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EXECUTIVE SUMMARY

This project entitled, “Security Analysis of Selected Stocks with reference to Information

Technology Sector ". This project is a combination of primary and secondary data. The study

is concerned with the tools used by investors for analyzing the stocks before taking the

investment decision. Primary data is basically derived from interactions with clients and the

branch manager and project guide of company. Secondary data is compiled from the various

websites of the companies, stock exchanges, books on securities analysis and journals. I have

selected this topic to understand the tools techniques used for analysis of stocks. This project

has helped me as an investor to take much wise decision related to investment in stocks. The

indicators used allow the investors to decide whether to buy, sell or hold the stock

Objectives

To study fundamental and technical analysis of securities.

To evaluate the performance of the company based on fundamental analysis.

To analyze the movement of stock prices using technical analysis

To evaluate the risk and return of the selected securities.

I have collected data for a period of six months from 1st Jan 2015 to 30th June 2015. I have

used different ratios for fundamental analysis and various graphs like candle stick graph to

know the fluctuations of the stock in the period of 6 months. Other indicators are RSI

(relative strength index). The general observation is that when RSI indicator is above 70

marks it indicates over brought zone, whereas, below 30 marks it indicates oversold zone.

Simple moving averages are other indicators.

Another tool used is the Beta value to judge the volatility of the scrip. This beta helps in

identifying the risk factor associated with the investment for earning returns. A beta of 1 is

considered balanced whereas a beta of more than 1 is considered more risky as well as higher

returns. A beta of less than 1 means the risk associated is low as well as the possible earnings.

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INTRODUCTION ABOUT THE SUBJECT

The market for long term securities like bonds, equity stocks and preferred stocks is divided

into primary market and secondary market. 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 or

buy securities. Stock markets predominantly deal in the equity shares. Well regulated and

active stock market promotes capital formation. The health of the economy is reflected by the

growth of the stock market. Stock broking is a growing industry in India. The main reason is

that Indian economy is one of the strongest in the world. As a result of that both foreign and

domestic investors are interested in investing in Indian stock market.

The topic selected for the study is “Security Analysis of selected stocks with reference to

information technology sector” with reference to IndiaNivesh Securities Ltd, Nashik.

The study is done for the purpose of conducting fundamental analysis and technical analysis

of leading securities in the stock market. In the stock market share price of companies are

determined by the demand and supply forces operating in the market. These demand and

supply forces in turn are influenced by a number of fundamental factors as well as certain

psychological or emotional factors. The combined impact of all these factors is reflected in

the share price movement. The price movements of securities follow systematic and certain

consistent patterns. Past movements in the prices of shares help to identify trends and pattern.

It is useful for the prediction of future price movements. The companies selected are

INFOSYS, WIPRO&TCS.

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SECURITY ANALYSIS

Security analysis is an examination of various factors affecting the value of a security.

Security analysis is about valuing the assets, debt, warrants and equity of companies from the

perspective of the outside investors using publicly available information .security analysis

assists as a friend to be aware of the market trends regarding securities of the companies.

Security analysis is conducted by analyzing both the fundamental and technical aspects.

FUNDAMENTAL ANANYSIS

Fundamental analysis is the process of looking at a business at the basic or fundamental

financial level. This type of analysis examines key ratios of a business to determine its

financial health and gives you an idea of the value its stock

Many investors use fundamental analysis alone or in combination with other tools to evaluate

stocks for investment purposes. The goal is to determine the current worth and, more

importantly, how the market values the stock.

Fundamental analysis is about using real data to evaluate a security's value. Although most

analysts use fundamental analysis to value stocks, this method of valuation can be used for

just about any type of security

It is the method of evaluating a security by attempting to measure its intrinsic value by

examining related economic, financial and other qualitative and quantitative factors.

Fundamental analysts attempt to study everything that can affect the security's value,

including macroeconomic factors (like the overall economy and industry conditions) and

individually specific factors (like the financial condition and management of companies.

For example, an investor can perform fundamental analysis on a stock’s value by looking at

economic factors, .aid, as interest rates and the overall state of the economy, and information

about the bond issuer, such as potential changes in credit ratings. For assessing stocks, this

method uses revenues, earnings, future growth, return on equity, profit margins and other

data to determine a company's underlying value and potential for future growth. In terms of

stocks, fundamental analysis focuses on the financial statements of the Company being

evaluated.

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The end goal of performing fundamental analysis is to produce a value that an investor can

compare with the security's current price in hopes of figuring out what sort of position to take

with that security (under priced = buy, overpriced = sell or short).

STEPS FOR FUNDAMENTAL ANALYSIS

Step-1: ECONOMY ANALYSIS

Business or economic cycle has direct impact on industry and individual companies. It affects

investment decisions, employment, demand and profitability. Four stages of economics

cycle are depression, recovery, boom, and recession. Investors should determine the

stage of the economic cycle before investing. Investors should invest just before or during a

boom.

STEP-2: INDUSTRY ANALYSIS

Importance of industry can never be understated. State of industry will affect the company

performance. It is important to determine cycle. These are entrepreneurial or sunrise,

expansion or growth, stabilization or maturity and decline or sunset stage. Investors should

purchase in the first two stages and disinvest at the maturity stage. It is better to invest in

evergreen industries. Results of cyclical industries are volatile. Investors should consider

competition as the greater the competition lower the profit. It is safer to invest in industries

not subject to government controls. Export oriented industries currently favored by the

government

STEP 3: COMPANY ANALYSIS

Final stage of fundamental analysis is company analysis.

Areas to be examined are the company, the results, ratios and cash flow.

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MANAGEMENT

Management is the single most important factor to consider in a company. Upon its quality

rests the future of the company. In India two main types of the management - family and

professional. Investors must check on integrity of managers, proven competence, how high is

it rated by its peers, how did it performs at times of adversity, the management's depth of

knowledge, its innovativeness and professionalism.

THE COMPANY

It is important to check how company is perceived by its competition and weather it is the

market leader in its products or in its segments. The investor must study the policy a

company follows and its plans for growth.

ANNUAL REPORT

The annual report is the primary and most important source of information on a company.

The investor must read between and beyond the lines of an annual report to determine the

state of the company being considered. The annual report is broken into the director's report,

the auditor's report, the financial statements and the schedules.

DIRECTORS REPORT

This report gives investors insights into the company. It enunciates the opinions of the

directors on the company, the industry and the political situation. It explains the performance

of the company, its plans for diversification, modernization and expansion. It discusses the

profits earned and states the dividend proposed. The report, if read properly, can give the

investor a good grasp of the working of the company.

AUDITORS REPORT

The auditor represents shareholders and reports to them on the stewardship of the directors

and whether the accounts presented do present a true and fair view of the company.

Auditors will comment on any changes made in accounting principles and the effect of the

changes on the results. Auditors will also comment on any action or method of accounting

they do not agree with. Investor must read the auditor report in detail and in depth as the

results can materially change if adjustments are made based on the notes or the comments in

the auditor's report.

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FINANCIAL STATEMENTS

Financial statements of a company in an annual report consist of the balance sheet and profit

and loss account. These detail the financial health and the performance of the company.

The balance sheet details all the assets and liabilities a company has on a particular date.

Assets are those that the company owns suckle as fixed assets investments and current assets

(stock, debtors, and cash).Liabilities are those that the company owes (trade creditors, loans

etc) and the shareholders investment in the company (share capital and reserves). The profit

and loss account details numerically the activities the company had undertaken during the

accounting period and the result of these activities (profit or loss).

Contingent liabilities are also detailed. These are liabilities that may arise on the happening

of event that may never arise (guarantees, bill discounted). The liability crystallizes on the

happening of the event. The profit and loss account also details the dividend given (interim)

and proposed.

