FUNDAMENTAL & TECNICAL ANALYSIS OF KARYAVA STOCK EX.docFUNDAMENTAL & TECNICAL ANALYSIS OF KARYAVA STOCK EX.doc

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Fundamental & Technical Analysis MBA FINANCE - 1 -

A Project ReportOn

“Fundamental & Technical Analysis”

Undertaken for:

KARVY Stock Broking Limited.

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CONTENTS

SI.no Contents Pageno

1 Executive Summary 1-4

2 Introduction to the capital market 5-14

3 Company Profile 15-37

Theoretical Framework

4 Fundamental analysis 38

4.1 Economic Analysis 39-46

4.2 Industry Analysis 47-51

4.3 Company analysis 52-59

5 Technical analysis 60-76

6 Findings 77-78

7 Recommendations 79

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8 Conclusions 809 Bibliography 81

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Executive Summary

Project Title : Fundamental Analysis and Technical Analysis of UnitechLtd.

Company and Place: KARVY Stock Broking Ltd. Dharwad

Research Process:KARVY Stock Broking Ltd. Is a premier financial services provider &ranked top five in the country. Recently the capital market crashed

because of many reasons investors lost heavy amount But fundamental &Macro factors Indian market is good. Stability in market is not there

currently therefore some of the investor who lost money in market crash,so many of them are shaky to enter into market again. Therefore gettinginvestor confidence is more important which will happen when the market

stabilizes. So for that matter broking firms should provide properguidance to their investors for facilitating their decision making ininvestments.

Research Objectives:

Main Objective: To know the future increase and decrease of stock pricein selected company stocks through Fundamental And Technical Analysis.

Sub Objectives:

To understand how best we can use this analysis is to meet the

financial goal of the investors.

To understand the effect of Industry specific factors on the stock

prices through Industry Analysis.

To know which securities to be bought and when to be bought.

To know which securities to be sold and when to sell.

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To provide investors with a basket of securities to be stay investedto have a sound portfolio.

Research Plan:The data collected for the study is secondary data. The data I have usedfor the study is

1. Historical shares value of the stocks collected fromwww.nseindia.com

2. The balance sheet and Income statement got from companies website.

3. Some of the information about the industry is collected from the

web site.

The Measurement Techniques

The following techniques are used for the study.1. The bar chart

2. Candlestick charting3. Point & figure chart4. Moving average.

5. Exponential moving average (EMA)6. The relative strength index (RSI)

7. Oscillators (ROC, RSI, MACD,STOCHASTICS)

Analysis: Using MS-Excel

Findings:General:

One of the most important areas for any investor to look when

researching a company is the financial statement. Financial reportsare required by law and are published both quarterly and annually.

http://www.nseindia.com/

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Management discussion give investors a better understanding of

what the company does and usually points out some key areaswhere they did well.

Audited financial reports have much more credibility than

unaudited ones.

The income statement takes into account some non-cash items

such as depreciation. The cash-flow statement strips away allnon-cash items and tells you how much actual money the companygenerated.

For Stock:

First, the projected MPS of the stock next three years are Rs.231.05,

Rs.286.03 and Rs.352.68.

Short term support for scrip: 265-275; Next support has beenestablished at 150-165.

Long term target by technical analysis is 620-40 but this is unlikelyto happen in the medium term because short term trend has been

bearish and long term trend has been flat and undergoing longconsolidation

For market:

Short term support or intermediate support: 4500-4600; next longterm support lies at3100-3150

Resistance for Nifty is at present is at 6000

Short term and intermediate trend has been bearish and long term

trend is still bullish.

Long term nifty target is a 6980- 7020.

Recommendations:

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Long term investors can include Unitech, because the growth rates

and earnings are good compared to others stocks. Thereforeinvestors can include this in their portfolio to earn the higher return

on their investment.

The Long term investors should buy the stocks fair value found out

by the fundamental analysis.

Short term investors should look on various support and resistanceof stocks to buy or sell and make profit.

Conclusion:

Stock market or capital market provides the industry with a lot of

capital needed by the industry, which leads to the growth of theindustry and economy as a whole; hence the stock market plays animportant role in the development of the industry.

Some times Using Technical and fundamental analysis individuallyleads to incorrect results hence both Fundamental and technical

analysis should be used at a time to get the desired result.

Fundamental analysts study everything from the overall economyand industry conditions, to the financial condition and management

of companies before deciding on any particular stock.

Technical analyst’s look for peaks, bottoms, trends, patterns and

other factors affecting a stock's price movement and then makebuy/sell decisions based on those factors.

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INTRODUCTION TO CAPITAL MARKETS

Introduction to Capital Markets

Transfer of resources from those with idle resources to others who have aproductive need for them is perhaps most efficiently achieved through thesecurities markets. Stated formally, securities markets provide channels

for allocation of savings to investments and thereby decouple these twoactivities. As a result, the savers and investors are not constrained by

their individual abilities, but by the economy’s abilities to invest and saverespectively, which inevitably enhances savings and investment in theeconomy.

Market SegmentsThe securities market has two interdependent and inseparable segments,

the new issues (primary market) and the stock (secondary) market. Theprimary market provides the channel for sale of new securities while the

secondary market deals in securities previously issued. The price signals,which subsume all information about the issuer and his businessincluding associated risk, generated in the secondary market, help the

primary market in allocation of funds. The issuers of securities issue(create and sell) new securities in the primary market to raise funds forinvestment and/or to discharge some obligation. They do so either

through public issues or private placement. There are two major types ofissuers who issue securities. The corporate entities issue mainly debt and

equity instruments (shares, debentures, etc.), while the governments(central and state governments) issue debt securities (dated securities,treasury bills).

The secondary market enables participants who hold securities to adjusttheir holdings in response to changes in their assessment of risk and

return. They also sell securities for cash to meet their liquidity needs. Avariant of secondary market is the forward market, where securities are

traded for future delivery and payment. Pure forward is out side the

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formal market. The versions of forward in formal market are futures andoptions. In futures market, standardized securities are traded for futuredelivery and settlement. These futures can be on a basket of securities

like an index or an individual security. In

case of options, securities are traded for conditional future delivery.

There are two types of options – a put option permits the owner to sell asecurity to the writer of options at a predetermined price while a call

option permits the owner to purchase a security from the writer of theoption at a predetermined price. These options can also be on individualstocks or basket of stocks like index. Two exchanges, namely NSE and

BSE provide trading of derivatives of securities.

Products and Participants

Savings are linked to investments by a variety of intermediaries through arange of complex financial products called “securities” which is defined in

the Securities Contracts (Regulation) Act, 1956. Which includes shares,scrip’s, stocks, bonds, debentures, debenture stock, or other marketablesecurities of like nature in or of any incorporate company or body

corporate, government securities, derivatives of securities, units ofcollective investment scheme, security receipts, interest and rights insecurities, or any other instruments so declared by the central

government These demand for and supply of securities and fundsdetermine, under competitive market conditions in goods and securities

market, the prices of securities.

Securities Market and Economic Growth

A well functioning securities market is conducive to sustained economicgrowth. There have been a number of studies, starting from World Bankand IMF to various scholars, which have established robust relationship

not only one way, but also the both ways, between the development inthe securities market and the economic growth.

The securities market fosters economic growth to the extent that it-

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Augments the quantities of real savings and capital formation from

any given level of national income,

Increases net capital inflow from abroad,

Raises the productivity of investment by improving allocation ofinvestible funds, and (d) Reduces the cost of capital.

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International LinkageThe securities market facilitates the internationalization of an economy bylinking it with the rest of the world. This linkage assists through the

inflow of capital in the form of portfolio investment. Moreover, a strongdomestic stock market performance forms the

basis for well performing domestic corporate to raise capital in theinternational market. This implies that the domestic economy is opened

up to international competitive pressures, which help to raise efficiency. Itis also very likely that existence of a domestic securities market will detercapital outflow by providing attractive investment opportunities within

domestic economy.

There are also other developmental benefits associated with the existence

of a securities market.

The securities market provides a fast-rate breeding ground for the

skills and judgment needed for entrepreneurship, risk bearing,portfolio selection and management.

An active securities market serves as an ‘engine’ of general

financial development and may, in particular, accelerate theintegration of informal financial systems with the institutional

financial sector. Securities directly displace traditional assets suchas gold and stocks of produce or, indirectly, may provide portfolioassets for unit trusts, pension funds and similar FIIs that raise

savings from the traditional sector.

The existence of securities market enhances the scope, andprovides institutional mechanisms, for the operation of monetary

and financial policy

A Profile of Indian Securities MarketThe past decade in many ways has been remarkable for securities marketin India. It has grown exponentially as measured in terms of amount

raised from the market, number of stock exchanges and other

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intermediaries, the number of listed stocks, market capitalization, tradingvolumes and turnover on stock exchanges, and investor population. Themarket has witnessed fundamental institutional changes resulting in

drastic reduction in transaction costs and significant improvements inefficiency, transparency and safety.

Securities and Exchange Board of India (SEBI)With the objectives of improving market efficiency, enhancing

transparency, checking unfair trade practices and bringing the Indianmarket up to international standards, a package of reforms consisting ofmeasures to liberalize, regulate and develop the securities market was

introduced during the 1990s. This has changed corporate securitiesmarket beyond recognition in this decade. The practice of allocation ofresources among different competing entities as well as its terms by a

central authority was discontinued. The secondary market overcame thegeographical barriers by moving to screen-based trading. Trades enjoy

counterparty guarantee.

Bombay Stock Exchange (BSE)

Bombay Stock Exchange Limited is the oldest stock exchange in Asia witha rich heritage. Popularly known as "BSE", it was established as "TheNative Share & Stock Brokers Association" in 1875. It is the first stock

exchange in the country to obtain permanent recognition in 1956 fromthe Government of India under the Securities Contracts (Regulation) Act,

1956.The Exchange's pivotal and pre-eminent role in the development ofthe Indian capital market is widely recognized and its index, SENSEX, istracked worldwide. With Demutualisation, the trading rights and

ownership rights have been de-linked effectively addressing concernsregarding perceived and real conflicts of interest. The Exchange isprofessionally managed under the overall direction of the Board of

Directors. The Board comprises eminent professionals, representatives ofTrading Members and the Managing Director of the Exchange.

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The Exchange has a nation-wide reach with a presence in 417 cities andtowns of India. The systems and processes of the Exchange are designedto safeguard market integrity and enhance transparency in operations.

During the year 2004-2005, the trading volumes on the Exchangeshowed robust growth. The Exchange provides an efficient andtransparent market for trading in equity, debt instruments and derivatives.

The BSE's On Line Trading System (BOLT) is a proprietary system of theExchange and is BS 7799-2-2002 certified. The surveillance and clearing

& settlement functions of the Exchange are ISO 9001:2000 certified.

BSE as a brand is synonymous with capital markets in India. The BSESENSEX is the benchmark equity index that reflects the robustness of the

economy and finance. At par with international standards,

First in India to introduce Equity Derivatives

First in India to launch a Free Float Index

First in India to launch US$ version of BSE Sensex

First in India to launch Exchange Enabled Internet Trading Platform

First in India to obtain ISO certification for Surveillance, Clearing &

Settlement

'BSE On-Line Trading System’ (BOLT) has been awarded the globallyrecognized the Information Security Management System

standard

First to have an exclusive facility for financial training

Moved from Open Outcry to Electronic Trading within just 50 days

An equally important accomplishment of BSE is the launch of anationwide investor awareness campaign - Safe Investing in the

Stock Market -

In 2002, the name The Stock Exchange, Mumbai, was changed to

BSE.

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National Stock Exchange (NSE)The National Stock Exchange of India Limited has genesis in the report ofthe High Powered Study Group on Establishment of New Stock Exchanges,

which recommended promotion of a National Stock Exchange by financialinstitutions (FII’s) to provide access to investors from all across thecountry on an equal footing. Based on the recommendations, NSE was

promoted by leading Financial Institutions at the behest of theGovernment of India and was incorporated in November 1992 as a

tax-paying company unlike other stock exchanges in the country

On its recognition as a stock exchange under the Securities Contracts

(Regulation) Act, 1956 in April 1993, NSE commenced operations in theWholesale Debt Market (WDM) segment in June 1994. The Capital Market(Equities) segment commenced operations in November 1994 and

operations in Derivatives segment commenced in June 2000.

