Professional Documents
Culture Documents
A
Project
Report On
Innovation Idea for Product & Services
TOPIC:- STOCK MARKET
EXECUTIVE SUMMARY 6
1. Introduction
I would also like to thank my project external guide and all the people who
provided me with the facilities being required and conductive conditions for my
MBA project.
Thank you,
This project is an attempt to understand the basics of stock market. A project, which
will make me well, versed with the market happenings ups & downs in the stock market.
The first chapter gives a brief description about the company where I did my internship
from, which is 5paisa.com, which is a trading arm of Indiainfoline Securities Pvt Ltd. The
following chapter explains about the formation & company composition of Indiainfoline
Securities Pvt Ltd. The chapter also gives a detailed report of my summer internship done
at the company. It gives the jobs assigned to me at work, followed by the methods, which I
undertook in going about my internship.
The following chapter two will give the details & explain in brief the basics of capital
market. It will show in details the way stocks are traded, cleared & settled in the market
using different techniques. Further the chapter covers the trading in India the importance
of stock market to the economy.
The next chapter gives the detail as to how I went about completing my project. The
steps taken to understand my topic & researching the oil sector companies have been
given in the chapter Body Methodology.
The chapter four is data presentation, analysis & interpretation on Fundamental
Analysis helps us to understand the importance of the analysis. It shows us the steps
taken to complete the analysis & the findings to be analyzed in the analysis.
The chapter summarizes the reason why I have selected the oil sector for analysis.
The huge investments & growth opportunities in the oil sector makes it an important
sector & all the more reason why we should keep an eye on the progress of it.
The sub chapter on Economy of the Country helps us to know the current
scenario of our country in terms of economy which taken into a/c GDP levels along with
future predictions, current inflation rate, Currency of the country, service industry of the
India & FDIs in India.
The next sub chapter explains the oil industry as a whole. From the huge oil market
in gulf, to the current scenario of oil sector in India, the chapter will give a details insight
into the ever in demand sector. The industry is further analyzed by porter’s five-force
.
The following project is a study of the Indian Stock Market & an investment
opportunity in the oil sector in India.
The capital market (securities markets) is the market for securities, where
companies and the government can raise long-term funds. The capital market includes
the stock market and the bond market. A stock market is a market for the trading of
company stock and derivatives.
To analyze the financial market & the share movements in order to study the prospects of
investing in a particular stock or sector.
The aim of the project is to understand the overall equity market, to get to know the
trading, clearing & settlement aspect of the equity market. As far as this project is
concerned, it will help me to understand the overall working of the equity market & its
importance to the economy of the India. A huge amount of money flows & millions of
shares exchange hands in a single market day. This exchange of shares enables the flow
of money in & out of a firm. The company whose shares are listed & the government who
plays a pivotal role through the policies formed in the market, helps them to raise long
term funds which can be used for the benefit & the growth of the companies & also give
back some part of their profit to the investor in the form of dividends.
Also through this project what I am trying to derive is the analysis of oil sector
concluding with the opportunities of investing in the sector. The reason why I have
selected oil sector is because of the Oil sector is the base for the growth of other
sectors and with that the growth of the economy in general and also there is huge
investment opportunities in the sector & also to understand this sector for my future
growth as a equity advisor for the secto
India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which
is engaged in the businesses of equities broking and portfolio management services. It
holds memberships of both the leading stock exchanges of India viz. the stock exchange,
Mumbai (BSE) and the national stock exchange (NSE).
India Info line Ltd is listed on both the leading stock exchanges in India, viz. the
Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). The India
Infoline group, comprising the holding company, India Info line Ltd and its subsidiaries,
straddles the entire financial services space with offerings ranging from Equity research,
Equities and derivatives trading, Commodities trading, Portfolio Management Services,
Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings
instruments to loan products and Investment banking. India Infoline also owns and
manages the websites, www.indiainfoline.com and www.5paisa.com .
India Infoline Ltd, being a listed entity, is regulated by SEBI (Securities and
Exchange Board of India). It undertakes equities research which is acknowledged by
none other than Forbes as 'Best of theWeb' and '…a must read for investors in Asia'.
