SUMMER INTERNSHIP PROGRAM-2022

INTERIM REPORT ON

EQUITY RESEARCH OF CHEMICAL SECTOR

(MID CAP)

BY

VIKRAM SAROHA

21BSPHH01C1464

HDFC LIFE INSURANCE PRIVATE LIMITED

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 SUMMER INTERNSHIP PROGRAM-2022

INTERIM REPORT ON

EQUITY RESEARCH OF CHEMICAL SECTOR

(MID CAP)

BY

VIKRAM SAROHA

21BSPHH01C1464

HDFC LIFE INSURANCE PRIVATE LIMITED

A report submitted in partial fulfillment of

the requirements of MBA Program of

IBS Hyderabad

Company Guide: Faculty Guide:

Mohd. Yusuf Khan Dr. Vaibhav Shekhar

Circle Head (HDFC LIFE) (Associate Professor)

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 ABSTRACT
The project aims at compiling a portfolio targeted to get maximum returns to the investors, and
for this we were allotted different sectors and were taught how to analyses different stocks and
predict their future growth movement using various techniques.

Regarding the project, we have opened our own Demat and trading account in a pair of two
candidates, where we analyze the stock market daily and trade in the market to understand the
working of various techniques used and analyze different sectors.

We were given training to analyze different sectors of the economy and find specifics a
portfolio manager should look at while selecting stocks for building a portfolio. We were given
hands-on training for an online trading platform where we learnt how to trade stocks online
and how to analyze the future performance of stocks using different technical analysis tools
such as candlesticks pattern.

To predict the future of any stocks, the first step begins with fundamental and technical
analysis. Starting with the training sessions we were taught about different investment options
available for an investor and how to help the investor to choose the best alternative so that they
can gain maximum from their investments.

And to acquire personal management and convincing skills, we were allotted a task to sell a
life insurance policy where different plans were explained to us and we were observed, while
we sell those plans in open market where the company checked our time management and
personal management skills.

We have been allocated a sector on which our project will be based on and currently I am
working on Chemical Sector (Mid cap).

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 TABLE OF CONTENTS

S. NO. TOPIC PAGE NO.

1 Introduction 5
2 About the company 6
3 Swot analysis 7
4 Insurance industry 9
5 Chemical sector 12
6 Project description – Intraday strategy 13
7 Mid-term strategy 16
8 Long term strategy 19
9 Indicators 21
10 Fundamental analysis 28
11 Index 31
12 Mutual fund 34

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 INTRODUCTION

EQUITY RESEARCH OF CHEMICAL SECTOR (MID CAP)

This project provides an analysis of chemical sector (middle cap) market capitalization
companies, their impact, and will provide a mutual fund that will be suitable for an investor
willing to invest in this sector.

In the project we will determine the best combination of companies that will generate more
result than the index. To reach this conclusion we will do technical and fundamental analysis
and use other methods of hedging to provide for risk cover

Technical Analysis: In this method we analyse the impact of demand and supply on the change
in price of the share of a company. This helps in short term trading of a security but also helps
in analysing the long-term position of the stock in the sector. In technical analysts look at the
following broad types of indicators:

o Price trends

o Chart patterns

o Volume and momentum indicators

o Moving averages

o Support and resistance levels

Fundamental Analysis: In this we measure the intrinsic value of the stock with the help of
economic and financial indicators. This tool helps us in finding the overvalued and undervalued
stocks of the sector. Fundamental analysis comprises of two categories quantitative and
qualitative analysis.

Hedging: A hedge is an investment that is made with the intention of reducing the risk of
adverse price movements in an asset. Normally, a hedge consists of taking an offsetting or
opposite position in a related security.

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 ABOUT THE COMPANY

HDFC Standard Life Insurance Company Ltd. is a leading private insurance company in
India, providing a variety of individual and group insurance solutions. It is a joint venture
between Housing Development Finance Corporation Limited (HDFC Ltd.), India's leading
housing finance institution, and a Standard Life Group Company in the United Kingdom.
As of December 31, 2007, HDFC owned 72.38 percent of the joint venture.

