PROJECT REPORT

ON

INVESTMENT

IN

EQUITIES

CONDUCTED AT

ITI FINANCIAL SECURITIES

BY
S.SABITHA

ROLL.NO: 225109672006

Submitted in partial fulfillment of award of Degree of

MASTER OF BUSINESS ADMINISTRATION

ARADHANA PG COLLEGE

CHEVELLA, RR DIST

2009-2011
 CERTIFICATE

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

REFERENCE TO ITI FINANCIAL SERVICES” submitted to the Osmania

University in partial fulfillment for the award of degree of Master of Business

Administration has been carried out by Ms. S.SABITHA, Hall-Ticket Number

225109672006, who is a bonafide student of ARADHANA PG College for Women,

CHEVELLA RR DIST for the academic year 2009-2011.

HEAD PRINCIPAL
 CERTIFICATE

This is to certify that the project report titled “INVESTMENT IN EQUITIES WITH

REFERENCE TO ITI FINANACIAL SERVICES” submitted in partial fulfillment for

the award of MBS Programme of Department of Business Management, ARADHANA

PG COLLEGE , RR DIST , was carried out by Ms. S.SABITHA, under my guidance.

This has not been submitted to any other university or institution for the award of any

degree / diploma / certificate.

Name and Address of the Guide Signature of the Guide

 ACKNOWLEDGMENT

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

carry out the project work on “INVESTMENT IN EQUITIES” in ITI FINANCIAL

SERVICES.

I also express my sincere thanks to the staff of ITI FINANACIAL SERVICES

who were of ready help in answering my various quires related to the project work.

It is with great pleasure that I Express my gratitude to Ms. NASREEN FATHIMA

and Mr. SURESH, under whose inspiring guidance and advice this study has been

carried out.

S.SABITHA
 DECLARATION

I hereby declare that this project report titled “INVESTMENT IN

EQUITIES WITH REFERENCE TO ITI FINANACIAL SERVICES”

submitted by me to the Department of Business Management, ARADHANA

PG COLLEGE, CHEVELLA, is a bonafide work undertaken by me and it is

not submitted to any other university or institution for the award of any

degree / diploma / certificate or published any time before.

Place:

Date:

(S.SABITHA)
 CONTENTS

Chapter no Name of the concept Page no

I Introduction 1

Objectives 2

Need of the study 3

Scope of the study 4

Research Methodology 5

Limitations 6

II Review of literature 7- 49

III Industry profile

Company profile 50- 52

Key learning’s in Organization 53

IV Data analysis and interpretation 54-74

V Summary 75

VI Suggestions 76

VII Conclusion 77

Bibliography
78
Introduction

INTRODUCTION
 Investment management once seemed a simple process. Well-heeled investors would
hold portfolios composed of stocks and bonds of blue chip industrial companies, treasury
bonds, notes and bills. The choices available to less well-off investors were much more
limited, confirmed primarily to passbook savings accounts. If the investment environment
can be thought of as an ice cream parlor, then the customers of past decades were offered
only chocolate and vanilla.

Mirroring the diversity of modern society, the investment ice cream parlor now
makes available a myriad of flavors to the investing public. Investors face a dizzying
array of choices. The ability to purchase different securities has become both less
expensive and more convenient with the advent of advanced communications and
computer networks, along with the proliferating market for mutual funds that has
developed to serve large or small investors.

Investment environment encompasses the kinds of marketable securities that exist

and where and how they are bought and sold. Investment process is concerned with how
an investor should proceed in making decisions about what marketable securities to
invest in, how extensive the investments should be and when the investments should
made.

Investment means the sacrifice of current rupees for future rupees. Two different
attributes are involved – “time” and “risk”. The sacrifice takes place in the present and is
certain. The reward comes later and the magnitude is uncertain. In some cases, risk is the
dominant attribute. These are two types of investments. They are:

1. Real Investments
2. Financial Investments

Real investments involve some kind of tangible assets such as land, machinery,
factories.

Financial investments involve contracts written on pieces of paper such as

common stocks and bonds.

Investment in securities such as shares, debentures and bonds is profitable as well

as exciting, but it involves great deal of risk. Investing in financial securities is
considered to be one of the best avenues for investing one’s savings while it is
acknowledged to be one of the most risky avenues of investment. Even Indian
government wants to encourage people in rural areas to invest in equities. This
will help the markets to stabilize by tapping the rural areas and decreases the
dependency on foreign institutional investors.
 NEED FOR THE STUDY

PURPOSE OF THE STUDY

The purpose of the study is to know about stock markets in India, how they work,
fundamental requirements before entering the stock market, how to enter the stock
market, market design, stock selection, when to buy or sell a stock, how to invest and
knowing about market intermediaries.

OBJECTIVES OF THE STUDY

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

SCOPE OF THE STUDY

 For the purpose of study, banking sector – is selected. ICICI and SBI are the
two companies that are taken for analysis.

INTRODUCTION TO STOCKS
The first step for you to understand the stock market is to understand stocks.

A share of stock is the smallest unit of ownership in a company. If you own a share of a
company’s stock, you are a part owner of the company.

You have the right to vote on members of the board of directors and other important
matters before the company. If the company distributes profits to shareholders, you will
likely receive a proportionate share.

One of the unique features of stock ownership is the notion of limited liability. If the
company loses a lawsuit and must pay a huge judgement, the worse that can happen is
your stock becomes worthless. The creditors can’t come after your personal assets. That’s
necessarily true in private-held companies.

There are two types of stock:

• Common stock
• Preferred stock

Most of the stock held by individuals is common stock.

Common Stock:

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

Preferred Stock:

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

Investors buy preferred stock for its current income from dividends, so look for
companies that make big profits to use preferred stock to return some of those profits via
dividends.
 DEMAT ACCOUNT
What is Demat account and why it is required?

Securities and Exchange Board of India (SEBI) is a board (corporate body) appointed
by the Government of India in 1992 with its head office at Mumbai. Its one of the
function is helping the business in stock exchanges and any other securities markets.
Demat (short form of Dematerialization) is the process by which an investor can get
stocks (also called as physical certificates) converted into electronic form maintained in
an account with the Depository Participant (DP).

DP could be organizations involved in the business of providing financial services

like banks, brokers, financial institutions etc. DP’s are like agents of Depository.

Depository is an organization responsible to maintain investor's securities (securities

can be stocks or any other form of investments) in the electronic form. In India there are
two such organizations called NSDL (National Securities Depository Ltd.) and CDSL
(Central Depository Services India Ltd.)

Investor’s wishing to open Demat account has to go DP and open the account.
Opening the Demat account is as simple as opening the bank account with any bank. As
we need bank account to save our money, make cheque payments etc, likewise we need
to open a demat account if we want to buy or sell stocks. All stocks what we possess will
show in our demat account. So we don't have to possess any physical certificates. They
are all held electronically in our demat account. As we buy and sell the stocks,
accordingly our stocks will get adjusted in our account.
Is a demat account must?

The market regulator, the Securities and Exchange Board of India (SEBI), has made
it compulsory to open the demat account if you want to buy and sell stocks.
So a demat account is a must for trading and investing.

