INTRODUCTION

India is a developing country, now a days many peoples are interested to

invest in financial markets especially on equities to get high returns, and to save tax in honest
way. Equities are playing a major role in contribution of capital to the business from the
beginning. Since the introduction of shares concept, large number of investors are showing
interest to invest in stock market. In an industry plagued with skepticism and stock market
increasingly difficult to predict and contend with, it one looks hard enough there may still be
a genuine aid for the day trader and short term investor. The price of a security represents a
consensus. It is the price at which one person agrees to buy and another agrees to sell the
price at which an investor is willing to buy or sell depends preliminary on his expectations. If
he expects the securities price to rise, he will buy it, if the investor expects the price to fall, he
will sell it. These simple statements are the cause of a major challenge in forecasting security
prices. If prices are based on investor expectations, then knowing what a security should sell
for (i.e, fundamental analysis)becomes less important that knowing what other investors
expect it to sell for. Thats not to say that knowing what a security should sell for is not
important it is. But there is usually a fairly strong consensus of a stocks future earnings that
the average investor cannot disprove fundamental analysis and technical analysis can co-exist
in peace and complement each other. Since all the investors in the stock market want to make
the maximum profits possible, they just cannot afford to ignore either fundamental or
technical analysis.

Secuirity Analysis

Investment success is pretty much a matter of careful selection and timing of stock purchases
coupled with perfect matching to an individuals risk tolerance. In order to carry out selection,
timing and matching actions an investor must conduct deep security analysis. Investors
purchase equity share with two basic objectives;

1.To make capital profits by selling shares at higher price

2.To dividend income

An investor has to carefully understand and analyze all these factors

there are basically two approaches to study security prices and valuation i.e; fundamental
analysis and technical analysis the value of common stock is determined in large measures by

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performance of the firm that issued the stock. If the company is healthy and can demonstrate
strength, the value of the stock will increase. When the values increase then prices follow and
returns on an investment will increase. However, the mix is completed by the risk factors
involved. Fundamental analysis examines all the dimensions of risk exposure and the
probabilities of return, and mergers them with broader economic analysis and greater industry
analysis and grater industry to formulate the valuation of stock.

FUNDAMENTAL ANALYSIS

Fundamental analysis is a method of forecasting the future price movements of a financial

instrument based on economic, political, environmental and other relevant factors and
statistics that will affect the basic supply and demand of whatever underlies the financial
instrument. It is the study of economic, industry and company value of the companies stock.
Fundamental analysis typically focuses on key statistics in company financial statement to
determine if the stock price is correctly valued. The term simply refers to the analysis of the
economic well being of a financial entity as opposed to only its price movements of
fundamental analysis is the corner stone of investing. The basic philosophy underlying the
fundamental analysis is that if an investor invests re,1 in buying a share of company, how
much expected returns from this investments he has. The fundamental analysis is to apprise
the intrinsic value of a security. It insist that no one should purchase or sell decision on the
basis of a detailed analysis of the information about the company, about the industry, and the
economic scenario, industry position and the company expectations and is also known as
economic industry company approach(EIC approach)

EIC approach:

1.Economic analysis

2.Industry analysis

3.Companyanalysi

1.Economic Analysis

The economic analysis activity has an impact on investment in many ways. If the economy
grows rapidly, the industry can also be expected to show rapid growth and vice versa. When
the level of economic activity is low, stock prices are low, and when the level of economic

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activity is high, stock prices are high reflecting the prosperous out look for sales and profits
of the firms. The analysis of macro economic environments essentials to understand the
behavior of the stock prices. The commonly analyzed macro economic factors are as follows.

A. Gross Domestic Product(GDP)

GDP indicates the rate of growth of the economy. It represents the aggregate value of the
goods and services produced in the economy. It consists of personal consumption
expenditure, gross private domestic investment and government expenditure on goods and
services and net exports of goods and services. The growth rate of economy points out the
prospects for the industrial sector and the return investors can expect from investment in
shares the higher growth rate is more favorable to the stock market.

B. Savings and Investment

It is obvious that growth requires investment which in turn requires substantial amount of
domestic savings. Stock market is a channel through which the savings are made available to
the corporate bodies. Savings are distributed over various assets like equity shares, deposits,
mutual funds, real estate and bullion. The savings and investment patterns of the public
affect.

C. Inflation

Along with the growth of GDP, if the inflation rate also increases, then there all growth
would be very little. The effects of inflation on capital markets are numerous. An increase in
the expected rate of inflation is expected to cause a nominal rise in interest rates. Also, it
increases uncertainty of future and investment decisions. As inflation increases, it results in
extra costs to business, there by squeezing their profit margins and leading to real decisions in
profitability.

D. Interest Rates

The interest rate affects the cost of financing to the firm. A decrease interest rate implies
lower cost of finance for firms and more profitability. More money is available at a lower
interest rate for the brokers who are doing business with barrowed money. Availability of
cheap funds encourages speculation and rise in the price of shares.

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 E. Tax Structure

Every year in march, the business community eagerly a waits the government announcement
regarding the tax policy. Concession and incentives given to a certain industry encourage
investment in that particular industry. Tax reliefs given to savings encourage savings. The
type of tax exemption has impact on the profitability of the industries.

F. Infra Structure Facilities

Infra structure facilities are essential for the growth of industrial and agriculture sector. A
wide network of communication system is a must for the growth of the economy. Regular
supply of power with out any power cut would boost the production. Banking and financial
sector also should be sound enough to provide adequate support to the industry. Good
infrastructure facilities affect the stock market favorably. An industry is a group of firms that
have similar technological structure of production and produce similar products and industry
analysis is a type of production and produce similar products and industry analysis is a type
of business research that focuses on the status of an industry or an industrial sector (a board
industry classification, like manufacturing). Irrespective of specific economic situations,
some industries might be expected to perform better, and share prices in those industries may
not decline as much as in other industries. This identification of economic and industry
specific factors influencing share prices will help investors identify the shares that fit
individual expectations.

2.INDUSTRY LIFE CYLE

The industry life cycle theory is generally attributed to Julius Grodensky. The life cycle of
the industry is separated into four well defined stages.

A.Pioneeering Stage
The prospective demand for the products is promising in this stage and the technology of the
product is low. The demand for the product attracts many producers to produce the particular
product. There would be completion and only fittest companies survive this stage. The
producers try to develop brand name, differentiate the product and create a product image. In
this situation, it is difficult to select companies for invest because the survival rate is
unknown.

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B.Rapid Growth Stage

This stage starts with the appearance of surviving firms from the pioneering stage. The
companies that have with stood the completion grow strongly it market share and financial
performance. The technology of the production would have improved resulting in low cost of
production and good quality products. The companies have stable growth rate in this stage
and they declare dividend to the shareholders. It is advisable to invest in the shares of these
companies.

C.Maturityand StabilizationStage

The growth tends to moderate and the rate of growth would be more or less equal to the
industrial growth rate or the gross domestic product growth rate. Symptoms may appear in
the technology. To keep going, technological innovations in the production process and
products should be introduced. The investors have to closely monitor the events that take
place in the maturity stage of the industry.

D.DeclineStage

For the particular product and the earnings of the companies in the industry decline. It is
better to avoid investing in the shares of the low growth industry even in the boom period.
Investment in the shares of these types of companies leads to erosion of capital.

E.Growth of the Industry

The historical performance of the industry in terms of the growth and profitability should be
analyzed. The past variability in return and growth in reaction to macro economic factors
provide an insight into the future.

F.Nature of Competition

Nature of completion is an essential factor that determines the demand for the particular
product, its profitability and the price of the companies ability to with stand the local as well
as the multinational completion counts much. If too many firms are present in the organized
sector, the completion would be serve. The completion would lead to a decline in the price of
the product. The investor before investing in the scrip of a company should analyze the

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market share of the particular companies product and should compare it with the top five
companies.

