Chetana’s R. K.

Institute of Management & Research

Bandra (East), Mumbai

'Fundamental Performance of the IT Sector'

Summer Internship Project

With
AFM ADVISORY

Submitted in partial fulfillment of the requirements for

Master of Management Studies
(University of Mumbai)
Academic Year: 2020-21

Submitted By
SHRISHTI DUBEY
Roll No. 80
MMS-Batch: 2020-22
 Declaration

I hereby declare that this project report titled “'Fundamental Performance of the IT
Sector'', submitted in partial fulfillment of the requirement of Master of Management
Studies to Chetana’s R.K. Institute of Management and Research, is my original work
and not submitted for award of any degree or diploma fellowship or for similar title or
prize. References of work and related sources of information have been duly
acknowledged in the report.

The project has been carried out under the guidance of Dr. Jayashree A. Bhakay
I further declare that I have no objection and grant the rights to Chetana’s R.K. Institute
of Management and Research to publish any chapter/project or use it for future reference
if they deem fit.

Place : Mumbai
Date :
Name : Shrishti Dubey
Class : MMS Batch 2020-22
Roll No. : 80
Signature :
 Certificate

This is to certify that the project titled “ Fundamental Performance of the IT Sector '',
submitted by Shrishti Dubey to Chetana’s R. K. Institute of Management & Research
in partial fulfillment of the requirement of Master Of Management Studies, has been done
under the guidance of the undersigned during the period May to June, 2021.

Date:

Place: Mumbai

Faculty Guide Director

Prof. . Jayashree A Dr.Jayashree A
Bhakay Bhakay
 ACKNOWLEDGEMENT

The internship opportunity that I was provided by the institute at AFM

Advisory helped me to have great exposure to the fundamental and technical
analysis of Indian Stock Market and Foreign Exchange.

I express heartiest gratitude to Mr. Dakshath Deviah and Mr. Rahil Hassan to guide
me throughout the internship and help me to gain insightful knowledge for the
subject. With the help of both of them I got enabled to have practical exposure and
understand how things work in real-time basis.

I would also like to express special thanks to our director, Dr. Jayashree Bhakay, who
also is my project mentor for her valuable guidance and support throughout the
project. I sincerely acknowledge her for extending her valuable guidance and critical
reviews on the project and above all, the moral support she provided during all the
stages of this project.

And I extend my gratitude to Chetana’s R.K. institute of management and research

for providing me with such an excellent opportunity.

Shrishti Dubey
 Executive Summary

The project titled " Fundamental Performance of the IT Sector ''is basically
comprising of Fundamental and technical analysis of Nifty IT stocks focusing upon
7 companies ,wherein more emphasis have been led upon Fundamental part. In
fundamental analysis various ratios have been used. Out of these ratios a 5-Point
Analysis has been made upon the 7 companies considering sector specific ratios. For
the determination of analysis various ratios such as EPS, P/E ratio, Dividend payout
ratio and Return on equity etc have been used. A comparison has been made after the
analysis. Technical Analysis is considered by using technical indicators like RSI,
VWAP, Bollinger Band, MACD. These indicators provide buy or sell signals and
how the stock reacted after these signals.

A brief overview upon the IT Sector in India apart from IT companies has also been
made.

KEYWORDS: EPS, P/E ratio, Dividend payout ratio, RSI, Bollinger Band
 TABLE OF CONTENTS
CHAPTERS PARTICULARS PAGE NO