HISTORY:

HDFC Limited

o HDFC is India's leading housing finance institution, having assisted in the construction
of over 230,000 homes since its inception in 1977.
o During the fiscal year 2003-04, its assets under management surpassed Rs. 36,000
crores.
o Outstanding deposits stood at Rs. 7,840 crores as of March 31, 2004.
o The depositor base has now grown to approximately one million depositors.
o CRISIL and ICRA have rated it AAA for the tenth year in a row.
o Management that is stable and experienced
o High levels of service
o The Economic Times Corporate Citizen of the Year Award was given to the company
for its long-standing commitment to community development.
o At the third Annual Outlook Money Awards in 2004, I received the Dream Home award
for the best housing finance provider.

The Standard Life Insurance Company Standard Life plc and its affiliates

o Giroup Standard Life (Standard Life ple and its subsidiaries)

o For over 180 years, the Standard Life group has been looking after customers' financial
needs.
o It currently has approximately 7 million customers who rely on the company for their
insurance, pension, investment, banking, and health-care needs.
o Its investment manager is currently in charge of A£l25 billion in assets.
o It is a leading pensions provider in the UK, and it is rated as 'strong' by Standard&
Poor's with an A rating, and 'good' by Moody's with an Al rating.

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o Standard Life was named the 'Best Pension Provider' at the Money Marketing Awards
in 2004, 2005, and 2006, and it has been named a 5star life and pensions provider at the
Financial Adviser Service Awards for the last ten years in a row. Standard Life
Investments has received the '5 Star' rating for the last ten years, and Standard Life
Bank has received the rating since its inception in 1998. Standard Life Bank was named
the 'Best Flexible Mortgage Lender' at the 2006 Mortgage Magazine Awards.

SWOT ANALYSIS:

STRENGTHS:
o The domestic image of HDFC, supported by Standard Life's international image, is the
company's strength.
o A large and well-connected network of qualified intermediaries and salespeople.
o A substantial capital and reserve base.
o The company provides excellent customer service.
o A wide range of products suitable for people of all ages and income levels.
o A large pool of technically skilled labour with in-depth market knowledge and
understanding.
o The company also offers innovative products to meet the diverse needs of its customers.

WEAKNESS:
o Expensive management and administrative costs.
o Low customer trust in private players.
o A vertical hierarchical reporting structure with numerous designations and cadres that
inevitably leads to power politics at all levels.
o Agents who are tied up have a low retention rate.

OPPORTUNITES:
o Insurable population: According to the IRDA, only 10% of the population is insured.
This means that more than 300 million people with the ability to purchase insurance are
uninsured.

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o Managerial and financial expertise from the world's leading insurance markets will be
brought in. Furthermore, the burden of educating consumers will be shared by a number
of players.
o International companies will contribute to the development of world-class expertise in
the local market by introducing best global practises.

THREAT:
o Competition from other private insurance companies for the same uninsured
population.
o Public-sector insurance companies such as LIC, National Insurance Company Limited,
Oriental Insurance Company Limited, New India Assurance Company Limited, and
United India Insurance Company Limited. People have more faith in them and turn to
them for help.
o Customer base poaching by other companies.
o The majority of people do not understand the need for insurance or are unwilling to
purchase insurance policies in general.

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 INSURANCE INDUSTRY ANALYSIS
Insurance is a means of protecting oneself against financial loss. It is a type of risk management
that is primarily used to mitigate the risk of a contingent or uncertain loss. An insurer, insurance
company, insurance carrier, or underwriter is a company that provides insurance. A
policyholder is a person or entity who purchases insurance, whereas an insured is a person or
entity who is covered by the policy. Policyholder and insured are frequently used
interchangeably, but they are not synonymous, because coverage can sometimes extend to
additional insureds who did not purchase the insurance. In exchange for the insurer's promise
to compensate the insured in the event of a covered loss, the policyholder assumes a guaranteed,
known, and relatively small loss in the form of a payment to the insurer (a premium). The loss
could be financial or non-financial, but it must be quantifiable. Furthermore, it usually involves
something in which the insured has an insurable interest as a result of ownership, possession,
or a prior relationship.

The insured receives a contract, known as an insurance policy, outlining the terms and
conditions under which the insurer will compensate the insured, or their designated beneficiary
or assignee. The premium is the amount of money charged by the insurer to the policyholder
for the coverage specified in the insurance policy. If the insured suffers a loss that may be
covered by the insurance policy, he or she submits a claim to the insurer, who then forwards it
to a claims adjuster for processing.