How to start to open a Demat account?

We have to approach a DP to open a Demat account. Most banks are DP participants

so we may approach them.

A broker and a DP are two different people. A broker is a member of the stock
exchange, who buys and sells stocks on his behalf and also on behalf of his customers.

Following are the documents required to open Demat account.

 When we approach any DP, we will be guided through the formalities of opening an
account. The DP will ask to provide some documents as proof of our identity and
address. Below is a list but we may not require all of them.
PAN card, Voter's ID, Passport, Ration card, Driver’s license, Photo credit card
Employee ID card, IT returns, Electricity/ Landline phone bill etc.

Do we need any stocks to open a Demat account?

No. We need not need any stocks to open a demat account. A demat account can be
opened with no balance of stocks. And there is no minimum balance to be maintained
either. You can have a zero balance in your account.

How much it cost to open a Demat account?

The charges for account opening, annual account maintenance fees and transaction
charges vary between various DP’s.
Finally – After successfully opening the demat account, the DP will allot “Beneficial
Owner Identification” Number, which will be needed to mention for all our future
transactions.

If we want to sell our stocks, we need to place an order with our broker and give a
'Delivery Instruction' to your DP. The DP will debit our account with the number of
stocks sold. We will receive the payment from our broker.

If we want to buy stocks, inform our broker about our Depository Account Number,
so that the stocks bought are credited into our account.

Points to remember while opening online account

a) Make multiple enquiries and try getting low brokerage trading and dematting account.
b) Also discuss about the margin they provide for day trading.
c) Discuss about fund transfer. The fund transfer should be reliable and easy. Fund
transfer from our bank account to trading account and visa versa. Some online share
trading account has integrated savings account which makes easy for us to transfer funds
from our saving account to trading account.
d) Very important is about service they provide, the research calls, intraday or daily
trading tips.
e) Also enquire about their services charges and any other hidden charges if any.
f) And also see how reliable and easy is to contact them in case if any emergency.
 Literature
Review
 Investment process
 Fundamental analysis
 Technical analysis

INVESTMENT PROCESS
Investment process describes how an investor should go about making decisions with
regard to what marketable securities to invest in, how extensive the investment should be
and when the investment should be made. An eight-step procedure for making these
decisions forms the basis for the investment process.

1. What is Investment
2. Understanding stocks
3. Finding a broker
4. Evaluation of stocks
5. Research tools
6. Investing strategy
7. Investing technique
8. What moves the market

Step 1: What is investment?

Investing is making your money work for you without taking any more risks than
necessary for your comfort

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

• How to calculate Risk Premium?

Risk premium is what a stock should return over a “risk-free” investment. It is your
reward for taking a risk with your money.

• Weak demand is the important factor in stock pricing:

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

• Corrections are natural part of stock market cycle.

• Don’t be too conservative with stocks in retirement:

There is a danger you can be too conservative in your investment strategy as you
approach retirement – don’t back off stocks too soon.

Step 2: Understanding stocks

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

Bull and bear markets go together and are necessary for an efficient market.

• Poll results show confidence in stocks:

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

Step 3: Finding a Broker

• To decide which type of broker is right for you, you need to use these resources to
find the brokerage arrangement that best fits your needs.
• Thirteen of the top online stock trading sites offer investors a wide variety of
services including research and advice.
• Brokers offer different levels of service. A broker fills in the gaps in knowledge
and experience.
• Broker explains what types of accounts are available and how to open an account.
• Financial advisers can map a blue print that will get you from where you are to
your financial goals.
• Financial advisers come in a variety of flavors. Finding the one right for you
involves knowing how each is compensated and what they do.
• The New Year poses many challenges for stocks, including high oil prices, the
credit crisis, and a potential recession.
• Stock prices are driven by the relationship between buyers and sellers. Attractive
stocks have more buyers than sellers, which drives up prices, while less attractive
stocks feel the reverse effect.

Step 4: Evaluating stocks for investment

Fundamental analysis relies on several tools to give investors an accurate picture of

the financial health of a company and how the market values the stock. The following are
the most popular tools of fundamental analysis. They focus on earnings, growth, and
value in the market.

a. Earnings per Share – EPS

b. Price to Earnings Ratio – P/E
c. Projected Earnings Growth – PEG
d. Price to Sales – P/S
e. Price to Book – P/B
f. Dividend Payout Ratio
g. Dividend Yield
h. Book Value
 i. Return on Equity

Step 5: Research Tools

The internet is a gold mine of information, but you’ll need some tools to get to the
nuggets. Research tools make the job easier if you know where to find them and how to
use them.

• The better stock screens offer similar characteristics that give you greater
flexibility when looking for investment candidates and eliminate other companies.
• Stock screens will save time and help to build a thoughtful portfolio by focusing
on those companies that meet your investing requirements.
• Stock screens can help any investor make better stock selections by reducing the
number of companies to research.
• Dividend ratios can tell much about a stock and its future payout prospects.
• One of the best sources of information on companies is free and as near as your
computer.

Step 6: Investing Strategies

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

• When and how to sell a winning stock?

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

• Don’t be too conservative with stocks:

Following a too conservative investment strategy in retirement may not protect you
from outliving your money.

• Bottom-up investors focus on strong companies and believe they will perform
well in any market conditions.
• Top-down investing looks at big picture before narrowing in on individual stocks.

Step 7: Investing Techniques

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

• After-hours trading of stocks may seem like a great idea, but it is full of risks for
the average investor.
• Diversify stocks by industry to avoid across-the-board losses on bad economic
news. Investments should not be correlated to achieve diversity.
• Investing with expectations of high returns is not investing but gambling. Don’t
try to double or triple your money quickly in the stock market – you’ll be
disappointed and perhaps poorer.

Step 8: What moves the market?

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

Basic steps in how stock trading works

Trade = Buy or Sell

To “trade” means to buy and sell in the jargon of the financial markets. How a
system that can accommodate one billion shares trading in a single day works is a
mystery to most people. No doubt, our financial markets are marvels of technological
efficiency.

We don’t need to know all of the technical details of how to buy or sell stocks,
however it is important to have a basic understanding of how the markets work.

Important terms in stock market and in stock trading

Open - The first price at which the stock opens when market opens in the
morning.

High - The stock price reached at the highest level in a day.

Low - The stock price reached the lowest level in a day.

Close - The stock price at which it remains after the end of market timings or the final
price of the stock when the market closes for a day.
Volume - Volume is nothing but quantity.

Bid - The Buying price is called as Bid price.

Offer - The selling price is called offer price.

Bid Quantity - The total number of stocks available for buying is called Bid Quantity.

Offer Quantity - The total number of stocks available for selling is called Offer
Quantity.

Buying and selling of stocks - Buy is also called as demand or bid and selling is also
called as supply or offer. First selling and then buying (this only happens in day trading)
is called as shorting of stocks or short sell.

Stock Trading - Buying and selling of stocks is called stock trading.

Transaction - One complete cycle of buying and selling of stocks is called One
Transaction.