NSE has been promoted by leading financial institutions, banks, insurancecompanies and other financial intermediaries. NSE is one of the first

de-mutualised stock exchanges in the country, where the ownership andmanagement of the Exchange is completely divorced from the right totrade on it. Though the impetus for its establishment came from policy

makers in the country, it has been set up as a public limited company,owned by the leading institutional investors in the country.

The NSE model however, does not preclude, but in fact accommodatesinvolvement, support and contribution of trading members in a variety ofways. Its Board comprises of senior executives from promoter institutions,

eminent professionals in the fields of law, economics, accountancy,finance, taxation, etc, public representatives.

NSE Milestones

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Nov-92 IncorporationApr-93 Recognition as a stock exchangeMay-93 Formulation of business planJun-94 Wholesale Debt Market segment goes liveNov-94 Capital Market (Equities) segment goes liveMar-95 Establishment of Investor Grievance CellApr-95 Establishment of NSCCL, the first Clearing CorporationJun-95 Introduction of centralised insurance cover for all trading membersJul-95 Establishment of Investor Protection FundOct-95 Became largest stock exchange in the countryApr-96 Commencement of clearing and settlement by NSCCLApr-96 Launch of S&P CNX NiftyJun-96 Establishment of Settlement Guarantee Fund

Nov-96Setting up of National Securities Depository Limited, first depository inIndia, co-promoted by NSE

Nov-96 Best IT Usage award by Computer Society of IndiaDec-96 Commencement of trading/settlement in dematerialised securitiesDec-96 Dataquest award for Top IT UserDec-96 Launch of CNX Nifty JuniorFeb-97 Regional clearing facility goes liveNov-97 Best IT Usage award by Computer Society of IndiaMay-98 Promotion of joint venture, India Index Services & Products Limited (IISL)May-98 Launch of NSE's Web-site: www.nse.co.inJul-98 Launch of NSE's Certification Programme in Financial MarketAug-98 CYBER CORPORATE OF THE YEAR 1998 awardFeb-99 Launch of Automated Lending and Borrowing MechanismApr-99 CHIP Web Award by CHIP magazineOct-99 Setting up of NSE.ITJan-00 Launch of NSE Research InitiativeFeb-00 Commencement of Internet TradingJun-00 Commencement of Derivatives Trading (Index Futures)Sep-00 Launch of 'Zero Coupon Yield Curve'

Nov-00Launch of Broker Plaza by Dotex International, a joint venture betweenNSE.IT Ltd. and i-flex Solutions Ltd.

Dec-00 Commencement of WAP tradingJun-01 Commencement of trading in Index OptionsJul-01 Commencement of trading in Options on Individual SecuritiesNov-01 Commencement of trading in Futures on Individual SecuritiesDec-01 Launch of NSE VaR for Government SecuritiesJan-02 Launch of Exchange Traded Funds (ETFs)

May-02NSE wins the Wharton-Infosys Business Transformation Award in theOrganization-wide Transformation category

Oct-02 Launch of NSE Government Securities IndexJan-03 Commencement of trading in Retail Debt MarketJun-03 Launch of Interest Rate FuturesAug-03 Launch of Futures & options in CNXIT IndexJun-04 Launch of STP InteroperabilityAug-04 Launch of NSE’s electronic interface for listed companies

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Mar-05 ‘India Innovation Award’ by EMPI Business School, New DelhiJun-05 Launch of Futures & options in BANK Nifty IndexDec-06 'Derivative Exchange of the Year', by Asia Risk magazineJan-07 Launch of NSE – CNBC TV 18 media centreMar-07 NSE, CRISIL announce launch of IndiaBondWatch.comJun-07 NSE launches derivatives on Nifty Junior & CNX 100Oct-07 NSE launches derivatives on Nifty Midcap 50Jan-08 Introduction of Mini Nifty derivative contracts on 1st January 2008Mar-08 Introduction of long term option contracts on S&P CNX Nifty Index

Depository SystemThe Depositories Act, 1996 was passed with the objective of ensuring free

transferability of securities with speed, accuracy and security. It does soby

Making securities of public limited companies freely transferable

subject to certain exceptions

Dematerializing the securities in the depository mode

Providing for maintenance of ownership records in a book entry

form.

In order to streamline both the stages of settlement process, the Actenvisages transfer ownership of securities electronically by book entry

without making the securities move from person to person. The Act hasmade the securities of all public limited companies freely transferable,restricting the company's right to use discretion in effecting the transfer

of securities, and the transfer deed and other procedural requirementsunder the Companies Act have been dispensed with. Two depositories,viz., NSDL and CDSL, have come up to provide instantaneous electronic

transfer of securities.

Capital Market IntermediariesThere are several institutions, which facilitate the smooth functioning of

the securities market. They enable the issuers of securities to interactwith the investors in the primary as well as the secondary arena.

Merchant Bankers

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Credit Rating Agencies

R& T Agents - Registrars to Issue

Stock Brokers

Custodians

Mutual Funds

Depositories

Depository Participants

Players (investors) in securities market

Individual investorsInstitutional investorsFII’sMutual fund investor

Capital Market InstrumentsThe changes in the regulatory framework of the capital market and fiscal

policies have also resulted in newer kinds of financial instruments(securities) being introduced in the market. Also, a lot of financial

innovation by companies who are now permitted to undertake treasuryoperations, has resulted in newer kinds of instruments - all of which canbe traded – being introduced. The variations in all these instruments

depend on thetenure, the nature of security, the interest rate, the collateral security

offered and the trading features, etc.

Debentures

Bonds

Preference Shares

Equity Shares

Government securities

Capital Market ProcessesThere are various processes that Issuers of securities follow or utilize in

order to tap the savers for raising resources. Some of the commonly usedprocesses and methods are described below.

Initial Public Offering (IPO)

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Private Placement

Preferential Offer/Rights Issue

Internet Broking

Dependence on Securities Market

Three main sets of entities depend on securities market. While theCorporates and governments raise resources from the securities marketto meet their obligations, the households invest their savings in securities.

While the corporate sector and governments together raised a sum of Rs.226,911 crore during 2001-02, the household sector invested 4.3% oftheir financial savings through the securities market during 2000-01.

Corporate Sector

The 1990s witnessed emergence of the securities market as a majorsource of finance for trade and industry. The share of capital marketbased instruments in resources raised externally increased to 53% in

1993-94, but declined thereafter to 31% by 2000-01.

Governments

Along with increase in fiscal deficits of the governments, the dependenceon market borrowings to finance fiscal deficits has increased over the

years. The state governments and the central government financed about14% and 18% respectively of their fiscal deficit by market borrowingsduring 1990-91. In percentage terms, dependence of the state

governments on market borrowing did not increase much during thedecade 1991-2002. In case of central government, it increased to 69.4%by 2001-02.

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HouseholdAccording to the RBI data, the household sector accounted for 84.8 % ofgross domestic

savings in Fixed income investment instruments during 2006-07; whichhas increased incomparison to 83.9% in 2005-06. In fiscal 2006-07, the household sector

has invested 55.7 % of financial savings in deposits, 24.2 % ininsurance/provident funds, 4.9 % in small savings, and 6.5 % in securities

market including government securities , units of mutual funds and othersecurities.

Investor population and profileAccording to the SEBI-NCAER survey of Indian investors conducted inearly 1999, an estimated 12.8 million, or 7.6% of all Indian households

representing 19 million individuals had directly invested in equity sharesand/or debentures as at the end of financial year 1998-99. The investor

households increased at a compound growth rate of 22% between1985-86 and 1998-99. About 35% of investor households becameinvestors in equity shares prior to 1991, while 47% of the investors

entered the market between 1991 and 1995 and 17% after 1995. Morethan 156 million or 92% of all Indian households were non-investorhouseholds who did not have any investments in equity/debentures. Low

per capita income, apprehension of loss of capital, and economicinsecurity, which are all inter-related factors, significantly influenced the

investment attitude of the households. The lack of awareness aboutsecurities market and absence of a dependable infrastructure anddistribution network coupled with aversion to risk inhibited non-investor

households from investing in the securities market.

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About KARVYThe Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks

among the top player in almost all the fields it operates. Karvy Computershare Limited is India’s largest Registrar and Transfer Agent with a client

base of nearly 500 blue chip corporate, managing over 2 crore accounts.Karvy Stock Brokers Limited, member of National Stock Exchange of Indiaand the Bombay Stock Exchange, ranks among the top 5 stock brokers in

India. With over 6, 00,000 active accounts, it ranks among the top 5Depositary Participant in India, registered with NSDL and CDSL. Karvy

COM trade, Member of NCDEX and MCX ranks among the top 3commodity brokers in the country. Karvy Insurance Brokers is registeredas a Broker with IRDA and ranks among the top 5 insurance agent in the

country. Registered with AMFI as a corporate Agent, Karvy is also amongthe top Mutual Fund mobilizer with over Rs. 5,000 crores undermanagement. Karvy Realty Services, which started in 2006, has quickly

established itself as a broker who adds value, in the realty sector. KarvyGlobal offers niche off shoring services to clients in the US.

Karvy has 575 offices over 375 locations across India and overseas atDubai and New York. Over 9,000 highly qualified people staff Karvy.

Karvy – Early DaysKarvy the name comes from the names of the directors:

K - Mr. V. Kutumba RaoA - Mr. K Ajay Kumar

R - Mr. M S RamakrishnaV - Mr. Vikram SinghY - Mr. M Yugandhar

The birth of Karvy was on a modest scale in 1979. It began with the visionand enterprise of a small group of practicing Chartered Accountants who

founded the flagship company …Karvy Consultants Limited. Karvy startedwith consulting and financial accounting automation, and carved inroads

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into the field of registry and share accounting by 1985. Since then, Karvyhave utilized its experience and superlative expertise to go from strengthto strength…to better its services, to provide new ones, to innovate,

diversify and in the process, evolved Karvy as one of India’s premierintegrated financial service enterprise.

GROWTH AND DEVELOPMENT OF KARVYOver the last 20 years Karvy has traveled the success route, towards

building a reputation as an integrated financial services provider, offeringa wide spectrum of services. And Karvy have made this journey by takingthe route of quality service, path breaking innovations in service,

versatility in service and finally…totality in service. Karvy’s highly qualifiedmanpower, cutting-edge technology, comprehensive infrastructure andtotal customer-focus has secured for Karvy the position of an emerging

financial services giant enjoying the confidence and support of anenviable clientele across diverse fields in the financial world.

Karvy’s values and vision of attaining total competence in its servicing hasserved as the building block for creating a great financial enterprise,which stands solid on its fortresses of financial strength - its various

companies.With the experience of years of holistic financial servicing behind it andyears of complete expertise in the industry to look forward to, Karvy have

now emerged as a premier integrated financial services provider.And today, Karvy can look with pride at the fruits of its mastery and

experience comprehensive financial services that are competentlysegregated to service and manage a diverse range of customerrequirements.

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KARVY-Milestones

AT PRESENT STATUS OF KARVY

Presently Karvy is a member of National Stock Exchange (NSE), the

Bombay Stock Exchange (BSE), and The Hyderabad Stock Exchange (HSE).Market analysis and market predictions are done by professionalmanagement team.

