ICFAI BUSINESS SCHOOL MUMBAI

INTERIM REPORT ON
FUNDAMENTAL AND TECHNICAL ANALYSIS OF PHARMACEUTICAL
SECTOR

By
Tanupriya Sabnani
Enrolment no. – 18BSP1285
Email – [email protected]
Contact no. – 9407594034

Future Generali India Life Insurance Company Limited

Company Guide: Mr. Iqbal Singh Bansal
(Senior Branch Manager)
Contact Details: 9820809429
Address: 1st Floor RPT house, sec - 24,
plot no. - 6, Sanpada , Near Shikara Hotel
Navi Mumbai – 400078, Mumbai (Maharashtra)

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 INTERIM REPORT
ON
FUNDAMENTAL AND TECHNICHAL ANALYSIS
PHARMACEUTICHAL SECTOR

SIP DURATION: 19th March – 17th May

Area of specialisation - FINANCE

A report submitted in partial fulfilment of

the requirements of
PGPM Program of
IBS Mumbai

Faculty Guide:
Prof. Anant Amdekar

Date of Submission: 15th April’ 2019

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 ABSTRACT
The report is associated with FUTURE GENERALI INDIA LIFE INSURANCE COMPANY LIMITED which is a joint
venture between three leading groups: Future Group, Generali Group, Industrial Investment Trust Limited (IITL).

OBJECTIVE OF THE STUDY

The main objective of this report is to analyse the movements as well as the investment risks of stocks in

pharmaceutical sector, by applying various tools and techniques which will also help to get an experience on

application of theoretical models into practice. The study will help to understand whether the efficiency of a

stock can be measured using techniques in order to identify movements and forecast the future movements.

And also to arrive at an investment strategy which will optimize returns for pharmaceutical sector.

PURPOSE OF THE TOPIC CHOSEN

The US$33 billion Indian pharmaceutical industry is one of the fastest growing sectors in the country. India

also has the distinction of being the hub for low cost drugs, and it has emerged as the largest exporter of

generic drugs. The country’s pharmaceutical industry is also expected to expand at a CAGR of 22.4% over

2018-2020 to reach US$55 billion, making huge growth opportunities for this sector. Pharmaceutical sector is

also considered as the most uncertain sector as the fluctuations in the stock prices of the companies are the

most. So the purpose is to find out how the fundamental and technical analysis will affect the decision

making to invest in this sector.

ACTIVITIES UNDERTAKEN
 Classroom training
 Live trading
 Group discussions
 Kept a track on the movements of the prices of the sector

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 INTRODUCTION

RELEVANCE
Indian companies are expanding globally and getting themselves listed in foreign exchanges, which also
expose the companies to various kinds of risks from different economic, political, cultural and other
global uncertainties. And India’s pharmaceutical companies are growing enormously well but also facing some
risks like patent cliffs, increased competition from generic drugs, product liabilities, legal, regulatory and
technological challenges every day. This resists the investors to invest in the pharmaceutical sector. So for
making the investors to invest in such market, it is necessary to do a proper analysis of the whole sector as
well as of the companies.
Analysis can be done in two ways Fundamental and Technical
Fundamental analysis is a stock valuation method that uses financial and economic analysis to predict the
movement of stock prices. It involves examination of financial data, management, business concepts and
competition and then it combines economic, industry and company analysis to derive stock’s current fair
value and forecast the future value.
Technical analysis is the method of forecasting the direction of prices by studying the past market data which
comprises of price and volume of a particular stock with the help of charts and statistics.
These tools help the investors rightly in their investment decisions.

VALUE IN MBA CAREER

The topic will give me a clear understanding of the market – about how it operates and by doing financial
analysis I will learn how to examine the financial data of the companies and use the findings to help
companies make business.

This internship will also polish my professional skill through observation and practice, and it will help me learn
meeting etiquette and gain confidence in talking to people at all levels of the organisation.

Overall, it will improve my conceptual as well as technical skills.

