A Study On Fundamental Analysis and Its Impact On Indian Stock Market

A Study on Fundamental Analysis and its Impact on Indian Stock Market
EXECUTIVE SUMMARY
The Indian scenario is changing day by day. The earnings of individuals have reached imaginary heights. People are able to earn more, save more and thereby can invest more. Indian capital market is one of the most preferred investment destinations for whole world. This fact encourages domestic individual investors to indulge in this activity. But looking at the volatility in Indian secondary market its very important to do a better analysis before going for investment to ensure expected earnings on there investment. Many investors use fundamental analysis wholly or in combination with other tools like Technical analysis, Sharps Single Index Model and DUPONT model to evaluate stocks for investment purposes. The goal is to determine the current worth and more importantly how the market values the stock. Fundamental analysis is the process of looking at a business at the basic or fundamental financial level. This type of analysis examines key ratios of a business like EPS, Debt-Equity ratio, Interest coverage ratio etc, to determine financial health and value its stock. The major objectives of the study are to facilitate scientific investment decision, to understand the impact of economy on the stock market, to find out the major threats of stock market, to know the impact of company performance on stock price and to find out the best industry to invest in. Based on the analysis done some major findings are arrived at the economic factors the global economies are getting interrelated. The Indian market will no longer be limited to domestic situation. When we compare the ratios of IT, Automobile, Cement, Pharmaceutical and Steel industries, the cement industry provides handsome returns to the investors. All the companies under study are financially strong and performance reveals the same. Keeping in line with analysis it is suggested that the investors should consider the budget decisions and present years forecast of different sectors. Comparisons between different industry is also necessary because of companies perform well when potential opportunity exists for industry.
The Oxford College of Business Management, Bangalore
INTRODUCTION: Investment Scenario:

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Investment is the commitment of money or capital to purchase financial instruments or other
assets in order to gain profitable returns in form of interest, income, or appreciation of the value of the instrument. It is related to saving or deferring consumption. An Investment involves the choice by an individual or an organization such as a pension fund, after some analysis or thought, to place or lend money in a vehicle, instrument or asset, such as property, commodity, stock, bond, financial derivatives, or the foreign asset denominated in foreign currency, that has certain level of risk and provides the possibility of generating returns over a period of time. An Indian Stock market has been no different. Memories of its crash of December 1990 are still there in the minds of many. After record rise in proceeding few years the index fell precipitously and investor loss heavily. This phenomenon repeated every now and then. Though the equity cult is fast spreading among the investor the hard fact is majority of stocks continue to remain volatile to date. All these are pointers to the fact that investor market is no longer holding an olive branch to investors in equity. Much of the danger associated with it can be avoided and it need not be such nerve raking experience, provided one approaches it as a rational decision making process. In short Security Analysis and Portfolio Management are hard work, requiring discipline and patience, and the work is not always rewarded with exceptional returns. Because of uncertainty in the Stock Market investor has to analyze various scrips before investing by using Economic Analysis, Industry Analysis and Company Analysis to avoid future possible loses.
Introduction to the Concept of Security Analysis:

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SECURITY ANALYSIS Connotes the careful study of available facts with the attempt to
draw conclusions there from based on established principles and sound logic.
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Security Analysis is the analysis of tradable financial instruments called securities. These
can be classified into debt securities, equities, or some hybrid of the two. More broadly, futures contracts and tradable credit derivatives are sometimes included. Security analysis is typically divided into fundamental analysis, which relies upon the examination of fundamental business factors such as financial statements. The Security analyst deals with the past, the present, and the future of any given security issue. He describes the business: he summarizes its operating results and financial position; he sets forth its strong and weak points, its possibilities and risks; he establishes its future earning power under various assumptions, or as a best guess. He makes elaborate comparisons of various companies or of the same company at various times. Finally, he expresses an opinion as to the safety of the issue, if it is a bond or investment grade preferred stock, or as to its attractiveness as a purchase, if it is a common stock. The motive behind investment varies from person to person. Some people invest in order to gain a sense of power or prestige. Often the control of corporate enterprises is a driving motive. For most investor however their interest in investment is largely pecuniary to earn a return on their money. But the return on stock market security is subject to risk. Risk incase refers to the uncertainty surrounding actual realization of the rate of return offered by an investment. The time element refers to period of waiting required to reap the return. Accordingly early investment decision has three key aspects. They are, Return Risk Time
There fore, investment process must be considered in terms above aspects.
Different Approaches to Evaluation:

There are essentially three approaches or school of thoughts on the matter of security price evaluation, classified as
A) Fundamental Approach
The concept of time value of money is the business of this approach. Money has a time value. A rupee now is worth more than rupee a year from now. For different securities, future benefits may be received at different times. Even when the amount of future payment is the same, differences in the speed of their receipt may create differences in value. Time value of money suggests that earlier receipt may create differences in value. Time value of money suggests that earlier receipt is more desirable than later receipt, even when the both are equal in the amount of certainty. Because, earlier receipt can be re invested to generate additional returns before later receipt come in. The force operating is the principal of compound interest. Framework: The proper order in which to proceed in Fundamental analysis is, first to analyze the overall economy and securities markets. Second, analyze the industry with in which a particular company operates. Finally, analysis of the company should be considered. The above analysis involves making a careful estimate of expected stream of benefits and required return of common stock. The intrinsic value then can be obtained through the present value analysis that is, the dividend discounts model. An alternative method of valuation is the P/E ratio or earning multiplier approach.
Economic Analysis:
The level of economic activity has an impact on investment in many ways. If the economy grows rapidly, the industry can also be expected to show rapid growth. When the level of economic activity is low, stock prices are low, and when the level of economic activity is high, stock prices are high reflecting the prosperous outlook for sales and profits of the firms. The analysis of macro economic environment is essential to understand the behavior of the stock prices.
Industry Analysis:
An industry is a group of firms that have similar technological structure of production and produce similar products. Companies are distinctly classified to give a clear picture about their manufacturing process and products. Industries can be classified on the basis of the business cycle i.e. classified according to their reactions to the different phases of the business cycle. They are classified in to growth, cyclical, defensive and cyclical growth industry.
Company Analysis:
In the company analysis the investor assimilates the several bits of information related to the company and evaluates the present and future value of the stock. The risk and return associated with the purchase of the stock is analyzed to take better investment decisions. The valuation process depends upon the investors ability to elicit information from relationship and interrelationship among the company related variables.
B) Technical Approach
Technical analysis is an alternative approach to predicting the stocks price behavior. Technical analysis is frequently used as a supplement to fundamental analysis rather than as a substitute for it. Thus technical analysis can frequently does, confirm findings based on fundamental analysis.
Technical analysis is viewed mainly through price and volume statistics. It helps in measuring price- volume, supply-demand relationship for overall market as well as for individual sticks. Technicians seldom rely upon a single indicator, as no one indicator is infallible; they place reliance upon reinforcement provided by groups of indicators.
C) Modern Approach
Markovitize led down the foundation for this approach in 1951. He studied capital market with the help of fairly sophisticated method of investigation and in general arrived at the following conclusions.
Stock markets are reasonably efficient in reacting quickly and rationally to the flow of
information.
Successive price changes are independent. As a result past price behavior cannot be used to
predict future price behavior.

In the capital market, there is a positive relationship between the risk and return, this indicates,
in general investment in several securities would reduce the variability of return and hence the riskless of a portfolio.
http://en.wikipedia.org/wiki/Investment Security Analysis by Benjamin Graham and David L Dodd http://en.wikipedia.org/wiki/Security_analysis.
Chapter 2 TITLE OF THE STUDY:

A study on fundamental analysis and its impact on Indian stock market
STATEMENT OF THE PROBLEM:

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Recently Harvard Business School conducted a Financial IQ Test with an intention to
find out financial literacy of U.S. Managers. According to this IQ test US Mangers and C-level executives to supervisors scored an average of only 38%. A majority were unable to distinguish profit from cash. Many didnt know the difference between an income statement and balance sheet. About 70% couldnt pick the correct definition of free cash flow, now the measure of choice for many Wall Street investors. Many investors invest in securities by their emotional forces and many invest without analyzing economic conditions, budget decisions, industry growth rates and company factors. Finally, they end up with losses. Of course, no one can predict the uncertainty factors like 26/11 attack in 26th, November 2008. Despite these factors investors could reduce the risk associated with securities through analyzing the security properly. How much the economic factors could influence the stock market? Whether positively or negatively have the relationship with the stock market movements. Answering these questions enables the investors to have the perspective about the overall economy and stock markets.
Harvard Business Review South Asia / October 2009 / hbrsasia.org
BACKGROUND OF THE STUDY:

Value investing means finding the intrinsic value of the stock. It means present value of the future cash inflows. I take into consideration of economic, industry and company analysis. In Economic factors, we consider macro economic factors because it reflects the prosperous out look for sales and profit of the firm or company. This economy reflects behavior of the stock prices. While macro economic theory has helped to develop risk factors like interest rate risk, purchasing power risk, market risk and such alike; the theory of the firm helped in delineating factors like firms cash dividend yield, beta coefficient as a numeric surrogates for securitys quality rating. This is the area where the present work focuses on. The security investment involves several type of risk diversifiable as well as non-diversifiable. While the risk of a security is nothing but the likelihood of the return turning out to be more or less than the expected, the total risk of an asset may be perceived as being the sum of several different contributing risk factors like interest rate fluctuations Donald E. Fisher and Ronald J. Jorden.
REVIEW OF THE LITERATURE:

Bombay Stock exchange Sensitive (SENSEX) Index on month-to-month basis for the said period constituted the database. The Company fundamentals and monthly share prices for 4 years of study period supported the conduct of the present study. Reports that industrial production, productivity, money supply and unemployment rates are consistently influencing the share returns, Chen et. al., (1996) proposes that the unexpected inflation, industrial production, changes in risk premiums, etc., are crucial in Asset pricing. In recent study Chen and Jorden (2002) finds inflation, interest rates on government bonds, industrial production, oil prices, etc., are germane in asset prices. In Indian environment, the study conducted by Rajan. Mookerjee (1998) observes weak linkages between changes in GDP and stock prices, Malathy Prabhakaran, (1999), Rao and Bhole (2001), Choudhari (1998) and others studied the impact of agriculture on stock prices and report conflicting results. A comprehensive study on these Economic variables is awaited in Indian context. A study conducted by Christopher B. Branston and Nicolaas Croenewold
Abstract
This paper quarterly U.S. data from 1953to 2000 to investigate the effects of share price changes on investment. We focus on the distinction between speculative and fundamental components of share price movements and we contribute to the literature by evaluating four alternative methods of decomposing share-price movements into these two components. The four methods are 1) a decomposition based on regressing share returns on a set of variables designed to capture fundamentals: 2) the use of the price- earnings ratio: 3) the use of dividend yield and 4) a structural vector-autoregressive model based on dividend discount equation. We find that, no matter what the method of decomposition is, shocks to both fundamental and speculative components have positive effects on investment and that, in contrast to the earlier literature, the effect of the speculative shock is at least as large as that of a shock to fundamentals.
OBJECTIVES OF THE STUDY: The main purpose of this study is to comparatively analyze the different industry
performance and selecting the appropriate security by considering potentiality of the industry.
To identify the returns of the securities in considering the risk, growth and other related
variables.
To understand the factors influencing the security prices in different industries. To evaluate the true worth of the securities. To know the impact of macro economic indicators on stock market returns.
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A Study on Fundamental Analysis and its Impact on Indian Stock Market SCOPE OF THE STUDY:
An effective fundamental analysis facilitates investment decision of individual investors. It helps investors to understand in which industry stock they should invest in. It also helps investors to minimize their risk through effective investment decisions.
OPERATIONAL DEFINITIONS: Economic Analysis:

Economic analysis refers to analyze the factors or indicators of the economy that affects the stock market. This is also called non-diversifiable risk analysis where the risk associated with the securities cannot be diversified.
Industry Analysis:
Industry analysis refers to analyze the plan, priorities and vulnerability of an industry for government regulations. The competitive conditions as reflected in any barriers to industry also taken in to consideration.
Company Analysis:
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In the company analysis the investor assimilates the several bits of information related to
the company and evaluates the present and future values of the stock. The risk and return associated with the purchase of the stock is analyzed to take better investment decisions.
Co relation:
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Correlation is another measure designed to indicate the similarity or dissimilarity in the
behavior of two variables. It ranges between -1 and +1 (+1 perfectly correlated, 0 uncorrelated and -1 perfectly negatively correlated).
5 Security Analysis and Portfolio Management by Punithavathy Pandian 6 NCFM Security Markets Beginners Module
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RESEARCH METODOLOGY:
Since the study is principally intended to examine the potential growth of securities, which might be affected by different risk variables on security returns, a sample of 5 industries, and selecting the profitable shares through selecting potential growth industries, whose shares are actively traded during the period 2006 to 2009 has been considered. In order to identifying the influence of exogenous variables of economy and market in security prices information on different indicators like Gross domestic product, Industrial production, Savings and Investment, Agricultural Production, Money supply, Fiscal deficit etc.
a) For analyzing the relationship between economic indicators and stock market movement,
the correlation tools has been used, and selecting the industry by comparing their sales growth, dividend and its ratios has been comparatively analyzed. On the other hand, groups of 10 financial ratios capturing the Size, Dividend Policy, Leverage, Productivity, Liquidity, Profitability, Earnings Variability, P/E ratios and Certain Growth Variables constituted the company specific fundamentals of financial risk variables. The estimation of Accounting Beta. (the ratio of EPS of a firm in relation to the average EPS of all firms), Sales, and Earnings have been measured as linear growth rates the testing period of most recent four-year period.
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SOURCES OF DATA:
Primary data: Since the study is mainly based on the financial results of the industries and the company and the facts of the economic factors, no such primary data has been collected. Secondary data: All the data has been collected through secondary sources only. These data are Various magazines, books and news papers. Companys websites, ministry of finance, BSE & NSE exchanges.
SAMPLE DESIGN: Definition of the Population:

Since the study is mainly related to selecting the appropriate security, analyzing economy, industries, company and comparison between those is necessary. Their potentiality for growth also to be consider for selecting particular industry, where the companies in that industry has to be analyzed through comparing between the companies considering their relative advantage over the others.
Sample size:
All the five industries under the study are randomly selected reconsidering differentialities in the new way they do business and the product they produced has been considered as sample and the four companies in that particular industry has been considered as representative sample.
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Sample Technique Adopted:

Techniques for selecting industries and companies is nothing but the way they doing business since the product they produce and also according to the market capitalization.
LIMITATIONS OF THE STUDY:

The economy and industry are so wide and comprehensive that is difficult to encompass all the likely factors influencing to be captured in any set of possible indicators. The study has been limited to only five major industries and only four companies from each industry. Hence the applicability of the study is limited to that extant. The findings and conclusions made during the study might not be applicable for long period of time because of high volatility in the stock market.
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OVERVIEW OF THE STUDY:

Chapter one started with the introduction of the concept of security analysis, where the investment scenario in the security takes place. The introduction part explains about different approaches to the security that is fundamental approach, modern approach and technical approach. And investors perception about the characteristics of growth and the value associated with securities. The second chapter starts with the statement of the problem for studying security and explains the areas of the analysis. And it covers source of the data literature review and operation of the study. The third chapter deals with the profile of the respondents. It highlights the economy of India, industries and the companies. In industries, it deals with growth rate of sales and dividend of five industries namely, Computer and Software, Pharmaceutical, Automobiles, Power and Steel industries and also analysis of government policies that affects performances. The export performance and competitive positions of said industries provides the guidelines about the future of industries. Then the analysis part it deals with primarily the global economy, where the Indian stock market no longer is limited to the Indian situation. It also deals with the analysis of the economic factors affect to the stock market. In the second part of analyzing industries through comparison of different ratios, sales and dividend growth that helps to select the appropriate industry which out perform other industries. Finally the conclusion and suggestions at the end provides the report guidelines which is drawn after analyzing the economy, industries and company enables the investors getting perspective above overall better performance industry and company.
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CHAPTER SCHEME:
Chapter 1 - Introduction This chapter includes an introduction to the broad area of IMPACT OF FUNDAMENTAL ANALYSIS ON INDIAN STOCK MARKET, role and importance of fundamental analysis. Chapter 2 Research Design This chapter deals with the plan of the study, tools and techniques used in data collection, review, methodology and sources of data. Chapter 3 Economic, industry and company profile This chapter deals with the overview country economy, industry and complete history, nature of business, competitors, capital structure. Chapter 4 Analysis and interpretation of the data This chapter provides an analysis of data with required interpretation. Chapter 5 Summary of findings, conclusions and recommendations This chapter includes an overview of the study done, summarize the findings under each objective provides conclusion and acceptable recommendations based on the findings. Bibliography This chapter deals with the list of various books, articles, websites that are referred and used in the research on Fundamental analysis. Annexure This chapter includes the data used for the calculations supporting interpretation etc.
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Chapter- 3 Industry Profile STEEL INDUSTRY:

Market Size: The steel industry in India has been moving from strength to strength according to the year end review by the Press Information Bureau, India has emerged as the fourth largest producer of steel in the world and the second largest producer of crude steel. Significantly, state-owned steel maker, Steel Authority of India (SAIL), which reported a net profit of US$ 571 million in January June 2009, has become the most profitable steel company globally, beating steel majors such as ArcelorMittal, Posco, Bao Steel and Nippon in the half yearly profits. Production: Steel production reached 28.49 million tone (MT) in April-September 2009. The National Steel Policy has a target for taking steel production up to 110 MT by 2019 20. Nonetheless, with the current rate of ongoing Greenfield and Brownfield projects, the Ministry of Steel has projected Indias steel capacity is expected to touch 124.06 MT by 2011- 12. In fact, based on the status of memoranda of understanding (MoUs) signed by the private producers with the various state governments, Indias steel capacity is likely to be 293 MT by 2020. Consumption: India accounts around 5 percent of global steel consumption, Almost 70% of the total steel used is for kitchenware. Indias Steel Consumption rose by 608% during April- November 2009 over the same period a year ago on account of improvement demand from sectors like automobile and consumer durables. A Credit Suisse Group study states that Indias steel consumption will continue to grow by 16% annually till 2012, fuelled by demand for construction projects worth US$ 1 trillion. The scope for raising the total consumption of steel is huge, given that per capita steel consumption is only 35 Kg compared to 150 Kg across the world and 2580 Kg in China.
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Exports: Out of Indias annual iron ore production of more than 200 MT, about 50% is exported. Indias iron ore exports more than doubled to 9.3 million tonne in October 2009 as compared to 4.4, million tonne in the same month a year ago on the back of increase in demand from Chinese steel producers, as per a joint study by a group of iron ore exports. The countrys iron ore exports during April October 2009 period grew 20% over the year ago period to 53 million tonne, as per the study. Investments: The domestic steel sector has attracted a staggering investment of about US$ 236 billion, according to the Minister of State for Steel Sai Prathap. A host of steel companies have lined up major investment proposals. Furthermore, with an expanding consumer market, the Indian steel industry is likely to receive huge domestic and foreign investments.
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A Study on Fundamental Analysis and its Impact on Indian Stock Market PHARMACEUTICALS:
Market Size: Indias pharmaceutical industry is now the third largest in the world in terms of volume and accounts for 10% of the worlds production. India ranks 14 in terms of value. The country ranks 4th in terms of generic production and 17th in terms of export value of bulk actives and dosage forms, according to Mr. Jena. Exports: Indias exports of drugs, pharmaceuticals and fine chemicals grew by 29% in 2008-09 to US$ 8.25 billion compared to 2007-08. A report by industry research firm, RNCOS, forecasts that pharmaceutical exports will grow at a compound annual growth rate (CAGR) of 18.5% between 2007-08 and 2011-12. This growth will be fuelled by multi billion dollar patent expirations and growth in the global generics market. Government Initiative: The government has offered tax breaks to the pharmaceutical sector. The government has offered tax breaks to the pharmaceutical sector. Units are eligible for weighted tax deduction at 150% for the research and development (R&D) expenditure incurred. The government has launched two new schemes New Millennium Indian Technology Leadership Initiative and the Drugs and pharmaceuticals Research programme especially targeted at drugs and pharmaceutical research. According to Mr. Ashok Kumar, Pharmaceutical Secretary the government is planning to set up a US$ 439.94 million corpus fund for the pharma industry soon. Investment: According to the ministry of Commerce, domestic investment in the pharmaceutical sector is estimated at US$ 6.31 billion. The drugs and pharmaceuticals sector has attracted foreign direct investment (FDI) worth US$1.43 billion between April 2000 and December 2008. Road Ahead: The Indian pharmaceutical industry will see tremendous growth in the coming years as consumer spending on healthcare increases in India. Consumer spending on healthcare is expected to increase to 13% of GDP by 2015, up from 7% in 2007.
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A Study on Fundamental Analysis and its Impact on Indian Stock Market INFORMATION TECHNOLOGY:
Market Size: According to the National Association of software and services companies (NASSCOM), the apex body for software services in India, the revenue of the information technology sector has risen from 1.2% of the gross domestic product (GDP) in FY 1997-98 to an estimated 5.8% in FY 2008-09. Further, the industry body expects the sector to grow between 4% and 7% during 2009-10 and return to over 10% growth next year. Moreover, according to a study by springboard Research, the Indian IT services market is estimated to remain the fastest growing in the Asia-Pacific region with a compound annual growth rate (CAGR) of 18.6%. At present there are 60 million internet users in the country. According to the Manufacturers Association of IT (MAT), the number of active internet entities rose to 8.6 million by March 2009 from 7.2 million units in March 2008. A study of MAIT estimated that the total PC sale in India is likely to grow by 7% in 200910, with total sales expected to cross 7.3 million units. Outsourcing: According to NASSCOM, software and services exports reached US$ 47 billion in FY 2008-09, contributing nearly 78% to the total software and services revenue of US$ 59.6 billion. Domestic Market: Indias domestic market has also become a force to reckon with, as the existing IT infrastructure evolves both in terms of technology and depth of penetration. According to NASSCOM, domestic IT market reached US$ 24.3 billion in FY 2008-09 as against US$ 23.1billion in FY 2007-08, a growth of 5.3%. Investments: The Andhra Pradesh Government expects the IT-related SEXs and software Technology Parks of India (STPI) in the nest five years. San Francisco-based virtualization solutions provide VMware Inc Plans to invest US$ 100 million.
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The total investments of EMC Corporation, a leading global player of information infrastructure solutions, in India will touch US$ 2 billion by 2014. Rural Penetration: According to a report of the internet and mobile Association of India rural India has 3.3 million active internet users as on March 2008. The research also notes there are 5.5 million people who claim to have used internet at some point in time. Government Initiatives: The government set up the National Taskforce on information Technology and software Development with the objective of farming a long term National IT Policy for the country. Enactment of the information Technology Act, which provides a legal framework to facilitate electronic commerce and electronic transactions. Road Ahead: According to a report prepared by Mckinsey for NASSCOM, the exports component of the Indian industry is expected to reach US$ 175 billion in revenue by 2020. The domestic component will continue US$ 50 billion in revenue by 23020. Together, the export and domestic markets are likely to bring in US$ 225 billion in revenue, as new opportunities emerge in areas such as public sector and healthcare and as geographies including Brazil, India, China and Japan opt for grater outstanding.
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A Study on Fundamental Analysis and its Impact on Indian Stock Market AUTOMOBILES:
The growth of the Indian middle class along with the growth of the economy over the past few years has attracted global auto majors to the Indian market Moreover; India provides trained manpower at competitive costs making India a favored global manufacturing hub. The attractiveness of the Indian markets on one hand and the stagnation of the auto sector in markets such as Europe, US and flow of capital to the Indian automobile industry. Global auto majors such as Japanese auto majors Suzuki, Honda and Korean car giant Hyundai are increasingly banking on their Indian operations to add weight to their business, even as numbers stay uncertain in developed markets due to economic recession and slowdown. Moreover, according to a study released by global by global consultancy firm Deloitte, at least one Indian company will be among the top six carmakers that would dominate the global auto industry by 2020. According to the study, the car industry would see a massive capacity building in low cost locations like India and China as manufacturers shift base from developed regions. Production: Although the sector was hit by economic slowdown, overall production (passenger vehicles, commercial vehicles, two wheelers and three wheelers) increased from 10.85 million vehicles in 2007-08 to 11.17 million vehicles in 2008-09. P passenger 8.41 million. In recent times, India has emerged as one of the favorite investment destinations for automotive manufactures. German car major AUDI will start assembling its sports utility vehicle AUDI Q5 fommid2010. The company plans to assemble more cars locally at its Aurangabad plant instead of importing completely built units.
Ford India commenced commercial production of its compact car Figo, and diesel and petrol
vehicles
increased
marginally from 1.77 million to 1.83 million while two-wheelers increased from 8.02 million to
engines at a new factory in Chennai. The Figo will be built exclusively in India and exported to Asian countries and South Africa.
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Domestic Market: According to figures released by the society of Indian Automobile Manufactures (SIAM), domestic passenger car sale have increased 32.28% to reach 145,905 units in January 2010 from 110,300 units in the same month last year. Across all categories, total sale of vehicles increased 44.94% to 1,114,157 units in January 2010, against 768,698 units in the January 2009. Road Ahead: The Indian auto industry is likely to see a growth of 10-12% in sales in 2010, according to a report by the global rating firm, Fitch. According to its report, Indian Auto sector is likely to increase due to increase increasing penetration of global original equipment manufactures (OEM).
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A Study on Fundamental Analysis and its Impact on Indian Stock Market CEMENT:
Market Size: India is the worlds second largest producer of cement after China, with cement companies adding nearly 11 million tones (MT) capacity during April-September 2009, taking the total installed capacity to around 231 MT by September 2009. With the boost given by the government to various infrastructure projects, road networks and housing facilities, growth in the cement consumption is anticipated in the coming years. According to Jyotiraditya Scindia, Minister of state, Ministry of Commerce and industry, cement production could rise to 236.16 MT in FY 2011 and touch 262.61 MT in FY 2012. With almost total capacity utilization levels in the industry, cement dispatches have maintained 10% growth rate. Total dispatches grew to 170 MT during 2007-08 against 155 MT in 2006-07. Technological Change: Continuous technological upgrading and assimilation of latest technology has been going on in the cement industry. Presently, 93% of the total capacity in the industry is based on modern and environment friendly dry process technology and only 7% of the capacity is based on old wet and semi-dry process technology. There is tremendous scope for waste heat recovery in cement plans and thereby reduction in emission level. New Investments:
Dalmia Cement, South Indias second largest cement maker will invest over US$ 652.6
million to ass 10MT capacity over the next 2-3 years. India Cements Ltd will invest US$ 104 billion to set up two thermal power plants in the southern states of Tamil Nadu and Andhra Pradesh.
Anil Ambani Group Company Reliance Infrastructure will invest US$ 2.1 billion to setup
cement plants with a total capacity of 20 MTPA over the next five years. Swiss cement company Holcim plans to invest US$ 1 billion in setting up 2-3 Greenfield manufacturing plants in India in the next five years. The expansion will take the companys total cement-making capacity to 60 MTPA from 50 MTPA currently.
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Government Initiatives: Government initiatives in the manufacturing sector, coupled with the housing sector boom and urban development, continue being the main drivers of growth for the Indian cement industry.
Increased infrastructure spending has been a key focus area over the last five years indicating good times ahead for cement manufactures.
The government has increased budgetary allocation for roads under National Highways Development Project (NHDP). Appointing a coal regulator is looked upon as a positive move as it will facilitate timely and proper allocation of coal (a key raw material) blocks to the core sectors, cement being one of them. Keeping in mind the global meltdown which is impacting the cement companies in India, the government re-imposed the counter-veiling duty (CVD) and special CVD on imported cement in January. This is likely to provide a level playing field to domestic companies. Road Ahead: According to a report by the ICRA Industry Monitor, the installed capacity is expected to increase to 241 MTPA by 2010 end. Indias cement industry is likely to record an annual growth of 10% in the coming years with higher domestic demand resulting in increased capacity utilization.
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A Study on Fundamental Analysis and its Impact on Indian Stock Market PROFILE OF THE ORGANIZATIONS:
INFOSYS TECHNOLOGIES LIMITED: House Name BSE Scrip code ISIN Face Value : :
:
Not Applicable 500209 INE009A01021 5
Infosys Technologies at a Glance

Table 3.1: Showing brief introduction of Infosys Technologies Ltd. Name of the Company Infosys Technologies Ltd Incorporation Year 1981 NSE Code INFOSYSTECH
Chairman N.R Narayana Murthy
BSE Group A
Auditors BSR & Co
Registered Address No. 44, Hosur Road, Electronic City, Bangalore 560-100
Industry: IT Consulting and Software
Registers Karvy Computershare Pvt Ltd.
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Share Holding Pattern As on 31-March-2010 Table 3.2: Showing Shareholding Pattern of Infosys Technologies Ltd. Category of Shareholder Shareholding of Promoter and Promoter Group Public Shareholding Shares held by Custodians and against which Depository Receipts have been issued Graph 3.1: Showing the Shareholding Pattern of Infosys Technologies Ltd. 374864267 106875947 65.32% 18.63% Total no of Shares 92084978 Percentage 16.05 %
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A Study on Fundamental Analysis and its Impact on Indian Stock Market WIPRO LIMITED:
House Name BSE Scrip code ISIN Face Value : :
:
Wipro Group 507685 INE075A01022 2.00
Wipro Ltd. at a Glance

Table 3.3: Showing brief introduction of Wipro Ltd. Name of the Company WIPRO LTD. Incorporation Year 1945 NSE Code WIPRO
Chairman Azim H Premji
BSE Group A
Auditors BSR & Co
Registered Address Doddakannelli, Sarjapur Road, Bangalore 560-035
Industry: IT Consulting and Software
Registers Karvy Computershare Pvt. Ltd
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Share Holding Pattern As on 31-March-2009 Table 3.4: Showing Shareholding Pattern of Wipro Ltd. Category of Shareholder Shareholding of Promoter and Promoter Group Public Shareholding 275058920 18.75 Total no of Shares 1168382260 Percentage 79.61
Shares held by Custodians and against which Depository Receipts have been issued
24130902
1.64
Graph 3.2: Showing the Shareholding Pattern of Wipro Ltd.
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A Study on Fundamental Analysis and its Impact on Indian Stock Market TATA STEEL LIMITED:
:
Tata Group 500470

INE081A01012
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Tata Steel Ltd. at a Glance

Table 3.5: Showing brief introduction of Tata Steel Ltd. Name of the Company TATA STEEL LTD. Incorporation Year 1907 NSE Code TATASTEEL
Chairman R N Tata
BSE Group A
Auditors Deloitte Haskins & Sells
Registered Address Bombay House, 24 Homi Mody Street, Fort Mumbai Maharashtra 400-001
Industry: Iron & Steel/ Interm. Products
Registers T R S Darashaw Ltd. No. 6-10, Haji Moosa Patrawala Industrial Estate,20, Dr. E Moses Road, Mahalaxmi, Mumbai 400-011
30

Share Holding Pattern As on 31-March-2010 Table 3.6: Showing the shareholding Pattern of Tata Steel Ltd. Category of Shareholder Shareholding of Promoter and Promoter Group Public Shareholding 605162261 68.20 Total no of Shares 277833893 Percentage 31.32
4218042
0.48
Graph: 3.3: Showing the Shareholding Pattern of Tata Steel Ltd.
31
A Study on Fundamental Analysis and its Impact on Indian Stock Market JSW STEEL LIMITED:
:
Jindal O P Group 500228 INE019A01020 10
Jsw Steel Ltd. at a Glance

Table 3.7: Showing brief introduction of JSW Steel Ltd. Name of the Company JSW STEEL LTD. Incorporation Year 1994 NSE Code JSWSTEEL
Chairman Savitri Devi Jindal
BSE Group
A
Industry: Iron & Steel/ Interm. Products
Registered Address Jindal Mansion 5A, Dr. G Deshmukh Marg, Mumbai Maharashtra 400-026
Registers Karvy Computershare Private Ltd. Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad 500-081
32

Share Holding Pattern As on 31-March-2010 Table 3.8: Showing Shareholding Pattern of JSW Steel ltd. Category of Shareholder Shareholding of Promoter and Promoter Group Public Shareholding Shares held by Custodians and against which Depository Receipts have been issued 102873009 0 55.01% 0 Total no of Shares 84175673 Percentage 45.01%
Graph 3.4: Showing the Shareholding Pattern of JSW Steel Ltd.
33
A Study on Fundamental Analysis and its Impact on Indian Stock Market SUNPHARMACEUTICAL INDUSTRIES LTD:
:
Not Applicable 524715 INE044A01028 5.00
Sun pharmaceutical Industries Ltd. at a Glance

Table 3.9: Showing brief introduction of Sun Pharmaceutical Industries Ltd. Name of the Company Incorporation Year 1982 NSE Code SUNPHARMA
Sun pharmaceutical Industries Ltd.
Chairman Dilip S Shanghvi
BSE Group
A
Industry: Pharmaceuticals
Registered Address Sun Pharma Advanced Research Centre Tandaija, Akota Road Vadodra Gujarat 390-020
Registers Link Intime India Pvt Ltd C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West), Mumbai -400 078
34

