SYAMALA DEVI INSTITUTE OF TECHNOLOGY, NANDYAL

WELCOME

MASTER OF BUSINESS ADMINISTRATION

Project Report on
FUNDAMENTAL AND TECHNICAL ANALYSIS Submitted By

N.SUSHMA REGD No. 094K1E0029

Under the Guidance Of

Mr.PULLAIAH
Associate Professor

Chapter 1 INTRODUCTION INDUSTRIAL PROFILE COMPANY PROFILE

Financial management
Financial management is that managerial activity which is concerned

with the planning and controlling of the firm's financial resources.Planning,directing,monitoring,organising and controlling of the monetary resources of an organisation.

INDUSTRIAL PROFILE
HISTORY OF STOCK EXCHANGE

The only stock exchanges operating in the 19th century were those of Bombay set up in 1875 and Ahmedabad set up in 1894. These were organized as voluntary non profit-making association of brokers to regulate and protect their interests. Before the control on securities trading became central subject under the constitution in 1950, it was a state subject and the Bombay securities contracts (control) Act of 1925 used to regulate trading in securities. Under this act, the Bombay stock exchange was recognized in 1927andAhmedbadin1937. 1

FEATURES OF STOCK EXCHANGE

It is a place where securities are purchased and sold. it is an association of persons, whether incorporated or not The trading in exchange is strictly regulated. rules and

regulations prescribed for various transactions Genuine Investors and speculators buy and sell shares The securities of corporations, trusts, Governments, Municipal corporations etc, are allowed to be dealt on stock exchange.

Securities and Exchange Board of India

The Government of India set up a body called Securities and
Exchange Board of India in April1988. However, the real beginning of SEBI startedin 1992,when the SEBI Act, 1992 was passed and assented

by the President of India

Objectives of SEBI
The main objectives of SEBI are as follows:
1.Objectives towards theI nvestors. 2.Objectives towards Capital Issuers. 3.Objectives towardsI ntermedi ari es.

BOMBAY STOCK EXCHANGE

 BOMBAY STOCK EXCHANGE IS THE OLDEST STOCK EXCHANGE

IN ASIA WITH RICH HERITAGE

IT SPANS OVER THREE CENTURIES WITH 133 YEARS OF

EXISTENCE
BSE WAS EXTABLISHED AS THE NATIVE SHARE AND STOCK

BROKERS ASSOCIATION IN 1875

Governing board comprising of 9 elected directors, 2 SEBI nominees, 7

public epresentatives and an executive director is the apex body,

FEATURES
Worlds no.1 exchange in terms of listed companies Over 4700 listed companies

Worlds 5 exchange in terms of transaction

Market capitalization USD 1.79 trillion on 31 dec 2007

NATIONAL STOCK EXCHANGE

 NSE has a market capitalization of aroundRs 47,01,923 NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other

financial intermediaries in India but its ownership and

management operate as separate entities

At present there are 24 stock exchanges recognized under the securities contract (regulation Act, 1956. They are

Ahmedbad Stock Exchange Bangalore Stock Exchange Bhubaneswar Stock Exchange Calcutta Stock Exchange Cochin Stock Exchange Coimbatore Stock Exchange Delhi Stock Exchange Guwahati Stock Exchange Hyderabad Stock Exchange Indore Stock Exchange Jaipur Stock Exchange Kanpur Stock Exchange Ludhiana Sock Exchange Madras Stock Exchange Magadh Stock Exchange Mangalore Stock Exchange Pune Stock Exchange Uttar Pradesh Exchange Assoc ltd Saurashtra Sock Exchange

COMPANY PROFILE

Doha Brokerage & Financial Services Ltd

Established in 1992, as one of the first corporate brokerages in India, The Doha Brokerage & Financial Services Ltd (formerly Select Securities Ltd), is the flagship company of the DBFS group. To serve our customers better, the company has gone beyond the traditional brokerage business, and offers a wide range of services, which include total wealth management and investment solutions. With a pan Indian presence, which comprises over 180 branches across major cities, as well as in Dubai and Doha in the Middle East, DBFS is always closer to its customers.

The Team
Mr. R Seetharaman, Chairman (Nominee- Doha Bank) Mr. K V Samuel, Vice Chairman (Nominee- Doha Bank) Mr. Prince George, Managing Director & CEO

Mr. Binny C. Thomas, Whole-time Director (Dubai)

Mr. Sekhar M, Whole-time Director Mr. Suresh Yezhuvath, Whole-time Director

Vision We want to remain as the leading, trusted total financial services provider, wherever we operate, by maintaining superior technological and service standards, and by keeping trust and transparency as our core values.
Mission We are committed to create and enhance wealth for corporate and retail customers, by delivering cuttingedge financial solutions which suit their specific needs.