It also undertakes research, customized and off-the-shelf. Launched on 11 May
1999, www.indiainfoline.com is India’s leading and most comprehensive business and
financial information website. The site provides quality information and analysis - earlier
restricted to a few people - to the common man, absolutely free! The site has met with an
overwhelming response and has been reviewed as the most comprehensive financial
content website in India by BBC World. The company also won the Golden Mouse Award
in India Internet World 2000 for the "Best Finance" site. In May 2001, the website was
included in the Top 200 Best of the Web list by Forbes Global under the Asia Investing
category. This is the only website from India to be featured in this category. Since then it
has been nominated twice to this list. In its last review, Forbes editors have said,
"www.indiainfoline.com is a must read for the investors in South Asia..."
India Infoline is a growing organization, which is an ideal place for individuals with
high ambitions. The working atmosphere is highly charged with a young and energetic
Mr. R Venkataram
R Venkataram is the co-promoter and Executive Director of India Infoline Ltd. He
holds a B. Tech degree in Electronics and Electrical Communications Engineering from IIT
Kharagpur and an MBA degree from IIM Bangalore. He has varied experience of
more than 14 years in the financial services sector.
India Info line Ltd (IIL) started in 1995 with providing Online Media and Content
services. Mr. Nirmal Jain and Mr. Venkataram, the founder members of the company
sensed the growing opportunities in the market and increased the horizon for IIL from
time to time. IIL with an aim to become 'One stop for all financial needs' started with equity
and commodity broking, distribution of financial products and now with investment banking.
IIL has a huge branch network across 95 cities, which it leverages for customer
acquisitions, relationship building, retail advisory and distribution services.
Equities
Indiainfoline provided the prospect of researched investing to its clients, which was
2006170700103 SUMIT KUMAR
preference (residence or office) through computerized access. Indiainfoline made it
possible for clients to view transaction costs and ledger updates in real time.
PMS
Portfolio Management Service is a product wherein an equity investment portfolio
is created to
suit the investment objectives of a client. Indiainfoline invest the resources of the
investors into stocks from different sectors, depending on one’s risk-return profile. This
service is particularly advisable for investors who cannot afford to give time or don't have
that expertise for day-to-day management of their equity portfolio.
Research
Sound investment decisions depend upon reliable fundamental data and stock
selection techniques. Indiainfoline Equity Research is proud of its reputation for, and wants
to find the facts that the investors need. Equity investment professionals routinely use the
research and models as integral tools in their investments strategy.
Commodities
Indiainfoline extension into commodities trading reconciles its strategic intent to
emerge as a one- stop solutions financial intermediary. Its experience in securities broking
has empowered it with requisite skills and technologies. The Company was among the first
to offer the facility of commodities trading in India’s young commodities market.
Mortgages
Indiainfoline acquired a 75% stake in Money tree Consultancy Services to mark its
foray into the business of mortgages and other loan products distribution. The business
is still in the investing phase and at the time of the acquisition was present only in the
cities of Mumbai and Pune. Indiainfoline now has plans to roll the business out across its
pan-Indian network to provide it with a truly national scale in operations.
Insurance
An entry into this segment helped complete the client’s product basket;
concurrently, it graduated the Company into a one-stop retail financial solutions
provider. To ensure maximum reach to customers across India, IIL have employed a
Newsletters
The Daily Market Strategy is a morning dose on the health of the markets. Five
intra-day ideas, unless the markets are really choppy coupled with a brief on the global
markets and any other cues, which could impact the market. Occasionally an investment
idea from the research team and a crisp round up of the previous day's top stories.
The Indiainfoline Weekly Newsletter is a flashback for the week gone by. A weekly
outlook coupled with the best of the web stories from Indiainfoline and links to important
investment ideas, Leader Speak and features is delivered in investor’s inbox every
Friday evening.
GEOGRAPHICAL PRESENCE
IIL has pan-India presence across 94 cities. It started off with major branches in
metros and now it is focusing on Tier II and III cities. In Q1-FY07 the company opened 56
branches, taking the total number of branches to 233 branches. Almost 50%of the
revenue comes from centers in Maharashtra and Delhi.
Followed by other regions.