RATIOS

No investment should be made without analyzing the financial statements of the company

and comparing the company's results with that of earlier years. Ratios express mathematically

the relationship between the performance figures and / or assets / liabilities in a form that can

be easily understood and Interpreted. No single ratio tells the complete story

For fundamental analysis, the following ratios are used:

1) EARNING PER SHARE (EPS)

2) PRICE TO EARNING RATIO

3) PRICE TO SALES RATIO

4) BOOK VALUE

5) PRICE TO BOOK RATIO

6) DIVIDEND PAYOUT RATIO

7) DIVIDENT YEILD RATIO

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FACTORS OF FUNDAMENTAL ANALYSIS

FIGURE NO 1: FACTORS OF FUNDAMENTAL ANALYSIS

FUNDAMENTAL

ANALYSIS

DEMAND AND

SUPPLY

MACRO ECONOMIC ISSUES

ENVIRONMENTAL CONDITIONS

GLOBAL EVENTS

AND MARKET

INTER-NATIONAL

PRICE

MOVEMENT

POLITICAL FACTORS

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TECHNICAL ANALYSIS

Technical Analysis is the forecasting of future financial price movements based on an

examination of past price movements. Like weather forecasting, technical analysis does not

result in absolute predictions about the future. Instead, technical analysis can help investors

anticipate what is “likely” to happen to prices over time. Technical analysis uses a wide

variety of charts that show price over time. Technical analysis is applicable to stocks, indices,

commodities, futures or any tradable instrument where the price is influenced by the forces of

supply and demand. Price refers to any combination of the open, high, low, or close for a

given security over a specific time frame. The time frame can be based on intraday (1-minute,

5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly), daily, weekly or monthly price

data and last a few hours or many years. In addition, some technical analysts include volume

or open interest figures with their study of price action.

TOOLS OF TECHNICAL ANALYSIS

1) Relative Strength Index (RSI) - RSI compares the magnitude of recent gains to

recent losses to see if an asset is oversold or overbought. RSI is plotted on a scale of 0-100.

Generally, if it is above 70, the stock is considered overbought and so one can look to sell it.

Similarly, an RSI of less than 30 indicates the stock is oversold and can be bought.

RSI=100 -100 Where RS = Average gain

1+RS Average loss

2) Simple Moving Average

This is the average stock price over a certain period of time. Keep in mind that equal

weighting is given to each daily price. A simple or arithmetic, moving average that is

calculated by adding the closing price of the security for a number of time periods and then

dividing this total by the number of time periods.

3) Moving average convergence divergence - MACD

Developed by Gerald Appel in the late seventies, the Moving Average

Convergence/Divergence oscillator (MACD) is one of the simplest and most effective

momentum indicators available. The MACD turns two trend-following indicators, moving

averages, into a momentum oscillator by subtracting the longer moving average from the

shorter moving average.

Because MACD is unbounded, it is not particularly useful for identifying overbought and

oversold levels.

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4) CANDLE STICK CHARTS

The Japanese began using technical analysis to trade rice in the 17th century. While this

early version of technical analysis was different from the US version initiated by around 1900

According to Steve Nison, candlestick charting first appeared sometime after 1850. Much of

the credit for candlestick development and charting goes to a legendary rice trader named

Homma from the town of Sakata. It is likely

that his original ideas were modified and

refined over many years of trading eventually

resulting in the system of candlestick charting

that we use today.

FORMATION- In order to create a candlestick

chart, you must have a data set that contains

open, high, low and close values for each time

period you want to display. The hollow or filled

portion of the candlestick is called “the body”

The long thin lines above and below the body

represent the high/low range and are called

“shadows”. The high is marked by the top of

the upper shadow and the low by the bottom of the lower shadow. If the stock closes higher

than its opening price, a hollow candlestick is drawn with the bottom of the body is

representing the opening price and the top of the body representing the closing price. If the

stock closes lower than its opening price, a filled candlestick is drawn with the top of the

body representing the opening price and the bottom of the body representing the closing

price. Compared to traditional bar charts, many traders consider candlestick charts more

visually appealing and easier to interpret. Each candlestick provides an easy-to-decipher

picture of price action. Immediately a trader can compare the relationship between the open

and close as well as the high and low. The relationship between the open and close is

considered vital information and forms the essence of candlesticks.

FIGURE NO 2: CANDLE STICK

FORMATION

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5) BULLS VERSUS BEARS

A candlestick depicts the battle between Bulls (buyers) and Bears (sellers) over a given

period of time. An analogy to this battle can be made between two football teams, which we

can also call the Bulls and the Bears. The bottom (intra-session low) of the candlestick

represents a touchdown for the Bears and the top (intra-session high) a touchdown for the

Bulls. The closer the close is to the high, the closer the Bulls are to a touchdown. The closer

the close is to the low, the closer the Bears are to a touchdown.

6) SUPPORT AND RESISTANCE

Support and resistance is a concept in technical analysis that the movement of the price of a

security will tend to stop and reverse at certain predetermined price levels. These levels are

denoted by multiple touches of price without a breakthrough of the level.

A support level is level where the price tends to find support as it is going down. This

means the price is more likely to "bounce" off this level rather than break through it.

However, once the price has passed this level, by an amount exceeding some noise, it is

likely to continue dropping until it finds another support level.

A resistance level is the opposite of a support level. It is where the price tends to find

resistance as it is going up. This means the price is more likely to "bounce" off this level

rather than break through it. However, once the price has passed this level, by an amount

exceeding some noise, it is likely that it will continue rising until it finds another resistance

level.

FIGURE NO 3: SUPPORT AND RESISTANCE

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7) GAP ANALYSIS

Just in case, a gap is an area on a price chart in which there were no trades. Normally this

occurs between the close of the market on one day and the next day's open. Lots of things can

cause this, such as an earnings report coming out after the stock market has closed for the

day. If the earnings were significantly higher than expected, many investors might place buy

orders for the next day. This could result in the price opening higher than the previous day's

close. If the trading that day continues to trade above that point, a gap will exist in the price

chart. Gaps can offer evidence that something important has happened to the fundamentals or

the psychology of the crowd that accompanies this market movement.

FIGURE NO 4: GAP ANALYSIS

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8)HEAD AND SHOULDER CHART

A head and shoulders pattern consists of a peak followed by a higher peak and then a lower

peak with a break below the neckline. The neckline is drawn through the lowest points of the

two intervening troughs and may slope upward or downward. A downward sloping neckline

is more reliable as a signal. The extent of the breakout move can be estimated by measuring

from the top of the middle peak down to the neckline. This target is then projected

downwards from the point of breakout.

FIGURE NO 5: HEAD AND SHOULDER

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9) CUP AND HANDLE CHART

A cup and handle chart is a bullish continuation pattern in which the upward trend has paused

but will continue in upward direction once the pattern is confirmed. As we can see in the

graph .this price pattern forms what looks like a cup, which is preceded by the upward trend.

The handle follows the cup and is formed generally downward sideways movement of the

security price.

FIGURE NO 6: CUP AND HANDLE

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TECHNICAL ANALYSIS V/S FUNDAMENTAL ANALYSIS

The comparison between technical analysis and fundamental analysis can be presented as

follows:

1) Fundamental analysis analyses the stock based on goals of the investors. They study

the financial strength of the corporation, growth of sales, earnings and profitability.

They also into account the general industrial and economic conditions. The technical

analysis chooses to study mainly focuses attention on the history of prices. Technical

analysts choose to study basic market data -price and volume.

2) Fundamental analyst estimate the intrinsic value of the shares and purchases them

when they are undervalued .They dispose of the shares when they are overpriced and

earn profits. They try to find out the long term value of value of compared to

fundamental analysts, technical analysts mainly predict the short term price

movements rather than long term movement they are not committed to a buy-and-

hold policy.

3) Fundamentalist are the opinions that supply and demand for stock depend for stock

depend on underlying factors. The forecasts of supply and demand depend on various

factors. Analysts opine that they can forecast supply and demand by studying the

prices and volume of trading.

In both the approaches, supply and demand factors are considered to be critical. Business,

economic, social, and political factors affect the demand and supply for securities. These

underlying factors in the form of demand and supply come together in the securities market

to determine security prices.

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HISTORY

Year Description

2006

Company has changed its name from Sanyei Corporation Ltd. To

IndiaNivesh Ltd.