G.SWOT analysis

SWOT analysis represents the strength, weakness, opportunity and threat for an industry.
Every investor should carry out a SWOT analysis for the chosen industry . Take for instance,
increase in demand for the industry product becomes is strength, presence of numerous
players in the market, i.e, completion becomes the treat to a particular company. The progress
in R&D in that industry is an opportunity and entry of multinationals in the industry is a
threat. In this way the factors are to be arranged and analyzed.

3.Company Analysis

In the company analysis the investor assimilates the several bits of information related to the
company and evaluate the present and future values of the stock. The risk and return
associated with the purchase of the stock is analyzed to take better investment decisions. The
present and future values are affected by a number of factors.

COMPETITIVE EDGE OF THE COMPANY:

Major industries in India are composed of hundreds of individual companies. Through the
number of companies is large, only few companies control the major market share. The
competitiveness of the company can be studied with the help of the following:

A.Market share

Companies relative competitive position with in the industry. If the market share is high, the
company would be able to meet the competition successfully. The companies in the market
should be compared with like product groups otherwise, the results will be misleading.

B.Growth of sale

The rapid growth in the sales would keep the shareholder in a better position than one with
stagnant rate. Investors generally prefer size and growth in sales because the large size
companies may be able to with stand the business cycle rather than the company of smaller
size.

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C.Stability of sales

If a firm has stable sales revenue, if will have more stable earnings. The fall in the market
share indicates the declining trend of company, even if the sales are stable. Hence the stability
of sales should be compared with its market share and the competitors market share.

D.Earning of the company

Sales alone do not increase the earnings but the costs and expenses of the company also
influence the earnings. Further, earnings do not always increases with increase in sales. The
companies sales might have increased but its earnings per share may decline due to rise in
costs. Hence, the investor should not only depend on the sales, but should analyze the
earnings of the company.

FINANCIAL ANALYSIS

The best source of financial information about a company is its own financial statements.
This is a primary source of information for evaluating the investment prospects in the
particular companies stock. Financial statement analysis is the study of a companies financial
statement from various view points. The statement gives the historical and current
information about the companies operations. Historical financial statement helps to predict
the future and the current information aids to analyze the present status of the company. The
two main statements used in the analysis are balance sheet and profit &loss account. The
balance sheet is the one of the financial statement that companies prepare every year for their
share holders. It is like a financial snapshot, the companies financial situation at a movement
in time. It is prepared at the year end, listing the company current assets and liabilities. It
helps to study the capital structure of the company. It is better for the investor to avoid a
company with excessive debt components in its capital structure.

From the balance sheet, liquidity position of the company can also be
assessed with the information on current assets and current liabilities.

Ratio analysis

Ratio analysis is a relationship between two figures expressed mathematically. Financial

ratios provide numerical relationship between two relevant financial data. Financial ratios are
calculated from the balance sheet and profit and loss account. The relationship can be either

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expressed as a percent or as a quotient. Ratios summarized the data for easy understanding,
comparison and interpretations. Ratios for investment purpose can be classified into
profitability ratios, turnover ratios, and leverage ratios. Profitability ratios are the most
popular ratios since investors prefer to measure to measure the present profit performance
and use this information to forecast the future strength of the company. The most often used
profitability ratios are return on assets, price earnings multiplier, price to book value, price to
cash flow, and price to sales, dividend yield, return on equity, present value of cash flows, and
profit margins.

A) Return on asset

ROA is computed as the product of the net profit margin and the total asset turnover ratios.

ROA=(net profit/total income)X(total income/total assets)

This ratio indicates the firms strategic success. Companies can have one of two strategies:
cost leadership, or product differentiation. ROA should be rising or keeping pace with the
companies competitors if the company is successfully pursuing these strategies, but how
ROA rises will depend on the companies strategy. ROA should rise with a successful cost
leadership strategy because the companies increasing operating efficiency. An example is an
increasing, total assets, turn over ratios as the company expands into new markets, increasing
its market share. The company may achieve leadership by using its assets more efficiently.
With a successful product differentiation strategy, ROA will rise because of rising profit
margin.

B) Return on investment

ROI is the return on capital invested in business, i.e, if an investment Rs 1crore in men,
machinery, land and material is made to generate Rs. 25lakhs of net profit, then the ROI is
25%. The computation of return on investment is as follows.

Return on investment(ROI)=(net profit/equity investments)*100

As the ratio reveals how well the resources of a firm are being used, higher the ratio, better
are the results. The returns on shareholders investment should be compared with the return of
other similar firms in the same industry. The inert firm comparison of this ratio determines

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whether the investments in the firms are attractive or not as the investors would like to invest
only where the return is higher.

C) Return on equty

Return on equity measures how much an equity shareholders investment is actually earing.
The return on equity tells the investor how much the invested rupee is earning from the
company. The higher the number the better is the performance of the company and suggests
the usefulness of the projects the company has invested in. the computation of return on
equity is as follows:

Return on equity=(net profit to owners/value of the specific owners contribution to the

business)*100

The ratio is more meaningful to the equity shareholders who are invested to know profits
earned by the company and those profits which can be made available to pay dividend to
them.

D) Eaningpershare (EPS)

The ratio determines what the company is earning for every share. For many investors,
earnings are the most important tool. EPS is calculated by dividing the earning (net profit) by
the total number of equity shares. The computation of EPS is as follows:

Earning per share =net profit/number of shares outstanding

The EPS is a good measure of profitability and when compared with EPS a good measure of
profitability and when compared with EPS of similar other companies, it gives a view of the
comparative earnings or earnings power of a firm. EPS calculated for a number of years
indicates whether or not earnings power of the company has increased.

NEW ISSUE MARKET (PRIMARY MARKET):

Stocks available for the first time are offered through new issue market. The issuer may be a
new company or an existing company. These issues may be of new type or security used in
the past. In the new issue market the issue can be considered as a manufacturer. The issuing

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houses, the investment bankers and brokers act as the channel of distribution for the new
issues. They take the responsibility of selling the stocks to the public

Parties involved in the new issue

In the sixties and seventies, public issue was managed by the company and its personnel but,
at present public issue involves a number of agencies. The rules and regulations, the changing
scenario of the capital market necessitated the company to seek for the support of many
agencies to make the public issues a success as a student of investment management, one
should know the number of agencies involved and their respective role in the public issue.
The promoters also should have a clear idea about the agencies to coordinate their activities
effectively in the public issue. The main agency involved in the public issue are managers to
the issue, registers to the issue, under writers, bankers, advertising agencies, financial
institutions and government/ statutory agencies.

Managers to the issue

Many agencies are performing the role of lead managers to the issue. The merchant banking
division of the financial institutions, subsidiary of commercial banks, foreign banks, private
sector banks and private agencies are available to act as a lead managers. Some of them are
SBI capital market ltd, bank of baroda, canara bank, ICICI securities & finance company ltd.

Register to the issue

After the appointment of the lead managers to the issue, in consultation with them the register
to the issue is appointed. Quotations containing the details of the various functions they
would be performing and changes for them are called for selection. Among them the most
suitable one is selected. It is always ensured that the register to the issue has the necessary
infrastructure like computer internet & telephone.

Underwrites

Underwriting is the contract by means of which a person gives an assurance to the issuer to
the effect that the former would subscribes offered in the event of non subscription by the
person to whom they were offered. The person who assures is called as a underwriter. The
underwriter do not buy and sell securities. They stand as back up supporters of inadequate

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subscription. Underwriters are divided into two types 1.financial institutions and banks
2.brockers and approved investment companies.

Some of the under writers are

Financial institutions
Merchant banks
Members of stock exchange
EXIM bank
SBI etc.