Introduction
Objective
Task Assigned
Achievements
Limitations
Conclusion
INTRODUCTION
I have been done my summer internship in India Infoline Securities Private Limited
to perform various activities undertaken by an E broking firm (Depository Participant).
OBJECTIVE
To acquire new customers for the company it was the task given to me. 8 new
Demat accounts have been opened in this duration.
Technical tasks:
Various technical tasks has been performed like, software down loading, to give
software demonstration to the clients, solving various problems of the clients regarding
software handling etc.
Administrative task:
These were the secondary task given bellow, which has been performed during the
training period.
Completion of account opening form
Collection of requires documents form existing clients
Margin funding form
To transfer shares
Customer follow-up:
Follow-up has been given to newly acquire as well as existing clients for various issues.
Trading for offline clients under the relationship manager’s guidance.
To give markets updates to newly acquire as well as existing clients in market duration, etc.
LIMITATIONS
It was hard to acquire knowledge about this field in such short span of time
Share market is very vast & fast sector, it was very difficult to cope-up with the
environment in such short span of time.
This field is requiring with very deep fundamental & technical knowledge.
Acquiring new clients it was the tough task to perform
High risk involve while trading on behalf of the clients under the guidance of RM.
CONCLUSION
Learning Experience:
In my summer training, I knew about the stock market and its nitty-gritty. And now
I am confident about equity knowledge. Although nobody can claim complete expertise
but there is a sea change at least from our point of view. I have learnt what are the
various indices and their significance in market. I have learnt about various fundamentals
and technical aspects, which affect the stock prices in short run and long run.
Selling Experience:
Apart from this my specific task is to sell the Demat accounts. During this period
across many people who came from different walks of life. I learnt how to deal with them,
how to persuade them and guide them in trading.
Selling an online trading account requires special focus on targeting the
customers. Each and every person does not trade / invest in the stock market. Actually
what I had to do was to identify the prospect and then convince them.
As I met more and more people, I came to know more about how to talk to them,
how much time be given to each person met. Even, by solving the customer queries, my
own understanding was enhanced.
While selling our product in the market, I also came to know more about the
competitor’s product like, icicidirect.com, India bulls and their strategy of marketing and the
consumer’s preference towards the competitor’s product.
After forms were filled clients after the procedures were given client Id. After that,
I was required to show the customer how to make a transaction and how to get access to
2006170700103 SUMIT KUMAR
INTRODUCTION
In world of commerce, apart from money equally revolutionary concept was the
concept of limited liability. Before the industrial revolution economy was self-sufficient
village economy. The artisans produced goods and services on demand. It was industrial
revolution, which paved the way for production in anticipation of demand, and along with it
came the economies of large-scale production and to support this was needed huge
finance. Innovative forms of business establishment, incorporating the principle of Limited
liability emerged. Form the highly imaginative world of business, a novel form of business
organization viz. Joint Stock Companies, with the features like limited liability and the
separation of ownership and management was born. Risk is an important and inherent
part of any business. Risk cannot be avoided. You can only try to manage it. This was the
best example of risk management by spreading it in small proportions amongst large
number of shareholders. This was achieved by a concept called shares or stock and the
need for trading in these stocks was felt.
Multiplicity of wants and scarcity of means to satisfy these unlimited wants has
continued to be the fundamental of economic problem. Money resources are required to
move physical resources. Mobilization of resources for economic development was and
continues to be the major problem with all developing and developed nations. The capital
might be from within the country or outside the country. But one of the greatest
challenges of nations today is creating conditions conducive for capital formation as also
for attracting capital from various countries. A growing economy with vibrant capital and
money market with rules and regulations in place is a of capital formation Prerequisite
for attracting capital. Stock market plays a key role in the entire gamut of financial system.
Having broadly discussed the developments and the basic issues involved, we will
now try to review the Indian Financial System. India has come a long way during the last
decade of the 20th Century. With the path-breaking budget of 91-92 presented by Dr. Man
Mohan Sign an era of globalization, liberalization, decontrol and de-regulation was
adhered in. Since then a lot of water has flown from under the bridge and lot of
Development has taken place. The focus all along has been to faster economic
2006170700103 SUMIT KUMAR
INDIAN FINANCIAL SYSTEM
Financial System
IPO
Further issue of capital
Rights issue
Offers to public
Bonus issue
Secondary market enables those who already hold securities to adjust their
investment in response to change in their assessment of risk and return, the statement
implies that those who already holds the securities may want to sell them in case if those
securities are not paying off, or if he needs to adjust his liquidity or for any other reason.