1 INTRODUCTION 1-7
1.1 Introduction to the Task 1

1.2 Introduction to the Sector/Industry 2

1.3 Introduction to the Organization 5

1.4 Introduction to the Project 7

2 SUMMER INTERNSHIP TASK 15-16

DETAILS
2.1 Objective of the project 15

2.2 Literature Review 15

2.3 Research Methodology 16

2.4 Limitations 16

3 ANALYSIS & FINDINGS 17-38

3.1 Fundamental Analysis of Companies 17

3.2 Technical Analysis of Companies 31

4 CONCLUSIONS & 39-41

RECOMMENDATIONS
Conclusion 39

5 ANNEXURES 41
Bibliology/ Webliology 41
 Chapter 1
Introduction

1.1 Introduction to the Task

• An overview of For-ex Market, Commodity Market and Stock Market

• Understanding terms involved in For-ex and Stock Trading
• Macro and Micro Factors affecting the Market
• Finding out all the Nifty-50 stocks
• Understanding the participants and timings of the Stock and For-ex Market
• Understanding Trade Entry, Impulse Entry
• Finding out Fake-outs in the candle-stick patterns
• Making us familiar with the concepts of Risk Management(Including Risk-Reward
Ratio),Position Sizing, Trial Stop-Loss
• Understanding stocks to take for intraday trading.
• Making us familiar with Demo For-ex Trading Platform- ‘Meta-Trader-5’
• Live For-ex Trading competition on Meta-Trader 5 for 5 days
• Understanding Trade Entry, Impulse Entry, along with that proper and timely exit from
the trade as well(Importance of Stop-Loss)
• Analyzing the IPOs considering Grey Market Price(Sentimental Analysis)
• Analysis of For-ex Market including Crypt o-Currency, Commodity and Stock
• To gauge the effect of any news or report upon the movement of the capital and market
prices and understanding the significance of the same.
• To acquire one Client for the company considering sale of Financial Training program
from the company.

1
1.2 Introduction to the Sector/Industry

Figure 1

Financial markets in India are divided broadly into two categories that is money markets (dealing in
short-term funds) and capital markets (dealing in long-term funds).Structurally, money market has both
organised and unorganised sectors.

Unorganised sector is comprises of indigenous money lenders and bankers who generally are not in
formal lines of business.

2
 Figure 2

▪ The Indian financial services sector is comprising of the capital markets which includes asset
management, depository companies, wealth management, broking, investment banking,) and
non-banking financial companies (NBFCs). Payments banks have also been allowed by the
market regulator with new entities which will be created recently thus an addition to the types of
existing entities operating inside the sector.
▪ With adoption of technologies such as, mobile phones, cloud computing and Interconnectivity
companies booming in the financial services industry are being able to speed up investment in
the information technology (IT) to get better experience to the users.
▪ Rise in financial inclusion, an increase in the financial assets penetration, enlarged
participation in equity capital markets coupled with adoption with the technology has led to
growth of the Financial Sectors
▪ An increase in the participation and inclination of domestic individual investors towards
Indian mutual fund industry has many factors including rising awareness upon advantages
of investing in equity markets and growing awareness of ways of investing, such as SIP etc. The
Mutual fund industry AUM in India has grown at a CAGR of 15.5% over the past five years,
with the equity AUM growing at a CAGR of 17.3%.
▪ During the last five years, the Indian equity markets also seen a healthy relation between the
domestic institutional investors (largely Mutual Funds) and Foreign Portfolio Investors (FPIs),
which has significantly reduced the degree of trust on FPI inflows, which has led to more
stability to the Indian markets.

3
▪ The Equity market of India has been experiencing expansion in many respects and market
capitalization, which has widened the area for brokerage firms. Last year there were 1942 and
5461, respectively listed companies on NSE and BSE.

It aims to meet any particular investment goals that benefit the clients whose money has been
provided to these companies. These clients are individual or institutional investors including
retirement plans,mutual funds, governments, , insurance companies, educational institutions.

Services in Investment management include allocation of asset, analysis of financial statements, ,

proper monitor o the investments currently being handled, selection of stocks, and strategy and
implementation of the portfolio management. Inclusion of financial planning and advising
services may also be seen in investment management, not just overseeing client's portfolio but
also coordinating it with the same in all the other assets and the goals intended for such
investments for the clients. Professional managers deal with plethora of financial assets and
securities that include bonds, equities, commodities, and real estate. Management of real assets
such as precious metals, commodities, and artwork by the manager may also be seen. An
alignment of investment to match retirement and estate planning coupled with asset distribution
is also one of the jobs of theses managers.

4
1.3 Introduction to the Organization

AFM Advisory established in 2016,having a vision of driving a platform which is user-friendly to

serve to the financial needs of its customer. After spending a lot of time in financial markets, it
was concluded that it is hardest part for a layman, who is not much aware to make financial
decisions. Traditional methods became tedious, obsolete, complicated to manage. Thus their aim
was to provide a service that would enable one to become better in terms of making financial
decision that is based on a wide range of parameters with no prior financial knowledge
AFM Advisory is a professional investment management organization with a purpose that reads:
to provide a foundation that enables everyone to build strong financial security. To help
individual to avail funds for generations to come,investing across all major asset classes: public
equities, fixed income instruments , and forex, providing help to their investors, learners and
provide detail help regarding, stock market, advisory services, training and Investments.
Mission: To impart experiential learning on how to create and manage wealth through the highest
quality facilitation and collaborations. To enable our learners to take informed and effective
financial decisions and build careers in financial markets
Vision: To be the largest enabler for people to lead financially secure lives. The endeavor is to be
a one stop solution for investors, learners and provide help regarding, stock market, advisory
services, training and Investments. Today, we're proud to empower individuals and small
investors around the nation. Everyone deserves a value, and we're excited to see what you create.

