BRIDGE GROUP SOLUTIONS

INTERIM REPORT

Submitted To: Submitted By:

Dr. Sunitha Ravi Saloni Tanwar

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 INSTITUTE OF INFORMATION
TECHNOLOGY & MANAGEMENT

BRIDGE GROUP SOLUTIONS

A REPORT ON

EQUITY RESEARCH ON BANKING SECTOR

SUBMITTED BY

SALONI TANWAR

03813703920

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 ABSTRACT

The main aim of summer internship program is to help students gain

experience from the corporate world and make students well equipped with
the required skills. This program helps interns to understand the market and
the sector they work in during the period of 14 weeks and based on this
understanding the interns simultaneously prepare a project on the work
allotted to them according to their domains.
The area of specialization taken by me is Finance and the research project will
be on Equity research of banking sector companies where I will study the
fundamentals of financial services sector, particularly banking sector and how
equity research helps in decision making.
Financial services sector in India is growing rapidly. Initially, this sector was
largely dominated by the government, but with time and due to foreign
investments this sector expanded. It is witnessing expansion not only in
existing financial services firms but also in new entities entering the market.
The financial services sector comprises of around 6% of the GDP of India. It is
expected that in the year 2019, this sector will have a good amount of foreign
investment and there might be a series of joint ventures between global and
local players.
Financial services are the professional services that provide investment,
lending and management of assets and money by individuals and corporations.
In the current scenario, investments by individuals are increasing as with the
improvement in the living standards of the people their financial needs are
also increasing. However, many individuals are not able to make best use of
their savings as they don’t have proper knowledge of investments.
Currently, people invest in equity of companies due to good returns and hence
to make a beneficial investment it is important to have equity research. Equity
research is used to provide investor with a detailed analysis and
recommendations on whether to buy, hold or sell a particular investment.
As it is witnessed that banking sector is expected to grow, the investors are
keen to invest in this sector. Hence, it is important to know the current and
future prospects of this sector and have a proper understanding of the factors
affecting the equity of any company which can affect the decision of an
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investor. For this purpose, it is important to study the secondary data
regarding the banking sector and take into consideration the views of the
people who invest or are planning to invest in this sector.

ACKNOWLEDGEMENT
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On the onset I take the privilege to convey my gratitude to those who have co-
operated, supported, helped and suggested me to accomplish my project
work.
I take this opportunity to sincerely thanks and express my gratitude to my
corporate trainer Mr. Nikesh Ruparel of Bridge Group Solutions for guiding me
throughout my entire project. The insights provided by him have helped make
this Project Report a truly professional effort.
This project has given me the chance to get in touch with the practical aspects
of management. The experience and the knowledge acquired over the
interactions with the guide have been invaluable to say the least and will help
me a great deal in my future education and career.
I would also like to thank all the faculty members of college name for their
critical advice and guidance without which this project would not have been
possible.
Last but not the least I place a deep sense of gratitude to my family members
and my friends who have been constant source of inspiration during the
preparation of this project work. Any omission in this brief acknowledgement
does not mean lack of gratitude.

DECLARATION
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 I, the undersigned Saloni Tanwar, Student of INSTITUTE OF INFORMATION
TECHNOLOGY AND MANAGEMENT batch of MBA 2020-2022 hereby declare
that the project “Equity Research on Banking Sector” presented in this report is
my own work and has been carried out under the supervision of Mr.
NikeshRuparel of Bridge Group Solutions.
I have completed this project in the academic year 2020-2022, during which
my internship period was from 25th June, 2021 to 10th August, 2021.

EXECUTIVE SUMMARY
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The main aim of this project is to do equity research banking sector and to find
out the opportunities of investment in these sectors where returns can be
maximized.
Indian Economy being one of the fastest developing economies in the world,
companies in India are growing at faster rate as compared to their growth rate
a decade back. Many Indian companies are expanding their business globally
with mergers and acquisitions.
As companies grow their shareholders are benefitted with good dividend and
capital appreciation on investment in equity shares of such companies.
Number of companies listed in stock exchange (BSE & NSE) has been increasing
every year with new IPOs coming in the market.
In India people are realizing that equity has potential to give highest return as
compared to other investment avenues however people are not aware how to
do equity valuation, they just invest in shares based on tips given by brokers,
friends or family members.
Investing in equity shares based on tips is not the true investment but it is
clear gambling with your money which many of us would not like to do with
our hard earned money.
Equity valuation begins with analysis of the sector in which you want make
investment; if the sector looks positive then analyse various companies in the
sector. A Company is analysed fundamentally to check its performance and
financial strength. Technical analysis is used to decide the right price to buy a
stock so that higher return on investment can be generated.
This report starts from the fundamental analysis where EIC (economy,
industry, Company) analysis of the four banks (ICICI Bank, HDFC Bank, Punjab
National Bank & Bank of Baroda) is done. Economy of India and banking
industry are analysed on the basis of various factors and indicators. Above
mentioned four banks were analysed based on the various qualitative and
quantitative factors. After analysing these banks, stock price is estimated using
relative valuation method. . The market price and P/E ratios have been taken
to calculate the EPS. After the target price was calculated with the help of
sector P/E and EPS and finally the difference was taken between the target
price and market price to arrive at the best performing company.