Bankers to the issue

Bankers to the issue have the responsibility to the collection the application money along
with the application form. The bankers to the issue generally change commission besides the
brokerage, if any. Depending upon the size of public issue more than one banker appointed.
When the size of the issue is large, 3 or 4 issues are appointed as bankers to the issue. The
number of collection centers is specified by the central government. The bankers to the issue
should have branches in the specified collection centers.

Advetising agents

Advertising plays a key role in prompting the public issue, hence, the past track record of the
advertising agency is studied carefully. Tentative programs of each advertising agency along
with the estimated cost are called for. After comparing the effectiveness and cost of each
program with the other, a suitable advertising agency is selected in consultation with the lead
managers to the issue. The advertising agencys take the responsibility of giving publicity to
the issue on suitable media. The media may be newspapers/magazines/hoardings/press
release or combination of all.

Pricing of new issues

Issue of capital prior to may 27, 1992 was governed by the controller of capital issues act
1947. Under the act, the premium was fixed as per the valuation guidelines provided for
fixation of a fair price on the basis of the net asset value per share on the expanded equity
base taking into account, the fresh capital and the profit earning capacity. The repealing of the
capital issue control act resulted in an era of ree pricing of securities . issuers and merchant

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bankers fixed the offer prices.pricing of the public issue has to be carried out according to the
guidelines issued by SEBI.

At PREMIUM:companies are permitted to price their issues at premium in the case of the
following.

.first issues of new companies set up by existing companies with the track record.
first issue of existing private/closely held or other existing unlisted companies with
three year track record of consistent profitability.
Public issue by existing listed companies with the last three years of dividend paying
track record.

At PAR Value: In certain cases companies are not permitted to mix their issues at
premium. The price of the share should be at par. They are for

first public issue by existing private, closely held or other existing unlisted
companies without three year track record of consistent profitability and
existing private/closely held and other unlisted companies without three year track
record of consistent profitability seeking disinvestment offer to public without
issuing fresh capital.

Allotment of Shares

According to SEBI regulation, the allocation of shares is done under proportionate allotment
method. The allocated for each category is inversely proportional to the over subscription
ratio. The application will be categorized according to the number of shares applied for. Then
allocation is done by proportionate basis. If the allocation to a applicant works out to be
more then hundred but is not a multiple of hundred ,the number excess of hundred and fifty
would be rounded off to the higher multiple of 100 i.e. 200. If the number is lower than 50 it
would b rounded of to the lower multiple of hundred. For example, if the allocation is 155
under the proportionate allotment method then, it would be rounded off to 200. If it is 148
then, it would be rounded off to 100. If the shares allocated on a proportionate basis any
category are more then the shares allotted to applicants in that category, the balance shares
allotted shall be first adjusted against any other category where the allotted of shares are not
sufficient for proportionate allotted in that category.

INVESTORS PROTECTION IN THE PRIMARY MARKET:

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To ensure healthy growth if primary market, the investing public should be protected. The
term investor protection are

provision of all relevant information

provision of accurate information and
transparent allotment procedure with out any basis.

THE SECUIRITYIES AND EXCHANGE BOARD OF INDIA:

SEBI regularity reach has been extended to more areas and there is a considerable change in
the capital market. SEBI annual report for 1997-98 has stated that throughout its six years
extended as a statutory body, it has sought to balance the twin objectives of investors
protection and market development. It has formulated new rules and crafted regulations to
foster development. Monitoring and surveillance was put in place in the stock exchange in
1996-97 and strengthened in 1997-98.

Objectives of SEBI:

The promulgation of the SEBI ordinance in the parliament gave statutory status ti SEBI in
1992. According to the preamble of the SEBI, the three main objectives are

To protect the interests of the investors in securities

To promote the development of securities market
To regulate the securities market

Functions of SEBI:

The main functions entrusted with SEBI are

Regulating the business in stock exchanges and any other securities market
Registering and regulating the working of collective investment schemes including
mutual funds
Promoting and regulating self regularity organizations
Prohibiting fraudulent and un fair trade practices in the securities market
Promoting investors education and training of intermediaries in securities market
Prohibiting insiders trading in securities
Regulating substantial acquisition of shares and take over of companies
Calling of information, undertaking inspection, conducting enquiries and audits of the
stock exchanges, intermediaries and self regularity organizations in the securities
market.

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 Registering and regulating of stock brokers, sub brokers, share transfer agents,
bankers to the issue, merchant bankers, underwriters, portfolio managers, investment
advisers and such others intermediaries who may be associated with securities market
in any manner.

SEBI Role in the Primary market

To protect the interest of the investor and to bring back the small investors to the market
several measures have been undertaken by the SEBI. Entry and disclouser norms are
tightened to prevent the exploitation of inventors by the unscrupulous promoters. Allocation
of shares and promoters contribution are regulated.

A.Entry norms: SEBI has issued guidelines to tighten the entry norms for companies
accessing the capital market.

A company should have a track record of divided payments for a minimum period of
3 years preceding the issue.
A company whose shares are already listed would fulfill the entry level required only
if the post issue net worth becomes more than five times the pre issue net worth
If the manufacturing company does not have such a track record, it could access the
public issue market, provided its project is appraised by a public financial institution
or a scheduled commercial bank. The apprising entity should also participate in the
project fund.
It would necessary for a corporate body making a public issue to have a at least five
public share holders for every Rs.1lakh of the net capital offer made to the public.

B.Promoters contribution: Promoters contribution means contribution by those

described in the prospectus as promoters, directors, friends, relatives &associates.

Promoter contribution should not be less then 20% of the issued capital irrespective of
the issue size.
The entire promoters contribution should be received before the public issue
SEBI announced that not more than 20% of the entire contribution brought in by
promoters cumulatively in public or preferential issue would e locked in for 5 years.
According to the decision taken by the SEBI board, in case of non underwritten public
issue promoters could bring their own money or procure subscription from elsewhere

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 within 60 days of the closer of the issue subject to such disclosures in the offer
document.

C. Disclosure

The draft prospectus field with SEBI is made as public document to enhance transparency.
The sraft prospects should provide all the needed information to the investor regarding: the
present position of the company, the future prospect and the risk factors associated with the
investment of the company. In accordance with the recommendation C.B. Bhave committee,
SEBI has advised all the listed companies to publish unaudited financial results on a quarterly
basis.

D. Book Building

Book buildings has been accepted as one of the modes of public issues. SEBI issued
guidelines relating to 100% book buildings in an issue of security to the public through
prospectus. It recommended a two tier under writing system for book built issues. SEBI also
stipulated that there should be atleast 30 book buildings centres with the syndicate members
being present at each centre.

E.Allocationof Shares

To bring back small investors t the primary market, the minimum application of share has
been reduced from 500to 200. Proportionate allotment of shares is made. A reservation of
minimum 50% of net offers to the small investors is being made. Small investors mean those
who have applied for 1000 or fewer shares or securities.

F.Market intermediaries

Licensing of merchant bankers or authorization by SEBI was the first step undertaken to
regulate intermediaries .this licensing of merchant bankers is based on the capital adequacy as
well as the track record of the capital market related activities. SEBI has the right to inspect
the records of the intermediaries.

The merchant bank categories of II, III,&IV are abolished. According to SEBI guidelines, a
merchant banker is one who handles public issue and manages them. He has to show a
network of Rs.5 crores by the time of his renewal. From dec 7, 1997 SEBI advised the
merchant bankers to segregate the fund based activities from the fee based activities.
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CAPITAL REVIEW OF THE SEBI

SEBI has made progress in many areas, but there are quite a few other areas with in the SEBI
domain which needs much more attention, for example the vetting of the issue SEBI left
much to be desired and allowed large number of issues to mobilise the public money between
1994 and 1996, led to a dull primary market. out of the 6200 odd companies listed on the
BSE, less than one third actively traded.