KARVY is covering the entire spectrum of financial services such as StockBroking Services, Advisory Services, Stock broking, Depository

Participants, Distribution of financial products - mutual funds, bonds,fixed deposit, equities, Insurance Broking, Commodities Broking, Personal

Finance Advisory Services, Merchant Banking & Corporate Finance,placement of equity, IPOs, among others.It is the largest mobiliser of funds as per PRIME DATABASE. It is among

the top 5 stock brokers in India (4% of NSE volumes). India's No. 1Registrar & Securities Transfer Agents (Ranked as “The Most AdmiredRegistrar" by MARG). Among the top 3 Depository Participants. Largest

Network of Branches & Business Associates. First ISO - 9002 CertifiedRegistrar in India. Among top 10 Investment bankers. Largest Distributor

of Financial Products are --

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Every 50th Indian is serviced by KARVY Every 20th trade in stock marketis done through KARVY. Every 6th Investor in India invests through KARVYIndia's No.1 Registrars and Transfer agent : KARVY Every 10th Demat

Account is held at KARVY.

ORGANISATION STRUCTURE OF KARVY

LEVEL-I

Board of

CMD, MD, & other Directors

KarvyConsultantsLimited

KarvyInvestorServiceLimited

KarvyGlobalServiceLimited

KarvyStockBrokingLimited

KarvyComputershare Pvt. Limited

KarvyInsuranceBrokingPrivateLimited

KarvyInc.

KarvyCommoditiesBrokingPrivateLimited

Karvy Regional

HQs / Branches

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Level-II

Regional BranchHead

ISO CELL

Operations Divisions

SupportFunctions

Branches

ACCOUNTS

HRD

SYSTEM

ADMN,PURCHASE,& STORES

BRANCHES

OperationsDivisions

SupportFunctions

RIS

FPD

BROKING

DP

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STUDY OF COMPANY PROFILE WITH RESPECT TOMc KINSEY’S 7S MODEL

STRATEGY:

In modern times the word strategy has found its way into themanagement field. In the context of a business concern, strategy

indicates specific program of action for achieving the organizationobjectives by employing the firm’s resources efficiently and economically.It involves preparing oneself for meeting unforeseen factor. It is also

concerned with meeting the challenges posed by the policies and actionsof other competitors in the market.

Quality PolicyTo achieve and retain leadership, Karvy shall aim for complete customer

satisfaction, by combining its human and technological resources, toprovide superior quality financial services. In the process, Karvy will striveto exceed Customer's expectations.

Quality Objectives are to:

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Build in-house processes that will ensure transparent and

harmonious relationships with its clients and investors to providehigh quality of services.

Establish a partner relationship with its investor service agents and

vendors that will help in keeping up its commitments to the

customers.

Provide high quality of work life for all its employees and equipthem with adequate knowledge & skills so as to respond to

customer's needs.

Continue to uphold the values of honesty & integrity and strive to

establish unparalleled standards in business ethics.

Use state-of-the art information technology in developing new andinnovative financial products and services to meet the changing

needs of investors and clients.

Strive to be a reliable source of value-added financial products and

services and constantly guide the individuals and institutions inmaking a judicious choice of same.

Strive to keep all stake-holders (shareholders, clients, investors,

employees, suppliers and regulatory authorities) proud andsatisfied.

STRUCTURE:

Board of DirectorsMr. C Parthasarathy (Chairman and Managing Director), Mr. M Yugandhar(Managing Director ), Mr. M S Ramakrishna (Director ), Mr. Prasad VPotluri (Director), William Stuart Crosby (Chairman – Karvy Computer

share Pvt Ltd.), Chandra Balaraman(Director– Karvy Computer share PvtLtd.), Mark Davis(Director– Karvy Computer share Pvt Ltd.), Mr. Uday

Raval(Director - Karvy Inc. )Karvy’s organization structure can be viewed as accomplishingdepartments Operations Divisions and Support Function Division.

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Below the Operations Divisions there are sub divisions namely Registryand Investor Services (RIS), Depository Participant (DP), Broking Services,Financial Product Distribution (FPD).

Below the Support Functions, there are sub divisions namely Accounts,System, Human Resource Development, and Administration, Purchase &

Stores.These department heads controls the day-to-day affairs of the company.

These department heads are directly reports to the director. Board ofDirectors directly appoints department heads. The departmental headsdoes locations of responsibilities among various positions.

In Karvy Departments are inter related. Majority of decisions are taken bythe top management. While taking important decision the department

managers are also consulted and their suggestions are also considered.Hence Participative style of management is followed in Karvy.

SYSTEM:KARVY covers the entire spectrum of financial services such as Stock

broking, Depository Participants, Distribution of financial products -mutual funds, bonds, fixed deposit, equities, Insurance Broking,Commodities Broking, Personal Finance Advisory Services, Merchant

Banking & Corporate Finance, placement of equity, IPOs.

A link called ‘Resource Center’, devoted solely to research. Karvy’s highlyskilled research team, comprising of technical analysts as well asfundamental specialists, secure result-oriented information on market

trends, market analysis and market predictions. This crucial informationis given as a constant feedback to its customers, through daily reportsdelivered thrice daily; The Pre-session Report, where market scenario for

the day is predicted, The Mid-session Report, timed to arrive during lunchbreak, where the market forecast for the rest of the day is given and The

Post-session Report, the final report for the day, where the market and

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the report itself is reviewed. To add to this repository of information,Karvy publish a monthly magazine The Finapolis, which analyzes thelatest stock market trends and takes a close look at the various

investment options, and products available in the market, while a weeklyreport, called Karvy Bazaar Baatein, gives more information on theimmediate trends in the stock market. In addition, its specific industry

reports give comprehensive information on various industries.

Karvy’s Stock Broking services are widely networked across India, with thenumber of trading terminals providing retail stock broking facilities. Toempower the investor further Karvy have made serious efforts to ensure

that its research calls are disseminated systematically to all our stockbroking clients through various delivery channels like email, chat, SMS,phone calls etc.

STYLE:

An activity like forecasting and planning are made by top level managers.Major policies and plans are made by top management and it isimplemented and administered by employees. In the organization the

style of informal communication and meetings with employees hascreated workers to a friendly environment.

STAFF:The term staff refers to manpower planning, recruitment, performance

appraisal, motivation and morale.

SKILLS:

The managers and workers in each department are skilled to the extent offunctions they perform. Directors of the company are skilled in everyactivities and disciplines of organization.

A 1600 team of highly qualified and dedicated professionals drawn fromthe best of academic and professional backgrounds are committed to

maintaining high levels of client service delivery. This has propelled Karvy

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to a position among the top distributors for equity and debt issues withan estimated market share of 15% in terms of applications mobilized,besides being established as the leading procurer in all public issues.

A link called ‘Resource Center’, devoted solely to research. Karvy’s highlyskilled research team, comprising of technical analysts as well asfundamental specialists, secure result-oriented information on market

trends, market analysis and market predictions.Achievements

Largest mobiliser of funds as per PRIME DATABASE

Among the top 5 stock brokers in India (4% of NSE volumes)

India's No. 1 Registrar & Securities Transfer Agents (Ranked as "

The Most Admired Registrar" by MARG)

A Category- I -Merchant banker.

Among the to top 3 Depository Participants

Largest Network of Branches & Business Associates

First ISO - 9002 Certified Registrar in India

Among top 10 Investment bankers

Largest Distributor of Financial Products

Full Fledged IT driven operations

Handled the largest- ever Public Issue - IDBI

Handled over 500 Public issues as Registrars.

Handling the Reliance Account which accounts for nearly 10 millionaccount holders

Major issues managed as arrangers

Kerala State Electricity Board.Power Finance Corporation

A.P. Water Resources Development Corporation.A.P. Roads Development Corporation.A.P. State Electricity Board.

Haldia Petrochemicals Ltd.

Major issues managed as Co-Managers

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IndusInd Bank LtdICICI Bonds – March 97ICICI Bonds – Dec 97

ICICI Safety Bonds March 98ICICI Safety Bonds – April 98. July 98, Oct 98, Dec 98, Jan 99.The Jammu and Kashmir Bank Ltd

Major issue handled as Registrars to Issues

IDBI EquityMorgan Stanley Mutual Fund

Bank of BarodaBank of Punjab LtdCorporation Bank

IndusInd Bank LtdJammu and Kashmir Bank LtdHousing and Urban Development Corporation (HUDCO) Ltd

Madras Refineries LtdTamil Nadu Newsprint & Paper Ltd

BPL LtdBirla 3M LtdEssar Shipping Ltd

Essar Steels Ltd.Hindustan Petroleum Corporation Ltd.

Infosys Technologies Ltd.Jindal Vijayanagar Steels Ltd.Nagarjuna Fertilizers & Chemicals Ltd.

Rajshree Polyfil Ltd.

Karvy Securities Ltd.

Karvy has secured over Rs. 500 crore in the following debt issues.

Andhra Pradesh Road Development Corporation LtdICICI Bonds ( Private Placement)

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ICICI Bonds – 96ICICI Bonds – 97- IICICI Bonds – 97 – II

ICICI Safety Bonds March 98.IDBI Bonds 96.IDBI Flexi Bonds I

IDBI Flexi Bonds IIIDBI Flexi Bonds III

Kerala State Electricity BoardKrishna Bhagya Jala Nigam LtdPower Finance Corporation Ltd

Andhra Pradesh Water Resources Development CorporationAndhra Pradesh State Electricity Board

SHARED VALUES:Employees at each level of organization are conscious about delivering

customer value for his money. Each and every employee understands themission and vision of the company. Employees of company arecommitted towards the quality aspects in service. The employees of Karvy

themselves put forward in fulfilling the organizational principles forbetterment of organization.

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STUDY OF FUNCTIONAL DEPARTMENTS OF KARVY

In Karvy the functions are mainly divided into two parts namelyOperational Functions and the Supporting Functions.

OPERATING FUNCTIONS:

Registry and Investor Services (RIS) in which Karvy carry out functions asRegistrar & transfer Agent (RTA), and Registrar to the Issues. FinancialProduct Distribution (FPD), Here financial products include Mutual Funds,

Fixed income securities, bonds, fixed deposits, Tax-saving Products,Insurance, etc. Stock Broking Services and Depository Participant (DP),which are explained in Service Profile of the Karvy group of companies.

SUPPORTING FUNCTIONS:

Administration - Purchase and Stores Department

Responsibilities

To ensure preventive breakdown of equipment/accessories

including computer hardware

To ensure speedy breakdown maintenance

To ensure that the maintenance status of all equipment/

accessories is entered in the service

To ensure that the maintenance is carried out efficiently

HOD

Assistant HOD

AdministrationTeam

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Maintenance includes preventive, breakdown and general maintenance.Preventive maintenance shall be done as per the prefixed time scheduleby the subcontractors for the purpose. The administration incharge shall

make necessary arrangements for this purpose.In Breakdown / General maintenance admi9nistration team receiveinformation regarding any breakdown or general repairs. On receipt of

the same, the administrative team shall maintain a record of allmaintenance done.

The Procedure involves identification of subcontractors which will be donethrough Newspaper, advertisements, word of mouth. Both the parties

meet to their requirements and enter into agreement. Subcontractors areappointed for providing services Preventive maintenance, Breakdownmaintenance, Courier services and any other services.

2.62 Accounts Department

Finance operations in Karvy are centralized at the Head Office Account.Periodic fund requirement at the regional level will be sort as and when

required. But all cheques and such instruments would be signed by thelocal regional manager.

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System Administration Department

In this department the functions include Trouble shooting, desktop

queries, Network problems, Software and Hardware problems, Installationof new systems, creating new networks.

Human resource DepartmentThe human resource Department (HRD) caters to the entire recruitment

and employee upbringing in the company. The HR functions and practices,which are practiced at the Karvy, are:Manpower Planning: The departmental heads are entrusted with the

responsibility of assessing the present and the future manpowerrequirement in their departments. Manpower planning is being done in

the company in order to secure a confidence and capabilityRecruitment: Advertising in newspaper and other media, privateemployment agencies, personal contacts, colleges and universities are thesources used by Karvy.

Training: The personnel department gives training for all new employees.

Performance Appraisal: The HOD of the department, to which the

employees belongs, presents a report of the employees, to be appraised.In addition to that other managers to whom the employee is associated is

also evaluating the performance of the employee.