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India's insurance industry is comprised of 57 insurance companies. 24 are life insurers, while
the remaining 34 are non-life insurers. Life Insurance Corporation (LIC) is the sole public-
sector life insurer. In the non-life insurance segment, there are six public sector insurers. In
addition, there is only one national re-insurer, the General Insurance Corporation of India (GIC
Re). Agents (individual and corporate), brokers, surveyors, and third-party administrators who
handle health insurance claims are among the other stakeholders in the Indian insurance
market.

The overall market size of the insurance sector in India is expected to be US$ 280 billion in
2020. Between 2019 and 2023, the life insurance industry is expected to grow at a CAGR of
5.3 percent. In FY21, India's insurance penetration was 4.2 percent, with life insurance
penetration at 3.2 percent and non-life insurance penetration at 1.0 percent. In terms of
insurance density, India's overall density in FY21 was US$78. The life insurance industry grew
by 5.8 percent in the first half of FY22, compared to 0.8 percent in the same period last year.
In September 2021, new premiums for life insurers increased by 22.2 percent, up from 2.9
percent in September 2020.

Gross premiums written off by non-life insurers totalled Rs. 108,705.3 crore (US$ 14.47
billion) between April 2021 and September 2021, a 12.8 percent increase over the same period
in FY21. The total premium earned by the non-life insurance segment in October 2021 was Rs.
17,679.98 crore (US$ 2.38 billion), up from Rs. 15,906.71 crore (US$ 2.14 billion) in October
2020. The private sector's market share in general and health insurance increased from 47.97
percent in FY19 to 48.03 percent in FY20. In the life insurance segment, private players held
a 33.78 percent market share in premium underwritten services in FY20. In FY22*, premiums
from new business of life insurance companies in India totalled US$ 20.7 billion, while
renewable premiums totalled US$ 20.7 billion. Premiums from new business of life insurance
companies in India totalled US$ 20.7 billion in FY22*, while renewable premiums totalled
US$ 53.7 billion.

Non-life insurance premiums stood at Rs. 20,171 crore (US$ 2.71 billion) in July 2021, up 19.5
percent year on year from Rs. 16,885 crore (US$ 2.26 billion) in July 2020. The strong
performance of the health and motor segments drove the growth. In July 2021, standalone
private health issuers reported a premium increase of Rs. 1,753 crore (US$ 235.11 million), a
27.5 percent year on year increase. The gross direct premium income for the general insurance
industry in India was Rs. 1,087 billion (US$ 14.62 billion) in FY22 (until September 2021), a

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12.3 percent increase year on year, owing to 28.8 percent growth in the health segment and
84.7 percent growth in the personal accident segment.

Six standalone private sector health insurance companies increased their gross premium by
66.6 percent to Rs 1,406.64 crore (US$ 191.84 million) in May 2021, up from Rs 844.13 crore
(US$ 115.12 million) the previous month.

Health insurance companies in the non-life insurance sector increased by 41% in March 2021,
owing to rising demand for health insurance products amid the COVID-19 surge. Non-life
insurers' premiums, which include general, standalone, and specialised public-sector, increased
19.46 percent year on year in July 2021, reaching Rs. 20,171.15 crore (US$ 2.71 billion) from
Rs. 16,885 crore (US$ 2.27 billion) in the same month last year.

According to S&P Global Market Intelligence data, India is the second-largest insurance
technology market in Asia-Pacific, accounting for 35% of the country's US$ 3.66 billion
insures-focused venture investments.

Source - https://www.ibef.org/industry/insurance-sector-india/infographic

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ABOUT THE SECTOR – CHEMICAL

Chemical Covering more than 80,000 commercial products, India’s chemical industry is
extremely diversified and can be broadly classified into bulk chemicals, specialty chemicals,
agrochemicals, petrochemicals, polymers and fertilisers.

Globally, India is the fourth-largest producer of agrochemicals after the United States, Japan
and China. India accounts for ~16% of the world production of dyestuffs and dye intermediates.
Indian colorants industry has emerged as a key player with a global market share of ~15%. The
country’s chemicals industry is de-licensed, except for few hazardous chemicals. India holds a
strong position in exports and imports of chemicals at a global level and ranks 14th in exports
and 8th in imports at global level (excluding pharmaceuticals).

The domestic chemicals sector's small and medium enterprises are expected to showcase 18-
23% revenue growth in FY22, owing to an improvement in domestic demand and higher
realisation due to high prices of chemicals.

