RS = Average Gain / Average Loss Average Gain = [(previous Average Gain) x 13 + current Gain] / 14 First Average Gain = Total of Gains during past 14 periods / 14 Average Loss = [(previous Average Loss) x 13 + current Loss] / 14 First Average Loss = Total of Losses during past 14 periods / 14 Note: "Losses" are reported as positive values. In his book. Welles Wilder and introduced in his 1978 book. Calculation 100 RSI = 100 . the number of time periods to use in the calculation. Relative Strength Index (RSI): Developed by J. The RSI compares the magnitude of a stock's recent gains to the magnitude of its recent losses and turns that information into a number that ranges from 0 to 100.

To simplify our explanation of the formula. Conversely. the 9-day and 25-day Relative Strength Indexes have also gained popularity. the Average Gain. The Relative Strength Index is a price-following oscillator that ranges between 0 and 100. Note: If the Average Loss ever becomes zero. the more volatile the indicator. This divergence is an indication of an impending reversal. The last part of the formula ensures that the indicator oscillates between 0 and 100. RSI becomes 100 by definition. multiplying it by 13. the more accurate the results. When the Average Gain is greater than the Average Loss. When the Relative Strength Index then turns down and falls below its most . The next values for the "averages" are calculated by taking the previous value. Important Note: The more data points that are used to calculate the RSI. but the Relative Strength Index is failing to surpass its previous high. the RSI has been broken down into its basic components which are the RS.(100 / RS + 1). Finally. Interpretation: When Wilder introduced the Relative Strength Index. To start the running calculation. the RSI declines because RS will be less than 1. the First Average Loss is calculated as the total magnitude of all losses during the past 14 periods divided by 14. the RSI is simply the RS converted into an oscillator that goes between zero and 100 using this formula: 100 . the RSI rises because RS will be greater than 1. adding in the next Gain (or Loss). the First Average Gain is calculated as the total of all gains during the past 14 periods divided by 14. Since then.86 - . Similarly. he recommended using a 14-day Relative Strength Index. and then dividing by 14. and the Average Loss. This is Wilder's modified "smoothing" technique in action. A popular method of analyzing the Relative Strength Index is to look for a divergence in which the security is making a new high. The fewer days used to calculate the Relative Strength Index. when the Average Loss is greater than the Average Gain. The RS value is simply the Average Gain divided by the Average Loss for each period.

In Mr. Failure Swings (also known as support or resistance penetrations or breakouts). 3. Support and Resistance. Prices usually correct and move in the direction of the Relative Strength Index. 4. 2. Chart Formations.recent trough. The Relative Strength Index often forms chart patterns such as head and shoulders or triangles that may or may not be visible on the price chart. The Relative Strength Index shows. 5. The Relative Strength Index usually tops above 70 and bottoms below 30. sometimes more clearly than price themselves. This is where the Relative Strength Index surpasses a previous high (peak) or falls below a recent low (trough). It usually forms these tops and bottoms before the underlying price chart. As discussed above. Tops and Bottoms. Wilder's book.87 - . it is said to have completed a "failure swing. Technical analysis consists of: • Market analysis • Company analysis ." The failure swing is considered a confirmation of the impending reversal. Divergences. he discusses five uses of the Relative Strength Index: 1. levels of support and resistance. divergences occur when the price makes a new high (or low) that is not confirmed by a new high (or low) in the Relative Strength Index.