Services
Internet Trading
Commodities & Forex Trading Custodial - Depository Services

Mutual Funds & Insurance Products

Portfolio Management Trading in Equities & Derivatives

SERVICES RENDERED BY DBFS

Equity & Derivative Trading Lending Services Institutional Distribution Services

Insurance Broking

Depository Services

Private Equity
Commodities Broking Services

Internet Trading

Investment Banking

Wealth Management Services

International Equity & Commodities

SERVICES.
Broking in Equities & Derivatives on NSE & BSE.
Depository Services IPO services

Mutual funds
Insurance Portfolio Management service

Benefits @ DBFS

Timely Entry & Exit De-Risking Portfolio Research Department Understanding Risk Regular Analysis & Monitoring Professional Management Administrative Convenience Transparency

COMPETITORS
These are the competitors of DBFS broking
Franklin Templeton IL&FS Investment Kodak Securities ICICI web trade UTI securities Stock holding corporation ltd

Karvy brokerage ltd

India bulls 5paisa.com

Chapter -2 Theoretical Framework

Introduction
Stock analysis

Technical Analysis

Fundamental analysis

The methods used to analyze securities and make investment decisions fall into two very broad categories: fundamental and technical analysis. Learn the core differences in these strategies and how to use each analysis effectively.

Fundamental analysis
The intrinsic value of an equity shares depends on a multitude of

factors. The earnings of the company, the growth rate and the risk exposure of the company have a direct bearing on the price of share. other factors like economic environment in which they function, the industry they belong to, and finally companies own performance. The fundamental school of thought appraised the intrinsic value of shares
Company factors to examine include the dividends that company

issues, the way a company manages its cash, the amount of debt a company has, and the growth of a company's costs and income

 the use of fundamental analysis can be viewed as a type

of arbitrage. To this end, earnings multiples, such as the P/E ratio, are used to determine value, where cash flows are relatively stable and predictable.
Other techniques include discounted cash flow, book

value, and dividend yield analysis.

Economic Analysis Industry Analysis Company Analysis

Economic Analysis
The level of economic activity has an impact on investment

in many ways. The analysis of Macro Economic environment is essential to understand the behavior of the stock prices. The economically analyzed the macro economic factors are as follows Gross Domestic Product (GDP): Savings & Investment: Inflation Interest rates Budget The Tax Structure The Balance of Payment

Industry Analysis
An industry is a group of firm that has similar technology

structure of production and produce similar products. For the convenience of the investor the board classification of the industry is given in financial dailies and magazines. Companies are directly classified to give a clear picture about their manufacturing process and products. For example food products, textiles, wood and wood products, leather and leather products, chemical products and there are many other industries.

Growth industry Cyclical industry Defensive industry Cyclical growth industry Industry life cycle Growth of the industry Cost structure and profitability Nature of the product Nature of competition Government policy Labor Research and Development SWOT Analysis

Company Analysis
factors
Competitive advantage Earnings Capital structure Management Operating efficiency Financial performance

share value
Historick price of stock P/E ratio Economic condition Stock market condition

Future price

Present price

In the company analysis the investor assimilates the several bits of information related to the company and evaluates the present value of the stocks. The risk and return associated with the purchase of the stock in analyzed to take better investment decisions

The competitive edge of the company Major industries in India are composed of hundreds of individual companies. In the information technology industry even though the no of companies like NIIT, SATYAM computers The market share The growth of annual sales The stability of annual sales Earnings of the company Sales alone do not increase the earning but the costs and expenses of the company also influence the earnings of the company. Further, earnings do not always increase with the increase in the sales The investors should be aware that income of the company may vary due to the following reasons:

Changes in sales C1hanges in cost Inventory accounting method Replacement cost of inventories Wages, salaries and fringe benefits Income taxes and other taxes

Capital structure The equity holders return can be increased manifold with the help of financial leverage, i.e. using debt financing along with equity financing Preference shares: Debt 1.Earnings limit of debt 2.Asset limit to debt Financial Analysis 1. Balance sheet 2.Profit and loss account Analysis of financial statements: Comparative financial statements Trend analysis Common size statements Funds flow analysis Cash flow analysis Ratio analysis

Fundamental Analysis Tools

These are the most popular tools of fundamental analysis. They focus on earnings, growth, and value in the market. For convenience, I have broken them into separate articles. Each article discusses related ratios.