Squaring off - This term is used to complete one transaction. Means if we buy then we
have to sell (means square-off) and if we sell then we have to buy (means square-off).

Limit Order - In limit order the buying or selling price has to be mentioned and when
the stock price comes to that price then our order will get executed with the mentioned
price by us.

Market Order- When we put buy or sell price at market rate then the price get executes
at the current rate of market. The market order get immediately executed at the current
available price.

Success Mantra
There are two steps to achieve success in the stock market.

1. How not to loose

When you learn what to do and what not to do in order to lose nothing means you have
won the half battle. Only then you can learn how to gain or what to do in order to win. A
new investor should do paper trading in order to get the market knowledge before
actually entering into the market.

2. How to gain

How to gain requires deep understanding about the market trends and fluctuations.

A new investor can take the route of mutual fund.

The average person generally falls into one of two categories.

The first believe investing is a form of gambling; they are certain that if you
invest, you will more than likely end up losing your money.

The second category consists of those who know they should invest for the
long-run, but don’t know where to begin.

Their characteristics….

o feel investing in some sort of black-magic that only a few people hold the
key to
o they leave their financial decisions up to professionals
o Cannot tell you why they own a particular stock / mutual fund.
o Investment style is blind faith or limited to “this stock is going up. We
should but it.”

This group is in far more danger than the first. They invest like the masses
and then wonder why their results are mediocre [or in some cases, devastating.

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

Researchers have found that stock price changes can be attributed to the following
factors:

• Economy-wide factors: 30-35 percent

• Industry factors: 15-20 percent
• Company factors: 30-35 percent
• Others factors: 15-25 percent

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

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

1. Understanding of the macro-economic environment and developments.

2. Analyzing the prospects of the industry to which the firm belongs.
3. Assessing the projected performance of the company and the intrinsic
value of its shares.

A. MACRO-ECONOMIC ANALYSIS

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

a. Growth Rate of Gross Domestic Product (GDP)

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

b. Industrial Growth Rate

 The GDP growth rate represents the average of the growth rates of the three principal
sectors of the economy, viz. the services sector, the industrial sector and the agricultural
sector.

Publicly listed companies play a major role in the industrial sector but only a minor
role in the services sector and the agricultural sector. Hence stock market analysts focus
more on the industrial sector. They look at the overall industrial growth rate as well as the
growth rates of different industries. The higher the growth rate of the industrial sector,
other things being equal, the more favorable it is for the stock market.

c. Agriculture and Monsoons

Agriculture accounts for about a quarter of the Indian economy and has important
linkages, direct and indirect, with industry. Companies using agricultural raw materials as
inputs or supplying inputs to agriculture are directly affected by the changes in
agricultural production. Other companies also tend to be affected due to indirect linkages.

A spell of good monsoons imparts dynamism to the industrial sector and buoyancy to
the stock market. Likewise, a streak of bad monsoons casts its shadow over the industrial
sector and the stock market.

d. Savings and Investment

The demand for corporate securities has an important bearing on stock price
movements. So investment analysts should know what the level of investment in the
economy is and what proportion of that investment is directed toward the capital market.

The level of investment in the economy is equal to:

Domestic savings + Inflow of foreign capital – Investment made abroad.

In India, as in many other countries, the domestic savings is the dominant component
in this expression. In addition to knowing what the savings are we should also know how
the same are allocated over various instruments like equities, bonds, bank deposits, small
savings schemes, and bullion.

Other things being equal, the higher the level of savings and investments and the
greater the allocation of the same to equities, the more favorable it is for the stock
market.

e. Government Budget and Deficit

 Governments play an important role in most economies, including the Indian economy.
The central budget as well as the state budgets prepared annually provides information on
revenues, expenditures, and deficit or surplus.

In India, governmental revenues come more from indirect taxes such as excise duty and
customs duty and less from direct taxes such as income tax. The bulk of the governmental
expenditures goes toward administration, interest payment, defence, and subsidies,
leaving very little for public investment. The excess of governmental expenditures over
governmental revenues represents the deficit. While there are several measures of deficit,
the most popular measure is the fiscal deficit.

The fiscal deficit has to be financed with government a borrowing which is done in
three ways. First, the government can borrow from the Reserve Bank of India. This leads
to increase in money supply which has an inflationary impact on the economy. Second,
the government can resort to borrowing in domestic capital market. This tends to push up
domestic interest rates and crowd out private sector investment. Third, the government
may borrow from abroad.

Investment analysts examine the government budget to assess how it is likely to impact
on the stock market.

f. Money Supply

There are several definitions of money. The two more commonly used ones are:

M1 = currency with public + demand deposits with bank + other

deposits with RBI.

M3 = M1 + time deposits with banks

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

g. Price Level and Inflation

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

h. Interest Rate

Interest rates vary with maturity, default risk, inflation rate, and productivity of capital
and so on. The interest rates on money market instruments which are virtually risk free
tend to be the lowest. Long dated government securities generally carry slightly higher
interest rates. Corporate debentures which have some default risk associated with them
carry still higher interest rates.

A rise in interest rates depresses corporate profitability and also leads to an increase in
the discount rate applied by equity investors, both of which have an adverse impact on
stock prices.

i. Foreign Investment

Foreign investment in India comes in two forms: foreign direct investment and foreign
portfolio investment. The former represents investment for setting up new projects and
hence is long term in nature; the latter is in the form of purchase of outstanding securities
in the capital market and hence can be reversed easily.

j. Infrastructural Facilities and Arrangements

Infrastructural facilities and arrangements significantly influence industrial

performance. More specifically, the following are important:

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

• A well-developed transportation and communication system.
• An assured supply of basic industrial raw materials like steel, coal, petroleum
products and cement.
• Responsive financial support for fixed assets and working capital.

k. Sentiments

The sentiments of consumers and businessmen can have an important bearing on

economic performance. Higher consumer confidence leads to higher expenditure on big
ticket items. Higher business confidence gets translated into greater business investment
that has a stimulating effect on the economy. Thus, sentiments influence consumption
and investment decisions and have a bearing on the aggregate demand for goods and
services.
 A. INDUSTRY ANALYSIS

The objective of industry analysis is to assess the prospects of various industrial

groupings. It is almost impossible to forecast exactly which industrial groupings will
appreciate the most. Yet careful analysis can suggest which industries have a brighter
future than others and which industries are plagued with problems that are likely to
persist for a while.

Industrial analysis is divided into three parts namely,

I. Industry life cycle analysis

II. Structure and characteristics of an industry
III. Profit potential of industries: Porter model.

I. Industry Life Cycle Analysis

Many industrial economists believe that the development of almost every industry
may be analyzed in terms of a life cycle with four well-defined stages:

a. Pioneering Stage
b. Rapid Growth Stage
c. Maturity and Stabilization Stage
d. Decline Stage
e.
2. Pioneering Stage: During this stage, the technology and or the product is
relatively new. Lured by promising prospects, many entrepreneurs enter this field.
As a result, there is keen, and often chaotic, competition. Only a few entrants may
survive this stage.
3. Rapid Growth Stage: Once the period of chaotic developments is over, the rapid
growth stages arise. Firms which survive the intense competition of the
pioneering stage, witness significant expansion in their sales and profits.
4. Maturity and Stabilization Stage: During this stage, when the industry is more
or less fully developed, its growth rate is comparable to that of the economy as a
whole.
5. Decline Stage: With the satiation of demand, encroachment of new products, and
changes in consumer preferences, the industry enters the decline stage, relative to
the economy as a whole. In this stage, the industry may grow slightly during
prosperous periods, stagnate during normal periods and decline during
recessionary periods.

