INDEX

S. NO TABLE OF CONTENT PAGE NO

1.1 INTRODUCTION OF THE STUDY 2

1.2 NEED OF THE STUDY 3

1.3 IMPORTANCE OF THE STUDY 4

1.4 SCOPE OF THE STUDY 5

1.5 OBJECTIVES OF THE STUDY 6

1.6 RESEARCH METHODOLOGY 7-8

1.7 LIMITATIONS OF THE STUDY 9

1
1.1 INTRODUCTION OF THE STUDY

India is a developing country. Nowadays many people are interested to invest in financial
markets especially on equities to get high returns, and to save tax in honest way. Equities
are playing a major role in contribution of capital to the business from the beginning.
Since the introduction of shares concept, large numbers of investors are showing interest
to invest in stock market.

In an industry plagued with skepticism and a stock market increasingly difficult to predict
and contend with, if one looks hard enough there may still be a genuine aid for the Day
Trader and Short Term Investor.

The price of a security represents a consensus. It is the price at which one person agrees
to buy and another agrees to sell. The price at which an investor is willing to buy or sell
depends primarily on his expectations. If he expects the security's price to rise, he will
buy it; if the investor expects the price to fall, he will sell it. These simple statements are
the cause of a major challenge in forecasting security prices, because they refer to human
expectations. As we all know firsthand, humans’ expectations are neither easily
quantifiable nor predictable. If prices are based on investor expectations, then knowing
what a security should sell for (i.e., fundamental analysis) becomes less important than
knowing what other investors expect it to sell for. That's not to say that knowing what a
security should sell for isn't important--it is. But there is usually a fairly strong consensus
of a stock's future earnings that the average investor cannot disprove

Fundamental analysis and technical analysis can co-exist in peace and complement each
other. Since all the investors in the stock market want to make the maximum profits
possible, they just cannot afford to ignore either fundamental or technical analysis.

2
1.2 NEED OF THE STUDY
To start any business capital plays major role. Capital can be acquired in two ways by
issuing shares or by taking debt from financial institutions or borrowing money from
financial institutions. The owners of the company have to pay regular interest and
principal amount at the end.

Stock is ownership in a company, with each share of stock representing a tiny piece of
ownership. The more shares you own, the more of the company you own. The more
shares you own, the more dividends you earn when the company makes a profit. In the
financial world, ownership is called “Equity”.
Advantages of selling stock:

 A company can raise more capital than it could borrow.

Stock/shares play a major role in acquiring capital to the business in return investors are
paid dividends to the shares they own. The more shares you own the more dividends you
receive.

The role of equity analysis is to provide information to the market. An efficient market
relies on information: a lack of information creates inefficiencies that result in stocks
being misrepresented (over or under valued). This is valuable because it fills information
gaps so that each individual investor does not need to analyze every stock thereby making
the markets more efficient.

3
1.3 IMPORTANCE OF THE STUDY
The role of equity research is to provide information to the market. A lack of information
creates inefficiencies that result in stocks being misrepresented (whether over or
undervalued). The main purpose of equity research is to provide insights into a company’s
financial performance and highlight the potential risks posed to its investors. It enables
investors to make informed decisions before entering into an agreement for buying a stock or
bond.

4
1.4 SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The project is

based on tools like fundamental analysis and ratio analysis. Further,

 the study is based on information of last five years from India Infoline ltd.

 The analysis is made by taking into consideration three companies the scope of the

study is limited for a period of five years.

 The scope is limited to only the fundamental analysis of the chosen stocks.

 To suggest and select best equity share for investment management in Indian stock

market

5
1.5 OBJECTIVES OF THE STUDY

The objective of this project is to deeply analyze our Indian Automobile Industry for

investment purpose by monitoring the growth rate and performance on the basis of historical

data form India info line ltd.

The main objectives of the Project study are:

 Detailed analysis of Automobile industry which is gearing towards international

standards

 Analyze the impact of qualitative factors on industry’s and company’s prospects

 Comparative analysis of three tough competitors of selected equity shares through

fundamental analysis.

 Suggesting as to which company’s shares would be best for an investor to invest.

6
1.6 RESEARCH METHODOLOGY

Research design or research methodology is the procedure of collecting, analyzing and

interpreting the data to diagnose the problem and react to the opportunity in such a way

where the costs can be minimized and the desired level of accuracy can be achieved to arrive

at a particular conclusion.

The methodology used in the study for the completion of the project and the fulfillment of the

project objectives.

The sample of the stocks for the purpose of collecting secondary data has been selected on

the basis of Random Sampling. The stocks are chosen in an unbiased manner and each stock

is chosen independent of the other stocks chosen. The stocks are chosen from the automobile

sector.

The sample size for the number of stocks is taken as 3 for fundamental analysis of stocks as

fundamental analysis is very exhaustive and requires detailed study.

Secondary sources

The sample of the stocks for the purpose of collecting secondary data has been selected on

the basis of Importance of security. The stock is chosen from the pharmacy and health care

sector.

Sample size:- 3 companies are taken for analysis

7
STATISTICAL ANALYSIS: -

The relative strength index (RSI) is computed with a two-part calculation that starts with the
following formula:

he relative strength index (RSI) is computed with a two-part calculation that starts with the
following formula:

The very first calculations for average gain and average loss are simple 14-period averages:

First Average Gain = Sum of Gains over the past 14 periods / 14.

First Average Loss = Sum of Losses over the past 14 periods / 14

The second, and subsequent, calculations are based on the prior averages and the current gain
loss:

Average Gain = [(previous Average Gain) x 13 + current Gain] / 14.

Average Loss = [(previous Average Loss) x 13 + current Loss] / 14.

The average gain or loss used in the calculation is the average percentage gain or losses
during a look-back period. The formula uses positive values for the average losses.

8
1.7 LIMITATIONS OF THE STUDY

 This study has been conducted purely to understand Equity analysis for investors.

 The study is restricted to three companies based on Fundamental analysis.

 The study is limited to the companies having equities.

 Detailed study of the topic was not possible due to limited size of the project.

 There was a constraint with regard to time allocation for the research study i.e. for a

period of 45 days.

 Suggestions and conclusions are based on the limited data of one.