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Then the technical analysis of the top Banks has been done. Technical analysis
is used to study stock chart patterns of these banks. The observed patterns are
tested with various oscillators and decision about particular stock is made.
Based on these factors, trend of a particular stock is observed and then the
target price is estimated.
Finally the conclusion and recommendations are given with respect to derived
result.

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OBJECTIVES OF THE PROJECT:
1. To provide an overview of the Banking sector and analysing the stocks of
that sector.
2. To study about some of the major players in Banking sector which has good
investment prospects.
3. To identify the growth drivers of the Banking sector.
4. To identify the top line and bottom-line of the companies selected under
Banking sector and the factors that affect them.
5. To justify the current investment in the chosen securities.
6. To understand the movement and performance of stocks.
7. To recommend increase/decrease of investment in a particular security.
8. The main objective of project is to do fundamental analysis of banks.
9. To study the present scenario of banks through its net interest income and
net interest margin.
This report will help the investors to know about the current growth prospects
of Indian economy and Banking sector. They will get to understand various
factors affecting banking sector and their impact on the growth of banking
sector. This report will help them in comparing the above mentioned four
banks and their estimated future share prices, so that they can invest in better
options. 

RESEARCH METHODOLOGY AND DESIGN:

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 The project is on equity research analysis of the sectors. Hence study has to
be done on the basis of information and news available about the sectors i.e.
secondary data by various modes. This research has completed by doing
Fundamental analysis and Technical analysis of the companies.
 Secondary data was collected from the internet, company websites. However
the main source of information is Annual Report issued by the companies and
also quarterly reports of the current year showing their performances in
current market scenario.
 Firstly data was analysed on the basis of the industry. The industry i.e.
financial services sector were focused on and its performance and relation with
the Indian economy was monitored and then specific stocks were chosen to be
invested in depending upon the fundamentals of the company stocks. These
stocks were individually analysed and then measured whether it would give
maximum returns if invested in.
 The research on the sectors and companies in those sectors is explained in
the later part of the report.
 Though, Primary data collection for preparing this project was not possible
due to time and money constraints. Thus, secondary data collection was been
used.
 While preparing this project, daily stock market prices were been tracked and
also the annual reports of the company analysed were taken into
consideration for evaluation of company performance.
 Company websites were a major source for collecting the annual reports of
the company.
 Internet was a major source of information while preparing the project as
most of the data collected was gathered from various websites. The knowledge
thus gained from preliminary study forms the basis for future detailed
descriptive research. In the exploratory study, the various technical indicators
that are important for analysing stock were actually identified and important
ones short were listed.

SAMPLE DESIGN:
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The sample of the stocks for the purpose of collecting primary and secondary
data has been selected on the basis of random sampling. The stocks are chosen
in an unbiased manner and each stock is chosen independent of the other
stock chosen. The stocks are chosen from the Banking sector.
 

  LIMITATIONS OF THE STUDY:

1. This study has been conducted purely to understand equity analysis for
investors.
2. The study is restricted to three companies based on Fundamental Analysis.
3. The study is limited to the companies having equities.
4. Detailed study of the topic was not possible due to limited size of the
project.
5. There was a constraint with regard to time allocation for the research study
i.e., for a period of 45 days.
6. Suggestions and conclusions are based on the data of five years.