2008

IndiaNivesh Ltd has appointed Mr. Hemant Panpalia as Additional

Director with immediate effect.

2010

IndiaNivesh Ltd has appointed Mr. Gireesh Bhagat as Additional

Director with immediate effect.

2012 IndiaNivesh Ltd said that it has completely acquired the equity

share capital (50,000 shares) of IndiaNivesh Commodities Ltd

(INCPL).

TABLE NO 1: HISTORY OF INDIANIVESH

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IDENTITY

Identity says it all. The green ' ' that connotes an India that is already an investment

powerhouse and is soaring high in the business world. The three red curves on the right wing

represent Trust, Commitment and Results

Trust – which clients have at IndiaNivesh

Commitment – which they have towards clients

Results – which they deliver for their clients.

At IndiaNivesh, it strives to earn the trust and respect of each of the clients. They believe that

winning the trust and respect of the clients is more important than achieving personal targets.

It is this core thought that has helped IndiaNivesh to transform into a progressive financial

services group not only in the country, but across the globe.

VISION

Vision of IndiaNivesh is to emerge as a dynamic, customer-centric, and progressive financial

group in the country with pan India presence. This will be made possible with a single

minded focus on business growth and profitability, with due emphasis on risk management in

an environment of professionalism, trust and transparency, observing the highest standards of

corporate governance and corporate social responsibilities and meeting the expectations of all

stakeholders as well as the aspirations of the employees.

Essentially, combining integrity with pursuit of excellence to ensure prosperity to all

stakeholders on a continuous basis is going to be the core philosophy and driving force for

the group.

MISSION

One of the key endeavors is to become one of the top ten financial powerhouses in India

within the coming 5-6 years by constantly exploring future business models and offering the

entire bouquet of financial services to our clients under one single roof.

It serves as a bridge for creating wealth and preserving it.

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BUSINESS PRINCIPLES

1) Integrity - The Group, through the actions of our partners and associates, will reflect the

highest ethical standards at all times. Trust is an essential element of our industry. Clients and

collaborating partners and associates can expect dealings with them to be honest and

forthright – IndiaNivesh will not waver in our commitment to this principal.

2) Respect - IndiaNivesh will always treat each other and those with whom they come in

contact with dignity and respect. It is a global firm and embrace diversity of culture and

religion at workplace. They are open to the thoughts and opinions of others irrespective of

race, creed or ethnic origin, and relish the creativity that comes from collaborating with those

who may view things from a different perspective.

3) Leadership - Every associate and partner of IndiaNivesh is empowered as a leader both in

workplace and the communities where they work. They are confident of the firm's support as

it strives to implement innovation, efficiency and growth. IndiaNivesh supports community

service activities, recognizing the debt owed to a society that enables the group to flourish.

4) Excellence - IndiaNivesh is a service organization. It’s worth is measured daily by clients

and collaborating partners, associates, customers, etc. It will consistently provide service at a

level that exceeds expectations through focus on quality.

5) Teamwork – IndiaNivesh is loyal to their clients, their collaborators, their firm and each

other. They will work together and are accountable to each other to provide the absolute best

results for our clients. They are rewarded for their collaborative efforts without regard for

individual credit. It recognizes varying talents and abilities; therefore, a cooperative effort is

the best effort for their clients

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BOARD OF DIRECTORS

MR. HEMANT PANPALIA-FOUNDER & DIRECTOR

Mr.Hemant Panpalia is co-founder and non-executive Director

of IndiaNivesh Limited. Mr. Panpalia has set up his

accountancy practice in the name of Hemant Panpalia & Co.

since 1997. As a professional accountant, he has been

extensively engaged, across various industry segments, in

matters related to Statutory Audit, Special Audit, Corporate

Taxation, Due Diligences and Corporate Compliances.

Besides, Mr. Panpalia has been instrumental in inorganic growth and expansion by many

large industrial houses. He has also deployed innovative capital raising instruments for

several medium and small companies. Additionally, he has successfully led many

transactions related to mergers & acquisitions, debt syndication for project finance and

raising of primary capital from domestic and international markets.

Mr. Panpalia is a Graduate in Commerce from University of Mumbai and a Chartered

Accountant (Fellow Member of ICAI). He is also a diploma holder in System Analysis and

Design from NIIT, Mumbai.

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MR. GIRISH BHAGAT

MANAGING DIRECTOR OF INDIANIVESH FUND MANAGERS

LIMITED

Mr. Girish Bhagat, Managing Director of IndiaNivesh

Fund Managers Limited and Vice Chairman of

IndiaNivesh Financial Advisors Limited has over 30 years

of experience in areas of Investment Management, Capital

Markets, Investment Banking, Alternate Investments, IT

Services and in Urban Infrastructure development .

During his career, he has led some very successful & pioneering start-ups, significantly

contributed to capital inflows into India, structured cross border joint ventures and done

transactions in many countries. In his career Mr. Bhagat has held leadership positions in

HSBC, HDFC Securities, IIT Invest Trust, Citibank and Unit Trust of India.

Mr. Bhagat, in an honorary capacity, also serves as Secretary (India) to The EuroIndia Centre

(EIC), which is a not-profit body founded by Dr. Manmohan Singh, Prime Minister of India

and the former Prime Minister of France, late Mr. Raymond Barre that focuses on

development of urban infrastructure & sustainability. Mr. Bhagat is also a member of CII’s

National Council on Real Estate & Housing. Besides, he is a (non executive) Member of the

Board of Directors of CC Global Investments, which is a Luxembourg based Fund (Sponsors:

Clemente Capital LLC, US) and it invests in listed securities in global markets.

Mr. Bhagat is a Masters in Business Economics and a Graduate in Economics from the

University of Delhi. Mr. Bhagat is a Fellow of Royal Institution of Chartered Surveyors.

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MR.RAJARAM BALDI

INDEPENDENT DIRECTOR

Mr. Baldi is an Independent Director of IndiaNivesh Limited

and has more than three and half decades of rich experience in

entire business operations and other fields encompassing

Finance & Accounts, Taxation, Project Management, HRD,

Marketing, Administration, Risk Management, Public Relations

& Auditing of Capital Market sector. Mr.Baldi also possesses

strong skills in project planning, monitoring project progress,

ensuring cost control and maintaining cash flow requirements.

Mr. Baldi has held various senior level positions in various Companies throughout his career.

He is a Chartered Accountant and a Graduate in Commerce.

MR. DINESH NUWAL

CHAIRMAN, INDIANIVESH SECURITIES PRIVATE LIMITED

Mr. Nuwal is the Chairman and Managing Director of

IndiaNivesh Securities Private Limited and Vice Chairman of

IndiaNivesh Limited. Mr. Nuwal has 18 years of experience

in Capital and Commodity Markets operations, Investment

Management, Taxation, Compliance and Corporate Affairs.

Mr. Nuwal has in-depth understanding of the processes along

with the risks and regulatory compliance affairs associated

with Securities & Commodities market in India. He is a Chartered Accountant & Graduate in

Commerce.

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MR.DALJEET SINGH KOHLI

DIRECTOR / HEAD OF RESEARCH

Daljeet comes with an experience of more than 21 years in Equity

research. His experience spans across economies and many

specific sectors such as chemicals, pharmaceuticals, auto

ancillaries, retail, etc. Daljeet's strengths lie in his ability to relate

global macro- economic situations, political and social factors and

relate them to their micro impact at industrial sector or company

level.

Previously, Daljeet has worked as HOR in an Australian company in its Global equity

research hub in India. He has also led the Equity research teams in other eminent financial

services houses of India. He has been writing reports on sectors/companies regularly. He has

written many a times for alIndiaNivesh all the financial newspapers & business magazines.

He is a regular on various TV shows done by NDTV Profit, CNBC TV 18, CNBC Awaaz,

ET Now, Zee Business & Bloomberg TV.

