MBA Project On Fundamental and Technical Analysis of Kotak Bank

Fundamental And Technical Analysis
EXECUTIVE SUMMARY:
In the recent past, the bank interest rates have been increased steadily. But the
rate of Inflation has also been increased. There is no big difference between the
interest rate and Inflation rate. Because of inflation, value of money has been
decreased and cost of living has been increased. This has created panic among lower,
middle and upper middle class families who considered keeping their savings in banks
as safe as well as remunerative. So, the invertors are searching for proper investment
avenues. Here, an attempt is made to predict the future movement of scrips. This
study helps the investors to invest in shares.
India has registered a growth rate of 8.6 percent in FY 2007-08 and is
expected to grow at the rate of 10% plus in this fiscal year, and is one of the fastest
growing economies in the world. It is one of the major attractions for FIs and FIIs.
FIIs invest in India through secondary Markets. There is a great scope for India for
becoming member of G-8 nations committee.
The stock exchange comes in the secondary market. Stock exchange performs
activities such as trading in share, securities, bonds, mutual fund & commodities.
Stock Broking industry is growing at an enormous rate, as more and more people are
attracted towards stock exchanges with the hope of making profits.
But during this period the country also registered a fairly high industrial
growth. The old industries and business establishments who wanted to expand the
activities as well as the new industries and the business establishments floated shares
in the market to raise capital for their activities. The companies, which registered
steady growth, earned confidence of the people and their shares, were rated high in
the market.
This project report helps the reader to understand the techniques of investing
in the stock market particularly in the secondary market. Some of the proven
techniques have been used in this report to help the reader or investor.
Fundamental Analysis is the study of everything from the overall economy
and industry conditions, to the financial condition and management of specific
companies (i.e., using real data to evaluate a stocks value).
Technical analysis is the examination of past price movements to forecast
future price movements. Technical analysts are sometimes referred to as chartists
because they rely almost exclusively on charts for their analysis.
Objectives of the study:
To know the future movement of selected companies shares through fundamental and
technical analysis.
Sub objectives
o To predict the future price of the selected companies shares.
o To study the strategies to be adopted by the retail investors based on the technical
and fundamental analysis.
o To know the floor and cap price of the stock.
o To analyze individual company scrip by considering the factors relating to the
economy, industry and the respective company.
o To predict investor positions (Buy, sell & hold) based on historical price trends
and the likely company prospects.
Findings and suggestion:

EXPECTED MARKET PRICE OF BHEL
year
particulars
2008
FUNDAMENTAL ANALISIS
2132.30
TECHNICAL ANALYSIS
current market price(31-03-08)
2500
2010
3429.62
3750
2,061.35
EXPECTED MARKET PRICE OF L&T

year
Particulars
2008
2325.33
TECHNICAL ANALYSIS
current market price
2009
2707.42
2009
2451.38
4450
2010
2584.41
5800
3,024.80
INDIAN STOCK MARKET

OVERVIEW OF EQUITY MARKET IN INDIA
BSE (Bombay Stock Exchange)

SENSEX - THE BAROMETER OF INDIAN CAPITAL MARKETS
Introduction:
For the premier Stock Exchange that pioneered the stock broking activity in India,
128 years of experience seems to be a proud milestone. A lot has changed since 1875
when 318 persons became members of what today is called "The Stock Exchange,
Mumbai" by paying a princely amount of Re1.
Since then, the country's capital markets have passed through both good and bad
periods. The journey in the 20th century has not been an easy one. Till the decade of
eighties, there was no scale to measure the ups and downs in the Indian stock market.
The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that
subsequently became the barometer of the Indian stock market.
SENSEX is not only scientifically designed but also based on globally
accepted construction and review methodology. First compiled in 1986, SENSEX is a
basket of 30 constituent stocks representing a sample of large, liquid and
representative companies. The base year of SENSEX is 1978-79 and the base value is
100. The index is widely reported in both domestic and international markets through
print as well
as electronic media.
The Index was initially calculated based on the "Full Market Capitalization"
methodology but was shifted to the free-float methodology with effect from
September 1, 2003. The "Free-float Market Capitalization" methodology of index
construction is regarded as an industry best practice globally. All major index
providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float
methodology.
Due to its wide acceptance amongst the Indian investors, SENSEX is regarded
to be the pulse of the Indian stock market. As the oldest index in the country, it
provides the time series data over a fairly long period of time (From 1979 onwards).
Small wonder, the SENSEX has over the years become one of the most prominent
brands in the country.
The growth of equity markets in India has been phenomenal in the decade
gone by. Right from early nineties the stock market witnessed heightened activity in
terms of various bull and bear runs. The SENSEX captured all these events in the
most judicial manner. One can identify the booms and busts of the Indian stock
market through sensex.
NSE (NATIONAL STOCK EXCHANGE)
The Organization:
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 taxpaying 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 segment commenced in
June 2000.
NIFTY:
The Nifty is relatively a new comer in the Indian market. S&P CNX Nifty is a
50 stock index accounting for 23 sectors of the economy. It is used for purposes such
as benchmarking fund portfolios; index based derivatives and index funds. The base
period selected for Nifty is the close of prices on November 3, 1995, which marked
the completion of one-year of operations of NSE's capital market segment. The base
value of index was set at 1000. S&P CNX Nifty is owned and managed by India
Index Services and Products Ltd. (IISL), which is a joint venture between NSE and
CRISIL. IISL is a specialized company focused upon the index as a core product. IISL
have a consulting and licensing agreement with Standard & Poor's (S&P), who are
world leaders in index services.
FII in Indian stock market

As part of its initiative to liberalize its financial markets, India opened her
doors to foreign institutional investors in September, 1992. This event represents a
landmark event since it resulted in effectively globalizing its financial services
industry.
Year
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
net investment by FII

4.27
5444.6
4776.6
6720.9
7386.2
5908.45 729.11
9765.13
9682.52
8272.9
2668.9
44000.03
41416.45
67432.34
94327.87
What does India Need - FDI or FII

FDI usually is associated with export growth. It comes only when all the
criteria to set up an export industry are met. That includes, reduced taxes, favorable
labor law, freedom to move money in and out of country, government assistance to
acquire land, full grown infrastructure, reduced bureaucratic involvement etc. IT,
BPO, Auto Parts, Pharmaceuticals, unexplored service sectors including accounting;
drug testing, medical care etc are key sectors for foreign investment. Manufacturing
is a brick and mortar investment. It is permanent and stays in the country for a very
long time. Huge investments are needed to set this industry. It provides employment
potential to semi skilled and skilled labor. On the other hand the service sector
requires fewer but highly skilled workers. Both are needed in India. Conventional
wisdom is that China will have an upper hand in manufacturing for a long time. If
India plays its cards right India may be the hub for the service sector. Still high end
manufacturing in auto parts and pharmaceuticals should be Indias target.
The FII (Foreign Institutional Investor) is monies, which chases the stocks in
the market place. It is not exactly brick and mortar money, but in the long run it may
translate into brick and mortar. Sudden influx of this drives the stock market up as too
much money chases too little stock. In last four months an influx of about $1.5 Billion
has driven the Indian stock market 20% higher.
Where FDI is a bit of a permanent nature, the FII flies away at the shortest
political or economical disturbance. The late nineties economic disaster of Asian
Tigers is a key example of the latter. Once this money leaves, it leaves ruined
economy and ruined lives behind. Hence FII is to be welcomed with strict political
and economical discipline.
China receives mainly the FDI. They do not have instruments to receive the FII i.e.
laws, institutions and political and judicial framework. On the contrary, India should
welcome both and work hard to retain both.
INTRODUCTION TO KOTAK SECURITIES
THE KOTAK MAHINDRA GROUP:

The Kotak Mahindra Group was born in 1985 as Kotak Capital Management
Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto
and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a
stake in 1986, and that's when the company changed its name to Kotak Mahindra
Finance Limited.
Kotak Mahindra is one of India's leading financial institutions, offering
complete financial solutions that encompass every sphere of life. From commercial
banking, to stock broking, to mutual funds, to life insurance, to investment banking,
the group caters to the financial needs of individuals and corporates.
As on December 31, 2006, the group has a net worth of over Rs.3, 100 crore,
and the AUM across the group is around Rs. 225 billion and employs over 9,600
employees in its various businesses. With a presence in 282 cities in India and offices
in New York, London, Dubai and Mauritius, it services a customer base of over
around
2.2
million.
The group specializes in offering top class financial services, catering to every
segment of the industry. The various group companies include:
1. Kotak Mahindra Capital Company Limited
2. Kotak Mahindra Securities Limited
3. Kotak Mahindra Inc
4. Kotak Mahindra (International) Limited
5. Global Investments Opportunities Fund Limited
6. Kotak Mahindra (UK) Limited
7. Kotak Securities Limited
8. Kotak Mahindra Old Mutual Life Insurance Company Limited
9. Kotak Mahindra Asset Management Company Limited
10. Kotak Mahindra Trustee Company Limited
11. Kotak Mahindra Investments Limited
12. Kotak Forex Brokerage Limited
13. Kotak Mahindra Private-Equity Trustee Limited
14. Kotak Mahindra Prime Limited
Kotak Mahindra has international partnerships with Goldman Sachs (one of

the world's largest investment banks and brokerage firms), Ford Credit (one of the
world's largest dedicated automobile financiers) and Old Mutual (a large insurance,
banking and asset management conglomerate).
Kotak Securities, an affiliate of Kotak Mahindra Bank, is the stock-broking
and distribution arm of the Kotak Mahindra Group. The institutional business
division, which provides AKSESS, primarily covers secondary market broking. It
caters to the needs of foreign and Indian institutional investors in Indian equities (both
local shares and GDRs). The division also has a comprehensive research cell with
sectoral analysts covering all the major areas of the Indian economy.
Kotak Securities Ltd. is India's leading stock broking house with a market
share of around 8.5 % as on 31st March. Kotak Securities Ltd. has been the largest in
IPO distribution.
The accolades that Kotak Securities has been graced with include:
1. Prime Ranking Award (2003-04)- Largest Distributor of IPO's
2. Finance Asia Award (2004)- India's best Equity House
3. Euro money Award (2005)-Best Equities House In India
4. Finance Asia Award (2005)-Best Broker In India
5. Finance Asia Award (2006)- Best Broker In India
6. Euro money Award (2006) - Best Provider of Portfolio Management: Equities
The company has a full-fledged research division involved in Macro
Economic studies, Sectorial research and Company Specific Equity Research
combined with a strong and well networked sales force which helps deliver current
and up to date market information and news.
Kotak Securities Ltd is also a depository participant with National Securities
Depository Limited (NSDL) and Central Depository Services Limited (CDSL),
providing dual benefit services wherein the investors can use the brokerage services
of the company for executing the transactions and the depository services for settling
them.
Kotak Securities has 195 branches servicing more than 2,20,000 customers
and a coverage of 231 Cities. Kotaksecurities.com, the online division of Kotak
Securities Limited offers Internet Broking services and also online IPO and Mutual
Fund Investments.
Kotak Securities Limited manages assets over 2500 crores of Assets Under
Management (AUM) .The portfolio Management Services provides top class service,
catering to the high end of the market. Portfolio Management from Kotak Securities
comes as an answer to those who would like to grow exponentially on the crest of the
stock market, with the backing of an expert.
INTRODUCTION TO THE TOPIC

FUNDAMENTAL AND TECHNICAL ANALYSIS:
Fundamental analysis
The basic purpose of buying a security is to earn dividends and ultimately sell
it at higher price. An investor therefore is interested in obtaining estimates of future
prices of the share. These in turn will depend upon the performance of the industry to
which the company belongs and the general economic situation of the country. The
multitude of factors affecting a companys profitability can be broadly classified as:
1. Economic wide factors: these includes the factors like growth rate of the
economy, the rate of inflation, foreign exchange rates etc which affects
profitability of all companies.
2.
Industry wide factors: these include factors which are specific to

industry to which the company belongs. For instance the demand supply gap
in the industry, the emergence of substitutes, and changes in government
policies towards industry affects the company belonging to an industry.
3. Company wide factor: these factors are specific to a firm. The firm
specific factors like plant and machinery, the brand image of the product, and
ability of the management to affect the profitability.
Fundamental analysis considers the financial and economic data that may
influence the viability of a company. There are many flavors of fundamental analysis
centered on such concepts as value, growth and turnarounds. Technical analysis is the
study of the price chart. It assumes that by looking at the progress of that little
squiggly line you can forecast the future trend of a stock. Fundamental analysis is
essential to most investors, and technical analysis is essential to most traders and
speculators.
An investor with rational and scientific approach will therefore be interested in
analyzing the influence of the expected performance of the company, industry and
economy as a whole on share prices, even before taking the investment decision such
analysis is called fundamental analysis.
Fundamental analysis is the method of evaluating securities by attempting to
measure the intrinsic value of a particular stock. It is the study of everything from the
overall economy and industry conditions, to the financial condition and management
of specific companies (i.e., using real data to evaluate a stocks value). The method
utilizes items such as revenues, earnings, return on equity and profit margins to
determine a companys 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, the price of an asset will
eventually gravitate toward its true value. This seems to be a reasonable bet
considering the long upward march of quality stocks in general despite regular
setbacks and periods of irrational exuberance. The key strategy for the fundamentalist
is to buy when prices are at or below this intrinsic value and sell when they got
overpriced.
TECHNICAL ANALYSIS:
Technical analysis is the examination of past price movements to forecast
future price movements. Technical analysts are sometimes referred to as chartists
because they rely almost exclusively on charts for their analysis.
Moving Average:
A Moving Average is an indicator that shows the average value of a security's
price over a period of time. When calculating a moving average, a mathematical
analysis of the security's average value over a predetermined time period is made. As
the securities price changes, its average price moves up or down.
There are several popular ways to calculate a moving average. Meta Stock for
Java calculates a "simple" moving average--meaning that equal weight is given to
each price over the calculation period.
Interpretation:
The most popular method of interpreting a moving average is to compare the
relationship between moving averages of the security's price with the security's price
itself. A buy signal is generated when the security's price rises above its moving
average and a sell signal is generated when the security's price falls below its moving
average.
This type of moving average trading system is not intended to get you in at the
exact bottom nor out at the exact top. Rather, it is designed to keep you in line with
the security's price trend by buying shortly after the security's price bottoms and
selling shortly after it tops.
The critical element in a moving average is the number of time periods used in
calculating the average. When using hindsight, you can always find a moving average
that would have been profitable. The key is to find a moving average that will be
consistently profitable. The most popular moving average is the 39-week (or 200day) moving average. This moving average has an excellent track record in timing
the major (long-term) market cycles.
Advantages:
The advantage of moving average system of this type (i.e., buying and selling
when prices break through their moving average) is that you will always be on the
"right" side of the market: prices cannot rise very much without the price rising above
its average price. The disadvantage is that you will always buy and sell some late. If
the trend does not last for a significant period of time, typically twice the length of the
moving average, you will lose your money.
Support and Resistance:
Support and resistance represent key junctures where the forces of supply and
demand meet. In the financial markets, prices are driven by excessive supply (down)
and demand (up). Supply is synonymous with bearish, bears and selling. Demand is
synonymous with bullish, bulls and buying. These terms are used interchangeably
throughout this and other articles. As demand increases, prices advance and as supply
increases, prices decline. When supply and demand are equal, prices move sideways
as bulls and bears slug it out for control.
What Is Support?
Support is the price level at which demand is thought to be strong enough to
prevent the price from declining further. The logic dictates that as the price declines
towards support and gets cheaper, buyers become more inclined to buy and sellers
become less inclined to sell. By the time the price reaches the support level, it is
believed that demand will overcome supply and prevent the price from falling below
support.
Support does not always hold and a break below support signals that the bears
have won out over the bulls. A decline below support indicates a new willingness to
sell and/or a lack of incentive to buy. Support breaks and new lows signal that sellers
have reduced their expectations and are willing sell at even lower prices. In addition,
buyers could not be coerced into buying until prices declined below support or below
the previous low. Once support is broken, another support level will have to be
established at a lower level.
Where Is Support Established?

