a project report on analysis of stock price movement at anagram stock broking ltd

EXECUTIVE SUMMARY

Babasabpatilfreepptmba.com

Analysis of Stock Price Movement At ANAGRAM STOCK BROKING LTD

Executive Summary:

Company Profile:Anagram Stockbroking Ltd is amongst the leading retail broking houses in India. It is engaged in

offering comprehensive personal finance solutions since 1994. The company is a part of the of the Rs 20

billion Lalbhai Group. Anagram has grown and developed steadily since 1994. Along with being one of top 5

(as per Dun & Bradstreet’s Survey – “leading Corporate Broking houses in the country”) national level

corporate broking house for more than a decade, they are at par with all other competitor in the Industry &

matching the standards.

Title of the project:“Analysis of Stock Price Movement”

Objective of the Study:

To study the behavior of the stock price movement during the last bull run from the period 1st October

2003 to 31st July 2008.

Research Methodology:

Type of Research: Descriptive Research

Data collection type: Secondary data.

Data period: 1st October 2003 to 31st July 2008.

Analytical Tool: Returns, Line Graph.



Major Findings:

Some of the sectors like Banking, Construction and Engineering sector have shown tremendous

growth in their returns during the past five years.

Some sectors have shown good returns during past few years but they have succumbed to the global

cues now.

Some sectors are emerging to be very strong in the coming future.

Suggestions:

Some sectors have been classified into high return group. These companies have yielded huge returns

in the last five years.

Some sectors have been classified into medium returns group. These companies yielded good and

steady returns in the last five years

Some sectors have been classified into average return sector. These companies may have yielded

huge returns in past but the returns have decreased in the recent times due to global economy.



INTRODUCTION

TO

THE STUDY



Introduction:

The history of the Indian capital markets and the stockmarket, in particular can be traced back to 1861 when

the American Civil War began. The opening of the Suez Canal during the 1860s led to a tremendous increase

in exports to the United Kingdom and United States.

Several companies were formed during this period and many banks came to the fore to handle the finances

relating to these trades. With many of these registered under the British Companies Act, the Stock Exchange,

Mumbai, came into existence in 1875. It was an unincorporated body of stockbrokers, which started doing

business in the city under a banyan tree. Business was essentially confined to company owners and brokers,

with very little interest evinced by the general public. There had been much fluctuation in the stock market

on account of the American war and the battles in Europe.

There are many other factors which affect the Indian equity markets. In this project we will study what are

the various factor that have affected the Stock markets from the period of 2006 – 2008.

Indian economy has steadily grown in past years. Positive tidings about the Indian economy combined with a

fast-growing market have made India an attractive destination for investments, Let it be a infrastructural

project, a real estate project or an investment in equity markets.

The stock market went through a bullish rally from the period of 2006 – 2008 and then suddenly there was a

bearish market. The stock markets turned out to be volatile from the mid of January 2008 till now. The study

on “Current Equity Market Analysis” focuses on what made stock market especially Sensex made bullish

from the period of 2006 to 2008 and what are the various reasons which helped the Sensex to cross the index

level of 21000 points.



Recently after the bullish rally the stock markets turned to be volatile markets from mid of January 2008.

This study also highlights the bearish rally of the Indian stock markets. It includes what are the various

reasons which made the Indian stock markets to be volatile.



INTRODUCTION

TO THE

FINANCIAL SYSTEM

Introduction to the financial system



Financial System of any country consists of financial markets, financial intermediation and financial

instruments or financial products.

The term "finance" in our simple understanding it is perceived as equivalent to 'Money'. We read

about Money and banking in Economics, about Monetary Theory and Practice and about "Public Finance".

But finance exactly is not money, it is the source of providing funds for a particular activity. Thus public

finance does not mean the money with the Government, but it refers to sources of raising revenue for the

activities and functions of a Government. Here some of the definitions of the word 'finance', both as a source

and as an activity i.e. as a noun and a verb.

The American Heritage Dictionary of the English Language, Fourth Edition defines the term as

under-

1:"The science of the management of money and other assets.";

2: "The management of money, banking, investments, and credit. ";

3: "finances Monetary resources; funds, especially those of a government or corporate body"

4: "The supplying of funds or capital."

Another English Dictionary, "WordNet ® 1.6, © 1997Princeton University " defines the term as

under-

1:"the commercial activity of providing funds and capital"

2: "the branch of economics that studies the management of money and other assets"

3: "the management of money and credit and banking and investments"

All definitions listed above refer to finance as a source of funding an activity. In this respect

providing or securing finance by itself is a distinct activity or function, which results in Financial

Management, Financial Services and Financial Institutions. Finance therefore represents the resources by

way funds needed for a particular activity.

We thus speak of 'finance' only in relation to a proposed activity. Finance goes with commerce,

business, banking etc. Finance is also referred to as "Funds" or "Capital", when referring to the financial



needs of a corporate body. When we study finance as a subject for generalising its profile and attributes, we

distinguish between 'personal finance" and "corporate finance" i.e. resources needed personally by an

individual for his family and individual needs and resources needed by a business organization to carry on its

functions intended for the achievement of its corporate goals.