Motivation: The Company provides both extrinsic and intrinsic motivation

to the employees. Extrinsic motivation is considered with externalmotivators which employees get through pay, promotion, fringe benefits,

Dy. General Manager

Dy.Manager

Asst. Manager

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holiday’s etc. Intrinsic motivation is concerned with the feeling of havingaccomplished something worthwhile i.e. the satisfaction one gets afterdoing one’s work well, praise, responsibility, recognition, participation

are the examples. Job rotation is undertaken to reduce the monitoringand burden of the employees.

Morale: For improving employee’s morale positive measures like jobrotation, building responsibility into job etc are introduced. Both upwardand downward communication takes place within the company.

Participation is the key to commitment.

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SERVICE PROFILE OF THEKARVY GROUP OF COMPANIES

Karvy Stock Broking Limited

Member - National Stock Exchange (NSE), the Bombay Stock Exchange(BSE), and the Hyderabad Stock Exchange (HSE). Karvy Stock Broking

Limited, one of the cornerstones of the Karvy edifice, flows freely towardsattaining diverse goals of the customer through varied services.

Stock Broking ServicesIt is an undisputed fact that the stock market is unpredictable and yet

enjoys a high success rate as a wealth management and wealthaccumulation option. The difference between unpredictability and a safetyanchor in the market is provided by in-depth knowledge of market

functioning and changing trends, planning with foresight and choosingone & other options with care. Karvy offer trading on a vast platform;

National Stock Exchange, Bombay Stock Exchange and Hyderabad StockExchange. Karvy’s highly skilled research team, comprising of technicalanalysts as well as fundamental specialists, secure result-oriented

information on market trends, market analysis and market predictions.This crucial information is given as a constant feedback to its customers,through daily reports delivered thrice daily; The Pre-session Report,

where market scenario for the day is predicted, The Mid-session Report,timed to arrive during lunch break, where the market forecast for the rest

of the day is given and The Post-session Report, the final report for theday, where the market and the report itself is reviewed. To add to thisrepository of information, Karvy publish a monthly magazine The

Finapolis, which analyzes the latest stock market trends and takes a closelook at the various investment options, and products available in the

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market, while a weekly report, called Karvy Bazaar Baatein, gives moreinformation on the immediate trends in the stock market. In addition, it’sspecific industry reports give comprehensive information on various

industries. Karvy’s Stock Broking services are widely networked acrossIndia, with the number of trading terminals providing retail stock brokingfacilities.

To empower the investor further Karvy have made serious efforts to

ensure that its research calls are disseminated systematically to all ourstock broking clients through various delivery channels like email, chat,SMS, phone calls etc.

Depository ParticipantsThe onset of the technology revolution in financial services Industry saw

the emergence of Karvy as an electronic custodian registered withNational Securities Depository Ltd (NSDL) and Central Securities

Depository Ltd (CSDL) in 1998. Karvy set standards enabling furthercomfort to the investor by promoting paperless trading across thecountry and emerged as the top 3

Depository Participants in the country in terms of customer serviced.Offering a wide trading platform with a dual membership at both NSDLand CDSL, Karvy have established live DPMs, Internet access to accounts

and an easier transaction process in order to offer more convenience toindividual and corporate investors. A wide national network makes its

efficiencies accessible to all.

Distribution of Financial Products

A 1600 team of highly qualified and dedicated professionals drawn fromthe best of academic and professional backgrounds are committed tomaintaining high levels of client service delivery. This has propelled Karvy

to a position among the top distributors for equity and debt issues withan estimated market share of 15% in terms of applications mobilized,

besides being established as the leading procurer in all public issues.

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Advisory ServicesUnder its retail brand ‘Karvy – the Finapolis', it delivers advisory servicesto a cross-section of customers. The service is backed by a team of

dedicated and expert professionals with varied experience andbackground in handling investment portfolios. They are continuallyengaged in designing the right investment portfolio for each customer

according to individual needs and budget considerations with acomprehensive support system that focuses on trading customers'

portfolios and providing valuable inputs, monitoring and managing theportfolio through varied technological initiatives. ‘Karvy - the Finapolis',covers the latest of market news, trends, investment schemes and

research-based opinions from experts in various financial fields.

Mutual Fund Services

Karvy has attained a position of immense strength as a provider ofacross-the-board transfer agency services to AMCs, Distributors and

Investors. Nearly 40% of the top-notch AMCs including prestigious clientslike Deutsche AMC and UTI swear by the quality and range of services thatKarvy offers. Besides providing the entire back office processing, Karvy

provides the link between various Mutual Funds and the investor,including services to the distributor, the prime channel in this operation.Carrying the ‘limitless' ideology forward, Karvy has explored new

dimensions in every aspect of Mutual Fund servicing right from volumemanagement, cost effective pricing, delivery in the least turnaround time,

efficient back-office and front-office operations to customized service.

Karvy has been with the AMCs every step of the way, helping them serve

their investors better by offering them a diverse and customized range ofservices. The ‘first to market' approach that is Karvy’s anthem has earnedthe reputation of an innovative service provider with a visionary bent of

mind.

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Karvy’s service enhancements such as ‘Karvy Converz', a full-fledged callcenter, a top-line website (www.karvymfs.com), the ‘m-investor' andmany more, creating a galaxy of customer advantages.

Karvy Consultants Limited

As the flagship company of the Karvy Group,

Karvy Consultants Limited has always remained at the helm oforganizational affairs, pioneering business policies, work ethic andchannels of progress. Today, Karvy service over 6 lakhs customer

accounts in this business spread across over 250 cities/towns in Indiaand are ranked amongst the largest Depository Participants in the country.With a growing secondary market presence, Karvy have transferred this

business to Karvy Stock Broking Limited (KSBL), Karvy’s associate and amember of NSE, BSE and HSE.

Karvy Investor Service

Merchant BankingRecognized as a leading merchant banker in the country, Karvy registeredwith SEBI as a Category I merchant banker. This reputation was built by

capitalizing on opportunities in corporate consolidations, mergers andacquisitions and corporate restructuring. Karvy’s quality professionalteam and our work-oriented dedication have propelled it to offer

value-added corporate financial services and act as a professionalnavigator for long term growth of its clients, who include leading

corporates, State Governments, foreign institutional investors, public andprivate sector companies and banks, in Indian and global markets.Its financial advice and assistance in restructuring, divestitures,

acquisitions, de-mergers, spin-offs, joint ventures, privatization and

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takeover defense mechanisms have elevated its relationship with theclient to one based on unshakable trust and confidence.

Karvy Global Services Limited

The specialist Business Process Outsourcing unit of the Karvy Group. HereKarvy offer several delivery models on the understanding that business

needs are unique and therefore only a customized service could possiblyfit the bill. Be it in re-engineering and managing processes or deliveringnew efficiencies, Karvy’s service meets up to the most stringent of

international standards. Karvy’s outsourcing models are designed for theglobal customer and are backed by sound corporate and operations

philosophies, and domain expertise. Providing productivity improvements,operational cost control, cost savings, improved accountability and awhole gamut of other advantages. Karvy’s wide market coverage includes

Banking, Financial and Insurance Services (BFIS), Retail and Merchandising,Leisure and Entertainment, Energy and Utility and Healthcare.

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Karvy Computershare Pvt. Limited

Karvy have traversed wide spaces to tie up with the world’s largest

transfer agent, the leading Australian company, Computershare Limited.The company that services more than 75 million shareholders across7000 corporate clients and makes its presence felt in over 12 countries

across 5 continents has entered into a 50-50 joint venture with Karvy.Excellence has to be the order of the day when two companies with suchsimilar ideologies of growth, vision and competence, get together.

Issue Registry

Karvy has emerged as the largest transaction-processing house for theIndian Corporate sector. With an experience of handling over 700 issues,Karvy today, has the ability to execute voluminous transactions and

hard-core expertise in technology applications have gained the No.1 slotin the business. Karvy is the first Registry Company to receive ISO 9002certification in India that stands testimony to its stature.

It is actively coordinating with both the main depositories to develop

special models to enable the customer to access depository (NSDL, CDSL)services during an IPO.

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Karvy Insurance Broking Private Limited

At Karvy Insurance Broking Pvt. Ltd., it provide both life and non-lifeinsurance products to retail individuals, high net-worth clients and

corporates. With the opening up of the insurance sector and with a largenumber of private players in the business, Karvy is in a position toprovide tailor made policies for different segments of customers. With

Indian markets seeing a sea change, both in terms of investment patternand attitude of investors, insurance is no more seen as only a tax savingproduct but also as an investment product. By setting up a separate entity,

Karvy would be positioned to provide the best of the products available inthis business to its customers.

Karvy’s wide national network, spanning the length and breadth of India,further supports these advantages. Further, personalized service is

provided here by a dedicated team committed in giving hassle-freeservice to the clients.

Karvy Commodities Broking Private Limited

At Karvy Commodities, Karvy is focused on taking commodities trading to

new dimensions of reliability and profitability. Karvy has madecommodities trading, an essentially age-old practice, into a sophisticatedand scientific investment option.

Here Karvy enable trade in all goods and products of agricultural andmineral origin that include lucrative commodities like gold and silver andpopular items like oil, pulses and cotton through a well-systematized

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trading platform.Regular trading workshops and seminars are conducted to hone tradingstrategies to perfection. Karvy’s commitment to excel in this sector stems

from the immense importance that commodity broking has to across-section of investors – farmers, exporters, importers, manufacturersand the Government of India itself.

Karvy Inc.

With its growing ambitions of reaching out to investors across the shoresof this country, Karvy’s has set up Karvy Inc. in the US located in NewYork to provide various financial products and information on Indian

equities to potential Foreign Institutional Investors (FIIs) in the region.This entity soon would be ACC registered and would also become amember of various important stock exchanges in the US. This entity

would extensively facilitate various businesses of Karvy viz., stockbroking (Indian equities), research and investment by (Qualified

Institutional Buyer) QIBs in Indian markets for both secondary and primaryofferings, outsourcing of various assignments for the multiple streams ofbusiness in Karvy Global Services Ltd (KGSL).

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THEROTICAL FRAMEWORK

FUNDAMENTAL ANALYSIS:

Fundamental analysis is the examination of the underlying forces thataffect the well being of the economy, industry groups, and companies.The goal is to derive the forecasted earning growths for future price

movements.

Fundamental analysis is the method of evaluating securities by

attempting to measure the intrinsic value of a particular stock. It is thestudy of everything from the overall economy and industry conditions, to

the financial condition and management of specific companies (i.e., usingreal data to evaluate a stock’s value). The method utilizes items such asrevenues, earnings, return on equity and profit margins to determine a

company’s underlying value and potential for future growth.

One of the major assumptions under fundamental analysis is that,

even though things get mis priced in the market from time to time, theprice of an asset will eventually gravitate toward its true value. This seems

to be a reasonable bet considering the long upward march of qualitystocks in general despite regular setbacks and periods of irrationalexuberance. The key strategy for the fundamentalist is to buy when prices

are at or below this intrinsic value and sell when they got overpriced.

Fundamental analysis consists of:

For the national economy we focus on economic data to assess thepresent and future growth of the economy.

At the industry level, there might be an examination of supply anddemand forces for the products offered.

At the company level, may involve examination of financial data,

management, business concept and competition.

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Economy analysis

The economy is the overall economic environment in which all firms

operate. The key variables used to describe the state of economy are:

World economy

Asian economy

Indian economy

1. Growth rate of GDP

2. Industry growth rate

3. Agriculture and monsoons

4. Savings and investment

5. Inflation

6. Interest rates

7. Balance of payments

8. Infrastructure

World economyAccording to the recent statistics, the world GDP (comprising 180

economies) has reached at a sum of US $ 46,747 Billions. Top 15contributors to the world GDP are USA, Japan, Germany, China, UK, France,

Italy, Canada, Spain, Brazil, Russia, Korea, India, Mexico and Australia.

Percentage share of USA to the total world GDP is 28.3. While both the

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emerging economies such as India and China have a share of 1.82 and5.41 respectively.