COMPANY PROFILE
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Bridge Group Solutions (BGS) is an emerging leader in the highly unorganized
and diversified Financial Sector and aims to provide best investment solutions
to the customers and also establish its footprint in this sector, with its strong
research capabilities and a robust team of Expert, BGS provide solutions that
will stand straight in each test. BGS is here not just to build a customer base
but to leave a legacy behind in the minds of our customers. Bridge group
Solutions help our customers foresee upcoming risks and help them reduce it
and at the same time maximise returns and take well planned and calculated
investment decisions through a well-trained team and its in-depth analysis and
extensive research. Bridge Group Solutions is promoted by a group of like-
minded young professionals having deep knowledge in providing investment
solutions and consulting. BGS passionately driven by our Vision of “being the
Top Investment Solution Provider and a Trusted Brand”

VISION STATEMENT
“Most people don't plan to fail; they fail to plan" - John L. Beckley”
Our vision as a firm focuses to help our customers and communities realize
their dreams by anticipating, understanding and meeting financial needs"

MISSION
As a firm, BGS strive to provide financial peace of mind by delivering tailored
objective advice designed to give clients the confidence to pursue their own
passion, dreams and talents. We help our customers in financial and
investment planning.

VALUE
INTEGRITY: Provide professional services with integrity.
OBJECTIVITY: Provide professional services with objectively.
COMPETENCE: Maintain the knowledge and skill necessary to provide
professional services.

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PROFESSIONALISM: Act in a manner that demonstrates exemplary
professional conduct.

*During the past days in the company I have worked on two different
verticals of company:
MARKETING: I worked in this vertical for almost 30 days where, the company
provided with the brief knowledge of the insurance sector, various product, its
tie up company and the products we were supposed to pitch in market (India’s
first Life Mahajeevan plan, child plans, retirement plan and Aditya Birla health
insurance). The pitch in process was aimed to make us understand the
mentality of people who are willing to negotiate for the insurance, the various
questions they ask. It is through this I understood the huge variability in the
behaviour of insurers and the need to understand and link correct product to
correct group of people.

PORTFOLIO MANAGEMENT SERVICES: This is the second vertical of the

company and we are working on the portfolio management services of our
company. For 15 days we were briefed with the importance of “Mutual Funds
and Equity” and how to apply this in doing financial planning for the clients.
Post me and my team members are going to various companies and
introducing our company and service we provide, upon which the company if
interested will revert back to us. Now we will visit BGS clients along with our
mentor how they are fitting best products according to their needs. So, that
they can maximize their wealth. Meanwhile, I will be working on my project
correspondently.

Currently the firm operates into three ventures

1. Financial Services (Gurugram Branch)
2. HR Outsourcing ( Rohini - Delhi Branch)
3. IT Services ( Noida Branch)

The Financial Services Sector is further divided into 4 sectors

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 1. Health Insurance – Aditya Birla, Star Health, ICICI Prudentials
2. Life Insurance – Max Life Insurance, IFAB
3. Mutual Funds – All Mutual Funds
4. Portfolio Management Services – , ICICI Securities

Bridge group Solutions is currently working on the schedule of being

“mediator” and selling the various financial products i.e. Term life insurance
of “India First Life Company” (Joint venture of Bank of Baroda, Andhra Bank
& Legal & General (UK)).

The major competitors of Bridge Group Solutions are:

 Motilal Oswal
 Angel Broking
 SMC Global
 Purnartha
 Capital First
 Wise Finserv

Objectives of the study

 To provide an overview on the banking sector and the stocks they
provide.
 To study major banks in India and their investment prospects
 To justify current investment in the securities chosen.
 To recommend increase or decrease of investments in a chosen security.
 To provide investment decisions to prospective buyers.

INTRODUCTION
Equity

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Equity is typically referred to as shareholder equity (also known as
shareholders' equity) which represents the amount of money that would be
returned to a company’s shareholders if all of the assets were liquidated and
all of the company's debt was paid off.
Equity is found on a company's balance sheet and is one of the most common
financial metrics employed by analysts to assess the financial health of a
company. Shareholder equity can also represent the book value of a company.

Equity shares

An equity share, commonly referred to as ordinary share also represents the

form of fractional or part ownership in which a shareholder, as a fractional
owner, undertakes the maximum entrepreneurial risk associated with a
business venture. The holders of such shares are members of the company and
have voting rights.

Derivatives

A derivative is a financial instrument that gets its value from some real good or
stock. It is the derived value of an underlying asset. It is, in its most basic form,
simply a contract between two parties to exchange value based on the action
of a real good or service. Typically, the seller receives money in exchange for
an agreement to purchase or sell some good or service at some specified
future date.
Derivatives offer the some degree of leverage or multiplication as a mortgage.