INDIAN FINANCIAL SYSTEM



The economic development of a nation is reflected by the progress of the various economic units,

broadly classified into corporate sector, government and household sector. While performing their activities

these units will be placed in a surplus/deficit/balanced budgetary situations.

There are areas or people with surplus funds and there are those with a deficit. A financial system or

financial sector functions as an intermediary and facilitates the flow of funds from the areas of surplus to the

areas of deficit. A Financial System is a composition of various institutions, markets, regulations and laws,

practices, money manager, analysts, transactions and claims and liabilities.

FINANCIAL MARKETS



A Financial Market can be defined as the market in which financial assets are created or transferred.

As against a real transaction that involves exchange of money for real goods or services, a financial

transaction involves creation or transfer of a financial asset. Financial Assets or Financial Instruments

represents a claim to the payment of a sum of money sometime in the future and /or periodic payment in the

form of interest or dividend.

Money Market- The money market its a wholesale debt market for low-risk, highly-liquid, short-

term instrument. Funds are available in this market for periods ranging from a single day up to a year. This

market is dominated mostly by government, banks and financial institutions.

Capital Market - The capital market is designed to finance the long-term investments. The

transactions taking place in this market will be for periods over a year.

Forex Market - The Forex market deals with the multicurrency requirements, which are met by

the exchange of currencies. Depending on the exchange rate that is applicable, the transfer of funds takes

place in this market. This is one of the most developed and integrated market across the globe.

Credit Market- Credit market is a place where banks, FIs and NBFCs purvey short, medium and

long-term loans to corporate and individuals.

FINANCIAL INTERMEDIATION



Having designed the instrument, the issuer should then ensure that these financial assets reach the

ultimate investor in order to garner the requisite amount. When the borrower of funds approaches the

financial market to raise funds, mere issue of securities will not suffice. Adequate information of the issue,

issuer and the security should be passed on to take place. There should be a proper channel within the

financial system to ensure such transfer. To serve this purpose, financial intermediaries came into existence.

Financial intermediation in the organized sector is conducted by a widerange of institutions functioning

under the overall surveillance of the Reserve Bank of India. In the initial stages, the role of the intermediary

was mostly related to ensure transfer of funds from the lender to the borrower. This service was offered by

banks, FIs, brokers, and dealers. However, as the financial system widened along with the developments

taking place in the financial markets, the scope of its operations also widened. Some of the important

intermediaries operating ink the financial markets include; investment bankers, underwriters, stock

exchanges, registrars, depositories, custodians, portfolio managers, mutual funds, financial advertisers

financial consultants, primary dealers, satellite dealers, self regulatory organizations, etc. Though the markets

are different, there may be a few intermediaries offering their services in move than one market e.g.

underwriter. However, the services offered by them vary from one market to another.



INDUSTRY

&

COMPANY PROFILE

INDUSTRY



Financial services organizations are striving to achieve increasingly ambitious profit and growth targets

against a background of heightened risk, regulation and market pressures.

Customer needs and expectations are evolving in the face of increasing personal wealth, more private

funding of pensions and healthcare and the desire for ever more accessible and personalized financial

products and services. In turn, intense competition has squeezed industry margins and forced organizations to

cut costs while still seeking to enhance the quality of client choice and service. The battle for talent is also

heating up as companies seek to enhance innovation, customer loyalty and investment returns.

The corollary of this market evolution is increasing risk as products become more complex, organizations

more diffuse and the business environment ever more uncertain. Regulation is also tightening in the wake of

public and government pressure for improved governance, transparency and accountability.

In this environment, the winners will be companies that can turn the challenges into opportunities to build

stronger and more enduring customer relationships; sharpen process efficiency; unlock talent and creativity;

use improved risk management processes to deliver more sustainable returns; and use new regulatory

demands as a catalyst for strengthening the business and enhancing market confidence.

Organizations will also need to identify and concentrate on core competencies where they can exert

maximum competitive advantage, be this particular product, service, process or geographical territory. For

some this will require a strategic re-orientation towards becoming a specialist niche provider. Even larger

groups will need to differentiate their offering and by implication the associated brand.



COMPANY PROFILE

Company Profile

Anagram Stock Broking (Anagram) is amongst the leading retail broking houses in India. It is engaged in

offering comprehensive personal finance solutions since 1994. The company is a part of the Rs 20 Billion



Lalbhai Group. The group companies in the capital and commodities market area include Anagram

Stockbroking Ltd and Anagram Comtrade Ltd. Anagram offers a wide range of services for the discerning

equity investor, in addition to online account access and real time trading.

Anagram has grown and developed steadily since 1994. With the vision of being the preferred destination for

all financial products for investors across India they are ready to take the next leap

Along with being one of top 5 (as per Dun & Bradstreet’s Survey – “leading Corporate Broking houses in the

country”) national level corporate broking house for more than a decade, they are at par with all other

competitor in the Industry & matching the standards.

Corporate family of Anagram consists of following 5 Companies:

● Anagram Securities Limited (ASL) having memberships with National Stock Exchange of India Ltd

(NSE) for Cash and F & O segment; and Ahmedabad Stock Exchange (ASE).