A. Discloser

Even through SEBI has taken enormous pains to make the disclosures more transparent the
quality of the information flow leaves much to be desired. Timeless of disclosure is another
area of concern. Despite the time limit of 48 hours to inform SEBI about any deal that would
affect the shareholders interest, it is not adhered to. For example IFCI has reported a deal
concluded in the august 1998 to sell the shares of sri Vishnu cement at Rs 100 each was
informed in October. There is needed for SEBI/NSE/BSE/to ensure the timely dissemination
of information.

B.Settlement

The NSE has Wednesday Tuesday settlements cycle while BSE has Monday-Friday cycle.
This creates more arbitrage opportunities. The prices of the securities experience fluctuations
on the opening and closing days. Implementation of uniform settlement cycle would be
improve the quality of the price formation reduce the cost of the arbitrage related traders.

C.Capital Adequacy

The capital adequacy of the registered market participation is low. SEBI requires stock
brokers of the NSE/BSE to maintain an absolute minimum of 50,0000 which is the largest
for all stock exchanges. The additional or optional capital, including the basic minimum
capital, has to be maintained at 8 percent or more of the gross outstanding trades.

D.Single authority

The regulation of capital market is carried out by multiple regulators such as RBI and
ministry of finance. Multiple regulatory system has undermined the role of SEBI. A case in
point is the order of ministry of finance negating the SEBIS order in the HLL insider trading

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case while agreeing that information on the merger was price sensitive. The regulatory aspect
should be properly coordinated and super regulator can be created. The U k has created a
super regulator which would regulate the capital and forex market.

F.Sticker registration of brokers

SEBIs registration system is for from adequate. The registration of sub broker is nominally is
place but lack of enforcement power permits the functioning of many hundreds of
unregistered sub brokers. Are also not effectively controlled. This would add to the risk
involved in the trading of securities.

THE SECONDRY MARKET:

The market for long term securities like bonds, equity stocks and preferred stocks is divided
into primary market and secondary market. The primary market deals with the new issues of
securities. Outstanding securities are traded in the secondary market, which is commonly
known as stock market or stock exchange. In the secondary market, the investors can sell and
buy securities. Stock markets predominantly deal in the equity shares. Debt instruments like
bonds and debentures are also traded in the stock market. Well regulated and active stock
market promotes capital information growth of the primary market depends on th secondary
market. The health of the economy is reflected by the growth of the stock market.

HISTORY OF STOCK EXCAHNGES IN INDIA:

The origin of the stock exchanges in India can be traced back to the later half of 19 th century.
After the America civil war (1860-61) due to the share mania of the public, the members of
the brokers dealing in shares increased the brokers organized an informal association in
Mumbai named the native stock and share brokers association in 1875.

Increased activity in trade and commerce during the first world war resulted in
the increase in the stock trading. Stock exchanges were established in different centers like
Chennai, Delhi, Nagpur, Kanpur, Hyderabad and Bangalore. The growth of the stock
exchanges suffered a set back after the end of the world war

Till recent past, floor trading took place in all the stock exchanges in the
floor trading system, the trade takes place through open outcry system during the official
trading hours. Trading posts are assigned for different securities where buy and sell activities

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of securities took place. This system needs a face to face contact among the traders and
restricts the trading volume. The speed of the new information reflected on the prices was
rather slow. The deals were also not transparent and the system favoured the brokers rather
than the investors.

The setting up of NSE and OCTEI with the screen based trading facility
resulted in more and more stock exchanges turning towards the computer based trading.
Bombay stock exchange introduced the screen based trading system in 19195, whish is
known as BLOT (Bombay on line trading system) .

Functions of Stock Exchange

1.Maintain activity trading

Shares are traded on the stock exchanges, enabling the investors to buy and sell securities.
The prices may vary from transaction to transaction. A continuous trading increases the
liquidity or marketability of the shares traded on the stock exchanges.

2.Fixation of prices

Prices is determined by the transactions that flow from investors demand and supplies
preferences. Usually the traded prices are made know to the public. This helps the investors
to make better decisions.

3.Ensure safe and fair dealing

The rules, regulations and by laws of the stock exchanges provide a measures of safety to the
investors. Transactions are conducted under competitive conditions enabling the investors to
get a fair deal.

4.AIDS in financing the industry

A continuous market for shares provides a favourable climate for rising capital. The
negotiability and transferability of the securities helps the companies to raise long term funds.
When it is easy to trade the securities, investors are willing to subscribe to the initial public
offerings. This stimulates the capital formation.

5.Dissemination of information

18
Stock exchange provide information through their various publications. They publish the
share prices traded on daily basis along with the volume traded. Directory of corporate
information is useful for the investors assessment regarding the corporate. Handouts, hand
books and pamphlets provide information regarding the functioning of the stock exchange.

6.Performance inducer

The prices of stocks reflect the performance of the traded companies. This makes the
corporate more concerned with its public image and tries to maintain good performance.

7.Self regulating organization

The stock exchanges monitor the integrity of the members, brokers, listed companies and
clients. Continuous internal audit safeguards the investors against unfair trade practices. It
settles the dispute between member brokers, investors and brokers.

MEMBERS OF THE STOCK EXCHANGE :

The securities contract regulation act of 1956 has provided uniform regulation for the
admission of members in the stock exchanges. The qualifications for becoming a member of
a recognized stock exchanges are given below.

The minimum age prescribed for the members is 21 years.

He/she should be an India citizen.
He should be neither a bankrupt nor compounded with the creditors
He should not be convicted for fraud or dishonesty.
He should not be engaged in any other business connected with a company.
He should not be defaulter of any other stock exchange.
The minimum required educational qualification is a pass in 12 th standard
examination.

The Mumbai and Calcutta stock exchanges have set up training

institutes to enable the members to understand the complexities of the stock trading. In recent
days highly qualified persons such as company secretaries, chartered accountants and MBAs
are becoming members. Corporate membership is also permitted now. The members of the
stock exchanges are eligible to work either as individuals or in partnership or as
representative members transacting business through their appointed members. The
governing board has to approve the partnership and the appoint members. A member, if he
has completed 5 years o membership in a stock exchange can apply for ember ship in ther

19
stock exchanges. Ih he applies before the completion of five years he has to relinquish the
membership of the present membership before accepting the other.

NEED FOR THE STUDY

The start any business capital plays major role. Capital can be acquired in two ways by
issuing shares or by taking debt from financial institutions or borrowing money from
financial institutions.

The owners of the company have to pay regular interest and principal amount
at the end. Stock is ownership in a company, with each share of stock representing a tiny
piece of ownership. The more shares you own, the more dividends you earn when the
company makes a profit. In the financial world, ownership is called Equity.

20
21
 SCOPE OF THE STUDY

S c o p e o f t h e project is based on tools like fundamental analysis and ratio

analysis. Further, the study is based on information of last five years.

1. The analysis is made by taking into consideration five companies i.e. TATA Motors,
Maruti Suzuki and Mahindra and Mahindra.
2. The scope of the study is limited for a period of five years.
3. The scope is limited to only the fundamental analysis of the chosen stocks.

22
 OBJECTIVES OF THE STUDY

The objective of this project is to deeply analyze our Indian Automobile Industry
for investment purpose by monitoring the growth rate and performance on the
basis of historical data. The main objectives of the Project study are:
1. To analysis of automobile industry which is gearing to words international standards.
2. To analyze the impact of qualitative factors on industrys & companys prospects
3. To Suggesting as to which companys shares would be best for an investor to
invest.
4. To comparative analysis of share fluctuations in TATA Motors, Maruti Suzuki&
Mahindra and Mahindra.