The experience of most industries suggests that they go through the 4 phases
of the industry life cycle though there are considerable variations in terms of the
relative duration of various stages and the rates of growth during these stages.
 II. Structure and Characteristics of an Industry

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

a. Structure of the industry and nature of competition:

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

the top few firms in the industry.
 Licensing policy of the government.
 Entry barriers, if any.
 Pricing policies of the firm.
 Differentiation among products.
 Competition from foreign firms.

b. Nature and prospects of demand:

 Major customers and their requirements.

 Key determinants of demand.
 Degree of cyclicality in demand.
 Expected rate of growth in the foreseeable future.

c. Cost, efficiency and profitability:

 Proportions of the key cost elements – raw materials, labor,

utilities and fuel.
 Productivity of labor.
 Turnover of inventory, receivables and fixed assets.
 Control over prices of outputs and inputs.
 Gross profit, operating profit and net profit margins.
 Return on assets, earning power and return on equity.

d. Technology and research:

 Degree of technological stability.

 Important technological changes on the horizon and their
implications.
 Research and development outlays as a percentage of
industry sales.
 Proportion of sales growth attributable to new products.

III. Profit Potential of Industries: Porter Model

 Michael Porter has argued that the profit potential of an industry depends on
the combined strength of the following five basic competitive forces:

a. Threat of new entrants

b. Rivalry among the existing firms
c. Pressure from substitute products
d. Bargaining power of buyers
e. Bargaining power of sellers

Following figure shows the forces that drive competition and

determine industry profit potential:

• Threat of new entrance

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

• The new entrants have to invest substantial resources to enter the industry.
• Economies of scale are enjoyed by the industry.
• Existing firms control the distribution channels, benefit from product
differentiation in the form of brand image and customer loyalty.
• Switching costs –these are essentially onetime cost of switching from the products
of one supplier to another-are high.

b. Rivalry between existing firms

Firms in an industry compete on the basis of price quality, promotion, service,

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

• The number of competitors in an industry is large.

• At least a few firms are relatively balanced and capable of engaging in a sustained
competitive battle.
• The industry growth is sluggish, prodding firms to strive for a higher market
share.
• There is chronic over capacity in the industry.
• The industry confronts high exit barriers.

c. Pressure from substitute products

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

• The price- performance trade off offered by the substitute products is attractive.
• The switching costs for prospective buyers are minimal
• The substitute products are being produced by industries earning superior profits.

d. Bargaining power of buyers

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

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

• Its switching costs are low.
• It poses a strong threat of back ward integration.

e. Bargaining power of suppliers:

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

• There is hardly any viable substitute for the products supplied.

• Few suppliers dominate and the supplier group is more concentrated than the
buyer group.
• The switching cost for the buyers is high.
• Suppliers do present a real threat of forward integration.

B.COMPANY ANALYSIS
 Company analysis is concerned with fundamental analysis of equity shares.
Fundamental analysts take two somewhat different approaches in their search for
mispriced securities. The first approach involves estimating the intrinsic value and
comparing the same with the prevailing market price to determine whether the
security is under priced or fairly priced or overpriced. The second approach
involves estimating a security’s expected return, given its current price and
intrinsic value, and then comparing it with the “appropriate” return for securities
with similar characteristics.

Company analysis is the last leg in the economy-industry-company analysis

sequence. It may be organized into two parts (a) a study of financials, and (b) a
study of other factors.

Investment analysts start with a historical analysis of earning (and dividends),

growth, risk, and valuation and use company analysis as a foundation for
developing the forecasts required for estimating the intrinsic value.

TECHNICAL ANALYSIS
Technical analysis is radically different from fundamental analysis. While the
fundamental analyst believes that the market is 90 percent logical and 10 percent
psychological, the technical analyst assumes that it is 90 percent psychological and 10
percent logical. Technical analysts don’t evaluate a large number of fundamental factors
relating to the company, the industry and the economy. Instead, they analyze internal
market data with the help of charts and graphs. Subscribing to the ‘castles-in-the-air’
approach, they view the investment game as an exercise in anticipating the behavior of
market participants. They look at charts to understand what the market participants have
been doing and believe that this provides a basis for predicting future behavior.

The technical approach is the oldest approach to equity investment, dating back to
the late 19th century. It continues to flourish in modern times as well. As an investor, we
will often encounter technical analysis because newspapers cover it, television
programmes routinely call technical experts for their comments, and investment advisory
services circulate technical reports. Technical analysis can be applied to commodities,
currencies, bonds, and equity stocks, our studies are restricted to equity stocks.

Technical analysis involves a study of market generated data like prices and volumes
to determine the future direction of price movement.

Martin J. Pring explains: “The technical approach to investing is essentially a

reflection of the idea that prices move in trends which are determined by the changing
attitudes of investors toward a variety of economic, monetary, political and psychological
forces. The art of technical analysis--for it is art—is to identify trend changes at an early
stage and to maintain an investment posture until the weight of the evidence indicates that
the trend has been reversed.”

THE DOW THEORY

Originally proposed in the late nineteenth century by Charles H. Dow, the editor of
the Wall Street Journal, the Dow Theory is perhaps the oldest and best known theory of
technical analysis.

In the words of Charles Dow:

“The market is always considered as having three movements, all going at the same
time. The first is the narrow movement from day to day. The second is the short swing,
running from two weeks to a month or more; the third is the main movement, covering at
least four years in its duration.”

Proponents of the Dow Theory refer to the three movements as: (a) daily fluctuations
that are random day-to-day wiggles; (b) secondary movements or corrections that may
last for a few weeks to some months; and (c) primary trends representing bull and bear
phases of the market.

An upward primary trend represents a bull market, whereas a downward primary

trend represents a bear market. A major upward move is said to occur when the high
point of each rally is higher than the low point of the preceding decline. Likewise, a
major downward move is said to occur when the high point of each rally is lower than the
low point of the preceding decline.

The secondary movements represent technical correction. They represent adjustments

to the excesses that may have occurred in the primary movements. These movements are
considered quite significant in the application of the Dow Theory.

The daily fluctuations are considered to be minor significance. Even zealous

technical analysts do not usually try to forecast day-to-day movements in the market.

Bar and Line Charts

The bar chart, one of the simplest and most commonly used tools of technical
analysis, depicts the daily price range along with the closing price. In addition, it may
show the daily volume of transactions. The upper end of each bar represents the day’s
highest price and the lower end the day’s lowest price. The small cross across the bar
marks the day’s closing price.
 Technical analysts believe that certain formations or patterns observed on the bar
char or line chart have predictive value. The more important formations and their
indications are described below:

Head and Shoulders Top (HST) Pattern: As the name suggests, the HST formation has
a left shoulder, a head, and a right shoulder. The HST formation represents a bearish
development. It the price falls below the neckline (the line drawn tangentially to the left
and right shoulders), a price decline is expected. Hence, it is a signal to sell.