1% of GDP and latter by 11. On the other side of the growth ie demand. So there is slight increase in the gap. So we are not dependent on foreign demand.88 - . Balance of payment: At present the biggest trade partner is US with whom India is having some $11bn surplus trade which might be at stake (US recession) and marginally affect foreign trade that to in service sector. Because. so swings of market make it so unstable beyond compare. Market analysis: Nifty is considered as market index.4% and average savings rate was also at the same level 28. India has domestic demand which forms major portion of total demand.32%. . Average investment ratio for 10th five year plan is at 31. This fact clearly shows that Indian investments are not dependent on foreign countries. We can say that gap between investment and saving is very which is usually being satisfied by FDI flow. Both short as well as long term analysis has been done using moving averages (simple and exponential MA) and relative strength index (RSI).3% of the GDP over five years till 2006-07. it has got little importance in present scenario. market is sentiment driven then the actual fact driven. Analysis: fundamentals of market Evaluating the fundamentals of market ie Nifty though gives us right estimation about the performance of market and also helps us in forecasting future growth of market. One more thing we need to critically look at is rupee appreciation v/s dollar which has been so furious and India needs to adjust to the pace at which it is being appreciated. In notable future of GDP growth rate that there has been sharply rising trend in GDP investment and savings with former rising by 13.

After critically examining these factors. hangsang which are shaken because of world economy slow down (US recession). market is in total chaos. we come to conclusion that Indian economy is not so much affected by above discussed factors and long term story of it going to be intact. If we look at the market from other side ie technical side. I expect the same level of growth in stock market for coming years. According to Indian planning commission expected the GDP growth rate for next plan is between 8%-9%.20 percent. (Across the board cut in excise duty) After looking at all these major factors of economy. Nikkei.89 - . In the same light the honorable FM proposed budget which has an element of inflationary containment. shanghai. .Inflation: Major concern for India than anything else is alarming inflation which is primarily driven by the capital goods price and other food items. At present stock market growth rate (CAGR) is pegged at 18. we also need to to look at many other stock markets across the world like dow jones. So keeping inflation below 5-7 percent is the immediate as well as long term prime objectives of governing bodies here.

Technical analysis of market .90 - .

At that level market was waiting for correction. So this is one more conclusive evidence for reversal of trend from Bull to Bear. The 18day EMA & SMA of Nifty has broken down below 90 day EMA. There has been shift in market trend and it has turned bearish though there is no clear sign of bear trend (it’s a long term correction not exactly bearish) but present situation is of complete chaos has left market in a state of volatility so we should wait and see market movement closely. (Target) Long term analysis Market is sentiment driven and swings and hypes in market are so strong that they prevail even for years that have happened at present. Market’s long term support is at 3118-3130 and next support is at 4500 level so next rally from that level 4500 is 1380-1400(4500-3110) and we can see some 150-200 points abortive rally has been occurred and has reached 6050.e. for the past one and half year the trend has been Bullish. At this level market is likely to consolidate for the medium time period. Immediate Future: As we can see from the graph it is clear that market is finding support at 4450 to 4600(which is previous resistance for the market). Significance of Future Trend: In future unless and until market finds required strengths to come to the previous level i.Analysis: (Short term or intermediate) Market Trend: If we look at 90 day EMA of Nifty chart. From 20th Jan 2008 onwards there has been shift in the trend towards Bearish. Bad clues from US slow down had made market to take LT correction and market has turned to be volatile and has yet to settle down at previous support of 4500. resistance at 5630 – 50. there will be no signs of market turning Bullish. 5630-50 then it will rally up to 6980-7020. . And if in future market breaks the resistance level i.91 - .e.

92 - ..

.Company technical analysis: Stock taken is Indian hotels which operates the brand name “Taj hotel resorts and palaces”.93 - . Now terning in to bearish. Both short and long term analysis has been done using moving averages (simple and exponential MA) and relative strength index (RSI). Short term analysis: 1) Trend short term or intermediate trend for the scrip has been flat.

As we can see from the 10 day EMA &SMA graph the scrip has established strong support at 130-140 price band. the stock is purely a trading stock. In the month Feb 2008 the scrip has broken the key support (130-140) and turned out to be bearish Future. investors should still wait till it clearly breaches above that level but with expanding volume. 2) Key short term support and resistance levels for the scrip. Long term analysis: .94 - . Here the identifying future target price (for the short term) is very difficult as scrip was undergoing phase of consolidation and has no established resistance level. And it seems that the scrip has made abortive attempt to breach the flat trend and start rally. If the stock is at support and selling pressure is high i. If in case scrip regains the strength to come back to the level of 130-140. but in vain and the obvious reason for this failure is market crash. RSI value 30 and below. Trading tactics for short term investors: As it can be clearly seen from the graph. at RSI value 70 & above. as the scrip has already broken the key support. the scrip has undergone major consolidation (sideway movement) phase. So to trade in the scrip one should look for key support and also look for cue from RSI.e. it should be bought and sold at high buying pressure i.e. the short term traders should sell it and the fresh buy signal for the stock is known only when scrip establishes support. Price movement.