Find next page the top 15 contributors to the world GDP.

Asian EconomyAsian Economies have brought tremendous success in the recent years.

Economic growth rate in China crossed a two-digit number, whileeconomic growth in India’s Economy is near to 10 percent. Apart from

those two emerging Asian Economic giants, economies such asPhilippines, Indonesia and Malaysia are growing at a faster pace. Findbelow various economic indicators on the Asian Economies.

GDP growth projections among various Asian Economies over years are asfollows:

GDP Growth Projection on Asian Economies

Country Name 2007 2008

Japan 2.3 1.9

Hong Kong SAR 5.5 5

Korea 4.4 4.4

Singapore 5.5 5.7

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China 10 9.5

India 8.4 7.8

Indonesia 6 6.3

Malaysia 5.5 5.8

Philippines 5.8 5.8

Thailand 4.5 4.8

The output over the world increased by 4.4% in the year 2005. The largestcontributors of the world output were India, China and Russia. The Gross

World Product (in purchasing power parity) as to the 2005 estimated datahas reached at $ 60.71 trillions with a real growth rate of 4.7%.

The services sector contributes a largest share to the world GDP. As to the2004 estimated data, the services sector accounted for 64% followed byindustries at 32% and Agriculture 4%.

The level of exports and imports over the world has reached at $10.33trillion and 10.3 trillions f.o.b. as to 2004 estimation.

World inflation:Inflation, which can be simply stated to be a state of economic activities

with rising price level and falling purchasing power of money, has becomeglobal phenomenon. Fast rising oil prices over the world has pressurizedthe general price level in countries of the world. Present world economy is

experiencing higher economic growth with some inflationary pressure.The stabilized countries have the inflation level ranging between 1-3%

and the developing countries have inflation between 3-6%.

Indian economy:

Indian primary sectorAgriculture is the mainstay of Indian economy because of its high share inemployment and livelihood creation notwithstanding its reduced

contribution to the nation’s GDP. The share of agriculture in the grossdomestic product has registered a steady decline from 36.4 per cent in

http://www.economywatch.com/world_economy/

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1982-83 to 17 per cent in 2007-08. Yet this sector continues to supportmore than half a billion people providing employment to 52 per cent ofthe workforce. It is also an important source of raw material and demand

for many industrial products, particularly fertilizers, pesticides,agricultural implements and a variety of consumer goods. This is firsttime after green revolution that the India has become dependent in

satisfying its own food need. Growth pattern of Indian agriculture hasbeen so irregular, because of over dependency on the monsoon. This year

we could achieve dismal growth of 2.5%.India is expecting its agricultureto grow at least 4% (CAGR) in the 11th plan to have sustainable andconsistent growth of overall GDP.

Industrial sector (secondary sector)Industrial growth in India has been inspired by the LPG in 1991. in the10th plan we could achive growth rate of 8-9%. At present industry

sector is contributing 28% to country’s GDP. Though at present India isexperiencing slowdown in growth of industry production, the long term

growth of 8-10% is still intact. The first eight months of the current fiscal,till November 2007, witnessed a moderate slowdown in the growth of theindustrial sector. The slowdown has mainly been on account of the

manufacturing sector. The mining and quarrying sector grew at a fasterpace, while the growth in electricity remained unchanged from April-November 2006. Nonetheless, the 9.2 per cent growth achieved during

April-November 2007 by the industrial sector, when seen against thebackdrop of the robust growth during the preceding four years, suggests

that the buoyancy in this sector has continued, albeit with a degree ofmoderation. Two important changes have occurred in the growth patternof the use-based industrial categories:

First, capital goods have grown at an accelerated pace, over a high baseattained in the previous years, which augurs well for the requiredindustria capacity addition. Secondly, the consumer durables basket that

forms part of the Index of Industrial Production (IIP) showed a negativegrowth during the period, thereby forcing a visible decline in the growth

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of the total consumer goods basket, despite reasonable growth in thenon-durables.

Dimension of Indian Economy

Gross domestic product: measure of the total production of final goodsand services in the economy during a specified period usually a year.

Higher the growth rate, the other things being equal, the more favorableit is for the stock market.

The growth rate of GDP is more important indicator of the performance ofthe economy. The average growth rate of Indian economy during1950-1980 was around 3.5% in real terms. In 1980 it was 5% and 6.2% in

2004. At present it is 8.7 and estimated to cross 9%.

Industrial growth rate: stock market analysts mainly focus on theindustrial sector. Higher the growth rate, more favorable is the things forstock market. The industrial sector witnessed a slowdown in the first nine

GDP Composition

28%

55%

17%

ManufacturingServiceAgriculture

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months of the current financial year. The growth of 9 per cent duringApril-December 2007, when viewed against the back drop of the robustgrowth witnessed in the preceding four years, suggests that there is a

certain degree of moderation in the momentum of the industrial sector.At the product group level, the moderation in growth has been selective.Industries like chemicals, food products, leather, jute textiles, wood

products and miscellaneous manufacturing products witnessedacceleration in growth, while basic metals, machinery and equipments,

rubber, plastic and petroleum products and beverages and tobaccorecorded lower but strong growth during April-December 2007.

Agriculture and monsoons: agriculture accounts for about a quarter ofthe Indian economy and has important linkages both direct and indirectwith the industry. There has been a loss of dynamism in the agriculture

and allied sectors in recent years. A gradual degradation of naturalresources through overuse and inappropriate use of chemical fertilizers

has affected the soil quality resulting in stagnation in the yield levels.Public investment in agriculture has declined and this sector has not beenable to attract private investment because of lower/unattractive returns.

Savings and investment: A notable feature of the recent GDP growthhas been a sharply rising trend in gross domestic investment and saving,

with the former rising by 13.1 per cent of GDP and the latter by 11.3 percent of GDP over five years till 2006-07. The average investment ratio for

the Tenth Five Year Plan at 31.4 per cent was higher than that for theNinth Five Year Plan, while the average saving rate was also 31.4 per centof GDP higher than the average ratio of 23.6 per cent during the Ninth

Five Year Plan.

Money supply: For policy purposes for 2007-08, the RBI assumed a real

GDP growth of 8.5 per cent with inflation close to 5 per cent, and targetedthe monetary expansion in the range of 17-17.5 per cent and creditexpansion in the range of 20 to 24 per cent as consistent with envisaged

growth and inflation.

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Interest rates: interest rates affect the cost of financing to the firms.Higher the interest rates, higher will be the cost and if lower, lower thecost and more will be the profitability. Below table shows that interest

rates are decreasing year after year which is a good sign for the growth.

Year Interest(bank)rates % p.a.

April 1997 11April 1998 10March 1999 8March 2001 7April 2003 6

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Inflation: The Wholesale Price Index (WPI), which is available on a weeklybasis, continues to be the most popular measure of headline inflation inIndia.

Balance of payments: The strength, resilience and stability of thecountry’s external sector is reflected by various indicators. These includea steady accretion to reserves, moderate levels of current account deficit,

changing composition of capital inflows, flexibility in exchange rates,sustainable external debt levels with elongated maturity profile and anincrease in capital inflows. The current account has followed an inverted

“U” shaped pattern during the period from 2001-02 to 2006-07, rising toa surplus of over 2 per cent of GDP in 2003-04. Thereafter it has returned

close to its post-1990s reform average, with a current account deficit of1.2 per cent in 2005-06 and 1.1 per cent of GDP in 2006-07.Capitalinflows, as a proportion of GDP, have been on a clear uptrend during the

six years (2001-02 to 2006-07) of this decade. They reached a high of5.1 per cent of GDP in 2006-07 after a somewhat modest growth rate of3.1 per cent in 2005-06.The net result of these two trends has been a

gradual rise in reserve increase to reach 4 percent of GDP in 2006-07(Figure 6.1). With capital inflows exceeding financing requirements,

foreign exchange reserve increase was of the order of US$ 15.1 billion in2005-06 and US$ 36.6 billion in 2006-07 (Table 6.2). As a proportion ofGDP, external debt was 17.2 per cent and 17.9 per cent in 2005-06 and

2006-07 respectively.

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Infrastructure: with the rapid growth of the economy in recent years theimportance and the urgency of removing infrastructure constraints have

increased. Traditionally, power, railways, roads, ports, airports andtelecommunications were the exclusive domain of the government. Policyhas changed gradually over the past two decades under the pressure of

rising gaps between demand and supply of infrastructure anddeteriorating quality of assets.

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Industry AnalysisGrowth of Construction Industry:

Since the beginning of economic reforms in 1991, the Indian economyhas recorded a compounded annual growth rate (CAGR) of over 6.7%.

That is impressive in itself, and makes India the second fastest growinglarge economy in the world — bettered only by China. More significant isthe orbit change in India’s GDP growth since 2003-04. With 9.4% growth

in 2006-07 following 9% growth in 2005-06, India’s CAGR since 2003-04has exceeded 8.6%. There is a wide consensus among economists,

policy-makers and industry that India can now sustain a CAGR of around8.5% for the foreseeable future. Indeed, the general feeling is that withmore investments in physical infrastructure, it is

quite feasible for the country to achieve double-digit growth by 2011-12— the terminal year of the Eleventh Five Year Plan. This strong economicgrowth, along with the

demographic impetus of a growing population in the working-agecategory, is creating a massive demand supply mismatch across the real

estate sector. The sheer increase in the ‘need for built-up space’ isopening up several opportunities for developers — be it forconstructing residential properties, creating commercial space for offices

or retail, setting up of SEZs, or developing entertainment zones.

Current situation of Constructions

The turnover of the construction industry witnessed 57% growth on Yearof Year(YoY) basis to reach Rs150,933m in December 2007. This is

because investments planned in the infrastructure both by governmentand private sector, booming housing construction and expansion incorporate production facilities, is likely to fast forward the growth in the

Indian construction industry. Aggregate operating profit increased by 35%to Rs22,186.55m. The other income of the industry was Rs8,481.04m.The depreciation increased to Rs2,048.49m. The net profit increased by

83% to reach Rs19,819.89m on YoY basis.

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The overall cost for the construction industry as the percentage of sales is90.27% from Rs87 billion in December 2006 to Rs1,35 billion inDecember 2007. The cost of raw materials to the total sales is 37.82%

during December 2007. The staff costs and other operating expenses are7.34% and 8.04% of the total sales, as compared to the correspondingquarter of the previous year. Depreciation and tax decreased but the

interest rate was high.Inversement

Real estate investments account for about 60% of the total constructioninvestments. Demand-supply gap for residential housing, favorabledemographics, rising affordability levels, availability of financing options

as well as fiscal benefits available on availing of home loan are the keydrivers supporting the demand for residential construction. In addition tothis, demand for office space from IT/BPO segment is expected to

continue due to emergence of India as a preferred outsourcingdestination. Also, boom in organized retail is expected to result in huge

demand for real estate construction. According to industry estimates, theIndian real estate industry is expected to grow at a compounded rate of33% between FY05 to FY10, mainly driven by the residential segment.

Regulations:Construction Industry in India According to the 11th five-year plan

(2007-12), the core infrastructure sector, comprising power, roads,highways, railways, ports, airports, mining and irrigation, will require

massive investments to the tune of US$490 billion over the next five yearsto sustain current 9-10% GDP growth per annum. The constructionindustry accounts for 40-50% of the plan outlays and contributes about

20%, nearly US$59.4 billion to the national GDP. It employs around 31mpeople, second only to the agriculture sector. The industry has witnesseda sustained growth of 30% per annum during the last four years and is

poised to grow at 55% in the current fiscal 2007-08, outperforming eventhe growth of IT and biotech industry in the knowledge sector. Jawaharlal

Nehru National Urban Renewal Mission, with an outlay of approximately

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Rs1,200 billion, is one of the most ambitious projects currently underwayin the nation for strengthening the urban infrastructure.