Inverse Head and Shoulders Top (IHST) Pattern: As the name indicates, the IHST
formation is the inverse of the HST formation. Hence, it reflects a bullish development. It
the price rises above the neck line, a price rise is expected. Hence, it is a signal to buy.

Triangle or Coil Formation: This formation represents a pattern of uncertainty. Hence,

it is difficult to predict which way the price will break out.

Flags and Pennants Formation: It typically signifies a pause after which the previous
price trend is likely to continue.

Double Top Formation: It represents a bearish development, signaling that the price is
expected to fall.

Double Bottom Formation: It reflects a bullish development, signaling that the price is
expected to rise.

Point and Figure Chart

More complex than a bar chart, a point and figure chart (PFC) has the following features:
 Company
Profile

COMPANY PROFILE

http://www.itifsl.co.in/Index.aspx

http://www.itifsl.co.in/Index.aspx
 ITIFSL is emerging as one of the top most wealth management companies in India
with a daily turnover of over 200 crores and 116 branches spread all over the country.
ITIFSL, originally promoted by the Investment Trust of India, is now a part of the Sharyans
and Inga Group. The Sharyans Group has an impressive portfolio of businesses under its fold
which mainly fall under the real estate and financial services categories. The prominent
subsidiaries of this Group are Prebone Yamane (Country’s largest debt broking company),
Intime Spectrum (India’s largest Registry & Transfer Agents), and Collin Stewarts India
Private Limited (Portfolio Management Services & Research along with institutional broking
operations for Collin Stewarts which is the largest wealth management company in the UK).
Under the guidance of the Sharyans and Inga Group, ITIFSL will soon touch the pinnacles of
success in the financial services industry by being a dominant force in the broking as well as
the distribution arena. With an unblemished and reputed track record, ITIFSL is all set
become an imposing wealth management firm in the country by giving the best to its clients
as well as stakeholders.

ITI FSL has been set up to engage in

• Stock Broking
• Institutional Broking
• Derivatives
• Depository Services
• Distribution of Investment Products
• Distribution of Insurance

• Commodities Broking
Headquartered in Chennai, ITI FSL has a growing network of offices across several states
to ensure easy accessibility to our clients wherever they are. ITIFSL has over 116 Branch
Offices spread across the country to offer better reach and service to the investor. The
company currently marks its presence in the following regions:

• Andhra Pradesh
• Delhi
• Karnataka
• Maharashtra
• Madhya Pradesh
• Tamil Nadu
• West Bengal

Mission:
ITI FSL's mission is to deliver value with commitment. Emerging as one of the
front-line Brokerage Houses and a dominant force in the Distribution arena, we are
continuously engaged in the assessment of market conditions to balance risk and
reward so as to optimize returns to our investors.
Vision:
"To be the most Preferred Financial Advisor, Creator, Wealth Manager and to
deliver the Highest Standards of Service to customers and be Prominent in the horde
of Finance Companies offering similar services".

Why ITIFSL?
• ITIFSL’s services are offered under total confidentiality and integrity with the sole
purpose of maximizing returns for their clients.
• Equity Broking - Corporate Member of The Stock Exchange, Mumbai (BSE) and
National Stock Exchange of India Ltd. (NSE).
• Pan India reach - 380 terminals spread across 75 different locations, in semi urban,
urban and metropolitan areas.
• More than 100,000 retail clients serviced from the above locations
• ITIFSL have heavily invested in technology (customized and ready to use software)
involving front and back end operations offering seamless process and flawless
execution and raising our service levels.
• ITIFSL operate on an alert and well-defined system in risk management and
settlement mechanism

OFFERINGS
Research competency:
Our primary strengths lie in research and operational efficiency. The day-to-day operations
are managed by some of the best professionals in the industry having in-depth understanding
of underlying market trends and sound business practices The Research Team comprises of
competent professionals with vast experience, insightful analytical abilities and high
standards of integrity.

Some of research reports are as below:

Economic Outlook and Updates

Sector & Company Reports
Technical Recommendations
Daily Market Report
Daily Technical Outlook
Reports on New Fund Offerings
Weekly analysis of mutual funds – Fund
Focus
Weekly debt report: Debt Dose
Monthly Newsletter - ITI Investment
Flash
Monthly 4 Pager - ITI Wealth Wise

ITIFSL also offer daily technical calls through SMS to our clients free of charge

ADVANTAGES TO INVESTERS:

Why you need a financial planner?

The financial planner is someone who can help you invest across investment avenues based
on your risk profile and investment objectives. Post-investment, he monitors your investments
and ensures that you are on course to achieve your investment objectives. If necessary, he
suggests changes to your financial plan so that you are able to achieve your investment
objectives as planned.

Given the critical inputs provided by the financial planner in helping you achieve your
financial goals, it is important that you select the right financial planner. Here are the reasons
why ITI is the right planner for you…
Certification/Membership

More than anything else, this is a pre-requisite from the compliance point of view. Your
financial planner should be certified and registered as a broker or mutual fund agent with
NSE, BSE, AMFI etc. ITI FSL has Trading and Clearing Memberships with major Stock
Exchanges in India to offer broking services across market segments at all of the National-
level Exchanges. ITI FSL is a Depository Participant with CDSL. We also have memberships
with commodity exchanges. We have AMFI certified professionals to advice you on mutual
funds.

Competence

Gone are the days when financial planning simply required delivering application forms. The
traditional "one-size fits all" approach is passé.

With the increasing list of investment avenues on offer, selecting the one that suits you the
best is becoming a challenge. To that end, competence and skill set are the basic criteria that
investors should look for in an investment planner.

With ITI fine staff of professionals, you can be sure that you will get the best advice and
service to achieve your financial goals. Furthermore, the recommendations offered by ITI are
backed by solid research.

Value-add services

In addition to financial planning, ITI provides related, value-add services that can assist you
in the investment process. On-line tools and calculators are some of our more popular value-
add services. These tools can help you keep track of your investments. These value-add
services form an integral part of our offering.

One-stop shop

Every individual has different needs and the same undergo a change over a period of time.
The financial planner should be capable enough to understand these needs and offer suitable
products to fulfill them. For this purpose, ITI provides you with the entire range of investment
products from stocks, mutual funds, bonds to fixed deposits. In other words, we offer a "one-
stop" solution for all your investment needs.