● Anagram Stock Broking Limited (ASBL) having membership of Bombay Stock Exchange Ltd (BSE)

for Cash and F & O segment; and DP of NSDL for Equity and Commodities

● Anagram Comtrade Limited (ACL) having membership of Multi Commodity Exchange (MCX),

National Commodity & Derivatives Exchange Ltd (NCDEX) and National Multi-Commodity

Exchange of India Ltd (NMCE).

● Enagram Securities Limited (ESL) duly registered with AMFI and Corporate Insurance Agent of

MET LIFE.

● Dropadi Finance Limited (DFL) an NBFC company engaged in the finance business.



They have with us a decade of hard won experience behind us.

They are a complete service brokerage house offering the entire spectrum of services that an equity investor

would need. They offer real time trading opportunities on the NSE as well as BSE. Their group Company is

also a Depository Participant of the NSDL and provides online services to their clients for account accessing

and information.

To cater to the ever mobile trader as well as the net savvy investor they offer state-of –the – art online trading

through their website www.anagram.co.in. Regular updates during trading hours, and access to information,

analysis and research, and a range of monitoring tools on www.anagram.co.in has made it one of the most

favorite sites amongst the investors.

Shake out and consolidation is a common feature across the industries and broking is no exception to it.

Despite of various phases of reforms the security business is going through, Anagram has managed to stand

erect and grow rapidly.

Founded in 1993, Anagram is one of India’s leading corporate broking houses today with a very strong

network. With their initial strongholds in West, they have now expanded to 150 Branches covering all major

business centers of India CATERING TO OVER 1, 00,000 CLIENTS. They have over 2500 terminals across

the country connected with private VPN.

The following areas give us a unique identity

Service: beyond broking

The differentiator: Research and risk management


http://www.anagram.co.in/

http://www.moneypore.com/


Technology: the byte that works

Personnel: intangible asset.

Beyond Broking

With a network of more than 150 odd branches and with over 500 odd Franchises/Sub Brokers and a

clientele of more than 1.00,000 Retail investors, Anagram is counted among the top 5 brokerages in the retail

arena.



If the first priority in business is reaching customers, the second is keeping him satisfied. At Anagram, they

believe in building relationship with their customers and provide him with a whole palate of services. The

relationship management encompasses from providing the right investment strategies based on needs and risk

stances to ensuring timely payouts.

They are proud of the fact that they’ve maintained a record of prompt payouts to their customers, winning a

reputation for reliability and transparency that is not too common a currency in this business. And they’ve

done this despite the alarming- and–sudden-slumps that the stock market and the economy have gone through

over the last decade.

As far as product range goes, they’re steadily building up a comprehensive portfolio of products and services

apart from conventional broking. High speed anywhere trading through the net, online depository services,

Commodities Trading and retail debt products are increasingly areas of special emphasis for us.

While they have their hand on the pulse of the retail client, they also understand the needs of the demanding

institutional clients. A separate institutional sales desk services the needs of the select institutions. They are

empanelled with leading Indian Financial Institutions, Insurance Companies, Mutual Funds, Treasury of

Banks, etc. and keep expanding the list.

Markets and Network

Anagram has membership in all the leading stock and commodities exchanges in the country. The firm is a

member in NSE, BSE, NCDEX and MCX. It is a depository participant with NSDL. Anagram has its roots in

Western India and has established nationwide presence with 169 branches, 1,360 sub-brokers, 2,556



terminals and a professional team of 2,000 plus employees spread across major metros and states in the

country. It also provides trading in futures and options through its online portal www.anagram.co.in

Areas of Expertise

Anagram offers real time trading opportunities on the BSE as well as the NSE. It also offers depository and

online services to clients for account accessing and information through its online portal catering to the needs

of mobile trader as well as the net savvy investor. Anagram offers state-of –the–art online trading through its

website (www.anagram.co.in). Regular updates during trading hours, and access to information, analysis and

research, and a range of monitoring tools is available. The company has steadily building up a

comprehensive portfolio of products and services apart from conventional broking. High speed anywhere

trading through the net, online depository services, commodities trading and retail debt products are

increasingly areas of special emphasis for the company.

Research

Anagram is a research driven organization. Daily Call is its morning newsletter that takes a trading

call on the market and gives a ringside view of the overnight national and international events.

Customers get real time feeds on news, comments and recommendations through instant messaging

that are of utmost essence to the serious trader. The Weekly Watch delivered to all the clients every

Saturday evening is the most comprehensive reports of its kind. The report summons developments

over the past week, major economic talking points, summary on derivatives markets, technical

outlook and trading ideas for the forthcoming week and fundamental investments with an exhaustive

research report for a medium to long term horizon. On the commodities side, it releases daily and

weekly reports providing outlook on international agri-commodities.

Information and research is a vital ingredient for success in an industry that relies on information flows and

where the ability of its people to understand the markets and foresee trends is what sets a good firm apart.



Research is close to their heart. Their 18 member research team is spread over two locations i.e. Ahmedabad

and Mumbai. They contribute regularly to the various TV channels, newspapers and other media.