SENIOUR MANAGEMENT TEAM

Mr. Sunil Avasthi President - Insurance Broking

Mr. C Krishnachander Senior Vice President – South

Mr. Manoj Jain Head - Commodities and Forex Broking

Mr. Sumit Bohra CEO - Insurance Broking

Mr. Govind Saboo Head - Merchant Banking

Mr. Jinesh Doshi Head – Compliance

TABLE NO 2: SENIOUR MANAGEMENT TEAM AT INDIANIVESH

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PRODUCTS OF INDIANIVESH

1) Securities broking

a) Equity- In keeping with its tradition of personalized service, IndiaNivesh Limited provides

Customized Equity Advisory Group to clients based on their profile. Equity Research is an

inherent strength of IndiaNivesh. Converting that research to advice is the main function of

Equity Advisory. The investment ideas identified by the research team are presented and

communicated with conviction to clients by advisory team. IndiaNivesh Equity Advisor

proactively helps you take informed equity investment decisions and build a healthy portfolio

giving the best fit to your investment and trading needs.

b) Derivatives- Futures & options are derivatives, which use equity as their underlying.

Hence Equity Advisory Group (EAG) will also act as advisors for F&O & help take informed

decisions while trading in these derivative instruments. Since derivatives instrument provide

good leverage opportunity, it is a great tool for speculation. Leverage is a double edge sword

for which one requires an equity advisor. The advisors will also help with various strategies

like Bull Spread, Bear Spread, Cover call writing, hedging strategies etc. This is to help to

make better trading returns.

2)Commodities broking- Over the years commodities markets have been experiencing

tremendous progress, which is evident from the fact that the trade in this segment is standing

as the boon for the global economy today. The promising nature of these markets has made

them an attractive investment avenue for investors.

3) Currency futures- A currency future, also known as FX future, is a futures contract to

exchange one currency for another at a specified date in the future at a price (exchange rate)

that is fixed on the purchase date. It offers US dollar-Indian rupee (USD/INR), euro-Indian

rupee (EUR/INR), pound sterling (GBP/INR) and Japanese yen-Indian Rupee. The currency

futures provide an effective tool to hedge against foreign exchange risk for Indian importers,

exporters, corporation and banks.

4) Depositories-a depository is a firm, company or organization which maintains investors

security in electronic form. In the same way IndiaNivesh reflect as a bank to their clients to

maintain their securities. The main function of a depositary is to dematerialize the securities

and enable their clients’ transactions in the book entry form.

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5)IPO and mutual funds- Book Building and Fixed Price Issue are the two types of Initial

Public Offerings (IPOs) through which a public company can raise money in the capital

market. In a book building public issue the bids are received at different

price levels and the demand for the issue is built up over a period of time.

Mutual funds offer the ideal platform to participate in the Equity & Debt market indirectly

through professional management. Mutual funds are becoming the most popular investment

vehicles offering various kinds of schemes with different investment objectives

6) Corporate finance-IndiaNivesh’s Corporate Finance activities are largely advisory in

nature and mostly geared towards meeting the Funding requirements of SME businesses,

from domestic & international markets.

7) Asset Management-The management of a client's investments by a financial services

company, usually an investment bank. The company will invest on behalf of its clients and

give them access to a wide range of traditional and alternative product offerings that would

not be to the average investor.

8) Investment research-A generic term that most commonly refers to the buying and selling

of investments within a portfolio. Investment management can also include banking and

budgeting duties, as well as taxes. But the term most often refers to portfolio management

and the trading of securities to achieve a specific investment objective.

9) Insurance broking-IndiaNivesh is one of the very first brokers in India to be registered

and licensed by IRDA. It was founded in 2003 on set of values and principles that still

governs today. Its mission is to provide personalized services and exceptional products

tailored to match your needs. We know that the world of Insurance can be confusing. They

are here to help you to navigate through it by working along with you. IndiaNivesh will

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METHODOLOGY

Research methodology is the way to systematically solve the research problem. It may be

understood as a science of studying through research. Methods comprise the procedures used

for generating, collecting and evaluating data.

RESEARCH STATEMENT

The research statement of this project is: Security analysis of selected stock with reference to

information technology sector for a period from 1st Jan 2015 to 30th June 2015.

RESEARCH BENEFIT

The Research will help to analyze the stocks the two different ways, namely-Fundamental

analysis and Technical Analysis. Therefore the research carried out will help to look into

various aspects of the company and will help to know which of the company performs best

and gives maximum returns to their stakeholders.

OBJECTIVES OF THE STUDY

To study fundamental and technical analysis of securities.

To evaluate the performance of the company based on fundamental analysis.

To analyze the movement of stock prices using technical analysis.

To evaluate the risk and return of the selected securities.

LIMITATIONS

Data considered only for past few months.

The research will be confined to only 3 securities in the IT sector-INFOSYS, TCS,

WIPRO.

The availability of information in the form of annual reports and price fluctuations of

the companies was a big constraint of the study.

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NEED OF THE STUDY

The capital gains of an investor are on the performance of a particular company’s stock in the

stock market. The stronger the company’s share, the more profit the investor gets. So it is

necessary to ascertain, analyze and interpret the share of various firms in order to know its

position in the market. Investors can make wise investment with the help of this analysis

through this project, it tries to point out the company which ensure maximum return and

minimum risk in IT sector where in investment could be made.

SCOPE OF THE STUDY

The study is to analyze the financial strength and future investment prospective of the key

players from IT sector of the economy. The fundamental analysis is to determine the value of

the shares. The technical analysis is to predict the future stock behavior. Rational investors

always focus on maximum return which bears minimum risk. Hence, for them, well

diversified equity funds are the superlative opportunity available for the investment. .

RESEARCH DESIGN

The research design selected for this project is descriptive. Descriptive studies are usually

the best methods for collecting information that will demonstrate relationships and describe

the world as it exists. This descriptive study is in which the researcher does not interact with

the participant, it include observational studies of prices in the market and studies involving

data collection using existing records on the same.

TYPE OF DATA

Primary data is collected through direct interactions with branch manager, terminal manager

and clients.

Secondary data is completely gathered from published sources like internet and annual

reports of the said companies. Some of the sources are NSE website, iCharts.com and

Wikipedia

SAMLPE SIZE

The sample size for the project is limited to 3 companies i.e. INFOSYS, TCS and WIPRO.

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REVIEW OF LITERATURE

Aber John (1976) in his study found that numerous empirical studies have tested the

profitability of technical trading rules in a variety of markets for the purpose of either

uncovering profitable trading rules or testing market efficiency, or both. The technical

trading studies simulated only one or two trading systems. In these studies, although

transaction costs were deducted to compute net returns of technical trading strategies,

risk was not adequately handled, statistical tests of trading profits and data snooping

problems were often disregarded, and out-of-sample verification along with parameter

(trading rule) optimization were not considered in the testing procedure.

Goodman and John W Peavy (1983) in their study found that there is no way of

making an expected profit by extrapolating past changes in the futures price, by chart

or any other esoteric devices of magic or mathematics. The market quotation already

contains in itself all that can be known about the future and in that sense has

discounted future contingencies as much as is humanly possible.

Philip O Regan (1988) explained that demonstrated that under a noisy rational

expectations model in which current prices do not fully reveal private information

(signals) because of noise (unobserved current supply of a risky asset) in the current

equilibrium price, historical prices (i.e., technical analysis) together with current

prices help traders make more precise inferences about past and present signals than

do current prices alone

Brown and David P (1989) in their article explained that results provide evidence for

a “predictive information link” between non-earnings numbers and future earnings

changes. They indicate that some non-earnings numbers do contain information useful

for predicting future earnings changes that is not contained in either past or current

earnings.

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Edward (1992) found that also extends her test to include a “valuation link” between

the predicted future earnings changes and stock returns during the annual report

dissemination period. She finds evidence that this valuation link does exist. The non-

earnings accounting numbers are therefore useful for predicting both future earnings

and returns.

Demark and Thomas R (1994) explained that the history of technical analysis dates

back to at least the 18th century when the Japanese developed a form of technical

analysis known as candlestick charting techniques. This technique was not introduced

to the West until the 1970s.

