Professional Documents
Culture Documents
ON
INVESTMENT
IN
EQUITIES
CONDUCTED AT
VENTURA SECURITIES
BY
AJAY KUMAR PATEL
ROLL.NO: 08708102
KOTI, HYDERABAD.
2008-2010.
CERTIFICATE
fulfillment for the award of degree of Master of Business Administration has been carried out
by Mr. AJAY KUMAR PATEL, Hall-Ticket Number 087-08-102, who is a bonafide student of
Vivek Vardhini School Of Business Management (VVSBM), Koti, Hyderabad for the academic
year 2008-10.
HEAD PRINCIPAL
CERTIFICATE
This is to certify that the project report titled “INVESTMENT IN EQUITIES WITH
University, Hyderabad, was carried out by Mr. AJAY KUMAR PATEL, under my
guidance. This has not been submitted to any other university or institution for the award
submitted to any other university or institution for the award of any degree /
Place:
Date:
I also express my sincere thanks to the Staff Of Ventura Securities who were of
inspiring guidance and advice this study has been carried out.
INTROUDCTION
would hold portfolios composed of stocks and bonds of blue chip industrial companies,
treasury bonds, notes and bills. The choices available to less well-off investors were
much more limited, confirmed primarily to passbook savings accounts. If the investment
environment can be thought of as an ice cream parlor, then the customers of past decades
Mirroring the diversity of modern society, the investment ice cream parlor now
makes available a myriad of flavors to the investing public. Investors face a dizzying
array of choices. The ability to purchase different securities has become both less
expensive and more convenient with the advent of advanced communications and
computer networks, along with the proliferating market for mutual funds that has
and where and how they are bought and sold. Investment process is concerned with how
invest in, how extensive the investments should be and when the investments should
made.
Investment means the sacrifice of current rupees for future rupees. Two different
attributes are involved – “time” and “risk”. The sacrifice takes place in the present and is
certain. The reward comes later and the magnitude is uncertain. In some cases, risk is the
1) Real Investments
2) Financial Investments
Real investments involve some kind of tangible assets such as land, machinery,
factories.
Financial investments involve contracts written on pieces of paper such as
well as exciting, but it involves great deal of risk. Investing in financial securities
is considered to be one of the best avenues for investing one’s savings while it is
will help the markets to stabilize by tapping the rural areas and decreases the
The purpose of the study is to know about stock markets in India, how they work,
fundamental requirements before entering the stock market, how to enter the stock market,
market design, stock selection, when to buy or sell a stock, how to invest and knowing about
market intermediaries.
The objective of the study is to look into the scientific approach for selecting a stock
For that purpose the most happening software sector was taken for study and from that
The study deals with analysis of performance of the company, share price fluctuations
The purpose of the study is to locate a stock which gives good returns with minimum
risk.
For the purpose of study, one sector – software is selected. Wipro, Satyam and TCS are
INTRODUCTION TO STOCKS
The first step for you to understand the stock market is to understand stocks.
A share of stock is the smallest unit of ownership in a company. If you own a share
matters before the company. If the company distributes profits to shareholders, you will
One of the unique features of stock ownership is the notion of limited liability. If the
company loses a lawsuit and must pay a huge judgment, the worse that can happen is
your stock becomes worthless. The creditors can’t come after your personal assets.
Common stock
Preferred stock
Common Stock:
Common stock represents the majority of stock held by the public. It has voting
Preferred Stock:
Despite its name, preferred stock has fewer rights than common stock, except in
one important are – dividends. Companies that issue preferred stocks usually pay
consistent dividends and preferred stock has first call on dividends over common stock.
Investors buy preferred stock for its current income from dividends, so look for
companies that make big profits to use preferred stock to return some of those profits via
dividends.
DEMAT ACCOUNT
appointed by the Government of India in 1992 with its head office at Mumbai. Its one of
the function is helping the business in stock exchanges and any other securities markets.
Demat (short form of Dematerialization) is the process by which an investor can get
stocks (also called as physical certificates) converted into electronic form maintained in
services like banks, brokers, financial institutions etc. DP’s are like agents of Depository.
(securities can be stocks or any other form of investments) in the electronic form. In
India there are two such organizations called NSDL (National Securities Depository
Investor’s wishing to open Demat account has to go DP and open the account.
