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EXECUTIVE SUMMARY
EQUITY ANALYSIS is the systematic study of the performance of companies instock market with help of fundamental analysis and technical analysis. Equity analysis consists of fundamental analysis & technical analysis. While decision ininvestment of shares should be base on actual movement of shares price measuredmore in money & percentage term & nothing else.
In equity analysis, calculations are based on FACTS & not on HOPE. The subject ofequity analysis, i.e. the to attempt to determine future share price movement with thehelp of RATIO ANALYSIS, STUDY OF GRAPH. Equity analysis does not discusshow to buy & sell shares, but does discuss the methods, which enables the investor toarriving at buying & selling decision.
The Technical Approach to investment is essentially a reflection of the idea thatprices moves in a trend that are determined by the changing attitude of investor’stoward a variety of economic, monetary, political and psychological forces. The art oftechnical analysis, for it is an art, is to identify a trend reversal at a relatively earlystage and ride on that trend until the weight of the evidence shows or proves the trendhas reversed.
So the basic aim of this study is to understand the functioning of Commodity Market in India in relation to various exchanges that are available for trading under this market and current scenario of commodity market in India along with rules and regulations under this market. The study also pertains to understand the rationale or behavior of investors towards commodity market which basically aims to understand the perception of retail investors in comparison to other markets through a means of structured questionnaire.
INTRODUCTION:BSE AND NSE`
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a richheritage. Popularly known as “BSE”, it was established as “ The Native Share &Stock BrokersAssociation ” in 1875. It is the first stock exchange in country to obtainpermanentrecognition in 1956 from the Government of India under the SecuritiesContracts(Regulation) Act, 1956. The Exchange’s pivotal and pre-eminent role in thedevelopment of the Indian capital market is widely recognized and its index,SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), theExchange is now a demutualised and orporative entity incorporated under theprovisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation andDemutualization) Scheme, 2005 notified by the Securities and Exchange Board ofIndia (SEBI).
With demutualization, the trading rights and ownership rights have been de linkedeffectively addressing concerns regarding perceived and real conflicts of interest. TheExchange is professionally managed under the overall direction of the Board ofDirectors. The Board comprises eminent professionals. Representatives of TradingMembers and the Managing Director of the Exchange. The Board is inclusive and isdesigned to benefit from the participation of market intermediaries.
The Exchange has a nation-wide reach with a presence in 417 cities and towns ofIndia. The systems and processes of the Exchange are designed to safeguard marketintegrity and enhance transparency in operations. During the year 2004-2005, thetrading volumes on the Exchange showed robust growth.
The Exchange provides an efficient and transparent market for trading in equity, debtinstruments and derivatives. The BSE On Line Trading System (BOLT) is aproprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillanceand clearing and settlement functions of the Exchange are ISO 9001:2000 certified.
SENSEX – THE BAROMETER OF INDIAN CAPITAL MARKETS
For the premier Stock Exchange that pioneered the stock broking activity in Indian,128 years of experience seems to be a proud milestone. A lot has changed since 1875When 318 persons became members of what today is called “The Stock Exchange,Mumbai” by paying a princely amount of Re1. Till the decade of eighties, there wasno scale to measure the ups and downs in the Indian stock market. The StockExchange, Mumbai (BSE) in 1986 came out with a stock index that subsequentlybecame the barometer of the Indian stock market.
First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing asample of large, liquid and representative companies. The base year of SENSEX is1978-79 and the base value is 100. The index is widely reported in both domestic andinternational markets through print as well as electronic media. The entry and exit ofany specific stock depends on the market capitalization of the top 30 companies in themarket and are from different sectors.
NATIONAL STOCK EXCHANGE
The National Stock Exchange (NSE) is India’s leading stock exchange coveringvarious cities and towns across the country. NSE was set up by leading institutions toprovide a modern, fully automated screen-based trading system with national reach.The Exchange has brought about unparalleled transparency, speed & efficiency,safety and market integrity. It has set up facilities and procedures.
