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A Comparative Fundamental Analysis of Bank Nifty Stocks

This document provides an overview of a study analyzing the fundamental valuation of stocks that make up the Bank Nifty index in India. The study objectives are to analyze the intrinsic value and performance of selected Bank Nifty stocks over 10 years, identify any undervalued stocks, and make investment recommendations. Both public and private sector banks will be included. The methodology uses financial ratios and the Graham-Rao valuation model to calculate the fair value of each stock and compare to current market prices. Results will be analyzed to test the hypothesis about book value and market value dependence.

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60 views5 pages

A Comparative Fundamental Analysis of Bank Nifty Stocks

This document provides an overview of a study analyzing the fundamental valuation of stocks that make up the Bank Nifty index in India. The study objectives are to analyze the intrinsic value and performance of selected Bank Nifty stocks over 10 years, identify any undervalued stocks, and make investment recommendations. Both public and private sector banks will be included. The methodology uses financial ratios and the Graham-Rao valuation model to calculate the fair value of each stock and compare to current market prices. Results will be analyzed to test the hypothesis about book value and market value dependence.

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nidhinambu
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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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A COMPARATIVE FUNDAMENTAL ANALYSIS OF BANK NIFTY STOCKS

Synopsis submitted in partial fulfillment of the requirements for the award of the Degree of MASTER OF BUSINESS ADMINISTRATION of BANGALORE UNIVERSITY

By Nityashree .M.N Reg No. 11KUCMA040 Under the guidance of Mrs. Reena Shyam
Faculty

M.S. RAMAIAH COLLEGE OF ARTS, SCIENCE AND COMMERCE P.G DEPARTMENT OF MANAGEMENT STUDIES MBA
Bangalore University Bangalore-2012-2013

Title: A Comparative Fundamental Analysis of Bank Nifty Stocks

Statement of the problem:


The equity market is one of the most profitable investing avenues for investors. The basic purpose of buying a security is to earn dividend and ultimately sell it at higher price. An investor therefore is interested in obtaining estimates of the future prices of the shares. Valuation of the stocks is the first step towards the intelligent investing. Equity valuation is most needed so as to know whether the stock is good to hold or sell. The knowledge of securities market, particularly of the equity markets, is essential to come to grips with the industry analysis and performance of the company through fundamental ratios. An investor attempts to determine the worth of their shares based on the fundamentals, real value of stock and news from the media. Equity valuation is most important and needed so as to know the competitiveness of the company with other companies. It is also needed to predict the future prices of the company to know where the company stands which would help the investor to make better investing decisions.

Objectives of the study:


To acquire knowledge about the performance of the Bank Nifty stocks. To analyse the intrinsic value of the selected Bank Nifty stocks. To find any stocks in Bank Nifty are undervalued and are having good investment objectives. To suggest investors in selecting the stocks of Bank Nifty for investment through fundamental analysis.

Methodology:
The project is on equity valuation where the equity share prices of the banks are analyzed. The study is based on the information available from the annual reports of the banks. The data will be analysed during the period of 2002-2011.

Sources of data:
The primary source of data is taken from annual reports of the banks websites. The secondary source of data is taken from related websites, journals and textbooks.

Hypothesis:
Null hypothesis: H0: The book value of the stock is independent to that of the market value of stock. Alternative hypothesis: H1: The book value of the stock is dependent to that of the market value of stock. The hypothesis is tested using t-test.

Sampling:
The sampling technique used is quota sampling. The sample contains three banks selected from private sector namely Axis Bank, ICICI Bank, HDFC Bank and three banks selected from public sector namely Canara Bank, IDBI Bank, Bank of India.

Plan of Analysis:
The data collected will be analysed using the various ratios and trend that form the part of quality and earnings criteria of Graham-Rao model. The study is based on analysing the previous 10 years financial statements for each stock on quality and fair value parameters as suggested by Benjamin Graham and modified by Narayan Rao for Indian Companies. The fair value of the stocks are calculated and compared against the current share price of the stocks.

Chapter Scheme:
The chapter scheme for the project will be as follows: 1. Introduction a. Stock market b. About NSE c. Bank Nifty 2. Research design a. Problem statement b. Objectives c. Scope of the study d. Methodology e. Limitations 3. Profile of Banking Industry Profile of Bank Nifty stocks Public sector banks Canara Bank IDBI Bank Bank of India Private sector banks Axis Bank ICICI Bank HDFC Bank 4. Results, Analysis and Interpretation 5. Findings, Recommendations and Conclusion

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