Support levels are usually below the current price, but it is not uncommon for
a security to trade at or near support. Technical analysis is not an exact science and it
is sometimes difficult to set exact support levels. In addition, price movements can be
volatile and dip below support briefly. Sometimes it does not seem logical to consider
a support level broken if the price closes 1/8 below the established support level. For
this reason, some traders and investors establish support zones.
What Is Resistance?
Resistance is the price level at which selling is thought to be strong enough to
prevent the price from rising further. The logic dictates that as the price advances
towards resistance, sellers become more inclined to sell and buyers become less
inclined to buy. By the time the price reaches the resistance level, it is believed that
supply will overcome demand and prevent the price from rising above resistance.
Resistance does not always hold and a break above resistance signals that the
bulls have won out over the bears. A break above resistance shows a new willingness
to buy and/or a lack of incentive to sell. Resistance breaks and new highs indicate
buyers have increased their expectations and are willing to buy at even higher prices.
In addition, sellers could not be coerced into selling until prices rose above resistance
or above the previous high. Once resistance is broken, another resistance level will
have to be established at a higher level.
Where Is Resistance Established?

Resistance levels are usually above the current price, but it is not uncommon
for a security to trade at or near resistance. In addition, price movements can be
volatile and rise above resistance briefly. Sometimes it does not seem logical to
consider a resistance level broken if the price closes 1/8 above the established
resistance level. For this reason, some traders and investors establish resistance zones.
So, Here, Identification of key support and resistance levels is an essential

ingredient to successful technical analysis. Even though it is sometimes difficult to
establish exact support and resistance levels, being aware of their existence and
location can greatly enhance analysis and forecasting abilities. If a security is
approaching an important support level, it can serve as an alert to be extra vigilant in
looking for signs of increased buying pressure and a potential reversal. If a security is
approaching a resistance level, it can act as an alert to look for signs of increased
selling pressure and potential reversal. If a support or resistance level is broken, it
signals that the relationship between supply and demand has changed. A resistance
breakout signals that demand (bulls) has gained the upper hand and a support break
signals that supply (bears) has won the battle.
Price Oscillator:
The Price Oscillator displays the difference between two moving averages of a
security's price. The difference between the moving averages can be expressed in
either points or percentages.
The Price Oscillator is almost identical to the MACD, except that the Price
Oscillator can use any two user-specified moving averages. (The MACD always uses
12 and 26-day moving averages, and always expresses the difference in points.)
Interpretation:
Moving average analysis typically generates buy signals when a short-term
moving average (or the security's price) rises above a longer-term moving average.
Conversely, sell signals are generated when a shorter-term moving average (or the
security's price) falls below a longer-term moving average. The Price Oscillator
illustrates the cyclical and often profitable signals generated by these one or two
moving average systems.
Price Rate-Of-Change:
The Price Rate-of-Change ("ROC") indicator displays the difference between

the current price and the price x-time periods ago. The difference can be displayed in
either points or as a percentage. The Momentum indicator displays the same
information, but expresses it as a ratio.
Interpretation:
It is a well-recognized phenomenon that security prices surge ahead and retract
in a cyclical wave-like motion. This cyclical action is the result of the changing
expectations as bulls and bears struggle to control prices.
The ROC displays the wave-like motion in an oscillator format by measuring
the amount that prices have changed over a given time period. As prices increase, the
ROC rises; as prices fall, the ROC falls. The greater the change in prices, the greater
the change in the ROC.
The time period used to calculate the ROC may range from 1-day (which
results in a volatile chart showing the daily price change) to 200-days (or longer).
The most popular time periods are the 12- and 25-day ROC for short to intermediateterm trading. These time periods were popularized by Gerald Appel and Fred
Hitschler in their book, Stock Market Trading Systems.
The
12-day
ROC
is
an
excellent
short-
to
intermediate-term
overbought/oversold indicator. The higher the ROC, the more overbought the
security; the lower the ROC, the more likely a rally. However, as with all
overbought/oversold indicators, it is prudent to wait for the market to begin to correct
(i.e., turn up or down) before placing your trade. A market that appears overbought
may remain overbought for some time. In fact, extremely overbought/oversold
readings usually imply a continuation of the current trend.
The 12-day ROC tends to be very cyclical, oscillating back and forth in a
fairly regular cycle. Often, price changes can be anticipated by studying the previous
cycles of the ROC and relating the previous cycles to the current market
Relative Strength Index (RSI):

The Relative Strength Index ("RSI") is a popular oscillator. It was first
introduced by Welles Wilder in an article in Commodities (now known as Futures)
Magazine in June, 1978.
The name "Relative Strength Index" is slightly misleading as the Relative
Strength Index does not compare the relative strength of two securities, but rather the
internal strength of a single security. A more appropriate name might be "Internal
Strength Index."
Interpretation:
When Wilder introduced the Relative Strength Index, he recommended using a
14-day Relative Strength Index. Since then, the 9-day and 25-day Relative Strength
Indexs have also gained popularity. The fewer days used to calculate the Relative
Strength Index, the more volatile the indicator.
The Relative Strength Index is a price-following oscillator that ranges between
0 and 100. A popular method of analyzing the Relative Strength Index is to look for a
divergence in which the security is making a 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 bottoms before 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 may not 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 surpasses a previous
high (peak) or falls below a recent low (trough).
4. Support and Resistance. The Relative Strength Index shows, sometimes
more clearly than price themselves, levels of support and resistance.
5. Divergences. As discussed above, divergences occur when the price 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.
Trend lines:
In the preceding section, we saw how support and resistance levels can be
penetrated by a change in investor expectations (which results in shifts of the
supply/demand lines). This type of a change is often abrupt and "news based."
In this section, we'll review "trends." A trend represents a consistent change in
prices (i.e., a change in investor expectations). Trends differ from support/resistance
levels in that trends represent change, whereas support/resistance levels represent
barriers to change.
As shown in the following chart, a rising trend is defined by successively

higher low-prices. A rising trend can be thought of as a rising support level--the bulls
are in control and are pushing prices higher.
As shown in the next chart, a falling trend is defined by successively lower

high-prices. A falling trend can be thought of as a falling resistance level--the bears
are in control and are pushing prices lower.
The Bar Chart:

The Bar chart is one of the most popular types of charts used in technical
analysis. As illustrated on the left, the top of the vertical line indicates the highest
price at which a security traded during the day, and the bottom represents the lowest
price. The closing price is displayed on the right side of the bar and the opening price
is shown on the left side of the bar. A single bar like the one to the left represents one
day of trading.
The chart below is an example of a bar chart for AT&T (T):
The advantage of using a bar chart over a straight-line graph is that it shows
the high, low, open and close for each particular day.
Candle sticks Charting:
Candlestick charts have been around for hundreds of years. They are often
referred to as "Japanese candles" because the Japanese would use them to analyze the
price of rice contracts.
Similar to a bar chart, candlestick charts also display the open, close, daily
high and daily low. The difference is the use of color to show if the stock went up or
down over the day.
The chart below is an example of a candlestick chart for AT&T (T).

Green bars indicate the stock price rose, red indicates a decline:
Investors seem to have a "love/hate" relationship with candlestick

charts. People either love them and use them frequently or they are
completely turned off by them. There are several patterns to look for with
candlestick charts - here are a few of the popular ones and what they mean.
This is a bullish pattern - the stock opened at (or near) its low and
closed near its high
The opposite of the pattern above, this is a bearish pattern. It

indicates that the stock opened at (or near) its high and dropped
substantially to close near its low.
Known as "the hammer", this is a bullish pattern only if it occurs

after the stock price has dropped for several days. A small body along
with a large range identifies a hammer. This pattern indicates that a
reversal in the downtrend is in the works.
Known as a "star. For the most part, stars typically indicate a

reversal and or indecision. There is a possibility that after seeing a
star there will be a reversal or change in the current trend.
Point and Figure Chart:

The point & figure (P&F) chart is somewhat rare. In fact, most charting
services do not even offer it. This chart plots day-to-day increases and declines in
price: increases are represented by a rising stack of "X"s, while decreases are
represented by a declining stack of "O"s. This type of chart was traditionally used for
intraday charting (a stock chart for just one day), mainly because it can be long and
tedious to create a P&F chart manually over a longer period of time.
The idea behind P&F charts is that they help you to filter out less significant
price movements and to focus on the most important trends. Below is an example of a
P&F chart for AT&T (T):
POPULAR CHARTING PATTERNS:
Technical analysts often use proven successful price patterns from great stocks
as tools to find new great stocks. Let's look at a few examples
Cup and Handle - This is a pattern on a bar chart that can be as short as seven
weeks and as long as 65 weeks. The cup is in the shape of a "U". The handle
has a slight downward drift. The right-hand side of the pattern has low trading
volume. As the stock comes up to test the old highs, the stock will incur
selling pressure by the people who bought at or near the old high. This selling
pressure will make the stock price trade sideways with a tendency towards a
downtrend for anywhere from four days to four weeks, then it will take off.
This pattern looks like a pot with a handle. It is one of the easier
patterns to detect; and investors have made a lot of money using it.
Head and Shoulders - This is a chart formation resembling an "M" in which a

stock's price:
- Rises to a peak and then declines, then
-
Rises above the former peak and again declines, and then
- rises again but not to the second peak and again declines.
The first and third peaks are shoulders, and the second peak forms the head.
This pattern is considered a very bearish indicator.
Double Bottom - This pattern resembles a "W" and occurs when a stock price
drops to a similar price level twice within a few weeks or months. You should
buy when the price passes the highest point in the handle. In a perfect double
bottom, the second decline should normally go slightly lower than the first
decline to create a shakeout of jittery investors. The middle point of the "W"
should not go into new high ground. This is a very Bullish indicator.
The belief is that, after two drops in the stock price, the jittery investors will
be out and the long-term investors will still be holding on.
Importance of project
1. The project gives thorough knowledge of fundamental and technical analysis
2. In this project report the Engineering sector is analyzed by considering budget
and demand and supply of the industry.
3. In the project report the 2 companies have selected and analyzed the
companys future market price by two distinct theories.
4. Reader of this project comes to know the expected future market prices and
can invest into the scripts.
5. This gives the full information of calculation of intrinsic value.
Objective of the study

Main objective:
To know the future movement of selected companies shares through fundamental and
technical analysis.
Sub objectives
o To predict the future price of the selected companies shares.
o To study the strategies to be adopted by the retail investors based on the technical
and fundamental analysis.
o To know the floor and cap price of the stock.
o To analyze individual company scrips by considering the factors relating to the
economy, industry and the respective company.
o To predict investor positions (Buy, sell & hold) based on historical price trends
and the likely company prospects.
Data collecting methodology
The data collected for the study is secondary data. The data I have used for the study
is
1. Historical shares value of the stocks collected from ICICI DIRECT.COM.
2. The balance sheet and Income statement got from companies web site.
3. Some of the information about the industry is collected from other financial
web site.
THE MEASUREMENT TECHNIQUE

The following techniques are used for the study.
1. Simple moving average.
5. Exponential moving average (EMA)
6. The relative strength index (RSI)
7. Value anchor.
LIMITATIONS OF THE STUDY:

1. The study is limited only to these 2 sectors and 4 companies.
2. Here, an attempt is made to predict the future movement stock. It contains an
element of guess work
3. Here, I have used only 3 Technical tools to predict the movement of Scrips
Technical analysis of selected sector socks is as fallows

Here you can see the charts of BHEL, L&T and NIFTY which is designed
(derived) by MS Excel sheet. For calculating of RSI, SMA and EMA 2 years
historical closing prices are used. The respective formulas of SMA, EMA and RSI is
as follows
SMA (Simple Moving Average)
A simple moving average is formed by computing the average (mean) price of a
security over a specified number of periods. While it is possible to create moving
averages from the Open, the High, and the Low data points, most moving averages
are created using the closing price. For example: a 5-day simple moving average is
calculated by adding the closing prices for the last 5 days and dividing the total by 5.
Ex: if the closing prices are as follows: 10, 11, 12, 13, 14, 17, 12
10+11+12+13+14=60
(60/5)=12
Here 12 is a first moving average obtained from the given closing prices, next moving
average can be calculated by deducting first cl price i.e 10 and adding next cl. Price i.e 17 and
again dividing it by 5.
Exponential Moving Average (EMA)

In order to reduce the lag in SMA, technicians often use EMA. EMA's reduce the lag by
applying more weight to recent prices relative to older prices. The weighting applied to the
most recent price depends on the specified period of the moving average. The shorter the
EMA's period, the more weight that will be applied to the most recent price. For example: a
10-period EMA weighs the most recent price 18.18% while a 20-period EMA weighs the
most recent price 9.52%. As such, it will react quicker to recent price changes than a SMA.
Here's the calculation formula
EMA (current) = ((price (current)-EMA (prev)) x multiplier+ EMA(prev)

Where, Multiplier 2/n+1
n- Number of days for which EMA is calculated
If we take the same example of SMA 5 day EMA is calculated as follows.
EMA= (12-11) X 0.666 + 11 = 11.66
Where multiplier = 2/ (5 +1) = 0.666
For next EMA 11.66 acts as previous EMA and so on
Relative Strength Index.