Share Holding Pattern As on 31-March-2010 Table 3.10: Showing Shareholding Pattern of Sun Pharmaceutical Industries Ltd. Category of Shareholder Shareholding of Promoter and Promoter Group Public Shareholding Shares held by Custodians and against which Depository Receipts have been issued 75150451 0 36.29% 0 Total no of Shares 131965940 Percentage 63.71%
Graph 3.5: Showing the Shareholding Pattern of Sun Pharmaceutical Industries Ltd.
35
A Study on Fundamental Analysis and its Impact on Indian Stock Market Dr. REDDYS LABORATORIES:
:
Reddy Group 500124 INE089A01023 5.00
Dr. Reddys Laboratories at a Glance

Table 3.11: Showing brief introduction of Dr. Reddys Laboratories Name of the Company Dr. Reddys Laboratories Incorporation Year 1984 NSE Code DRREDDY
Chairman K Anji Reddy
BSE Group
Auditors BSR & Co.
A
Industry: Pharmaceuticals
Registered Address 7-1-27, Ameerpet, Hyderabad 500016
Registers Bigshare Services Pvt Ltd G 10 Amrutha Ville, Opp. Yashodha Hospital, Rajbhavan Road, Somajiguda, Hyderabad 500082
36

Share Holding Pattern As on 31-March-2010 Table 3.12: Showing Shareholding Pattern of Dr. Reddys Laboratories Category of Shareholder Shareholding of Promoter and Promoter Group Public Shareholding Shares held by Custodians and against which Depository Receipts have been issued 100778704 24548869 59.69% 14.54% Total no of Shares 43517812 Percentage 25.77%
Graph 3.6: Showing the Shareholding Pattern of Dr. Reddys Laboratories
37
A Study on Fundamental Analysis and its Impact on Indian Stock Market MARUTI SUZUKI INDIA LTD:
:
MNC Associate 532500 INE585B01010 5.00
Maruti Suzuki India Ltd at a Glance

Table 3.13: Showing Brief introduction of Maruti Suzuki India Ltd Name of the Company Maruti Suzuki India Ltd. Incorporation Year 1981 NSE Code MARUTI
Chairman R C Bhargava
BSE Group
Auditors Price Waterhouse.
A
Industry: Auto - Cars & Jeeps
Registered Address Plot No. 1, Vasant Kunj, Nelson Mandela Marg, New Delhi 110070
Registers Karvy Computershare Pvt Ltd Plot No. 17-24, Vittalrao Nagar, Madhapur, Hyderabad Andhra Pradesh - 500081
38

Share Holding Pattern As on 31-March-2010 Table 3.14: Showing Shareholding Pattern of Maruti Suzuki India Ltd. Category of Shareholder Shareholding of Promoter and Promoter Group Public Shareholding 132291620 45.79% Total no of Shares 156618440 Percentage 54.21%
Graph 3.7: Showing the Shareholding Pattern of Maruti Suzuki India Ltd.
39
A Study on Fundamental Analysis and its Impact on Indian Stock Market HERO HONDA MOTORS LTD:
:
Hero Group 500182 INE158A01026 2.00
Hero Honda Motors Ltd at a Glance

Table 3.15: Showing brief introduction of Hero Honda Motors Ltd. Name of the Company Hero Honda Motors Ltd. Incorporation Year 1984 NSE Code HEROHONDA
Chairman Brijmohan Lall Munjal
BSE Group
Auditors A F Ferguson & Co.
A
Industry: Auto - 2 & 3 Wheelers
Registered Address Basant Lok, Community Centre, 34, Vasant Vihar, New Delhi 110057
Registers Karvy Computershare Pvt Ltd Plot No. 17-24, Vithalrao Nagar, Madhapur, Hyderabad 500 081
40

Share Holding Pattern As on 31-March-2009 Table 3.16: Showing Shareholding Pattern of Hero Honda Motors Ltd. Category of Shareholder Shareholding of Promoter and Promoter Group Public Shareholding Shares held by Custodians and against which Depository Receipts have been issued 89938195 0 45.04% 0 Total no of Shares 109749305 Percentage 54.96%
Graph 3.8: Showing the Shareholding Pattern of Hero Honda Motors Ltd.
41
A Study on Fundamental Analysis and its Impact on Indian Stock Market ACC LTD:
:
ACC Group 500410 INE012A01025 10.00
ACC Ltd. at a Glance

Table 3.17: Showing brief introduction of ACC Ltd. Name of the Company ACC Ltd. Incorporation Year 1936 NSE Code ACC
Chairman N S Sekhsaria
BSE Group
Auditors S R Batliboi & Associates
A
Industry: Cement - Major
Registered Address 121, Cement House, Maharshi Karve Road, Mumbai 400020
Registers In House share Department, Cement House,121,Maharhi Karve road,Mumbai-400020
42

Share Holding Pattern As on 31-March-2010 Table 3.18: Showing Shareholding Pattern of ACC Ltd. Category of Shareholder Shareholding of Promoter and Promoter Group Public Shareholding Shares held by Custodians and against which Depository Receipts have been issued 101012889 0 53.79% 0 Total no of Shares 86732067 Percentage 46.20%
Graph 3.9: Showing the Shareholding Pattern of ACC Ltd.
43
A Study on Fundamental Analysis and its Impact on Indian Stock Market GRASIM INDUSTRIES LTD:
:
Birlas (Aditya Vikram) Group 500300 INE047A01013 10.00
Grasim Industries Ltd. at a Glance

Table 3.19: Showing brief introduction of Grasim Industries Ltd. Name of the Company Grasim Industries Ltd. Incorporation Year 1947 NSE Code GRASIM
Chairman Kumar Mangalam Birla
BSE Group
A
Industry: Cement - Major
Registered Address P.O. Birlagram Nagda Madhya Pradesh 456331
Registers Grasim Industries Ltd. P.O. Birlagram
44

Share Holding Pattern As on 31-March-2010 Table 3.20: Showing Shareholding Pattern of Grasim Industries Ltd. Category of Shareholder Shareholding of Promoter and Promoter Group Public Shareholding Shares held by Custodians and against which Depository Receipts have been issued Graph 3.10: Showing the Shareholding Pattern of Grasim Industries Ltd. 58400900 9901495 63.70% 10.80% Total no of Shares 23381176 Percentage 25.51%
45
A Study on Fundamental Analysis and its Impact on Indian Stock Market Chapter 4 DATA ANALYSIS AND INTERPRETATION Indian Economy:
The Indian economy is one of the fastest growing economies and is the 12 th largest in terms of the market exchange rate at $ 1,242 billion. In terms of purchasing power parity, the Indian economy ranks the fourth largest in the world. However, poverty still remanins a major concern besides display in income. The Indian economy has been propelled by the liberalization policies that have been instrumental in boosting demand as well as trade volume. The growth rate has averaged around 7% since 1997 and india was able to keep its economy growing at healthy rate even during the 20072009 recession, managing a 5.355% rate in 2009. The biggest boon to the economy has come in the shape of outsourcing. Its English speaking population has been instrumental in making Indian a preferred destination for information technology products as well as business process outsourcing. `The economy of India is as diverse as it is large, with a number of major sectors including manufacturing industries, agriculture, textiles, handicrafts and services. Agriculture is a major component of the Indian economy, as over 66% of the Indian popultion earns its livehood from this area. Other areas where India is expected to make progress include manufacturing, construction of ships, pharmaceuticals, aviation, biotechnology, tourism, nanotechnology, retailing and telecommunications. Growth rates in thease sectors are expected to incrase dramatically. In 2009, Indias PPP Gross Domestic Product stood at $3.548 trillion, and was the fourth largest economy by volume. The service sector, backed by the IT revolution, remained the biggest contribute to the national GDP, with a contribution of 58.4%. The industry sector contributed 24.1% and agriculture sector contributed 17.5% to the GDP.
46
TRENDS IN GROWTH RATE IN GDP:

Table 4.1: Showing Co-relation between Growth rate of GDP and Sensex returns.
Year
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Growth Rate of GDP (%)

4.4 5.8 4 8.5 7.5 9.5 9.7 9.2 6.7 0.7069
Sensex Returns (%)

-20.65 -17.87 3.52 72.89 13.08 42.33 46.7 47.15 -52.45
Correlation
Graph 4.1: Showing Growth rate of GDP and Sensex returns.
47
INFERENCE:
GDP has become most crucial variable affecting the stock market. As the graph shows, there has been positive correlation of 0.7069 between GDP and Sensex.
ANALYSIS:
It clearly iindicates that GDP has direct influence on stock market, so both the variables are moving in the same direction.
TRENDS IN GROWTH RATE OF AGRICULTURE:

Table 4.2: Showing Co-relation between Agricultural growth rate and Sensex returns
Year
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Growth Rate of Agriculture (%)

0.3 -15.9 21.7 -3.1 8.2 4.6 3.2 -8,9
Sensex Returns (%)

-17.87 3.52 72.89 13.08 42.33 46.7 47.15 -52.45
Correlation
0.7582
48
Graph 4.2: Showing the growth rate of Agriculture and Sensex returns.
INFERENCE:
The above figure shows the relationship between agriculture and Sensex returns. The Corelation between above two variables is positive i.e. 0.7582.
ANALYSIS:
As could be seen easily from the graph, the growth rate of both variables is moving in the same direction. It indicates that the agriculture production has direct impact on stock market.
49
A Study on Fundamental Analysis and its Impact on Indian Stock Market TRENDS IN FISCAL DEFICIT:
Table 4.3: Showing Co-relation between Fiscal Deficit and Sensex returns.
Year
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Fiscal Deficit (%)

5.7 6.2 5.9 4.5 3.9 4 3.3 2.6 5.9 -0.7561
Sensex Returns (%)

-20.65 -17.87 3.52 72.89 13.08 42.33 46.7 47.15 -52.45
Correlation
INFERENCE:
The above table shows the relationship between Fiscal Deficit and Sensex returns. Correlation between these two variables is negative i.e. -0.7561.
ANALYSIS:
It clearly indicates that both the variables moving in the opposite direction. It has indirect impact on stock market returns.
50
A Study on Fundamental Analysis and its Impact on Indian Stock Market TRENDS IN GROWTH RATE OF INDUSTRIAL PRODUCTION:
Table 4.4: Showing Co-relation between growth rate of industrial production and Sensex returns.
Year
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Industrial Production (%)

5 2.7 5.7 7 8.4 8.2 11.6 8.5 2.6 0.7841
Sensex Returns (%)

-20.65 -17.87 3.52 72.89 13.08 42.33 46.7 47.15 -52.45
Correlation
INFERENCE:
The above table shows the relationship between Industrial production and Sensex returns. Industrial Production has a positive relationship (0.7841) with Sensex.
ANALYSIS:
It shows that both the variables are moving in the same direction. So it has direct impact on stock market returns.
51
A Study on Fundamental Analysis and its Impact on Indian Stock Market TRENDS IN INFLATION:
Table 4.5: Showing Co-relation between Trends in Inflation and Sensex returns
Year
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Inflation (%)
7.2 3.6 3.4 5.5 6.5 4.4 5.4 4.7 8.4 -0.4267
Sensex Returns (%)

