A PROJECT ON

Study of technical and fundamental analysis of equity market on cement

sector

Submitted to

University of Mumbai For Partial Completion Of Degree Of

Bachelor Of Commerce (Accounting And Finance)
Semester VI 2019-20

Under The Faculty Of Commerce

Submitted By:
Mrs. Shubham Bawkar
Roll No. 521
Under the Guidance of
Professor: Ms Neha Mishra

Uttari Bharat Sabha’s

RAMANAND ARYA D.A.V. COLLEGE
DATAR COLONY BHANDUP (E), MUMBAI- 400042.
March, 2020-21
 CERTIFICATE
This is to certify that MR. SHUBHAM SUSHIL BAWKAR has worked and duly completed
her Project Work for the degree of Bachelor in Commerce under the faculty of commerce in
the subject of Account and Finance and her project is entitled, “Study of technical and
fundamental analysis of equity market on cement sector

under my supervision.
I further certify that the entire work has been done by the learner under my guidance
and that no part of it has been submitted previously for any Degree or Diploma of any
University.
It is her own work and facts reported by her personal findings and investigations.

Date :
Dr. Ajay Bhamare
Principal

Mrs. Chandrakala Srivastava

Course Coordinator

Project Guide/ Internal Examiner

Ms. Neha Mishra
ExternalExaminer
 INDEX

Sr. No. Title Page no.

1. Introduction
1.1 Equity research
1.2 Purpose of equity research
1.3 The equity research process
1.4 Title of the project
1.5 Introduction to project

2. Research Methodology
2.1 Objectives Of Study
2.2 economic analysis
GDP
Current population of india
Inflation rate
Unemployment
Indian government to gdp
Foreign direct investment
Types of fdi

3. Literature Review

4. Data analysis, Interpretation and Presentation

4.1 Primary Data
4.2 Secondary Data

5. Finding, Conclusion and Suggestions

5.1 Finding
5.2 Conclusion
5.3 Suggestion

6. Bibliography

7. Appendix
 CHAPTER 1
INTRODUCTION
EQUITY RESEARCH
Financial markets sustain on information. Here, information is the prized asset. The
desire for information availability and consumption spurned a whole new industry,
popularly known as Equity Research. Well, to start with, equity research is the study
of equities or stocks for the purpose of investments. Equity research is what an equity
research analyst does. In simpler terms, equity research is the act of gathering
information:

1) Information that helps investors to decide where to put in their money;

2) Information that traders require to understand whether to enter or exit a market

position;

3) Information that financiers (bankers and firms) need to evaluate companies.

Equities or common stock comprises a big chunk in any company’s capital and
shareholders needto know whether to stay invested in the company or sell the shares
and come out. Both the buy- side and the sell-side companies invest in maintaining an
equity research division. This research may also include bonds and commodities. The
function of the equity researcher is to present a detailed analysis of a company, enabling
investors to make an informed decision. The research report is used by investment banks
and private equity firms to evaluate the company for IPO, LBO,mergers and others.

For an investment bank, the equity research segment produces revenue as buy-side
firms pay the equity research team to delve into its records and analyse information.

As an individual, it is time consuming to do equity research, that is, to study the

company, its financial statements, products, management and take a decision about
investment. Exactly for the same reason, there are people working in research
companies whose job is to do equity research and recommend companies for
investment.
PURPOSE OF EQUITY RESEARCH

As stated before, the purpose of equity research is to study companies, analyse financials
and lookat quantitative and qualitative aspects, helping investors of varying degrees to
make an informed decision. As the name suggests, ‘research’ plays the most important
role here.

Over the years, research methods have changed but the sole intention of research remains
the same.The number of investors is booming and so is the need for exploring the nature
of investments.

Investors wish to take calculated and informed decisions, and this is where the role of
equity research begins.

The purpose of equity research and the researcher is manifold. To begin with, one
gathers and analyses industry data and financial models of a specific company or an
industry. It also involves understanding current market trends, both from the
perspectives of macro economy and micro economy, and report findings. Since the
equity research targets a specific audience, it is necessaryto tailor the findings to the
audience demand.