Accessibility

One of the common complaints from investors is that their financial planner is
unavailable/inaccessible and therefore unable to provide adequate/prompt service. This is
particularly common in a one-man setup where the financial planner's services begin and end
with him, with little or no backup.
If the financial planner is preoccupied with some important clients or if he re-locates, it leaves
you in a soup because your financial plan is in limbo. It is best to go with a financial planning
initiative that is run by teams (as opposed to one-man setups) to ensure continuity of your
financial plan. ITI has a team of professionals who are ever ready to serve you at any point of
time. We are spread across the country so that you can have access to us always

Key learning’s in the organization

• EQUITY
• FUTURES
• OPTIONS
• COMMODITIES
• IPO
• MUTUAL FUNDS
• SIP
• TAX SAVING SCHEMES IN INDIA
• ONLINE AND OFFLINE TRADING
• PORTFOLIO MANAGEMENT
 Data
Analysis

ANALYSIS
 ICICI:

COMPANY PROFILE:

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$
81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for
the year ended March 31, 2010. The Bank has a network of 2,044 branches and about
5,546 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of
banking products and financial services to corporate and retail customers through a
variety of delivery channels and through its specialized subsidiaries in the areas of
investment banking, life and non-life insurance, venture capital and asset management.
The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches
in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai
International Finance Centre and representative offices in United Arab Emirates, China,
South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has
established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs)
are listed on the New York Stock Exchange (NYSE).

History:
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was
reduced to 46% through a public offering of shares in India in fiscal 1998, an equity
offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition
of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary
market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was
formed in 1955 at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a development
financial institution for providing medium-term and long-term project financing to Indian
businesses. In the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services group offering a
wide variety of products and services, both directly and through a number of subsidiaries
and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the
first bank or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the

emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the managements of ICICI and ICICI Bank formed the view that the
merger of ICICI with ICICI Bank would be the optimal strategic alternative for both
entities, and would create the optimal legal structure for the ICICI group's universal
banking strategy. The merger would enhance value for ICICI shareholders through the
merged entity's access to low-cost deposits, greater opportunities for earning fee-based
income and the ability to participate in the payments system and provide transaction-
banking services. The merger would enhance value for ICICI Bank shareholders through
a large capital base and scale of operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new business segments, higher market
share in various business segments, particularly fee-based services, and access to the vast
talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of
ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail
finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital
Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI
and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmadabad in March
2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in
April 2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity.

Board of Directors:

ICICI Bank's Board members include eminent individuals with a wealth of experience in
international business, management consulting, banking and financial services

Director's Profiles

Chanda Kochhar
Managing Director and Chief Executive Officer

N.S. Kannan K. Ramkumar Rajiv Sabharwal

Executive Director & CFO Executive Director Executive Director
Board Members:

Mr. K. V. Kamath, Chairman

Mr. Sridar Iyengar

Mr. Homi R. Khusrokhan

Dr. Anup K. Pujari

Mr. M.S. Ramachandran

Dr. Tushaar Shah

Mr. M.K. Sharma

Mr. V. Sridar

Mr. V. Prem Watsa

Ms. Chanda D. Kochhar,

Managing Director & CEO

Mr. N. S. Kannan,
Executive Director & CFO

Mr. K. Ramkumar,
Executive Director

Mr. Rajiv Sabharwal,

Executive Director

Investor Relations:

All the latest, in-depth information about ICICI Bank's financial performance and
business initiatives.
ICICI Bank disseminates information on its operations and initiatives on a regular
basis. The ICICI Bank website serves as a key investor awareness facility,
allowing stakeholders to access information on ICICI Bank at their convenience.
ICICI Bank's dedicated investor relations personnel play a proactive role in
disseminating information to both analysts and investors and respond to specific
queries.

BALANCE SHEET AS AT MARCH 31, 2010

PARTICULARS As at As at

March 31, March 31,

2010 2009

Rs.in crores Rs. in crores

SOURCES OF FUNDS:
11148.89 11132.90
Share Capital
0.00 0.00
Share warrants and outstanding
505034.77 484197.29
Total reserve
2020165.97 2183478.25
Deposits
942635.69 931554.54
Borrowings
155011.83 182646.64
Other liabilities and provisions

TOTAL LIABILITIES
3633997.15 3793009.62

APPLICATION OF FUNDS:
Cash and balance with reserve bank of 275142.92 175363.94
 India
Balance with banks and money at call 113594.02 124302.30
and short notice
1208928.01 1030583.08
Investments
1812055.97 2183108.49
Advances
71141.15 74437.06
(a) Gross Block
39014.25 36420.85
(b) Less:- Accumulated Depreciation
0 0
Less: impairment of assets
32126.90 38016.21
(c) Net Block
Lease adjustment 0 0
0 0
(d) Capital Work-in-Progress

OTHER ASSETS
3633997.15 3793009.62

Contingent liability
7270840.59 8346830.03

Bills of collection
64749.54 60004.38

CASH FLOW STATEMENT (Rs. in Million)

Year ended March 31,

2010 2009

53453.22 51169.69
Net profit before tax
52409.07 55240.66
Adjustments for expenses and provisions
-71184.82 -232835.55
Adjustments for liabilities and assets
61507.32 38578.81
Cash flow from investing activities
13826.17 16253.59
Cash flow from financing activities
-4954.30 6306.85
Effect of exchange fluctuation on translation reserve
94025.60 -87052.50
Net increase (decrease) in cash and cash equivalents
299665.64 280411.29
st
Cash and cash equivalents at 1 April
388736.94 299665.64
st
Cash and cash equivalents at 31 march

CLOSING PRICE
DATE
1st-Nov 1243.47
2nd-Nov 1250.79
3rd-Nov 1258.15
4th-Nov 1274.50
5th-Nov 1285.02
8th-Nov 1274.50
9th-Nov 1279
10thNov 1271.52
11thNov 1267.04
12thNov 1240.55
15thNov 1243.47
16thNov 1242.01
18th-Nov 1210.35
19th-Nov 1168.47
22ndNov 1197.63
23rdNov 1175.34
24th-Nov 1173.97
25th-Nov 1158.90
 26th-Nov 1156.19
29th-Nov 1164.36
30th-Nov 1157.54

INFERENCE:

The above graph represents the daily fluctuations in the market which is one of the major
proponent in Dow Theory. It is difficult to forecast day-to-day movements in the market.
In the above 15 days of trading, the share price of ICICI was highest on 5th Nov.-
Rs.1285.02 and the lowest was on 25th Nov. – Rs. 1156.19.

CLOSING PRICE SUM OF THREE YEARS AVERAGE

DATE
1st-Nov 1243.47
2nd-Nov 1250.79 3752.41 1250.80
3rd-Nov 1258.15 3783.44 1261.14
4th-Nov 1274.50 3817.67 1272.55
5th-Nov 1285.02 3834.02 1278
8th-Nov 1274.50 2550.52 850.17
9th-Nov 1279 3817.56 1272.52
10thNov 1271.52 3779.11 1259.70
11thNov 1267.04 3751.06 1250.35
12thNov 1240.55 3726.03 1242.01
15thNov 1243.47 3695.83 1231.94
16thNov 1242.01 3620.83 1206.94
18th-Nov 1210.35 3576.45 1192.15
19th-Nov 1168.47 3541.44 1180.48
22ndNov 1197.63 3546.94 1182.31
23rdNov 1175.34 3508.21 1169.40
24th-Nov 1173.97 3489.06 1163.02
25th-Nov 1158.90 3479.45 1159.81
26th-Nov 1156.19 3478.09 1159.36
29th-Nov 1164.36
30th-Nov 1157.54
INFERENCES:

A 15-day moving average of daily prices may be used to detect a short term trend. This
stock price line stands as an indicator to an investor whether to buy the share or to sell it.
In the above 15-day average the highest 3-year moving average is on 05th Nov.