Their research reports for the institutional clients are exhaustive and in detail, where as for the retail segment

the stress is on timeliness. They have a battery of products that cater to the retail investor. Chinta’s Call is

their morning newsletter that takes a trading call on the market and gives you a ringside view of the overnight

national and international events and how they would shape the day’s trading. While the retail investors

thrive on these products, even their institutional clients find these products interesting.

What differentiates us is their strategic advise under different circumstances, whether it is a dividend yield

story, a call to embrace the PSU banks or to plugging into the power sector.

The Research Product they come out with are:

1. Sector Update Report

2. Company Research Report

3. Weekly sector outlook and investment picks

4. Weekly domestic and international market wrap up

Back Office Support

Anagram has centralized Back Office, which is based at Ahmedabad. Back Office handled by Nilesh

Dakway based in Mumbai out of Bandra- Kurla Complex and supports the Back Office operation to

Institutions and others from this place.



1. Infrastructure

2. Office Network Across India

3. Office Network in Mumbai

4. Research & Market Information

5. Back Office Support

Office Network across India

They have at present more than 150 offices across India. The addresses of the various offices are given in the

enclosed annexure. Besides this branch network Anagram has network of Sub-brokers, Franchisees and

Remessiers. Anagram has connectivity provided through installed Vsats, lease lines and Bharti VPN (Virtual

Private Network) through VSATs. The other CTCL installations are over 100 at various locations.



Robust risk management

Risk management is at the core of their very existence. There is no margin for any error here. With the help

of modern technology and some hard nuts in the risk management room they have been able to keep the risks

of their business to the bare minimum. Their comfort to expand geographically comes from the fact that their

risk management is clinical. Their strict adherence to systems ensures that their clients and stake holders can

have their quota of the much needed peaceful sleep.

The byte that works

Like every other business, securities and Commodity broking business too has been increasingly driven by

technology. They have made substantial investment and committed to make investment in information

technology as it is increasingly the future business growth driver.

Their website www.anagram.co.in offer online trading which is supported by high bandwidth leased lines,

secure servers and a custom-built user interface that gives the customers an international standard trading

experience.

They have also invested in the state-of-the-art VPN infrastructure that gives a robust system to ease

geographical expansion and build terminal network across the country. It also enables the entire business

applications available cutting across geographical boundaries.

Whether it is the trading engine for their website or the VSATs based VPN they use for their connectivity or

the applications that make their front office, back office and Depository service completely seamless, they

have always settled for the best. They have the best of the breed technology partners complemented by some

of best brains in IT and connectivity working for us.


http://www.anagram.co.in/


Intangible assets

People, it is often said, are company’s biggest resource. This is doubly true in a service industry like

securities business.

Their success lies in the fact that they have been able to hire, train and then retain the desired people. They

are a 1300 plus people strong team. The average age of their team is which just the right blend of youth and

experience is.

Distribution Business

The Distribution Business offers advisory Services of Investments into Mutual Funds, Primary Market, Life

Insurance and other small saving products. They currently operate out of 60 locations of the total 150

Anagram locations and by 31st March 2008 shall cover at least 40 locations Pan India. The distribution

service adds up to their broking business and is serviced by experts at each location. The business is

supported by an efficient Research & Back Office team.

Anagram provides a host of services for customers investing in mutual funds. It offers wide range of services

like, rankings of different mutual fund schemes, list of new schemes issued in the market, interviews with

fund managers, InstaNAV – a quick search based application that enables customers to get the related

information about the desired scheme, Primer – a brief description about mutual funds, RBI procedural

guidelines and a Risk Profiler – which helps the customers in ascertaining one’s own profile, thus minimizing

risk.

Commodities Business



Commodity markets are markets where raw or primary products are exchanged. These raw commodities are

traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts.

Commodities' trading in India is on the cusp of transformation. Organized commodities trading as a

professional service-oriented set-up, is a recent phenomenon in India but is growing at a tremendous pace,

emerging as the largest and most exciting service sectors of this decade.

In order to match up with this phenomenal growth and pace, there is always going to be a need for

passionate, trained commodities professionals. In addition, the fast changing commodities sector demands

that professionals learn new skills, improve their efficiency, learn to compete and think out of the box. All

this requires an education that is intensive, comprehensive and closely linked to the commodities derivatives

market, through experiential learning.

Investment Banking

Investment Banking is the traditional aspect of investment banks which involves helping customers raise

funds in the Capital Markets and advising on mergers and acquisitions. Investment banking may involve

subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target.

Other terms for the Investment Banking Division include Mergers & Acquisitions (M&A) and Corporate

Finance. The Investment Banking Division (commonly referred to as IBD) is generally divided into industry

coverage and product coverage groups. Industry coverage groups focus on a specific industry such as

Healthcare or Technology, and maintain relationships with corporations within the industry to bring in

business for the bank. Product coverage groups focus on financial products, such as Mergers & Acquisitions,

Financial Sponsors, and Leveraged Finance.

Performance



The company registered strong growth during the first 10 months of 2007. The company added 26,460

domestic customer accounts in 2007 as compared to 25,295 in 2006. Number of terminals, sub brokers and

employees almost doubled during this period.

