MBA Project on Fundamental and Technical Analysis of Kotak Bank 237757942 PDF

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EXECUTIVE SUMMARY:In the recent past, the bank interest rates have been increased steadily. But the rate of Inflation has also been increased. There is no big difference between the interest rate and Inflation rate. Because of inflation, value of money has been decreased and cost of living has been ...

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Fundamental And Technical Analysis

EXECUTIVE SUMMARY: In the recent past, the bank interest rates have been increased steadily. But the rate of Inflation has also been increased. There is no big difference between the interest rate and Inflation rate. Because of inflation, value of money has been decreased and cost of living has been increased. This has created panic among lower, middle and upper middle class families who considered keeping their savings in banks as safe as well as remunerative. So, the invertors are searching for proper investment avenues. Here, an attempt is made to predict the future movement of scrips. This study helps the investors to invest in shares.

India has registered a growth rate of 8.6 percent in FY 2007-08 and is expected to grow at the rate of 10% plus in this fiscal year, and is one of the fastest growing economies in the world. It is one of the major attractions for FI’s and FII’s. FII’s invest in India through secondary Markets. There is a great scope for India for becoming member of G-8 nations committee. The stock exchange comes in the secondary market. Stock exchange performs activities such as trading in share, securities, bonds, mutual fund & commodities. Stock Broking industry is growing at an enormous rate, as more and more people are attracted towards stock exchanges with the hope of making profits. But during this period the country also registered a fairly high industrial growth. The old industries and business establishments who wanted to expand the activities as well as the new industries and the business establishments floated shares in the market to raise capital for their activities. The companies, which registered steady growth, earned confidence of the people and their shares, were rated high in the market. This project report helps the reader to understand the techniques of investing in the stock market particularly in the secondary market. Some of the proven techniques have been used in this report to help the reader or investor.

Fundamental And Technical Analysis

Fundamental Analysis is the study of everything from the overall economy and industry conditions, to the financial condition and management of specific companies (i.e., using real data to evaluate a stock’s value). Technical analysis is the examination of past price movements to forecast future price movements. Technical analysts are sometimes referred to as chartists because they rely almost exclusively on charts for their analysis.

Objectives of the study: To know the future movement of selected companies shares through fundamental and technical analysis.

Sub objectives o To predict the future price of the selected companies shares. o To study the strategies to be adopted by the retail investors based on the technical and fundamental analysis. o To know the floor and cap price of the stock. o To analyze individual company scrips by considering the factors relating to the economy, industry and the respective company. o To predict investor positions (Buy, sell & hold) based on historical price trends and the likely company prospects.

Findings and suggestion: EXPECTED MARKET PRICE OF BHEL year particulars 2008 FUNDAMENTAL ANALISIS 2132.30 TECHNICAL ANALYSIS current market price(31-03-08)

2500 2,061.35

2009 2707.42

2010 3429.62

3750

Fundamental And Technical Analysis

EXPECTED MARKET PRICE OF L&T year Particulars 2008 FUNDAMENTAL ANALISIS 2325.33 TECHNICAL ANALYSIS current market price

4450

2009 2451.38

2010 2584.41 5800

3,024.80

INDIAN STOCK MARKET OVERVIEW OF EQUITY MARKET IN INDIA BSE (Bombay Stock Exchange) SENSEX - THE BAROMETER OF INDIAN CAPITAL MARKETS Introduction:

Fundamental And Technical Analysis

For the premier Stock Exchange that pioneered the stock broking activity in India, 128 years of experience seems to be a proud milestone. A lot has changed since 1875 when 318 persons became members of what today is called "The Stock Exchange, Mumbai" by paying a princely amount of Re1. Since then, the country's capital markets have passed through both good and bad periods. The journey in the 20th century has not been an easy one. Till the decade of eighties, there was no scale to measure the ups and downs in the Indian stock market. The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that subsequently became the barometer of the Indian stock market. SENSEX is not only scientifically designed but also based on globally accepted construction and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies. The base year of SENSEX is 1978-79 and the base value is 100. The index is widely reported in both domestic and international markets through print as well

as electronic media.

The Index was initially calculated based on the "Full Market Capitalization" methodology but was shifted to the free-float methodology with effect from September 1, 2003. The "Free-float Market Capitalization" methodology of index construction is regarded as an industry best practice globally. All major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float methodology. Due to its wide acceptance amongst the Indian investors, SENSEX is regarded to be the pulse of the Indian stock market. As the oldest index in the country, it provides the time series data over a fairly long period of time (From 1979 onwards). Small wonder, the SENSEX has over the years become one of the most prominent brands in the country. The growth of equity markets in India has been phenomenal in the decade gone by. Right from early nineties the stock market witnessed heightened activity in terms of various bull and bear runs. The SENSEX captured all these events in the most judicial manner. One can identify the booms and busts of the Indian stock market through sensex.