Opening the Demat account is as simple as opening the bank account with any bank. As
we need bank account to save our money, make cheque payments etc, likewise we need
to open a demat account if we want to buy or sell stocks. All stocks what we possess will
show in our demat account. So we don't have to possess any physical certificates. They
are all held electronically in our demat account. As we buy and sell the stocks,
The market regulator, the Securities and Exchange Board of India (SEBI), has
made it compulsory to open the demat account if you want to buy and sell stocks.
A broker and a DP are two different people. A broker is a member of the stock
exchange, who buys and sells stocks on his behalf and also on behalf of his customers.
When we approach any DP, we will be guided through the formalities of opening
an account. The DP will ask to provide some documents as proof of our identity and
PAN card, Voter's ID, Passport, Ration card, Driver's license, Photo credit card
The charges for account opening, annual account maintenance fees and
Finally –
After successfully opening the demat account, the DP will allot “Beneficial
Owner Identification” Number, which will be needed to mention for all our future
transactions.
If we want to sell our stocks, we need to place an order with our broker and give a
'Delivery Instruction' to your DP. The DP will debit our account with the number of
If we want to buy stocks, inform our broker about our Depository Account
Number, so that the stocks bought are credited into our account.
with regard to what marketable securities to invest in, how extensive the investment
should be and when the investment should be made. An eight-step procedure for making
1) What is Investment
2) Understanding stocks
3) Finding a broker
4) Evaluation of stocks
5) Research tools
6) Investing strategy
7) Investing technique
Investing is making your money work for you without taking any more risks than
Despite high crude oil prices, its weak demand for gasoline that holds back oil stock
There is a danger you can be too conservative in your investment strategy as you
Stocks are the basic units of ownership in publicly traded companies. There are two
a. Common Stock: Common stock represents the majority of stock held by the
public. It has voting rights, along with the right to share in dividends.
consistent dividends and preferred stock has first call on dividends over
common stock.
Bull and Bear stock markets are the two sides of same coin:
Bull and bear markets go together and are necessary for an efficient market.
are positive.
To decide which type of broker is right for you, you need to use these resources to
Thirteen of the top online stock trading sites offer investors a wide variety of services
Brokers offer different levels of service. A broker fills in the gaps in knowledge and
experience.
Broker explains what types of accounts are available and how to open an account.
Financial advisers can map a blue print that will get you from where you are to your
financial goals.
Financial advisers come in a variety of flavors. Finding the one right for you involves
The new year poses many challenges for stocks, including high oil prices, the credit
Stock prices are driven by the relationship between buyers and sellers. Attractive
stocks have more buyers than sellers, which drives up prices, while less attractive
of the financial health of a company and how the market values the stock. The following
are the most popular tools of fundamental analysis. They focus on earnings, growth, and
g) Dividend Yield
h) Book Value
i) Return on Equity
The internet is a gold mine of information, but you’ll need some tools to get to the
nuggets. Research tools make the job easier if you know where to find them and how to
use them.
The better stock screens offer similar characteristics that give you greater flexibility
Stock screens will save time and help to build a thoughtful portfolio by focusing on
Dividend ratios can tell much about a stock and its future payout prospects.
One of the best sources of information on companies is free and as near as your
computer.
What strategy to use as an investor? The different investment strategies and how
Knowing when and how to sell a winning stock is as important as knowing when to
Following a too conservative investment strategy in retirement may not protect you
Bottom-up investors focus on strong companies and believe they will perform well in
Investing techniques offer powerful ways for investors to execute their strategies.
average investor.
Investing with expectations of high returns is not investing but gambling. Don’t try to
double or triple your money quickly in the stock market – you’ll be disappointed and
perhaps poorer.
What makes the market rise or fall? Sometimes it seems to have a mind of its
own that reacts poorly to good news and with enthusiasm to bad news. One should learn
the factors that are the major influences on the markets and how to use this information.
To “trade” means to buy and sell in the jargon of the financial markets. How a
system that can accommodate one billion shares trading in a single day works is a
mystery to most people. No doubt, our financial markets are marvels of technological
efficiency.
We don’t need to know all of the technical details of how to buy or sell stocks,
morning.
Close - The stock price at which it remains after the end of market timings or the final
Bid Quantity - The total number of stocks available for buying is called Bid Quantity.
Offer Quantity - The total number of stocks available for selling is called Offer
Quantity.
Buying and selling of stocks - Buy is also called as demand or bid and selling is also
called as supply or offer. First selling and then buying (this only happens in day trading)
Transaction - One complete cycle of buying and selling of stocks is called One
Transaction.