NSE has played a catalytic role in reforming the Indian securities market in terms ofmicrostructure, market practices and trading volumes. The market today uses state-ofartinformation technology to provide an efficient and transparent trading, clearingand settlement mechanism, and has witnessed several innovations in products &services viz. demutualization of stock exchange governance, screen based trading, Professionalisation of trading members, fine-tuned risk management systems,emergence of clearing corporations to assume counter party risks, market of debt and derivative instruments and intensive use of information technology. IDBI & other financial institution with paid equity capital of Rs 25 cores set up NSE. It started operation in Wholesale debt market in June 1994 & in equity, in Nov 1994.
OBJECTIVE
It was good opportunity to familiarize myself with the stock market i.e. the capital market & their co-relation with economical environment through “ EQUITY RESEARCH”. The
analysis of equity gives me the opportunity to understand thoroughly this behavioural pattern’s of different equity & overall capital market.
The main objective of the project research is as follows:
1. To Study the equity analysis and obtain the knowledge of equity market
2. To Study the present behavior & predicting the future behavior of equity in
stock market.
3. Obtain the knowledge about how to select the companies for investment.
Company brief introduction
SS&C GlobeOp, a division of SS&C Technologies is one of the world’s largestadministrators with core competencies in private equity, hedge funds, funds of funds and managed accounts. SS&C has been providing outsourcing and fund administration services since 1995. Key differentiators for our business are significant staff expertise and high employee retention rates, ownership of underlying technology and impeccable client service. Our growth is largely driven by referrals from satisfied clients.
SS&C History
SS&C Technologies, Inc. (SS&C) was founded in 1986 by William C. Stone, who has remained the company's CEO and Chairman of the Board since inception. SS&C first went public in 1996. In November 2005, the company was acquired by entities affiliated with The Carlyle Group and was taken private. On March 31, 2010, SS&C Technologies Holdings, Inc. began trading on the NASDAQ Global Select Market under the ticker symbol "SSNC".
SS&C employs a disciplined and highly focused acquisition strategy to increase the breadth and depth of its products and services, and capitalize on evolving market opportunities. Since 1995, SS&C has acquired 43 businesses with products, services and technologies in existing or complementary vertical markets. SS&C has more than 4,600 employees worldwide, located in offices throughout North America, Europe, Asia, and Australia.
Our Solutions
SS&C GlobeOp is the 4th largest fund administrator (eVestment survey Q4 2012) with US$510 billion in alternative assets under administration in North America. SS&C’s independent fund administration services for hedge funds will assist fund managers with the day-to-day administrative duties associated with running their hedge fund such as:
• Fund accounting
• Investor relations
• Risk analytics
• Net asset value of the fund
• Middle office services
• Management and financial reporting
A Director leads each team and remains the primary contact to ensure that all client needs are met and exceeded. Our team approach ensures clear communication among all SS&C’s resources and provides each client with the highest level of customized service.