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 PROJECT DESCRIPTION

1. INTRADAY STRATEGY
Intraday trading as the name suggests refers to the trading done by investors on a day-to-day
basis. In this type of trading, an investor settles his accounts on the same day itself. This is a
trading which is widely followed by Retail and Individual investors who are looking for quick
and good profits in the short run. It is considered a really risky kind of a trade as it is very
hugely dependent on factors like news and volatility in the market and it also doesn’t allow the
time to recover the losses for an investor. Though a certain set of strategies can help investors
analyse in advance on how the market is going to perform on that particular day.

1.1 DOJI

Source – tradingview.com

A Doji is a candlestick pattern that looks like a cross as the opening price and the closing prices
are equal or almost the same. When looked at in isolation, a Doji indicates that neither the
buyers nor sellers are gaining – it's a sign of indecision.

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 1.2 INVERTED HAMMER

Inverted Hammer candlestick is a pattern that appears on a chart when there is a buyer’s
pressure for pushing the price of the stocks upwards. This is a reversal candlestick pattern that
appears at the bottom of a downtrend and signals a potential bullish reversal.

This candlestick pattern gets its name from an inverted hammer in real life.

Source – tradingview.com

1.3 BLENDING CANDLES

1.3.1 BULL 180

In this strategy, shares should be bought when they are continuously falling over some time
and it increases suddenly. (Note – It's better if the share is bought when the increase in the
following candle is higher than the preceding candle). The strategy is best suited to stocks that
are sold in the opening hours of the market as the institutional investors try to bring down the
price but it generally gets recovered to some extent or could even cross the range of its fall.

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Here is one example of the strategy being followed in the real time.

1.3.2 BEAR 180

In this strategy, shares should be short sold when they are continuously increasing but then
suddenly fall, here it should be noted that the fall should be greater than the increase in order
to earn profits through Short Sell. This type of strategy is generally witnessed on days when
SENSEX and NIFTY fall by a considerable amount and generally in stocks which have the
potential to grow. The strategy focuses on selling first and then buying henceforth creating an
arbitrary image of the stock in the mind of the investors.

1.4 SHOOTING STAR

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2. MID TERM STRAGERY

In order to carry out short-term trading by investing in the share market i.e. for a period of 1 to
90 days as well as to carry out medium-term trading i.e. for a period of 6 months to 18 months,
you should understand the kind of portfolio of shares you need to carry

2.1 SYMMETRICAL TRIANGLES

Symmetrical triangles occur when a security's price is consolidating in a way that generates
two converging trend lines with similar slopes. The breakout or breakdown targets for a
symmetrical triangle is equal to the distance between the initial high and low applied to the
breakout or breakdown point.

2.2 ASCENDING TRIANGLE

The ascending triangle is a bullish formation that usually forms during an uptrend as a
continuation pattern. There are instances when ascending triangles form as reversal patterns at
the end of a downtrend, but they are typically continuation patterns. Regardless of where they
form, ascending triangles are bullish patterns that indicate accumulation.

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2.3 DESCENDING TRIANGLE

The descending triangle is a bearish formation that usually forms during a downtrend as a
continuation pattern. There are instances when descending triangles form as reversal patterns
at the end of an uptrend, but they are typically continuation patterns. Regardless of where they
form, descending triangles are bearish patterns that indicate distribution.

2.4 PRICE CHANNEL

A price channel is a continuation pattern that slopes up or down and is bound by an upper and
lower trendline. The upper trendline marks resistance and the lower trendline marks support.
Price channels with negative slopes (down) are considered bearish and those with positive
slopes (up) bullish. For explanatory purposes, a "bullish price channel" will refer to a channel
with positive slope and a "bearish price channel" to a channel with negative slope.

Bullish price channel: As long as prices advance and trade within the channel, the trend is
considered bullish. The first warning of a trend change occurs when prices fall short of channel
line resistance. A subsequent break below main trendline support would provide further
indication of a trend change. A break above channel line resistance would be bullish and
indicate an acceleration of the advance.

Bearish price channel: As long as prices decline and trade within the channel, the trend is
considered bearish. The first warning of a trend change occurs when prices fail to reach channel

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line support. A subsequent break above main trendline resistance would provide further
indication of a trend change. A break below channel line support would be bearish and indicate
an acceleration of the decline.

2.5 RECTANGLE

A rectangle is a continuation pattern that forms as a trading range during a pause in the trend.
The pattern is easily identifiable by two comparable highs and two comparable lows. The highs
and lows can be connected to form two parallel lines that make up the top and bottom of a
rectangle. Rectangles are sometimes referred to as trading ranges, consolidation zones or
congestion areas.