23
 RE SEARCH METHODOLOGY

Research design or research methodology is the procedure of collecting

analyzing and interpreting the data to diagnose the problem and react to the opportunity in
such a way where the costs can be minimized and the desired level of accuracy
can be achieved to arrive at a particular conclusion.

The methodology used in the study for the completion of the project& the
fulfillment of the project. of the objectives a sample of the stocks for the purpose of
collecting secondary data has been selected on the basis of random sampling. The stocks are
chosen in an unbiased manner& each stock is chosen independent of the study other stocks
chosen. The stocks are chosen from the Automobile sector the sample size for the number of
stocks is taken as three for fundamental analysis of stocks as fundamental analysis is very
exhaustive& requires detailed study.

Source of the data:

Secondary data: secondary data is collected from previous researches & literature to fill
in the respective project.

24
 LIMITATIONS OF THE STUDY

1. This study has been conducted purely to understand Equity analysis for investors.
2. The study is restricted to three companies based on Fundamental analysis.
3. The study is limited to the companies having equities.
4. Detailed study of the topic was not possible due to limited size of the project.
5. There was a constraint with regard to time allocation for the research study i.e. for a
period of 45 days.
6. Suggestions and conclusions are based on the limited data of five years.

INDUSTRY PROFILE

25
FINANCIAL MARKETS

Financial is the pre requisite for modern business and financial institutions play a vital role in
the economic system. It is through markets and institutions that the financial system of an
economy works. Financial markets refer to the institutional arrangements for dealing in
financial assets and credit instruments of different types such as currency, cheques, bank
deposits , bills, bonds, equities etc. financial market is a board turn describing any market
place where buyers and seller participate in the trade of assets such as equities, bonds
currencies and derivatives. They are typically defined by having transparent pricing basic
regulations on trading costs and fees and market forces determining the prices of securities
that trade. Generally, there is no specific plays are location to indicate a financial market
wherever a financial transaction takes plays, it is deemed to have taken place in the financial
market. Hence financial markets are pervasive in nature since financial transactions are
themselves very pervasive throughout the economic system. For instance, issue of equity
shares, granting of loan by term lending instructions, deposits of money into a bank, purchase
of debentures sale of shares and so on. In nutshell, financial markets are the credit markets
catering to the various needs of the individuals, firms and institutions by facilitating buying
and selling of financial assets claims and services.

CLASIFICATION OF FINANCIAL MARKETS:

1.Capitalmarket

The capital market is a market for financial assets which have a long or indefinite maturity
generally, it deals it long term securities which have a period of above one year in the widest
sense, it consist of a series of channels thought which the savings of the community are made
available for industrial and commercial enterprises and public authorities. As a whole, capital
market facilitates rising of capital. The major functions performed by a capital market are

a) mobilization of financial resources on a nation wide sale

b) securing the foreign capital and know how to fill up deficit in the required resources
for economic growth at a faster rate.
c) effective allocation of the mobilized financial resources, by directing the same to
projects yielding highest yield or to projects needed to promote balanced economic
dev0elopment.

26
 Capital market consists of primary market and secondary market.
Primary market

Primary market is a market for new issues or new financial claims. Hence it is also called
as new issue market. It basically deals with those securities which are issued to the public
for the first time. The market, therefore, markets available a new block of securities for
public subscription. In other words, it deals with raising of fresh capital by companies
either for cash or for consideration other than cash. The best example could be initial
public offering(IPO) where a firm offers shares to the public for the first time.

Secondary Market

Secondary market is the market where existing securities are traded. In other words,
securities which have already passed through new issue market are traded in this market.
Generally, such securities are quoted in the stock exchange and it provides a continuous
and regular market for buying and selling of securities. This market consists of all stock
exchanges recognized by the government of India.

2.Money Market

Are generally very safe investments which return relatively low interest rate that is most
appropriate for temporary cash storage Or short term time needs. It consists of a number of
sub market which collectively constitute the money market namely call money market,
commercial bill market, acceptance market, and treasury bill market.

3.Derivatives Market

The derivatives market is the financial market or derivatives, financial instruments like
futures contract or options, which are derived from other forms of assets. A derivative is a
security whose price is dependent upon or derived from one or more underlying assets. The
derivatives itself is merely a contract between two or more parties. Its value is determined by
fluctuations in the underlying assets. The most common underlying assets include stocks,
bonds, commodities, currencies, interest rates and market indexes. The important financial
derivatives are the following:

4.Forwards

27
 Forwards are the oldest of all the derivatives. A forward contract refers to an agreement
between two parties to exchange an agreed quality of an asset for cash at a certain date in
future at a predetermined price specified in that agreement. The promised asset may be
currency, commodity, instrument etc.

5.Futures

Future contract is very similar to a forward contract in all respects expecting the fact that it is
completely a standardized one. It is nothing but a standardized forward contract which is
legally enforceable and always traded on an organized exchange.

6.Options

The presents a contract sold by one party(option writer) to another party(option holder). The
contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security
or other financial asset at an agreed upon price (the strike price) during a certain period of
time or an a specific date (exercise date). Call options give the option to buy at certain price,
so the buyer would want the stock to go up. Put options give the option to sell at a certain
price, so the buyer would want the stock to go down.

7. SWAPS

It is yet another existing trading instrument. In fact, it is the combination of forwards by two
counterparties. It is arranged to reap the benefits arising from the fluctuations in the market
either currency market or interest rate market or any other market for that matter.

8.Foreign Exchange Market

It is a market in which participants are able to buy, sell, exchange and speculate on
currencies. Foreign exchange markets are made up of banks, commercial companies, central
banks, investment management firms, hedge funds, and retail forex brokers and investors.
The forex market is considered to be the large financial market in the world. It is world wide
decentralized over the counter financial market for the trading of currencies. Because the
currency markets are large and liquid, they are believed to be the most efficient financial
markets. It is important to realize that the foreign exchange market is not a single exchange,
but is constructed of a global network of computers that connects participants from all parties
of the world.

28
9.Commodities Market

It is an physical or virtual market place for buying, selling and trading raw or primary
products hard and soft commodities. Hard commodities are typically natural resources that
must be mined or extracted(gold rubber, oil, etc), where as soft commodities are agriculture
products or live stock(corn, wheat, coffee, sugar, soybeans, pork ,etc).

INDIAN FINANCIAL MARKETS

Indian financial market is one of the oldest in the world and is considered to be the fastest
growing and best among all the markets of the emerging economies. The history of Indian
capital markets dates back 200 years toward the end of the 18th century when Indian was
under the rule of the East India company. The development of the capital market in India
concentrated around Mumbai where no less than 200 to 250 securities brokers were active
during the second half of the 19th century. The financial market in India today is more
developed than many other sectors Indian addition to the centralized NSE (National stock
Exchange) and OTCEI (over the counter Exchange of the India). However the stock markets
in India remained stagnant due to straighten controls on the market economy that allowed
only a handful of monopolies to dominate their respective sectors. The corporate sector
wasnt allowed into many industry segments, which were dominated by the state controlled
public sector resulting in stagnation of the economy right up to the early 1990s. there after
when the Indian economy began liberalizing and the controls began to be dismantled or eased
out; the securities market witnessed a flurry of IPOs that were launched. This resulted in
many new companies across different industry segments to come up with newer products and
services.

A remarkable feature of growth of the Indian economy in recent years has been the role
played by its securities markets in assisting and fuelling that growth with money rose with in
the economy. This was in marked contrast to the initial phase of growth in many of the fast
growing economies of East Asia that witnessed huge does of FDI(Foreign direct investment)
spurring growth in their initial days of market decontrol. During this phase in India much of
the organized sector has been affected by high growth as the financial markets played an all
inclusive role in sustaining financial resources mobilization. Many PSUs (public sector
undertaking) that decided to off load part of their equity were also helped by the well
organized securities market in India. The launch of the NSE(national stock exchange)and the

29
OTCEI (over the counter exchange of India) during mid 1990s by the government of India
was meant to user in n easier and more transparent from of trading in securities. The NSE
was conceived as the market for trading in the securities of companies from large scale sector
and the OCTEI for those from the small scale sector.