Objectives: -
1. To promote financial literacy among the people.

2. To build a community of likeminded people having financial goals to chat together, create
and share ideas.

3. To make it easy to understand for a layman on how the financial market functions.

4. To provide customized services based on client objectives.

5. To provide transparency in trading, dealings with brokers and commissions.

6. To encourage people to trade and learn the importance of compounding.

5
 SWOT Analysis of AFM Advisory

Figure 3

Key Strategies used by the organization:-

• Proper Recruitment, Training and Engagement

• Staff Co-operation
• Improved focus on Customer Loyalty
• Proper Channel of Communication
• Customer Feedback
• Grievance Redress
• Creation of Goodwill

6
1.4 Introduction to the Project

The I.T sector is broadly divided into two major categories first is services and products. Services
are further classifies into ITeS and Others. An easy way of identifying the ITES is by refering to
the classification provided by the GATS of the World Trade Organization. According to this
classification, the sub-category of Computer and Related Services are including the following
services: (i) consultancy services that are related to the installation of computer hardware; (ii) data
processing services; (iii) software implementation services; (iv) database services; and (v) other
related services. India has more than approximately 5000 ITES companies, having maturity of
more than 25 years. Other services however include services such as AMC or Annual
Maintenance Contract, etc. The product includes reselling of electronic items such as laptops
,providing storage solutions, networking solutions.
Further following table represents the growth rate of Export and import Indian Services Sector
inclusive of IT sector.

Figure 4

7
 Figure 5

IT Enabled Services
2017- 2018- 2019- 2020-
Parameter NAME Units 18 19 20 21
USD
Indian ITeS Exports billion 28.4 30.8 33 32.5
IT Services exports employee base thousands 1188 1244 1287 1283
Operating Margin for ITeS companies per cent 15.6 15.3 15.9 14.8
rupees
Domestic ITeS market billion 265 286 306 279.4
Domestic ITeS employee base thousands 212 218 225 219
8
 Source: Crisil Report

Figure 6
IT Services
2017- 2018- 2019- 2020-
Parameter NAME Units 18 19 20 21
USD
Indian IT Service Exports billion 69 74 78.1 82.7
IT Services exports employee base thousands 1970 2071 2142 2339
Operating Margin for tier 1
companies per cent 23.3 23.6 22.4 24.4
Operating Margin for mid-tier
companies per cent 16.6 17.7 15.7 18.2
rupees
Domestic IT services market billion 1097 1166 1232 1171
Domestic IT services employee
base thousands 597 614 633 636
Source: Crisil Report
Figure 7

Figure 8

9
 Figure 9

Our study will be confined to the following 7 companies of the Nifty -IT Sector

• Tata Consultancy Services Ltd.

• Infosys Ltd.
• HCL Technologies Ltd.
• Tech Mahindra Ltd.
• Wipro Ltd.
• MindTree Ltd.
• L&T Infotech

The entire focus of the research is Fundamental Analysis on the IT Sector companies of India with

Technical and Sentimental Analysis

Fundamental analysis:-
Fundamental analysis is a method used by experienced investors to identify the intrinsic value of a stock.

The current price of a stock may not be as the current actual value of the stock. The stock may be
overvalued or undervalued in the market. the underlying health of the company is studied by Fundamental
analysts in order to find the intrinsic value.

various qualitative and quantitative factors such as the company’s revenues, profit margins, return on
equity, future growth potential and other metrics are use to this. The main purpose of this method is to
identification of the fundamentally strong companies in order to invest in them for the long term.

10
 Importance of Fundamental Analysis

In the crux of investment, fundamental analysis helps in better decision making. it helps one to have
fair value determination. Evaluation of the health and performance of any organisation through crucial
numbers and major economic indicators can be made through stock fundamental analysis.

the business model of a firm can be understood using Fundamental analysis of stocks and the working of
management, essential for making prudent investment decision. this enables a company to gauge it
strength and their by beat its competitors.

Tools used in fundamental analysis

Following different tools are used to determine and evaluate the actual worth of a stock by the Investors .