Squaring off - This term is used to complete one transaction. Means if we buy then we
have to sell (means square-off) and if we sell then we have to buy (means square-off).
Limit Order - In limit order the buying or selling price has to be mentioned and when
the stock price comes to that price then our order will get executed with the mentioned
price by us.
Market Order- When we put buy or sell price at market rate then the price get executes
at the current rate of market. The market order get immediately executed at the current
available price.
Success Mantra
When you learn what to do and what not to do in order to loose nothing means you
have won the half battle. Only then you can learn how to gain or what to do in order to
win. A new investor should do paper trading in order to get the market knowledge before
2) How to gain
How to gain requires deep understanding about the market trends and fluctuations.
The first believe investing is a form of gambling; they are certain that if you
invest, you will more than likely end up losing your money.
The second category consists of those who know they should invest for the
Their characteristics….
feel investing in some sort of black-magic that only a few people hold the key
to
cannot tell you why they own a particular stock / mutual fund.
investment style is blind faith or limited to “this stock is going up. We should
but it.”
This group is in far more danger than the first. They invest like the masses
and then wonder why their results are mediocre [or in some cases, devastating.
FUNDAMENTAL ANALYSIS
To determine the intrinsic value of an equity share, the security analyst must forecast the
earnings and dividends expected from the stock and choose a discount rate which reflects
the riskness of the stock. This is what is involved in fundamental analysis, perhaps the
most popular method used by investment professionals. The earnings potential and
riskness of a firm are linked to the prospects of the industry to which it belongs. The
prospects of various industries, in turn, are largely influenced by the developments in the
macro economy.
Researchers have found that stock price changes can be attributed to the
following factors:
A. MACRO-ECONOMIC ANALYSIS
operate. The key variables commonly used to describe the state of the macro-economy
are:
The gross domestic product (GDP) is a measure of the total production of final goods
and services in the economy during a specified period usually a year. The growth rate of
GDP is the most important indicator of the performance of the economy. Firm estimates
of GDP growth rate are available with a time lag of one to two years or so, but
preliminary estimates are made from time to time by various bodies like CMIE, NCAER,
and the RBI. The higher the growth rate of GDP, other things being equal, the more
sectors of the economy, viz. the services sector, the industrial sector and the agricultural
sector.
Publicly listed companies play a major role in the industrial sector but only a minor
role in the services sector and the agricultural sector. Hence stock market analysts focus
more on the industrial sector. They look at the overall industrial growth rate as well as
the growth rates of different industries. The higher the growth rate of the industrial
sector, other things being equal, the more favourable it is for the stock market.
Agriculture accounts for about a quarter of the Indian economy and has important
linkages, direct and indirect, with industry. Companies using agricultural raw materials
linkages.
A spell of good monsoons imparts dynamism to the industrial sector and buoyancy to
the stock market. Likewise, a streak of bad monsoons casts its shadow over the industrial
The demand for corporate securities has an important bearing on stock price
movements. So investment analysts should know what is the level of investment in the
economy and what proportion of that investment is directed toward the capital market.
The level of investment in the economy is equal to:
component in this expression. In addition to knowing what the savings are we should
also know how the same are allocated over various instruments like equities, bonds, bank
Other things being equal, the higher the level of savings and investments and the
greater the allocation of the same to equities, the more favourable it is for the stock
market.
economy. The central budget as well as the state budgets prepared annually provides
In India, governmental revenues come more from indirect taxes such as excise duty
and customs duty and less from direct taxes such as income tax. The bulk of the
subsidies, leaving very little for public investment. The excess of governmental
expenditures over governmental revenues represents the deficit. While there are several
The fiscal deficit has to be financed with government borrowings which is done in
three ways. First, the government can borrow from the Reserve Bank of India. This leads
to increase in money supply which has an inflationary impact on the economy. Second,
the government can resort to borrowing in domestic capital market. This tends to push up
domestic interest rates and crowd out private sector investment. Third, the government
f) Money Supply
There are several definitions of money. The two more commonly used ones are:
When we talk of money supply, we usually refer to M3. The growth rate of M3 in
India has been around 15 percent per year. This growth can be explained by three
factors in the main: growth in the real economy, monetization of a portion of deficit
deficit financing means the RBI buys the securities issued by the government.