Secondary market refers to the stock exchanges, a stock exchange provides
mechanism to buy and sell the securities already issues in primary market. There are
at present 23 stock exchanges in India.
STOCK MARKET
The term ‘the stock market’ is a concept for the mechanism that enables the
trading of company stocks (collective shares) and other securities. The size of the 'stock
market' is estimated at about $51 trillion. The stocks are listed and traded on stock
exchanges which are entities specialized in the business of bringing buyers and sellers of
stocks and securities together.
Participants in the stock market range from small individual stock investors to large
Market participants
Many years ago, worldwide, buyers and sellers were individual investors, such as
wealthy businessmen, with long family histories (and emotional ties) to particular
corporations. Over time, markets have become more "institutionalized"; buyers and sellers
are largely institutions (e.g., pension funds, insurance companies, mutual funds, hedge
funds, investor groups, and banks). The rise of the institutional investor has brought with it
some improvements in market operations.
The Dutch started joint stock companies, which let shareholders invest in business
ventures and get a share of their profits - or losses. In 1602,The Dutch East India
Company issued the first shares on the Amsterdam Stock Exchange It was the first
company to issue stocks and bonds. Amsterdam Stock Exchange (or Amsterdam Beurs)
is also said to have been the first stock exchange to introduce continuous trade. The Dutch
"pioneered short selling, option trading, debt-equity, merchant banking, unit trusts and
other speculative instruments ". There are now stock markets in virtually every developed
and most developing economies, with the world's biggest markets being in the United
States, Canada, China, India, UK, Germany, France and Japan
TRADING IN INDIA: -
The trading on stock exchange in India used to take place through open outcry
without use of information technology for immediate matching or recording of trades. This
was time consuming and inefficient. This imposed limits on trading volumes and efficiency.
In order to provide efficiency, liquidity and transparency, NSE introduced a nationwide
online fully automated screen based trading system (SBTS) where a member can punch
into the computer quantities of securities and the prices at which he likes to transact and
the transaction is executed as soon as it finds matching sale or buy order from a counter
party. SBTS electronically matches order on strict time/price priority and hence cuts
down on time, cost and risk of error, as well as on fraud resulting in improved operational
efficiency. It allows faster incorporation of price sensitive information into prevailing prices,
thus increasing the information efficiency of markets. It enables market participants,
irrespective of their geographical locations, to trade with one another simultaneously,
improving the depth of liquidity market. It also provides a perfect audit trail, which helps to
resolve disputes by logging in the trade execution process in entirety. Today India can
boast that almost 100% trading take place through electronic order matching. Technology
was used to carry the trading platform from the trading hall of stock exchanges to the
premises of brokers. NSE carried the further platform further the PCs at the residence of
Clients through the Internet for Users in geographically vast country like India.
Trading Network
The trading network is depicted in the above figure shows NSE has main computer,
which is connected through very small Aperture Terminal installed at the office. The main
computer runs on falls tolerant STRATUS mainframe computer at the exchange. Brokers
have terminals installed at their premises, which are connected through VASTs/ leased
lines/ modems. Investors inform broker to place an order on behalf of them. The broker
enters the order through his PC, which runs under Windows NT and sends signal to the
satellite via VAST/ leased line/ modem. The signal directed to mainframe computer at
NSE
The system also provides complete market information online. The market screens
at any point of time provide information on total order depth in a security, the five best buys
and sells available in the market, the quantity traded in the day security, the high and
the low, the last traded price, etc. investors can also know the fate of the orders almost
as soon as they placed with the trading members. The trading system is normally made
available for trading on all days except Saturdays, Sundays and other holidays.
Once I got to know about the basics about the fundamental analysis, my
task was to select one company in the oil sector, one major company on
which I can conduct the analysis. After doing a thorough research on the oil
sector in India, the company that I short-listed was Oil & Natural Gas
Corporation (ONGC), the big guns of oil sector.