-20.65 -17.87 3.52 72.89 13.08 42.33 46.7 47.15 -52.45
Correlation
INFERENCE:
There has been negative relationship between Inflation rate and Sensex returns (-0.4267). So it clearly indicates that Inflation has negative impact on the stock market.
ANALYSIS:
It clearly indicates that both the variables are moving in the opposite direction. It shows clearly when inflation is moving up at that time Sensex returns will fall.
52
A Study on Fundamental Analysis and its Impact on Indian Stock Market TRENDS IN GROWTH RATE OF SAVINGS:
Table 4.6 Showing Co-relation between growth rate of savings and Sensex returns.
Year
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Savings (%)
23.5 23.5 26.4 29.8 32.2 33.1 34.4 36.4 32.5 0.4780
Sensex Returns (%)

-20.65 -17.87 3.52 72.89 13.08 42.33 46.7 47.15 -52.45
Correlation
INFERENCE:
The above table shows that relationship between individual savings in the country and Sensex returns. Correlation between the above mentioned variables is positive i.e. 0.4780.
ANALYSIS:
It indicates that both the variables are moving in the same direction. So it shows that individual savings has a direct impact on stock market returns.
53
A Study on Fundamental Analysis and its Impact on Indian Stock Market TRENDS IN FOREIGN EXCHANGE RATE:
Table 4.7: Showing Co-relation between Foreign Exchange Rates and Sensex returns.
Year
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Foreign Exchange Rate

46.62 48.74 47.64 45.08 43.69 44.48 44.03 40.36 51.23 -0.6586
Sensex Returns (%)

-20.65 -17.87 3.52 72.89 13.08 42.33 46.7 47.15 -52.45
Correlation
INFERENCE:
The above table shows that relationship between foreign exchange rate and sensex returns. There has been negative relationship between exchange rate and Sensex (-0.6586).
ANALYSIS:
As above table indicates initially value of money was decreased and the Sensex return increased. In the year 2009 rupee exchange rate moved to 51.23 at the same time Sensex returns moved to negative side (-52.45%).
54
A Study on Fundamental Analysis and its Impact on Indian Stock Market TRENDS IN GROWTH RATE OF MONEY SUPPLY:
Table 4.8: Showing Co-relation between trends in Money Supply and Sensex returns.
Year
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Money Supply (%)

16.8 14.1 14.7 16.8 12 16.9 21.7 21.4 18.6
Sensex Returns (%)

-20.65 -17.87 3.52 72.89 13.08 42.33 46.7 47.15 -52.45
Correlation
0.2936
INFERENCE:
The above table shows that the relationship between Money supply and Sensex returns. It has a positive co-relationship i.e. 0.2936.
ANALYSIS:
It indicates that both the variables are moving in the same direction. So it has a positive impact on stock market returns.
55
A Study on Fundamental Analysis and its Impact on Indian Stock Market COMPANY ANALYSIS: Compounded Annual Growth Rate (CAGR) for Sales
Formula: CAGR Sales = Sales 2009/sales 2006 ^ 1/3-1

Steel Industry
Table 4.9: Showing CAGR-sales of various companies in Steel Industry
Name of the Company

JSW Steel SAIL Tata Steel NMDC
CAGR
31.83 % 15.38 % 17.11 % 26.79 %
Automobile Industry
Table 4.10: Showing CAGR-sales of various companies in Automobile industry
Name of the Company

Hero Honda Maruti Suzuki Bajaj Auto TVS Motors
CAGR (%)
12.35 % 20.05 % -2.61 % 4.92 %
56
A Study on Fundamental Analysis and its Impact on Indian Stock Market Software Industry
Table 4.11: Showing CAGR-sales of various companies in Software industry
Name of the Company

HCL Technologies Ltd Infosys Technologies Ltd. TCS Wipro Ltd.
CAGR (%)
15.52 % 30.93% 25.94 % 26.99 %
Pharmaceutical Industry
Table 4.12: Showing CAGR-sales of various companies in Pharmaceutical Industry
Name of the Company

Cipla Ltd. Ranbaxy Laboratories Ltd. Sun Pharmaceutical Industries Ltd. DR. Reddys Labs
CAGR (%)
20.75 % 6.81 % 31.21 % 27.94 %
57
A Study on Fundamental Analysis and its Impact on Indian Stock Market Cement Industry
Table 4.13: Showing CAGR-sales of various companies in Cement Industry
Name of the Company

ACC Grasim Industries Ambuja Cements Ultratech Cements
CAGR (%)
10.82 % 16.70 % 3.40 % 23.67 %
INFERENCE:
CAGR Measures Companys year-over-year growth rate of an investment. The above table gives clear picture about compounded growth rate of sales from past four years.
ANALYSIS:
Companys like JSW Steel, Maruti Suzuki, Infosys Technologies, Sun Pharmaceuticals and Ultratech Cements is growing rapidly in terms of operating activities (sales). So these companies operating activates had grown rapidly in the four year period.
58
A Study on Fundamental Analysis and its Impact on Indian Stock Market Compounded Annual Growth Rate (CAGR) for EPS
Formula: CAGR EPS = EPS 2009/EPS 2006 ^ 1/3-1

Steel Industry
Table 4.14: Showing CAGR-EPS of various companies in Steel Industry
Name of the Company

CAGR
-25.80 % 15.43 % 3.11 % -56.96 %
Automobile Industry
Table 4.15: Showing CAGR-EPS of various companies in Automobile Industry
Name of the Company

CAGR (%)
9.69 % 0.82 % -1661 % -35.71 %
59
Table 4.16: Showing CAGR-EPS of various Companies in Software Industry
Name of the Company

CAGR (%)
-9.11 % 4.66 % -4.80 % 12.46 %
Table 4.17: Showing CAGR-EPS of various Companies in Pharmaceutical Industry
Name of the Company

CAGR (%)
-20.67 % 9.49 % 34.88 % 6.51 %
60
A Study on Fundamental Analysis and its Impact on Indian Stock Market Cement Industry
Table 4.18: Showing CAGR-EPS of various companies in Cement Industry
Name of the Company

CAGR (%)
9.17 % 24.05 % -13.14 % 61.97 %
INFERENCE:
CAGR is a business and investing specific term for the smoothed annualized gain of an investment over a given time period. In the above table CAGR of Earnings per Share is calculated for past four years.
ANALYSIS:
Companies like SAIL, Hero Honda, Wipro, Sun Pharmaceuticals and Ultratech Cements CAGR- Sales rates are growing rapidly from the past four years.
61
A Study on Fundamental Analysis and its Impact on Indian Stock Market Current Ratio Current Ratio = Current Assets /Current Liabilities Steel Industry
Table 4.19: Showing Current ratio of various companies in steel industry for four years
Name Of the Company

2008-09
0.386 3.268 0.944 23.458
2007-08
0.600 2.245 0.937 19.211
2006-07
0.875 3.469 3.021 -
2005-06
0.9268 2.764 1.058 -
Automobile Industry
Table 4.20: Showing Current ratio of various companies in Automobile Industry for four years
Name Of the Company

2008-09
0.460 0.837 0.791 0.988
2007-08
0.567 1.447 0.729 0.983
2006-07
0.624 1.452 0.639 1.030
2005-06
0.510 1.975 0.592 0.840
Software Industry
62

Table 4.21: Showing Current ratio of various companies in software industry for four years
Name Of the Company

2008-09
1.258 8.247 1.758 1.552
2007-08
0.838 7.137 2.147 2.165
2006-07
1.141 6.711 2.303 1.585
2005-06
0.905 5.936 2.435 1.737
Table 4.22: Showing Current ratio of various companies in Pharmaceutical industry for four years
Name Of the Company

2008-09
3.269 1.212 4.310
2007-08
3.017 0.604 3.364
2006-07
4.096 2.927 8.116
2005-06
2.973 2.652 10.719
2.417
3.047
4.565
3.027
Cement Industry
Table 4.23: Showing Current ratio of various companies in Cement Industry for 4 years
Name Of the Company
2008-09
2007-08
2006-07
2005-06
63

ACC Grasim Industries Ambuja Cements Ultratech Cements 0.67 0.79 0.89 0.59 0.89 0.74 1.26 0.58 0.86 0.85 1.03 0.71 0.77 0.87 1.08 0.67
INFERENCE:
Current Ratio indicates the extent of current assets available to meet current liabilities. The satisfactory level is considered as 2:1. It means company has Rs.2 cash for paying every Rs.1 of liabilities.
ANALYSIS
The above tables shows current ratio of NMDC is highest. Other Companies like Sun Pharmaceutical Industries, Cipla Ltd from Pharmaceutical Industry, Infosys Technologies from Software industry, Maruti Suzuki from Automobile Industry is satisfactory, followed by JSW Steel, Tata steel, Bajaj Auto is very less than the standard level in cement industry where it will face a problem in meeting current obligation.
Debt Equity Ratio D/E ratio = Total Debt / Equity Capital Steel Industry
Table 4.24: Showing Debt Equity ratio of various companies in Steel Industry for four years
64
A Study on Fundamental Analysis and its Impact on Indian Stock Market Name Of the Company
2008-09
1.416 0.269 0.892 3.03
2007-08
0.982 0.132 0.660 3.91
2006-07
0.745 0.241 1.278 4.06
2005-06
0.940 0.341 1.847 3.32
Automobile Industry
Table 4.25: Showing Debt Equity ratio of various companies in Automobile industry for four years
Name Of the Company

2008-09
0.020 0.079 0.839 1.118
2007-08
0.044 0.108 0.840 0.811
2006-07
0.067 1.40 0.293 0.782
2005-06
0.092 1.77 0.307 0.502
Software Industry
Table 4.26: Showing Debt Equity ratio of various companies in Software Industry for four years
Name Of the Company

HCL Technologies Ltd Infosys Technologies Ltd.
2008-09
0.147 -
2007-08
0.007 -
2006-07
0.011 -
2005-06
0.005 -
65

TCS Wipro Ltd. 0.003 0.400 0.001 0.329 0.006 0.025 0.006 0.007
Table 4.27: Showing Debt Equity ratio of various companies in Pharma Industry for four years
Name Of the Company

2008-09
0.216 0.85 0.004
2007-08
0.143 1.052 0.024
2006-07
0.038 1.380 0.436
2005-06
0.236 1.353 1.191
0.121
0.096
0.075
1.408
Cement Industry
Table 4.28: Showing Debt Equity ratio of various companies in Cement Industry for four years
Name Of the Company

2008-09
0.09 0.36 0.03 0.59
2007-08
0.10 0.39 0.05 0.65
2006-07
0.07 0.47 0.07 0.90
2005-06
0.25 0.40 0.25 1.40 66
INFERENCE:
Debt-equity ratio enables the investors to analyze the long term solvency of the company. According to the greatest investor Benjamin Graham (Author of The Intelligent Investor) a company which is having a low Debt- Equity ratio or zero debt in their capital structure is very much appropriate for investment. So the above analysis shows Infosys in a zero debt company.
ANALYSIS:
In the above table solvency position of the TCS Ltd, Hero Honda and SAIL is good. On the other hand Ranbaxy and NMDC Steel are quite high.
67
DIVIDEND PAYOUT RATIO Div Payout ratio = Dividend Per share / Earnings Per share Steel Industry
Table 4.29: Showing Dividend payout ratio of various companies in Steel Industry for four years
Name Of the Company

2008-09
4.405 17.391 23.038 20.036
2007-08
14.696 20.273 23.820 9.610
2006-07
15.603 20.639 21.014 21.360
2005-06
14.396 20.576 20.520 14.432
Automobile Industry
Table 4.30: Showing Dividend payout ratio of various companies in Automobile Industry
Name Of the Company