Further, adequate stress is laid on the accuracy of information. If investors take actions
based on any kind of misinformation or misrepresentation, losses are tremendous and
harmful to both the investor and the company. Therefore, equity analysts spend a
considerable amount of time analysing stocks and valuating estimates.
THE EQUITY RESEARCH PROCESS

1)Economic Analysis: It is a systematic practice undertaken to determine the usability

of available resources, comparison between two or more resources, accounting
opportunity costs and measuring the scope or viability of an investment.

2)Industry Analysis: It is a tool used for assessing current markets and understanding

its complexities. Political, economic and market factors are reviewed to understand its
influence overthe development of the industry.

3)Company Analysis: It is a series of activities undertaken to analyse the operations of a

business, focusing on the cause and effect of decisions and how they are likely to
benefit (or not) future investors.

4)Financial Statement Analysis: The accounts of a company are evaluated to

determine the financial soundness (or otherwise) of the company. Profit and loss
statements and managerial practices are overseen to prepare an accurate financial
statement.

5)Financial and Valuation Modelling : This is the process of valuing the company and its assets.

6)Report Writing: All the above processes culminate into the report writing stage
where the equity analyst prepares an in-depth report accessible to relevant
shareholders.

7)Presentation or Recommendation: Based on the report, recommendations are

made for the benefit of the company and its shareholders.

The application of equity research varies. Primarily, equity research is used in the
mutual funds industry, investment evaluation, merger and acquisition deals, financial
publications and charitable endowments.
TITLE OF THE PROJECT

STUDY OF TECHNICAL AND FUNDAMENTAL ANALYSIS OF EQUITY

MARKET ON CEMENT SECTOR

The main aim of this project is to do equity research on Cement sector and to find out the
opportunities of investment in this sector where returns can be maximized. This report
starts with Sector Analysis of Cement sector followed by the fundamental analysis of the
companies. Analysis of the sector has been done. Economy of India, cement industry is
analyzed on the basis of various factors and indicators. After analyzing these companies,
stock price is estimated by Relative Valuation Method and the stocks were purchased by
creating a portfolio. Ratios are calculated and then the growth and value of the stocks were
estimated.

Technical analysis is used to study stock chart patterns of these companies. The observed
patterns are tested with various oscillators and decision about particular stock is made.
Based on these factors, trend of a particular stock is observed.

This report will help the investors to know about the current growth prospects of Indian
Economy in relation with Cement sector. They will get to understand various factors
affecting this sector and their impact on the growth of the sector. This report will help them
in comparing the stocks and their estimated future share prices, so that they can invest in
better options and get maximum returns.

This report will help Wealth Management on their investment decisions of the wealth
management team
INTRODUCTION OF PROJECT

To study the cement sector stock in the market and the factors that affect the share prices
of the stocks of the sector. The growth of the Indian economy has slowed down in recent
times on account of the rising inflation, high interest rates, high prices of commodities and
fuels.

Cement is the main binding agent in concrete and, thus, the most common building and
construction material in the world. A key feature of the cement industry is the strong direct
relationship between economic growth and cement consumption. It has been a very good
sector in terms of growth. The Indian cement industry is the 2nd largest market after China
accounting for about 7-8% of the total global production. It had a total capacity of about 330
m tons (MT) as of financial year ended 2011-12. Cement is a cyclical commodity with a high
correlation with GDP, growing at around 1.2x of GDP growth rate. The housing sector is the
biggest demand driver of cement, accounting for about 64% of the total consumption. The
other major consumers of cement include infrastructure, commercial & institutional and
industrial segment.
 CHAPTER 2
RESEARCH METHODOLOGY
OBJECTIVE
➢ To provide an overview of Indian Cement Industry. 
➢ To study about some of the major players in Indian Cement Industry which has good
investment prospects.
➢ To identify the growth drivers of the sector.
➢ To identify the top-line and bottom-line of the companies selected under the sector and the
factors that affect them.
➢ The analysis of various stocks of the Cement sector by calculating the various ratios, the
price targets and the technical analysis which would help us know which stock is
outperforming and which stock is underperforming. Apart from this the price target will help
us know that by how much our shares would rise or fall when the market fluctuates in future.
ECONOMIC ANALYSIS
The study of forces that determine the distribution of scarce resources. Economic
analysis provides insight into how markets operate, and offers methods for
attempting to predict future market behaviour in response to events, trends, and cycles.
Economic analysis is also used by governments to determine tax rates and evaluate the
financial health of the nation orstate.