Growth Areas

Anagram has diversified its business to other areas such as portfolio management services and is looking

forward at opening overseas branches. It plans to introduce company fixed deposits and merchant banking to

its current offerings. It is also aiming at increasing their institutional client base, acquiring new

business/brokerage firms and also entering into joint venture operations in the near future.

The firm has its roots in Western India especially Gujarat where it is the biggest player. But it has expanded

considerably.

Products & Services

Equity Broking – Cash & Derivatives

Commodity Broking

Margin Trading



Depository Services

Research

Distribution of Mutual Funds, Insurance, IPO’s etc

Equities:

The amount which shareholders own in a publicly quoted company

Equity is the risk-bearing part of the company's capital and contrasts with debt capital which is usually

secured in some way and which has priority over shareholders if the company becomes insolvent and its

assets are distributed

Anagram is a member of both the BSE and NSE. The Equity cash market can be divided into:

1. Pure Delivery: The client can purchase stocks on any exchange and pay the entire purchase value before

T+2

Initial margin will or will not be required depending on the comfort level with the clien



2. Intra-Day: The client can go for Intra-day trading on any exchange on the basis of the margin deposit.

Anagram gives a intra-day exposure of 5 times the margin. It is mandatory to square off Intra-day positions

on the same day.

3. NBFC Funding: Anagram currently has a list of 574 stocks under this product – Revised Periodically.

Initial margin of 30% will be required from the client – Cash or Eligible Stocks. The client can purchase

stocks from this list on any exchange and the balance 70% will be funded through the NBFC @ 18% p.a. The

position will be valued at Daily Closing Price 30% margin will have to be maintained by the client. To avail

the NBFC Funding, client has to complete the NBFC formalities.

4. Tatkal: Means buying stocks in the last 30 minutes of the trading session & selling the same in the first 15

minutes. Tatkal basically is meant to earn interest on funds deployed. Funds have almost multiplied 4 times

in last 4 years. It is not risk free. It carries overnight risk. Risk of Short delivery. Funding facility allowed in

Tatkal. Brokerage can be negotiated if amount involved is sizable

Derivative Market

Derivative: These are the financial instruments for Risk Management Derives its value from an underlying

asset, index or reference rate

The Derivatives Segment can further be divided into

1. Futures



2. Options

Futures: Future is an agreement between two parties to buy and sell an asset at a certain time in the future at

a certain price. A future contract gives the holder the right and the obligation to buy or sell. Both parties of a

“future contract” must exercise the contract (buy or sell) on or before the settlement date

Index Futures and Stock Futures

Time period – 3 months – Current, near and far month. All contracts expire on last Thursday of every month.

Contract Size – The value shall not be less than 2 lacs at the time of its introduction

Options: An option is a contract, which gives the buyer the right, but not the obligation to buy or sell shares

of the underlying security at a specific price on or before a specific date.

There are two types of options:

1. Call Option.

2. Put Option.

Call Option: An option contract that entitles the buyer to buy a fixed number of the underlying shares at a

stated price on or before a fixed expiry day



Put Option: An option contract that entitles the buyer to sell a fixed number of underlying shares at stated

price on or before a fixed expiry day

On-line Trading Software

Anagram provides free On line trading software further there are two versions available Web and moneypore

Express. Web version is to have limited number of scrips in the market watch Money-pore Express is .exe

version (client-server application)Can be downloaded. Offer both Cash & derivatives. In cash anagram offers

both NSE & BSE

Two Products – Delivery & Margin

Delivery – 3 times limit

Margin – 5 times limit with auto square off

Derivatives – as per exchange margin (span + exposure). No auto square off

Mutual Funds

Anagram provides a host of services for customers investing in mutual funds. It offers wide range of services

like, rankings of different mutual fund schemes, list of new schemes issued in the market, interviews with

fund managers, InstaNAV – a quick search based application that enables customers to get the related

information about the desired scheme, Primer – a brief description about mutual funds, RBI procedural

guidelines and a Risk Profiler – which helps the customers in ascertaining one’s own profile, thus minimizing

risk.

Advisory ServicesBabasabpatilfreepptmba.com


Apart from broking business, Anagram is also engaged in offering advisory services of investments into

mutual funds, primary market, life insurance and other small saving products. The distribution services add

up to their broking business and are serviced by experts at each location. An efficient research and back

office team support the business. Anagram’s set of diligent advisors helps its customers plan and get more

out of one’s money. The schemes include, fixed income, bank fixed deposits, company fixed deposits, small

savings schemes, tax saving schemes and NRI deposits. Anagram also provides tax planning services –

where a list of tax saving schemes and a forum for Q&A where the queries are answered by the tax advisors;

and an NRI advisory body, where it provides information for NRIs in helping them makes judicious

investment decisions.

Loan Advisory

Anagram also provides advisory services on the loan schemes of certain banks to its customers. The schemes

include, home loans, adhoc loans, professional loans, educational loans, consumer loans and auto loans. Its

advisory services are classified into four categories namely; Primers – giving an overview about all schemes

that are available, Calculators – where it helps the customers with quick calculators, Jargon Buster – a

translator and Digital Advisors – which help in making decisions easy. It has entered into partnership with

many leading banks in providing this facility.