Developed by J. Welles Wilder and introduced in his 1978 book, New Concepts in
Technical Trading Systems, the Relative Strength Index is an extremely useful and
popular momentum oscillator.
Calculation
BHEL Company Charts
1. Short term moving averages of BHEL Company.
2. Long-term moving averages of BHEL Company.
Interpretation for short term moving averages:

1. The above chart of BHEL is of short term analysis say for example 15 days to
60 days.
2. The above chart shows support and resistance level which is shown by arrow
mark above.
3. The chart shows the buying and selling signals which is shown in red green
and red arrow marks and circle is the point which specifies the exact price to
buy or sell the stock.
4. And from above chart one can see the trend line violation which is shown by
black arrow mark.
Interpretation for long term moving averages:

1. As we can see from the above chart the buy and sell levels are Rs 1130 and
Rs. 2100.
2. In the long term chart also we can see a trend violation at the stage of jan
2008.
3. Here in long term moving average chart one can see that the 25 days SMA
going upwards and 125 days EMA coming downwards. So if in future the 25
days SMA goes upwards and crosses the 125 days EMA then again the bull
run rally start.
Target price for BHEL according to Technical charts:

1. At the beginning of the chart the support level is around Rs. 900 in the month
of June 2006 and resistance level is at Rs. 1100 in the month of August 2006.
2.
after its resistance in august 2006 at Rs 1100 the stock has under gone for
consolidation for 2 months
3. After breaking its resistance of Rs. 1100 the stock again under gone for
consolidation up to Feb 2007.
4. On Fab 2007 the stock had resistance of Rs. 1200 and fell down in march id
for Rs. 1000 there for the new support become Rs. 1000 and resistance again
Rs. 1200.
5. On April 2007 end it crossed its resistance and started rally.
6. In the month of July 2007 it achieved 52 weeks high and created a new
resistance of Rs. 1800 and new support become Rs. 1700
7. The stock was on its life time high of Rs. 2870 on November 2007.
8. In the November 2007 the stock had resistance of Rs. 2900 and support was
Rs. 2100 in the year 2007 of October.
9. In the month of Jan 2008 it has broken its previous support and started a
bearish run.
10. In the month of Dec mid 2007 the stock violated its trend line.
11. the present support is 1850 and previous resistance is 2200
Short term target
Target prices for BHEL

Support- 1800
Resistance- 2150
Target price- 2150-1800=350
There for = 350 + 2150= 2500

Long term target
Support- 1850
Resistance- 2800
There for = 950 + 2800= 3750
3. 14 days RSI OF BHEL COMPANY

Interpretation:
1. Here we can see that the stock has gone for correction over a period and the
present RSI is around 50 and which is very attractive.
2. From the above chart we can say that the stock is under consolidation and it is
a best time to enter into this script at present market price.
L&T company Charts
1. Short term moving average of L&T Company
2. Long term moving averages of L&T
Interpretation for short term moving average:

1. The stock is showing upward trend line from Aug 2006 to June 2007.
2. There is a buy signal on March 2007 at Rs. 1500 level.
3. We can see the aggressive Bull Run from May 2007 to Nov 2007 the stock has
almost double on Nov 2007.
4. There is a selling signal when 10 days SMA came below 40 days EMA.
5. From Jan 2008 to March 2008 there is a declining trend line.
6. At the end of 31.3 2008 it seems to be violation of trend line.
Interpretation for long term moving average:

1. The long term moving average of L&T stock is bit attractive which is showing
3 phases of Bull Run.
2. The stock has shown a accumulation for the period from May 2006 to My
2007 and immediately the upward break out happened and the stock started
rally.
Target price for L&T according to Technical charts:
Short term target

Support- 2800
Resistance- 3650
There for = 850+3650=4450
Long term target

Support- 2800
Resistance- 4300
Target price- 4300-2800=1500
There for = 4300-1500=5800
3. 14 DAYS RSI OF L&T
RSI of L&T Company

1. At present the L&T Company RSI is very reasonable and started rally so one
should see the market condition and invest in the script.
2. The RSI going upward and at present the RSI is around 45 levels.
So one should invest at current market price.
Nifty Charts
1. NIFTY moving averages
2. RSI Calculation for Nifty
Analysis: (Short term or intermediate)

1.
If we look at 90 day EMA of Nifty chart, for the past one and half year the
trend
has been Bullish.
2.
From 20th Jan 2008 onwards there has been shift in the trend towards Bearish.
3.
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 to Bear.
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 level market 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 of market 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
1.
Market is sentiment driven and swings and hypes in market are so strong that
they prevail even for years that have happened at present.

2.
There has been shift in market trend and it has turned bearish though there is
no clear sign of bear trend (its 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.
3.
Markets long term support is at 3118-3130 and next support is at 4500 level
so next rally from that level 4500 is 1380-1400(4500-3110) and we can see some 150200 points abortive rally has been occurred and has reached 6050.
4.
At that level market was waiting for correction. Bad clues from US slow down
had made market to take LT correction and market has turned to be volatile and has
yet to settle down at previous support of 4500.
Short term analysis:
1) Trend short term or intermediate trend for the scrip has been flat. Now
turning 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 has established
strong support at 130-140 price band.
Price movement; the scrip has undergone major consolidation (sideway
movement) phase. And it seems that the scrip has made abortive attempt to
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 only when 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 with
expanding volume.
Trading tactics for short term investors:
As it can be clearly seen from the graph, the stock is purely a trading stock. 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 is high i.e. RSI value 30 and
below, it should be bought and sold at high buying pressure i.e. at RSI value
70 & above.
Here the identifying future target price (for the short term) is very difficult as
scrip was undergoing phase of consolidation and has no established resistance
level.
Fundamental analysis of selected sector socks is as fallows

Fundamental analysis
The basic purpose of buying a security is to earn dividends and ultimately sell
it at higher price. An investor therefore is interested in obtaining estimates of future
prices of the share. These in turn will depend upon the performance of the industry to
which the company belongs and the general economic situation of the country. The
multitude of factors affecting a companys profitability can be broadly classified as:
1. Economic wide factors: these includes the factors like growth rate of the
economy, the rate of inflation, foreign exchange rates etc which affects
profitability of all companies.
2.
Industry wide factors: these include factors which are specific to

industry to which the company belongs. For instance the demand supply gap
in the industry, the emergence of substitutes, and changes in government
policies towards industry affects the company belonging to an industry.
3. Company wide factor: these factors are specific to a firm. The firm
specific factors like plant and machinery, the brand image of the product, and
ability of the management to affect the profitability.
Economic wide factors

The following are the some of the important economic factors which influence the
investment of investor over a period of time.
Indian Economy Overview
India's economy is on the fulcrum of an ever increasing growth curve. With
positive indicators such as a stable 8-9 per cent annual growth, rising foreign
exchange reserves, a booming capital market and a rapidly expanding FDI inflows,
India has emerged as the second fastest growing major economy in the world.
The economy has been growing at an average growth rate of 8.8 per cent in
the last four fiscal years (2003-04 to 2006-07), with the 2006-07 growth rate of 9.6
per cent being the highest in the last 18 years. Significantly, the industrial and service
sectors have been contributing a major part of this growth, suggesting the structural
transformation underway in the Indian economy.
For example, industrial and services sectors have logged in a 10.63 and 11.18
per cent growth rate in 2006-07 respectively, against 8.02 per and 11.01 cent in 200506. Similarly, manufacturing grew by 8.98 per cent and 12 per cent in 2005-06 and
2006-07 and transport, storage and communication recorded a growth of 14.65 and
per cent 16.64 per cent, respectively.
Another significant feature of the growth process has been the consistently
increasing savings and investment rate. While the gross saving rate as a proportion of
GDP has increased from 23.5 per cent in 2001-02 to 34.8 per cent in 2006-07, the
investment rate-reflected as the gross capital formation as a proportion of GDP-has
increased from 22.8 per cent in 2001-02 to 35.9 per cent in 2006-07.
The Current Fiscal Year

The process continues in the current fiscal year. On the back of 9.9 per cent growth in
the first half of 2006-07, GDP grew by 9.1 per cent during April-September 2007.
While overall industrial production grew by 9 per cent during April-December

2007, importantly capital goods production rose by 20.2 per cent compared to
18.6 per cent during same period in 2006.
Services grew by 10.5 per cent in April-September 2007, on the back of 11.6
per cent during the corresponding period in 2006-07.
Manufacturing grew by 9.6 per cent during April-December 2007, on the back
of 12.2 per cent growth during same period in 2006-07.
Core infrastructure sector continued its growth rate recording 6 per cent
growth in April-November 2007.
While exports grew by 21.76 per cent during April-December 2007, imports
increased by 25.97 per cent in the same period.
Money Supply (M3) has grown by a robust 22.8 per cent growth (year-onyear) as of December 21, 2007 compared to 19.3 per cent last year.
The annual inflation rate in terms of WPI was 3.5 per cent for the week ended
December 29, 2007 as compared to 5.89 per cent a year ago.
Fiscal and revenue deficit decreased by 11 per cent and 17.2 per cent,
respectively, during April-November 2007-08 over corresponding period last
year.
With such a robust growth rates, the advance estimates of the Central Statistical
Organization (CSO) expects the economy to grow by 8.7 per cent in 2007-08.
Per Capita Income

Along this significant acceleration in the growth rate of Indian economy, India's per
capita income has increased at a rapid pace, exceeding an earlier forecast made by
Goldman Sachs BRIC report which estimated India's per capita to touch US$ 800 by
2010 and US$ 1149 by 2015.
Per capita income has increased from US$ 460 in 2000-01 to almost double to US$
797 by the end of 2006-07. In 2007-08, India's per capita income is estimated to be
over US$ 825.07, according to the advance estimates of the Central Statistical
Organisation (CSO). Further, India's per capita income is expected to increase to US$
2000 by 2016-17 and US$ 4000 by 2025. This growth rate will, consequently, propel
India into the middle-income category.
Some Highlights
Reflecting the favorable prospect of growth rate of Indian economy, the orders
received Indian companies have increased by a whopping 68.6 per cent to US$ 32.48
billion during January-October 2007 compared to US$ 19.26 billion in the same
period last year.
India is among the five countries sharing 50 per cent of the world production
(or GDP).
FDI inflows have jumped by almost three times to US$ 15.7 billion in 2006-07
as against US$ 5.5 billion in 2005-06.
The aggregate income of the top 500 companies rose by 28.4 per cent in 200607 to total US$ 469.51 billion.
India's National Stock Exchange (NSE) ranks first in the stock futures and
second in index futures trade in the world.
Twenty Indian firms have made it to the list of Boston Consulting Group's 100
New Global Challenger Giants list.
According to a study by the McKinsey Global Institute (MGI), India's

consumer market will be the world's fifth largest (from twelfth) in the world
by 2025.
The number of companies incorporated has increased at an annual average of

55,000 companies in the last two years to 865,000, from 712,000 companies at
the end of 2005.
Four Indians and seven Indian microfinance companies make it to the Forbes
list of Top10 world's wealthiest CEOs World's Top 50 Microfinance
Institutions, respectively.
India has the most number of private equity (PE) funds operating amongst the
BRIC markets.
Mumbai has been ranked tenth among the world's biggest centers of
commerce in terms of the financial flow volumes by a survey compiled by
MasterCard Worldwide.
Another significant aspect has been the broad-based nature of the growth process.
While new economy industries like Information Technology and biotechnology have
been growing around 30 per cent, significantly old economy sectors like steel have
also been major contributors in the Indian growth process. For example, India has
moved up two places to become the fifth largest steel producer in the world.
And with its manufacturing and service sectors on a searing growth path, Lehman
Brothers Asia estimates India to grow by as much as 10 per cent every year in the next
decade.
1. Growth rate of industrial sector:
The growth of industrial sector is an important contributor to the growth of
national income. The performance and the growth of industry is measured through an
Index of industrial product. The industrial growth rate is further disaggregated into
growth rates of different sectors like electricity basic goods consumer goods and so
Industry
YoY % change FY00

FY01
Mining &
Quarrying
1
3.7
Electricity
7.3
4
Manufacturing
7.2
5.4
IIP
6.6
5.1
Industry
FY02
FY03
0.5
3.1
2.9
2.6
5.8
3.2
6
5.8
FY04
5.3
5
7.4
7
FY05
4.4
5.2
9.1
8.4
FY06
1
5.2
9.1
8.2
2. Inflation
Inflation prevailing in the economy has considerable impact on the
performance of the companies high rates of inflation upsets business plans, results in
high input costs and hence reduction in profit margins. On the other hand the inflation
erodes purchasing power of buyer and results in reduction in demand for goods. The
demand for consumer goods will particularly be affected adversely.
Inflation is measured by sustainable price index number. The whole sale price
index number is generally used for this purpose.
FY07
5
6.5
10.7
9.7
Year Inflation rate (consumer prices) Rank Percent Change Date of Information
2003
5.40 %
64
2002 est.
2004
3.80 %
92
-29.63 %
2003 est.
2005
4.20 %
134
10.53 %
2004 est.
2006
4.20 %
125
0.00 %
2005 est.
2007
5.30 %
139
26.19 %
2006 est.
3. Interest rates
Interest rates reflect the cost and availability of credit to the companies
operating in the economy. The interest rates and the volume as well as direction of the
credit supply in the economy is influenced by monitory policy of the reserve bank of
India (RBI). If the cheap money policy is pursued the interest rates are likely to be
lower and larger volume of money supply is expected to be there in the economy.
The lower rate of interest implies lower cost of financing the companys
operations and assures higher profitability, higher the rate of interest higher will be the
costs of manufacturing and sale, which is expected to lead lower profit.
Interest Rates
(% per annum)
Cash Reserve Ratio
Bank Rate
Reverse Repo rate
(Absorption rate)
Repo rate (Injection rate)
IDBI MT lending rate
PLR of 5 major banks
2-Apr
5.5
6.5
3-Apr
4.8
6.3
4-Apr
4.5
6
5-Apr
5
6
6-Apr
5
6
6-Dec
5.3
6
6
8
12.5
11.0-12.0
5
7
12.5
10.8-11.5
4.5
6
10.3
10.3-11.0
4.8
6
10.3
10.3-10.8
5.5
6.5
10.3
10.3-10.8
6
7.3
10.3
11.0-11.5
Deposit rate of 5 major

banks (maturity>1year)
Average call money rate
7.0-8.5
3.6-7.5
5.3-6.2
2.0-5.1
5.0-5.5
2.1-4.5
5.3-6.3
3.3-5.5
6.0-7.0
4.2-6.2
6.8-8.0
5.4-12.0
4. Foreign exchange rates

If company is major exporter or importer its performance and profitability are
likely to be affected considerably by the exchange rates of rupee against other
currencies. A depreciation of rupee against US or other currency will make Indian
products more competitive price wise. In the foreign markets, thereby stimulating
export from India
5. Government budget.
The government budget provides detailed information on each of components
of government spending and revenues. The deficit is essentially the excess of
government spending on revenues. A budget deficit is often incurred for creating
infrastructural facilities in the economy tends to create inflationary pressure. Due to
this there is a strong public opinion against the governments creating of deficit
without expanding the revenue.
6. Savings and investment.
The capital market is channel through which the savings of households are
made available to corporate for investment. Therefor the trends in saving and
investment are significant in studying their impact on capital market.
Savings and Investment
% to GDP at constant
prices
By sector
Household Savings
FY01
21.3
FY02
21.2
FY03
22
FY04
23.1
FY05
23.5
FY06
22
Private Corporate Sector