Indian Equity Market

Most of the trading in the Indian stock market takes place on its two stock
exchanges: the Bombay Stock Exchange (BSE) and the National Stock Exchange
(NSE). The BSE has been in existence since 1875. The NSE, on the other hand,
was founded in 1992 and started trading in 1994. However, both exchanges
follow the same trading mechanism, trading hours, settlement process, etc. At
the last count, the BSE had more than 5,000 listed firms, whereas the rival NSE
had about 1,600. Out of all the listed firms on the BSE, only about 500 firms
constitute more than 90% of its market capitalization; the rest of the crowd
consists of highly illiquid shares.

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Almost all the significant firms of India are listed on both the exchanges. NSE
enjoys a dominant share in spot trading, with about 70% of the market share,
as of 2009, and almost a complete monopoly in derivatives trading, with about
a 98% share in this market, also as of 2009. Both exchanges compete for the
order flow that leads to reduced costs, market efficiency and innovation. The
presence of arbitrageurs keeps the prices on the two stock exchanges within a
very tight range.

Equity Investment

Equity investment generally refers to buying and holding of shares of stock on

a stock market by individuals and firms in anticipation of income from dividend
and capital gain as the value of the stock rises. It also sometimes refers to the
acquisition of equity (ownership) participation in private (unlisted) company or
start up (a company being created or newly created). When investment is in
infant companies, it is referred to as venture capital investing and is generally
understood to be higher risk than investment in listed going-concern situation.

How to invest in Equity Shares?

Investors can buy equity shares of a company from security market that is from
primary market or secondary. The primary market provides the channel for
sale of new securities. Primary market provides opportunity to issuers of
securities; Government as well as corporate, to raise resources to meet their
requirements of investment and/or discharge some obligations some
obligations. Investors can buy shares of a company through IPO (Initial Public
Offerings) when it is first time issued to the public. Once shares are issued to
the public it is traded in the secondary market. Stock exchange only acts as
facilitator for trading of equity shares. Anyone who wishes to buy shares of
company can buy it from an existing shareholder of a company.

Who should make an equity investment?

The first characteristic that an ideal equity investor has is an ability and
willingness to take risk. Without risk tolerance in at least moderate levels,
equity investment cannot be made or held successfully. Thus the concept that

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says risk-averse investors should opt for fixed returns investments instead of
an equity investment such as an equity mutual fund. The next important
characteristic is an ability to stay invested for the long term. Novice investors
tend to panic easily and the volatile nature of equity investments can lead to
substantial swings in value of equity investments over the short term. This
short term volatility does even out in due course but that can happen only if
the investor stays invested in the long term ideally five years or more. These
two are probably the most important features that an equity investor should
possess but having understanding of how markets work and help from a good
financial advisor can definitely improve chances of making a successful
investment.

Why to invest in Equity Shares?

Equities have the potential to increase in value over time. It also provides your
portfolio with the growth necessary to reach your long term investment
goals .research studies have proved that the equities have outperform most
other forms of investments in the long term. Research studies have proved
that investments in some shares with a longer tenure of investment have
yielded far superior returns than any other investment. However this does not
mean all equity investments would guarantee similar higher returns. Equities
are high in investment. One need to study before investment.

Purpose of equity research is to study companies, analyse financials, and look

at quantitative and qualitative aspects mainly for decision: Whether to invest
or not.

 Equity Share of any company can be analysed through:

 Fundamental Analysis
 Technical Analysis

FUNDAMENTAL ANALYSIS

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Fundamental Analysis is a method of evaluating a security that entails
attempting to measure its intrinsic value by examining related economic,
financial and other qualitative and quantitative factors. Fundamental analysts
attempt to study everything that can affect the security's value, including
macroeconomic factors (like the overall economy and industry conditions) and
company-specific factors (like financial condition and management).

Fundamental analysis is about using real data to evaluate a security's value.

Although most analysts use fundamental analysis to value stocks, this method
of valuation can be used for just about any type of security.

Fundamental analysis observes numerous elements that affect stock prices

such as sales, price to earnings (P/E) ratio, profits, earnings per share (EPS), as
well as macroeconomic and industry specific factors.

The end goal of performing fundamental analysis is to produce a value that an

investor can compare with the security's current price, with the aim of figuring
out what sort of position to take with that security (underpriced = buy,
overpriced = sell or short).

Fundamental analysis of a business involves analysing its financial statements

and health, its management and competitive advantages, and its competitors
and markets. When analysing a stock, futures contract, or currency using
fundamental analysis there are two basic approaches one can use; bottom up
analysis and top down analysis. The term is used to distinguish such analysis
from other types of investment analysis, such as quantitative analysis and
technical analysis.

