OUR GROUP PORTFOLIO FOR EQUITY RESEARCH PEPAR

SECURITIES PRICE TOTAL AMOUNT INVESTED

 Yes bank 507 shares @296 1,50,072

 Sail 510 shares @196 99,960
 Ifb 607 shares @165 1,00,320
 Ongc 446 shares @1231 4,49,315
 Cadila healthcare 312 shares @642 2,00,304
9,99,971

TOTAL 9,99,971 Rs. INVESTED OUT OF AVAILABLE 10,00,000 RUPEES.

SUBMITTED TO SUBMITTED BY
PROF. BIRENDRA PRASAD VIKRAM SHARMA
MONMEE DAS
AASHISH SHARMA (FS)
 WHY CHOOSING THESE STOCKS

BANKING SECTOR

Influenced by the global financial turmoil and repercussion of the subprime crisis,
the global banking sector has been witness to some of the largest and best known
names succumb to multi-billion dollar write-offs and face near bankruptcy.
However, the Indian banking sector has been well shielded by the central bank
and has managed to sail through most of the crisis with relative ease. Further with
the economic buoyancy the world over showing signs of cooling off, the
investment cycle has also been wavering. Having said that, the latent demand for
credit (both from the food and non food segments) and structural reforms have
paved the way for a change in the dynamics of the sector itself. Besides gearing
up for the compliance with Basel II accord, the sector is also looking forward to
consolidation and investments on the FDI front.

Public sector banks have been very proactive in their restructuring initiatives be it
in technology implementation or pruning their loss assets. While the likes of SBI
have made already attempts towards consolidation, others are keen to take off in
that direction. Incremental provisioning made for asset slippages have
safeguarded the banks from witnessing a sudden impact on their bottom lines.

Retail lending (especially mortgage financing) that formed a significant portion of

the portfolio for most banks in the last two years lost some weight age on the
banks' portfolios due to their risk weight age. However, on the liabilities side, with
better penetration in the semi urban and rural areas the banks garnered a higher
proportion of low cost deposits thereby economizing on the cost of funds.

Apart from streamlining their processes through technology initiatives such as

ATMs, telephone banking, online banking and web based products, banks also
resorted to cross selling of financial products such as credit cards, mutual funds
and insurance policies to augment their fee based income.

STEEL SECTOR
 India is currently the fifth largest steel-producing nation in the world with production of over
54 million tones (MT). However, it has a very low per capita consumption of steel of around
46 kgs as against an average of 198 kgs of the world. This wide gap in relative steel
consumption indicates that the potential ahead for India to raise its steel consumption is
high

 Being a core sector, steel industry tracks the overall economic growth in the long term.
Also, steel demand, being derived from other sectors like automobiles, consumer durables
and infrastructure, its fortune is dependent on the growth of these user industries

 The Indian steel sector enjoys advantages of domestic availability of raw materials and
cheap labor. Iron ore is also available in abundant quantities. This provides major cost
advantage to the domestic steel industry, with companies like Tata Steel being one of the
lowest cost producers in the world.

 However, Indian steel companies have to bear additional costs pertaining to capital
 equipment, power and inefficiencies (low per employee productivity). This has resulted in
the erosion of the edge they would have otherwise enjoyed due to availability of cheap
labor and raw materials.

 The government reinstated basic customs duty on steel imports in order to protect India
from dumping of cheap steel products. It has also provided series of benefits to auto,
housing and real estate sector in order to counter the slowdown in the economy.

PHARMACEUTICAL SECTOR
 The Indian Pharmaceutical industry is highly fragmented with about 24,000 players (around
330 in the organized sector). The top ten companies make up for more than a third of the
market. The revenues generated by the industry are approximately US$ 7.6 bn and have
grown at an average rate of 10% over last five years. The Indian pharma industry accounts for
about 1% of the world's pharma industry in value terms and 8% in volume terms.

 In the recent past, Indian companies have targeted international markets and have extended
their presence there. While some companies are exporting bulk drugs, others have moved up
the value chain and are exporting formulations and generic products. India also offers
excellent exports opportunities for clinical trials, R&D, custom synthesis and technical
services like Bioinformatics.

 The drug price control order (DPCO) continues to be a menace for the industry. There are
three tiers of regulations – on bulk drugs, on formulations and on overall profitability. This has
made the profitability of the sector susceptible to the whims and fancies of the pricing
authority. The new Pharmaceutical Policy 2006, which proposes to bring 354 essential drugs
under price control has not been officially passed as yet and has been stiffly opposed by the
pharmaceutical industry.

 The R&D spend of the top five companies is about 5% to 10% of revenues. Despite growing
at a CAGR of over 50% over the last four years, the ratio is still way below the global average
of 15% to 20% of sales. However, despite the relatively low R&D spending, Indian companies
are stepping up their research activities to make themselves more self sufficient in terms of
product development, now that the product patent regime has come into force.

ENERGY SECTOR
 There are two stages in the energy value chain, upstream (exploration and production) and
downstream (refining and marketing). After extracting crude oil from the reserves, it is
processed to yield various petroleum products, which are then marketed.

 ONGC and Oil India dominate the upstream segment contributing 85% to India's total oil
production. In the downstream segment, major players include IOC, HPCL, BPCL and
Reliance. Independent refineries have now become subsidiaries of these bigger players. There
are a total of 19 refineries in the country comprising 17 in the public sector and 2 in the private
sector with a combined refining capacity of 178 MMTPA. IOC dominates the refining capacity
with a total share of nearly 32% of the current refining capacity.

 Refining sector got deregulated in FY99 whereas marketing sector deregulation began to take
shape on 1st April 2003, although it largely remained so on paper. Political intervention
persists in the pricing of sensitive petroleum products.
 ONGC is the major producer of natural gas accounting for 60% of domestic production. GAIL is
the monopoly player in the transmission and distribution of natural gas, accounting for about
79% of the supplies. However, the country still witnesses shortage in supply of natural gas. In
spite of huge discoveries made by RIL in KG basin, the demand growth will outperform the
supply growth for some time to come.