While the government announced the withdrawal of tax benefits underSection 80 IA of the Income Tax Act, there is a lot of confusion regardingits interpretation. While some companies are of the opinion that they can

no more claim benefits under this section (i.e. they will have to pay taxesat marginal rate), others feel that the benefit has been withdrawn only on

the subcontracted work i.e. they can still claim tax benefits onself-executed projects.

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Budget 2008-09India is on the verge of witnessing a sustained investment phase in

infrastructure buildup. With a slew of announcements in housing, road,port and airport development, we are seemingly on a path of sustained

higher economic growth on the back of improvement in infrastructureconstruction in the country. From a policy perspective, there has been agrowing consensus that a private-public partnership is required to

remove difficulties concerning the development of infrastructure in thecountry. A substantial chunk of the abovementioned investment target is

likely to come from the private sector.

Budget measures

The general CENVAT rate has been reduced to 14% from 16%.

Allocation for National Highway Development Programme (NHDP)has been enhanced to Rs 12,966 crore in 2008-09 from Rs 10,867

crore bn in 2007-08.

The budget has given special attention to development of roads in

North Eastern region where 180 kms of roads will be completed in2007-08 and 300 kms of road is being targetted for completion in2008-09.

The corpus of Rural Infrastructure Development Fund (RIDF-XIV)has been raised to Rs14,000 crore, with a separate window for rural

roads.

The budget has also given considerable thrust to irrigation projectwhere the outlay for 2008-09 has been increased to Rs 20,000

crore from Rs 11,000 crore in 2007-08.

The government is setting up 14 irrigation projects with initial

capital of Rs 100 crore to fund long-gestation major and mediumirrigation projects.

Budget Impact

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The Bharat Nirman and water irrigation programmes will benefit

companies involved in road construction and BOT irrigationprojects.

Reduction of CENVAT is also a big positive for the sector as it

indicates government’s commitment towards the Goods and Service

Tax Act.Company ImpactCompanies like Jain Irrigation and Madhucon Projects will benefit from

increased outlay in irrigation spending.

Industry Wish list

Builders’ Association of India

Alter existing customs duty structure on imported steel bars and

rods – fix the duty at 5% without levy of special additional duty andcountervailing duty

Extend existing structure of import duty, countervailing duty and

special duty on cement for another year, to discourage domesticmanufacturers from hiking prices

Project exporters who have executed projects abroad to be allowed

to import equipment purchased abroad at 5% duty instead ofcurrent 50%

Scrap 2% TDS on construction companies as margins are wafer thin

at 4-5%. Allow companies to pay advance tax instead

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PORTER’S FIVE FORCE MODEL

Supply Past 2-3 years have seen a substantial increase in thenumber of contractors and builders, especially in thehousing and road construction segment.

Demand Demand exceeds supply by a large margin. Demand forquality infrastructure construction is mainly emanatingfrom the housing, transportation and urbandevelopment segments.

Barriers toentry

Low for road and housing construction. However, highworking capital requirements can create growthproblems for companies with weak financial muscle.

Bargainingpower ofsuppliers

Low. Due to the rapid increase in the number ofcontractors and construction service providers, marginshave been stagnant despite strong growth in volumes.

Bargainingpower ofcustomers

Low. The country still lacks adequate infrastructurefacilities and citizens have to pay for using publicservices.

Competition Very high across segments like road construction,housing and urban infrastructure development.Relatively less in airport and port development.

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COMPANY ANALYSISEstablished in 1971, Unitech today is India’s leading real estate companywith a market

capitalization of around US$ 10 billion. From being a National CapitalRegion (NCR) focused real estate developer, Unitech is fast establishing apan India presence. It is already a market leader in NCR and Kolkata and

endeavors to attain leadership in everymarket that it operates in. Unitech has the most diversified product mix

comprising residential, commercial, Information Technology (IT) parks,Retail, Amusement parks and Hotels. It is known for the quality of itsproduct and is the first real estate developer to have been certified ISO

9001:2000 certificate in North India.

Future expansion plans

As of 31 March 2007, the Company has 22 major ongoing residentialprojects. The total

residential space offering from on-going projects is over 25 millionsquare feet. Of these 22 major projects, nine are in Gurgaon, five inGreater Noida, six in Kolkata and one each in Lucknow and Bangalore.

Ongoing ProjectsProject Location Type

Close(North) Gurgaon Multi-StoriedClose(South) Gurgaon Multi-Storied

Uniworld Spa Gurgaon Multi-StoriedFresco Gurgaon Multi-StoriedUniworld Garden Gurgaon Multi-Storied

Espace Gurgaon VillaHarmony Gurgaon Multi-StoriedEscape Gurgaon Multi-Storied

Uniworld City Gurgaon Multi-StoriedHorizon Greater Noida Multi-Storied

Habitat Greater Noida Multi-Storied

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Heights Greater Noida Multi-StoriedCascades Greater Noida Multi-StoriedVerve Greater Noida Multi-Storied

Garden Kolkata Multi-StoriedAir Kolkata Multi-StoriedDowntown Kolkata Multi-Storied

Heights Kolkata Multi-StoriedCascades Kolkata Multi-Storied

Horizon Kolkata Multi-StoriedSouth City Lucknow Multi-StoriedHeritage Estate Bangalore Multi-Storied

Upcoming Township ProjectsProject Location TypeUnitech Grande Noida Multi-Storied

Uniworld Resorts Gurgaon Villa & Multi-StoriedGateway Kolkata Multi-Storied

Uniworld City Greater Noida Multi-StoriedOasis Chennai Villa & Multi-StoriedOasis Hyderabad Villa & Multi-Storied

Risk factors:In the course of its business, Unitech is exposed to a wide variety of risks.

The company is pursuing a strategy of high growth through entry intonew markets. Though the company has, in the recent past, significantly

scaled up its internal as well as external resources in keeping with itsstrategy, it remains to be seen if the company can manage this growtheffectively. Demand for real estate especially residential real estate is

sensitive to interest rate movements. Interest rats have been rising in therecent past owing to a Reserve Bank of India’s credit tightening policy.This could adversely affect company’s business plans considering that

residential segment constitutes a significant portion of company’sbusiness. Also, recent curbs by RBI and the Government of India to reduce

credit flow to real estate sector may affect company’s plans. Rise in cost

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of raw materials could impact company’s performance. While the prices ofcement and steel arebeyond company’s control, we have been leveraging the bargaining power

of scale to manage the cost of other materials through consolidatedpurchase of those materials. Real estate business in India being highlyregulated by Governments at various levels, several regulatory approvals,

permits, licenses etc. are required to be obtained from the Governmentfrom time to time for our projects. Any delay in obtaining such approvals

can affect the timely execution of our projects. While there remain anumber of risks to our business, due to Unitech’s experience of over twodecades in real estate development, its relatively low average cost of the

land bank, its capital efficiency and its innovativemethods of turning around cash flows, we believe that the company willcontinue to generate healthy shareholder returns for the future. Therefore,

Unitech’s outlook for 2007-08 remains positive.Financial performance analysis:

Ratios Industry 2007 2006 2005Current Ratio 1.74 0.95 0.48 0.43Quick Ratio 1.46 0.93 0.46 0.4Inventory TurnoverRatio 14.23 32.16 16.45 15.78Debt Equity Ratio 1.85 3.11 3.06 1.86Operating Profit Ratio 23.49 56.83 19.41 9.73Return On Equity 28.46 84.72 31.01 17.2P/E 29.02 31.97 50.04 13.99Price to Book ValueRatio 7.26 16.37 18.35 2.63Dividend PayoutRatio 13.34 4.13 152.1 127.47Earning Yield 3.46 3.13 2 7.15Dividend Yield 0.47 0.13 0.04 1.19Total Asset TurnoverRatio 0.88 0.22 0.58 0.93Capital TurnoverRatio 2.31 0.91 2.36 2.66Gross Profit Margin 21.84 56.64 18.94 9.31Net Profit Margin 12.78 39.22 10.32 5.67

Interpretation:

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Liquidity ratios:

Ratios Industry Company

Current Ratio 1.74 0.95Quick Ratio 1.46 0.93

Though company’s current ratio is increasing year by year still it is

lesser than industry average. But as the company has got ability to usecapital more efficiently, this ratio gives it more leverage in terms ofearnings. So it can be justifiable.

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Turnover ratios:


Total Asset Turnover Ratio 0.88 0.36

Capital Turnover Ratio 2.31 0.54

Inventory Turnover Ratio 14.23 32.16

Inventory turnover ratio is exceptionally good compared to industry.

Inventory turnover ratios are improving year by year. Asset and CapitalTurnover Ratios are lower than industry, because company has not yetrealized good from its newly restructured capital .

Leverage ratios:


Debt Equity Ratio 1.85 3.11

Company is in the comfortable zone. So that it can still use moreFinancial Leverage in future.

Profitability ratios:


Operating Profit Ratio 23.49 56.83Gross Profit Margin 21.84 56.64Net Profit Margin 12.78 39.22

All profitability ratios for the company are exceptionally good and theyare more than double the industrial average. Perhaps this could be

possible because of its volume, very good companies businessstrategies and mainly because of high project execution expertise that

the company has got over the year.

Valuation ratios:


P/E 29.02 31.97Price to Book Value Ratio 7.26 16.37Dividend Payout Ratio 13.34 4.13

Earning Yield 3.46 3.13

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Dividend Yield 0.47 0.13

P/E of company is higher than industry average; it is because of the

company brand and almost de-risked business operations andcompany’s higher earning ratios. Coming to Price to BV ratio companyhigher ratio than industry average which is substantiable from the

companies past financial track record point of view. The DY and EY forscrip is lower than industry average, because of lower proportion of

dividend payout owing to companies high growth potential.Summary:So I can conclude company’s scrip is over valued.

Note:

Adjustment factor for P/E:

I have considered only Historical P/E but not the Weighted P/E ratio.Because Constant Growth Dividend Model can not be applied for the

company. ( because there is no consistent dividend pay out).

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Period & months 2007/032006/

032005/

032004/

032003/

03INCOMENet OperatingIncome 2,441.74 653.13 509.33 373.95 235.63EXPENSESMaterialConsumption 78.97 61.07 55.68 20.14 25.45ManufacturingExpenses 853.98 396.1 359.62 298.87 174.36Personnel Expenses 65.62 31.11 15.95 10.38 8.71Selling Expenses 13.13 10.62 8.35 4.3 0.91AdministrativeExpenses 42.35 27.4 20.15 14.71 8.45

Cost of Sales 1,054.04 526.29 459.75 348.4 217.88

Reported PBDIT 1,387.69 126.84 49.57 25.56 17.75Other RecurringIncome 65.66 21.45 17.41 8.1 12.01Adjusted PBDIT 1,453.35 148.29 66.98 33.66 24.55Depreciation 4.54 3.1 2.14 1.69 1.84Other Write-offs 0 0 0 0 0Adjusted PBIT 1,448.81 145.19 64.84 31.97 22.71Financial Expenses 193.71 37.14 21.92 9.54 12.01Adjusted PBT 1,255.11 108.05 42.92 22.43 10.7Tax Charges 361.27 38.48 13.46 6.46 4.61Adjusted PAT 893.84 69.57 29.47 15.98 6.1Non-recurringItems 89.72 0.07 0.45 -1.91 4.52Other Non-cashAdjustments 0.44 -0.51 -1.05 2.5 0.02REPORTED PAT 983.56 69.64 29.92 14.07 10.61No. of shares 81.17 1.25 1.25 1.25 1.25

EPS 12.12 55.71 23.94 11.26 8.49

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Estimated EPS:

Period & months 2008 2009 2010 CAGRINCOMENet Operating Income 3150.59 4065.22 5245.37 1.29EXPENSESMaterial Consumption 98.29 122.33 152.25 1.24Manufacturing Expenses 1048.42 1287.14 1580.22 1.23Personnel Expenses 90.21 124.02 170.49 1.37Selling Expenses 24.27 44.85 82.90 1.85Administrative Expenses 56.83 76.26 102.33 1.34

Cost of Sales 1318.02 1654.60 2088.20 1.25

Reported PBDIT 1832.57 2410.62 3157.17Other Recurring Income 75.91 87.75 101.44 1.16Adjusted PBDIT 1908.47 2498.36 3258.61 1.57Depreciation 5.17 5.89 6.71 1.14

Adjusted PBIT 1903.30 2492.47 3251.90Financial Expenses 292.50 441.68 666.93 1.51Adjusted PBT 1610.80 2050.79 2584.97Tax Charges 469.65 610.55 793.71 1.30Adjusted PAT 1141.15 1440.25 1791.26Non-recurring Items 31.65 11.17 3.94 0.35Other Non-cashAdjustments 0.11 0.03 0.01 0.24REPORTED PAT 1172.90 1451.44 1795.20No. of shares 81.17 81.17 81.17

EPS 14.45 17.88 22.12Adjusted EPS(factor is1/2)* 7.22 8.94 11.06

Note: recently company has issued 1:1 bonus, so the adjustment factor of½ is considered for calculation of expected EPS and Book Value.