India due to the countrys world class IT industry. This has pushed up the operational
efficiency of the Indian stock market to global standards and as a result the country has been
able to capitalize on its high growth and attract foreign capital like never before. The capital
markets in India is the SEBI(Security exchange board of India). SEBI came into prominence
in the 1990s after the capital markets experienced some turbulence. It had to take drastic
measures to plug many loopholes that were exploited by certain market forces to advance
their vested interests. After this initial phase of struggle SEBI has growth in strength as the
regulator of Indias capital markets and as one of the countrys most important institutions.

Stock Exchanges in India

Are an organized marketplace, either corporation or mutual organization, where members of

the organization gather to trade company stocks or other securities. He members may act
either a agents for their customers, or as principals for their own accounts whether
incorporated or not, established for the purpose of assisting, regulating and controlling
business in buying, selling and dealing in securities.

Equity analysis stock exchanges facilitate for the issue and redemption of securities and other
financial instruments including the payment of income and dividends. The record keeping is
central but trade is linked to such physical place because modern markets are computerized.
The trade on an exchange is only by members and stock broker so have a seat on the
exchange.

List of stock Exchanges in India

Bombay stock Exchange National Exchanges OTC Exchange of INDIA.

Regional Stock Exchanges

1 Ahmadabad
2 Bangalore
3 Bhubaneswar
4 Calcutta
5 Cochin
30
 6 Coimbatore
7 Delhi
8 Guwahati
9 Meerut
10 Pune
11 Saurashtrakutch
12 Uttar Pradesh
13 vadodara
14 Hyderabad
15 Jaipur
16 Madhya pradesh
17 Madras
18 Magadh
19 Mangalore
20 Ludhiana

Bombay Stock Exchange

A very common name for all traders in the stock market, BSE, stands for Bombay Stock
Exchange. It is the oldest market not only in the country, but also in Asia. In the early days,
BSE was known as The Negative Share & Stock Brokers Association. It was established in
the year 1875 and became the first stock exchange in the country to be recognized by the
government. In 1956, BSE obtained a permanent recognization from the government of India
under the securities contracts (Regulation) Act, 1956. In the past and even now, it plays a
pivotal role in the development of the countrys capital market. This is recognized by world
wise and its index, SENSEX, is also 1956, pursuant to the BSE (Corporatization and
Damutualizaion) scheme, 2005 notified by the securities and Exchange Board of India
(SEBI).

NATIONAL STOCK EXCHANGE INDIA LIMITED

The national stock exchange of India limited has genesis in the report of the changes
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 prompted by leading financial institutions at the behest of the government of India
and was incorporated in November 1992 as a tax paying company unlike other stock
exchange in the country. On its recognition as a stock exchange under the securities
contracts(regulations) act, 1956 in April 1993, the capital market(equities) segment
commenced operations in November 1994 and operations in derivatives segment commenced
in june2000.

31
32
 COMPANY PROFILE

BASAN Equity Broking Private Limited (BASAN) is the member of National Stock
Exchange, Bombay Stock Exchange and MCX Stock Exchange and was established in 2007.
We provide customized investment solutions for serious investors who value personal
service. We do this via a suite of products tailored to each individual client's needs. Some
clients will hand over all the decision making to us, while others will prefer to remain closely
involved - either way, the balance of the partnership is what is important, and trust and
integrity are paramount in the close working relationship between BASAN and each client.
We believe in personalizing services by assigning each client to our customer relationship
managers.

SERVICES
Equity Broking
Commodity Trading
Currency Trading
Internet Trading
Depository Services
IPO Distribution
Research and Advisory

POLICIES
Inactive Clients
Client Info
PMLA
RDD
Rights &Obli
Do's and Don'ts
Policy and Procedures
Password Policy
Privacy Policy

33
WHY BASAN:
Our philosophy:
Fund Raising Equity Capital Markets
We advise corporate and businesses of all sizes which are seeking to mobilize capital from
investors in India and overseas. Within the practice, we provide opportunities for clients to
raise funds through the following:
1. Initial Public Offerings (IPOs)
2. Follow-on Public Offerings (FPOs)
3. Qualified Institutional Placements (QIPs)
4. Rights Issues
5. Preferential Allotments
6. Foreign Currency Convertible Bonds Issues (FCCBs)
7. American and Global Depositary Receipts Issues (ADRs / GDRs)
We assist innovative and exciting companies in accessing the equity capital market. We
believe that our strength lies in identifying present and future market leaders, working with
them closely in understanding and fine tuning their business model, and showcasing the
investment opportunity to the right set of investors.
Advisory and Open Offer Management
The team is engaged in turnkey transaction management and advises a diverse range of
clients in medium to large transactions. Our key strengths include independent advice, deep
sector knowledge backed by professionals with a range of training and experience that spans
across multiple cross-border deals and our relationships with corporate of all sizes. We
provides both buy-side and sell-side advisory services as part of our M&A advisory offering.
We are also one of the leading merchant bankers hired for managing open offers of listed
companies. Our expertise includes coordination between various agencies, preparation of
open offer document and public announcements, and liaising with SEBI, ROC and other
relevant authorities.
Besides our Equity Markets practice also caters to the entire spectrum of capital market needs
such as managing Delisting Offers, Buy Back Offers etc.
Private Equity Offerings

34
We have been a leading Private Equity advisor for over a decade and have developed a strong
expertise across industries which enable us to recognize emerging industry themes and
position transactions within the context. Our strength in Private Equity advisory stems from:
1. Long standing relationships with marquee PE funds - Access to key decision makers
at PE funds gives us an unparalleled edge in optimal structuring and efficient closure of
transactions.
2. High quality execution - An experienced team of professionals ensures complete
confidentiality, strong focus on implementation and quick turnaround time.
3. Focus on long term relationships - In addition to handholding the client across the
entire transaction process, we provide continued support post-transaction and have the
capability to cater to investment banking needs of the client throughout his business
lifecycle.
4. Having achieved a leadership position in the Private Equity advisory market, we
believe that we are ideally placed to advise promoters and companies on the key
considerations in a PE fund raising exercise.
Structured Finance Advisory
Over the years, we have built up significant expertise in structuring appropriate financing
solutions for client specific situations and identifying and placing the transaction with
institutional investors. Our portfolio of solution comprises the following:
Promoter Funding
Promoter financing is mostly done to enable promoters to raise their stake in the company.
The financing is usually against collateral of shares or other securities held by the promoter in
any of the group company. The transaction helps in unlocking the value of promoter
shareholding by raising additional funds. It can also be structured to refinance a loan raised
against the same shares by the client earlier.
Acquisition Financing
There has been a significant increase in the number of acquisitions by Indian companies, both
domestic as well as overseas. Acquisition financing plays a critical role in the success of
inorganic growth planned by the acquirer. Based on each clients unique requirements, we
have advised on acquisition financing through appropriate stacked financing structures which
comprise foreign currency senior secured debt with recourse to parent companies, rupee
senior secured debt with recourse to parent companies, equity investment by the promoters,
non-recourse debt, guaranteed mezzanine debt with equity upside

35
Corporate Finance Advisory and Certifications
We are highly experience in managing corporate finance activities such as Scheme of
Amalgamations, Mergers, ESOP Transactions, Foreign Remittance and Equity Placements
etc.
We provide certifications / fairness opinions /valuations as required by BSE / NSE / SEBI
/RBI /ROC and other relevant regulatory authorities.
Our strengths in this area include our vast experience with such activities, our quick and
positive response to urgent needs of client and also our excellent financial modeling
capabilities.