Hackel and Kenneth S (1996)found that it has been stated that “the task of research is

to discover what information projects future earnings and, from a financial statement

analysis point of view, what information in the financial statements does this”

Jan R (1998) explained that results show that receivables do provide incremental

information for the prediction of future sales, earnings and profit margins.

Squires (2000) found that study the value relevance of capital expenditures for

explaining returns beyond the use of current earnings. Their findings show that

changes in the level of capital expenditure were strongly and positively related to

excess returns. This exhibits the fact that current capital expenditure has good news

for the future performance of a firm and supports the use of capital expenditures for

predicting future earnings or returns.

Thomas Robinson (2002) in their study explained that Fundamental analysis involves

assessing a firm’s equity value based on the analysis of published financial statements

and other information without reference to the prices at which a firm’s securities trade

in the capital markets.

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Palepu and Krishna (2004) found that technical analysis has been extensively used

among market participants such as brokers, dealers, fund managers, speculators, and

individual investors in the financial industry. 3 Numerous surveys indicate that

practitioners attribute a significant role to technical analysis. For example, futures

fund managers rely heavily on computer-guided technical trading systems, and about

30% to 40% of foreign exchange traders around the world believe that technical

analysis is the major factor determining exchange rates in the short-run up to six

months.

Prasanna Chandra (2005) explained that Active portfolio management is commonly

partitioned into two types of activities: market timing, which requires forecasts of

broad-based market movements, and security analysis, which requires the selection of

individual stocks that are perceived to be underpriced by the market.

V K Bhalla (2006) explained that security analysis Psychological and Institutional

Forces and the Determination of Exchange Rates, Neoclassical economists, by their

own admission, have had a terrible time explaining foreign-currency prices. In large

part, this is due to the fact that they assume "economic" behavior to be independent of

social and cultural influences. But markets are social institutions. They "organize and

guide human social behavior through sanctions (formal and informal, negative and

positive), mores, norms, status, and shared worldviews". Consequently, explaining

economic exchange requires an understanding of the behaviour associated with the

subculture of those in question.

Dhanesh Kumar Khatri (2006) in their article found that a leading technical analyst,

provides a more specific definition: “The technical approach to investment is

essentially a reflection of the idea that prices move in trends that are determined by

the changing attitudes of investors toward a variety of economic, monetary, political,

and psychological forces. The art of technical analysis, for it is an art, is to identify a

trend reversal at a relatively early stage and ride on that trend until the weight of the

evidence shows or proves that the trend has reversed.”

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Stephan H Penman (2007) in his study found that Technical analysis includes a

variety of forecasting techniques such as chart analysis, pattern recognit ion analysis,

seasonality and cycle analysis, and computerized technical trading systems.However,

academic research on technical analysis is generally limited to techniques that can be

expressed in mathematical forms, namely technical trading systems, although some

recent studies attempt to test visual chart patterns using pattern recognition

algorithms. A technical trading system consists of a set of trading rules that result

from parameterizations, and each trading rule generates trading signals (long, short, or

out of market) according to their parameter values. Several popular technical trading

systems are moving averages, channels, and momentum oscillators.

Ran Canetti & IBM Research (2008) explained that Composable Formal Security

Analysis, a security property of a protocol is composable if it remains intact even

when the protocol runs alongside other protocols in the same system. We describe a

method for asserting composable security properties, and demonstrate its usefulness.

In particular, we show how this method can be used to provide security analysis that

is formal, relatively simple, and still does not make un-justified abstractions of the

underlying cryptographic algorithms in use. It can also greatly enhance the feasibility

of automated security analysis of systems of realistic size.

Prasanna Chandra (2008) in his study he explained that Motivated by an obvious gap

between the widespread use of Bloomberg terminals in the finance industry and the

scant resources available to an instructor on how to incorporate the available

information through the terminal into a finance course, we illustrate our experience

using the terminal in an equity-focused security analysis and portfolio management

course. Our goal is to enable students inexperienced with the terminal to prepare an

analyst report. We identify the most significant challenges we face and provide the

corresponding solutions. Our results are also applicable to other finance courses

including financial analysis, investments, and student managed investment fund.

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INDUSTRY ANALYSIS OF INFORMATION TECHNOLOGY SECTOR

INTRODUCTION

India is the world's largest sourcing destination for the information technology

industry, accounting for approximately 52 per cent of the US$ 124-130 billion market.

The industry employs about 10 million Indians and continues to contribute

significantly to the social and economic transformation in the country.

The IT industry has not only transformed India's image on the global platform, but has

also fuelled economic growth by energizing the higher education sector especially in

engineering and computer science. India's cost competitiveness in providing IT

services, which is approximately 3-4 times cheaper than the US, continues to be its

unique selling proposition in the global sourcing market.

India has emerged as the fastest growing market for Dell globally and the third largest

market in terms of revenue after the US and China, said Mr Alok Ohrie, Managing

Director, Dell India.

MARKET SIZE

India, the fourth largest base for young businesses in the world and home to 3,000 tech

start-ups, is set to increase its base to 11,500 tech start-ups by 2020, as per a report by

Nasscom and Zinnov Management Consulting Pvt Ltd.

India’s internet economy is expected to touch Rs 10 trillion (US$ 161.26 billion) by

2018, accounting for 5 per cent of the country’s gross domestic product , according to a

report by the Boston Consulting Group and Internet and Mobile Association of India. In

December 2014, India’s internet user base reached 300 million, the third largest in the

world, while the number of social media users and smart phones grew to 100 million.

Public cloud services revenue in India is expected to reach US$ 838 million in 2015,

growing by 33 per cent year-on-year, as per a report by Gartner Inc. In yet another

Gartner report, the public cloud market alone in the country was estimated to treble to

US$ 1.9 billion by 2018 from US$ 638 million in 2014. The increased internet

penetration and rise of e-commerce are the main reasons for continued growth of the data

centre co-location and hosting market in India.

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INVESTMENTS

Indian IT's core competencies and strengths have placed it on the international canvas,

attracting investments from major countries. The computer software and hardware

sector in India attracted cumulative foreign direct investment (FDI) inflows worth

US$ 13,788.56 million between April 2000 and December 2014, according to data

released by the Department of Industrial Policy and Promotion (DIPP).

The private equity deals increased the number of mergers and acquisitions (M&A)

especially in the e-commerce space in 2014. The IT space, including e-commerce,

witnessed 240 deals worth US$ 3.8 billion in 2014, as per data from Dealogic.

India also saw a ten-fold increase in the venture funding that went into internet

companies in 2014 as compared to 2013. More than 800 internet start-ups got funding

in 2014 as compared to 200 in 2012, said Rajan Anandan, Managing Director, Google

India Pvt Ltd and Chairman, IAMA.

Most large technology companies may have so far focused primarily on bigger

enterprises, but a report from market research firm Zinnov highlighted that the small

and medium businesses will present a lucrative opportunity worth US$ 11.6 billion in

2015 and US$ 25.8 billion in 2020. Moreover, India has nearly 51 million such

businesses of which 12 million have a high degree of technology influence and are

looking to adopt newer IT products, as per the report.

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Some of the major investments in the Indian IT sector are as follows:

Wipro has won a US$ 400 million, multi-year IT infrastructure management contract

from Swiss engineering giant ABB, making it the largest deal for the technology

company.

Tech Mahindra has signed a definitive agreement to acquire Geneva-based SOFGEN

Holdings. The acquisition is expected to strengthen Tech Mahindra’s presence in the

banking segment.

Tata Consultancy Services (TCS) plans to set up offshore development centres in

India for Japanese clients in a bid to boost the company's margin in the market.

Reliance is building a 650,000 square feet (sq ft) data centre in India—its 10th data

centre in the country—with a combined capacity of about 1 million sq ft and an

overall investment of US$ 200 million.

Intel Corp plans to invest about US$ 62 million in 16 technology companies, working

on wearable, data analytics and the Internet of Things (IoT), in 2015 through its

investment arm Intel Capital. The Indian IoT industry is expected be worth US$ 15

billion and to connect 28 billion devices to the internet by 2020.