The Articles Are: Earnings per Share EPS Price to Earnings Ratio P/E Projected Earning Growth PEG Price to Sales P/S Price to Book P/B Dividend Payout Ratio Dividend Yield Book Value Return on Equity

Technical Analysis
Technical analysis refers to the study of price action in

securities markets, primarily, but not exclusively, through charts in order to forecast future prices. There are many different methods and tools utilized in technical analysis Charles Dow's Dow Theory is considered the foundation of technical analysis. A cliche among technical analysts is, "Forget the fundamentals and follow the money.

TOOLS OF TECHNICAL ANALYSIS

Technical tools are dow theory, volume of trading, short

selling, odd lot trading , bars and line charts , moving averages . In this section some of the above mentioned tools are analysis Dow theory Around the turn of the century, Charles h. Dow formulated a hypothesis that the stock market does not perform on a random basis but is influenced by three distinct cyclical trends that guide its general direction . Dow classified these cycles as primary, secondary, and minor trends.

 Moving averages:

The market indices do not rise or fall in straight line. The upward and downward movements are interrupted by counter moves. 1.Index and stock price moving average: 2.Comparison of the moving average:

 Charts:

charts are the valuable and easiest tools in technical analysis. The graphic presentation of the data helps the investors to find out the trend of the price without any difficulty. 1.Point and figure chart 2.Bar and line charts 3.Chart patterns 4.V-formation 5.Top and bottoms

Point and figure chart

Bar and line charts:

The bar chart, one of the simplest and most commonly

used tools of technical analyst. To build a bar a dot is entered to represent the highest price at which the stock is traded on that Day, week or month.

Double Top and Bottoms This type of formation signals the end of one trend and the beginning of another.

 Head & shoulder top (HST) approach:

As the name suggests, the HST formation has a left shoulder, a head, and a right shoulder.

Chapter -3 Research Methodology

Data collection
To fulfill the objectives set above the data will be collected

from primary as well as secondary sources. The primary data was collected from the respondent of DOHA Brokerage & Financial Services Ltd employees. Secondary data was collected from relevant records of the selected company, relevant journals magazines, news papers and relevant websites The study for Fundamental and Technical analysis is done by taking P&L a/c, balance sheet &key financial ratios of three companies for four years form 2005-2010. The key ratios taken are average price and average volume from various websites, for technical analysis graphs have been constituted accordingly.

Objectives of Study
The purpose of doing study is to analyze the factor that affect the companys

performance company

To examine the internal and external factors affecting the future price of The purpose includes assessing the future market strength of company The purpose also serves the investors to decide whether to invest in company

shares to gain returns

Limitations of Study
The study is based on information which is secondary

The study is basically on Pharma industries For analysis purpose two pharmaceutical companies are taken

into consideration
The sample size is restricted to two companies

Chapter -4 Data Analysis & Interpretation

Analysis of Dr. reddys Ltd

Since its inception in 1984, DR. Reddys has chosen to walk the

path of discovery and innovation in health sciences. There has been a quest to sustain and improve the quality of life, and they have has nearly two decades of creating safe Pharmaceutical solutions with the ultimate purpose of making the world a healthier place.

Milestones:
In 2002 Dr. reddys makes its first overseas acquisition of BMS

laboratories limited and meridian healthcare, UK. In 2001 on April 11, Dr. reddys becomes the first Asia Pacific Pharmaceutical company, outside Japan, to list on the New York stock exchange.

Board of Directors:
Whole Time Directors: DR. Anji reddy-Chairmen

G. V. Prasad- Vice Chairmen and CEO

Satish Reddy- Chief Operating Officer

loss account Analysis Profit of Cipla Ltd.

Rs. in crores

Mar ' 10 Income Operating income 4,395.60 Expenses Material consumed Manufacturing expenses Personnel expenses 1,482.10

Mar ' 09

Mar ' 08

Mar ' 07

Mar ' 06

3,999.50

3,343.89

3,783.26

2,003.25

1,469.90

1,253.46

1,121.59

756.15

221.40

195.90

207.46

213.46

123.18

516.40

412.50

366.28

299.04

205.85

Selling expenses

443.80

448.70

375.37

323.40

243.15

Adminstrative expenses Expenses capitalised

643.40

714.50

558.60

498.42

357.86

Cost of sales Operating profit Other income recurring

3,307.10 1,088.50 181.30 1,269.80 16.00 222.40 19.30 1,012.10 238.70 773.40

3,241.50 758.00 249.70 1,007.70 27.40 193.60 19.70 767.00 168.60 598.40 -37.50 -0.10 560.80 2,218.30 105.30 17.80 2,095.20

2,761.19 582.70 156.64 739.35 14.69 161.99 20.71 541.96 108.88 433.08 40.65 -0.06 473.67 1,778.80 63.06 10.72 1,705.02