Commodities



This exchange is promoted by ICICI Bank, NSE, LIC, NABARD, CRISIL, IFFCO, PNB & CANARA

BANK. It is more or less on the lines of the NSE of the capital market.

This exchange started operations from 10th November 2003 and is promoted by Financial Technologies

(India) Ltd., SBI, Union Bank of India, Corporation Bank, Bank Of India, Canara Bank etc.

Commodities available for trading:

1) Agro Products:

● Food Grains (Sugar, Yellow Peas, Soya Seed, Soya Meal, Soya,Gur, Chana & Maize)

● Plantation ( Cotton, Rubber, Coffee , Raw Jute)

● Spices (Jeera, Pepper, Red Chili & Turmeric)

● By Products (Guar/ Guar Gum , Jute Bags)



● Oil & Oil Seeds ( Castor, Cotton / Kapas, CPO, Ground Nut Oil, Mustard, Soya Oil, Mentha Oil)

Non Agro Products :

● Precious Metals (Gold & Silver)

● Ferrous Metals (Steel Long & Flat)

● Non Ferrous Metals (Aluminium, Copper, Zinc, Lead, Nickel & Tin)

● Energy (Crude Oil, Natural Gas, Carbon Credit)

STOCK EXCHANGE



Stock exchange is an organized market place, either corporation or mutual organization, where

members of the organization gather to trade company stocks or other securities. Stock exchanges also

facilitates for the issue and redemption of securities and other financial instruments including the payment of

income and dividends. The trade on an exchange is only by members and stock holders who have a seat on

the exchange.

Some of the stock exchanges are

New York Stock Exchange(NYSE)

National Stock Exchange (NSE)

Bombay Stock Exchange (BSE)

Regional Stock Exchange (RSE)

Stock exchange being a vast topic, they are focusing on

Bombay Stock Exchange.

National Stock Exchange.



BOMBAY STOCK EXCHANGE (BSE)The Bombay stock exchange limited, (formerly the stock exchange, Mumbai; popularly called as BSE) is the

oldest stock exchange in asia with a rich heritage. It is located at Dalal Street, Mumbai, India.

BSE was established in 1875 as “The Native Share and Stock Brokers”. It was the first stock exchange in the

country to obtain permanent recognition in 1956 from The Government of India under The Securities

Contracts Act 1956. There are around 4700 companies listed with stock exchange and has a significant

trading volume.

The exchange is professionally managed under the over all directions of the board of directors. Board

comprises eminent professional, representatives of trading Member and the managing directors of the

exchange. The Board is inclusive & is designed to benefit from the participation of market intermediaries.

Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by providing it with an

efficient access to resources. There is perhaps no major corporate in India which has not sourced BSE's

services in raising resources from the capital market.

Today, BSE is the world's number 1 exchange in terms of the number of listed companies and the world's 5th

in transaction numbers. The market capitalization as on December 31, 2007 stood at USD 1.79 trillion . An



investor can choose from more than 4,700 listed companies, which for easy reference, are classified into A,

B, S, T and Z groups.

Functions of BSE

The stock market is a pivotal institution in the financial system. A well – ordered stock market

performs several economic functions:

It ensures the measure of safety and fair dealing

It performs and act of magic’ by translating short term investments into long term funds for compa-

nies.

It directs the flow of capital in the most profitable channels.

It induces companies to raise their standard of performance.

It offers guidance to management about the cost of capital.

N ATIONAL STOCK EXCHANGE (NSE) The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group

on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange

by financial institutions (FIs) to provide access to investors from all across the country on an equal footing.

Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the

Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock

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 the Wholesale Debt Market (WDM) segment in June 1994. The Capital

Market (Equities) segment commenced operations in November 1994 and operations in Derivatives seg-

ment commenced in June 2000.



ANALYSIS & FINDINGS



The basic study on the stock price movement is conducted mainly on 8 major sectors of the economy.

They are as follows:

CEMENT

REFINERIES

ELECTRICAL EQUIPMENTS

BANKING

AUTOMOBILE

COMPUTER SOFTWARE

PHARMACEUTICALS



CONSTRUCTION & ENGINEERING.

CEMENT SECTOR

Returns in percentage are calculated by taking the base price of the shares as 1st October 2003.and the

current index as 31July.

The above table can be represented in the form of graph as follows.


JUL -2004

JUL -2005

JUL -2006

JUL -2007

JUL -2008

ACC 22 93.5 293 370 186.59GRASIM 57.69 61.94 194.52 298.79 170.16


Interpretation:

From the above graph we observe that the Cement sector as whole has started it from the scratch and made it

big in the last five years. Major highlighting points in the cement sector are:

The major cement factories like ACC and Grasim had their returns as low as 22% and 57.695

respectively in year 2004.

Due to governments focus on Infrastructure development the demand for cement and cement products

increased tremendously from year 2005. So the returns also increased proportionately for these two

companies.