Fundamental And Technical Analysis

NSE (NATIONAL STOCK EXCHANGE) The Organization: The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a taxpaying company unlike other stock exchanges in the country. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000. NIFTY: The Nifty is relatively a new comer in the Indian market. S&P CNX Nifty is a 50 stock index accounting for 23 sectors of the economy. It is used for purposes such as benchmarking fund portfolios; index based derivatives and index funds. The base period selected for Nifty is the close of prices on November 3, 1995, which marked the completion of one-year of operations of NSE's capital market segment. The base value of index was set at 1000. S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is a specialized company focused upon the index as a core product. IISL have a consulting and licensing agreement with Standard & Poor's (S&P), who are world leaders in index services.

FII in Indian stock market As part of its initiative to liberalize its financial markets, India opened her doors to foreign institutional investors in September, 1992. This event represents a landmark event since it resulted in effectively globalizing its financial services industry. Year

net investment by FII

Fundamental And Technical Analysis

1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

4.27 5444.6 4776.6 6720.9 7386.2 5908.45 729.11 9765.13 9682.52 8272.9 2668.9 44000.03 41416.45 67432.34 94327.87

What does India Need - FDI or FII FDI usually is associated with export growth. It comes only when all the criteria to set up an export industry are met. That includes, reduced taxes, favorable labor law, freedom to move money in and out of country, government assistance to acquire land, full grown infrastructure, reduced bureaucratic involvement etc. IT, BPO, Auto Parts, Pharmaceuticals, unexplored service sectors including accounting; drug testing, medical care etc are key sectors for foreign investment. Manufacturing is a brick and mortar investment. It is permanent and stays in the country for a very long time. Huge investments are needed to set this industry. It provides employment potential to semi skilled and skilled labor. On the other hand the service sector requires fewer but highly skilled workers. Both are needed in India. Conventional wisdom is that China will have an upper hand in manufacturing for a long time. If India plays its cards right India may be the hub for the service sector. Still high end manufacturing in auto parts and pharmaceuticals should be India’s target. The FII (Foreign Institutional Investor) is monies, which chases the stocks in the market place. It is not exactly brick and mortar money, but in the long run it may translate into brick and mortar. Sudden influx of this drives the stock market up as too much money chases too little stock. In last four months an influx of about $1.5 Billion has driven the Indian stock market 20% higher. Where FDI is a bit of a permanent nature, the FII flies away at the shortest political or economical disturbance. The late nineties economic disaster of Asian Tigers is a key example of the latter. Once this money leaves, it leaves ruined

Fundamental And Technical Analysis

economy and ruined lives behind. Hence FII is to be welcomed with strict political and economical discipline. China receives mainly the FDI. They do not have instruments to receive the FII i.e. laws, institutions and political and judicial framework. On the contrary, India should welcome both and work hard to retain both.

INTRODUCTION TO KOTAK SECURITIES THE KOTAK MAHINDRA GROUP: The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited. Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporates. As on December 31, 2006, the group has a net worth of over Rs.3, 100 crore, and the AUM across the group is around Rs. 225 billion and employs over 9,600 employees in its various businesses. With a presence in 282 cities in India and offices

Fundamental And Technical Analysis

in New York, London, Dubai and Mauritius, it services a customer base of over around

2.2

million.

The group specializes in offering top class financial services, catering to every segment of the industry. The various group companies include: 1. Kotak Mahindra Capital Company Limited 2. Kotak Mahindra Securities Limited 3. Kotak Mahindra Inc 4. Kotak Mahindra (International) Limited 5. Global Investments Opportunities Fund Limited 6. Kotak Mahindra (UK) Limited 7. Kotak Securities Limited 8. Kotak Mahindra Old Mutual Life Insurance Company Limited 9. Kotak Mahindra Asset Management Company Limited 10. Kotak Mahindra Trustee Company Limited 11. Kotak Mahindra Investments Limited 12. Kotak Forex Brokerage Limited 13. Kotak Mahindra Private-Equity Trustee Limited 14. Kotak Mahindra Prime Limited Kotak Mahindra has international partnerships with Goldman Sachs (one of the world's largest investment banks and brokerage firms), Ford Credit (one of the world's largest dedicated automobile financiers) and Old Mutual (a large insurance, banking and asset management conglomerate). Kotak Securities, an affiliate of Kotak Mahindra Bank, is the stock-broking and distribution arm of the Kotak Mahindra Group. The institutional business division, which provides AKSESS, primarily covers secondary market broking. It caters to the needs of foreign and Indian institutional investors in Indian equities (both local shares and GDRs). The division also has a comprehensive research cell with sectoral analysts covering all the major areas of the Indian economy. Kotak Securities Ltd. is India's leading stock broking house with a market share of around 8.5 % as on 31st March. Kotak Securities Ltd. has been the largest in IPO distribution.