Fundamental analysis is performed on historical and present data, but with the
goal of making financial forecasts. There are several possible objectives:

 To conduct a company stock valuation and predict its probable price

evolution,
 To make a projection on its business performance,
 To evaluate its management and make projected decisions.

Fundamental analysis includes:

1. Economic analysis
2. Industry analysis
3. Company analysis

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On the basis of these three analyses the intrinsic value of the shares are
determined. This is considered as the true value of the share. If the intrinsic
value is higher than the market price it is recommended to buy the share. If it
is equal to market price then hold the share and if it is less than the market
price then sell the shares.

TYPES OF FUNDAMENTAL ANALYSIS:

1. Quantitative Factors
2. Qualitative Factors

The various fundamental factors can be grouped into two categories:

quantitative and qualitative.
 Qualitative - related to or based on the quality or character of something,
often as opposed to its size or quantity.
 Quantitative - capable of being measured or expressed in numerical terms.

QUALITATIVE FACTOR
Each industry has differences in terms of its customer base, market share
among firms, industry-wide growth, competition, regulation and business
cycles. Learning about how the industry works will give an investor a deeper
understanding of a company’s financial health.
1. Customers
Some companies serve only a handful of customers, while others serve
millions. In general, it’s negative if a business relies on a small number of
customers for a large portion of its sales because the loss of each customer
could dramatically affect revenues. For example, think of a military supplier
who has 100% of its sales with the Indian government. One change in
government policy could potentially wipe out all of its sales. For this reason,
companies will always disclose in their annual report if any one customer
accounts for a majority of revenues.

2. Competition

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Simply looking at the number of competitors goes a long way in understanding
the competitive landscape of a company. Industries that have limited barriers
to entry and a large number of competing firms create a difficult operating
environment for firms. One of the biggest risk in a highly competitive industry
is pricing power. This refers to the ability of supplier to increase prices and pass
those costs on to customers. Companies operating in industries with few
alternatives have the ability to pass on costs to customers. A great example of
this is Wal-Mart. They are so dominant in the retailing business, that Wal-Mart
practically sets the price for any of the suppliers wanting to do business with
them. If you want to sell to Wal-Mart, you have little, if any, pricing power.

QUANTITATIVE FACTORS
Now as we know the qualitative factor of fundamental analysis, let’s proceed
to the quantitative factor of the fundamental analysis. Quantitative factor
include analysis of financial statement of the company.

RATIO ANALYSIS
Financial ratios are tools for interpreting financial statements to provide a basis
for valuing securities and appraising financial and management performance.
In general, there are 3 kinds of financial ratios that a financial analyst will use
most frequently, these are:
1. Working capital ratios
2. Liquidity ratios
3. Solvency ratios

These 3 financial ratios allow a good financial analyst to quickly and efficiently
address the following questions or concerns:

Working capital ratios

1. How quickly are debts paid?
2. How many times is inventory turned?

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Liquidity ratios
1. Can the company continue to pay its liabilities and debts?

Solvency ratios
1. What is the level of debt in relation to other assets and to equity?
2. Is the level of interest payable out of profits?

EARNINGS PER SHARE

Earnings per share is calculated by dividing the net profit (after interest, tax
and preference dividend) by the number of equity shares.
Earnings per share = Net profit after Interest, Tax and Preference Dividend/ No.
of Equity shares

P/E Ratio
In general, a high P/E suggests that investors are expecting higher earnings
growth in the future compared to companies with a lower P/E. However, the
P/E ratio doesn't tell us the whole story by itself. It's usually more useful to
compare the P/E ratios of one company to other companies in the same
industry, to the market in general or against the company's own historical P/E.
It would not be useful for investors using the P/E ratio as a basis for their
investment to compare the P/E of a technology company (high P/E) to a utility
company (low P/E) as each industry has much different growth prospects.
The P/E is sometimes referred to as the "multiple", because it shows how
much investors are willing to pay per rupee of earnings. If a company were
currently trading at a multiple (P/E) of 20, the interpretation is that an investor
is willing to pay Rs.20 for Re.1 of current earnings.
It is important that investors note an important problem that arises with the
P/E measure, and to avoid basing a decision on this measure alone. The
denominator (earnings) is based on an accounting measure of earnings that is

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susceptible to forms of manipulation, making the quality of the P/E only as
good as the quality of the underlying earnings number.
1. Generally a high P/E ratio means that investors are anticipating higher
growth in the future.
2. The average market P/E ratio is 20-25 times earnings.
3. The P/E ratio can use estimated earnings to get the forward looking P/E
ratio.