2008-09
31.157 8.297 48.672 53.435
2007-08
39.199 8.345 36.900 53.238
2006-07
39.571 8.324 33.14 5.357
2005-06
41.118 8.503 35.60 26.369
Software Industry
68

Table 4.31: Showing Dividend payout ratio of various companies in Software Industry
Name Of the Company

2008-09
33.534 23.118 25.046 19.569
2007-08
85.106 47.591 30.388 18.948
2006-07
59.241 18.401 33.862 40.160
2005-06
60.422 49.058 24.311 34.794
Table 4.32: Showing Dividend payout ratio of various companies in Pharmaceutical Industry
Name Of the Company

2008-09
20.020 22.504
2007-08
22.172 20.628
2006-07
23.474 50.867 20.149
2005-06
9.995 81.967 22.088
18.757
13.264
5.051
18.129
Cement Industry
Table 4.33: Showing Dividend payout ratio of various companies in Cement Industry
69
A Study on Fundamental Analysis and its Impact on Indian Stock Market Name Of the Company
2008-09
25.92 15.03 28.19 5.60
2007-08
29.13 13.18 23.55 5.84
2006-07
25.13 15.50 31.06 5.62
2005-06
21.45 18.10 28.73 5.57
INFERENCE:
Dividend Payout ratio shows what percentage share of the net profits after taxes and preference dividend is paid out as dividend to equity shareholders. The above tables show D/P ratio of various companies from five industries has been interpreted.
ANALYSIS:
In the above table Dividend payout ratio of Tata steel, HCL Technologies, Sun Pharmaceutical Laboratories, Ambuja Cement and Bajaj Auto is good. On the other hand companies namely Infosys, ACC Ltd, Ranbaxy Labs is quite attractive.
70
A Study on Fundamental Analysis and its Impact on Indian Stock Market Earnings per Share (EPS) EPS = Earnings / No of equity shares Steel Industry
Table 4.34: Showing Earnings per Share of various companies in Steel Industry
Name Of the Company

2008-09
22.7 14.95 69.45 11.03
2007-08
95.26 18.25 67.17 245.99
2006-07
80.11 15.02 73.76 175.56
2005-06
55.57 9.72 63.35 138.3
Automobile Industry
Table 4.35: Showing Earnings per Share of various companies in Automobile Industry
Name Of the Company

2008-09
64.19 42.18 45.2 1.31
2007-08
48.47 59.91 54.2 1.34
2006-07
42.96 54.06 122.35 2.8
2005-06
48.64 41.16 108.87 4.93
71
Table 4.36: Showing Earnings per Share of various companies in Software Industry
Name Of the Company

2008-09
14.91 101.65 47.91 20.44
2007-08
11.75 78.27 46.07 21.11
2006-07
16.88 67.93 38.39 19.92
2005-06
19.86 88.67 55.53 14.37
Table 4.37: Showing Earnings per Share of various companies in Pharmaceutical Industry
Name Of the Company

2008-09
9.99 13.61 61.1
2007-08
9.02 -27.29 50.9
2006-07
8.52 16.71 33.5
2005-06
20.01 10.37 24.9
33.32
28.27
74.23
27.58
Cement Industry The Oxford College of Business Management, Bangalore

72

Table 4.38: Showing Earnings per Share of various companies in Cement Industry
Name Of the Company

2008-09
85.58 179.76 8.00 78.48
2007-08
64.62 223.35 9.21 80.94
2006-07
76.67 167.53 11.62 62.84
2005-06
65.78 94.16 9.91 18.47
INFERENCE:
It measures the profit available to the equity shareholders on a per share basis, i.e. the amount that they can get on every share held. In the above tables earnings per share has been calculated for four years.
ANALYSIS:
In the above tables NMDC, Bajaj Auto, Infosys, Sun pharmaceuticals and Grasim Industries is generating good profits on the other hand companies like ACC Ltd, Dr. Reddy Labs, TCS, Hero Honda and Tata Steel also quite attractive.
73
A Study on Fundamental Analysis and its Impact on Indian Stock Market INTEREST COVERAGE RATIO: Formula: Interest Coverage Ratio = PBIT/ Interest Steel Industry
Table 4.39: Showing Interest Coverage ratio of various companies in Steel Industry
Name Of the Company

2008-09
2.88 43.20 8.19 -
2007-08
8.20 51.62 9.99 -
2006-07
7.04 33.01 42.59 -
2005-06
5.73 15.77 52.23 -
Automobile Industry
Table 4.40: Showing Interest Coverage ratio of various companies Automobile Industry
Name Of the Company

2008-09
60.93 243.88 52.77 3.43
2007-08
42.85 52.51 254.62 60.34
2006-07
59.28 68.79 280.28 6.56
2005-06
248.07 100.82 4280.03 20.99
74
Software Industry
Table 4.41: Showing Interest Coverage ratio of various companies in Software Industry
Name Of the Company

2008-09
52.47 747.92 7.36
2007-08
58.32 1598.26 34.611
2006-07
105.54 1317.06 492.11
2005-06
63.21 743.03 850.29
Table 4.42: Showing Interest Coverage ratio of various companies in Pharmaceutical Industry
Name Of the Company

2008-09
32.56 10.01 459.14
2007-08
83.89 -0.63 206.27
2006-07
131.01 10.84 67.31
2005-06
69.83 10.99 41.57
50.90
74.21
32.25
18.51

75
Table 4.43: Showing Interest Coverage ratio of various companies in Cement Industry
Name Of the Company

2008-09
27.96 16.34 80.15 12.11
2007-08
42.56 27.56 52.66 20.85
2006-07
24.05 19.88 26.02 14.45
2005-06
19.97 12.53 17.61 4.11
INFERENCE:
It measures the debt servicing capacity of a firm insofar as fixed interest on long term loan is concerned.
ANALYSIS:
In the above table Tata Steel, Bajaj Auto, TCS, Sun Pharmaceuticals and ACC Ltd Companies ratios very good on the other hand SAIL, Maruti Suzuki, Wipro, Cipla and Ambuja Cements ratios also quite attractive. Infosys does not have any debt.
76
PRICE EARNING RATIO (P/E) Formula: P/E = Market price of share / EPS Steel Industry
Table 4.44: Showing Price Earnings ratio of various companies in Steel Industry
Name Of the Company

2008-09
44.63 16.16 8.89 38.40
2007-08
2.40 4.24 3.23 0.67
2006-07
16.47 18.94 12.68 -
2005-06
6.95 9.16 7.61 -
Automobile Industry
Table 4.45: Showing Price Earnings ratio of various companies in Automobile Industry
Name Of the Company

2008-09
26.75 36.98 38.82 66.60
2007-08
16.58 8.68 7.21 16.82
2006-07
16.20 18.39 25.83
2005-06
15.70 22.57 17.69
77
Table 4.46: Showing Price Earnings ratio of various companies in Software Industry
Name Of the Company

2008-09
24.90 25.58 15.65 33.26
2007-08
9.81 14.25 10.37 11.05
2006-07
19.52 26.05 28.06 26.38
2005-06
32.30 25.28 22.00 42.16
Table 4.47: Showing Price Earnings ratio of various companies in Pharmaceutical Industry
Name Of the Company

2008-09
33.53 38.05 24.69
2007-08
20.68 -9.24 20.90
2006-07
24.95 25.46 35.93
2005-06
12.56 37.78 39.45
34.41
16.57
9.86
29.41

78

Table 4.48: Showing Price Earnings ratio of various companies in Cement Industry
Name Of the Company

2008-09
10.19 13.76 13.03 11.64
2007-08
7.43 5.46 7.60 4.76
2006-07
13.36 21.95 12.65 16.12
2005-06
16.51 29.75 14.23 59.53
INFERENCE:
The P/E Ratio reflects the price currently being paid by the market for each rupee of currently reported Earnings per Share. According to Peter Lynch Author of One up on Wall Street, P/E Ratio of the company should be between 9 to12 for good investment.
ANALYSIS:
In the above tables Tata Steel, Hero Honda Motors, TCS, Cipla and ACC Ltd is attractive for investment.
79
A Study on Fundamental Analysis and its Impact on Indian Stock Market RETURN ON EQUITY (ROE) Formula: PAT / Share Capital + Reserves Steel Industry
Table 4.49: Showing Return on Equity of various companies in Steel Industry
Name Of the Company

2008-09
5.76 % 32.34 % 17.23 % 37.57 %
2007-08
22.51 % 38.09 % 17.16 % 39.21 %
2006-07
23.09 % 35.82 % 29.95 % 39.99 %
2005-06
19.66 % 31.84 % 35. 94 % 351.17%
Automobile Industry
Table 4.50: Showing Return on Equity of various companies in Automobile Industry
Name Of the Company

2008-09
33.72 % 17.82 % 35.11 % 3.83 %
2007-08
32.41 % 29.74 % 47.61 % 3.86 %
2006-07
34.73 % 33.26 % 22.36 % 8.22 %
2005-06
48.34 % 32.09 % 23.09 % 15.27 %
80
Software Industry
Table 4.51: Showing Return on Equity of various companies in Software Industry
Name Of the Company

2008-09
28.59 % 32.67 % 34.92 % 23.76 %
2007-08
24.28 % 33.13 % 40.97 % 26.38 %
2006-07
32.16 % 33.83 % 46.62 % 30.49 %
2005-06
24.77 % 35.10 % 48.43 % 31.43 %
Table 4.52: Showing Return on Equity of various companies in Pharmaceutical Industry
Name Of the Company

2008-09
17.85 % 14.44 % 24.56 %
2007-08
18.67 % -29.50 % 24.10 %
2006-07
20.64 % 24.34 % 25. 67 %
2005-06
30.78 % 16.19 % 31.48 %
10.66 %
9.87 %
26.90 %
9.33 %
81
Cement Industry
Table 4.53: Showing Return on Equity of various companies in Cement Industry
Name Of the Company

2008-09
26.70 % 17.39 % 18.82 % 27.13 %
2007-08
24.61 % 25.16 % 24.72 % 37.37 %
2006-07
34.64 % 24.66 % 37.95 % 44.35 %
2005-06
39.19 % 17.34 % 43.06 % 22.13 %
INFERENCE:
It Measures the profitability of a firm from the owners point of view. Worlds greatest investor Mr. Warren Buffetts one of the famous quote is Focus on Return on Equity not on Earnings per Share.
ANALYSIS:
In the above tables SAIL, Hero Honda, TCS, Sun Pharmaceuticals, Ambuja Cements ratios are very much attractive since from past four years.
82
Comparative Analysis of Four Companies in Steel Industry Comparison of Net Sales

Table 4.54: Showing Growth rate of Net sales for various companies in Steel Industry
Year
JSW Steel Tata Steel NMDC SAIL
2006
6,092.39 15,132.09 3,710.92 49.1
2007
8,595.03 17,452.66 4,185.84 265.58
2008
11,391.05 19,654.41 5,711.31 374.94
2009
14,006.59 24,348.32 7,564.03 386.52
Graph 4.3: Showing the growth rate of Net Sales for four companies in Steel Industry
83
Comparative Analysis of Four Companies in Automobiles Industry Comparison of Net Sales