Public Sector
By types of assets
Physical Assets
Financial Assets
Gross Domestic Savings
Net Capital Inflow
Gross Domestic Investment
Errors and Omission
Gross Capital Formation
4.5
-0.9
4.1
-1.7
3.6
-2
4.1
-0.7
4.4
1
4.8
2.2
10.7
10.5
24.9
1.1
24.3
1
23.3
11
10.2
23.6
0.6
24
1.1
23.8
11.2
10.8
23.6
0.2
24.8
-2.1
22.2
12.7
10.4
26.5
-1.2
25.3
0.1
25
12
11.5
28.9
-1.6
27.2
1
27.4
11.7
10.3
29.1
1
30.1
1.6
30.2
Industrial analysis
Engineering:
Engineering is a diverse industry with a number of segments. A company from
this sector can be a power equipment manufacturer (like transformers and boilers),
execution specialist or a niche player (like providing environment friendly solutions).
It can be an electrical, non-electrical machinery and static equipment manufacturer
too
The sector is relatively less fragmented at the top, as competencies required
are high. But it is highly fragmented at the lower end (like unbranded transformers for
the retail segment) and is dominated by smaller players. The user industries in broad
terms are power utilities (generation, transmission and distribution), industrial majors
(refining, automotive and textiles), government (public investment) and retail
consumers (pumps and motors).
Order book size determines the performance of the company in the short to
medium-term. In order to bag big contracts, companies need to have a big balance
sheet size and proven execution capabilities. They need huge working capital in order
to execute bigger contracts, as initially they receive only part payment and the
remaining comes as projects get executed.
Tariffs that earlier offered protection to Indian capital goods manufacturers,
have been removed. Import duties on a range of equipments have also been reduced.
This coupled with the high cost of capital in India puts Indian manufacturers at a
disadvantage against overseas competition.
Power sector contributes the largest to the engineering companies' revenues.
For instance, ABB and BHEL derive 60% and 72% of their revenues from supplying
equipments to the power sector. And with the government planning to add large
generation capacities in the eleventh (2007-12) five-year plan, the potential seems
huge for the engineering majors. This is because, apart from the investment in
generation capacity buildup, an equivalent amount is likely to be spent in the
transmission and distribution space as well.
Infrastructure is another key area of operation for major Indian engineering
companies. L&T, for example, garners around 30% of its sales from infrastructure
activities like engineering, design and construction of industrial projects and social &
physical projects like housing, hospitals, IT parks, expressways, bridges, ports, and
water & effluent treatment projects.
The high global crude prices on account of growing demand has led to increased
activities in the exploration and development space. This has helped the engineering
companies in this space. More importantly, this segment of the engineering business
has relatively higher margins than infrastructure, owing to more complex tasks
involved.
Key Points
Supply: Abundant supplies available across most segments, except for technology
intensive executions
Demand: Demand growth in this sector is fuelled by expenditure in core sectors such
as power, railways, infrastructure development, private sector investments and the
speed at which the projects are implemented.
Barriers to entry: Barriers to entry are high at upper end of the industry as skilled
manpower and technologies, and ability to fund large projects are a prerequisite
Bargaining power of suppliers: Bargaining power of suppliers is low because of
intense competition. However, in technology driven high-end segments, suppliers
have the upper hand.
Bargaining power of customers: Bargaining power for technology driven segments
is low.
Competition: Majority of the companies compete in terms of pricing, experience in
specific field, product differentiation and timely completion of projects.
Financial Year '07
FY07 proved to be yet another good year for the Indian engineering and
capital goods industry. Strong growth in industrial and manufacturing industries
reflected in the picking up of investment activities in areas like power, infrastructure
and processes. The capital goods index recorded strong growth during the entire year,
though with some blips during the months September and October 2006.
The order books of almost all companies witnessed healthy growth. For
engineering majors like BHEL and L&T, at the end of March 2007, the value of
outstanding orders stood at nearly 3 times and 2 times respective FY07 revenues. In
general, the growth in order book came from both power and industrial businesses.
The companies were able to bag international orders. The topline of the engineering
majors witnessed double-digit growth during the fiscal.
While the industry continued the trend of cost cutting through reducing debt
and restructuring operations and manpower rationalization, rising input costs dented
pared the improvement in profitability. Sharp rise in costs of steel and crude on the
back of buoyant global demand and inadequate supplies, was the biggest dampener to
profit growth
The fiscal also witnessed majors like Suzlon and Crompton Greaves chart out
aggressive acquisitions in the international arena. The major focus area for these
companies was to fill in the niches by way of acquiring new technologies and clients
and having a diversified geographical presence.
Budget 2008-09:
World-class infrastructure has emerged as one of the most important
necessities for unleashing high and sustained growth and alleviation of poverty in any
economy. And with poor infrastructure to support other growth initiatives, the Indian
economy continues to be a laggard when compared to its developing peers. From a
policy perspective, however, there has been a growing consensus that a private-public
partnership is required to remove difficulties concerning the development of
infrastructure in the country. The realisation finally seems to be setting in. This makes
the future of the Indian engineering sector extremely bright. Apart from highway
development and construction and modernisation of airports, the potential for the
sector lies in the oil and gas space, where high global demand has led to increased
action in exploration and production activities. However, scale and execution
capabilities remain the mantras for success
Budget Measures
1. Fourth UMPP at Tilaiya to be awarded shortly; Chhattisgarh, Karnataka,
Maharashtra, Orissa and Tamilnadu urged to bring five more UMPPs to the
bidding stage by extending the required support
2. Rajiv Gandhi Grameen Vidyutikaran Yojana to be continued during the
Eleventh Plan period with a capital subsidy of Rs 280 bn; allocation of Rs 55

bn for FY09.
3. Rs 8 bn to be provided for Accelerated Power Development and Reforms
Project (APDRP) in FY09

4. Proposal to set up a national fund for transmission and distribution (T&D)
reform in the power sector

5. Exemption from 4% additional duty of customs has been withdrawn on power
generation projects (other than mega power projects), transmission, sub

transmission and distribution projects, and specified goods for high voltage
transmission projects
6. Custom duty on project imports reduced from 7.5% to 5%
7. Initiatives like skill development programme and setting up of industrial
training institutes to be taken

8. Defense allocation to be increased by 10%
9. Excise duty being exempted on end-use basis, on refrigeration equipment
(consisting of compressor, condenser units, evaporator, etc) above 2 TR (tonne

refrigeration) utilising power of 50 KW and above
10. Parent company allowed to set-off the dividend received from its subsidiary
company against dividend distributed by the parent company; provided that

the dividend received has suffered DDT and the parent company is not a
subsidiary of another company.
Budget Impact
1. Aggressiveness in allotting UMPPs to prospective bidders expected to be
helpful for engineering companies providing equipments and EPC services for
power plants.
2. Setting up of a national fund for T&D reforms to aid growth prospects of

equipment suppliers and T&D project developers.
3. Removal of exemption from additional customs duty on power generation,
transmission and distribution projects to increase cost for companies importing
such projects, which shall consequently be beneficial for domestic project
developers. However, on the other hand, reduction in custom duty on project
imports to nullify the impact.
4. Initiatives like skill development programme and setting up of industrial
training institutes to reduce talent crunch for engineering companies, which
are reporting high levels of attrition
5. Increase in defense allocation to aid prospect of companies providing defense
equipments and technologies
Company Impact:
1. Allocation of UMPPs to support growth if equipment and service providers
like BHEL, L&T.
2.
Greater focus on the T&D front to be beneficial for ABB, Siemens, Crompton
Greaves, Emco, Bharat Bijlee. Also, companies providing T&D project
services like Jyoti Structures and Kalpataru Transmission to benefit.
3. Removal of exemption from additional customs duty on power generation,

transmission and distribution projects to benefit domestic companies i.e
BHEL and L&T.
4. Skill development initiatives to pare pressure of attrition from companies like
L&T and BHEL.
5. Increase in defense allocation to aid prospects of L&T and Bharat Electronics.
Budget over the years:

Budget 2005-06
A special purpose vehicle
(SPV) to be launched to
finance
infrastructure
projects
that
are
financially
viable.
Investment limit for
2005-06 is fixed at Rs
100 bn.
Budget 2006-07
Estimated outlay for Jawaharlal
Nehru National Urban Renewal
Mission to be Rs 62.5 bn during
2006-07, including a grant
component of Rs 45.9 bn.
Through this mission, the
government intends to promote
establishment of new towns,
preferably focused on a specific
industry (IT) or a specific theme
(education or health).
Budget support for National
Highway
Development
Programme (NHDP) enhanced
from Rs 93.2 bn to Rs 99.5 bn in
2006-07.
NHDP-III to be launched
in FY06 to target selected
high density highways
not forming part of the
GQ or the N-S, E-W
corridor; Rs 14 bn
provided in FY06 to
four-lane 4,000 kms.
Excise duty on A/Cs has Special
accelerated
road
been reduced from 24% development programme for the
to 16%.
North Eastern region proposed
at an estimated cost of Rs 46.2
bn approved with allocation of
Rs 5.5 bn in 2006-07
1,000 kms of access-controlled
Expressways to be developed on
the Design, Build, Finance and
Operate (DBFO) model.
Capital expenditure on defense
proposed at Rs 375 bn.
Budget 2007-08
Hike in corpus of Rural
Infrastructure
Development Fund-XIII
and
Rajiv
Gandhi
Grameen
Vidyutikaran
Yojana (RGGVY)
Private
sector
participation
in
transmission projects and
hike in budgetary support
for APDRP
Reduction in customs
duty on imports of
medical equipments from
12.5% to 7.5%
Increase in allocation to
defense to Rs 960 bn,
including Rs 420 bn for
capital expenditure
Concessions
under
section
80IA
for
infrastructure
facilities
extended to cross country
natural gas distribution
network, including gas
pipeline and storage
facilities integrated to the
network
Peak rate of customs duty on Customs
duty
on
non-agricultural products has sprinklers
and
drip
been reduced from 15% to irrigation systems for
12.5% with a few exceptions.
agricultural
&
horticultural purposes is
reduced from 7.5% to 5%

Exemption to specified goods
for making capital goods for
setting up a unit with an
investment of Rs 50 m or more
withdrawn.
Resin
binders
used
for
manufacture of rotor blades for
wind
operated
electricity
generators
exempted
from
excise duty.
Under NELP VI, 55 blocks and
area of 355,000 sq kms offered.
Investment of Rs 220 bn
expected in the refinery sector
in the next few years.
Concessional
customs
duty of 5% on specified
plantation
machinery
extended by two years to
April 2009
Customs duty on food
processing
machinery
and parts reduced from
7.5% to 5%
Five ultra mega power projects of

4,000 MW each to be awarded before
December 31, 2006
Additional education cess of

1% to fund secondary and
higher educa
Dividend distribution tax

to be hiked from 12.5%
to 15%
Key Positives of budget 2008-09:

Power play: Since power utilities are one of the biggest consumers (generation,
transmission and distribution) for engineering companies, reforms introduced in the
power sector like privatisation of SEBs will help in strengthening the order book size.
Huge addition in power generation capacity, in order to meet the demand supply gap
will be a big positive for the sector.
Infrastructure development: The government is focusing on development of
infrastructure like housing, airports, roads and ports. This will be big positive for
engineering and construction companies
Industrial act: Industrial divisions of engineering companies are likely to benefit

from the increased focus on automation and capacity addition plans drawn by the
India Inc.
Key Negatives of budget 2008-09
Captive competition: Duty free import of T&D equipments by captive power
generation units, if allowed by government, can have some impact on margins of the
T&D majors because of competition
People problem: Engineering companies, across the board, are facing troubled times
retaining key employees. This is due to increased levels of competition for talent from
MNCs, who have deep pockets and thus better paying capabilities. As a result of
increasing levels of attrition, some companies are facing execution issues.
Prospects:
World-class infrastructure has emerged as one of the most important necessities for
unleashing high and sustained growth and alleviation of poverty in any economy. And
with poor infrastructure to support other growth initiatives, the Indian economy
continues to be a laggard when compared to its developing peers. From a policy
perspective, however, there has been a growing consensus that a private-public
partnership is required to remove difficulties concerning the development of
infrastructure in the country. The realisation finally seems to be setting in. This makes
the future of the Indian engineering sector extremely bright. Apart from highway
development and construction and modernisation of airports, the potential for the
sector lies in the oil and gas space, where high global demand has led to increased
action in exploration and production activities. Considering these factors, we expect
the sector to grow strongly into the future. However, scale and execution capabilities
will be the key mantras for success for the engineering companies
Impetus given for growth of infrastructure and core industry in the last two budgets of
the central government is expected to increase capacity utilisation of producers of
coal, cement, iron ore and likely to increase demand for construction and mining
equipments. Industrial growth and capital investment levels have improved and this
will drive the growth in the coming years.
The government's initiative to bring clarity to the power sector reforms is a welcome
sign for the industry. More coordination between the Centre and states for
infrastructure development is a step in the right direction. The Electricity Act 2003
has introduced a lot of reforms in the power sector. The unbundling in the sector will
definitely boost private investment. PSUs like NTPC are expected to almost double
their generation capacity in next few years, which is a good sign for the engineering
companies.
The shift in focus towards reducing T&D losses will further increase the order book
size of the companies operating in this realm. With power generation and distribution
looking up, power equipment companies can look forward to a promising future
Deregulation combined with high global demand for crude has led to a surge in
exploration and production activities in India and globally. Also, there has been a
radical change in the governments approach to E&P (exploration and production)
activities in the country. This thrust in development of new wells and improvement of
output from old wells promises bright prospects for engineering companies
Automation business has perked as the user industries started realising its benefits.
With increasing competition among the power companies, the consumers will demand
better quality and uninterrupted power supply. In such a scenario automation will play
an important role. With the automation technologies gaining momentum, companies
like ABB and Siemens will benefit a lot going forward.
Capacity addition and de-bottlenecking exercise being carried by various industries
like steel, power, refineries, chemicals etc is likely to provide a fillip to the industrial
segment of the engineering companies
Performance of Industry
The industrial sector recorded a healthy growth of 10.3% (measured in terms of the
Index of Industrial Production) during the period April-Oct. 2006-07 as compared to
8.6 percent achieved during the corresponding period last year. Capital goods sector,
which posted a robust growth of 16.9 per cent in 2005-06, has maintained its growth
momentum during the current year as well. According to the Index of Industrial
Production, capital goods sector posted a growth of 15.0 per cent during April-Oct.
2006-07. The growth trends during Apr-Oct 2006-07 as compared to Apr-Oct 2005-06
are given in the table below:
Sector Wise Growth Rates (in %)
2005Weight 06
2005-06
2006-07
(Apr- Oct) (Apr-Oct)
8.2
Overall
100.0
8.6
10.3
0.9
3.4
9.7
11.2
5.2
7.1
1.0
Mining
and 10.5
Quarrying
9.1
Manufacturing 79.4
5.2
Electricity
10.2
Use-Based Classification
Overall
100.0
8.2
8.6
10.3
Basic Goods
35.6
6.7
6.3
9.0
Capital Goods 9.3
15.8
16.9
15.0
Consumer
Goods
28.7
12.0
13.5
9.8
I) Durables
5.4
15.3
13.9
13.2
II)
Non- 23.3
11.0
13.5
8.5
durables
Production and growth rates of some of the industries being dealt within the
Department of Heavy Industry for the period April-October 2006-07 as compared to
April-October 2005-06 are given below
Industry
Unit
Production
Growth
Apr-Oct
2005-06
Apr-Oct
2006-07
Rate (%)
Industrial Machinery
Rs. lakhs 176464.79 147578.72 16.37
Machine Tools
Rs. lakhs 151449.86 153371.70 1.27
Boilers
Rs. lakhs 181945.45 262286.24 44.16
Turbines
(Steam/Hydro)
Rs. lakhs 38443.43 56947.33 48.13
Electric Generators
Rs. lakhs 41662.05 58458.17 40.32
Power
Distribution Mill.
Transformers
KVA
35.43
39.50
11.51
Telecommunication
Tables
Mill.
Mtr.
7778.79
4813.09
-38.20
Commercial Vehicles
Numbers 214510
277808
29.51
Passenger Cars
Numbers 580952
689649
18.71
Heavy Engineering Industry