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3. LONG TERM STRAGERY

3.1 Double Top (Reversal)

The double top is a major reversal pattern that forms after an extended uptrend. As its name
implies, the pattern is made up of two consecutive peaks that are roughly equal, with a moderate
trough in between.

Although there can be variations, the classic double top marks at least an intermediate change,
if not long-term change, in trend from bullish to bearish. Many potential double tops can form
along the way up, but until key support is broken, a reversal cannot be confirmed

Above is the example of double top

3.2 Double Bottom (Reversal)

The double bottom is a major reversal pattern that forms after an extended downtrend. As its
name implies, the pattern is made up of two consecutive troughs that are roughly equal, with a
moderate peak in between

Although there can be variations, the classic double bottom usually marks an intermediate or
long-term change in trend. Many potential double bottoms can form along the way down, but
until key resistance is broken, a reversal cannot be confirmed.

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3.3 Head and Shoulders Top (Reversal)

A head and shoulders reversal pattern forms after an uptrend, and its completion marks a trend
reversal. The pattern contains three successive peaks with the middle peak (head) being the
highest and the two outside peaks (shoulders) being low and roughly equal. The reaction lows
of each peak can be connected to form support, or a neckline

3.4 Rounding Bottom

The rounding bottom is a long-term reversal pattern that is best suited for weekly charts. It is
also referred to as a saucer bottom, and represents a long consolidation period that turns from
a bearish bias to a bullish bias.

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 4) TECHNICAL INDICATORS
Traders who use technical analysis use technical indicators, which are heuristic or
mathematical calculations based on the price, volume, or open interest of an asset or contract.
By analysing historical data, technical analysts use indicators to predict future price
movements. Unlike fundamental analysts, who attempt to determine a security's intrinsic value
based on financial or economic data, technical analysts evaluate a security's strength or
weakness using price patterns, trading signals, and other analytical charting tools. These
indicators are used to determine entry and exit points for trades, technical analysts or chartists
look for technical indicators in historical asset price data. Any security with past trading data
can benefit from technical analysis. Stocks, futures, commodities, fixed-income, currencies,
and other securities fall under this category. In our internship we are taught 10 Indicators
namely:

• Super Trend
• RSI (Relative Strength Index)
• VWAP (Volume Weighted Average Price)
• MACD (Moving Average Convergence Divergence)
• CPR
• Fibonacci Golden Cross & Death Cross
• Bollinger Bands
• Stochastic RSI
• Aroon

1) Super trend:

A Super Trend is a trend following indicator similar to moving averages. It is plotted on price
and the current trend can simply be determined by its placement vis-a-vis price. It is a very
simple indicator and is constructed with the help of just two parameters- period and multiplier.
When we construct the Super trend indicator strategy, the default parameters are 10 for Average
True Range (ATR) and 3 for its multiplier. The average true range (ATR) plays a key role in
‘Super trend’ as the indicator uses ATR to compute its value and it signals the degree of price
volatility.To use this indicator, open the chart of the stock you want to track and set time
interval of 5 Minutes

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For Buy Call: Purchase the stock where “Long” is written.
For Short Sell: Sell the stock where “Short” is written.

2) RSI:

The Relative Strength Index (RSI) is a technical analysis indicator that examines the size of
recent price fluctuations to determine if a stock or other asset is overbought or oversold. The
RSI is represented by an oscillator (a line graph that travels between two extremes) with a range
of 0 to 100.

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 3) VWAP:

The Volume-Weighted Average Price (VWAP) is a technical indicator that shows the average
price a security has traded at over the course of a day, depending on both volume and
price. VWAP is significant since it gives traders information about a security's trend and value.
The volume-weighted average price (VWAP) appears as a single line on intraday charts (5
minutes), similar to how a moving average looks.

For Buy Call: Whenever the VWAP line cuts a green candle, the stock is projected to go up
and we take the call for buy.

For Short Sell: Whenever the VWAP line cut a red candle, the stock is projected go down and
we take the call for short sell.