attributable to the factor of inflation. The effect of inflation on the corporate sector tends
to be uneven. While certain industries may benefit, others tends to suffer. Industries that
enjoy a strong market for their products and which do not come under the purview of
price control may benefit. On the whole, it appears that a mild level of inflation is good
h) Interest Rate
Interest rates vary with maturity, default risk, inflation rate, productivity of capital
and so on. The interest rates on money market instruments which are virtually risk free
tend to be the lowest. Long dated government securities generally carry slightly higher
interest rates. Corporate debentures which have some default risk associated with them
A rise in interest rates depresses corporate profitability and also leads to an increase
in the discount rate applied by equity investors, both of which have an adverse impact on
stock prices.
h) Foreign Investment
Foreign investment in India comes in two forms: foreign direct investment and
foreign portfolio investment. The former represents investment for setting up new
projects and hence is long term in nature; the latter is in the form of purchase of
outstanding securities in the capital market and hence can be reversed easily.
An assured supply of basic industrial raw materials like steel, coal, petroleum
j) Sentiments
ticket items. Higher business confidence gets translated into greater business investment
that has a stimulating effect on the economy. Thus, sentiments influence consumption
and investment decisions and have a bearing on the aggregate demand for goods and
services.
B. INDUSTRY ANALYSIS
appreciate the most. Yet careful analysis can suggest which industries have a brighter
future than others and which industries are plagued with problems that are likely to
industry may be analyzed in terms of a life cycle with four well-defined stages:
a. Pioneering Stage
d. Decline Stage
a. Pioneering Stage: During this stage, the technology and or the product is relatively
new. Lured by promising prospects, many entrepreneurs enter this field. As a result,
there is keen, and often chaotic, competition. Only a few entrants may survive this
stage.
b. Rapid Growth Stage: Once the period of chaotic developments is over, the rapid
growth stage arise. Firms which survive the intense competition of the pioneering
c. Maturity and Stabilization Stage: During this stage, when the industry is more or
less fully developed, its growth rate is comparable to that of the economy as a whole.
d. Decline Stage: With the satiation of demand, encroachment of new products, and
changes in consumer preferences, the industry enters the decline stage, relative to the
economy as a whole. In this stage, the industry may grow slightly during prosperous
periods, stagnate during normal periods and decline during recessionary periods.
The experience of most industries suggest that they go through the 4 phases of
the industry life cycle though there are considerable variations in terms of the relative
duration of various stages and the rates of growth during these stages.
Since each industry is unique, a systematic study of its specific features and
Productivity of labour.
implications.
sales.
Michael Porter has argued that the profit potential of an industry depends
New entrants add capacity, inflate costs, push prices down, and reduce profitability.
If an industry faces the threat of new entrants, its profit potential would be limited. The
threat of new entrants is low if the entry barriers confer an advantage on existing firms
Switching costs –these are essentially one time cost of switching from the
warranties, and so on if the rivalry between the firms in an industry is strong, competitive
moves and counter moves dampen the average profitability of the industry. The intensity
At least a few firms are relatively balanced and capable of engaging in a sustained
competitive battle.
The industry growth is sluggish, prodding firms to strive for a higher market
share.
products. Substitute products may limit a profit potential of the industry by imposing a
ceiling on the prices that can be charged by the firms in the industry. The threat from
The price- performance trade off offered by the substitute products is attractive.
The substitute products are being produced by industries earning superior profits.
Buyers are competitive force. They can bargain for price cut, ask for superior
quality and better service and induce rivalry among competitors. If they are powerful,
they can depress the profitability of the supplier industry. The bargaining power of a
Suppliers can exert a competitive force in an industry as they can raise prices, lower
quality and curtail the range of free services they provide. Suppliers have strong
There are hardly any viable substitute for the products supplied.
Few suppliers dominate and the supplier group is more concentrated than the
buyer group.
C. COMPANY ANALYSIS
Fundamental analysts take two somewhat different approaches in their search for
mispriced securities. The first approach involves estimating the intrinsic value and
comparing the same with the prevailing market price to determine whether the
estimating a security’s expected return, given its current price and intrinsic value, and
then comparing it with the “appropriate” return for securities with similar
characteristics.
sequence. It may be organized into two parts (a) a study of financials, and (b) a study
of other factors.
Investment analysts start with a historical analysis of earning (and dividends),
growth, risk, and valuation and use company analysis as a foundation for developing
TECHNICAL ANALYSIS
fundamental analyst believes that the market is 90 percent logical and 10 percent
percent logical. Technical analysts don’t evaluate a large number of fundamental factors
relating to the company, the industry and the economy. Instead, they analyze internal
market data with the help of charts and graphs. Subscribing to the ‘castles-in-the-air’
approach, they view the investment game as an exercise in anticipating the behaviour of
market participants. They look at charts to understand what the market participants have
been doing and believe that this provides a basis for predicting future behaviour.