Middle and Back Office
• Security master and static data processing
• derived from independent sources
• Connectivity with various front-office and
• order management systems
• Daily and monthly trade, cash and position
• reconciliations, and break resolution
• Settlement processing, fails reporting
• OTC processing
• Loans processing
• Collateral management
• Independent valuations and data
• enrichment
• Daily portfolio P&L statements
• Exposure calculations and reports
• Corporate action support
Valuation control
• Multiple data and pricing vendors
• Broad product coverage
• Exception-based reporting
• Independent asset valuation
• Transparency for buy-side stakeholders
• Complex instrument coverage
Fund Administration
• Fund valuation
• Pricing and NAV
• Financial reporting
• Daily, weekly, month-end NAV
• Fund performance reporting
• Audit support
• Financial/regulatory reporting and tax
Services
Investor Services
• Investment processing services
• Maintain official books and records
• Investor communications – Audits, DDQs,
• queries, reporting
• Customized reporting to fund managers
• Share registry
• Transfer agency
• Registered office and corporate secretarial
services
OTC Services
• Trade capture and maintenance
• Valuation
• Collateral management
• Reconciliation – Position, valuation, cash,
• collateral
• Document management
• Settlement processing
• Credit derivative auto-novation
Risk Services
• Integrated with MBO and Administration
• Services / Delivered to managers and
• investors
• GoRisk™ services
• Position and exposure reporting
• Customizable stress tests
• Value-at-Risk (VaR)
• Calculations with flexible parameters
• Supports UCITS III directive
Managed Services – IT/ Data Center
• Data center and hosted services
• Platform as a Service (PaaS)
• Specifically designed facilities
• Disaster recovery and business continuity
Facilities
Cash Management / Execution
Services
• GoMoney™ portal
• Cash management portal, daily cash
• projection reporting, single-source
• access
• CurreneX® services
• FX sports, forwards, swaps, metals, loans
• and deposit
• MTS™ BondVision services
• European fixed income products, realtime
• indicative prices
• ICELink platform
• Trade date electronic affirmation of
• DTCC eligible credit derivatives, realtime
trade monitoring and notification
Regulatory Solutions
• Cloud based solutions for Form PF (Private Fund), FATCA (Foreign Account Tax Compliance Act), the CFTC and NFA’s CPOPQR requirements, Form 13F, Open Protocoland European regulatory initiatives
Key strengths:
• Dedicated team of experts
• State-of-the art technology platform, available stand-alone or as part of SS&C GlobeOp’s middle and back office services
• Intuitive, customizable interfaces enabling easy oversight, transparency, drilldown capability and full documentation of methodologies along with relevant permissioning and security
• Investment managers can integrate an automated solution into theirregulatory reporting process, removing operational burden and reducing cost
GlobeOp Financial Services takes some of the risk out of risky business. The company provides back-office services such as Web-based trade processing and fund administration to hedge funds, managed accounts, and funds of funds. Its activities include accounting, pricing and valuation, investor reporting, and transfer agency services. Also serving banks, insurance companies, pension funds, corporate treasuries, and family wealth offices, SS&C GlobeOp processes over-the-counter derivatives trades, performs cash and risk management, and provides IT and business continuity services. SS&C Technologies acquired Globeop.
The deal combined SS&C's operations, along with GlobeOps. The combination also includes the PORTIA business, which was acquired by SS&C from Thomson Reuters. The combined company has more than 40 offices in New York, Boston, Chicago, London, Amsterdam, Hong Kong, Kuala Lumpur, Singapore, Sydney, Bangalore, and Mumbai.
Private Equity Services
SS&C GlobeOp is the leading provider of private equity cost- effective fund administration,
accounting and tax services. Our clients include high profile financial institutions, venturecapital firms and private equity divisions of Fortune 500 firms – with capital commitmentsranging from start-up funds to multi-billion dollar funds. SS&C’s Private Equity FundServicesleverage a leading edge technology platform and specialized private equity team to providemiddle and back office services:
• Client implementation
• Fund and partnership accounting
• Capital call/distribution management
• Investor tracking and investor relations support
• Tax support
• Management and financial reporting
• Waterfall accounting
• Side pocket accounting
Bank Loans
SS&C GlobeOp has the expertise and technology to manage and account for the intricacies
and challenges of accurately valuing and managing your bank debt. Today we manage more
than 1,350+ loan facilities for more than 20 fund managers and we can promise to properly
account for these instruments and accurately report on the results of the investment activity.
Web Portal
With our state of the art reporting portal, you and your investors can get the information
you need faster and easier.