PEG ratio
The PEG ratio that indicates an over or under priced stock varies by industry
and by company type; though a broad rule of thumb is that a PEG ratio below
one is desirable. Also, the accuracy of the PEG ratio depends on the inputs
used. Using historical growth rates, for example, may provide an inaccurate
PEG ratio if future growth rates are expected to deviate from historical growth
rates. To distinguish between calculation methods using future growth and
historical growth, the terms "forward PEG" and "trailing PEG" are sometimes
used.

TECHNICAL ANALYSIS

Technical analysis is a financial term used to denote a security analysis

discipline for forecasting the direction of prices through the study of past
market data, primarily price and volume. Behavioural economics and
quantitative analysis incorporate technical analysis, which being an aspect of
active management stands in contradiction to much of modern portfolio
theory.

Technical analysis employs models and trading rules based on price and
volume transformations, such as the relative strength index, moving averages,
regressions, inter-market and intra-market price correlations, business cycles,
stock market cycles or, classically, through recognition of chart patterns.

Technical analysis stands in contrast to the fundamental analysis approach to

security and stock analysis. Technical analysis analyses price, volume and other
market information, whereas fundamental analysis looks at the actual facts of

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the company, market, currency or commodity. Most large brokerage, trading
group, or financial institutions will typically have both a technical analysis and
fundamental analysis team.

Simply put, technical analysis is the study of prices, with charts being the
primary tool. Technical analysts are sometimes referred to as chartists because
they rely almost exclusively on charts for their analysis.

Technical analysis is applicable to stocks, indices, commodities, futures or any

tradable instrument where the price is influenced by the forces of supply and
demand. Price refers to any combination of the open, high, low or close for a
given security over a specific timeframe. The time frame can be based on
intraday, daily, weekly or monthly price data and last a few hours or many
years.

Technicians, as technical analysts are called, are only concerned with two
things:
1. What is the current price?
2. What is the history of the price movement?

The price is the end result of the battle between the forces of supply and
demand for the company’s stock. The objective of analysis is to forecast the
direction of the future price. By focusing on price and only price, technical
analysis represents a direct approach. After all, the value of any asset is only
what someone is willing to pay for it.

TYPES OF CHARTS

There are four main types of charts that are used by investors and traders
depending on the information that they are seeking and their individual skill
levels. The chart types are: the line chart, the bar chart, the candlestick chart
and the point and figure chart. In the following sections, we will focus on the
State Bank of India (SBI) stock during the period of May 2014 to July 2014.
Notice how the data used to create the charts is the same, but the way the
data is plotted and shown in the charts is different.

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Line Chart

The most basic of the four charts is the line chart because it represents only
closing prices over a set period of time. The line is formed by connecting the
closing price over the time frame. Line charts do not provide visual information
of the trading range for the individual points such as the high, low and opening
prices. However, the closing price is often considered to be the most important
price in stock data compared to the high and low for the day and this is why it
is the only value used in line charts.

Bar Chart

The bar chart expands on the line chart by adding several more key pieces of
information to each data point. The chart is made up of a series of vertical lines
that represent each data point. This vertical line represents the high and low
for the trading period, along with the closing price. The close and open are

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represented on the vertical line by a horizontal dash. The opening price on a
bar chart is illustrated by the dash that is located on the left side of the vertical
bar. Conversely, the close is represented by the dash on the right. Generally, if
the left dash (open) is lower than the right dash (close) then the bar will be
shaded black, representing an up period for the stock, which means it has
gained value. A bar that is coloured red signals that the stock has gone down in
value over that period. When this is the case, the dash on the right (close) is
lower than the dash on the left (open).

Candlestick Chart

The candlestick chart is similar to a bar chart, but it differs in the way that it is
visually constructed. Similar to the bar chart, the candlestick also has a thin
vertical line showing the period's trading range. The difference comes in the
formation of a wide bar on the vertical line, which illustrates the difference
between the open and close. And, like bar charts, candlesticks also rely heavily
on the use of colours to explain what has happened during the trading period.
A major problem with the candlestick colour configuration, however, is that
different sites use different standards; therefore, it is important to understand
the candlestick configuration used at the chart site you are working with. There
are two colour constructs for days up and one for days that the price falls.
When the price of the stock is up and closes above the opening trade, the
candlestick will usually be white or clear. If the stock has traded down for the
period, then the candlestick will usually be red or black, depending on the site.
If the stock's price has closed above the previous day's close but below the
day's open, the candlestick will be black or filled with the colour that is used to
indicate an up day.