Table 4.55: Showing Growth rate of Net sales for various companies in Automobiles Industry Year Hero Honda Maruti Suzuki Bajaj Auto TVS Motors 2006 9,905.95 12,197.90 7,572.13 3,234.96 2007 9,905.95 14,806.40 9,420.24 3,854.96 2008 10,345.01 18,066.80 8,827.15 3,219.50 2009 12,325.38 20,729.40 8,700.17 3,670.92
Graph 4.4: Showing the growth rate of Net Sales for four companies in Automobile Industry
84
Comparative Analysis of Four Companies in Software Industry Comparison of Net Sales

Table 4.56: Showing Growth rate of Net sales for various companies in Software Industry Year HCL Technologies Ltd Infosys Technologies Ltd. TCS Wipro Ltd. 2006 3,032.92 9,028.00 11,230.50 10,227.12 2007 3,768.62 13,149.00 14,939.97 13,683.90 2008 4,615.39 15,648.00 18,533.72 17,492.60 2009 4,675.09 20,264.00 22,401.92 21,507.30
Graph 4.5: Showing the growth rate of Net Sales for four companies in Software Industry
85
Comparative Analysis of Four Companies in Pharmaceutical Industry Comparison of Net Sales

Table 4.57: Showing Growth rate of Net sales for various companies in Pharmaceutical Industry Year
SunPharmaceuticals 1,291.64 Cipla Ranbaxy Dr. Reddy's
2006
2007
2008
2009
1,662.56 3,561.99 4,293.02 3,783.26
2,368.51 4,203.29 4,652.04 3,343.89
2,774.65 5,234.29 4,781.59 3,999.50
2,981.35 4,165.12 2,003.26
Graph 4.6: Showing the growth rate of Net Sales for four companies in Pharmaceutical Industry
86
Comparative Analysis of Four Companies in Cement Industry Comparison of Net Sales

Table 4.58: Showing Growth rate of Net sales for various companies in Cement Industry
Year ACC 2006 2007 2008 2009
5,731.75
6,894.79 5,671.39 8,643.24
7,229.97 6,182.09 10,241.97
8,021.59 7,083.21 10,877.98
Ambuja Cements 6,226.28 Grasim Industries 6,646.21 Ultratech Cements
3,299.45
4,909.05
5,512.43
6,385.50
Graph 4.7: Showing the growth rate of Net Sales for four companies in Cement Industry
87
INFERENCE:
The above tables and graphs showing that net sales growth rate of various companies in five different industries. It clearly shows that year by year growth in terms of net sales.
ANALYSIS:
By observing above tables and graphs we found that Grasim Industries in Cement, Ranbaxy in pharmaceuticals, TCS in software, Maruti Suzuki in Automobiles and Tata steel in Steel Industry growth rates of net sales is attractive.
88
A Study on Fundamental Analysis and its Impact on Indian Stock Market Comparative Analysis of Four Companies in Steel Industry Comparison of Net Profit
Table 4.59: Showing Growth rate of Net profit for various companies in steel Industry year JSW Steel Tata Steel NMDC SAIL 2006 864.29 3,506.38 1,827.80 4,012.97 2007 1,292.00 4,222.15 2,320.21 6,202.29 2008 1,728.19 4,687.03 3,250.98 7,536.78 2009 458.5 5,201.74 4,372.38 6,174.81
Graph 4.8: Showing the growth rate of Net Profit for four companies in Steel Industry
89
A Study on Fundamental Analysis and its Impact on Indian Stock Market Comparative Analysis of Four Companies in Automobile Industry Comparison of Net Profit
Table 4.60: Showing Growth rate of Net profit for various companies in Automobiles Industry year Hero Honda Maruti Suzuki Bajaj Auto TVS Motors 2006
971.34 1,189.10 1,101.63 117
2007
857.89 1,562.00 1,237.96 66.6 967.88
2008
1,730.80 755.95 31.77
2009
1,281.76 1,218.70 656.48 31.08
Graph 4.9: Showing the growth rate of Net Profit for four companies in Automobile Industry
90
Comparative Analysis of Four Companies in Software Industry Comparison of Net Profit

Table 4.61: Showing Growth rate of Net profit for various companies in Software Industry year HCL Technologies Ltd Infosys Technologies Ltd. TCS Wipro Ltd. 2006
638.38 2,421.00 2,716.87 2,020.48
2007
1,101.82 3,783.00 3,757.29 2,842.10
2008
780.65 4,470.00 4,508.76 3,063.30 997.31
2009
5,819.00 4,696.21 2,973.80
Graph 4.10: Showing the growth rate of Net Profit for four companies in Software Industry
91
Comparative Analysis of Four Companies in Pharmaceutical Industry Comparison of Net Profit

Table 4.62: Showing Growth rate of Net profit for various companies in Pharmaceutical Industry
year Sun-Pharmaceuticals Cipla Ranbaxy Dr. Reddy's
2006
461.29 607.64 380.54 211.12
2007
628.93 668.03 617.72 1,176.86
2008
1,014.04 701.43 -1,044.80 475.22
2009
1,265.29 776.81 571.98 560.9
Graph 4.11: Showing the growth rate of Net Profit for four companies in Pharmaceutical Industry
92
Comparative Analysis of Four Companies in Cement Industry Comparison of Net Profit

Table 4.63: Showing Growth rate of Net profit for various companies in Cement Industry year ACC Ambuja Cements Grasim Industries Ultratech Cements 2006
1,231.84 1,503.25 1,535.81 229.76
2007
1,438.59 1,769.10 1,535.81 782.28
2008
1,212.79 1,402.27 2,047.57 1,007.61
2009
1,606.73 1,218.37 1,647.96 977.02
Graph 4.12: Showing the growth rate of Net Profit for four companies in Cement Industry
93
INFERENCE:
The above table and graphs showing that growth rate of net profit for four companies in five various industries. In above graphs X axis indicates that years and Y axis indicates that Rs. in crores.
ANALYSIS:
By observing above tables companies like Steel Authority of India Limited from Steel industry, Maruti Suzuki from Automobile industry, Infosys Technologies from Software industries, Sun Pharmaceutical Industries from Pharmaceutical Industry, Grasim Industries from Cement industries, growth rates are very much attractive.
94
Beta Analysis Steel Industry

Table 4.64: Showing Beta values for various companies in Steel Industry
Companies
JSW Steel Tata Steel NMDC SAIL
Beta
2.23 1.93 1.69 1.54
Automobiles Industry
Table 4.65: Showing Beta values for various companies in Automobile Industry
Year
Beta
0.53 0.78 1.21 1.1
95
Software Industry
Table 4.66: Showing Beta values for various companies in Software Industry
Year
Beta
1.17 0.65 0.84 1.11
Table 4.67: Showing Beta values for various companies in Pharmaceutical Industry
Year
Sun-Pharmaceuticals Cipla Ranbaxy Dr. Reddy's
Beta
0.35 0.53 0.83 0.57
96
Cement Industry
Table 4.68: Showing Beta values for various companies in Cement Industry
Year
ACC Ambuja Cements Grasim Industries Ultratech Cements
Beta
0.86 1.00 0.95 0.86
INFERENCE:
Beta refers measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. In others the beta of a stock or portfolio is a number describing the relation of its returns with that of the financial market as a whole. An asset with a beta of 0 means that its price is not at all co-related with the market. A positive beta means that the asset generally follows the market. A negative beta shows that the asset inversely follows the market.
ANALYSIS:
The above tables showing clearly Beta values of various companies in five different industries. By observing above tables, companies like Hero Honda (0.53) from Automobile industry, Infosys technologies (0.65) from Software industry, Sun Pharmaceutical (0.35) from Pharmaceutical industry and ACC ltd (0.86) from Cement industry companies Beta values are positive and less than one.
97
A Study on Fundamental Analysis and its Impact on Indian Stock Market CHAPTER- 5 FINDINGS:
Now at the final the following facts emerge from the study security analysis for selecting appropriate security through analyzing economy. As far as the Indian economy is concerned, the GDP is primary factor, has the positive corelation with the sensex/Nifty, which directly affects the overall market and followed by other factor.
Agricultural growth rate has direct influence on stock market and responsible for the
economy to become prospers. It has the co-relation of 0.758 with the sensex indicates the stock market would be prospers only when the agriculture grows well.
A change in inflation has indirect impact on stock market. It has a co-relation of -0.426
with the sensex which indicates that an inflation rates has indirectly co-related to the stock market returns. The savings rate has a positive co-relation with the sensex. In recent years savings rate is growing rapidly in India, which is good sign for growth of the stock market.
When came to the industrial factors Automobiles, Pharmaceuticals and Software industries
likely to grow 10 % p.a. in the coming years.

When come to fundamentals, Infosys Technologies, Sun Pharmaceuticals and ACC Ltd.
are strong compare to other companies.

When compare to specific indicators like CAGR for sales, Return on Equity and current
ratio, the Infosys, Sun Pharmaceuticals and Ultratech cements are doing good, Sales EPS and P/E ratios are encouraging
98
CONCLUSION:
Fundamental Analysis always holds good only if the company statements are revealed clearly and analyzed properly. Investment is serious business and not making decision on vague. Fundamental analysis has direct impact on the stock market. Because it is the performance of the company that affects the stock prices. Better performance raises the value of the stocks where as poor performance reduces the value of stocks. The overall study on fundamental analysis of selected five industries gives the conclusion that, the investors can rate the performances for investment in the following sequence.
Cement industry Automobile Industry Pharmaceutical industry IT industry Steel Industry
99
SUGGESTIONS:
After a close look of economy industries and companies in considering the risk it may be recommended that international economy might affects the firms export prospects, the price competition it faces from competitors, or the profit it makes from abroad. The investors also should consider the budget decision and present years forecast of different sectors. Comparisons between the different budget allocations is also necessary because of companies perform well when potential opportunity exists for industry.
Even though the industry may perform well, the companies in the particular industry may
suffer from lack of ability or any other factor; one should scrutinize the performance of the company, in considering importantly, sales growth, leverages, beats, P/E ratio and Return on Equity ratios. However, there are such things as a final answer to security values, a dozens experts arrive at twelve different conclusions. Market values are fixed only in part by balance sheet and income statement: much more by hops and fears of humanity: by greed, by act of god, where the investor should carefully consider the emotional factors influence the market. Of all the systems, the researcher is of the view that fundamental analysis even today holds good. It demands, may insist on information about the company. It requires subjecting Companys performance and its financial statement to in depth scrutiny. It also calls for the company and industry in which the company operates.
100
BIBLIOGRAPHY:
BOOKS
Prasanna Chandra, 2007, Investment Analysis and Portfolio Management, Second Edition. Security Analysis by Benjamin Graham and David L. Dood, Sixth edition. Security Analysis and Portfolio Management by Punithavathy Pandian.
NEWS PAPERS AND JOURNALS: Business standard Business line. Business standard WEBSITES: www.wikipedia.com www.ibef.com www.rbi.org www.sebi.gov.in www.moneycontrol.com www.bseindia.com www.bseindia.com
101
ANNEXURE Tata Steel Ltd Income Statement