• Financial reports which comprises balance sheets, income statement, cash flow statement
• Earnings including quarterly earnings and projected future earnings
• Financial ratios for e.g. Earnings per share, price to earnings ratio, return on equity

Technical analysis:-
Technical analysis is a method used by traders to forecast future price movements of stocks by analysing
past trading activity. technical analysts use Chart patterns and statistical numbers .

Fundamental analysis has a believe that the market value of a stock may not always match the true value
of the stock. hence the intrinsic value of a stock is calculated by fundamental analysts thus benefitting in
investing in undervalued stocks.

On the contrary, technical analysts have the belief that the fundamental elements that a stock’s value has,
are already represented in the stock price. In addition, stock prices move in trends that are identifiable over
a period of time.

Hence the past price patterns of stocks are evaluated in order to find out how the stock price moves in the
future.

3 Principles of Technical Analysis:-

11
 • Stock price represent every significant importance of the stock
• Movement in stock price follows Trend
• It is Inevitable that History always repeats itself

Tools of Technical Analysis:-

Now that you know the meaning of technical analysis let’s see the various tools that are used in it. They
are:

• Charts

Volume charts ,one of the most widely used technical analysis tools show the number of shares bought
and sold in the market during a day. One can either use a bar chart or candlestick chart to make technical
analysis. If used together with trend lines, charts facilitate technical analysis to a great extent.

• Momentum Indicators

These are statistical figures calculated based upon prices of the stock and volume data. During technical
analysis, momentum indicators behave as supporting tools to charts. One of the objectives of technical
analysis is to verify views about a stock and momentum indicators .

• Moving Averages

Another technical analysis tool, with moving averages you can eliminate sharp and frequent fluctuations
in a stock chart. Note that sometimes there could be sharp movement in stock
prices within a short period. This makes it difficult to predict the trend. Moving averages help remove its
impact and make the trend more prominent.

Sentimental Analysis:-

Sentiment analysis is the process that helps in analyzing the sentiments of people using various platforms like
social media and similar websites, where in people can freely express their emotions and opinions about
anything they think or wish to do.

And classification of these kinds of sentiments can be done at the , sentence level, , phrase level and document
level.

12
Any news present on social media spreads very fast. Such news if comes in favor or against

the stocks, it builds a huge pool of investors into one basket, being a deciding factor for the stock prices to

go up or down.

Effect of foreign exchange rate fluctuations on stock market:-

How is the stock market is related to fluctuations in exchange rate?

A relation between currency of one country with the other currencies is shown by the exchange rate.
Fundamentally, it can be described as the rate at which a person exchange one currency with any other. For
example, let us take the US dollar and Indian rupee. If one wants to buy one US dollar then he/she will have
to pay INR 71 in India. So, the exchange rate for USD-INR becomes 71 per dollar.

This exchange rate being a very close link with trends in stock market. The rate at which one currency is
exchanged for the other does not remain stable. It fluctuates, and fluctuates very fast. So such kind of
changes in the value of exchange rate strengthens or weakens a particular currency against the other.

Factors affecting stock market in India

Besides the exchange rate fluctuations, the following are the important factors among others. These also
affect the trend in the stock market in India.

1. Any development or change inside the organization– Internal developments are the ones that occur within
the companies. This consist of various restructuring patterns including financial reports, mergers and
acquisitions, development and improvement of a new invention ,suspension of dividends,. Furthermore, if
any company executive is hired or fired out of allegations of being fraudulent,it has deep effect upon the
company..

2.World happenings and events – This factor comes into the picture when any war or civil unrest, terrorism
natural disaster. These influence might affect can be directly or indirectly and they forming a chain reaction.

3. Interest rates and Inflation– The most predictable influence of stock market comprise of periodic
adjustments of interest rates and any fluctuations in the same. The central bank in any economy is
13
responsible to perform these adjustments. In India, the RBI does this and regularly fights against inflation.
In case of high interest rates, investors are willing to sell their stocks holdings. High inflation is a result of
High-interest rate having a negative impact on the stock market. They will prefer to invest in securities such
as bonds that government-backed. They also try to take advantage of the higher interest rates and so they do
this.. They also get satisfaction by knowing that their investment is secure & safe.

4.Sentiments– Any new company or famous but old company is launching new product or services brings in
excitement or hype in the stock market. The organizations create hype mainly in order to promote their
stocks.This helps to increase the value of their own shares and profits. Hype could be through , internal blogs.
positive financial reports, press releases and news reports. These hypes will create high expectations for the
performance of the company.