2,455.91 1,327.35 272.74 1,600.08 51.96 133.50 18.16 1,396.47 188.99 1,207.48 -38.79 -0.02 1,168.66 1,496.49 62.97 10.70 1,422.82

1,686.19 317.06 91.21 408.27 24.63 111.33 13.31 259.00 52.64 206.36 4.77 -0.01 211.11 392.66 38.35 5.38 348.93

Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT

Non recurring items 72.70

Other non adjustments

cash

-0.10 846.00 2,860.30 190.00 31.60 2,638.70

Reported net profit Earnigs appropriation Equity dividend Preference dividend Dividend tax Retained earnings before

Balance Sheet of Dr reddys Ltd Balance sheet

Sources of funds Mar ' 10 Mar ' 09 Owner's fund Equity share capital 84.40 Share money application share 5,830.20 0.80 562.40 6,477.80 84.20 5,174.90 2.60 637.70 5,899.40 84.09 -

Mar ' 08

Mar ' 07

Mar ' 06

83.96 4,289.40 1.92 327.98 4,703.26

38.35 2,223.79 145.13 778.74 3,186.01

Preference capital Loan funds Secured loans

Reserves & surplus

4,727.72 3.40 458.91 5,274.11

Unsecured loans Total Uses of funds Fixed assets Gross block Less : reserve revaluation

2,425.70 -

2,157.30 946.50 1,210.80 411.20 1,865.10

1,750.21 762.80 987.42 245.71 2,080.71

1,291.19 609.15 682.04 280.61 966.99

1,052.90 491.08 561.82 112.92 911.36

Less : accumulated 1,110.10 depreciation Net block 1,315.60 Capital work-in745.40 progress Investments 2,652.70

Net current assets Current assets, loans 3,647.30 & advances Less : liabilities provisions Total net assets current & 1,883.20 current 3,870.40 3,348.01 4,028.55 2,398.87

1,458.10

1,387.74

1,254.93

798.95

1,764.10

2,412.30

1,960.27

2,773.62

1,599.92

Miscellaneous expenses not written Total Notes: Book value unquoted investments of 2,652.40 6,477.80

5,899.40

5,274.11

4,703.26

3,186.01

1,864.80

2,080.41

966.68

911.05

Market value of 360.10 quoted investments Contingent liabilities 2,016.10 Number of equity sharesoutstanding 1688.45 (Lacs)

53.00

1.92

1.20

1.16

1,934.80

1,892.55

1,896.92

2,409.27

1684.69

1681.73

1679.12

766.95

Sales profit

Dec ' 09, 1,172.28 Mar ' 10, 1,271.26 Mar ' 10, 315.6 Jun ' 10, 273.9 Sep ' 10, 343.13
800.00 600.00 400.00 1,400.00 1,200.00 1,000.00 200.00 0.00

Dec ' 09, 273.07

Sales /profit chart

Jun ' 10, 1,296.88

Sep ' 10, 1,389.76

Sep ' Jun ' Mar ' Dec ' 10 10 10 09

Dr reddys chart showing EPS over the years

year 2010 Earnings per share (rs) 42.9

2009
2008 2007 2006

58.4
43.8 52.3 57.9

70 60 50 40 30 20 10 0 2009 2008 2007 2006

Analysis of Cipla Ltd. History: Khwaja Abdul Hamied, the founder of Cipla, was born on October 31, 1989. In college, he found chemistry fascinating. He set sail for Europe in 1924 and got admission in Berlin University as a research student of the Technology of Barium compounds. He earned his doctorate Three Years later. In October 1927, during the long voyage from Europe to India In 1935, he set up the chemical, industrial &pharmaceutical Laboratories, which came to be popularly known as cipla. On August 17, 1935, cipla was registered as a public limited company Cipla was officially opened on September 22, 1973 when the first products were ready for the market.

Balance sheet of cipla ltd Rs in crores Balance sheet

Mar ' 10 Sources of funds Owner's fund Equity share capital 160.58 Share money application share 155.46 4,186.32 2.79 937.45 5,282.02 155.46 3,591.39 16.98 563.55 4,327.38 155.46 3,071.84 7.25 116.31 3,350.86 59.97 1,913.98 51.27 417.64 2,442.86 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Preference capital

Reserves & surplus 5,744.54 Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block 0.41 4.66 5,910.19

2,895.44

2,693.29
8.97

2,201.79
8.97

1,799.71
8.97

1,366.67
9.32

Less : revaluation 8.97 reserve Less : accumulated 884.27 depreciation

700.80

540.43

411.64

310.06

Net block 2,002.20 Capital work-in684.24 progress Investments 265.10 Net current assets Current assets, loans 5,483.42 & advances