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Point and Figure Chart

The point and figure chart is not well known or used by the average investor
but it has had a long history of use dating back to the first technical traders.
This type of chart reflects price movements and is not as concerned about time
and volume in the formulation of the points. The point and figure chart
removes the noise, or insignificant price movements, in the stock, which can
distort traders' views of the price trends. These types of charts also try to
neutralize the skewing effect that time has on chart analysis.

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 INTRODUCTION TO BANKING SECTOR
India is considered among the top economies in the world, with tremendous
potential for its banking sector to flourish. The last decade witnessed a
significant upsurge in transactions through ATMs, as well as internet and
mobile banking.
Influenced by the global financial turmoil and repercussion of the subprime
crisis, the global banking sector has witness some of the largest and best
known names succumb to multi-billion dollar write-offs and face near
bankruptcy. However, the Indian banking sector has been well shielded by the
central bank and has managed to sail through most of the crisis with relative
ease, the sector is also looking forward to consolidation and investments on
the FDI front.
Public sector banks have been very proactive in their restructuring initiatives
be it in technology implementation or pruning their loss assets. Retail lending
that formed a significant portion of the portfolio for most banks in the last two
years lost some weightage on the banks portfolios due to their risk weightage.
The monetary stimuli (reduction in repo rate, cash reserve ratio and statutory
liquidity ratio) offered to the banks by the RBI made things easier. The repo
rate is unchanged at 8% currently where the new credit policy will be
announced soon. Recently Reserve bank Deputy Governor R Gandhi expressed
concern over bad loans and said banks should strengthen their internal credit

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appraisal systems to minimise the risk of default. The growing NPAs are the
biggest challenge for the banking sector with the increase in bad loans which
needs to be resolved.
The country's banking industry looks set for greater transformation. With the
Indian Parliament passing the Banking Laws (Amendment) Bill in 2012, the
landscape of the sector has duly changed. The bill allows the Reserve Bank of
India (RBI) to make final guidelines on issuing new licenses, which could lead to
a greater number of banks in the country. The style of operation is also slowly
evolving with the integration of modern technology into the banking industry.
In the next 5-10 years, the sector is expected to create up to two million new
jobs driven by the efforts of the RBI and the Government of India to expand
financial services into rural areas. Two new banks have already received
licences from the government, and the RBI's new norms will offer incentives to
banks to spot bad loans and take necessary recourse to curb the practices of
rogue borrowers.

FUTURE PROSPECTS

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India's banking industry could become the fifth largest banking sector globally
by 2020 and the third largest by 2025. These days, banks in India are turning
their focus to servicing clients and improving their technology infrastructure,
which can help better customer experience and give them a competitive edge.
The popularity of internet and mobile banking is at an all-time high, with
customer relationship management (CRM) and data warehousing anticipated
to drive the next wave of banking technology in the country. . Since Indian
economy is witnessing strong growth the demand for banking services,
especially retail banking, mortgages and investment services are expected to
be strong.

EVALUATION OF BANKING STOCKS

It is said that the banking sector reflects the economy's health. The sector acts
as a funnel providing the funds that corporates need to expand their business.
When the economy is expanding, as is happening in India currently, banks lend
more and hence profit more.
Banking stocks are evaluated on the basis of price/book value multiples but
again these valuations are given premium or discount considering the
categories such as public sector banks and private banks.
Data was collected on all the private and public sector banks having market
cap of more than 5000 crores and accordingly banks were selected.
After collecting data of all the banks the banks were analysed on the basis of
value picks, growth picks, top line and bottom line factors.
1. Earnings per share (EPS) :
EPS indicate the overall quality of earnings, the main thing on which analysis
was done is at the growth in EPS over the past years to understand how
volatile the EPS is and to see if they are an underachiever or overachiever.

2. Price to Earnings (P/E)-

After having EPS figures the analysis was done on P/E which reflect the future
growth of the company. By comparing price and earnings per share for a
company the analysis was on the market’s stock valuation of a company and its
shares relative to the income the company is actually generating. Stocks with

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higher forecast earnings growth usually have a higher P/E, and those expected
to have lower earnings growth usually have a lower P/E.