14
 Chapter 2
Summer Internship Task Details

2.1 Research Objectives :

• To study the performance and growth of IT sector in India.
• To understand the structure of all the components
comprising of IT sector.
• To analyze IT sector using Fundamental and Technical Analysis
• To do sector specific analysis using 5-Point Analysis

• To enable the reader to take a rational investment decision by

reading the report.

2.2 Literature Review

• Dr. AS AMBILY (2017) in his research paper titled, “A study on Fundamental Analysis of
Selected IT Companies Listed At NSE” has focused on the understanding of Fundamental
Sector and tools to measured the same.
• VALARMATHI A (2016) in his research paper titled, “A Study on the Technical Analysis of
NSE towards IT stocks with Reference t Indian Stock Market” has thrown light on technical
analysis and various indicators used for the same to analyze IT stocks.
• RAKESH MOHAN AND PARTHA RAY(January 2017) in their research paper titled 'Indian
Financial Sector-Sector, Trends and Turns ' published by IMF have provided all the necessary
details on the sector analysis.
• 'How sentimental Analysis is used for Stock Prediction' an article written by VIKRAM
SINGH BISEN explains how analytics is used to analyze a stock sentimentally.
• 'Chapter 9 -Services in the Economic Survey' on the website of Government of India 'Analysis
of Financial sector of India' on businessmapsofindia

15
2.3 Research Methodology
• The main focus of the study is Fundamental analysis and technical analysis of
companies under Indian IT Sector
• Tools like relative strength index (RSI), Bollinger band, Volume Weighted Average
Price (VWAP), MACD etc have been used for Technical Analysis.
• Fundamental Analysis is done using Liquidity, Efficiency and Profitability ratios

• A 5-Point Analysis has also been made on all the companies whose data was
available. This analysis is made considering sector Specific.

• Study on the effect of Foreign Exchange Fluctuations on the IT stocks has also been
considered as a short part.
• Due to Covid-19 and Bull run going on in the market ,major focus is done on
Fundamental Analysis.
• All the data has been collected from the Annual Reports of all the companies being
studied.
• Major Data Collection Source is Secondary.

2.4 Limitations

• Data collection procedure was kept confined to secondary due to covid-19.

• As the main focus of the study is made on Fundamental analysis, it may not be
found effective for short term. However for long term investing, the study can be
considered as a useful tool.
• Technical analysis may or may not hold good always.
• The all time high of Nifty Stocks considering volatility of the market may not follow
the technical trends currently.

16
 Chapter 3
PRIMARY DATA PRESENTATION, TABULATION,
ANALYSIS/INTERPRETATIONS

SALES 2017 2018 2019 2020 2021

TCS 117966 123104 146463 154549 164177
Infosys 68484 70522 82675 90791 100472
HCL Techn. 47568 50569 60427 70676 75379
Tech Mahindra 29140 30722 34742 36867 37855
Wipro Ltd 41634 41729 42094 42460 42825
MindTree 5236 5462 7021 7764 7967
L & t Infotech 6500 7306 9445 10878 12369

17
 Operating Profit Margin

2017 2018 2019 2020 2021

TCS 27.39 26.41 26.97 26.83 28.34

Infosys 27.17 26.69 24.4 24.53 27.76

HCL Technology 21.83 22.24 23.05 24.5 26.6

Tech Mahindra 14.36 15.3 18.05 14.93 17.95

Wipro Ltd 20.42 19.06 19.68 20.19 23.85

MindTree 13.45 13.56 15.16 13.93 20.79
L & t Infotech 18.92 16.25 19.94 18.65 22.03

18
The current ratio is a kind of liquidity ratio indicating the capacity of a particular company to repay
its short-term loans that are due for the next year.. It answers the question: “How many rupees in
current assets can cover each rupee of current liabilities?

Current Ratio
2017 2018 2019 2020 2021
TCS 2.2 3.3 4.92 4.85 6.4
Infosys 2.74 2.88 3 3.78 4.05
HCL Techn. 2.77 1.69 2.93 3.29 3.06
Tech Mahindra 3.36 3.16 2.28 2.85 2.8
Wipro Ltd 2.5 2.77 2.94 2.84 3.5
MindTree 2.87 2.46 3.23 2.57 2.7
L & t Infotech 1.46 1.18 1.3 1.32 1.44

19
• EARNING PER SHARE
Earnings per share (EPS) are a company's net profit divided by the numberof
common shares it has outstanding. EPS shows the earning capability of the
company.