Fundamental And Technical Analysis

The accolades that Kotak Securities has been graced with include: 1. Prime Ranking Award (2003-04)- Largest Distributor of IPO's 2. Finance Asia Award (2004)- India's best Equity House 3. Euro money Award (2005)-Best Equities House In India 4. Finance Asia Award (2005)-Best Broker In India 5. Finance Asia Award (2006)- Best Broker In India 6. Euro money Award (2006) - Best Provider of Portfolio Management: Equities The company has a full-fledged research division involved in Macro Economic studies, Sectorial research and Company Specific Equity Research combined with a strong and well networked sales force which helps deliver current and up to date market information and news. Kotak Securities Ltd is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services wherein the investors can use the brokerage services of the company for executing the transactions and the depository services for settling them. Kotak Securities has 195 branches servicing more than 2,20,000 customers and a coverage of 231 Cities. Kotaksecurities.com, the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited manages assets over 2500 crores of Assets Under Management (AUM) .The portfolio Management Services provides top class service, catering to the high end of the market. Portfolio Management from Kotak Securities comes as an answer to those who would like to grow exponentially on the crest of the stock market, with the backing of an expert.

Fundamental And Technical Analysis

INTRODUCTION TO THE TOPIC

FUNDAMENTAL AND TECHNICAL ANALYSIS:

Fundamental analysis The basic purpose of buying a security is to earn dividends and ultimately sell it at higher price. An investor therefore is interested in obtaining estimates of future prices of the share. These in turn will depend upon the performance of the industry to which the company belongs and the general economic situation of the country. The multitude of factors affecting a company’s profitability can be broadly classified as:

1. Economic wide factors: these includes the factors like growth rate of the economy, the rate of inflation, foreign exchange rates etc which affects profitability of all companies.

2.

Industry wide factors: these include factors which are specific to industry to which the company belongs. For instance the demand supply gap in the industry, the emergence of substitutes, and changes in government policies towards industry affects the company belonging to an industry.

Fundamental And Technical Analysis

3. Company wide factor: these factors are specific to a firm. The firm specific factors like plant and machinery, the brand image of the product, and ability of the management to affect the profitability. Fundamental analysis considers the financial and economic data that may influence the viability of a company. There are many flavors of fundamental analysis centered on such concepts as value, growth and turnarounds. Technical analysis is the study of the price chart. It assumes that by looking at the progress of that little squiggly line you can forecast the future trend of a stock. Fundamental analysis is essential to most investors, and technical analysis is essential to most traders and speculators.

An investor with rational and scientific approach will therefore be interested in analyzing the influence of the expected performance of the company, industry and economy as a whole on share prices, even before taking the investment decision such analysis is called fundamental analysis. Fundamental analysis is the method of evaluating securities by attempting to measure the intrinsic value of a particular stock. It is the study of everything from the overall economy and industry conditions, to the financial condition and management of specific companies (i.e., using real data to evaluate a stock’s value). The method utilizes items such as revenues, earnings, return on equity and profit margins to determine a company’s underlying value and potential for future growth. One of the major assumptions under fundamental analysis is that, even though things get mis priced in the market from time to time, the price of an asset will eventually gravitate toward its true value. This seems to be a reasonable bet considering the long upward march of quality stocks in general despite regular setbacks and periods of irrational exuberance. The key strategy for the fundamentalist is to buy when prices are at or below this intrinsic value and sell when they got overpriced.

Fundamental And Technical Analysis

TECHNICAL ANALYSIS:

Technical analysis is the examination of past price movements to forecast future price movements. Technical analysts are sometimes referred to as chartists because they rely almost exclusively on charts for their analysis. Moving Average: A Moving Average is an indicator that shows the average value of a security's price over a period of time. When calculating a moving average, a mathematical analysis of the security's average value over a predetermined time period is made. As the securities price changes, its average price moves up or down. There are several popular ways to calculate a moving average. Meta Stock for Java calculates a "simple" moving average--meaning that equal weight is given to each price over the calculation period. Interpretation: The most popular method of interpreting a moving average is to compare the relationship between moving averages of the security's price with the security's price itself. A buy signal is generated when the security's price rises above its moving average and a sell signal is generated when the security's price falls below its moving average.

This type of moving average trading system is not intended to get you in at the exact bottom nor out at the exact top. Rather, it is designed to keep you in line with

Fundamental And Technical Analysis

the security's price trend by buying shortly after the security's price bottoms and selling shortly after it tops. The critical element in a moving average is the number of time periods used in calculating the average. When using hindsight, you can always find a moving average that would have been profitable. The key is to find a moving average that will be consistently profitable. The most popular moving average is the 39-week (or 200day) moving average. This moving average has an excellent track record in timing the major (long-term) market cycles. Advantages: The advantage of moving average system of this type (i.e., buying and selling when prices break through their moving avera...