The technical approach is the oldest approach to equity investment, dating back to
the late 19th century. It continues to flourish in modern times as well. As an investor, we
will often encounter technical analysis because newspapers cover it, television
programmes routinely call technical experts for their comments, and investment advisory
currencies, bonds, and equity stocks, our studies is restricted to equity stocks.
Technical analysis involves a study of market generated data like prices and
reflection of the idea that prices move in trends which are determined by the changing
forces. The art of technical analysis--for it is art—is to identify trend changes at an early
stage and to maintain an investment posture until the weight of the evidence indicates
Originally proposed in the late nineteenth century by Charles H. Dow, the editor
of the Wall Street Journal, the Dow theory is perhaps the oldest and best known theory of
technical analysis.
“The market is always considered as having three movements, all going at the
same time. The first is the narrow movement from day to day. The second is the short
swing, running from two weeks to a month or more; the third is the main movement,
Proponents of the Dow Theory refer to the three movements as: (a) daily
fluctuations that are random day-to-day wiggles; (b) secondary movements or corrections
that may last for a few weeks to some months; and (c) primary trends representing bull
trend represents a bear market. A major upward move is said to occur when the high
point of each rally is higher than the low point of the preceding decline. Likewise, a
major downward move is said to occur when the high point of each rally is lower than
adjustments to the excesses that may have occurred in the primary movements. These
movements are considered quite significant in the application of the Dow Theory.
technical analysts do not usually try to forecast day-to-day movements in the market.
The bar chart, one of the simplest and most commonly used tool of technical
analysis, depicts the daily price range along with the closing price. In addition, it may
show the daily volume of transactions. The upper end of each bar represents the day’s
highest price and the lower end the day’s lowest price. The small cross across the bar
Technical analysts believe that certain formations or patterns observed on the bar
char or line chart have predictive value. The more important formations and their
Head and Shoulders Top (HST) Pattern: As the name suggests, the HST formation
has a left shoulder, a head, and a right shoulder. The HST formation represents a bearish
development. It the price falls below the neckline (the line drawn tangentially to the left
Inverse Head and Shoulders Top (IHST) Pattern: As the name indicates, the IHST
formation is the inverse of the HST formation. Hence, it reflects a bullish development. It
the price rises above the neck line, a price rise is expected. Hence, it is a signal to buy.
Flags and Pennants Formation: It typically signifies a pause after which the previous
Double Top Formation: It represents a bearish development, signaling that the price is
expected to fall.
Double Bottom Formation: It reflects a bullish development, signaling that the price is
expected to rise.
Company
Profile
COMPANY PROFILE
Market.
• Ventura believes in philosophy that the key to their business is service which will
Ventura – PROMOTERS
India.He has nearly fifteen years of varied experience in corporate advisory structured
markets in Europe, US and the Far East and has been personally involved in international
equity offerings and cross border acquisitions. He is the CEO of Genesys International, a
of India. He has nearly fifteen years of rich experience in the capital markets
intermediation, equity research and has a wide cross section of market relationships. Mr.
Majethia is the CEO of Ventura Securities. It was his vision to create an all India
Company's Goal
• We aim to add value and provide our clients with an unrivalled and specialized
service which reflects the expertise and efficiency of our dedicated support teams.
History
FOUNDATION OF VENTURA
Founded in 1994 by Chartered Accountants Sajid Malik and Hemant Majethia. They
are the first generation entrepreneurs and are the principal promoters of Ventura.
A dedicated and efficient team of senior managers assists Mr. Majethia the CEO of
the company.
services to Institutions (Foreign and Domestic), High Net Worth and Retail Investors
derivatives market.
Ventura has achieved a reputation for innovative and unbiased research along with
funds, it has also developed the advice-driven business of high net worth and
corporate clients.
Why Ventura?