EPS = (Net Income − Preferred Dividends)/End of Period CommonShares

Outstanding

EPS 2017 2018 2019 2020 2021

TCS 66.71 67.46 83.87 86.18 87.67

Infosys 31.24 36.69 35.26 38.96 45.42
HCL Techn. 30.16 31.32 37.31 40.75 14.07
Tech Mahindra 28.88 38.79 43.7 41.75 45.73
WIpro Ltd 13.1 13.27 14.92 17.02 19.7
MindTree 24.92 34.78 45.93 38.33 67.43
L & t Infotech 56.9 64.65 87.37 87.31 110.76

20
• PRICE TO EARNING RATIO
It is the ratio for valuing a company that measures its current share price
comparative to its per-share earnings. By comparing this ratio of particular company
with sector specific P/E we get an idea whether the stock is at an undervalued or
overvalued rate.

P/E Ratio=Earnings per share/Market value per share

PE RATIO 2017 2018 2019 2020 2021

TCS 18.23 21.12 23.87 21.19 36.25
Infosys 16.36 15.42 21.1 16.46 30.12
HCL Techn. 14.5 15.46 14.57 10.71 23.93
Tech Mahindra 15.9 16.47 17.75 13.54 21.68
Wipro Ltd 14.76 15.89 17.08 11.56 21.02
MindTree 18.18 22.19 20.57 21.62 30.91
L & t Infotech 12.56 20.74 19.49 16.36 36.6

21
 • DIVIDEND PAYOUT RATIO

It is the ratio that indicates the total amount of dividends paid out to
shareholders with respect to the net income of the company. The Dividend Payout
Ratio shows what a company‘s pay out to investors in the form of dividends.

Dividend Payout Ratio= (Dividends Paid/Net Income)*100

Dividend Payout Ratio

2017 2018 2019 2020 2021
TCS 35.22 36.98 35.75 84.65 43.35
Infosys 41.05 59.05 59.87 44.76 59.27
HCL Techn. 39.74 19.13 10.71 25.55 29.23
Tech Mahindra 28.8 32.55 28.91 32.42 88.82
Wipro Ltd 5.72 5.65 6.7 5.88 5.07
MindTree 40.13 31.62 71.86 33.92 37.08
L & t Infotech 29.15 33.26 32.14 32.05 36.16

22
• R
E
T
U
R
N

O
N

• RETURN ON EQUITY

The return on equity ratio is a profitability ratio which is taken to measure

the capability of a firm to make profits out of its shareholders investments in the
company.

It is calculated by,

RETURN ON EQUITY = Net Income/Shareholder’s Equity

ROE
2017 2017 2019 2020 2021
TCS 30 30 35 35 38
Infosys 21 25 24 25 25
HCL Techn. 26 24 24 22 19
Tech Mahindra 21 17 20 21 18
Wipro Ltd 16 17 16 18 20
MindTree 16 21 23 20 26

23
 L & t Infotech 31 29 31 28 27

Return on Capital Employed (ROCE) is a profitability ratio that measures the efficiency of a
company in utilization of its capital to generate profits. The return on capital employed metric is
considered to be one of the best profitability ratios and is commonly used by investors to determine
and evaluate whether a company is suitable to invest in or not.

2017 2018 2019 2020 2021

TCS 44 40 48 47 48
Infosys 31 30 32 33 35
HCL Techn. 34 31 31 28 26
Tech Mahindra 28 24 26 26 22

24
 Wipro Ltd 19 17 19 20 22
MindTree 22 27 31 25 36
L & t Infotech 47 42 47 37 37

Pledging of shares is one of the options that is available with the promoters of companies to secure
loans to meet working capital requirements, personal needs and helps to fund other ventures or
acquisitions. A promoter shareholding in a company can be used as collateral to avail a loan.

Pledged
%
TCS 0.47
Infosys 0
Wipro 0
HCL
Tech 0
Tech
Mahindra 0

25
Institutional Investor Ownership Percentage

Institutional Ownership Percentage is the percentage of shares outstanding that is owned by financial
institutions. These institutions can be banks, funds, large holdings companies, etc.