GDP $2.848 trillion

GDP GROWTH RATE 8.8 percent

POPULATION 138 crores

INFLATION RATE 4.59 percent

JOBLESS RATE 3.52 percent

DEBT/GDP 68.70 percent

FDI 1165 USD million

PER CAPITA INCOME 1,974.76 USD

GDP

GDP is commonly used as an indicator of the economic health of a country, as well as

to gauge acountry's standard of living. Critics of using GDP as an economic measure
say the statistic does not take into account the underground economy - transactions
that, for whatever reason, are not reported to the government. Others say that GDP is
not intended to gauge material well-being, but serves as a measure of a nation's
productivity, which is unrelated.

POPULATION India's Population 2021

Current Population of India in 2021 1,389,419,783 (1.38 billion) As of march 13,
2021
Total Male Population in India 717,100,970 (7.17crore)

Total Female Population in India 662,903,415 (6.62crore)

Sex Ratio 945 females per 1,000 males

Age structure

0 to 25 years 50% of India's current population

Currently, there are about 51 births in India in a minute.

 India Population (2018, 2017 and historical)

Year Population Yearly Density Country's World India

% (P/Km²) Share of Population Global
Change World Pop Rank

2020 1,380,004,385 0,99% 464 17.70% 7,794,798,739 2

2019 1,366,417,754 1.02% 460 17.71% 7,713,468,100 2

2018 1,352,642,280 1.04% 455 17.73% 7,631,091,040 2

CURRENT POPULATION OF INDIA –

India, with 1,389,419,783 (1.38 billion) people is the second most populous country in
theworld, while China is on the top with over 1,443,191,314(1.44 billion) people. The
figures show that India represents almost 17.85% of the world's population, which
means one out of six peopleon this planet live in India. Although, the crown of the world's
most populous country is on China'shead for decades, India is all set to take the numeric
uno position by 2030. With the population growth rate at 1.2%, India is predicted to
have more than 1.53 billion people by the end of 2030.

More than 50% of India's current population is below the age of 25 and over 65%
belowthe age of 35. About 72.2% of the population lives in some 638,000 villages and
the rest 27.8% inabout 5,480 towns and urban agglomerations. The birth rate (child
births per 1,000 people per year) is 22.22 births/1,000 population (2020 est.) while death
rate (deaths per 1000 individuals peryear) is 6.4 deaths/1,000 population. Fertility rate
is 2.72 children born/woman (NFHS-3, 2020) and Infant mortality rate is 30.15
deaths/1,000 live births (2020estimated). India has the largest illiterate population in
the world. The literacy rate of India as per 2021 Population Census is 74.04%, with
male literacy rate at 82.14% and female at 65.46%. Kerala has the highest literacy rate
at 93.9%, Lakshadweep (92.3%) is on the second position and Mizoram (91.6%) is on
third.
INFLATION RATE

Retail price inflation in India jumped to 5.03 percent in February of 2021 from 4.06 percent in
January, above market forecasts of 4.83 percent. It is the highest reading in 3 months. Food
inflation accelerated to 3.87 percent from 1.89 percent which was the lowest since May of
2019. Cost of pulses jumped 12.54 percent while vegetables fell at a slower 6.24 percent. Cost
of clothing and footwear also accelerated (4.21 percent vs 3.82 percent) while prices eased for
miscellaneous (6.82 percent vs 6.49 percent); pan, tobacco and intoxicants (10.7 percent vs
10.87 percent); housing (3.23 percent vs 3.25 percent); and fuel and light (3.53 percent vs 3.87
percent).
UNEMPLOYMENT

Unemployment Rate in India decreased to 6.50 percent in January from 9.10 percent
in December of 2020.Unemployment Rate in India averaged 4.05 percent from 1983
until 2017, reaching an all-time high of 23.50 percent in 2020 and a record low of 6.50
percent in 2020

In India, the unemployment rate measures the number of people actively

looking for a job as a percentage of the labour force.