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Estimated Book Value:

BookvalueCalculation 2007 2006 2005 2004 2003 2008 2009 2010 CAGR

Dividend 40.58 16.23 5 3.75 2.5 70.86123.7

3 216.04 1.75REPORTED PAT

983.56 69.64 29.92 14.07 10.61

1172.90

1451.44

1795.20

EquityShareCapital

162.34 12.49 12.49 12.49 12.49

162.34162.3

4 162.34Reserves& Surplus

998.66212.0

5 161.42 138.2125.8

6998.6

6998.6

6 998.66Numberof Equitysharesoutstanding 81.17 1.25 1.25 1.25 1.25 81.17 81.17 81.17

Net worth2103.98

277.95 198.83

161.01146.4

63212.11

4560.15

6190.31

Bookvalue

25.92

222.36 159.06

128.81

117.17

39.57

56.18 76.26

Price toB.V.Ratio 5.84 5.09 4.62

Projection of MPSBasis Formula MPS 2008 2009 2010P/E(Historical Method)

EPS *P/E

231.04 286.08 352.92

Price to BV BV *price toBV ratio

231.08 285.96 352.32

Data:P/E multiple = 32

Fair value of stock:Weight age assigned to different basis for calculating MPS of stock:

For P/E basis: 1.5

For price to BV basis: 1

Particular Formula 2008 2009 2010

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Fair Value (1.5*P/E MPS+ 1* P to BVMPS )/2.5

231.05 286.03 352.68

TECHNICAL ANALYSIS:

Technical analysis is the examination of past price movements toforecast future price movements. Technical analysts are sometimes

referred to as chartists because they rely almost exclusively on charts fortheir analysis.

Technical stock analysis is based on three basic principles namely:1. Market action discounts everything;

2. Prices move in trends;3. History repeats itself.

Technical analysis is a forecasting method of price movements using pastPrices, volume, and open interest. Pring (2002), a leading technical

Analyst provides a more specific definition:“The technical approach to investment is essentially a reflection of theidea 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, isTesting of Technical Analysis Tools”.

Two technical indicators have been used to analyze the patterns on thechart. They are moving averages both simple and exponential moving

averages and relative strength index. They are explained in detail asbelow:

Moving Average:

Zigzag movement of prices often makes it difficult to judge theunderlying trend. Trend lines do help as we have already seen.

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Another popular way is to smooth the price data with the help ofmoving averages.Technical analysts use two different types of moving averages -

simple moving average, exponential moving average and weightedmoving average.The moving average system of trading is also known as the trend

following system because the trader waits for the trend to beestablished before initiating a trade.

Moving averages are one of the most popular and easy to use toolsavailable to the technical analyst. They smooth a data series and make it

easier to spot trends, something that is especially helpful in volatilemarkets. They also form the building blocks for many other technicalindicators and overlays.

The two most popular types of moving averages are the Simple MovingAverage (SMA) and the Exponential Moving Average (EMA). They are

described below:

Simple Moving Average (SMA)

A simple moving average is formed by computing the average (mean)

price of a security over a specified number of periods. While it is possibleto create moving averages from the Open, the High, and the Low datapoints, most moving averages are created using the closing price. For

example: a 5-day simple moving average is calculated by adding theclosing prices for the last 5 days and dividing the total by 5.

10+ 11 + 12 + 13 + 14 = 60(60 / 5) = 12

The calculation is repeated for each price bar on the chart. The averagesare then joined to form a smooth curving line - the moving average line.

Continuing our example, if the next closing price in the average is 15,then this new period would be added and the oldest day, which is 10,

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would be dropped. The new 5-day simple moving average would becalculated as follows:

11 + 12 + 13 + 14 +15 = 65(65 / 5) = 13Over the last 2 days, the SMA moved from 12 to 13. As new days are

added, the old days will be subtracted and the moving average willcontinue to move over time.

Table 14

Source: stockcharts.com

In the example above, using closing prices from Eastman Kodak (EK), day

10 is the first day possible to calculate a 10-day simple moving average.As the calculation continues, the newest day is added and the oldest day

is subtracted. The 10-day SMA for day 11 is calculated by adding theprices of day 2 through day 11 and dividing by 10. The averaging processthen moves on to the next day where the 10-day SMA for day 12 is

calculated by adding the prices of day 3 through day 12 and dividing by10.

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The chart above is a plot that contains the data sequence in the table. Thesimple moving average begins on day 10 and continues.

Exponential Moving Average (EMA)

In order to reduce the lag in simple moving averages, technicians often

use exponential moving averages (also called exponentially weightedmoving averages). EMA's reduce the lag by applying more weight torecent prices relative to older prices. The weighting applied to the most

recent price depends on the specified period of the moving average. Theshorter the EMA's period, the more weight that will be applied to the most

recent price. For example: a 10-period exponential moving averageweighs the most recent price 18.18% while a 20-period EMA weighs themost recent price 9.52%. As we'll see, the calculating and EMA is much

harder than calculating an SMA. The important thing to remember is thatthe exponential moving average puts more weight on recent prices. Assuch, it will react quicker to recent price changes than a simple moving

average. Here's the calculation formula.

Exponential Moving Average Calculation

Exponential Moving Averages can be specified in two ways - as a

percent-based EMA or as a period-based EMA. A percent-based EMA hasa percentage as it's single parameter while a period-based EMA has aparameter that represents the duration of the EMA.

The formula for an exponential moving average is:

EMA (current) = ( (Price(current) - EMA(prev) ) x Multiplier) + EMA(prev)

For a percentage-based EMA, "Multiplier" is equal to the EMA's specifiedpercentage. For a period-based EMA, "Multiplier" is equal to 2 / (1 + N)where N is the specified number of periods.

For example, a 10-period EMA's Multiplier is calculated like this:

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(2 / (Time periods + 1) ) = (2 / (10 + 1) ) = 0.1818 (18.18%)

This means that a 10-period EMA is equivalent to an 18.18% EMA.

Note: StockCharts.com only support period-based EMA's.

Below is a table with the results of an exponential moving averagecalculation for Eastman Kodak. For the first period's exponential movingaverage, the simple moving average was used as the previous period's

exponential moving average (yellow highlight for the 10th period). Fromperiod 11 onward, the previous period's EMA was used. The calculation in

period 11 breaks down as follows:

(C - P) = (57.15 - 59.439) = -2.289

(C - P) x K = -2.289 x .181818 = -0.4162( (C - P) x K) + P = -0.4162 + 59.439 = 59.023

Table 15

Source: stockcharts.com

*The 10-period simple moving average is used for the first calculation

only. After that the previous period's EMA is used.

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Note that, in theory, every previous closing price in the data set is used inthe calculation of each EMA that makes up the EMA line. While the impactof older data points diminishes over time, it never fully disappears. This is

true regardless of the EMA's specified period. The effects of older datadiminish rapidly for shorter EMA's. than for longer ones but, again, theynever completely disappear.

Uses:

There are many uses for moving averages, but three basic uses stand out:

1. Trend identification/confirmation2. Support and Resistance level identification/confirmation3. Trading Systems

Interpretation:

A moving average smoothens the underlying price data andrepresents the trend for the period used to calculate the average.More importantly, it acts as a curved trendline providing support in

an uptrend and resistance in a downtrend.Since the moving average reflects the trend, intersection of the

price with the moving average signals at least a pause in the trendby way of a correction and possibly a trend reversal.In an uptrend, both the price and the moving average are rising and

price is above the moving average. If the price were now to movebelow the moving average while the moving average is still rising, it

would probably signal just a correction.After a while renewed buying usually pushes the price again overthe moving average. If the moving average is still rising, such a

crossover of the price over the moving average indicatesresumption of the uptrend.However, caution is indicated if the moving average has begun to

move sideways. A trend reversal is now more likely and is signalledwhen the price again crosses below the moving average.

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Penetration of a very short term average such as the 5-day averageoccurs often in long lasting trends and often signals temporarypauses in the trend by way of correction or consolidation. This

happens after a sharp upmove or a downmove when profit-takingsets in a countertrend move in the opposite direction. However,when prices retrace 50 to 60% of the previous move, players who

missed the earlier move usually enter leading to resumption of theunderlying trend.

On the other hand, penetration of say 20-day average accompaniedby a change in the direction of the moving average itself, wouldusually confirm trend reversal or prolonged and deep correction.

Relative Strength Index (RSI):

Developed by J. Welles Wilder and introduced in his 1978 book, NewConcepts in Technical Trading Systems, the Relative Strength Index (RSI)is an extremely useful and popular momentum oscillator. The RSI

compares the magnitude of a stock's recent gains to the magnitude of itsrecent losses and turns that information into a number that ranges from

0 to 100. It takes a single parameter, the number of time periods to usein the calculation. In his book, Wilder recommends using 14 periods.

http://store.yahoo.com/stockcharts/newcointean.html

http://store.yahoo.com/stockcharts/newcointean.html

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Calculation:100

RSI = 100 - --------

(1 + RS)

RS = Average Gain / Average Loss

Average Gain = [(previous Average Gain) x 13 + current Gain] / 14

First Average Gain = Total of Gains during past 14 periods / 14

Average Loss = [(previous Average Loss) x 13 + current Loss] / 14

First Average Loss = Total of Losses during past 14 periods / 14

Note: "Losses" are reported as positive values.

To simplify our explanation of the formula, the RSI has been broken down

into its basic components which are the RS, the Average Gain, and theAverage Loss.

To start the running calculation, the First Average Gain is calculated asthe total of all gains during the past 14 periods divided by 14. Similarly,the First Average Loss is calculated as the total magnitude of all losses

during the past 14 periods divided by 14. The next values for the"averages" are calculated by taking the previous value, multiplying it by

13, adding in the next Gain (or Loss), and then dividing by 14. This isWilder's modified "smoothing" technique in action.

The RS value is simply the Average Gain divided by the Average Loss foreach period.

Finally, the RSI is simply the RS converted into an oscillator that goesbetween zero and 100 using this formula: 100 - (100 / RS + 1).

When the Average Gain is greater than the Average Loss, the RSI risesbecause RS will be greater than 1. Conversely, when the Average Loss is

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greater than the Average Gain, the RSI declines because RS will be lessthan 1. The last part of the formula ensures that the indicator oscillatesbetween 0 and 100. Note: If the Average Loss ever becomes zero, RSI

becomes 100 by definition.

Important Note: The more data points that are used to calculate the RSI,

the more accurate the results.

Interpretation:

When Wilder introduced the Relative Strength Index, herecommended using a 14-day Relative Strength Index. Since then, the

9-day and 25-day Relative Strength Indexes have also gained popularity.The fewer days used to calculate the Relative Strength Index, the morevolatile the indicator.

The Relative Strength Index is a price-following oscillator thatranges between 0 and 100. A popular method of analyzing the Relative

Strength Index is to look for a divergence in which the security is makinga new high, but the Relative Strength Index is failing to surpass its

previous high. This divergence is an indication of an impending reversal.When the Relative Strength Index then turns down and falls below its

most recent trough, it is said to have completed a "failure swing." The

failure swing is considered a confirmation of the impending reversal.