Institutional Holdings as a % of
Free Float

(FII+DII as a
% of Free-
Float)
TCS 84.54
Infosys 64.1
Wipro 57
HCL
Tech 87.5
Tech
Mahindra 82.1

EV/EBITDA
TCS 25.39
Infosys 20.54
Wipro 19.59
HCL Tech 16.03
Tech
Mahindra 15.05

EV/EBITDA is a ratio that helps to compare a company’s Enterprise Value (EV) with its Earnings
Before Interest, Taxes, Depreciation & Amortization (EBITDA). The EV/EBITDA ratio is
commonly used valuation metric helping in comparison of the relative value of different businesses.
26
5-points Analysis

Employee attrition can be defined as the unpredictable, uncontrollable reduction of the workforce due
to , retirement, sickness, resignations or death. This however can be considered as normal. The
employee attrition rate measures the quantum of people who move out of a company and are not
replaced.

Employe Attrition Rate

2019 2020 2021
TCS 11.3 12.1 7.2
Infosys 11.77 6.25 7.12
Tech Mahindra 20.8 19.2 13.3
Wipro Ltd 17.6 14.7 12
MindTree 14.2 17.4 12.1
L & t Infotech 17.5 16.5 12.3

27
Employee cost as % of Net Sales
2020 2021
TCS 55.8 54.1
Infosys 54.4 54.9
HCL Techn. 48.9 55.3
Tech Mahindra 51.5 48.3
Wipro Ltd 52.8 53

28
Employee utilization calculates the amount of working time for an employee that can be used for
billable work. Employee utilization rate is the percentage of total working hours that can be billed in
comparison to administrative tasks

EMPLOYEE
UTILIZATION
RATE
2019 2020 2021
Infosys 84.3 84 84.7
Tech Mahindra 81 80 87
MindTree 71.29 76.6 80.4

29
L & t Infotech 80.6 79.5 80.5

Total Contract Vlaue of Deal Wins in FY 2021

TCV($ Bn)
TCS 9.2
Infosys 2.1
Wipro 1.4
HCL Tech 3.1
Tech Mahindra 1.04

Employe
Metrics-Net
Addition(2021)
Employe Net Addition as a % Total
Net Addition Base Base
30
TCS 19388 488649 3.96
Infosys 10307 259619 3.96
Wipro 7404 197712 3.74
HCL Tech 9294 168977 5.5
Tech
Mahindra -847 121054 -0.7

Clients Metrics(2021
50 Mn $ 100 Mn $
TCS 101 48
Infosys 59 23
Wipro 41 13

TECHNICAL ANALYSIS OF COMPANIES:

Technical analysis is basically a tool that predicts the probable future price movement of a
any currency pair or stock that is based upon market data.

The collective actions of buying and selling of all the participants in the market accurately
reflects all relevant information that is any which way related to a traded security, and thus
allowing a fair market value to the security to be continually allotted,is the theory behind the
validity of technical analysis is the notion.

This is a systematic study of secondary data gathered from NSE India of

different IT stocks. The data is collected by the means of actual price of IT company stocks
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 from the 2017 till June 2021. The purpose of study is TO GET TO KNOW how investors
use technical analysis in trading OF SHARES, fluctuations IN PRICES and usage of THE
SAME. Technical tools like relative strength index (RSI), Bollinger band, Volume
Weighted Average Price (VWAP), Moving Average (MA), and the chart pattern format are
the basis of analysis done.

• Relative strength Index (RSI)

The Relative Strength Index is a technical tool which used by the investors to
identify the technical strength or weakness in particular period of time. When the RSI goes
above 75,it is assumed that the stock will downturn ,similarly when the RSI goes below 30
it’s time to pick up the stock. When RSI crosses 80, it is believed that the stock is in
overbought zone and the downfall will happen. However when stock goes below 20, it is
considered to be in oversold zone and will retrace back in some time.

TCS:

During the period of 2018 to Oct,2019,the stock seems to be overbought a a few times as it crossed
80 however after that it reversed back an remained consolidated till March 2020.Heavy downtrend
can be seen after that due to Covid-19 circumstances.
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 HCL:

The stock of HCL saw huge fluctuations in prices with an overbought and oversold situation arising
many times from the period of 2017 to 2020.

Infosys

Tech -Mahindra
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 Wipro

• MOVING AVERAGE CONVERGENCE DIVERGENCE

The MACD indicator,which is commonly known as MACD oscillator,

is one of the most popular technical analysis tools which is comprising of three major
components of the MACD. the 26-period EMA subtracted by The 12-period exponential
moving average (EMA). MACD Signal Line: A 9-period EMA of the MACD.

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 MACD can be calculated by using short cycle 12, long cycle 26 and
signal period 9. MACD is made up of 3 parameters first is signal line second is MACD line
and third is histogram.