Actual Previous Highest Lowest Dates Unit Frequency

6.50 9.10 23.50 6.50 2018-2021 percent monthly

INDIA GOVERNMENT DEBT TO GDP
India recorded a government debt equivalent to 69.62 percent of the country's Gross
Domestic Product in 2019. Government Debt to GDP in India averaged 73.24 percent
from 1991 until 2019,reaching an all-time high of 83.23 percent in 2003 and a record
low of 47.94 percent in 1996.

Generally, Government debt as a percent of GDP is used by investors to

measure a country abilityto make future payments on its debt, thus affecting the country
borrowing costs and government bond yields.

Actual Previous Highest Lowest Dates Unit Frequency

69.62 69.80 83.23 47.94 1980 - 2019 percent Yearly

FOREIGN DIRECT INVESTMENT

Foreign Direct Investment in India increased by 6526 USD Million in December of 2020.
Foreign Direct Investment in India averaged 1318.29 USD Million from 1995 until
2020, reaching an all-time high of 17800 USD Million in August of 2020 and a record
low of -838 USD Million in June 2020.

Actual Previous Highest Lowest Dates Unit Frequency

6526.00 5746.00 17800.00 -838.00 1995 - 2018 USD Million Monthly

TYPES OF FDI

Horizontal FDI arises when a firm duplicates its home country-based activities at the
samevalue chain stage in a host country through FDI.

Platform FDI Foreign direct investment from a source country into a destination
countryfor the purpose of exporting to a third country.

Vertical FDI takes place when a firm through FDI moves upstream or downstream in
different value chains i.e., when firms perform value-adding activities stage by stage
in a vertical fashion in a host country.

LIST OF SECTORS INFLUENCE BY FDI

Insurance Sector: FDI in Insurance sector in India

FDI up to 26% in the Insurance sector is allowed on the automatic route subject to
obtaining licencefrom Insurance Regulatory & Development Authority (IRDA)

Trading: FDI in Trading Companies in India

Trading is permitted under automatic route with FDI up to 51% provided it is primarily
export activities, and the undertaking is an export house/trading house/super trading
house/star trading house. However, under the FIPB

100% FDI is permitted in case of trading companies for the following activities:

FDI up to 100% permitted for e-commerce activities subject to the condition that such
companieswould divest 26% of their equity in favour of the Indian public in five years,
if these companies are listed in other parts of the world. Such companies would engage
only in business to business (B2B) e-commerce and not in retail trading.
FDI

In Power Sector in India

Up to 100% FDI allowed in respect of projects relating to electricity generation,

transmission anddistribution, other than atomic reactor power plants. There is no limit
on the project cost and quantum of foreign direct investment.

Drugs & Pharmaceuticals

FDI up to 100% is permitted on the automatic route for manufacture of drugs and
pharmaceutical,provided the activity does not attract compulsory licensing or involve
use of recombinant DNA technology, and specific cell / tissue targeted formulations

Roads, Highways, Ports and Harbours

FDI up to 100% under automatic route is permitted in projects for construction and
maintenance of roads, highways, vehicular bridges, toll roads, vehicular tunnels, ports
and harbours.

Pollution Control and Management

FDI up to 100% in both manufacture of pollution control equipment and consultancy

for integration of pollution control systems is permitted on the automatic route.

Call Centers in India

FDI up to 100% is allowed subject to certain

conditions.Business Process Outsourcing

BPO in India

FDI up to 100% is allowed subject to certain conditions.

PER CAPITA INCOME

The Gross Domestic Product per capita in India was last recorded at 1963.55 US dollars
in 2017.The GDP per Capita in India is equivalent to 16 percent of the world's average.
GDP per capita in India averaged 693.96 USD from 1960 until 2017, reaching an all-
time high of 1963.55 USD in 2017 and a record low of 304.20 USD in 1960.
 CHAPTER 3
LITERATURE REVIEW
ABSTRACT

1)N.A. MADLOOL (4 MAY 2011) The cement sub-sector consumes approximately 12–
15% of total industrial energy use. Therefore, a state of art review on the energy use
and savings is necessary to identify energy wastage so that necessary measures
could be implemented to reduce energy consumption in this sub-sector. In this paper
energy use at different sections of cement industries, specific energy consumption,
types of energy use,details of cement manufacturing processes, various energy
savings measures were reviewed and presented. Various energy savings measures
were critically analyzed considering amount of energy that can be saved along with
the implementation cost. Amount of CO2 reduction has been presented along with
the payback period for different energy savings measures as well.