1,983.52 366.32 81.32

1,652.39 233.12 94.75

1,379.10 73.19 117.80

1,047.29 87.01 22.43

4,419.57

3,743.98

2,834.68

2,292.28

Less : liabilities provisions Total net assets

current & 2,524.77

current 2,958.65

1,568.71 2,850.86 -

1,396.86 2,347.12 -

1,053.91 1,780.77 -

1,006.15 1,286.13 -

Miscellaneous expenses not written

Total Notes: Book value unquoted investments

5,910.19
of 265.10

5,282.02

4,327.38

3,350.86

2,442.86

81.32

94.75

117.80

22.43

Market value of quoted investments Contingent liabilities 423.87 Number of equity sharesoutstanding 8029.21 (Lacs)

730.75

1,664.58

1,586.64

1,600.75

7772.91

7772.91

7772.91

2998.70

Profit loss account

Mar ' 10 Income Operating income Expenses Material consumed 2,503.45 Manufacturing expenses 351.82 2,399.56 354.36 271.33 375.59 588.61 3,989.45 1,244.84 90.05 2,121.11 330.80 255.45 284.63 359.13 3,351.12 852.17 64.91 1,785.62 273.18 184.59 226.08 270.69 2,740.16 821.83 65.78 1,469.76 233.71 150.76 187.58 245.65 2,287.46 693.89 37.98 5,605.69 5,234.29 4,203.29 3,561.99 2,981.35 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Personnel expenses 318.87 Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other income recurring 326.48 724.14 4,224.76 1,380.93 94.21

Adjusted PBDIT

1,475.14

1,334.89
52.23 151.79

917.08
18.05 130.68

887.61
11.16 103.37

731.87
16.07 80.18

Financial expenses 28.30 Depreciation 165.25

Other write offs Adjusted PBT Tax charges Adjusted PAT Non items recurring

1,281.59 243.50 1,038.09 31.50

1,130.87 124.50 1,006.37 -229.56

768.35 136.93 631.42 70.01

773.08 139.95 633.13 34.90

635.62 102.20 533.42 74.22

Other non adjustments

cash

11.90

Reported net profit 1,081.49 Earnigs before 2,036.32 appropriation Equity dividend Preference dividend Dividend tax 160.58 26.67

776.81 1,286.71 155.46 26.42 1,104.83

701.43 1,091.78 155.46 26.42 909.90

668.03 972.23 155.46 26.42 790.35

607.64 841.46 155.46 21.80 664.20

Retained earnings 1,849.07

comparison of cipla's net profits& net sales over the years

year

Net sales(crs)

Net profit(crs)

2010

1486.77

459.65

2009

1513.61

392.09

2008

1661.22

283.2

2007

1666.63

435.6

2006

1767.7

447.83

Graph that shows Cipla's net profits& net sales over the years

2006 2007 2008 2009 2010 0 1000 2000 Net profit(crs) Net sales(crs)

CHAPTER-5

SUGESSTIONS
The investor should analyze the risk factors which can affect the

prices of share before marketing investment decision

For long term benefit emphasis should be given to both

fundamental and technical analysiss Investment decision should also be based on risk return analysis
For Investment decisions, future prospects of the company should

also be taken into consideration

The Investor should also analyze the behavior of the market as a

whole as well the behavior of movement of the share in which the investor is likely to invest

Findings and conclusions

Helpful for investor for taking investment decisions

The Investor can know the risk and return of the share by analyses
This analysis is useful for investor who wants to go for long and short

term investment

The Investor can estimate the future EPS with the help of historical data
The Financial statements of company reveal the needed information for

investor to make investment decisions

The ratio analysis helps the investor to study the individual parameters

like profitability, liquidity and solvency of stocks

 Fundamental analysis is used to predict long-term share price

movement
Technical analysis is used to forecast the supply and demand by

studying the price and volume of trading by using technical analysis the moment investor is able to know growth of share
Technical analyst short term share price

BIBLOGRAPHY
INVESTMENTS & SECURITIES MARKET IN INDIA VA AVADHANI

INVESTMENT MANAGEMENT

ANALYSIS

&

PORTFOLIO PRASANA CHANDRA

PROFILES ABOUT COMPANY

WWW.INFOSYS.COM WWW.WIPRO.COM

FINANCIAL ANALYSES

WWW.MONEYCONTROL.COM WWW.FINANCE.YAHOO.COM WWW.DBFS.COM WWW.STOCKS.ABOUT.COM WWW.INVESTOPEDIA.COM WWW.TRADETRECK.COM WWW.THESTREET.COM