(in Cr.) Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity Reserves EPS CEPS OPM % NPM % 2008 - 09 24,315.77 308.27 24,624.04 -15,182.34 -1,152.69 8,289.01 -973.4 7,315.61 -2,113.87 5,201.74 730.79 23,972.81 69.45 84.5 38.83 21.39 2007 - 08 19,693.28 335 20,028.28 -11,248.61 -878.7 7,900.97 -834.61 7,066.36 -2,379.33 4,687.03 730.78 21,097.43 67.17 75.56 44.58 23.8 2006 - 07 17,552.02 433.67 17,985.69 -10,578.75 -173.9 7,233.04 -819.29 6,413.75 -2,039.50 4,222.15 580.67 13,368.42 73.76 -42.2 24.06 2005 - 06 15,139.39 254.76 15,394.15 -9,207.88 -118.44 6,067.83 -775.1 5,292.73 -1,733.58 3,506.38 553.67 -63.35 -40.86 23.16 2004 - 05 14,498.95 148.03 14,646.98 -8,453.59 -186.8 6,006.59 -618.78 5,387.81 -1,823.12 3,474.16 553.67 7,326.67 62.77 -42.72 23.96
102
JSW Steel Ltd Income Statement

(in Cr.) Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity Reserves EPS CEPS OPM % NPM % 2008 - 09 14,158.42 102.39 14,260.81 -11,958.27 -797.25 1,505.29 -827.66 677.63 -219.13 458.5 187.05 7,422.24 22.7 68.76 16.26 3.24 2007 - 08 11,420.00 257.14 11,677.14 -8,065.40 -440.44 3,171.30 -687.18 2,484.12 -755.93 1,728.19 187.05 7,140.24 95.26 129.13 31.63 15.13 2006 - 07 8,594.44 105.15 8,699.59 -5,886.64 -399.54 2,413.41 -498.23 1,915.18 -623.18 1,292.00 163.98 4,873.38 80.11 -32.73 15.03 2005 - 06 6,180.10 382.96 6,563.06 -4,495.78 -360.32 1,706.96 -405.82 1,301.14 -444.61 856.53 156.98 3,555.12 55.57 -33.45 13.86 2004 - 05 6,679.36 18.98 6,698.34 -4,392.99 -469.87 1,835.48 -359.54 1,475.94 -602.5 870.11 129.04 2,329.97 64.98 -34.51 13.03
103
Income Statement Sun Pharmaceuticals

in Cr.) Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity Reserves EPS CEPS OPM % NPM % 2008 - 09 3,861.55 66.51 3,928.06 -2,689.75 115.96 1,354.27 -58.86 1,295.41 -30.12 1,265.29 103.56 5,047.86 61.1 63.93 32.07 32.77 2007 - 08 2,365.64 911.2 3,276.84 -2,168.53 -1,108.31 -56.11 1,052.20 -38.16 1,014.04 103.56 4,104.06 50.9 51.67 46.85 42.87 2006 - 07 1,662.56 741.49 2,404.05 -1,717.24 -686.81 -46.27 640.54 -11.61 628.93 96.7 2,351.42 33.5 -41.31 37.83 2005 - 06 1,709.38 95.64 1,805.02 -1,275.61 -529.41 -40.73 488.68 -27.39 461.29 92.87 1,370.67 24.9 -30.97 26.99 2004 - 05 1,282.37 24.46 1,306.83 -934.26 -372.57 -28.77 343.8 -16.58 327.22 92.76 -17.6 -29.05 25.52
104
Income Statement Cipla Ltd

(in Cr.) Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity Reserves EPS CEPS OPM % NPM % 2008 - 09 5,257.02 69.75 5,326.77 -4,220.88 -33.96 1,071.93 -170.61 901.32 -124.5 776.82 155.46 4,186.32 9.99 12.19 21.04 14.78 2007 - 08 4,218.45 119.76 4,338.21 -3,357.48 -11.69 969.04 -130.68 838.36 -136.93 701.43 155.46 3,591.39 9.02 10.71 23.25 16.63 2006 - 07 3,572.14 89.13 3,661.27 -2,749.41 -6.96 904.9 -104.08 800.82 -140 660.82 155.46 -8.52 -25.53 18.5 2005 - 06 2,985.72 131.1 3,116.82 -2,319.32 -11.42 786.08 -83 703.08 -103 600.08 59.97 -20.01 -26.71 20.1 2004 - 05 2,181.26 155.24 2,336.50 -1,759.20 -7.63 569.66 -55.05 514.61 -105 409.61 59.97 ---26.47 18.78
105
Income Statement Hero Honda Motors Ltd

(in Cr.) Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity Reserves EPS CEPS OPM % NPM % 2009 - 10 15,860.51 235.63 16,096.14 -13,093.56 20.62 3,023.20 -191.47 2,831.73 -599.9 2,231.83 39.94 3,425.08 111.77 121.35 18.93 14.07 2008 - 09 12,356.88 180.92 12,537.80 -10,607.36 31.68 1,962.12 -180.66 1,781.46 -499.7 1,281.76 39.94 3,760.81 64.19 73.23 15.62 10.37 2007 - 08 10,331.80 185.42 10,517.22 -8,982.43 35.81 1,570.60 -160.32 1,410.28 -442.4 967.88 39.94 2,946.27 48.47 56.49 14.86 9.37 2006 - 07 9,899.96 189.85 10,089.81 -8,726.92 22.99 1,385.88 -139.78 1,246.10 -388.21 857.89 39.94 2,430.12 42.96 -13.77 8.67 2005 - 0 8,713.98 152.73 8,866.71 -7,345.98 6.13 1,526.86 -114.62 1,412.24 -440.9 971.34 39.94 1,969.39 48.64 -17.45 11.15
106
Income Statement Maruti Suzuki

(in Cr.) 2009 - 10 2008 - 09 2007 - 08 2006 - 07 2005 - 06
Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity Reserves EPS CEPS OPM % NPM %
29,623.01 496.76 30,119.77 -25,668.72 -33.5 4,417.55 -825.02 3,592.53 -1,094.91 2,497.62 144.46 11,690.60 86.45 115 15.03 8.43
20,852.52 601.34 21,453.86 -19,020.46 -50.98 2,382.42 -706.54 1,675.88 -457.14 1,218.74 144.46 9,200.37 42.18 66.64 11.67 5.84
17,860.28 963.47 18,823.75 -15,692.91 -59.62 3,071.22 -568.17 2,503.05 -772.23 1,730.82 144.46 8,270.94 59.91 79.57 17.53 9.69
14,653.89 598.41 15,252.30 -12,663.48 -37.63 2,551.19 -271.36 2,279.83 -717.85 1,561.98 144.46 6,709.39 54.06 -17.67 10.66
12,052.24 429.19 12,481.43 -10,425.63 -20.39 2,035.41 -285.42 1,749.99 -560.94 1,189.05 144.46 5,308.11 41.16 -17.06 9.87
107
Income Statement Infosys Technologies Ltd

(in Cr.) Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity Reserves EPS CEPS OPM % NPM % 2009 - 10 21,140.00 910 22,050.00 -13,771.00 -8,279.00 -807 7,472.00 -1,717.00 5,803.00 287 21,749.00 101.22 115.16 -27.45 2008 - 09 20,264.00 502 20,766.00 -13,358.00 -7,408.00 -694 6,714.00 -895 5,819.00 286 17,523.00 101.65 113.86 -28.72 2007 - 08 15,648.00 683 16,331.00 -10,685.00 -5,646.00 -546 5,100.00 -630 4,470.00 286 13,204.00 78.27 87.69 -28.57 2006 - 07 13,149.00 375 13,524.00 -8,924.00 -4,602.00 -469 4,133.00 -352 3,783.00 286 10,876.00 67.93 -34.98 28.77 2005 - 06 9,028.00 144 9,172.00 -6,039.00 -3,133.00 -409 2,724.00 -303 2,421.00 138 6,759.00 88.67 -34.7 26.82
108
Income Statement
TCS (in Cr.) Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity Reserves EPS CEPS OPM % NPM % 2009 - 10 23,044.45 177.6 23,222.05 -16,372.78 -9.54 6,839.73 -469.35 6,370.38 -751.87 5,618.51 -14,820.90 28.61 -29.72 24.38 2008 - 09 22,404.00 -456.24 21,947.76 -16,383.17 -7.44 5,557.15 -417.46 5,139.69 -443.48 4,696.21 -13,248.39 47.91 -24.84 20.96 2007 - 08 18,533.72 445.95 18,979.67 -13,513.61 -3.42 5,462.64 -458.78 5,003.86 -495.1 4,508.76 97.86 10,806.95 46.07 50.76 29.49 24.33 2006 - 07 14,939.97 216.55 15,156.52 -10,639.00 -3.43 4,514.09 -343.41 4,170.68 -413.39 3,757.29 97.86 7,961.13 38.39 -30.24 25.15 2005 - 06 11,214.86 67.95 11,282.81 -7,946.59 -4.49 3,331.73 -257.38 3,074.35 -357.48 2,716.87 48.93 5,560.40 55.53 -29.75 24.23
109
Income Statement ACC Ltd

(in Cr.) Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity Reserves EPS CEPS OPM % NPM % 2008 - 09 8,190.90 77.41 8,268.31 -5,547.52 -84.3 2,636.48 -342.09 2,294.39 -687.66 1,606.73 187.94 5,828.20 85.6 103.69 33.22 19.62 2007 - 08 7,474.15 123.18 7,597.33 -5,526.59 -39.96 2,030.78 -294.18 1,736.59 -523.81 1,212.78 187.88 4,739.85 64.63 80.21 27.71 16.23 2006 - 07 7,007.17 128.8 7,135.97 -4,876.67 -23.94 2,235.36 -305.07 1,930.29 -491.7 1,438.59 187.83 3,964.78 76.75 92.83 32.24 20.53 2005 - 06 5,803.48 131.48 5,934.96 -4,180.26 -52.03 1,702.67 -254.25 1,448.42 -387.66 1,231.84 187.48 2,955.16 66.02 -30.24 21.23 2004 - 05 3,203.41 114.15 3,317.56 -2,683.97 -63.76 569.83 -164.37 405.46 -139.94 544.18 184.72 1,951.21 30.02 -19.78 16.99
110

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Income Statement Grasim Industries Ltd

(in Cr.) Revenue Other Income Total Income Expenditure Interest PBDT Depreciation PBT Tax Net Profit Equity Reserves EPS CEPS OPM % NPM % 2008 - 09 10,940.36 214.07 11,154.43 -8,307.48 -142.14 2,704.81 -456.97 2,247.84 -599.88 1,647.96 91.69 9,372.08 179.73 229.57 26.02 15.06 2007 - 08 10,278.09 314.8 10,592.89 -7,122.72 -107 3,363.17 -353.27 3,009.90 -962.33 2,232.60 91.69 8,040.52 243.49 282.02 33.76 21.72 2006 - 07 8,675.69 209.66 8,885.35 -6,266.34 -111.84 2,507.17 -317.91 2,189.26 -690.55 1,535.81 91.69 6,134.46 167.5 -30.19 17.7 2005 - 06 6,655.67 169.07 6,824.74 -5,233.88 -97.32 1,493.54 -291.64 1,201.90 -342.82 863.21 91.69 4,886.11 94.14 -23.9 12.97 2004 - 05 6,247.07 169.38 6,416.45 -4,631.76 -138.76 1,645.93 -284.57 1,361.36 -418 885.71 91.69 4,231.96 96.6 -28.57 14.18
111

A Study On Fundamental Analysis and Its Impact On Indian Stock Market

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A Study on Fundamental Analysis and its Impact on Indian Stock Market

The Oxford College of Business Management, Bangalore