Signal line is simple and slow line shows 9 days simple moving average. MACD line is the
average difference of 26 and 12 days moving average. And histogram is the numbers which
is shown in the MACD graph. IT basically has two types of values that is positive and
negative, if value is positive it shows positive strength and if the value is negative then the
strength is negative.

HCL:

TCS

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 Tech Mahindra

Wipro

Infosys

• BOLLINGER BAND AND VWAP:

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Bollinger Bands are envelopes that are plotted at a standard deviation level above
and below a simple moving average of the price. Due to the distance of the bands
which is based on standard deviation, they adjust to volatility swings in the
underlying existing price mainly due to the distance of the bands based on
standard deviation.Tw parameters are basically used by Bollinger bands Period
and Standard Deviations. The default values are 20 for period, and 2 for standard
deviations, although combinations can be customized.

Bollinger bands helps to determine whether prices are high or low. They are used
in pairs with a moving average. Further, the pair of bands is not intended to be
used on its own.

Volume Weighted Average Price (VWAP) is a tool used in technical analysis

that is used to measure the average price weighted by volume. VWAP is
typically used with and in the intraday charts as it helps one to determine the
direction of intraday prices and their gradual flow. VWAP is similar to a
moving average in that when price is above VWAP, prices are rising and when
price is below VWAP, prices are falling. It is therefore considered that when
price is above VWAP, prices are rising, and when prices are below VWAP,
prices tend to fall.

It is the sum of the price multiplied by volume and divided by total volume. We need to use
less than 1day candle for vwap .

TCS

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TECH MAHINDRA

Mind tree

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 Chapter 4
Results & Findings, Conclusions

• PE ratio is lowest Tech Mahindra, with highest being TCS.

• EV/EBITDA is Lowest for Tech-Mahindra and highest for TCS
• ROE-Higher the better TCS having the best ROE,TECH MAHINDRA having least.
• Pledged %- TCS has only pledged, rest of the companies have zero pledged %.
• Institutional Holding as % of free-float-Highest HCL indicating that apart from promoters, the
institutional investors have the most holdings.
• Employee cost as % of net sales-lesser the better, lowest is Tech Mahindra. The employee
cost of HCL has increased due to providing one time lifetime bonus to their stakeholders.
• Operating profit margin-TCS has highest.
• Client metrics:
• New deals of FY 2021-Maximum deals have been signed by TCS, minimum deals signed
by Infosys this year.
• Active clients-TCS has highest Active Clients. Tech Mahindra has lowest active clients

• Attrition rate: Lesser the better, TCS has lowest attrition rate followed by HCL Tech.
• Free cash flow as% of Net profit-Highest is Tech Mahindra.
• Even though TCS is an established company having market cap much higher than HCL,HCL
seems to be working much more efficiently. However concluding the Fundamental analysis,
TCS has performed very well since the last few years even after considering Covid-19
situations.
• Employee Metric:

Net addition-Highest done by TCS. However highest % has been employed by HCL. Gross
Utilization- TCS and HCL have not provided, so highest is Tech Mahindra

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• Technical analysis is an important tool that helps us analyze the stock leading to
decide whether to we buy or sell . Different indicators like RSI, Bollinger band,
VWAP and MACD have been used in this project. From the RSI analysis we
conclude that the RSI TCS has remained sideways for a period of over 1 year from
2018-2020 January. However a strong movement has been noticed after March
2020,with a great bounce back., And the other stocks are observed to be in neutral
condition neither in overbought nor in oversold zone.

Another important most important indicator in technical analysis MACD i.e.,

moving average convergence divergence that helps to conclude the exact time to
enter or exit the stock. When MACD line crosses signal line from the upward
direction making a sharp angle between the two, it can be considered a buy call.
When MACD line crosses signal line from downward direction with sharp angle it
can be concluded that the stock will start falling and is better to sell it off
• Bollinger band and VWAP help one to confirm and crosscheck with the RSI and
MACD indicators. With the help of Bollinger band which has three bandsi.e., two
standard deviation and one Median band which helps to identify the price range of
the stock and right time to enter or exit the stock. In the aboveanalysis a beautiful
upward lift in the band can be observed in Mind Tree after the period of 2019 resulting
into buy option.
• VWAP being a good tool to identify whether to take a buy or sell call. When the
candle closes above the VWAP line, it is the time to sell.

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 BIBLIOLOGY/ WEBLIOLOGY

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