Textile Machinery
There are over 600 units engaged in the manufacture of Textile Machineries,
their components, accessories and spares,and out of these about 100 units are
manufacturing the complete textile machinery. The range includes textile machinery
required for sorting, cording,processing of yarns/ fabrics and weaving. The industry is
gearing itself to avail the opportunities of supplying machines required to cater the
export target of garment manufacturers post Multi Fibre Agreement (MFA).With a
capital investment of Rs. 1500 crore and an installed capacity of Rs. 3050 crore per
annum.
Their current production as well as exports and imports are as under: (Rs. in crore)
Year
Production
Exports
Imports
2003-2004
1339
535
2179
2004-2005
1685
457
3299
2005-2006
2212
476
6768
Cement Machinery
Cement plants based on dry processing and precalcination technology for capacities
upto 7500 TPD are being manufactured in the country.Modern cement plants are
designed for zero downtime, high product quality and better output with minimum
energy consumed per unit of cement production etc. At present, there are 18 units in
the organized sector for the manufacture of complete cement plant machinery. With an
installed capacity of around Rs. 600 crore/annum, the industry is fully capable to meet
the domestic demand.
Sugar Machinery
Domestic manufacturers occupy predominant position in the global scenario and are
capable of manufacturing from concept to commissioning stage sugar plants of latest
design for a capacity upto 10,000 TCD (tons crushing per day). There are presently 27
units in the organised sector for the manufacture of complete sugar plants and
components with an installed capacity of around Rs. 200 crore per annum.
(Rs. in lakh)
2003-2004
2004-2005
2005-2006
Import 427
1259
905
Export 1139
2682
3767
Rubber Machinery
There are at present 19 units in the organized sector for the manufacture of
rubber machinery mainly required for tyre/tube industry. The range of equipments
manufactured in the country includes inter-mixer, tyre curing presses, tube splicers,
bladder curing presses, tyre moulds, tyre building machines, turnet servicer, bias
cutters, rubber injection moulding machine,bead wires etc.
(Rs.in crore)
2003-2004
2004-2005
2005-2006
Import
25.91
36.75
12.02
Export
22.29
46.15
50.32
Material Handling Equipment

The range of equipment manufactured includes crushing and screening plants,
coal/ore/ash handling plant and associated equipment such as stackers, reclaimers,
ship loaders/ unloaders,wagon tipplers, feeders etc. catering to the growing and
rapidly changing needs of the core industries such as Coal, Cement, Power, Port,
Mining, Fertilizers and steel plants. There are 50 units in the organised sector for the
manufacture of material handling equipment.Besides, there are number of units
operating in the small-scale sector. The industry is self sufficient in meeting domestic
demand and is also capable of meeting global competition.
(Rs.in crore)
2003-2004
2004-2005
2005-2006
Import
242.58
261.44
545.54
Export
41.54
80.16
77.91
Oil Field Equipment

The petroleum industry in India is undergoing a major change. With the ongoing
process of liberalisation, the industry has been thrown open for private sector in all
major areas of exploration,production, refining and marketing, and this has resulted in
increased demand for the oil field and related equipments. Domestic production
covers mainly the on-shore drilling equipment.Under Offshore drilling only offshore
platforms and some other technological structures are being produced locally. The
major producers of these equipments are BHEL,Hindustan Shipyard, Mazagaon Dock
and Larsen & Toubro.
(Rs.in crore)
2003-2004
2004-2005
2005-2006
Import
142.49
638.20
352.84
Export
165.81
300.47
71.87
Metallurgical Machinery
Metallurgical machinery includes equipment for mineral beneficiation, ore
dressing, size reduction, steel plant equipments, foundry 30 Indian Public Sector
aiming global heights equipments and furnaces. At present, there are 39 units in the
organized sector engaged in the manufacture of various types of metallurgical
machinery. The existing production capacity in the country is sufficient to meet the
demand of these equipment in the country. Indigenous manufacturers are in a position
to supply majority of the equipment for steel plants e.g. blast furnaces, sinter plants,
coke ovens, steel melting shop equipment, continuous casting equipment, rolling mills
& finishing line.However, there is a technological gap in the basic design and
engineering for plant and equipment required in the ferrous and non-ferrous sector for
which the domestic manufacturers are dependent on imported know-how. Since the
process of making ferrous and non-ferrous metal is linked up with the design of the
equipment, there is a need for close interaction between the process know-how,
designers and equipment manufacturers.
(Rs.in crore)
2003-2004
2004-2005
2005-2006
Import
495.28
454.40
1200.65
Export
434.23
370.70
535.04
Mining Machinery
The major mining equipments are Longwall Mining Equipment, Road Header,
side discharges Loader (SDL), Haulage Winder, Ventilation Fan,Load Haul dumper
(LHD), Coal Cutter,Conveyors, Battery Locos, Pumps, Friction Prop,etc. At present
there are 32 manufacturers in the organized sector both in public and private sector for
underground and surface mining equipment of various types. Out of these, 17 units
manufacture underground mining equipment.Majority of the requirement of the
mining industry is being met by the indigenous manufacturers.
(Rs.in crore)
2003-2004
2004-2005
2005-2006
Import
16.80
39.01
41.99
Export
1.15
1.55
5.90
Dairy Machinery
At present, there are 16 units in the organized sector, both in private and public
sector, manufacturing Dairy Machinery equipments such as evaporators, milk
refrigerators andstorage tanks, milk and cream deodorizers, centrifuges, clarifiers,
agitators , homogenisers, spray dryers and heat exchangers. Small Scale units are also
contributing to the indigenous production. The spray dryers, plate type heat exchanger
and other core equipment for milk powder plant call for high degrees of polish
requirement on the equipment because the presence of any micro crevices resulting
from inadequate polish tends to be the incubation and breeding ground for the
bacteria. The technology gaps exist for handling equipments such as self cleaning
cream, separator, aseptic processing systems, and for the equipment required for
manufacture of yoghurt and traditional Indian sweets.
(Rs.in crore)
2003-2004
Import 18.15
Export 10.54
2004-2005
21.05
8.08
2005-2006
52.36
5.95
Machine Tools
Machine Tool Industry is in a position to export general purpose and a
standard machine tool to even industrially advanced countries. During last four
decades, the machine tool industry in India has established a sound base and there are
around 160 machine tool manufacturers in the organized sector as also around 400
units in the small ancillary sector. The industry, however,lacks in design and
engineering capability to undertake very high precision CNC Machines.Some
companies have taken up manufacture of CNC Machines, but there is a need to
upgrade research and development in this field. Indian machine tools are
manufactured to the international standard of quality / precision and reliability. A
number of collaborations have also been approved for bringing in the latest
technology in this field of modern machine tools and the industry is now exporting
conventional as well as NC/CNC high - tech machine tools. In the field of R& D,
Central Manufacturing Technology Institute, Bangalore has been doing research for
more appropriate designed machine tools. There is gap in technology for Special
Purpose Machines and even in some categories of CNCs. Import of technology is
encouraged to bridge the gap.
Performance of the industry during the last three years is tabulated below:
(Rs. in crore)
2003-2004
2004-2005
2005-2006
797.00
965.00
55.00
1089.04
1820.83
52.61
1342.00
2899.00
50.00
Production
Import
Export
Company analysis
The company analysis is the last step in EIC analysis framework of
fundamental analysis. The industry analysis helps the investor in selecting the
industry in which the investments are better rewarded. The investor now has to decide
in which of the companies belonging to chosen industries he should invest. This
requires the company analysis.
The company analysis has to be made in three different parts
1. Study of financial information and asses the financial health of the company.
2. Sizing up present situation and prospects. This requires an analysis of the
present business of the company and its future prospects.
3. Evolution of management.
BHEL COMPANY ANALYSIS
1. Company financial health

The financial statements of the company can be used to understand and
evaluate the financial performance and health of the company. Ratio analysis helps an
investor to determine the financial strengths and weakness of the company.
The following is the ratio analysis of the BHEL Company
Balance sheet of BHEL
Mar '03
Mar '04
Mar '05
Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Application Of Funds
Gross Block
Less: Accum. Depreciation
Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Miscellaneous Expenses
Total Assets
Contingent Liabilities
Book Value (Rs)
Mar '06
Mar '07
244.76
244.76
0
0
4,558.91
0
4,803.67
500
31.09
531.09
5,334.76
244.76
244.76
0
0
5,051.18
0
5,295.94
500
40.03
540.03
5,835.97
244.76
244.76
0
0
5,782.13
0
6,026.89
500
36.98
536.98
6,563.87
244.76
244.76
0
0
7,056.62
0
7,301.38
500
58.24
558.24
7,859.62
244.76
244.76
0
0
8,543.50
0
8,788.26
0
89.33
89.33
8,877.59
3,347.82
2,178.81
1,169.01
67.55
10.33
2,001.06
4,075.78
1,119.44
7,196.28
1,495.26
201.47
8,893.01
4,094.18
806.46
4,900.64
3,992.37
95.5
5,334.76
1,054.58
196.26
3,459.16
2,365.46
1,093.70
109.57
28.98
2,103.88
4,608.48
1,504.63
8,216.99
1,693.39
1,155.01
11,065.39
5,339.66
1,139.94
6,479.60
4,585.79
17.92
5,835.96
815.79
216.37
3,628.50
2,584.70
1,043.80
98.12
8.95
2,916.11
5,972.14
1,392.86
10,281.11
1,921.33
1,785.01
13,987.45
7,248.99
1,325.45
8,574.44
5,413.01
0
6,563.88
609.68
246.24
3,821.62
2,839.79
981.83
191.27
8.29
3,744.37
7,168.06
1,483.97
12,396.40
4,186.27
2,650.01
19,232.68
8,905.14
3,649.32
12,554.46
6,678.22
0
7,859.61
769.95
298.31
4,134.61
3,146.31
988.3
306.58
8.29
4,217.67
9,695.82
2,068.91
15,982.40
5,517.59
3,740.00
25,239.99
11,957.32
5,708.25
17,665.57
7,574.42
0
8,877.59
976.05
359.06
Mar '05
Mar '06
Mar '07
Profit & Loss account

Mar '03
Mar '04
Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Selling and Admin Expenses
Preoperative Exp Capitalised
Total Expenses
Operating Profit
PBDIT
Interest
PBDT
Depreciation
Other Written Off
Profit Before Tax
Extra-ordinary items
PBT (Post Extra-ord Items)
Tax
Reported Net Profit
Total Value Addition
Preference Dividend
Equity Dividend
Corporate Dividend Tax
Per share data (annualised)
Shares in issue (lakhs)
Earning Per Share (Rs)
Equity Dividend (%)
Book Value (Rs)
7,727.79
728.49
6,999.30
69.08
-45.32
7,023.06
8,893.17
856.44
8,036.73
14.61
-30.63
8,020.71
10,682.15
1,043.15
9,639.00
259.98
539.77
10,438.75
14,739.46
1,298.01
13,441.45
342.00
386.01
14,169.46
19,058.33
1,695.44
17,362.89
482.32
181.37
18,026.58
3,160.38
199.96
1,504.64
478.10
532.98
81.56
0.00
5,957.62
996.36
1,065.44
54.78
1,010.66
185.35
0.00
825.31
-49.01
776.30
291.51
444.51
2,797.24
0.00
97.90
12.54
3,634.66
196.81
1,639.51
598.67
888.89
193.58
0.00
7,152.12
853.98
868.59
60.08
808.51
198.00
0.00
610.51
396.59
1,007.10
348.93
658.15
3,517.46
0.00
146.86
19.00
5,097.68
220.54
1,650.38
783.44
1,006.38
116.98
0.00
8,875.40
1,303.37
1,563.35
81.41
1,481.94
218.87
0.00
1,263.07
306.60
1,569.67
616.30
953.40
3,777.71
0.00
195.81
26.64
7,099.40
229.01
1,878.51
1,054.67
1,216.00
126.27
0.00
11,603.86
2,223.60
2,565.60
58.75
2,506.85
245.93
0.00
2,260.92
299.86
2,560.78
881.61
1,679.16
4,504.46
0.00
354.90
49.78
8,561.41
259.08
2,366.93
1,733.59
887.55
190.50
0.00
13,999.06
3,545.20
4,027.52
43.33
3,984.19
244.61
0.00
3,739.58
-13.79
3,725.79
1,311.09
2,414.70
5,437.65
0.00
599.66
92.83
2,447.60
18.16
40.00
196.26
2,447.60
26.89
60.00
216.37
2,447.60
38.95
80.00
246.24
2,447.60
68.60
145.00
298.31
2,447.60
98.66
245.00
359.06
BHEL Ratios calculations

sl.no
1
2
3
ratio
Net working capital
current ratio
quick ratio
formula
CA-CL
CA/CL
CA-(stock+prepaid exp)/CL
2007
7574.42
1.43
1.13
year
2006
6678.22
1.53
1.17
2005
5413.01
1.63
1.22
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
inventory turnover ratio

debt equity ratio
interest coverage ratio
gross profit margin
Net profit ratio
cost of goods sold ratio
Operating profit ratio
return on equity
return on assets
return on capital employed
EPS
DPS
P/E
price to book value ratio
book value per share
dividend payout ratio
earning yield
dividend yield
total asset turnover ratio
capital turnover ratio
COGS/avg INV
long trm DBT/ Sh holders eq
EBIT/INTERST
Gross profit / sales
EAT/ Net sales
COGS/ net sales*100
EBIT/ Net sales
Net profit/ share holders equity
Net profit/total assets
EBIT/ Total capital
Net profit available eq sh/ NO shares
Div paid to ord sh / No of shares
MPS/EPS
MPS/BPS
Net worth / no of shares
DPS/EPS*100
EPS/MPS *100
DPS/MPS*100
COGS/total asst
COGS/capital employed
3.32
0.01
93.42
19
13.51
80.63
20.41
27.48
27.69
44.18
98.66
24.5
22.91
6.30
359.06
24.83
4.36
1.08
1.58
1.59
3.10
0.07
43.46
14.71
12.19
86.33
16.54
23.00
22.11
30.28
68.6
14.5
32.75
7.53
298.31
21.14
3.05
0.65
1.48
1.59
Interpretation:
Net working capital:
NWC represents the excess of current assets over current liabilities. Companies
should have sufficient NWC in order to be able to meet the claims of the creditors and
3.04
0.08
19.8
11.25
9.58
92.08
13.52
15.82
15.77
20.82
38.95
8
19.70
3.12
246.24
20.54
5.08
1.04
1.35
1.47
the day to day needs of business. The greater is the amount of NWC greater is the
liquidity of the firm. In BHEL company the three year NWC is as follows.
Year
Sl.no Ratio
Formula
2007
2006
2005
1
Net working capital
CA-CL
7574.42 6678.22 5413.01
The company from 2005 to 2007 has increased its NWC which shows that the
company has good liquidity to its creditors.
Current ratio:
The Current Ratio expresses the relationship between the firms current assets and its
current liabilities. The rule of thumb says that the current ratio should be at least 2 that
is, the current assets should meet current liabilities at least twice.
Year
sl.no Ratio
Formula
2007
2
current ratio
CA/CL
1.43:1
Here we can see that the companys current ratio decreasing gradually.
2006
1.53:1
2005
1.63:1
Quick ratio:
The quick ratio, also referred to as acid test ratio, examines the ability of the business
to cover its short-term obligations from its quick assets only (i.e. it ignores stock).
Clearly this ratio will be lower than the current ratio, but the difference between the
two (the gap) will indicate the extent to which current assets consist of stock.
year
sl.no Ratio
Formula
2007
2006
2005
3
Quick ratio
CA - (stock + prepaid exp)/CL
1.13:1 1.17:1 1.22:1
Here we can see that the companys quick ratio is bit constant for three years and
company is able to satisfy its creditors with this ratio.
Inventory turn over ratio:
This ratio measures the stock in relation to turnover in order to determine how often
the stock turns over in the business. It indicates the efficiency of the firm in selling its
product.
sl.no
4
Ratio
inventory turnover ratio
In 2007: 12/ 3.32= 3.61 months
Formula
year
2007
2006
2005
COGS/avg INV
3.32
3.10
3.04
In 2006: 12/3.1=3.87 months