4) MACD:
The relationship between two moving averages of a security's price is shown by moving
average convergence divergence (MACD), a trend-following momentum indicator. By
subtracting the 26-period exponential moving average (EMA) from the 12-period EMA, the
MACD is calculated. The MACD line is the result of the calculation. The "signal line," a nine-
day EMA of the MACD, is then placed on top of the MACD line, which can act as a trigger
for buy and sell signals.
For Buy Call: Whenever the signal line (orange) cuts the MACD line (Blue) from up to
down below the zero line, we get first confirmation to buy the stock. For second confirmation,

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we wait for both the MACD and the signal line to cross the 0 line. When both the conditions
are met, we take the call to buy

5) CPR:

The central pivotal range (CPR) is one of the most important technical indicators. The primary
purpose of CPR is to discover stock price fluctuations by highlighting critical price points. The
pivot point, top central pivot point, and bottom central pivot point are all included in the range
provided by this effective indication.

The CPR technique is based on the premise that a trader may predict price movement for the
following period by studying the market trend utilizing previous period pricing.

6) Fibonacci Golden Cross & Death Cross:

A chart pattern in which a relatively short-term moving average crosses above a long-term
moving average is known as a golden cross. A bullish breakout pattern generated by a security's
short-term moving average (such as the 15-day moving average) breaking above its long-term
moving average (such as the 50-day moving average) or resistance level is known as the golden
cross. The golden cross, which is strengthened by large trade volumes, signals a bull market

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on the horizon, as long-term signs hold more weight. A golden cross is made up of three stages.
A downtrend must finally bottom out as selling is depleted in the first stage.

Fibonacci Golden Cross (Buy Call): Whenever the 21 days Moving Average cuts 55 days
Moving Average from below, we take the call to buy.

Fibonacci Death Cross (Short Sell): Whenever the 21 days Moving Average cuts 55 days
Moving Average from above, we take the call to short sell.

7) Stochastic RSI:
The Stochastic RSI (StochRSI) is a technical analysis indicator that ranges from 0 to 1 (or 0 to
100 on some charting platforms) and is calculated by applying the Stochastic oscillator formula
to a set of relative strength index (RSI) values rather than standard price data.

For Buy Call: When stochastic RSI (blue line) cuts the Signal line(orange) from below 20 it
indicates the buy call.
For Short Sell: When RSI (blue line) cuts the Signal line (orange) from above 80 it indicates
the short sell call.

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 8) Aroon:

The Aroon indicator is a technical indicator used to identify price trend changes as well as the
strength of that trend. In essence, the indicator measures the time between highs and lows over
a given time period. The idea is that strong uptrend will see new highs on a regular basis, while
strong downtrends will see new lows on a regular basis. The indicator indicates when this
occurs and when it does not. The indicator is made up of two lines: "Aroon up," which measures
the strength of the uptrend, and "Aroon down," which measures the strength of the downtrend.

9) Bollinger Bands:
Bollinger Bands are a trading tool that can be used to determine trade entry and exit positions.
Overbought and oversold circumstances are frequently identified using the bands. Trading just
with the bands is a dangerous technique because the indicator focuses on price and volatility
while disregarding a lot of other important data. When employing Bollinger Bands, one popular
strategy is to look for overbought or oversold market circumstances. When the asset's price
falls below the lower band of the Bollinger Bands, it's possible that prices have fallen too far
and are due for a bounce. When price breaks above the upper range, however, the market is

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likely overbought and due for a pullback.
Buy Call: When a red candle touches the lower Bollinger band, we take the call to buy.
Short Sell: When a green candle touches the upper Bollinger band, we take the call to short
sell.

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5) FUNDAMENTAL ANALYSIS

Fundamental analysis is the process of looking at a business at the most basic, or

fundamental, financial level. This type of analysis takes a look at the key ratios of a business
to figure out how financially healthy it is. Fundamental analysis can also give you an idea
of a company's stock trade value, compared to similar companies. The analysis should take
many factors into account, including revenue, asset management, and the production of a
business, as well as the interest rate.

Fundamental analysis is a method of assessing the intrinsic value of a security by analysing

various macroeconomic and microeconomic factors. The ultimate goal of fundamental
analysis is to quantify the intrinsic value of a security. Its intrinsic value can then be
compared to its current market price to help with investment decisions. Fundamental
analysis aims to determine the “correct price” (true value) of a security. By knowing the
right price, an investor can make an informed investment decision. A security can be
overvalued, undervalued, or fairly valued

Components of Fundamental Analysis: Fundamental analysis consists of three main parts:

• Economic analysis

• Industry analysis

• Company analysis

Fundamental analysis is an extremely comprehensive approach that requires a deep

knowledge of accounting, finance, and economics. For instance, fundamental analysis
requires the ability to read financial statements, an understanding of macroeconomic
factors, and knowledge of valuation techniques. It primarily relies on public data, such as
a company’s historical earnings and profit margins, to project future growth.