Keiretsu Forum, a global angel investor network, has forayed into India by opening a

chapter in Chennai. With this, the Silicon Valley-based network will have 34 chapters

across three continents.

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GOVERNMENT INITIATIVES

The adoption of key technologies across sectors spurred by the 'Digital India Initiative' could

help boost India's gross domestic product (GDP) by US$ 550 billion to US$ 1 trillion by

2025, as per research firm McKinsey.

Some of the major initiatives taken by the government to promote ITsector in India are as

follows:

India and the United States (US) have agreed to jointly explore opportunities for

collaboration on implementing India's ambitious Rs 1.13 trillion (US$ 18.22 billion)

‘Digital India Initiative’. The two sides also agreed to hold the US-India Information

and Communication Technology (ICT) Working Group in India later this year.

India and Japan held a Joint Working Group conference for Comprehensive

Cooperation Framework for ICT. India also offered Japan to manufacture ICT

equipment in India.

The Government of Telangana began construction of a technology incubator in

Hyderabad—dubbed T-Hub—to reposition the city as a technology destination. The

state government is initially investing Rs 35 crore (US$ 5.64 million) to set up a

60,000 sq ft space, labeled the largest start-up incubator in the county, at the campus

of International Institute of Information Technology-Hyderabad (IIIT-H). Once

completed, the project is proposed to be the world’s biggest start-up incubator

housing 1,000 start-ups.

Bengaluru has received US$ 2.6 billion in venture capital (VC) investments in 2014,

making it the fifth largest recipient globally during the year, an indication of the

growing vibrancy of its startup ecosystem. Among countries, India received the third

highest VC funding worth US$ 4.6 billion.

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CONTRIBUTION OF IT SECTOR IN INDIAN ECONOMY

FIGURE NO 7: CONTRIBUTION OF IT SECTOR IN INDIAN ECONOMY

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IMPACT OT IT SECTOR ON INDINAN ECONOMY

FIGURE NO 8: IMPACT OF IT SECTOR

•8%of Indian GDP

•23-25%of Indian Exports

•7%of India's total FDI share

Contribution to Indian Economy

•50%of the workforse from non Tier-I cities

•30-35% women employees

Empowering the Diverse Human Assets

•78% of the patents filed over last decade

•Growing Reserch and development spend

Creating Onnovative Platform

•Presence in 75 countries with 580delivery centre

•100000 foreign national employed

•380 cross border acquisitions since 2010

Putting India on Globle Map

•Contributing state GDP

•Enhancing Education System

•Employment generation

•Infrastructure Creation

Regional development

•Improved access and Delivery services ,Egovernance solutions,CSR activities

Social Resonsibilty and Inclusive

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SWOT ANALYSIS OF IT SECTOR

STRENGTHS

Highly skilled, English speaking manpower.

Cheap workforce than their Western counterparts. According to NASSCOM, the

wages difference is as high as 70-80 percent when compared to other Western

counterparts.

Lower attrition rates than on the West.

Dedicated workforce aiming at making a long term career in the area.

Round-the clock benefit for Western companies due to the huge time difference.

Lower response time with efficient and effective service.

WEAKNESSES

Recent months have seen a rise in the level of attrition rates among IT workers who

are quitting their jobs to pursue higher studies. Of late workers have shown a

tendency not to pursue IT as a full-time career.

The cost of telecom and network infrastructure is much higher in India than in the US.

OPPORTUNITIES

To capitalize and Ancash on the already established image of India being portrayed as

the most favored IT destination in the world.

Opportunities for Indian companies to work closely with western Governments and

assure their concerns and issues.

India can be branded as a quality IT destination rather than a low-cost destination.

THREATS

The anti-outsourcing legislation in the US state of New Jersey. Three more states in

the US are planning legislation against outsourcing.

Workers in British Telecom have protested against outsourcing of work to Indian

BPO companies.

Other IT destinations such as China, Philippines and South Africa could have an edge

on the cost factor.

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COMPANY ANALYSIS

INFOSYS

INFOSYS is a Bangalore-based Information Technology MNC which started the IT

revolution in India that transformed Bangalore into the “Silicon Valley of India”.

INFOSYS is a household name in India that is highly respected by employees and the

general public for its strong value system as a corporation.

INFOSYS defines designs and delivers technology-enabled business solutions for

Global 2000 companies and operates in 64 countries across the world.

INFOSYS leadership made a strategic decision to return to an increasing return to

scale where the growth rate of revenues and margins are not limited by the growth

rate of input factors like human capital or number of client acquisitions.

Technology-based automation of different aspects of IT solutions development and

maintenance has helped INFOSYS battle diminishing return to scale. Starting with 7

founders and $250 in 1981, the current size of over 140,000+ employees and $6.6

Billion revenues demon.

INFOSYS is the second largest IT major in India by revenues and size. TCS,

Cognizant, Wipro, Mahindra Satyam, etc. are some of the Indian competitors of

INFOSYS whereas Accenture, IBM, Capgemini, etc. are the major international

competitors of INFOSYS in the software services sector. Apart from these, thousands

of other small and medium software companies compete with INFOSYS in different

segments for micro chunks of the market.

INFOSYS is a “knowledge enterprise” which relies primarily on its human capital to

deliver quality services to customers. labour is the Factor Market most critical for its

increased productivity and leadership.

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INFOSYS has always had the best employee training and leadership fostering

programs in the industry. It has invested heavily in state-of-the-art training facilities

where 14,000 employees can be trained simultaneously.

It has also established the Infosys Leadership Institute (ILI) which is focused on

breeding the next 3-tiers of leadership. This is comparable with the efforts of world

leaders like GE and IBM in leadership development. It was for these reasons that

Boston Consulting Group named INFOSYS among the Top-10 Value Creators

Technology Companies where it specifically cited that INFOSYS is among the few

companies which align their talent for global advantage. It also places heavy thrust

on the leadership vision and talent management.

INFOSYS has already launched an initiative in 2010 which is called the Talent 3.0

that is aimed at revolutionizing the way talent is spotted, recruited and retained in the

company with ample opportunities for utilizing their full capabilities on the job. Such

initiatives and investments in infrastructure and capital spending on talent

management will place INFOSYS in a leadership position in the long run.

In the short run of 3 years i.e. 2012–2015 it will still be struggling with the industry

specific problems of high talent attrition, increased talent acquisition costs and loss of

knowledge capital due to high human capital turnover.

INFOSYS continued to invest heavily in building up its human capital pool by

recruiting thousands even through the recessionary period. This helped the company

to be better prepared than its competitors when the recessionary clouds lifted and

there was an increased IT spending by businesses across the world.

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WIPRO

Wipro Limited (Western India Products Limited) is an Indian multinational IT

consulting and System Integration Services Company headquartered in Bangalore,

India. Wipro Limited is a global company provider of comprehensive IT solutions and

services, including Systems Integration, Consulting, Information Systems

outsourcing, IT-enabled services, and R&D services.

As of March 2015, the company has 158,200 employees servicing over 900 of the

Fortune 1000 corporations with a presence in 67 countries. On 31 March 2015,

its market capitalization was approximately $ 35 Billion, making it one of India's

largest publicly traded companies and seventh largest IT Services firm in the World.

To focus on core IT Business, it demerged its non-IT businesses into a separate

company named Wipro Enterprises Limited with effect from 31 March 2013. The

demerged companies are consumer care, lighting, healthcare and infrastructure

engineering which contributed approximately 10% of the revenues of Wipro Limited

in previous financial year.

In Later Part of 2014, Wipro's largest deal in its five decade of history and probably

one of the largest deals in the history of the Information Technology services industry

was the 10 year $ 1.2 billion contract with ATCO, a Canadian Energy & Utilities

corporation based out of Calgary, Alberta. The Deal was spearheaded by Rishad

Premji along with Canadian Team.

It is also a value added reseller of desktops, servers, notebooks, storage products,

networking solutions and packaged software for international brands.