In 2005: 12/3.04= 3.95 months. Here we can see that the companys working
efficiency increased over a period of time. They are able to convert their inventory
into sale in 3.61 months.
Debt equity ratio:

This ratio indicates the extent to which debt is covered by shareholders funds. It
reflects the relative position of the equity holders and the lenders and indicates the
companys policy on the mix of capital funds. The ratio reflects the relative
contribution of creditors and owners of business in its financing.
year
sl.no Ratio
Formula
2007
2006
2005
5
debt equity ratio
Long trm DBT/ Sh holders eq
0.01
0.07
0.08
Here we can see that the company gradually decreased its debt combination from its
finance.
Interest Coverage Ratio:
This ratio indicates how well the firms earning can cover the interest payments on its
debt.
sl.no Ratio
6
interest coverage ratio
Gross Profit Margin:
Formula
EBIT/INTERST
year
2007
93.42
2006
43.46
2005
19.8
Normally the gross profit has to rise proportionately with sales. It can also be useful to
compare the gross profit margin across similar businesses although there will often be
good reasons for any disparity.
year
sl.no Ratio
Formula
2007
2006
2005
7
Gross profit margin
19
14.71
11.25
The ratio above shows the increasing trend in the gross profit since the ratio has
improved from 11.25% in 2005 to 19.00% on 2007. This indicates that the rate in
increase in cost of goods sold are less than rate of increase in sales, hence the
increased efficiency.
Net profit ratio:

year
sl.no Ratio
Formula
2007
2006
2005
8
Net profit ratio
EAT/ Net sales
13.51% 12.19% 9.58%
a high net profit margin would ensure adequate return to the owners as well as enable
a firm to withstand adverse economic conditions when selling price is declining cost
of production is rising and demand for the product falling.
Cost of goods sold ratio:

year
sl.no Ratio
Formula
2007
2006
2005
9
cost of goods sold ratio COGS/ net sales*100
80.63
86.33
92.08
This is one of the expenses ratios it is computed by expenses by net sales. The cost of
goods sold ratio shows what percentage share of sales is consumed by cost of goods
sold and conversely what proportion is available for meeting expenses such as selling
and general distribution expenses as well as financial expenses consisting of taxes
interest and dividend and so on.
Operating profit ratio:
This ratio reveals the profitability of sales resulting from regular business as well as
buying, selling, and manufacturing operations.
sl.no Ratio
10
operating profit ratio
Formula
EBIT/ Net sales
year
2007
20.41
2006
16.54
2005
13.52
Return on Equity:
This ratio shows the profit attributable to the amount invested by the owners of the
business. ROE measures the amount of money that the company has managed to
generate for its shareholders.
sl.no Ratio
11
return on equity
Formula
year
2007
27.48
2006
23.00
2005
15.82
Here we can see that the companies return on equity is increasing constantly so we
can say that the profitability to ordinary shareholders is strong and showing an
upward trend.
Return on assets:
This ratio gives you an idea on the company's management effectiveness in utilizing
its assets to make a profit for its shareholders.
year
sl.no Ratio
Formula
2007
2006
2005
12
return on assets
27.69
22.11
15.77
The company ROA has increased constantly which its management efficiency in
getting good returns from its assets.
Return on capital employed:

sl.no Ratio
return
year
2007
Formula
on
2006
2005
capital
13
employed
EBIT/ Total capital
44.18
30.28
20.82
This ratio shows how efficiently the long term funds of owners and lenders are being
used.
Earning Per Share:
For an equity investor, a companys EPS is the most important indicator of its
performance. If the EPS is good, the company can pay dividends, plough back the
surplus into reserves and issue bonus shares in the future. For these reasons, the
market price of any companys share is largely influenced by its projected EPS
Sl.no
ratio
Formula
Net profit available eq sh/ NO
year
2007
2006
14
EPS
shares
98.66
68.6
We can see here the companys EPS gone three times higher from three year.
2005
38.95
Dividend per Share:

Year
Sl.no ratio
Formula
2007
2006
2005
15
DPS
div paid to ord sh / No of shares
24.5
14.5
8
This indicates the dividend paid for each share. Shareholders would, naturally like to
receive the maximum possible dividends from a company, consistent with its profits
and need for retained earnings.
P/E Ratio:
P/E ratio is a useful indicator of what premium or discount investors are prepared to
pay or receive for the investment. The higher the price in relation to earnings, the
higher the P/E ratio which indicates the higher the premium an investor is prepared to
pay for the share. This occurs because the investor is extremely confident of the
potential growth and earnings of the share.
sl.no Ratio
16
P/E
Formula
MPS/EPS
year
2007
22.91
2006
32.75
2005
19.70
The above ratio shows that the shares were traded at a much higher premium in
2007 than were in 2005. In 2005 the price was 19.7 times higher than earnings
while in 2007, the price is 22.91 times higher.
Price to book value ratio:
year
sl.no Ratio
Formula
2007
2006
2005
17
Price to book value ratio
MPS/BPS
6.30
7.53
3.12
It measures the relationship between the market price of an equity share with book
value per share. The P/B ratio is significant in predicting future stock return. Firms
with low P/B ratio had consistently higher returns compared to the firms with high
P/B ratio.
Book value per share:
year
sl.no Ratio
Formula
2007
2006
18
Book value per share
Net worth / no of shares
359.06 298.31
This ratio indicates the net asset value of a companys share. A high book value
2005
246.24
indicates that the company has strong reserves, indicating scope for bonus shares, of
course subject to necessary guidelines of the SEBI.
Dividend payout ratio:
This ratio looks at the dividend payment in relation to net income and can be
calculated as follows:
sl.no Ratio
19
dividend payout ratio
Formula
DPS/EPS*100
year
2007
24.83
2006
21.14
2005
20.54
Earning yield:
This ratio highlights as a percentage a companys earnings vis-a-vis the current
market value of its share. For blue chip companies this ratio tends to be around 5 per
cent to 6 per cent.
sl.no Ratio
20
earning yield
Formula
EPS/MPS *100
Year
2007
4.36
2006
3.05
2005
5.08
Dividend yield:
The dividend yield ratio indicates the return that investors are obtaining on their
investment in the form of dividends. This yield is usually fairly low as the investors
are also receiving capital growth on their investment in the form of an increased share
price.
sl.no Ratio
21
dividend yield
Formula
DPS/MPS*100
Year
2007
1.08
2006
0.65
2005
1.04
Total asset turnover ratio:

Year
sl.no Ratio
Formula
2007
2006
2005
22
total asset turnover ratio
COGS/total asst
1.58
1.48
1.35
Total asset turnover ratio measures the efficiency of a firm in managing and utilizing
its assets. The higher ratio indicates the more efficient management.
Capital turnover ratio:
Year
sl.no Ratio
Formula
2007
2006
2005
23
capital turnover ratio
1.59
1.59
1.47
Capital turnover ratio measures the efficiency of a firm in managing and utilizing its
capital. The higher ratio indicates the more efficient management.
Bharat Heavy Electricals Limited:

Bharat Heavy Electricals Limited (BHEL) is one of the largest
engineering enterprises of its kind in India. BHEL is the largest domestic capital
goods manufacturer in India and the 12th largest in the world. The international
competitors of BHEL are General Electric, Siemens, Alstom and ABB. BHEL offers a
wide spectrum of equipment, systems and services in the field of power, transmission,
industry, transportation, oil & gas, non-conventional energy sources and
telecommunication. Power sector constitutes over half of its total business. The
company has 14 manufacturing divisions, 8 service centres and 4 power sector
regional centres. Its first plant was set up at Bhopal in 1956 under technical
collaboration with AEI, UK followed by three more major plants at Hardwar,
Hyderabad and Tiruchirapalli with Russian and Czechoslovak assistance.
Products & services
BHEL manufactures over 200 products under 30 major product groups.
The company has installed equipment for over 100,000 mw of power generation for
utilities, captive and industrial users. Its strengths are comparable product range and
cost competitiveness with foreign manufacturers. The company enjoys a crucial
advantage of depreciated assets. The company is cost-competitive when it comes to
power plant equipment and has bagged a number of power project orders placed in
India against open international competitive bidding.
The company has joint venture with Siemens for servicing old Indian
fossil fuel power plants and with GE for designing of heavy-duty gas turbines. Thirtytwo thermal power stations equipped with Bhels generating sets have been given
productivity awards by the power ministry. Of these power stations, eight have
received gold medals. The awards have been given for meritorious and efficient
performance based on account of reduced inputs.
The company already manufactures products required by the
distribution systems like transformers, switchgears etc. The company is planning
towards becoming an application service provider. The company will continue to
focus on project management, reducing cycle time and cost control. In the power
sector, the company plans to obtain a part of the business generated by independent
power producers through a combination of approaches including consortium route,
equity participation and limited financial syndication.
I
It has equipped itself with the new type of once-through design boiler
technology, and for pollution control - bag filter technology. BHEL entered into new
business in integrated gasification combined cycle systems, coal washeries, and LRT
systems. In it's existing businesses of transportation, transmission & industry. BHEL
is pursuing opportunities in EMU coaches, loco refurbishment, gas-insulated switcher,
HVDC insulators, and electronic meters. The company will continue to focus on
product developments in order to foster its growth strategy. The electronics division
has forayed into traction business and received a large order from DoT for switching
equipment.
BHEL has developed a new series compensation scheme Flexible AC
Transmission System (FACTS) for reducing power losses and speedy transmission.
The FACTS will enhance power transfer capability of the system and reduce
transmission losses in 400 kV lines considerably. The company has also developed an
automatic device that adjusts itself to the systems requirement in less than 10
milliseconds. It reduces system losses and improves power system stability in highvoltage transmission lines.
Key Risks
Delay in capacity expansion
The companys 37,000 MW of order flow for BHEL over FY09-12E, in addition to
the existing strong order backlog. Any delay in second phase of expansion from
10,000 MW to 15,000 MW could severely impact BHELs earnings, given the strong
deliverables over next three-four years. The first phase of expansion from 6,000 MW
to 10,000 MW had been delayed by nine months.
Slowdown in pace of power reforms
Given the recent momentum in power reforms, it is expected the balance Eleventh
Plan orders and 70% of Twelfth Plan orders to be placed by FY12. Any significant
delay in the awarding activity could be a huge dampener for BHELs outlook going
ahead, given that the company is the market leader (65% market share in countrys
installed capacity as in FY07).
Increase in private sector investments in power projects = intensifying
competition
As per CEA, 35% of the power capacity addition in the Twelfth Plan will be
undertaken by the private sector. Any subsequent change in the mix, in favour of the
private sector, could result in lower order intake for BHEL. While central and state
sector projects are BHELs forte (70% plus market share), the companys market share
in private sector projects has been lower (20-25%) on account of stiff competition.
Stiff input prices could affect margins
Although it have not built in benefits on account of raw material pricing over FY09
12E, any unprecedented rise in input costs above FY07-08E levels could dampen
BHELs margins. Execution delays could lead to de-rating The re-rating in BHELs
valuations over the past one year builds in strong visibility over the next few years.
The key concern now is BHELs ability to execute this huge opportunity, failing
wherein could lead to the stock being de-rated.
Value anchor
Period & months
INCOME
Net Operating Income
EXPENSES
Material Consumption
Manufacturing Expenses
Personel Expenses
Selling Expenses
Administrative Expenses
Cost of Sales
Reported PBDIT
Other Recuring Income
Adjusted PBDIT
Depreciation
Average Dividend payout ratio
Adjusted
PBIT
Required
rate of rate
Finanical
Expenses
Expected
growth rate in dividend
Adjusted
PBT
P/E Ratio
Tax
Charges
AVG
PE ratio
Adjusted
PAT
Weighted
PE ratio
Non-recurring Items
Other Non-cash Adjustments
REPORTED PAT
no. of shares
CAGR
2008/03
2009/03
2010/03
20822.62
24971.74
29947.6
1.20
10155.72
2472.116
2591.409
248.2735
942.93
12307.66
3066.919
2837.178
277.4314
1038.846
14915.58
3804.834
3106.255
310.0138
1144.518
1.21
1.24
1.09
1.12
1.10
16,410.45
19,528.03
23,281.20
4,412.17
5,443.70
6,666.41
783.4328
5,195.60
258.5655
4,937.04
41.34491
Expected EPS FOR 3 YEAR
4,895.69
1771.04
3,124.65
-13.4603
1220.577
1901.64
6,664.28
risk free rate 8,568.05
Beta
273.3171
288.9104
25.28
8,279.14
18.6 6,390.96
8
1.1
37.64339
16.0239.45076
8,241.49
9.81 6,351.51
3231.617
23.742392.347
5,009.88
16.78 3,959.17
-8.82506
-5.78605
3,111.19
3,950.34
5,004.09
24.48
24.48
24.48
127.09
161.37
204.42
Expected future price of the BHEL Company

Year
Value ancher
2008
2009
2010
2132.30
2707.42
3429.62
Calculation of Intrinsic value

Average Dividend payout ratio= sum of 5 years DPR/ 5
Required rate of rate= risk free rate +(beta*EMPR)
1.56
EMRP
1.06
9.5
0.95
1.37
1.35
0.66
0.78
Expected growth rate in dividend= avg of retention ratio* avg of

ROE
P/E RATIO= AVG DPR / (required rate of risk-exp growth rate in
div)
AVG PE ratio= 5 years PE ratio/ 5
Weighted PE ratio= calculated PE ratio+AVG PE ratio/2
Value anchor = weighted PE ratio* expected market price
L&T COMPANY ANALYSIS
1. Company financial health

The financial statements of the company can be used to understand and
evaluate the financial performance and health of the company. Ratio analysis helps an
investor to determine the financial strengths and weakness of the company.
The following is the ratio analysis of the BHEL Company
L&T Company balance sheet and profit and loss account