3. Price Earnings to Growth (PEG) Ratio:

This valuation technique is better than just looking at a P/E because it takes
three factors into account; the price, earnings and earnings growth rates. The
theory goes that as the percentage rises over 100% the stock becomes more
and more overvalued, and as the PEG ratio falls below 100% the stock
becomes more and more undervalued. The theory is based on a belief that P/E
ratios should approximate the long- term growth rate of a company’s earnings.
The analysis was also made on the basis of top line and bottom line factors, the
top line which is net interest income and the bottom line which is net interest
margin. All the banks were analysed on net interest income and net interest
margin which was compared on the basis and at the end banks were
shortlisted.

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 MY LEARNINGS

Our internship has been divided into 2 Modules, based on which we are
working. The first module included sales to the customers which had to be
completed within the given time period. Currently we are working on the
second module which includes training on the Mutual Funds and further
providing Portfolio Services to the companies.

MODULE 1(Sales to the Customers - B2C)

• The first module started with training program which went on for 2 weeks.
We were given training about insurance policies of India First Life Insurance,
Aditya Birla Health Insurance and Max life Insurance. We were provided time
period to work on field for making sale, experiencing the field strategy and
mould our learning on project titles. We spent around a 15 Days on field work,
post which we were called back and assigned work on different verticals of
company.
• The minimum target to be achieved was worth Rs.50, 000, which was to be
achieved within the time period allotted. The time period allotted was from 4th
March’19 till 15th March’19. Further the amount was to be deposited in the
company to the undersigned Company Guide.
• The product sold was MahaJeevan Plan of India first. The pitching of almost
30 clients was done and out of them two were converted. The two clients thus
applied for the policies worth “Rs25, 900” &“Rs27, 000”, which in all made “Rs
52,900”, hence completing my target for the first module.

The Client Generation Process thus included certain steps such as

1. Pitching of Clients (Calling and References)
2. Briefing the clients regarding the Investment Plans
3. Closing the sale by collecting the cheque or cash from the clients and also
finishing the form filling procedure.

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MODULE 2(Portfolio Management to the Companies)
• Under this first we were gone through the basic understandings of the
Mutual Funds.

➢ WHAT ARE MUTUAL FUNDS?

• A mutual fund is a professionally managed investment fund that pools
money from many investors to purchase securities. These investors may be
retail or institutional in nature. Mutual funds have advantages and
disadvantages compared to direct investing in individual securities. The
primary advantages of mutual funds are that they provide economies of scale,
a higher level of diversification, they provide liquidity, and they are managed
by professional investors. Primary structures of mutual funds include open-end
funds, unit investment trusts, and closed-end funds.

➢ ADVANTAGES OF MUTUAL FUND

• Not to spend much time in the market.
• Diversified Portfolio
• Regular Investment
• Maintenance of liquidity (easily converted to cash when required)
• Risk can be distributed.

➢ CHALLENGES
• Mutual Funds are subjected to market Risks.

The structure of Mutual Funds is as follows:

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 SPONSOR

AMCS TRUST MUTUAL FUND TRUSTEE

PUBLIC INVEST RETURN

In all there are 41 Mutual Fund Companies.

I learned that these mutual fund Companies have been categorized by SEBI as
follows

Less than 1000cr Micro Cap

Smaller than 8844cr Small Cap
In between 8844cr and Mid Cap
29264cr
Larger than 29264cr Larger Cap

➢ There are total three types of mutual funds available in market those are:
• EQUITY- MUTUAL FUND: These are those types of mutual fund in which fund
manager invests more than or equal to 65% of fund avail with him in equity
shares (ownership funds) and rest in debentures. These mutual funds for those
who wants to invest in mutual for long period.
• DEBT-MUTUAL FUND: These are those type of mutual funds in which funds
manager invest 65% of fund available in the debenture instruments and rest in
the equity shares. These mutual funds are preferred for those who wants to
Invest in mutual funds for short period of time like for 1 year.

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• BALANCED-MUTUAL FUND: These are those mutual funds in which fund
manager keeps the ratio of equity and debenture equal. That’s why it is called
balanced mutual fund. These funds are suggested for those have low risk
appetite.

Future Plan of work

I intend to accomplish the following tasks in the coming 6 weeks in Bridge
Group Solutions:
 Gain knowledge about equity, mutual funds and other financial
instruments.
 Visit corporate offices for offering financial services.
 Learn how to manage a portfolio.
 Study the equity market of the banking sector.

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