Key features include:
• Customized intuitive desktop with market, fund and relevant data
• Underlying manager portfolio, performance, risk and fund liquidity analyses
• Document management
• Ad-hoc reporting
• Investor Relations
• NAV workflow analysis
Technology Capabilities
• Ownership and control of the underlying technology, AdvisorWare and Total Return
• Centralized portfolio and partnership accounting management “Go Applications”
• General Ledger, Contact Management, Reporting and Investor Web Portal
Our competitive strengths
We believe that we have several key competitive strengths that position us well in the marketplace. These strengths include:
Enhanced Capability through Software Ownership
We use our proprietary software products and infrastructure to provide our software-enabled services, strengthening our overall operating margins and providing a competitive advantage. Because we primarily use our own proprietary software in the execution of our software-enabled services and generally own and control our products’ source code, we can quickly identify and deploy product improvements and respond to client feedback, enhancing the competitiveness of our software and software-enabled service offerings. This continuous feedback process provides us with a significant advantage over many of our competitors, specifically those software competitors that do not provide a comparable model and therefore do not have the same level of hands-on experience with their products.
Broad Portfolio of Products and Services Focused on Financial Services Organizations
Our broad portfolio of over 80 software products and software-enabled services allows professionals in the financial services industry to efficiently and rapidly analyze and manage information, increase productivity, devote more time to critical business decisions and reduce costs. Our products and services automate our clients’ most mission-critical, complex business processes, and improve their operational efficiency. We believe our product and service offerings position us as a leader within the specific verticals of the financial services software and services market in which we compete. We provide highly flexible, scalable and cost-effective solutions that enable our clients to track complex securities, better employ sophisticated investment strategies, scale efficiently and meet evolving regulatory requirements. Our solutions allow our clients to automate and integrate their front-office, middle-office and back-office functions, thus enabling straight-through processing.
Independent Fund Administration Services
The third-party service providers that participate in the alternative investment market include fund managers, auditors, fund administrators, attorneys, custodians and prime brokers. Each provider performs a valuable function with the intention of providing transparency of the fund’s assets and the valuation of those assets. Conflicts of interest may arise when the above parties attempt to provide more than one of these services. The industry is increasingly recognizing these conflicts and, as a result, seeking independent fund administrators such as SS&C.
Scalable Software and Software-Enabled Services
We have designed our software and software-enabled services to accommodate significant additional business volumes with limited incremental costs. The ability to generate additional revenues from increased volumes without incurring substantial incremental costs provides us with opportunities to improve our operating margins.
RESEARCH METHODLOGY
During my project, I collected data through various sources primary & secondary.
Primary source includes :-
1) Discussion with branch manager
2) Discussion with experts
3) Questionnaires for investors
4) Live trading in the market
Secondary source includes :-
1) Various books related to stock market
2) Books related to Financial Management
3) Web sites were used as the vital information source.
EQUITY ANALYSIS
FUNDAMENTAL ANALYSIS
The investor, while buying stock, has the primary purpose of gain. If he invests for ashort period of time, it is speculative but when he holds if for a fairly long period oftime, the anticipation is that he would receive some return on his investment. Thefundamental analysis is a method of finding out the future price of a stock, which aninvestor wishes to buy. The method for forecasting the future behavior of investmentand the rate of return on them is clearly through an analysis of the broad economicforces, industry analysis, the company analysis and ration analysis.
A. Influence of the economy on the company.
These are the following factor: -
01. Economic Growth
02. Populations
03. Monsoons and Agriculture Production
04. Natural resources and availability of raw material
05. Industrial Productions
06. Inflation
07. Interest rate
08. Foreign exchange reserve
09. Balance of payment position
10. Budget deficits
11. Public debt and foreign debt
12. Domestic saving and capital output rate
13. Employments
14. Taxation policies
15. Infrastructure facilities
16. Government policies
17. Political Stability
18. International developments
19. Capital formations
20. Saving pattern
21. Economic indicators
22. Foreign direct investments
23. Rupee-Dollar Fluctuation
24. Stock News
B. Industrial Analysis.
The industry analysis should take in to account the following factors as
influence the performance of the company, whose share prices are to be
analyzed.
Product Line.
It is also necessary to know the industries with a high growth potential like
computers, electronics, chemicals, diamonds, textiles etc. and whether the
industry is in the priority sector of the key industry group of capital goods or
consumers goods group.