The demand for the Cement and cement products increased as there was limit for the production of

cement in India and so the prices also increased. This resulted into heavy returns for companies. It

touched high points in the year 2007 when there was bullish market.



Due to the global cues and the rising inflation the equity markets went down hampering the prices of

the shares. This caused decrease in the returns to be earned by the investors. This can be seen in the

graph, the returns soared down after the year 2007.

REFINERIES SECTOR

Returns in percentage are calculated by taking the base price of the shares as 1st October 2003.and the current index as 31July.

JUL -2004

JUL -2005

JUL -2006

JUL -2007

JUL -2008

BPCL -1.49 1.19 -7.79 -6.51 -9.22RELIANCE 0.68 46.83 143.21 287.37 430.72




Interpretation:

From the above graph we can see that the refineries are having some diversified growth in the last five years.

Some of the major points to be seen in this sector are as follows:

In the year 2004 the refinery sector had a minimal returns. Private refinery like Reliance Industries

had just 0.68% growth while BPCL is in negative returns of -1.49%.

In the year 2005 there was sufficient growth in this sector, Reliance had returns of almost 47% while

BPCL had just 1.19%.

Due to ever risisng global and domestic demands and rising cude prices in recent times the prices of

RIL reached sky giving maximun returns to the investors.This was because, RIL is into exporting of



petroleum to foreign countries. So it had a windfall profit and resulting heavy returns.

On the other hand, BPCL is government owned petrol distributor in the country. It has to abide by

several laws which makes it to supply the fuels in very subsidised rates. This made company to suffer

heavy losses and in return to lose its returns.

ELECTRICAL EQUIPMENT


JUL -2004

JUL -2005

JUL -2006

JUL -2007

JUL -2008

ABB 45.06 174.69 389.25 129.26 64.57BHEL 30.11 112.12 383.33 279.47 334.25SIEMENS 89.32 329.02 93.04 202.24 0.27




Interpretations:

From the above graph it can be seen that there had been rise and fall in the returns of this sector. Highlights

of this sector are as follows:

The growth of returns for this sector moved on almost simultaneously for all the companies. Three

major players in these sectors namely ABB, BHEL and Siemens.

ABB and BHEL are into production of Power generating equipments so there has been a tremendous

growth in these two firms during the past five years.

In the year 2005 all the companies have shown tremendous growth in their returns. Heavy equipment

producer Siemens had shown more than 300% growth.

Due to thrust of government on the Power sector there has been high growth in the returns of the

companies like ABB, BHEL. It can be seen from the graph that the return of BHEL started from 30%

in year 2004 has risen to 334% in 2008.



The growth of this sector may increase in the near future also because of growth of various sectors

such as Power and Infrastructure sectors.

BANKING SECTOR


JUL -2004

JUL -2005

JUL -2006

JUL -2007

JUL -2008

HDFCBANK 23.5 117.8 179.85 307.06 295.83ICICIBANK 21.84 106.16 140.32 367.8 215.47PNB 47.61 103.78 72.32 236.33 15.23




Interpretations:

From the above graph it can be seen that there had been rise in the returns of this sector. Highlights of this

sector are as follows:

The returns during the year 2004 were almost similar due to various Reserve bank policy, it

liberalized the businesses of all the banks. Accordingly the returns started increasing, as we can see,

HDFC Bank had returns of 23.5%, ICICI had 22% and Punjab National Bank had highest returns

among these banks with returns of 48%.

There were some government reforms during the year 2005 which helped the bank earn more

incomes. The banks had more miscellaneous incomes during the year which also resulted into higher

incomes. One more reason for the higher incomes would be the consolidated business made by the

banks. This is why the returns increased to its peak during the year 2007.



The rising inflation during these recent times and increase of CRR rates made by the Reserve Bank

made these bank lose its business a lot. The bank increased its loan rates making people to refrain

taking loans. These are the reasons for losing its returns, this can be seen in the table

AUTOMOBILE SECTOR

Returns in percentage are calculated by taking the base price of the shares as 1st October 2003.and the current index as 31July

JUL -2004

JUL -2005

JUL -2006

JUL -2007

JUL -2008

HEROHONDA 62.78 88.58 155.94 123.44 157.72M&M 87.27 140 159.16 204.79 115MARUTI 77.19 107.45 248.68 240.04 147.8TATAMOTORS 24.88 36.5 153.56 116.93 26.42




Interpretations:

From the above graph we can observe that there has been good growth in the sector in the recent five years.

The major highlights of this sector are:

It can be seen that almost all the automobile sector had similar earning in the year 2004. As it is said

that there is null before storm, it was period before boom in automobile sector. The returns upon each

share were in range of 25%- 87%.

As the spending behavior of a consumer of people changed there was heavy demand for the vehicles

in country. This could be due to various reasons like High salary, high disposable income and also

high standard of living.

The trend has reached its peak in the year 2007 where there were several launch of two wheelers and

four wheelers in the market. Therefore there had been the highest returns earned during that particular

year.



Lately due to rising inflation and the rising prices of fuel have decreased the sales of vehicles in the

markets. But two wheelers have still the wide market open for them.