• Ventura’s services are offered under total confidentiality and integrity with the sole
• Equity Broking - Corporate Member of The Stock Exchange, Mumbai (BSE) and
• Pan India reach - 380 terminals spread across 75 different locations, in semi urban,
• More than 100,000 retail clients serviced from the above locations
• Ventura have heavily invested in technology (customized and ready to use software)
involving front and back end operations offering seamless process and flawless
settlement mechanism
OFFERINGS
Research competency
• Market Outlooks and Strategy Analysis Market research at Ventura is structured to
• Services in this area range from the intra-day analysis of the most recent
• Along with its price forecasting capability, the Team undertakes analytical research
• The Team also publishes monographs on topics of broad interest to its customers,
management, and current hedge activities and strategic thought in the various sectors
of the market.
Data
Analysis
ANALYSIS
WIPRO
FUNDAMENTAL ANALYSIS:
COMPANY ANALYSIS:
of technology services by Gartner, Forrester and other research and advisory firms. Wipro
process outsourcing, or BPO, services and research and development services in the areas of
hardware and software design to companies worldwide. The company combines business
knowledge and industry expertise of its domain specialists and the technical knowledge and
implementation skills of its delivery team in the development centers located in India and around
the world, to develop and integrate solutions which enables its clients to leverage IT for
The range of its services includes IT consulting, custom application design, development,
infrastructure outsourcing, BPO services and research and development services in the areas of
The market for IT services is highly competitive and rapidly changing. India and
AsiaPac IT Services and Products segment focuses primarily on meeting the IT products and
services requirements of companies in India, Asia-Pacific and the Middle East region.
Wipro’s revenue has grown by an average of 26% a year while profits have grown by
69%.
The company sells and markets its consumer care products primarily through distribution
network in India, which has access to 2 million retail outlets throughout the country. The primary
raw materials for many of its soap and hydrogenated oil products are agricultural commodities,
As of March 31, 2006, Wipro had over 53,700 employees. Wipro Limited, which had
$1.2 billion in revenue for FY04, also has other interests in fluid power, lighting, medical
equipment products, and financial services. Wipro Technologies makes up around 67% of the
Wipro Technologies achieved $617 million in revenue for the fiscal year ending March
Wipro Technologies has emerged as the second-largest software exporter from India and
has a high-powered client base, including GM, Lehman Brothers, Sony, NYSE, Weyerhaeuser,
Vision: To offer services based on world-class infrastructure, industry expert skills, proven
process-oriented service operations that are backed by principals to ensure the world’s best
Mission: “To serve customers with integrity through innovative, value for money solutions,
present era, has not only captured the imagination of the people but also contributed to foster the
pace of globalization and bringing together humanity as has never been before by breaking
geographical, territorial and man made barriers. In the process, it has generated economic
opportunities, social-closeness and contributed to the overall growth process of the whole world.
Within a short span, ICT related exports have become the largest export item of India
surpassing a large number of traditional products and services including dynamic ones.
Information technology (IT) refers to the collection of products and services that turn data into
The U.S. is the world leader in information and communications technology (ICT)
products and services, representing almost 40 percent of global spending. U.S. spending on ICT
has increased almost 21 percent since 2000, to almost $1.13 trillion in 2005. Between 2000 and
2005, ICT in the U.S. has achieved a compound annual growth rate of 4 percent, compared to 6.3
To put U.S. ICT spending into context, member nations of the G-8 experienced CAGR of
4.5 percent for the same years. At $3,800, the U.S. is also one of the world’s largest per capita
ICT spending nations. The Information Technology Sector has grown in size from Rs. 5,450
crores in 1994-95 to about Rs. 64,200 crores in 2001-02 contributing 0.59% and 2.87% to G.D.P.
(Rs. In Million)
As of March 31,
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
136,299 116,954
LOAN FUNDS
APPLICATION OF FUNDS
FIXED ASSETS
109,084 83,792
151,235 115,997
2006 2005
Adjustments:
Cash and cash equivalents at the beginning of the period 5,368.96 2,900.94
Cash and cash equivalents at the end of the period 8,230.02 5,368.96)
TECHNICAL ANALYSIS
Sales and Other Income
106.3
81.7
58.8
12.9
In the FY1995-96, Wipro’s sales was US$ 12.9 billion and now it is US$ 106.3 billion.
20.7
16.3
10.3
0.5
In FY1995-96, the profit after tax was US$ 0.5 billion and in FY2005-06 it has increased to
798
466
304
Capitalization is a measure of corporate size. The invested capital in the FY1995-96 was US$
19.6
18.1
10.0
7.4
Operating cash flows is the income before depreciation and taxes. In the FY1995-96, the
operating income was Rs.7.4 billions and in FY2005-06 it has increased to Rs. 19.6 billions.