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Wipro entered into the technology business in 1981 and has over 140,000 employees

and clients across 54 countries today. Revenues stood at $6.2 billion for the year

ended 31 March 2013, with a repeat business ratio of over 95%.

The business model at Wipro Technologies Ltd is an industry-aligned customer-

facing model which gives greater understanding of customers’ businesses to build

industry specific solutions.

Wipro Limited joined hands with a global telecom major KPN (Royal Dutch telecom)

to form a joint venture company "Wipro Net Limited" to provide internet services in

India. The year 2000 was the year Wipro launched solutions for convergent networks

targeted at Internet and telecom solution providers in the names of Wipro OSS Smart

and Wipro WAP Smart. In the same year, Wipro got listed on New York Stock

Exchange. In early 2000 Wipro Vice Chairman Vivek Paul and Azim Premji

approached KPMG Consulting Vice Chairman Keyur Patel and CEO Rand Blazer to

form a mega-outsourcing joint venture between the two organizations.

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TATA CONSULTANCY SERVICES (TCS)

Tata Consultancy Services Limited (TCS) is an Indian multinational information

technology (IT) service, consulting and business Solutions Company headquartered

in Mumbai, Maharashtra. TCS operates in 46 countries.

It is a subsidiary of the Tata Group and is listed on the Bombay Stock Exchange and

the National Stock Exchange of India. TCS is one of the largest Indian companies

by market capitalization ($80 billion) and is the largest India-based IT services

company by 2013 revenues.

TCS is now placed among the ‘Big 4’ most valuable IT services brands

worldwide. In 2013, TCS is ranked 57th overall in the Forbes World's Most

Innovative Companies ranking, making it both the highest-ranked IT services

company and the first Indian company. It is the world's 10th largest IT services

provider, measured by the revenues.

TCS established the first software research centre in India, the Tata Research

Development and Design Centre, in Pune, India in 1981. TRDDC undertakes research

in Software engineering, Process engineering and systems research.

In 2007, TCS launched its co-innovation network, a network of innovation labs, start

up alliances, university research departments, and venture capitalists.

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TOOLS AND TECHNIQUES OF FUNDAMENTAL ANALYSIS:

All data stated below is as on 31st march 2015

1) EARNING PER SHARE (EPS):

The portion of a company's profit allocated to each outstanding share of common

stock. Earnings per share serve as an indicator of a company's profitability.

Calculated as:

Net income

Earnings per share = -------------------------------------------

No. per share

PARTICULARS.

INFOSYS

WIPRO

TCS

NET INCOME

(CR)

12164

8193

19256.96

O/S SHARES

( LACS)

11484.72

24690.43

19587.28

EPS

(Rs.)

105.91

33.18

98.31

TABLE 3: SHOWING EARNING PER SHARE

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GRAPH 1: EARNING PER SHARE

INTERPRETATION:

EPS helps to determine the profitability position of the company. As per the

prevailing consideration in the market, higher EPS IS better. Therefore, from the

above graphs it is clear that Infosys is a better investment option with Rs.105.91, as

compared to Wipro and TCS with Rs.33.18 and Rs.98.31 respectively.

105.91

33.18

98.31

0

20

40

60

80

100

120

INFOSYS WIPRO TCS

Earning Per Share

Earning Per Share

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2) PRICE TO EARNING RATIO:

A valuation ratio of a company's current share price compared to its per-share earnings.

Calculated as:

Market value per share

P/E Ratio = ------------------------ -----------------

EPS

PARTICULARS

INFOSYS

WIPRO

TCS

MARKET VALUE

1108.3

541.40

2466.65

EPS

105.91

33.18

98.31

P/E RATIO

10.46

16.31

25.09

TABLE 4: SHOWING PRICE TO EARNING RATIO

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GRAPH 2: PRICE TO EARNING RATIO

INTERPRETATION:

P/E ratio shows how much a rupee of investment can earn in return. As per the

prevailing standards of the industry, lower P/E ratio is considered a better option.

According to the graph above, Infosys has a P/E of 10.46 similarly Wipro and TCS

have a P/E of 16.31 and 25 respectively, therefore Infosys and Wipro can be

considered better option.

10.46

16.31

25

0

5

10

15

20

25

30

INFOSYS WIPRO TCS

P/E RATIO

P/E RATIO

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3) PRICE TO SALES RATIO:

A ratio for valuing a stock relative to its own past performance, other companies or the

market itself. Price to sales is calculated by dividing a stock's current price by its revenue per

share for the trailing 12 months:

Calculated as:

Share price

P/S Ratio = -----------------------------------------------

Revenue per share

The ratio can also be referred to as a stock's "PSR".

Particulars

INFOSYS

WIPRO

TCS

Share price

1108.3

541.40

2466.65

Revenues per share

411.85

166.91

375.64

P/s ratio

2.69

3.24

6.56

TABLE 5: SHOWING PRICE TO SALES RATIO

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GRAPH 3: SHOWING PRICE TO SALES RATIO

INTERPRETATION:

P/S shows the price one pays to earn the revenue. As per the generally accepted standards,

lower P/S is better as it shows the revenue earned on a specific amount invested in the stock.

From the above graph, Infosys has the lowest P/S of 2.69 among the three companies.

2.69

3.24

6.56

0

1

2

3

4

5

6

7

INFOSYS WIPRO TCS

P/S RATIO

P/S RATIO

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4) BOOK VALUE:

The net asset value of a company, calculated by total assets minus intangible assets

(patents, goodwill) and liabilities.

Calculated as:

Total assets – intangible assets & liability

Book value = ----------------------------------------------------------------

Number of shares

Calculations

Particulars

INFOSYS

WIPRO

TCS

Total assets - intangible asset &

liabilities (in cr)

24034.07 34615.98 31564.78

No. of shares (in lacs)

11484.72 24690.43 19587.28

Book value

209.27 140.20 161.14

TABLE 6: SHOWING BOOK VALUE

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GRAPH 4: SHOWING BOOK VALUE

INTERPRETATION:

Book value of a stock is the amount realized per share in case of liquidation of the

company. Any shareholder is expectant to earn a higher amount on the shares

purchased. Thus, a higher book value is considered the best investment. According to

the above chart Infosys has the highest book value per share of Rs. 209.27

209.27

140.2

161.14

0

50

100

150

200

250

INFOSYS WIPRO TCS

BOOK VALUE

BOOK VALUE

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5) PRICE TO BOOK RATIO:

A ratio used to compare a stock's market value to its book value. It is calculated by dividing

the current closing price of the stock by the latest quarter's book value per share.

Also known as the "price-equity ratio"

Calculated as:

Stockprice

Calculated as:-P/B Ratio = ------------------------------------------

Book value

Calculations

Particulars

INFOSYS

WIPRO

TCS

Stock price

1108.3

541.40

2466.65

Book value

209.27

140.20

161.14

P/B ratio

5.09

3.86

15.3

TABLE 7: PRICE TO BOOK VALUE RATIO

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GRAPH5: SHOWING PRICE TO BOOK VALUE RATIO

INTERPRETATION:

A lower P/B ratio could mean that the stock is undervalued. However, it could also

mean that something is fundamentally wrong with the company. As with most ratios,

be aware that this varies by industry. This ratio also gives some idea of whether you're

paying too much for what would be left if the company went bankrupt immediately.

Therefore, a lower P/B ratio is better. From above we can say that Wipro has a better

P/B ratio of 3.86 among the three.