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Top-down vs. Bottom-up Fundamental Analysis: Fundamental analysis can be either top-down
or bottom-up. An investor who follows the top-down approach starts the analysis with the
consideration of the health of the overall economy. By analysing various macroeconomic
factors such as interest rates, inflation, and GDP levels, an investor tries to determine the overall
direction of the economy and identifies the industries and sectors of the economy offering the
best investment opportunities. Afterward, the investor assesses specific prospects and potential
opportunities within the identified industries and sectors. Finally, they analyse and select
individual stocks within the most promising industries.

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Price Earnings (P/E):

Using this ratio, one can understand how much an investor is willing to pay for each rupee of
a company’s earnings. A stock with higher P/E simply means that investors have higher
expectations in terms of earnings of the company. But one also has to remember that a stock
with high P/E is simply overvalued. On the other hand, a stock with a low P/E ratio means the
stock is undervalued. One can understand whether a particular stock is undervalued or
overvalued by comparing it with other similar companies.

Column1 PE ratio
AMI Organics 67.48
Apcotex Ind 43.93
Camlin Fine 36.42
Chemcon Special 19.62
Clariant Chem 5.08
Fairchem Org. 50.53
Fineotex Chem 49.69
Guj Heavy Chem 39.23
IG Petro 12.1
Manali Petro 10.11
Meghmani Finech 43.3
Neogen 136.37
Paushak Ltd 93.91
Privi Special 66.68
Rossari 67.22
Supreme Petro 18.41
Tatva Chintan 98.99
Yasho Industrie
Average 50.53352941

The figure depicts the P/E ratio of the sector (chemical mid cap)

PE Ratio = Market price of Share

Earnings Per Share

Assume there are two companies’ 'A' and 'B', operating in the same sector. If PE of 'A' is 30
and PE of 'B' is 22, then 'B' is considered to be a better buy, as the market price has not gone
up to reveal the earnings prospects of the company. But 'A' is considered to show higher growth
prospects as compared to 'B'.

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 6) INDEX

An index is a metric or indicator of something, and in finance, it typically refers to a statistical

measure of change in the stock market. Stock and bond market indices, in the case of financial
markets, are made up of a hypothetical portfolio of securities that represent a specific market
or segment of it. A stock market index is made up of a group of stocks that represent the entire
market or a specific sector or segment of the market.

A base period and a base index value are used to calculate the index. In the financial,
commodities, and other markets, an index is used to provide information about product price
movements. Financial indices are used to track the performance of stocks, bonds, T-bills, and
other investments. Stock market indexes are designed to reflect the overall performance of the
stock market. The internship trading is mostly in the NSE SENSEX in this project report.

name list price market cap percentage closing price no of shares

market/list price 03-03-2022

AMI Organics 943.3 3,437.11 6% 945.3 3.64 0.21% 0.01% 0.125653
Apcotex Ind 344.05 1,783.73 3% 347.3 5.18 0.94% 0.03% 0.290529
Camlin Fine 135.5 2,127.14 4% 134.65 15.70 -0.63% -0.02% -0.23008
Chemcon Special 277.55 1,016.69 2% 277.65 3.66 0.04% 0.00% 0.006316
Clariant Chem 476 1,098.69 2% 476.75 2.31 0.16% 0.00% 0.029849
Fairchem Org. 1,657.55 2,158.28 4% 1624.95 1.30 -1.97% -0.07% -0.73191
Fineotex Chem 154.6 1,712.17 3% 154.1 11.07 -0.32% -0.01% -0.09548
Guj Heavy Chem 430 4,100.08 7% 431 9.54 0.23% 0.02% 0.164408
IG Petro 682.1 2,100.52 4% 684 3.08 0.28% 0.01% 0.100886
Manali Petro 99.5 1,711.39 3% 98.8 17.20 -0.70% -0.02% -0.2076
Meghmani Finech 804.3 3,341.88 6% 809.85 4.16 0.69% 0.04% 0.397616
Neogen 1,598.85 3,987.42 7% 1602.45 2.49 0.23% 0.02% 0.154805
Paushak Ltd 8,950.00 2,758.49 5% 8,900.00 0.31 -0.56% -0.03% -0.26572
Privi Special 1,915.00 7,480.51 13% 1901.75 3.91 -0.69% -0.09% -0.89244
Rossari 968.15 5,330.28 9% 974 5.51 0.60% 0.06% 0.555343
Supreme Petro 731.35 6,876.20 12% 730.85 9.40 -0.07% -0.01% -0.08106
Tatva Chintan 2,208.00 4,894.05 8% 2,209.30 2.22 0.06% 0.00% 0.049683
Yasho Industrie 1,826.30 2,081.84 4% 1830 1.14 0.20% 0.01% 0.072724
57,996.47 100% -0.55646
999.4435