Advantage clients

Our clients benefit from Basans commitment to providing the best service and passion for
high standard of performance. At the Basan Group, our high standard of customer service is
derived from our ability to address problems at the root cause. We are nimble, flexible and
stay in touch with our customers through telephone, email and visits. If you are still
contemplating on why to take advantage of Basans services, here are some of the reasons to
start with:

Zero Account opening charges for both online and offline clients.

Possibility of opening five accounts through one-time submission of documents.

Easy to use product demos contained in CD given to you with the Welcome Kit.

Daily research calls to help you make the right stock selection and timing.

24x7 accesses to client in online back office system.

Concurrent trade confirmation facility like Bank ATMs.

Online fund transfer facility with no less than 25 banks to meet the pay-in obligation.

Request for pay-out through SMS/ online back-office/ calling customer care.

Dedicated customer care, dealer for each account.

36
Clients can stay in touch with us through Face book, LinkedIn, Twitter and Blog.

You can also track your complete asset portfolio through our online Wealth Tracker
application.

Basan classroom makes it possible to comprehend investing in a simple way.

All information that you need is provided through our customer-friendly and informative
communications department.

Pro-Partners

Basans business model is primarily made on cultivating entrepreneurial skills among people
who have an aspiration to do big in life. We believe that in a partnership business, both the
partners have to contribute equally for the partnership to grow and prosper. So we work just
as hard as you to make sure that we keep innovating and improving ourselves. A partnership
works on trust and care for relationships. This is the DNA of our business model.

Reputation

Basan has been a leading player in the market for nearly two decades. Our partners and
associates can reap the benefits of our goodwill and reputation. The Basan brand is a unique
selling point of any entrepreneur.

General Offerings

Basan provides all the facilities and amenities that most of the good brokers provide. We have
an independent research team, both in equity and commodity that help you take the right
decisions.

Marketing Support

To help augment the growth of its business partners, basan provides sales training and
marketing material to all its affiliates. In order to further reap the potential of an area, Basan
conducts Investor Awareness Seminar from time to time.

Policies
37
We at Basan believe in maintaining complete transparency in all our dealings with you. All
Basan policies are available online on our website as well as comes to you with the Welcome
Kit.

Technology

Basan always uses cutting-edge technology to conduct business. Our partners and associates
will also gain access to this high-tech advantage.

Click here to learn about the process of becoming our partner and the terms and conditions
that need to be fulfilled.

For Employees

At Basan, we believe in Growing and sharing, and our employees benefit from a distinctive
environment for them to learn, experiment, and grow. Basan proudly boasts one of the
highest retention ratios in the broking industry. More than 40% of Basans employees have
been associated with the company for more than 4 years.

If you are wondering how your career will progress at Basan, we have the right answers for
you:

Growth

Check out the excellent track record of our enterprise. You surely dont want to miss out on
the opportunity of being a part of this wonderful experience. We will provide you with the
right opportunity to allow your career to grow and flourish.

Focus on merit

We aim to provide the best services and have a goodwill for excellence. We respect merit in
our employees.

38
Leadership

We believe leaders make the world go around and everyone has the potential to be a winner.
At Basan, we train our employees to cultivate their leadership aptitude.

Merchant banking
Our Offerings:
Fund Raising Equity Capital Markets:
We advise corporate and businesses of all sizes which are seeking to mobilize capital from
investors in India and overseas. Within the practice, we provide opportunities for clients to
raise funds through the following:
o Initial Public Offerings (IPOs)
o Follow-on Public Offerings (FPOs)
o Qualified Institutional Placements (QIPs)
o Rights Issues
o Preferential Allotments
o Foreign Currency Convertible Bonds Issues (FCCBs)
o American and Global Depositary Receipts Issues (ADRs / GDRs)
We assist innovative and exciting companies in accessing the equity capital market. We
believe that our strength lies in identifying present and future market leaders, working with
them closely in understanding and fine tuning their business model, and showcasing the
investment opportunity to the right set of investors.
Advisory and Open Offer Management
The team is engaged in turnkey transaction management and advises a diverse range of
clients in medium to large transactions. Our key strengths include independent advice, deep
sector knowledge backed by professionals with a range of training and experience that spans
across multiple cross-border deals and our relationships with corporate of all sizes. We
provides both buy-side and sell-side advisory services as part of our M&A advisory offering.
We are also one of the leading merchant bankers hired for managing open offers of listed
companies. Our expertise includes coordination between various agencies, preparation of
open offer document and public announcements, and liaising with SEBI, ROC and other
relevant authorities.
Besides our Equity Markets practice also caters to the entire spectrum of capital market needs
such as managing Delisting Offers, Buy Back Offers etc.
Private Equity Offerings

39
 We have been a leading Private Equity advisor for over a decade and have developed a
strong expertise across industries which enable us to recognize emerging industry themes and
position transactions within the context. Our strength in Private Equity advisory stems from:
5. Long standing relationships with marquee PE funds - Access to key decision makers
at PE funds gives us an unparalleled edge in optimal structuring and efficient closure of
transactions.
6. High quality execution - An experienced team of professionals ensures complete
confidentiality, strong focus on implementation and quick turnaround time.
7. Focus on long term relationships - In addition to handholding the client across the
entire transaction process, we provide continued support post-transaction and have the
capability to cater to investment banking needs of the client throughout his business
lifecycle.
8. Having achieved a leadership position in the Private Equity advisory market, we
believe that we are ideally placed to advise promoters and companies on the key
considerations in a PE fund raising exercise.

Structured Finance Advisory

Over the years, we have built up significant expertise in structuring appropriate financing
solutions for client specific situations and identifying and placing the transaction with
institutional investors. Our portfolio of solution comprises the following:
Promoter Funding
Promoter financing is mostly done to enable promoters to raise their stake in the company.
The financing is usually against collateral of shares or other securities held by the promoter in
any of the group company. The transaction helps in unlocking the value of promoter
shareholding by raising additional funds. It can also be structured to refinance a loan raised
against the same shares by the client earlier.
Acquisition Financing
There has been a significant increase in the number of acquisitions by Indian companies, both
domestic as well as overseas. Acquisition financing plays a critical role in the success of
inorganic growth planned by the acquirer. Based on each clients unique requirements, we
have advised on acquisition financing through appropriate stacked financing structures which
comprise foreign currency senior secured debt with recourse to parent companies, rupee

40
senior secured debt with recourse to parent companies, equity investment by the promoters,
non-recourse debt, guaranteed mezzanine debt with equity upside.
Corporate Finance Advisory and Certifications
We are highly experience in managing corporate finance activities such as Scheme of
Amalgamations, Mergers, ESOP Transactions, Foreign Remittance and Equity Placements
etc.
We provide certifications / fairness opinions /valuations as required by BSE / NSE / SEBI
/RBI /ROC and other relevant regulatory authorities.
Our strengths in this area include our vast experience with such activities, our quick and
positive response to urgent needs of client and also our excellent financial modeling
capabilities.

41
Table showing and opening and closing price of Mahindra & Mahindra

DATE MAHINDRA&MAHINDRA
Date OPENING PRICE CLOSING PRICE
481.80 472.00
472.20 475.50
477.00 479.25
480.00 480.15
477.00 486.15
485.00 477.20
477.20 467.20
464.00 466.95
466.80 479.35
475.20 473.05
475.10 478.60
479.45 482.70
477.90 473.90
471.50 481.20
482.00 479.80
479.00 486.95
489.00 483.80
481.00 484.75
484.20 484.00
482.30 475.85

Source: Secondary data

Graph showing opening price of the Mahindra & Mahindra

42
 OPENING PRICE
495
490
485
480
475
470
465
460
455
450

INTERPRETATION:

The Mahindra& Mahindra share opening price is Rs.481.80, the share are regularly
fluctuating. High price share on 17 may2016 Rs.489 on 26April 2016 Mahindra & Mahindra
share price is very low i.e,472.20.