5.09 3.86

15.3

0

2

4

6

8

10

12

14

16

18

INFOSYS WIPRO TCS

P/B RATIO

P/B RATIO

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6) DIVIDEND PAYOUT RATIO:

The portion of EPS which is being declared as actual dividend

Calculated as:

Actual dividend per share

Dividend payout ratio= --------------------------------------------------

Earnings per share

Calculated as:-

PARTICULARS

INFOSYS

WIPRO

TCS

DIVIDEND PER SHARE 59.50 12 79

EPS 105.91 33.18 98.31

DPR 0.56 0.36 0.80

TABLE 8: SHOWING DPR FOR YEAR ENDED 31.3.15

PARTICULARS INFOSYS WIPRO TCS

DIVIDEND PER SHARE 63 8 32

EPS 178.40 29.95 94.17

DPR 0.35 0.26 0.33

TABLE8.1: SHOWING DPR FOR YEAR ENDED 31.3.14

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GRAPH 6: DIVIDEND PAYOUT RATIO

INTERRETATION:

A reduction in dividends paid is looked poorly upon by investors, and the stock price

usually depreciates as investors seek other dividend-paying stocks. A stable dividend

payout ratio indicates a solid dividend policy by the company's board of directors.

From the above chart we can say that wipro company with most stable dividend

payout ratio for two consecutive years.

0.56

0.36

0.8

0.35

0.26

0.33

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

INFOSYS WIPRO TCS

Mar-15

Mar-14

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7) DIVIDEND YIELD:

A financial ratio that shows how much a company pays out in dividends each year

relative to its share price. In the absence of any capital gains, the dividend yield is the

return on investment for a stock. Dividend yield is calculated as follows:

Calculated as:

Annual dividend per share

Dividend yield = -------------------------------------------------

Price per share

PARTICULARS

INFOSYS

WIPRO

TCS

DIVIDEND PER

SHARE

59.50

12

79

PRICE PER SHARE

1108.46

541.40

2466.65

DIVIDEND YIELD

5.36%

2.21%

3.20%

TABLE 9: SHOWING DIVIDEND YIELD RATIO

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GRAPH 7: SHOWING DIVIDEND YIELD RATIO

INTERPRETATION:

The company with the highest dividend yield adds to the income of the shareholder.

From above, we can see that Infosys pays a 5.36% dividend of share price which is

highest among the three. Thus, Infosys is preferable.

5.36%

2.21%

3.20%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

INFOSYS WIPRO TCS

DIVIDEND YEILD

DIVIDEND YEILD

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RISK AND RETURN

GRAPH NO 8: BETA AND RETURN

INTERPRETATION:

The graph shows that the beta of Infosys is 0.70, Wipro is 0.66, and TCS is 0.62.

Beta less than 1 is considered riskier but here the entire three betas are less than one.

So the one which is closer to 1 is can be considered less risky. Therefore Infosys is preferred.

The Yearly return of Infosys and TCS can be considered better than Wipro.

Therefore Infosys and TCS can be preferred.

0

0.5

1

1.5

2

2.5

3

INFOSYS WIPRO TCS

NAME OF COMPANY

Beta

Return

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TECHNICAL ANALYSIS

INFOSYS:

GRAPH 9: INFOSYS TECHNICAL

INTERPRETATION-INFOSYS

10 day moving average is breaking down 20day SMA further short term and medium term

moving average is broken by long term moving average. This indicates major reversal of

trend downside; therefore we can see stock moving down 1100 to level of around 980-1000.

RSI is marching below 50 and facing difficulties in crossing 50 marks above .So I

recommend going short on the stock at level of 1000 for a downtrend target of 960.

A large buy and sell in volume indicates trend reversal. In the above chart there is trend

reversal 2 times.

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WIPRO

GRAPH 10: WIPRO TECHNICAL

INTERPRETATION-WIPRO

The graph is showing a mixed performance. The gap which is formed indicates a reverse in

trend and the trend goes upwards. The movement is again coming down in inverted “U”

shape.

The movement long term SMA is cutting 10 day SMA and 20 day SMA .It has a steep fall

down in the stock value.

The RSI has gone down below 30 when there was steep fall in price. On the other side it can

be seen that RSI is not stable at any point of time.

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TCS

GRAPH 11: TCS TECHNICAL

INTERPRETATION-TCS

The stock has strong resistance at level close to around 2700.it has been successful to break

the resistance only once. Similarly, 2400 acts as a support level for the stock. The stock has

tried to touch the level twice but unable to break it. It indicates that buyers are very active at

level close to 2400.

The stock has moved to consolidation mode for short term. So I recommend a wait and watch

for further indication of a specific trend.

Also RSI is unable to cross level of 70 and 30 and is trading at level of 50.

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FINDINGS

FUNDAMENTAL ANALYSIS

The most important aspect discovered from this project work is that an in depth

analysis of the stocks is involved in the decision making of which stocks to

buy.

Given below is a table showing all the tools in a gist to give clearer and better

picture of the analysis.

RATIO’S INFOSYS WIPRO TCS COMPANY

EPS 105.91 33.18 98.31 INFOSYS

P/E RATIO 10.46 16.31 25.09 INFOSYS

PRICE TO

SALES RATIO

2.69 3.24 6.56 INFOSYS

BOOK VALUE 209.27 140.20 161.14 INFOSYS

PRICE TO

BOOK VALUE

RATIO

5.09 3.86 16.3 WIPRO

DIVIDENT

PAYOUT

RATIO

0.35(2014)

0.56(2015)

0.26(2014)

0.36(2015)

0.33(2014)

0.80(2015)

STABILITY WIPRO/INFOSYS

DIVIDEND

YEILD RATIO

5.36% 2.21% 3.20% INFOSYS

TABLE 10: COMPARATIVE ANALYSIS OF STOCK

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According to above chart we can see that INFOSYS has most of strong ratios.

Therefore we can take INFOSYS to invest as a priority,

Whereas, WIPRO has strong price to book value ratio and a stable dividend payout

ratio.

All in all TCS does not have good reflection in any of the case, so it is not a good

option to invest.

After analyzing these stocks we can see that the best investment option in the priority

order from amongst the chosen samples is:

1) INFOSYS

2) WIPRO

3) TCS

TECHNICAL ANALYSIS

Technical analysis within a short span is difficult to analyze.

INFOSYS

The candle stick chart does not show any particular trend. The simple moving average

is mostly showing a down trend where all the averages are breaking each other.

There are variations in the stock prices and no stability is there

The RSI does not give any suggestion to hold, buy or sell the stock

WIPRO

The candle stick charts is mostly in uptrend .It had taken a trend reverse but again

rose up to an extent.

The averages are moving as per the movement of the stock.

The RSI is showing a buy signal.

TCS

The candle stick chart does not show any particular trend. But it has support and

resistance, therefore it is wait and watch situation.

Averages are colliding with each other, so no clear prediction can be made.

RSI shows the hold signal.

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CONCLUSION

The above project is the security analysis of stock of IT sector, namely, Infosys,

Wipro and TCS with the help of various tools and techniques.

The project helped me gain more knowledge about the useful tools of analysis and its

application. It helped in learning the use of ratios in analyzing the stocks and

performance of the company along with the candle stick charts and tools of technical

analysis.

Moreover, this project also helped me in understanding the mechanism involved in

the decision making of the investment in stocks. Through this project I got to know

more about the relevance of fundamental analysis and technical analysis in investment

decision. Thus, this was an important and most useful project work.

It has also helped in knowing about the IT sector, its performance, and impact on

economy. Contribution in economic development etc.

SUGGESSIONS

Investors must take into account various factors like government of India budget,

company performance, political and social events, climatic conditions etc. before any

decision is made.

The scrip should also be fundamentally good. Financial market reflects a country’s

economic growth as they supply necessary financial inputs for the development of the

country.

Technical analysis gives investor a better understanding of the stocks and also gives them

right direction to go on further to buy or sell the stocks. Therefore, the small investors and

traders should not blindly make an investment rather they should analyze using the

various tools to check if the scrip is technically strong.

Therefore, it’s advisable for a trader or investor to make technical analysis of stocks for

better return of investments.

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BIBLIOGRAPHY:

Books referred:

1) “Security analysis and portfolio management”, 2nd Edition 2013, Punithavathy Pandian.

2) “Technical Analysis Trading”, CNBC, network 18.

WEBSITES REFERRED:

1) http://www.icharts.in

2) http:// www.wikipedia.com

3) http://www.moneycontrol.com

4) http:// www.nseindia.com

5) http://www.investopedia.com

6) http://www.indianivesh.in