Raw Material and Inputs.
Under these head, we have to look in to industries depending on imports of
scare raw materials, competition from other companies and industries and the
barriers to entry of new company, protection from foreign competition, import
and export restriction etc.
Capacity Installed and Utilized.
The demand for industrial product in the economy is estimated by the
planning commission and the Government, and the units are given licensed
capacity on the basis of these estimates.
Industry Characteristics.
It included whether the industry is cyclical, fluctuating of stable. It is also
important industry produce seasonal product or FMCG. It also included
demand of product freight charges, cost of production, advertisement cost,
skill of operation, profitability.
Demand and Market.
It includes demand of the product in the market and price of raw material and
other input cost like freight, electricity, season, monsoon, etc. if the nature of
product is such as drugs, fertilizer or other consumer goods, whose price and
distribution control by Government.
Government Policy with regard to Industry
Government Policy is announced in the industrial policy resolution and
Subsequent announcement from time to time by the Government. The Policy
strategy as laid down in the five years plans according to planning
commission and expected demand in the economy.
Management.
If the promoters and the management are the efficient and capable of steering
the company through the difficult days such management likes TATA &
BIRLA, who have reputation, buildup their companies on the strong
foundation. The management has to be assessed in the terms of their
capabilities, popularity, honesty and integrity.
TECHNICAL ANALYSIS
The methods used to analyze securities and make investment decisions fall into two
very broad categories:
Fundamental Analysis and Technical Analysis.
Fundamental analysis involves analyzing the characteristics of a company in order to
estimate its value. Technical analysis takes a completely different approach; it doesn’t
care one bit about the “value” of a company or a commodity. Technicians (some time
called chartists) are only interested in the price movement in the market.
Despite all the fancy and exotic tools it employs, technical analysis really just studies
supply and demand in a market in an attempt to determine what direction, or trend,
will continue in the future. In other words, technical analysis attempts to understand
the emotions in the market by studying the market it self, as opposed to its
components. If you understand the benefits and limitation of technical analysis it can
give you a new set of tools or skills than will enable you to better trader or investor.
DEFINITION
Technical analysis is a method of evaluating the securities by analyzing the statistics
generated by the market activity, such as past price and volume. In technical analysis,
analysts use charts and other tools to identify patterns that can suggest future
activity.
Just as there are many investment styles on fundamental side, there is also much
different type of technical traders. Some rely on chart patterns. In any case, technical
analysts exclusive use of historical price and volume data is what separates them from
their fundamental counterparts. Unlike fundamental analysis technical analysts don’t
care whether a stock is undervalued the only thing that matter is a security’s past
trading data and what information this data can provide about where the security
might move in the future.
Assumptions:
1. The Market Discounts Everything
A major criticism of technical analysis is that it only considers price movement,
ignoring the fundamental factors of the company. However, technical analysis
assumes that, at any given a time, a stocks price reflects everything that has or could
affect the company- including Fundamental Factors. Technical analysts believe that
the company’s fundamentals, along with broader economic factors and market
psychology, are all priced into the stock, removing the need to actually consider these
factors separately.
This only leaves the analysis of price movement, which technical theory views as a
product of supply and demand for a particular stock in the market.
2. Price Moves In Trends
In technical analysis, price movements are believed to follow trends. This means that
after a trend has been established, the future price movement is more likely to be in
the same direction as the trend that to be against it. Most technical trading strategies
are based on this assumption.
3. History Tends To Repeat Itself
Another important idea in technical analysis is that history tends to repeat itself,
mainly in terms of price movement. The repetitive nature of price movement is
attributed to market psychology; in other words, market participants tend to provide a
consistent reaction to similar market stimuli over time. Technical analysis uses chats
patterns to analyze market movements and understand trends. Although many of
these charts have been use for more than 100 years they are still believed to be
relevant because they illustrate patterns in price movements that often repeat
themselves.