STATE BANK OF INDIA:

Company Profile:

The evolution of State Bank of India can be traced back to the first decade of the 19th
century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June
1806. The bank was redesigned as the Bank of Bengal, three years later, on 2 January
1809. It was the first ever joint-stock bank of the British India, established under the
sponsorship of the Government of Bengal. Subsequently, the Bank of Bombay
(established on 15 April 1840) and the Bank of Madras (established on 1 July 1843)
followed the Bank of Bengal. These three banks dominated the modern banking scenario
in India, until when they were amalgamated to form the Imperial Bank of India, on 27
January1921

State Bank of India is an India-based bank. In addition to banking, the Company,

through its subsidiaries, provides a range of financial services, which include life
insurance, merchant banking, mutual funds, credit card, factoring, security trading,
pension fund management and primary dealership in the money market. It operates in
four business segments: Treasury, Corporate/Wholesale Banking, Retail Banking and
Other Banking Business. The Treasury segment includes the investment portfolio and
trading in foreign exchange contracts and derivative contracts. The Corporate/Wholesale
Banking segment comprises the lending activities of Corporate Accounts Group, Mid
Corporate Accounts Group and Stressed Assets Management Group. The Retail Banking
segment consists of branches in National Banking Group, which primarily includes
personal banking activities, including lending activities to corporate customers having
banking relations with branches in the National Banking Group.
History

An important turning point in the history of State Bank of India is the launch of the first
Five Year Plan of independent India, in 1951. The Plan aimed at serving the Indian
economy in general and the rural sector of the country, in particular. Until the Plan, the
commercial banks of the country, including the Imperial Bank of India, confined their
services to the urban sector. Moreover, they were not equipped to respond to the growing
needs of the economic revival taking shape in the rural areas of the country. Therefore, in
order to serve the economy as a whole and rural sector in particular, the All India Rural
Credit Survey Committee recommended the formation of a state-partnered and state-
sponsored bank.

The All India Rural Credit Survey Committee proposed the take over of the Imperial
Bank of India, and integrating with it, the former state-owned or state-associate banks.
Subsequently, an Act was passed in the Parliament of India in May 1955. As a result, the
State Bank of India (SBI) was established on 1 July 1955. This resulted in making the
State Bank of India more powerful, because as much as a quarter of the resources of the
Indian banking system were controlled directly by the State. Later on, the State Bank of
India (Subsidiary Banks) Act was passed in 1959. The Act enabled the State Bank of
India to make the eight former State-associated banks as its subsidiaries.

The State Bank of India emerged as a pacesetter, with its operations carried out by the
480 offices comprising branches, sub offices and three Local Head Offices, inherited
from the Imperial Bank. Instead of serving as mere repositories of the community's
savings and lending to creditworthy parties, the State Bank of India catered to the needs
of the customers, by banking purposefully. The bank served the heterogeneous financial
needs of the planned economic development.

INVESTOR RELATIONS:

State Bank of India, the country’s largest commercial Bank in terms of profits, assets,
deposits, branches and employees, welcomes you to its ‘Investors Relations’ Section.
SBI, with its heritage dating back to the year 1806, strives to continuously provide latest
and up to date information on its financial performance. It is our endeavor to walk on the
path of transparency and allow complete access to all the stakeholders enabling total
awareness about the Bank. The Bank communicates with the stakeholders through a
variety of channels, such as through e-mail, website, conference call, one-on-one
meeting, analysts’ meet and attendance at Investor Conference throughout the world.

Please find below Bank’s financial results, analysis of performance and other highlights
which will be of interest to Investors, Fund Managers and Analysts. SBI has always been
fundamentally strong in its core business which is mirrored in its results – year after
year.

Board of directors:

1 Chairman / Chair Person

Mr. P Bhatt
2 Dr.Ashok Jhunjhunwala Director
Director
3 Dr.(Mrs.)Vasantha Bharucha
Director
4 Mrs.Shyamala Gopinath
Director
5 Mr.S Venkatachalam
Director
6 Mr.Ashok Chawla
Director
7 Mr.D Sundaram
Director
8 Mr.Dileep C Choksi
Director
9 Dr.Rajiv Kumar
Managing Director
10 Mr.R Sridharan

Branches:

The corporate centre of SBI is located in Mumbai. In order to cater to different functions,
there are several other establishments in and outside Mumbai, apart from the corporate
centre. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices,
located at major cities throughout India. It is recorded that SBI has about 10000 branches,
well networked to cater to its customers throughout India.

ATMServices:

SBI provides easy access to money to its customers through more than 8500 ATMs in
India. The Bank also facilitates the free transaction of money at the ATMs of State Bank
Group, which includes the ATMs of State Bank of India as

Well as the Associate Banks –

State Bank of Bikaner & Jaipur,

State Bank of Hyderabad,

State Bank of Indore, etc.

You may also transact money through SBI Commercial and International Bank Ltd by
using the State Bank ATM-cum-Debit (Cash Plus) card.

Subsidiaries:

The State Bank Group includes a network of eight banking subsidiaries and several non-
banking subsidiaries. Through the establishments, it offers various services including
merchant banking services, fund management, factoring services, primary dealership in
government securities, credit cards and insurance.

The eight banking subsidiaries are:

• State Bank of Bikaner and Jaipur (SBBJ)

• State Bank of Hyderabad (SBH)
• State Bank of India (SBI)
• State Bank of Indore (SBIR)
• State Bank of Mysore (SBM)
• State Bank of Patiala (SBP)
• State Bank of Saurashtra (SBS)
• State Bank of Travancore (SBT)

Personal Banking:

• SBI Term Deposits SBI Loan For Pensioners

• SBI Recurring Deposits Loan Against Mortgage Of Property
• SBI Housing Loan Against Shares & Debentures
• SBI Car Loan Rent Plus Scheme
• SBI Educational Loan Medi-Plus Scheme
Other Services:

• Agriculture/Rural Banking
• NRI Services
• ATM Services
• Demat Services
• Corporate Banking
• Internet Banking
• Mobile Banking
• International Banking
• Safe Deposit Locker
• RBIEFT
• E-Pay
• E-Rail
• SBI Vishwa Yatra Foreign Travel Card
• Broking Services
• Gift Cheques

BALANCE SHEET AS AT MARCH 31, 2010

PARTICULARS As at As at

March 31, March 31,

2010 2009

Rs.in crores Rs. in crores

SOURCES OF FUNDS:
6348.83 6348.80
Share Capital
0.00 0.00
Share warrants and outstanding
653143.16 573128.16
Total reserve
8041162.27 7420731.28
Deposits
1030116.01 840579.29
Borrowings
803367.04 9644320.81
Other liabilities and provisions
TOTAL LIABILITIES
10534137.31 9644320.81