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 WORK DONE TILL DATE ON THE JOB

At Future generali India life insurance company limited we started with a 3-week classroom training

programme were we get to know about the theoretical and fundamental learning of the Indian market

(Indian Indices – NSE and BSE) and about the market capitalization of companies along with Mutual funds,

basics of Derivative market and the types of risks which are involved, like:

 Systematic risk
 Default risk
 Market risk
 Business risk
 Reputation risk

After the classroom training programme we headed towards live trading, so that we can get the experience of

the live market and can apply the theoretical knowledge in practice by applying different tools and techniques

like fundamental and technical.

Fundamental analysis is the examination of the underlying forces that affect the wellbeing of the economy,

Industry groups, and companies. The main goal is to derive a forecast and profit from future price

movements. There are different kind of ratios which we need to do while doing fundamental analysis:

EARNING PER SHARE (EPS)

Earnings per share or EPS is an important financial measure, which indicates the profitability of a company. It

is calculated by dividing the company's net income with its total number of outstanding shares.

PRICE TO SALES (P/S)

It is an indicator of the value placed on each dollar of a company's sales or revenues. The P/S ratio can be

calculated either by dividing the company's market capitalization by its total sales over a designated period –

usually twelve months, or on a per-share basis by dividing the stock price by sales per share.
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PRICE TO EARNING (P/E)

The price to earnings ratio indicates the expected price of a share based on its earnings. As a company's
earnings per share being to rise, so does their market value per share. A company with a high P/E
ratio usually indicated positive future performance and investors are willing to pay more for this company's
shares.

RETURN ON EQUITY (ROE)

The return on equity ratio or ROE is a profitability ratio that measures the ability of a firm to generate profits
from its shareholder’s investments in the company.

PRICE EARNING GROWTH RATIO (PEG)

The PEG ratio enhances the P/E ratio by adding in expected earnings growth into the calculation. The PEG
ratio is considered to be an indicator of a stock's true value, and similar to the P/E ratio, a lower PEG may
indicate that a stock is undervalued.

Technical analysis

Technical analysis is the study of historical market data which is used to forecast the direction of
future price movements. And it majorly operates on the basis of the prices and the volatility of the
stocks.

CANDLE STICKS

Candlestick charts are the most common form of charts used in today’s world. Green candles are
generally used to depict bullish candles, where current price is higher than the opening price and the
Red candle is common for bearish candles, where current price is below the opening price. It has a
data set that contains open, high, low and close for each time frame.

BOLINGER BAND

It uses a simple moving average and plots two lines and the two standard deviations above and below
it to form a range. It is also used by traders using a mean reversion strategy where price moving
above or below the bands is “stretched” and potentially expected to revert back inside the bands. The
band automatically widens when volume increases and narrows when volume decreases.

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RELATIVE STRENGTH INDEX (RSI)

It is a momentum oscillator that compares the magnitude of gains and losses to determine the
overbought and oversold conditions. It shows a standardized scale (ranging 0-100) designed to
determine the rate of change over a specified time period.

MOVING AVERAGE CONVERGENCE AND DIVERGENCE (MACD)

Moving Average Convergence Divergence (MACD) is a trend following momentum indicator that shows the
relationship between two moving averages of a security’s price. It is calculated by subtracting the 26
days Exponential Moving Average(EMA) from the 12 days EMA. A nine-day EMA of the MACD, called the
"signal line," is then plotted on top of the MACD line, which can function as a trigger for buy and sell signals.
Traders may buy the security when the MACD crosses above its signal line and sell - or short - the security
when the MACD crosses below the signal line.

OFF THE JOB WORK DONE

 Kept a track on the movements of stocks on a daily basis.

 Read newspaper (ET) in order to keep a record on all the news regarding the stocks.
 Hands on guidance from the company as well as the faculty guidance.
 Browse through websites for additional information.

INTERACTION

One to one interaction with the company guide.

LEARNINGS

 Got a hands on experience on application of theoretical models into practice.

 Understood the importance of risk management that will further help in optimising returns.

SOURCE OF DATA COLLECTED

All the data was collected from the secondary source:

 Money control
 Economic times
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