The next step lead me to knowing the history about the companies
along with the growth prospects that the possess for the future. Internet
research & one on one interview with the branch manager helped me in this
task.
Once this was done I went ahead & started my analysis on the
companies & concluded the project with my say on the future investment
prospects in the following company.
Objective: -
To study the oil industry and find out the growth opportunities.
To carry out the company analysis of the selected company and to suggest whether it
is a viable investment option.
INTRODUCTION
Fundamental analysis is the examination of the underlying forces that affect the well
being of the economy, industry groups, and companies. As with most analysis, the goal
is to derive a forecast profit from future price movements. At the company level,
fundamental analysis may involve examination of financial data, management, business
concept and competition. At the industry level, there might be an examination of supply
and demand forces for the products offered. For the national economy, fundamental
analysis might focus on economic data to assess the present and future growth of the
economy. To forecast future stock prices, fundamental analysis combines economic,
industry, and company analysis to derive a stock's investment opportunity. Fundamental
analysis is a method used to determine the value of a stock by analyzing the financial
data that is 'fundamental' to the company. Fundamental analysis does not look at the
overall state of the market nor does it include behavioral variables in its methodology. It
focuses exclusively on the company's business in order to determine whether or not the
stock should be bought or sold. To buy a share of stock a investor is buying a proportional
share in a business. As a consequence, to figure out how much the stock is worth, one
should determine how much the business is worth. Investors generally need to assess the
company's financials in terms of per-share values in order to calculate how much the
proportional share of the business is worth. Some knows this as “fundamental” analysis,
and most who use it view it as the only kind of rational stock analysis.
Long-term Trends
Fundamental analysis is good for long-term investments based on long-term
trends. The ability to identify and predict long-term economic, demographic,
technological or consumer trends can benefit patient investors who pick the right
company in the right industry groups.
Value Spotting
Sound fundamental analysis will help identify companies that represent a good
value. Some of the most renowned investors think long-term and value. Graham and
Dodd, Warren Buffet and John Neff are seen as the champions of value investing.
Fundamental analysis can help uncover companies with valuable assets, a strong
balance sheet, stable earnings, and staying power.
Business Acumen
One of the most obvious, but less tangible, rewards of fundamental analysis is the
development of a thorough understanding of the business. After such painstaking
research and analysis, an investor will be familiar with the key revenue and profit
drivers behind a company. Earnings and earnings expectations can be potent drivers
of equity prices. A good understanding can help investors avoid companies that are
prone to shortfalls and identify those that continue to deliver. In addition to
understanding the business, fundamental analysis allows investors to develop an
understanding of the key value drivers and companies within an industry. Its industry
group heavily influences a stock’s price. By studying these groups, investors can
better position themselves to identify opportunities that are high-risk (tech), low-risk
(utilities), growth oriented (computer), value driven (oil), non-cyclical (consumer
staples), cyclical (transportation) or income-oriented (high yield).
A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks, which
represent ownership claims on businesses; these may include securities listed on a public stock
The concept behind how the stock market works is pretty simple. ... Companies list shares
of their stock on an exchange through a process called an initial public offering, or IPO.
Investors purchase those shares, which allows the company to raise money to grow its
business.
After looking at the above analysis ONGC stands strong Net Profit for last FY & the
market capitalization. The financial performance of ONGC for the 3 years reflected a
good growth in sales and though all the market segments sustained or bettered their
performance over the previous years. Cost overrun in a few long-term projects
impacted the profitability. However, the company’s track record has always been
oriented towards profitable growth and with the strong fundamentals; the company is well
placed to grow continuously on major fronts. The financial performance of the company
for the 3 years reflected a good growth in sales and though all the market segments
sustained or bettered their performance over the previous years.
EPS measures per share profit available for distribution for equity shareholders. The ratio
indicates the earning of the shareholder on their investment .The EPS of ONGC has
increased in 2006 due to increased in PAT, which shows that ONGC is maximizing the
wealth of the shareholders. And further ONGC’s has issued bonus share in the ratio 1:2.
The overall performance of the company is good and there is a continuous flow of
project business. The company is continuing its drive for volume with continued focus on