APPLICATION OF FUNDS:
Cash and balance with reserve bank of 612908.65 555461.73
India
Balance with banks and money at call 348929.76 488576.26
and short notice
2857900.71 2759539.57
Investments
6319141.52 5425032.04
Advances

(a) Gross Block

118316.27 104030.58

(b) Less:- Accumulated Depreciation

77141.07 68310.06

Less: impairment of assets

0 0

(c) Net Block 41175.20

35720.52

Lease adjustment
2.03 23.57

(d) Capital Work-in-

Progress 2951.84 2634.37

Other assets 351127.60 377332.74

Total assets 10534137.31 9644320.81

Contingent liability 5484468.85

7236997.57

Bills of collection
 479223.28 438705.67

CASH FLOW STATEMENT (Rs. in Million)

Year ended March 31,

2010 2009

139260.96 141806.43
Net profit before tax
51863.33 85529.74
Adjustments for expenses and provisions
-140025.50 140255.77
Adjustments for liabilities and assets
-17615.23 -16519.30
Cash flow from investing activities
-33596.71 50973.84
Cash flow from financing activities
-12937.75 20581.62
Effect of exchange fluctuation on translation reserve
-69261.82 -329251.83
Net increase (decrease) in cash and cash equivalents
1044037.99 674663.35
Cash and cash equivalents at 1st April
961838.42 1044037.99
Cash and cash equivalents at 31st march

CLOSING PRICE
DATE
1st-Nov 3223.15
2nd-Nov 3245.71
3rd-Nov 3294.58
4th-Nov 3462.86
 5th-Nov 3501.02
8th-Nov 3511.50
9th-Nov 3347.52
10thNov 3297.86
11thNov 3255.42
12thNov 3178.50
15thNov 3184.84
16thNov 3197.56
18th-Nov 3115.79
19th-Nov 3069.57
22ndNov 3060.41
23rdNov 3015.02
24th-Nov 2979.18
25th-Nov 2894.33
26th-Nov 2920.40
30th-Nov 3000.03

INFERENCE:

The above graph represents the daily fluctuations in the market which is one of the major
proponents in Dow Theory. It is difficult to forecast day-to-day movements in the
market. In the above 15 days of trading, the share price of ICICI was highest on 5th Nov.-
Rs.3501.02 and the lowest was on 25th Nov. – Rs. 2894.33.
 CLOSING PRICE SUM OF THREE YEARS AVERAGE
DATE
1st-Nov 3223.15
2nd-Nov 3245.71 9763.44 3254.48
3rd-Nov 3294.58 10003.15 3334.38
4th-Nov 3462.86 10258.46 3419.48
5th-Nov 3501.02 10475.38 3491.79
8th-Nov 3511.50 10360.04 3453.34
9th-Nov 3347.52 10156.88 3385.62
10thNov 3297.86 9900.8 3300.26
11thNov 3255.42 9731.78 3243.92
12thNov 3178.50 9618.76 3206.25
15thNov 3184.84 9560.9 3186.96
16thNov 3197.56 9498.19 3166.06
18th-Nov 3115.79 9382.92 3127.64
19th-Nov 3069.57 9245.77 3081.92
22ndNov 3060.41 9145 3048.33
23rdNov 3015.02 9054.61 3018.20
24th-Nov 2979.18 8888.53 2962.84
25th-Nov 2894.33 8793.91 2931.30
26th-Nov 2920.40 8814.76 2938.25
30th-Nov 3000.03

INFERENCES:

A 15-day moving average of daily prices may be used to detect a short term trend. This
stock price line stands as an indicator to an investor whether to buy the share or to sell it.
In the above 15-day average the highest 3-year moving average is on 05th Nov.
Summary

SUMMARY
 Investing in financial securities is now considered to be one of the best avenues for
investing one’s savings while it is acknowledged to be one of the most risky avenues of
investment. Even Indian Government is planning to encourage people in rural areas to
invest in equity. This will help the markets to stabilize by tapping the rural areas and
decreases the dependency on Foreign Institutional Investors.

The factors which were studied under this are to know about stock markets in India,
how they work, prerequisites to enter the stock markets, market design, stock selection,
when to buy or sell a stock, how to invest, knowing about market intermediaries.

For successful investment factors like timing, selection, setting targets, avoiding
speculation and constant review of portfolio is advised.
Suggestions

SUGGESTIONS
Suggestions to an investor for reaping good returns in Equity Investment

• Proper scientific way of investigation should be undertaken about sector and its
players before investment

• Clear targets should be set before investment

• Stock pickup should be always selective and should not depend on rumors of the
market

• Define price range first before buying and selling shares

• Before buying and selling shares latest price movement trends should be analyzed

• Speculation is not advised in the market

• Individual Risk tolerance should be known and then be ready for unexpected

• Constant proper review of portfolio should be done and wherever required buying
and selling of shares should be done.
 Conclusions

CONCLUSIONS

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

According to Fundamental Analysis:

Economy:

While analyzing stock, investor should consider GNP, Price conditions, Economy,
Housing, Construction Activity, Employment, Accumulation of inventories, Personal
Disposable Income, Personal savings, Interest rates, Balance of Trade, Strength of the
Rupee in Foreign exchange market and Corporate Taxation (Direct and Indirect)

Sector Analysis:

It is advised to invest in a sector that is either in a pioneering stage or in its expansion

stage. It is advisable to quickly get out of sectors which are in the stagnation stage prior
to its lapse into the decline stage. The particular phase or stage of a sector can be
determined in terms of sales, profitability and their growth rates amongst other factors.

Company Analysis:

In company analysis, history of the company and line of business, Product portfolio’s
strength, Market share, Top Management, Intrinsic Values like Patents and Trademarks
held, Foreign collaboration, its need and availability for future, Quality of competition in
the market, present and future, Future business plans and projects, Level of trading of the
company’s listed scrip, EPS, its growth and rating vis-à-vis other companies in the
industry, P/E Ratio, Growth in Sales are analyzed.

According to technical analysis:

The fundamental analysis is the determination of price based on future earnings; where as
the price of a security represents a consensus. The price at which an investor is willing to
buy or sell depends primarily on his expectations. For this purpose technical analysis also
forms a strong tool in analyzing a company where the price movements are recorded in
charts and analyzed.
LIMITATIONS OF THE STUDY

• The study is confined to only one sector.

• All the limitations of Fundamental Analysis, Technical Analysis are applicable to
the study.
• The factors which affect the markets and intangible are not considered.
• Risk perception is considered to be moderate which may not be acceptable to all.
• The data for the study considered is of past two years, so analysis is restricted to
that period only.
• In the application of Dow Theory, only daily price fluctuations were considered
due to time constraint.
 Bibliography

BIBILIOGRAPHY

BOOKS REFFERED:
 o Security Analysis and Portfolio Management

- Prasanna Chandra.

o Investments

- William, Sharpe

WEBSITES:

www.about.stocks.com

www.nseindia.com

www.buzzingstocks.com

www.moneycontrol.com