In Mr. Wilder's book, he discusses five uses of the Relative Strength Index:

1. Tops and Bottoms. The Relative Strength Index usually tops above

70 and bottoms below 30. It usually forms these tops and bottomsbefore the underlying price chart.

2. Chart Formations. The Relative Strength Index often forms chart

patterns such as head and shoulders or triangles that may or maynot be visible on the price chart.

3. Failure Swings (also known as support or resistance penetrations

or breakouts). This is where the Relative Strength Index surpassesa previous high (peak) or falls below a recent low (trough).

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4. Support and Resistance. The Relative Strength Index shows,sometimes more clearly than price themselves, levels of supportand resistance.

5. Divergences. As discussed above, divergences occur when theprice makes a new high (or low) that is not confirmed by a new high(or low) in the Relative Strength Index. Prices usually correct and

move in the direction of the Relative Strength Index.

Technical analysis consists of:

Market analysis

Company analysis

Market analysis:

Nifty is considered as market index. Both short as well as long termanalysis has been done using moving averages (simple and exponentialMA) and relative strength index (RSI).

Analysis: fundamentals of marketEvaluating the fundamentals of market ie Nifty though gives us right

estimation about the performance of market and also helps us inforecasting future growth of market, it has got little importance in

present scenario. Because, market is sentiment driven then the actual factdriven, so swings of market make it so unstable beyond compare.In notable future of GDP growth rate that there has been sharply rising

trend in GDP investment and savings with former rising by 13.1% of GDPand latter by 11.3% of the GDP over five years till 2006-07. So there isslight increase in the gap. Average investment ratio for 10th five year plan

is at 31.4% and average savings rate was also at the same level 28.32%.We can say that gap between investment and saving is very which is

usually being satisfied by FDI flow. This fact clearly shows that Indianinvestments are not dependent on foreign countries. On the other side ofthe growth ie demand, India has domestic demand which forms major

portion of total demand. So we are not dependent on foreign demand.

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Balance of payment:At present the biggest trade partner is US with whom India is having some

$11bn surplus trade which might be at stake (US recession) andmarginally affect foreign trade that to in service sector. One more thingwe need to critically look at is rupee appreciation v/s dollar which has

been so furious and India needs to adjust to the pace at which it is beingappreciated.

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Inflation:Major concern for India than anything else is alarming inflation which isprimarily driven by the capital goods price and other food items. So

keeping inflation below 5-7 percent is the immediate as well as long termprime objectives of governing bodies here. In the same light thehonorable FM proposed budget which has an element of inflationary

containment. (Across the board cut in excise duty)

After looking at all these major factors of economy, we also need to tolook at many other stock markets across the world like dow jones, Nikkei,shanghai, hangsang which are shaken because of world economy slow

down (US recession). After critically examining these factors, we come toconclusion that Indian economy is not so much affected by abovediscussed factors and LT story of it going to be intact. According to

Indian planning commission expected the GDP growth rate for next planis between 8%-9%. At present stock market growth rate (CAGR) is pegged

at 18- 20 percent. I expect the same level of growth in stock market forcoming years.If we look at the market from other side ie technical side, market is in

total chaos.

SAAB MARFIN MBA


SAAB MARFIN MBA


Analysis: (Short term or intermediate)Market Trend:If we look at 90 day EMA of Nifty chart, for the past one and half year the

trend has been Bullish. From 20th Jan 2008 onwards there has been shiftin the trend towards Bearish.The 18day EMA & SMA of Nifty has broken down below 90 day EMA. So

this is one more conclusive evidence for reversal of trend from Bull toBear.

Immediate Future:As we can see from the graph it is clear that market is finding support at

4450 to 4600(which is previous resistance for the market). At this levelmarket is likely to consolidate for the medium time period.

Significance of Future Trend:In future unless and until market finds required strengths to come to the

previous level i.e. resistance at 5630 – 50, there will be no signs ofmarket turning Bullish.And if in future market breaks the resistance level i.e. 5630-50 then it

will rally up to 6980-7020. (Target)

Long term analysis

Market is sentiment driven and swings and hypes in market are so strongthat they prevail even for years that have happened at present. There has

been shift in market trend and it has turned bearish though there is noclear sign of bear trend (it’s a long term correction not exactly bearish)but present situation is of complete chaos has left market in a state of

volatility so we should wait and see market movement closely.Market’s long term support is at 3118-3130 and next support is at 4500level so next rally from that level 4500 is 1380-1400(4500-3110) and we

can see some 150-200 points abortive rally has been occurred and hasreached 6050. At that level market was waiting for correction. Bad clues

from US slow down had made market to take LT correction and market

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has turned to be volatile and has yet to settle down at previous support of4500.

Company technical analysis:Stock taken is Indian hotels which operates the brand name “Taj hotel

resorts and palaces”. Both short and long term analysis has been doneusing moving averages (simple and exponential MA) and relative strengthindex (RSI).

Short term analysis:

1) Trend short term or intermediate trend for the scrip has beenflat. Now terning in to bearish.

2) Key short term support and resistance levels for the scrip.As we can see from the 10 day EMA &SMA graph the scrip hasestablished strong support at 130-140 price band.

Price movement; the scrip has undergone major consolidation (sidewaymovement) phase. And it seems that the scrip has made abortive attemptto breach the flat trend and start rally, but in vain and the obvious reason

for this failure is market crash.In the month Feb 2008 the scrip has broken the key support (130-140)

and turned out to be bearish

Future; as the scrip has already broken the key support, the short term

traders should sell it and the fresh buy signal for the stock is known onlywhen scrip establishes support.If in case scrip regains the strength to come back to the level of 130-140,

investors should still wait till it clearly breaches above that level but withexpanding volume.

SAAB MARFIN MBA


Trading tactics for short term investors:As it can be clearly seen from the graph, the stock is purely a tradingstock. So to trade in the scrip one should look for key support and also

look for cue from RSI. If the stock is at support and selling pressure ishigh i.e. RSI value 30 and below, it should be bought and sold at highbuying pressure i.e. at RSI value 70 & above.

Here the identifying future target price (for the short term) is very difficultas scrip was undergoing phase of consolidation and has no established

resistance level.

UNITECH RSI, M.A. & Volume

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EMA 10SMA 10EMA 40SupportResistanceBuySell

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Short term analysis:Trend:The long term trend was bullish but turned flattish. The short term trend

is bearish and stock undergoing consolidation.Short term resistance:Short term resistance is at 365 and support at 275 though the trend

seems to be bullish, the intermediate trend has been flat because for yearscrip has shown a sign of consolidation. Now the scrip is slightly on down

trend and settling down to the intermediate support of 265-275.Future:If market turns back to old levels then scrip will get the strength to

regain its previous momentum at resistance level of 365 and even breakaway that level of resistance with expanding volume then rally is set to beresumed and is expected to rally till 455-475 (target) or else if it doesn’t

get support from market it fails to take support at then straight awaygoes down to settle at the rock bottom i.e. 150 level.

Note:Buying and selling is suggested to be followed at support level in

combination with right RSI values i.e. when RSI value is in oversold region30. If possible investors should also have a close eye on expandingvolume which is a conclusive evidence for aggressive bull or bear run.

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Unitech Long Term RSI, M.A. & Volume

Long term analysis:

Long term resistance:Long term resistance is at 500 and support at 300 then 200.Future:

Movement of scrip is mainly dependent on the market (Nifty) performance.If market turns back to old levels then scrip will get the strength to regain

its previous momentum at resistance level of 500 and even break awaythat level of resistance with expanding volume then rally is set to be

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resumed and is expected to rally till 620-640 (target) or else if it doesn’tget support from market it fails to take support at then straight awaygoes down to settle at the rock bottom ie 150 level. If it crosses 620-40

range successfully then it may rally till 700.

Note:

Buying and selling is suggested to be followed at support level incombination with right RSI values ie when RSI value is in oversold region

30. if possible investors should also have a close eye on expandingvolume which is a conclusive evidence for aggressive bull or bear run.

SAAB MARFIN MBA


FINDINGS:General:

One of the most important areas for any investor to look when

researching a company is the financial statement. Financial reportsare required by law and are published both quarterly and annually.

Management discussion give investors a better understanding of

what the company does and usually points out some key areaswhere they did well.

Audited financial reports have much more credibility than

unaudited ones.

The income statement takes into account some non-cash items

such as depreciation. The cash-flow statement strips away allnon-cash items and tells you how much actual money the companygenerated.

The share prices of the company are very sensitive and may change

very rapidly (upward or downward), but if we follow a systematic

study, it is possible to predict the share prices to a certain extent.

The stock prices always take a correction after a major climb.

Technical analysts evaluate securities by analyzing statistics

generated by market activity, past prices and volume.

The bar chart is used more than a straight-line graph because it

shows the high, low, open and close for each particular day.

One of the most basic and easy to use technical analysis indicators

is the moving average, which shows the average value of a

security's price over a period of time. The most commonly used

moving averages are 20-, 30-, 50-, 100- and 200-day.

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Support and resistance levels are price levels, at which movement

should stop and reverse direction. Think of support/resistance (S/R)

as levels that act as a floor or a ceiling to future price movements.

For Stock:

First, the projected MPS of the stock next three years are Rs.231.05,Rs.286.03 and Rs.352.68.

Short term support for scrip: 265-275; Next support has beenestablished at 150-165.

Short term resistance for scrip: 365

Short term support for scrip: 265

Long term resistance for scrip: 500

Long term support is at 200 level;

Now the scrip is slightly on the down trend(short term) and settling

down to the intermediate support of 265-275

Long term target by technical analysis is 620-40 but this is unlikely

to happen in the medium term because short term trend has beenbearish and long term trend has been flat and undergoing longconsolidation

For market:

Short term support or intermediate support: 4500-4600; next long

term support lies at3100-3150

Resistance for Nifty is at present is at 6000

Short term and intermediate trend has been bearish and long term

trend is still bullish.

Long term nifty target is a 6980- 7020.

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Recommendations:

Long term investors can include Unitech, because the growth rates

and earnings are good compared to others stocks. Therefore

investors can include this in their portfolio to earn the higher return

on their investment.

The Long term investors should buy the stocks fair value found out

by the fundamental analysis.

Short term investors should look on various support and resistance

of stocks to buy or sell and make profit.

The investors are watch the news which affects the stocks and

market because market is very much driven by sentiments, so they

see its effects the market or stocks that they can make more profit

out of it.

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Conclusion:


capital needed by the industry, which leads to the growth of the

industry and economy as a whole; hence the stock market plays an

important role in the development of the industry.

Some times Using Technical and fundamental analysis individually

leads to incorrect results hence both Fundamental and technical

analysis should be used at a time to get the desired result.

Fundamental analysts study everything from the overall economy and

industry conditions, to the financial condition and management of

companies before deciding on any particular stock.

Technical analyst’s look for peaks, bottoms, trends, patterns and other

factors affecting a stock's price movement and then make buy/sell

decisions based on those factors.


capital needed by the industry, which leads to the growth of the

industry and economy as a whole; hence the stock market plays an

important role in the development of the industry.

SAAB MARFIN MBA


SAAB MARFIN MBA


BIBLIOGRAPHY

Books referred

Security Analysis and Portfolio Management- Fisher and Jordan

Investment Analysis and Portfolio Management

-Prasanna ChandraWebsites;

- www.rbi.com- www.sebi.com- www.bse.com

- www.nseindia.com- www.icicidirect.com- www.equitymaster.com

- www.moneycontrol.com

http://www.bse.com/

http://www.nseindia.com/

http://www.icicidirect.com/

http://www.equitymaster.com/

http://www.moneycontrol.com/

Economy & Finance

FUNDAMENTAL & TECNICAL ANALYSIS OF KARYAVA STOCK EX.docFUNDAMENTAL & TECNICAL ANALYSIS OF KARYAVA STOCK EX.doc