Index for chemical mid cap for the date 3rd march 2022 taking 1000 as a base

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Steps to calculate Stock Market Index:

1. The first step is to select mid cap stocks of your sector

2. Then select a base index which in my case is 1000.

3. Then note down the market capitalization and last trading price of your sector. In
my case this data has been collected from money control.

4. The next step is to calculate total market capitalization and find out daily weightage.

Day Weightage = Market Capitalization of a particular stock / TotalMarket

Capitalization

5. Next step is to note down the current price and find out percentage change in price,
weightage change and Numberof shares.

% change = [(Closing Price – Last Price)/ Last Price] x 100

No. of Shares = Market Capitalization of each stock / Last Price of theStock

6. Then calculate weightage percentage and weightage change.

a. Weightage Percentage = Day Weights x Percentage change
b. Weightage Change = Weightage Percentage x 1000

7. Weightage Change tells us the impact that the change in price has on thebase
index. After calculation sum up total change.

8. The final step is to sum up total change and base index in order to find out new base
indexwhich in my case is 999.4435

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Above Image shows the index value on 11th April 2022

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 7) MUTUAL FUNDS

A mutual fund is a company that pools money from many investors and invests the money in
securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual
fund are known as its portfolio. Investors buy shares in mutual funds. Each share represents an
investor’s part ownership in the fund and the income it generates. In India, A Mutual Fund
works on the principal of NAV (Net Asset Value) since it is hard for an investor to calculate
whether his investment is in profit or not. The most commonly used scale of measurement for
NAV is 1 unit = 10 Rs. Here 10 Rs. Is taken from the Total value of the assets in the pool of
Investments.

NAV is calculated by the Following Formula –

NAV= AUM/ No. of units

When the value of the Portfolio increases, the value of NAV also increases which indicates that
the fund is doing positive. Though, it may not be always true that a low NAV means that the
fund is doing bad and vice versa.

Mutual Funds

Debt Funds Equity Funds

→ Corporate & Government Bonds → Large Cap Funds
→ Corporate Debt Securities → Mid Cap Funds
→ Money Market Instruments → Small Cap Funds
→ Multi Cap Funds
→ Contra Funds
→ Index Funds
→ Sector Funds
→ Foreign Funds
→ Fund of Funds
→ Equity Saving Fund

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Our Group worked on the large Cap Mutual Funds which basically invest in companies that
have a valuation of more than 7500 crores. The results of the research gave us the 5 best Mutual
Funds to invest in Small Cap sector on the basis of Year-on-Year Growth and their current
valuation.

SCHEME NAME AUM 5 YEAR NAV EXPENSE

RETURNS RATIO

Axis Bluechip Fund - Direct Plan - 34,181.90 17.64% 46.96 0.47%

GrowthLarge Cap Fund

Canara Robeco Bluechip Equity 6,020.47 16.58% 42.41 0.38%

Fund - Direct Plan - GrowthLarge
Cap Fund

Mirae Asset Large Cap Fund - 31,296.65 14.65% 79.008 0.54%

Direct Plan - GrowthLarge Cap
Fund

Edelweiss Large Cap Fund - 315.2 14.51% 54.96 1.00%

Direct Plan - GrowthLarge Cap
Fund

BNP Paribas Large Cap Fund - 1,254.38 14.43% 143.57 1.00%

Direct Plan - GrowthLarge Cap
Fund

Here, Expense Ratio represent the percentage of fund being used for administrative expenses
in cases like Brokerage and Third-Party Mutual funds dealing. It also showcases the other
expenses taking place in terms of advertising and marketing or any sort of management
expenses related to that particular fund.

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 BIBLIOGRAPHY

o www.ibef.org
o Trading view
o Moneycontrol.com
o Sensibull.com
o Opstra Analysis
o Zerodha app
o Streak Zerodha
o https://www.hdfclife.com
o https://www.nseindia.com

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