Tata Motors suffered decrease in the returns because of the buy out Jaguar and Landrover stable. But

in long run it will be very profitable for the company.

COMPUTERS- SOFTWARE SECTOR


JUL -2004

JUL -2005

JUL -2006

JUL -2007

JUL -2008

HCLTECH 71.12 118.96 184.82 89.02 16.8SATYAMCOMP 21.62 97.91 97.91 83.73 53.99WIPRO 28.67 39.31 -4.32 -4.32 -17.78




Interpretation:

This sector has shown tremendous growth in the last few years. This sector had even shown growth more

than the GDP of the country. Some of highlighting points of this sector are as follows:

The major markets for the software company were the US market and had a flourishing market in the

year 2004 where returns were considerably good.

The returns continued to be high even in the year 2005 but reached its peak during the year 2006 were

companies like HCL and Satyam were earning returns almost 100% or even more than it.

The other reason of this sector would be the government thrust on the IT sector and heavy deduction

of taxes for such companies in India. Almost all the companies enjoyed tax holiday and facilities to

develop IT park.

But the returns started diminishing from 2007 onwards due to the change in the global environment

such as recession of American economy where these companies had major contracts.

This can be seen as HCL which was having returns of 89% soared down to just 17% in year 2008.

While Satyam soared comparatively less from 84% to 53%. But still investing in this sector is still

considered good since it is ever developing type of sector.



PHARMACEUTICAL SECTOR


JUL -2004

JUL -2005

JUL -2006

JUL -2007

JUL -2008

DRREDDY -30.83 -28.77 19.49 23.9 23.24RANBAXY -3.68 12.6 -62.43 -61.85 -45.4SUNPHARMA -25.88 18.79 58.39 109.89 192.72




Interpretation:

From the above graph we can observe that there have been diversified returns of the companies. One

company is making huge returns while the other one is making huge losses. The major highlighting factors

are as follows:

All the companies were having negative returns during the year 2004. There is no particular

reason why the companies were having loss. The one major reason would be of losing the

business. This can be seen in the graph were Ranbaxy was the least loser with -3.68%.

Ranbaxy Lab suffered huge losses during the last five years. the reasons are several like losing the

case and major failure of its products. There were also news of selling the company which finally

happened in the year 2008. This is why the returns started decreasing till -45% in the year 2008



Dr Reddy pharmaceuticals had a similar story for the loss in the revenue. There were several

losses occurred due to the failure of its major products. But it recovered during the year 2006 with

a positive returns of 20% which grew steadily to almost 23.5% in the year 2008.

In contrast Sun Pharmaceuticals made huge recovery during the year 2005 itself. The reasons

were several like successful products and efficient management. It invested huge in research and

Development which yielded huge returns. Now currently its returns are at peak with almost 193%.

CONSTRUCTION & ENGINEERING.


JUL -2004

JUL -2005

JUL -2006

JUL -2007

JUL -2008

L&T 137 268.56 592.04 597.04 738.91UNITECH 87.9 848.5 310.38 844.89 205.2




Interpretation:

During the past five years there had been boom in the sector of construction and Engineering. There had been

remarkable growth in returns during the last five years. Some of the highlighting points are:

As the government’s five year plan was development of the infrastructure there was demand for such

companies in India. Unitech started with good return of 88% in the year 2004. While Engineering

Company like L&T had a huge return of 137% in the year 2004.

The year 2005 brought huge returns for the construction company like Unitech as there was huge

development in infrastructure sector. The return was astonishing 848.5% in the year 2005. While

L&T had steady increase in its returns to almost 269%.

The actual boom was in the year 2007 where the returns were at the peak for both the companies.

L&T had the returns of almost 597% while Unitech had the returns of 845%. It was majorly because



of huge development in the infrastructures. There were major plans of constructing SEZs in the

country and so these companies had huge returns.

But the inflation took on toll on the growth of construction company this can be seen from the fall in

returns to 205% and in contrast the engineering company like L&T made growth till 739%. This may

be due to the various contracts secured by the company and also due to the pending bonus on each

share.



SUGGESTIONS

SUGGESTIONS:

The rate of returns can be classified into High returns, Medium returns and Average returns. High returns

include companies having huge returns but also the volatility is also high. Medium returns include companies

which have high and steady return with relatively less volatility in their shares. Average returns include

companies having satisfactory returns with high gestation periods. So accordingly suggestions are based

upon these categories.

Investors willing to have high returns can invest in companies of Construction or Engineering sectors

like Unitech an L&T. even they can invest into companies such as BHEL, ABB which are into

production of Power equipments. During the recent 5 years the Banking sector has shown

tremendous growth so it can be placed in high returns categories.



Investors willing to have a medium returns can invest in Automobile sectors, Cement companies and

Refineries. These companies have a long gestation period but the returns are guaranteed with

comparatively less risk involved for the investors.

Investors willing to have a average returns on their investment can invest in companies such as

Software sectors which were having high growth returns during past years but have slowed down due

to international environment.



BIBLIOGRAPHY

Bibliography:

www.nseindia.com

www.bseindia.com

www.moneypore.com

www.anagramstock.com



ANNEXURES