Graph showing closing price of Mahindra & Mahindra

43
 CLOSING PRICE
490
485
480
475
470
465
460
455

INTERPRETATION:

The Mahindra & Mahindra share closing price on 25April2016,i.e,472.00. the closing price
also fluctuating regularly on 4May2016, the share price is very low i.e,466.95.

44
Graph showing opening and closing price of the Mahindra& Mahindra

495
490
485
480
475
470
OPENING PRICE
465
CLOSING PRICE
460
455
450

INTERPRETATION:
The above graph represents opening& closing prices are fluctuating regularly. On
25April2016 the share value is @481.80 and at the same time closing value is @472.00.the
highest value of the share is 29April2016 will be increased i.e,486.15 the lowest value of the
share price is Rs,467.20.

45
 MARUTI SUZUKI
DATE OPENING CLOSING
PRICE PRICE
25Apr,2016 3706.10 3727.95
26Apr,2016 3704.05 3871.55
27Apr,2016 3841.10 3859.40
28Apr,2016 3819.00 3747.95
29Apr,2016 3742.00 3794.65
2May,2016 3799.90 3830.85
3May,2016 3840.80 3819.95
4May,2016 3800.00 3811.55
5May,2016 3825.00 3836.85
6May,2016 3829.95 3818.95
9May,2016 3830.00 3846.50
10May,2016 3850.50 3844.80
11May,2016 3888.00 3890.05
12May,2016 3884.85 3854.20
13May,2016 3856.00 3846.25
16May,2016 3870.00 3881.60
17May,2016 3891.50 3950.70
18May,2016 3928.80 3914.90
19May,2016 3900.00 3926.60
20May,2016 3883.80 3944.95

Source: Secondary data

46
Graph showing opening price of the Maruti Suzuki

OPENING PRICE
3950
3900
3850
3800
3750
3700
3650
3600
3550

INTERPRETATION:

The Maruti Suzuki share prices are regularly increasing on 25April2016 the share value is
3706.10. The highest value of the share on 18May2016 i.e,3928.80 the lowest value of the
share price is 26april2016 i.e,3704.05.

47
Graph showing closing price of Maruti Suzuki

CLOSING PRICE
4500
4000
3500
3000
2500
2000
1500
1000
500
0

INTERPRETATION:

The Maruti Suzuki company value of the share is very high on 25April2016 Rs.3727.95 the
everyday share prices increasing at Rs. 10 to 20. Because they are develouping innovatively
for the products.

48
Graph showing opening and closing price of Mariti Suzuki

4500
4000
3500
3000
2500
2000
1500 OPENING
1000 CLOSING PRICE
500
0

INTERPRETATION:

Opening share Mruti Suzuki on 25Apr,2016 Rs.3706.10.at the same time closing price of the
is 3727.95. The Maruti Suzuki share are very high because they are using international
standards.

49
Table showing opening and closing price of the TATA Motors

TATA MOTORS
DATE OPENING PRICE CLOSING PRICE
25Apr,2016 417.80 411.35
26Apr,2016 410.00 419.30
27Apr,2016 419.95 418.00
28Apr,2016 419.80 410.90
29Apr,2016 410.05 408.85
2May,2016 410.00 407.30
3May,2016 411.40 409.50
4May,2016 406.75 381.80
5May,2016 383.50 391.20
6May,2016 390.40 398.70
9May,2016 401.00 403.35
10May,2016 401.00 388.90
11May,2016 386.00 380.10
12May,2016 384.00 387.20
13May,2016 390.00 390.00
16May,2016 393.80 392.55
17May,2016 391.50 389.90
18May,2016 384.00 385.00
19May,2016 385.25 387.70
20May,2016 386.25 384.55

Source: Secondary data

50
Graph showing opening price of TATA motors

OPENING PRICE
430
420
410
400
390
380
370
360

INTERPRETATION:

The TATA Motors shares opening price i.e,417.80. the shares are every day fluctuating the
highest value on 27 April2016 i.e,419.95 and the lowest value of the share price on
5May2016 i.e,483.50.

51
Graph showing closing price of TATA Motors

CLOSING PRICE
430
420
410
400
390
380
370
360

INTERPRETATION:

The closing price of the share value on 25April2016 i.e,411.35 every day share prices are
very low. The lowest share value is 20may2016 i.e,384.55.

52
Graph showing opening and closing price of TATA Motors

430

420

410

400

390
OPENING PRICE
380 CLOSING PRICE

370

360

INTERPRETATION:

The above graph represents the TATA motors company share value .Every day the share
value will be fluctuating the opening price of the share on 25 April417.80 and closing price
on 20May2016 384.55 the price will be very decrease they are not following international
standards.

53
 FINDINGS

From the data analysis and interpretation of the ratios of three companies viz. Tata Motors,
Maruti Suzuki and Mahindra and Mahindra, the following findings have been given

From the analysis it is observe that TATA Motors share prices are increasing every day
comparing with Mahindra & Mahindra and Maruti Suzuki.
TATA Motors company performance is very poor. Compare with belonging share value.
Among the tree companies the Maruti Suzuki share value is very high compare with the
remaining two companiesi.e, Mahindra & Mahindra, TATA Motors.
Maruti Suzuki and Mahindra & Mahindra companies share value are having the high
performance because of these two companies obtain the high return.
From the analysis more performance purchasing shares in Maruti Suzuki.

54
 SUGGESTIONS

By analyzing the automobile industry with the help of fundamental analysis, it has been
revealed that this industry as a lot of potential to grow. The three giants of Indian automobile
industry viz. TATA Motors, Maruti Suzuki and Mahindra & Mahindra have out performed in
the industry.

Through the fluctuations cannot be traced particular with a facts fundamental analysis
will help the invest to some extent in estimating the price fluctuations.
From the company analysis, we can known that Mahindra would be a better option for
an investor compared to TATA and Maruti. In TATA the return on investment is also
very low. In view of all these, TATA is not a better option for an investor.
Mahindra has maintained its up word sales level. I suggested that if u you are invested in
Mahindra gaining more profits.
Investing Maruti Suzuki for long time could be a good option where as in TATA Motors
there is a chance of getting correction, as it already share value will be high in short
period.

55
 CONCLUSION

The automobile industry in Indias the seventh largest in the world. Maruti Suzuki India ltd
company has trend of growth during the financial year 2015-2016 there down fall in the
growth of the company. The main reason behind this downfall is because of the global
recession. The down fall of net profit during the financial year 2015-2016 is 29.6% over the
financial year 2014-2015. TATA motors which was trying to consolidate its leadership
position in the market also had to face the impact of global melt down. Amid the crippling
economic crisis, TATA purchased Britons Jaguar Land Rover(JLR) from Ford motor
company. Acquiring JLR saddled TATA with some tough losses. Dividend and earnings
remain low.

The analysis gives an optimistic view about the industry and its growth which recommends
the investors to keep a good watch on the major place to benefit in terms of returns on their
investments

56
 BIBLIOGRAPHY

TEXT BOOKS

Punithavathipandian, Security analysis and Portfolio management, Vikas

publications, 2010.
V.A.Avadhani,Security analysis and Portfolio management, Himalaya
publicatios,2008
Gordon and Natrajan,financial markets and services, Himalaya publications,2010.

WEBSITES

www.bseindia.com

www.investopedia.com

www.moneycontrol.com

www.indiainfoline.com

www.sebi.gov.in

www.tatamotors.com

www.marutisuzuki.com

www.mahindra.com

www.yahoofinance.com

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