Balance Sheet
Mar '03
Mar '04
Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Reserves
Revaluation Reserves
Net worth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
Application Of Funds
Gross Block
Mar '05
Mar '06
Mar '07
248.67
248.67
0.04
3,279.53
34.34
3,562.58
2,703.11
472.89
3,176.00
6,738.58
24.88
24.88
0.00
2,717.55
32.61
2,775.04
1,045.25
279.10
1,324.35
4,099.39
25.98
25.98
0.00
3,312.25
30.90
3,369.13
793.72
1,065.34
1,859.06
5,228.19
27.48
27.48
0.00
4,583.32
29.37
4,640.17
465.79
987.78
1,453.57
6,093.74
56.65
56.65
0.00
5,683.85
27.93
5,768.43
245.40
1,832.35
2,077.75
7,846.18
6,231.79
2,038.15
2,106.55
2,300.68
2,876.30
Less: Accum. Depreciation

Net Block
Capital Work in Progress
Investments
Inventories
Sundry Debtors
Cash and Bank Balance
Total Current Assets
Loans and Advances
Fixed Deposits
Total CA, Loans & Advances
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Total Assets
Contingent Liabilities
Book Value (Rs)
2,256.12
3,975.67
72.60
1,160.37
2,590.01
1,850.37
279.11
4,719.49
1,484.53
41.42
6,245.44
4,360.73
424.75
4,785.48
1,459.96
69.98
6,738.58
562.79
141.88
1,049.63
988.52
26.23
965.88
1,812.30
3,314.58
282.05
5,408.93
1,423.34
93.22
6,925.49
4,191.95
660.99
4,852.94
2,072.55
46.21
4,099.39
655.86
220.45
Profit & Loss account

Mar '03
Mar '04
Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Selling and Admin Expenses
Preoperative Exp Capitalised
Total Expenses
Operating Profit
PBDIT
Interest
PBDT
Depreciation
Other Written Off
Profit Before Tax
Extra-ordinary items
PBT (Post Extra-ord Items)
Tax
Reported Net Profit
1,089.54
1,017.01
65.82
960.70
2,310.84
3,963.60
354.67
6,629.11
1,860.18
473.35
8,962.64
5,023.23
794.64
5,817.87
3,144.77
39.89
5,228.19
625.10
256.94
982.22
1,318.46
286.06
1,919.52
2,210.27
4,814.16
398.71
7,423.14
2,061.50
184.49
9,669.13
6,106.04
1,015.37
7,121.41
2,547.72
21.98
6,093.74
305.59
335.61
1,122.83
1,753.47
471.22
3,104.44
3,001.14
5,504.64
993.68
9,499.46
2,449.14
100.75
12,049.35
8,362.01
1,180.13
9,542.14
2,507.21
9.84
7,846.18
270.22
202.65
Mar '05
Mar '06
Mar '07
9,931.98
518.99
9,412.99
248.21
-1.15
9,660.05
9,917.52
272.20
9,645.32
391.15
432.59
10,469.06
13,404.27
214.56
13,189.71
634.94
86.84
13,911.49
15,030.81
253.86
14,776.95
527.52
-103.24
15,201.23
17,983.37
338.08
17,645.29
459.80
121.76
18,226.85
3,000.92
656.94
668.40
2,801.77
1,144.12
214.40
-1.98
8,484.57
927.27
1,175.48
388.13
787.35
304.57
0.00
482.78
4.35
487.13
77.10
433.10
3,729.06
69.19
678.08
4,009.64
662.21
191.91
-0.74
9,339.35
738.56
1,129.71
273.15
856.56
84.53
0.00
772.03
4.53
776.56
236.08
532.75
5,211.98
90.33
764.51
5,170.22
877.60
147.20
-3.15
12,258.69
1,017.86
1,652.80
280.51
1,372.29
87.52
0.00
1,284.77
8.02
1,292.79
302.29
983.85
4,510.78
221.50
890.03
6,647.70
996.59
125.00
-1.89
13,389.71
1,284.00
1,811.52
321.34
1,490.18
107.12
0.00
1,383.06
-1.85
1,381.21
366.12
1,012.14
5,320.98
308.13
1,258.21
7,451.07
1,222.80
166.15
-3.30
15,724.04
2,043.01
2,502.81
331.46
2,171.35
160.13
0.00
2,011.22
-5.34
2,005.88
601.87
1,403.02
Total Value Addition

Preference Dividend
Equity Dividend
Corporate Dividend Tax
Per share data (annualised)
Shares in issue (lakhs)
Earning Per Share (Rs)
Equity Dividend (%)
Book Value (Rs)
5,483.65
0.00
186.80
23.93
5,610.29
0.00
199.04
25.54
7,046.71
0.00
357.21
49.41
8,878.93
0.00
302.25
42.39
10,403.06
0.00
368.25
53.34
2,486.69
17.42
75.00
141.88
1,244.02
42.82
800.00
220.45
1,299.24
75.72
1,375.00
256.94
1,373.86
73.67
1,100.00
335.61
2,832.71
49.53
650.00
202.65
Ratios calculations
Sl.no
1
2
3
4
5
6
7
8
9
10
Ratio
Net working capital
Current ratio
Quick ratio
Inventory turnover ratio
Debt equity ratio
Interest coverage ratio
Gross profit margin
Net profit ratio
Cost of goods sold ratio
Operating profit ratio
11 Return on equity
12 Return on assets
Return on capital
13 employed
14 EPS
15
16
17
18
19
20
21
DPS
P/E
Price to book value ratio
Book value per share
Dividend payout ratio
Earning yield
Dividend yield
Formula
CA-CL
CA/CL
COGS/avg INV
Long trm DBT/ Sh holders eq
EBIT/INTERST
EAT/ Net sales
COGS/ net sales*100
EBIT/ Net sales
Net profit/ share holders
equity
EBIT/ Total capital
Net profit available eq sh/
NO shares
Div paid to ord sh / No of
shares
MPS/EPS
MPS/BPS
Net worth/ no of shares
DPS/EPS*100
EPS/MPS *100
DPS/MPS*100
Year
2007
2006
2005
2,507.21 2,547.72 3,144.77
1.26
1.36
1.54
0.93
1.03
1.12
5.24
6.06
5.30
0.36
0.31
0.55
7.52
5.03
4.43
10.61
7.91
7
7.74
6.69
7.33
89.11
90.61
92.94
11.52
8.63
7.66
24.44
22.11
21.95
21.88
29.47
24.18
54.98
44.08
37.61
49.53
73.67
75.72
13
32.69
7.99
202.65
26.25
3.06
0.80
22
33.02
7.25
335.61
29.86
3.03
0.90
27.5
13.14
3.87
256.94
36.32
7.61
2.76
22 Total asset turnover ratio

23 Capital turnover ratio
COGS/total asst
2.00
2.74
2.20
2.90
2.34
3.67
1. Net working capital:

Sl.n
o
Ratio
Year
Formula
2007
2006
2005
2,507. 2,547. 3,144.
1 Net working capital
CA-CL
21
72 77
Here we can see that the L&T company has maintained a constant NWC which is a
good sign it implies that the company is able to good liquidity to its creators
2. Current ratio
Sl.no
Ratio
2 Current ratio
Formula
CA/CL
2007
1.26
Year
2006
1.36
2005
1.54
The short term creditors prefer high current ratio since it reduces their risk. As a share
holder one should prefer low current ratio so that the company may use its current
assets for expansion purpose. Here we can see that the companys current ratio has
reduced over a period of time so we can say that the companies using its current assets
for expansion purpose.
3. Quick ratio
Year
Sl.no
Ratio
Formula
2007
2006
3 Quick ratio
0.93
1.03
Measures assets that are quickly converted into cash and they are compared with
2005
1.12
current liabilities. This ratio realizes that some of current assets are not easily
convertible to cash e.g. inventories. In the ratio above we can see that the companys
quick ratio reduced over a period of time.
4. Inventory turn over ratio.
Sl.no
Ratio
4 Inventory turnover ratio
Formula
COGS/avg INV
2007
5.24
Year
2006
6.06
2005
5.30
This ratio measures the stock in relation to turnover in order to determine how often
the stock turns over in the business. This ratio should be higher because it indicates
that the company is efficiently converting its inventory into sales.
2007: 12/5.24 = 2.29 times
2006: 12/6.06 = 1.98 times
2005: 12/5.30 = 2.26 times
5. Debt equity ratio.
Year
Sl.no
Ratio
Formula
2007
2006
5 Debt equity ratio
long trm DBT/ Sh holders eq
0.36
0.31
The debt to equity ratio shows that for every 1 rupee of shareholders funds in 2007
2005
0.55
there was 0.36 rupee of debt. This compares to 0.55 rupee in 2005.
6. Interest coverage ratio.
Year
Sl.no
Ratio
Formula
2007
2006
6 Interest coverage ratio
EBIT/INTERST
7.52
5.03
This ratio, as the name suggests indicates the extent to which a fall in EBIT is
2005
4.43
tolerable in that the ability of the firm to service its interest payments would not be
adversely affected. Here the companys Interest coverage ratio has increased which is
dangerous sign.
7. Gross profit margin
Year
Sl.no
Ratio
Formula
2007
2006
7 Gross profit margin
10.61
7.91
The ratio above shows the increasing trend in the gross profit since the ratio has
improved from 7% in 2005 to 10.61% on 2007. This indicates that the rate in increase
in cost of goods sold are less than rate of increase in sales, hence the increased
efficiency.
8. Net profit margin
2005
7
Sl.no
Ratio
Formula
2007
8 Net profit ratio
EAT/ Net sales
7.74
The net margin ratio shows that the margin is fairly stable over time with slight
Year
2006
6.69
2005
7.33
improvement to 7.74% in 2007. However, to know how well the firm is performing
one has to compare this ratio with the industry average or a firm dealing in a similar
business
9. Cost of goods sold

Sl.n
o
Year
Ratio
Cost of goods sold
Formula
2007
2006
2005
9 ratio
COGS/ net sales*100
89.11 90.61
The cost of goods sold ratio shows what percentage share of sales is consumed by
92.94
cost of goods sold and conversely what proportion is available for meeting expenses
such as selling and general distribution expenses as well as financial expenses
consisting of taxes interest and dividend and so on.
10 Operating profit ratio
Year
Sl.no
Ratio
Formula
2007
2006
10 Operating profit ratio
EBIT/ Net sales
11.52
8.63
Here operating profit ratio has increased over a period of time which shows firms
2005
7.66
ability to withstand adverse economic conditions when selling price is declining.
11. Return on equity

Sl.no
Ratio
11 Return on equity
Formula
2007
24.44
Year
2006
21.95
2005
29.47
Here the profitability to ordinary shareholders is bit weaker and showing an

downward trend.
12. Return on assets

Year
Sl.n
o
20
Ratio
Formula
2007
2006
05
24.
12 Return on assets
22.11 21.88 18
This ratio gives you an idea on the company's management effectiveness in utilizing
its assets to make a profit for its shareholders
13. Return on capital employed
Sl.n
o
Year
Ratio
Return on capital
Formula
2007
2006
13 employed
EBIT/ Total capital
54.98
44.08
This ratio shows how efficiently the long term funds of owners and lenders are being
2005
37.61
used.
14. Earnings Per Share
Sl.no
Ratio
Formula
Net profit available eq sh/ NO
2007
Year
2006
14 EPS
shares
49.53
73.67
Whatever income remains in the business after all prior claims, other than owners
claims (i.e. ordinary dividends) have been paid, will belong to the ordinary
shareholders who can then make a decision as to how much of this income they wish
to remove from the business in the form of a dividend, and how much they wish to
retain in the business. The shareholders are particularly interested in knowing how
much has been earned during the financial year on each of the shares held by them.
For this reason, an earning per share figure must be calculated.
2005
75.72
15. Dividend per Share

Year
Sl.no
Ratio
Formula
2007
2006
15 DPS
Div paid to ord sh / No of shares
13
22
This indicates the dividend paid for each share. Shareholders would, naturally like to
receive the maximum possible dividends from a company, consistent with its profits
and need for retained earnings. But the companys DPS has reduced drastically in
L&T Companys case.
16. PE ratio
Sl.n
o
16 P/E
Year
Ratio
Formula
MPS/EPS
2007
32.69
2006
33.02
2005
13.14
The P/E ratio reflects the price currently being paid by the market for each rupee of
currently reported EPS. High P/E generally reflects lower risk and/or higher growth
prospects for earnings.
The above ratio shows that the shares were traded at a much higher premium in 2007
than were in 2005. In 2005 the price was 13.14 times higher than earnings while in
2007, the price is 32.69 times higher.
17. Price to book value
Year
Sl.no
Ratio
Formula
2007 2006
2005
17 Price to book value ratio MPS/BPS
7.99 7.25
3.87
It measures the relationship between the market price of an equity share with book
value per share. The P/B ratio is significant in predicting future stock return. Firms
with low P/B ratio had consistently higher returns compared to the firms with high
P/B ratio.
2005
27.5
18. Book value per share

Sl.no
Ratio
Formula
2007
18 Book value per share
Networth/ no of shares
202.65
This ratio indicates the net asset value of a companys share. A high book value
Year
2006
335.61
2005
256.94
indicates that the company has strong reserves, indicating scope for bonus shares, of
course subject to necessary guidelines of the SEBI.
19. Dividend payout ratio
Sl.n
Year
o
Ratio
Formula
2007
2006
19 Dividend payout ratio
DPS/EPS*100
26.25 29.86
This ratio looks at the dividend payment in relation to net income and can be
2005
36.32
calculated
20. Earning yield
Year
Sl.no
Ratio
Formula
2007
2006
20 Earning yield
EPS/MPS *100
3.06
3.03
This ratio highlights as a percentage a companys earnings vis-a-vis the current
2005
7.61
market value of its share. For blue chip companies this ratio tends to be around 5 per
cent to 6 per cent.
21. Dividend yield
Sl.no
Ratio
21 Dividend yield
Formula
DPS/MPS*100
2007
0.80
Year
2006
0.90
Notice here there is a decrease in the yield from 2005 to 2007. The main reason for
this is that the dividend per share decreased while at the same time, the price of a
share increased.
22. Total asset turnover ratio
2005
2.76
Year
Sl.no
Ratio
Formula
2007
2006
22 Total asset turnover ratio COGS/total asst
2.00
2.20
Total asset turnover ratio measures the efficiency of a firm in managing and utilizing
2005
2.34
its assets. The higher ratio indicates the more efficient management.
23. Capital turn over ratio
Sl.no
Ratio
23 Capital turnover ratio
Formula
2007
2.74
Year
2006
2.90
2005
3.67
Capital turnover ratio measures the efficiency of a firm in managing and utilizing its
capital. The higher ratio indicates the more efficient management.
Value anchor of the L&T Company is in the next page.
Period & months