95 - . the intermediate trend has been flat because for year scrip has shown a sign of consolidation. .Trend Though the long term trend seems to be bullish and intact.

It’s a LT support for stock and also confirms end of Bull Run for the scrip. If market turns back to old levels then scrip will get the strength to regain its previous momentum at resistance level of 145-155 and even break away that level of resistance with expanding volume then rally is set to be resumed and is expected to rally till 225(target) or else if it doesn’t get support from market it fails to take support at 110-115 then straight away goes down to settle at the rock bottom ie 65 level. Note on how to use RSI value and Volume. when RSI value is in oversold region i.Now the scrip is slightly on down trend and settling down to the intermediate support of 110-115.96 - . Buying and selling is suggested to be followed at support level in combination with right RSI values. But if possible investors should also have a close eye on expanding volume which is a conclusive evidence for aggressive bull or bear run. FINDINGS For stock: .e. Future: Movement of scrip is mainly dependent on the market (Nifty) performance. Long term support & resistance Long term resistance is at 145-155 and support at 65. And when RSI value is in the overbought region (70-100) traders should try to make selling decision with respect to applicable resistance. 30 or lower than 30 traders should rty to combine it with support at that level and make buying decisions.

next long term support lies at3100-3150 • Resistance for Nifty is at present is at 6000 • Short term and intermediate trend has been bearish and long term trend is still bullish • Long term nifty target is a 6980. the projected MPS using fundamental approach for the stock for next three years are 144. • Short term support for scrip: 130-140. • First. Recommendations .97 - . For market: • Short term support or intermediate support: 4500-4600.7020. Next support has been established at 110- 115 • Long term resistance for scrip: 160-165 • Long term support is at 65 level.163 and 176 rupees. • Now the scrip is slightly on the down trend(short term) and settling down to the intermediate support of 110-115 • Long term target by technical analysis is 225 but this is unlikely to happen in the medium term because short term trend has been bearish and long term trend has been flat and undergoing long consolidation.

Conclusion • Technical analysis can be used as a reliable tool for investing in to stocks. so investors are advised to concentrate more on technicals then being worried about fundamentals which is very difficult some times. . • the long term investors should buy the scrip at key support levels at which the price is lower or almost equal to the fair value found out by fundamental approach. But the same does not apply to long term investors unless the break out is from key support/resistance levels. • Short term traders should buy or sell whenever there is break outs from the various levels of resistance and support with expansion in volume. • Market is very much sentiment driven. • Short term investors (traders) need not be worried about the fundamentals of the company but should have a close eye on various supports and resistances of scrip and market to buy/ sell and book the profit.98 - . • So investors are advised to try to discount every happening or news which affects market and stock before they see its effect on the market or stock so that they get more benefit out of it.

About market • It’s equally important to analysis market conditions before digging into individual stock. And these sentiments very market moments to a greater extent Bibliography Websites 1. • Technical analysis is more useful in identifying the identification of buying points and selling points. nseindia.com . • In the context of market the sentiments (technical’s) are more important to decide market conditions(level of index) than the actual fundamentals.99 - . • Combination of both approaches will give a investor right guidance in taking decisions regarding buying and selling points.

Reference Books o Investment Analysis and Portfolio Management. stockchart. equitymaster.com 4. bseindia. (2nd edition) Prasanna Chandra o Financial management. Khan and jain .com 9.com 5.100 - . moneycontrol.com 6. icicidirect. reliancecommunication.com 7.com 8.com 3. 2. bharatiairtel.