Revenues from Global IT Services & Products
1,815
1,353
943
50
Wipro’s global revenues have increased from US$ 50 million to US$ 1,815 million.
APPLICATION OF DOW THEORY:
CLOSING
DATE PRICE
12-Feb 422.65
13-Feb 423.15
14-Feb 410
15-Feb 416.35
19-Feb 415.05
20-Feb 412.35
21-Feb 411
22-Feb 426.8
26-Feb 439.4
27-Feb 445.25
28-Feb 440.65
29-Feb 447.4
INFERENCE:
The above graph represents the daily fluctuations in the market which is one of the major
proponent in Dow Theory. It is difficult to forecast day-to-day movements in the market. In the
above 12 days of trading, the share price of wipro was highest on 29TH Feb. - Rs.447.4 and the
lowest was on 14th Feb. – Rs. 410.
CLOSING SUM OF THREE
DATE PRICE YEAR AVERAGE
12-Feb 422.65
13-Feb 423.15 1255.8 418.6
14-Feb 410 1249.5 416.5
15-Feb 416.35 1241.4 413.8
19-Feb 415.05 1243.75 414.58
20-Feb 412.35 1238.4 412.8
21-Feb 411 1250.15 416.72
22-Feb 426.8 1277.2 425.73
26-Feb 439.4 1311.45 437.15
27-Feb 445.25 1325.3 441.77
28-Feb 440.65 1333.33 444.44
29-Feb 447.4
INFERENCES:
A 10-day moving average of daily prices may be used to detect a short term trend. This stock
price line stands as an indicator to an investor whether to buy the share or to sell it. In the above
competition. TCS helps enterprises stay agile and respond better to changing market conditions
by optimizing business processes, making their IT infrastructure resilient and ensuring faster
business results. TCS partners with enterprises worldwide to help them achieve business
transformation. Leveraging its industry insight and technology expertise, TCS enables success in
with their business needs, TCS helps enterprises experience real business results.
TCS provides solutions globally to help enterprises realize their product development,
processes and competencies. TCS leverages its years of domain and IT experience to bring in
process improvements, process automation and platform based solutions to enterprises across
industries.
COMPANY ANALYSIS:
The company has seen strong and profitable growth across all markets driven by good
For the year ended march 31, 2007, the company earned a total income of Rs.15156.52
crores an increase of 34.20% over previous year’s Rs.11,293.76 crores. TCS total income is
18914.26 crores. The net profit increased by 24.79% of the total income. The company is
amongst the leading IT companies in the world and continues to retain its leadership position in
the Indian IT industry. The company has provided effective business solutions to Global and
Indian companies by leveraging its domain knowledge across industry verticals, excellence in
technology and robust processes. The company’s continued investments in innovation and
technology have enabled it to undertake a number of large, end-to-end, mission critical projects
in diverse business areas and technology domains. The company has 148 offices globally. TCS
Schedule As at As at
Rs. in Rs. in
crores crores
SOURCES OF FUNDS:
1. SHAREHOLDERS' FUND
2. LOAN FUNDS
50.74 35.5
APPLICATION OF FUNDS:
5. FIXED ASSETS
2218.46 1449.78
5257.13 3991.09
2594.9 1720.68
Therefore, the TCS total assets are Rs. 8170.34 crores in March 31, 2007 whereas Rs.
5709.52 crores in March 31, 2006. The assets has been increased by 43.1% in the year March
31, 2006.
TECHNICAL ANALYSIS
The Total Indian IT Exports (including hardware & software in addition to services) were
US$ 24.2 billion in 2005-06 with services exports at 97.5% of the total IT exports. The major
components of Services exports were IT Services exports (55%), BPO exports (26%) and
software products and engineering services exports (16.5%). NASSCOM estimates that in
FY2006-07 Indian IT exports will grow to US$ 31.9 billion from US$ 24.2 billion in 2005-
06.
In FY 2005-06, the domestic IT-BPO market was at US$ 13.2 billion and was estimated to
grow at 20% to exceed US$ 15.9 billion in FY 2006-07. The IT services segment in the
domestic market is expected to reach US$ 5.6 billion in FY 2006-07, exhibiting a 24.2%
growth over FY 2005-06. The domestic BPO segment is estimated to grow by 29.6% in
The Industry Verticals where the Company has a sizable presence are:
b. Insurance
c. Manufacturing
d. Telecommunications
f. Retail
g. Transportation
h. Utilities
15.30% 17.00%
4.30%
7.10%
3.20%
42.20% 2.40%
8.50%
The company’s major revenues come from BFSI i.e., 42.20% and the next from
manufacturing 15.30%.