INCOME
Period & months
Net Operating Income
INCOME
EXPENSES
Net
Operating
Income
Material
Consumption
EXPENSES
Personnel
Expenses
Material
Consumption
Selling Expenses
Administrative Expenses
Personel
Expenses
Capitalized
Expenses
Selling
Expenses
Cost of Sales
Reported PBDIT
Administrative
Expenses
Other
Recurring
Income
Capitalised Expenses
Adjusted PBDIT
Cost of Sales
Depreciation
Reported PBDIT
Adjusted PBIT
Other
Recuring
Income
Finanical
Expenses
Adjusted
AdjustedPBDIT
PBT
Tax
Charges
Depreciation
AdjustedPBIT
PAT
Adjusted
Non-recurring Items
Finanical Expenses
Other Non-cash
Adjusted PBT
Adjustments
Tax
Charges PAT
REPORTED
Adjusted
PAT
no. of shares
earnings
per Items
share
Non-recurring
Other Non-cash Adjustments
REPORTED PAT
2008/03 income statement

2009/03
L&T Company
2007/03
20521.39
17,645.29
5826.54
9112.49
1468.49
5,199.22
232.85
7,759.20
1347.46
1,258.21
-4.80
200.84
17,983.04
2,538.35
1,197.99
493.93
-3.3
3,032.28
15,612.16
187.86
2,033.13
2,844.42
458.56
347.89
2,491.69
2,496.53
725.76
160.13
1,770.77
2,331.56
0.59
331.46
5.52
2,000.10
601.87
1,776.88
1,398.23
33.40
53.20
1.24
-5.34
2010/03
2006/03
2005/03
2004/03
23866.29
27756.39
14,776.95
13,189.71
6529.54
10701.82
1713.915,125.14
4,614.02
269.96
6,869.20
5,260.55
1515.59
890.03 -6.97 764.51
156.74
20,723.86 170.18
3,142.43 861.27
972.22
-1.89532.02 -3.15
3,674.45
13,500.32
12,178.50
220.40
1,276.63
1,011.21
3,454.06
339.48365.13 230.91
1,616.11
3,088.931,242.12
107.12875.15 87.52
2,213.781,154.60
1,508.99
0.28
321.34
280.51
-5.70
1,187.65
874.09
9,645.32
7317.37
12568.34
2000.36
3,296.47
312.99
4,078.83
1704.69
678.08
-10.13
111.16
23,893.61
3,862.77
748.51
573.05
-0.74
4,435.82
8,912.31
258.56
733.01
4,177.26
340.67
383.22
1,073.68
3,794.03
1055.28
84.53
2,738.75
989.15
0.13
273.15
5.89
716.00
366.12
236.08
2,208.36 302.29 2,744.78
821.53 39.37 571.80
479.92
46.42
56.09
59.13
188.04
404.03
50.48
-1.85
8.02
4.53
CAGR
2003/03
1.16
9,412.99
1.12
1.17
1.17
3,002.07
1.16
3,458.71
1.12
668.4
1.45
609.39
749.13
1.08-1.98
8,485.72
1.17
927.27
388.13
1.05
1,315.40
1.21
304.57
1,010.83
0.48
388.13
-1.03
622.70
77.1
545.60
1.18
26.91
4.35
1,394.13
1,007.72
983.85
534.93
576.86
no. of shares
28.33
13.74
12.99
12.44
24.87
earnings per share
49.21
73.34
75.74
43.00
23.20
1,028.24
718.70
628.62
360.95
252.78
13.00
22.00
27.50
80.00
7.50
368.29
302.28
357.225
995.2
186.525
0.74
0.71
0.64
0.67
0.44
5,683.85
4,583.32
3,312.25
2,717.55
3,279.53
23.36
21.35
28.58
18.82
16.35
1,619.15
32.90
2,432.70
33.17
999.5
13.20
574.35
13.36
184.55
7.96
Retained Earnings
Dividend/Share
total dividend
Retention ratio
Reserves & Surplus
ROE
market price
PE ratio
risk free rate

Dividend payout ratio
required rate of rate
expected growth rate in dividend
p/e ratio
AVG PE ratio
weighted pe ratio
69.69
17
15.92
64.26
23.16
43.71
beta
EMRP
The following table shows the expected market prices of L&T

Company.
year
value anchor
2008
2325.33
2009
2451.38
2010
2584.41
The following is the L&T company management review

The following lines explain the chairmans speech of L&T Company it tells
about the companys strategy of future expansion and development strategy.
Performance overview:
India is one of the fastest growing economies globally with GDP growing at
9.4% last year. High capacity utilisation across various sectors is fuelling an up trend
in capital expenditure. The scale of investment in infrastructure envisaged in the 11th
Five Year Plan (2007-2012) will call for greater engagement by the private sector and
international institutions. All these are lead indicators for growth.
The conducive business environment coupled with a slew of measures taken by the
Company for improvement of operational efficiency, institutionalization of a risk
management framework and more judicious selection of projects, have yielded
significant benefits. In Financial Year 2006-2007, the Company's order inflows &
sales have grown by 37% and 19% respectively. The Company bagged its largest ever
order in domestic & international markets such as expansion & modernisation of
Delhi International Airport and an offshore platform project in Qatar. The order book
as on March 31, 2007 stood at Rs. 369 Bn including Rs. 61 Bn from international
business. The Company has achieved improvement in margins in all its business
segments for the second year. The Subsidiary and Associate Companies have also
performed well. During the year, the Company issued bonus shares in the ratio of 1:1
and recommended/paid dividend of-Rs. 13 per share on a face value of Rs. 2 per
share. The market capitalization of the Company has increased further from Rs. 334
Bn to Rs. 456 Bn during the year and has outperformed the Sensex.
Investing for profitable growth:
Investments are the oxygen of growth. Within the larger context of the
country's increasing investments in building a brighter future, the Company is also
investing in multiple spheres - people, technology, capacity expansion both
domestically & internationally and brand building. This is essential for sustaining the
growth momentum and continuous value creation.
People - Talent management:
Talent acquisition and retention is one of the key result areas for our senior
managers. On an on-going basis, the Company renews, rejuvenates and adds Human
Resource Management & Development systems, processes and practices to its
repertoire and periodically does compensation benchmarking so as to ensure a vibrant
and motivated workforce. The Company is constantly honing people management
leadership skills of the employees and is increasingly investing in training centers
across India. Innovative human resource initiatives like 'Campus to Corporate', launch
of an e-learning portal - 'Any Time Learning', buddy referrals for talent acquisition,
have been launched. As a result, the Company has been able to substantially increase
its human resource.
Technology - Building on core engineering strength:

Given
our commitment
to becoming
a knowledge-based premium
conglomerate, investments in technology across all businesses continue to remain at

the forefront of the Company's business strategy. The Company has set up
Engineering design centers at Mumbai, Baroda, Chennai, Bangalore, and Delhi as
well as in the Middle East. In line with our objective of emerging as a player with
end-to-end capabilities in the power sector, the Company has signed an agreement
with Mitsubishi Heavy Industries Limited, Japan for super critical boiler technology
and is close to achieving a similar tie-up in the field of turbines.
International Business - Strengthening presence beyond India:
The Company continues to forge alliances and to invest in international
business for enhancing capabilities and achieving its vision of becoming an Indian
multinational with focus in the Middle East and China. Joint ventures have been set
up in Kuwait and Saudi Arabia for electromechanical construction in oil & gas, power
and infrastructure sectors. The Modular Fabrication yard being set up at Sohar, Oman
will strengthen the Company's presence in the Gulf region. The Company is receiving
encouraging response from clients for project execution and Design & Engineering
services. The Company has set up manufacturing facilities in China for high- end
switchgear & rubber processing machinery and a factory is also being built for
industrial valves. These initiatives will accelerate the Company's thrust towards its
`Lakshya' target of achieving 25% revenues from international business.
Capacity Expansion:
The Company is expanding capacity internationally and within India.
Substantial capacity augmentation at Hazira will help us address the growing demand
in oil & gas industry. The Electrical & Electronics division is expanding its capacity at
Mysore, Ahmednagar and Mahape to take care of rapid growth in the sector. The
Company crossed a major milestone with the inauguration of the first two units at its
300-acre campus in Coimbatore. The facilities for the manufacture of industrial valves
and switchboards are already accomplished. The campus will progressively see the
establishment of manufacturing facilities for advanced tooling and high precision
components in aerospace, nuclear power, defence sectors etc. The Company is
building a state of the art Heavy Lift-cum-Pipelay vessel in partnership with
SapuraCrest Petroleum Berhad, Malaysia that will give offshore installation capability
and achieve significant competitiveness. All the divisions of the Company have
planned increased investments in acquisition and installation of new equipment and
manufacturing facilities.
Looking Ahead:
As we move on, the Company is well positioned to exploit the opportunities
that will emerge from hydrocarbon, infrastructure, power, minerals & metals and
other industrial sectors.
The Public Private Partnership model is going to be the way forward for infrastructure
projects in the country. L&T Infrastructure Development Projects Limited has already
consolidated its position with some completed projects and several under
implementation across various sectors. With its capabilities augmented through the
recent tie-up for manufacture of super critical boilers and the proposed collaboration
for turbines, the Company will be in a position to set up complete power projects.
L&T Infrastructure Finance Company Limited has initiated funding in the
infrastructure segment.
The Company has commenced building ships at its Hazira Works. We are also
scouting for a suitable site in India to set up a world-class facility for shipbuilding and
repair, comparable to the best worldwide. The defence, nuclear power and aerospace
sectors show potential and promise. The Raksha Udyog Ratna (RUR) status, when
granted to the Company, will facilitate increased business in Defence sector.
Leveraging its proven capabilities in construction and electrification for the railways,
the Company envisages expanding its presence in this sector. Given the healthy order
book position and the opportunities available, the Company believes that it will be
able to achieve sustained growth.
I am happy to share that the Company was ranked number 1 in two critical attributes 'Quality' and 'Reputation' over a host of other corporates, in The Wall Street Journal
Asia's nationwide survey of Indian companies.
To conclude, I wish to place on record my appreciation for the outstanding
commitment and smart work of all our employees. I am also grateful for the
continuing support of my colleagues, our customers, business associates, shareholders
and members of the Board. It is this collective effort and support of each member of
L&T Group's extended family that instills confidence in our ability for building on the
profitable growth momentum into the future.
Finding and suggestion:

1. The following table shows the expected market of the BHEL stock for the
period of 3 years i.e 2008 to 2009
EXPECTED MARKET PRICE OF BHEL
year
particulars
2008
2170.85
TECHNICAL ANALYSIS
current market price(31-03-08)
2500
2009
2756.37
2010
3491.62
3750
2,061.35
Analysis:
At present the company share price is very attractive and fundamentally
undervalued
Because the intrinsic value of the share is 2170.85 and current market price is 2061.35
So one can have buy view on this stock from long term point of view.
Suggestion:
Buy for long term point of view.
2. The following table shows the expected market of the L&T stock for the period
of
3 years i.e 2008 to 2009
EXPECTED MARKET PRICE OF L&T

year
Particulars
2008
2325.33
4450
TECHNICAL ANALYSIS
Current market price
2009
2451.38
2010
2584.41
5800
3,024.80
Analysis:
Above table shows the company script is mainly technical driven there is less scope
for fundamental analysis. Companys intrinsic value is Rs. 2325.33 but the current
market price is Rs. 3024.8. By this we can say that the company is overvalued
according to fundamental analysis.
But when we analyze by technically the stock is having good support and resistance
so we can say that the stock moves upto 4450 in short run and in long term the stock
is predicted to go around 5800.
Suggestion: If investor at present holding this stock should wait for some time to get
good return in short term the stock may go for Rs. 4450 and in the long run the stock
may go to Rs. 5800.
Suggestion:
support.
Conclusion
Hold
for time being and sell when stock breaks its previous
Engineering is a diverse industry with a number of segments. A company from

this sector can be a power equipment manufacturer (like transformers and boilers),
execution specialist or a niche player (like providing environment friendly solutions).
It can be an electrical, non-electrical machinery and static equipment manufacturer
too
The economy has been growing at an average growth rate of 8.8 per cent in
the last four fiscal years (2003-04 to 2006-07), with the 2006-07 growth rate of 9.6
per cent being the highest in the last 18 years. Significantly, the industrial and service
sectors have been contributing a major part of this growth, suggesting the structural
transformation underway in the Indian economy.
Technical and fundamental analysis is the strong theory accepted world wide
some investor strongly believes on fundamentals of company and some believe
technical plays very important role in investing. But it is mainly depends on demand
and supply for the stocks in the stock market.
An effort is made to make understand the reader of this project what is
fundamental analysis and what is technical analysis. By this project report one can
strive to calculate intrinsic value of the shares and understanding what graphs are
showing about the script.
Bibliography
1. Kotak securities.com
2. equitymaster.com
3. icicidirect.com
4. nseindia.com
5. bseindia.com
6. bhel.com
7. larsentabro.com
Reference Books
o Security Analysis and Portfolio Management.
Prasanna Chandra
o Financial management.
Khan and jain
Software used
Ms-Office 2003
Microsoft Excel
Microsoft Word
M S power point
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MBA Project On Fundamental and Technical Analysis of Kotak Bank

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Fundamental And Technical Analysis

Fundamental And Technical Analysis

Fundamental And Technical Analysis

Findings and suggestion:

EXPECTED MARKET PRICE OF L&T

INDIAN STOCK MARKET

Fundamental And Technical Analysis

BSE (Bombay Stock Exchange)

Fundamental And Technical Analysis

Fundamental And Technical Analysis

FII in Indian stock market

net investment by FII

What does India Need - FDI or FII

Fundamental And Technical Analysis

INTRODUCTION TO KOTAK SECURITIES

Fundamental And Technical Analysis

THE KOTAK MAHINDRA GROUP:

Fundamental And Technical Analysis

Kotak Mahindra has international partnerships with Goldman Sachs (one of

Fundamental And Technical Analysis

INTRODUCTION TO THE TOPIC

Fundamental And Technical Analysis

Industry wide factors: these include factors which are specific to

Fundamental And Technical Analysis

Fundamental And Technical Analysis

Fundamental And Technical Analysis

Fundamental And Technical Analysis

Where Is Support Established?

Where Is Resistance Established?

Fundamental And Technical Analysis

So, Here, Identification of key support and resistance levels is an essential

Fundamental And Technical Analysis

The Price Rate-of-Change ("ROC") indicator displays the difference between

Fundamental And Technical Analysis

Relative Strength Index (RSI):

Fundamental And Technical Analysis

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

Fundamental And Technical Analysis

As shown in the following chart, a rising trend is defined by successively

As shown in the next chart, a falling trend is defined by successively lower

The Bar Chart:

Fundamental And Technical Analysis

The chart below is an example of a bar chart for AT&T (T):

Fundamental And Technical Analysis

The chart below is an example of a candlestick chart for AT&T (T).

Investors seem to have a "love/hate" relationship with candlestick

Fundamental And Technical Analysis

The opposite of the pattern above, this is a bearish pattern. It

Known as "the hammer", this is a bullish pattern only if it occurs

Known as a "star. For the most part, stars typically indicate a

Point and Figure Chart:

Fundamental And Technical Analysis

POPULAR CHARTING PATTERNS:

Fundamental And Technical Analysis

Head and Shoulders - This is a chart formation resembling an "M" in which a

Fundamental And Technical Analysis

Fundamental And Technical Analysis

Fundamental And Technical Analysis