This study complied a comprehensive literature on the cement industries in terms of

Thesis(MS and PhD), peer reviewed journals papers, conference proceedings, books,
reports, websites. It has been observed that China producing major share of global
cement production. Coal contribute major share of fuel used in cement industries.
However, along with conventional fuels, industries are moving towards the use of
alternative fuels to reduce environmental pollution. It was reported that cement
industries are moving from wet process to dry process as it consume less energy
compared to wet process.

2)M.B. ALI (5 JUNE 2011) The cement subsector consumes approximately 12–15% of

thetotal industrial energy use. Therefore, this subsector releases CO2 emissions to
the atmosphere as a result of burning fossil fuels to produce energy needed for the
cement manufacturing process. The cement industry contributes about 7% of the
total worldwide CO2 emissions. This study complied a comprehensive literature in
terms of Thesis (MS and PhD), peer reviewed journals papers, conference
proceedings, books, reports, websitesfor emission generation and mitigation
technique. Emission released associated with the burning of fuels have been
presented in this paper. Different sources of emissions in a cement industry has
been identified and presented in this study. Different techniques to

reduce CO2 emissions from the cement manufacturing industries are reviewed and
presented in this paper. The major techniques are: capture and storage CO2 emissions,
reducing clinker/cement ratio by replacing clinker with different of additives and using
alternative fuels instead of fossil fuels. Apart from these techniques, various energy
savingsmeasures in cement industries expected to reduce indirect emissions released to
the atmosphere. Based on review results it was found that sizeable amount of emission
can bemitigated using different techniques and energy savings measures.

3)JAMES W MIHALEK (16 JUNE 2009) Tables are turning and times are changing.
Previous expectation of prolonged recession has been ruled out by recently released
economic and financial numbers worldwide. Sectors which at the end of 2008 and 1Q-
2009were recording huge losses and declines have eventually turned the tables and
are postingbetter than expected results. Cement sector of GCC has also followed the
foot-steps of theleaders. After registering a y-o-y decline of 35% and 43% in 2008
and 1Q-2009 respectively, the sector reported q-o-q increase of 61.6% in 2Q-2009
which eventually restricted the half year y-o-y decline to 24.4%. The sector reported a
profit of US$922.2mnin 1H-2009 as compared to US$1,220.5mn in 1H-2008, while on
a q-o-q basis the profit soared to US$567.9mn in 2Q-2009 as compared to
US$351.3mn in 1Q-2009.

On a country basis during 1H-2009, Qatar cement sector reported profit growth of 5.7%
followed by Oman at 1.8%. Kuwait registered the highest decline at 58.5%, followed
by UAE at 43.8%. While the ranking on a q-o-q basis was charted by UAE with profit
growthof 204.5% followed by Oman at 28%. On a company specific basis, RAK Cement
of UAEreported the highest profit growth of 126.8% followed by Union Cement of UAE
and OmanCement at 49.8% and 49.3% respectively. Top losers were Arkan Building
Materials of UAE followed by Umm Al Qaiwain Cement Company, UAE and Kuwait
Cement Company.
4)NEIL WALKER (15 JUN 2011) An oligopoly competition model is described and
used to illustrate the potential effect of EU emissions trading and transport issues on the
production decisions and profitability of cement producers in a typical western
European country market. The role of geography is introduced from three viewpoints:
the existence of regional markets, the fact that EU producers may operate multiple
plants across these regions, and the possibility of production capacity constraints. A
typical EU state is divided into a coastal region which is initially exposed to international
competition, and an inlandregion which is initially protected. Assuming pure auctioning
of EU Allowances and a range of CO2 prices up to €50/t, our model predicts a large
increase of imports into the coastal region. Consequences for the inland producers
include reduced attractiveness of thecoastal market, as well as increased competition
from coastal producers and from non-EU imports. The model includes a number of
simplifications and therefore does not claim to offer definitive predictions, but our
results do suggest that an increase in non-EU imports could feasibly offset more than
70% of the decrease in EU cement sector emissions. The likely impact on producer
profits is considered for each region, and the advantages and disadvantages of potential
mitigating policy measures are reviewed for either the EU Allowance allocation process
or border adjustments on cement products.