DATE CLOSING
PRICE
12-Feb 906.1
13-Feb 864.65
14-Feb 758.1
15-Feb 873.8
19-Feb 853.2
20-Feb 875.45
21-Feb 886.1
22-Feb 900.55
26-Feb 900.75
27-Feb 898.4
28-Feb 877.55
29-Feb 880.9
INFERENCES:
TCS share prices lie between Rs.750 to Rs.900. in the beginning of the week, the share prices of
TCS was decreasing and in the middle of the week it increased to the maximum and by the end of
SUM OF
CLOSING THREE
DATE PRICE YEAR AVERAGE
12-Feb 906.1
13-Feb 864.65 2528.85 842.95
14-Feb 758.1 2496.55 832.18
15-Feb 873.8 2485.1 828.37
19-Feb 853.2 2602.45 867.48
20-Feb 875.45 2614.75 871.58
21-Feb 886.1 2662.1 887.37
22-Feb 900.55 2687.4 895.8
26-Feb 900.75 2699.7 899.9
27-Feb 898.4 2676.7 892.2
28-Feb 877.55 2656.3 885.62
29-Feb 880.9
INFERENCES:
The share price of TCS has an increasing trend. It has reached its highest average at the end of
SUMMARY
Investing in financial securities is now considered to be one of the best avenues
for investing one’s savings while it is acknowledged to be one of the most risky avenues
to invest in equity. This will help the markets to stabilize by tapping the rural areas and
The factors which were studied under this are to know about stock markets in
India, how they work, prerequisites to enter the stock markets, market design, stock
selection, when to buy or sell a stock, how to invest, knowing about market
intermediaries.
For successful investment factors like timing, selection, setting targets, avoiding
solution. Due to this, its sales in FY 2006-07 have increased by 30.1% and PAT has
increased by 27%.
TCS gets it majority of income from Telecom industry and banking industry.
In comparison to WIPRO and TCS share price analysis, it is found out that TCS has
the highest share price value because of its diversification. TCS is into Banking,
If the stock price line falls below the moving average line, the investor should
purchase the stock because the intrinsic value is more than the market price. That
If the stock price line rises above the moving average line, the investor should sell the
stock as the intrinsic value is more than the market price. Therefore, the stock is
overvalued.
Suggestions
SUGGESTIONS
Proper scientific way of investigation should be undertaken about sector and its
Stock pickup should be always selective and should not depend on rumors of the
market
Before buying and selling shares latest price movement trends should be analyzed
Individual Risk tolerance should be known and then be ready for unexpected
Constant proper review of portfolio should be done and wherever required buying
In India, the role of securities market has undergone structural transformation with the
also involves great deal of risk. Even Indian Government wants to encourage Equity
Investment.
Economy:
While analyzing stock, investor should consider GNP, Price conditions, Economy,
Disposable Income, Personal savings, Interest rates, Balance of Trade, Strength of the
Sector Analysis:
stage. It is advisable to quickly get out of sectors which are in the stagnation stage prior
to its lapse into the decline stage. The particular phase or stage of a sector can be
determined in terms of sales, profitability and their growth rates amongst other factors.
Company Analysis:
In company analysis, history of the company and line of business, Product portfolio’s
strength, Market share, Top Management, Intrinsic Values like Patents and Trademarks
held, Foreign collaboration, its need and availability for future, Quality of competition in
the market, present and future, Future business plans and projects, Level of trading of the
company’s listed scrip, EPS, its growth and rating vis-à-vis other companies in the
The fundamental analysis is the determination of price based on future earnings, where
as the price of a security represents a consensus. The price at which an investor is willing
to buy or sell depends primarily on his expectations. For this purpose technical analysis
also forms a strong tool in analyzing a company where the price movements are recorded
All the limitations of Fundamental Analysis, Technical Analysis are applicable to the
study.
The factors which affect the markets and intangible are not considered.
The data for the study considered is of past two years, so analysis is restricted to that
period only.
In the application of Dow theory, only daily price fluctuations were considered due to
time constraint.
Bibliography
BIBILIOGRAPHY
BOOKS REFFERED:
- Prasanna Chandra.
Investments
- William, Sharpe
WEBSITES:
www.about.stocks.com
www.nseindia.com
www.buzzingstocks.com
www.moneycontrol.com