A

PROJECT REPORT
ON

CAPITAL MARKETS, FINANCIAL

INTERMEDIATION, AND INVESTMENT
ANALYSIS

FOR THE PARTIAL FULFILMENT OF

P.G.D.B.A. PROGRAMME

SUBMITTED BY:
ANCHAL BAJAJ
REGISTRATION NO. 200717223

SUBMITTTED TO:
SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
MY ENROLLMENT DATE : JULY 2007
 PROJECT PROPOSAL

Name of the Learner : Miss Anchal Bajaj

Registration No. : 200717223
Program Name : PGDBA
Address : 8-B, Ratnashyam Apartment
RaviDham Complex,
B/H, Panjrapole,
Ghoddod Road,
Surat.395001
Gujarat

CAPITAL MARKETS, FINANCIAL INTERMEDIATION, AND

INVESTMENT ANALYSIS
Investing in various types of assets is an interesting activity that attracts people from
all walks of life irrespective of their occupation, economic status, education and
family background. When a person has more money than he requires for current
consumption, he would be coined as a potential investor. The investor who is having
extra cash could invest it in securities or in any other assets like gold or real estate or
could simply deposit it in his bank account. Sometimes it becomes difficult for a
potential investor to choose from various sources of alternatives.

The base of an economy rests on the working of the strong financial system and
various financial intermediaries. Banks are like pillars of the financial system that
helps in mobilizing and pooling of the savings, producing possible information about
various investment patterns, ease out exchange of goods and services and helps a
country grow faster.

The title of the report “Capital Markets, Financial Intermediation, and

Investment Analysis” itself suggests that the report is based on the working of the
profit from equity shares. This report might help the prospective investors to choose
among the securities before investing in their hard earned money.
The report starts with the introduction to financial services along with the industry
and company profile. The industry is the financial services industry and the company
where the project has been undertaken is India Infoline Ltd., one of the top most
broking firms and provider of various other financial services. Detailed information of
equity share is given in the theoretical framework.

The research methodology represents the views of various research design and
CRAMEL model. The research is exploratory in nature and the study is based on
various studies at the institute and online and also based on the knowledge acquired at
the college.
Then comes the detailed study of the world economy, Indian economy, the profitable
security analysis of eight different firms BHEL, RIIL, RNRL, ORCHID, ISPAT,
JETAIR, INDIAINFOLINE, ARVINDMILL LTD. which are selected as their market
capitalization. Ranks are given as per the ratios derived and their performance.
Conclusion is given at the end along with necessary reasons of the choosing the best
security. All the books, articles and various websites referred are clearly stated in the
section of bibliography.

This report is purely based on researcher’s study and hope it provides a useful
guidance to the investors to make profit by investing their hard earning money in
equity shares.
 NO OBJECTION CERTIFICATE

This is to certify that Anchal bajaj is permitted to use relevant data/information of

this organization for her project in fulfillment of the PGDBA Program.

We wish her all the success.

Seal Signature

Place: Surat
Date: 01/12/2010
 DECLARATION BY THE LEARNER

This is to declare that I have carried out this project work myself in part fulfillment of
the PGDBA Program of SCDL.
The work is original, has not been copied from anywhere else and has not been
submitted to any other University/Institute for an award of any degree/diploma.

Date: 01/12/2010 Signature:

Place: Surat Name: Anchal Bajaj
 CERTIFICATE OF SUPERVISOR (GUIDE)

Certified that the work incorporated in this Project Report “CAPITAL MARKETS,
FINANCIAL INTERMEDIATION, AND INVESTMENT ANALYSIS”

Submitted by : Anchal Bajaj is her original work and completed under my

supervision.
Material obtained from other sources has been duly acknowledged in the Project
Report

Date: 01/12/2010 Signature of Guide:

Place: Surat
 BRIEF CONTENTS

Sr. NO. CONTENTS PAGE NO.

1 INTRODUCTION 1-5

2 INDUSTRY PROFILE 6-15

3 COMPANY PROFILE 16-27

4 THEORETICAL FRAMEWORK 28-55

5 RESEARCH METHODOLOGY 56-61

6 FINDING AND ANALYSIS 62-98

7 CONCLUSION 199-101

8 BILIOGRAPHY 102-103

CONTENTS
1. Introduction

 Investing in stock market………………………………… 2

 Finding a broker…………………………………………….. 2

 Understanding stock fundamental……………………….. 3

 Understanding stock technical……………………… 3

 Choosing stocks……………………………………………….. 4

 When to sell…………………………………………..….. 5

2. Industry profile

 Financial market……………………………………..…. 7

• Definition………………………………………. 7

• Type of financial market………………………….... 8

 Trading pattern in the Indian stock market………..... 8

 Over The Counter Exchange of India (OTCEI)………… 9

 National Stock Exchange………………………….…. 10

 Financial services …………………….……….….. 12

• Stock market ……………………………….………….….. 12

• Private equity……………………………...…………... 13

• Mutual funds……………………………………...…….... 13

• Banking industry…………………………………..……... 14

• Insurance…………………………………………….…… 14

• Debt market………………………………………….…… 15

 India emerged third most profitable equity market …………...... 15

3. Company Profile

 Introduction……………………………………………….... 17

 Profile of India Infoline………………………………..….. 17

 Board of director…………………………………………..…….. 18

 Corporate office…………………………………….………. 19

 Awards………………………………………………………… 19

 Key milestone…….………………………………………….…... 19

 India Infoline group…………..………………………….…. 20

• India Infoline Ltd. ………………………….... 21

• India Infoline Ltd. Media and Research service Ltd. .….. 21

• India Infoline . Commodities Ltd. ……………… 21

• India Infoline Marketing and Services…………...…… 22

• India Infoline Investment Services Ltd. ……… 22

 Products and services…………………………………….… 23

• Equities……………..………………………….….… 23

• Portfolio Management Service (PMS)……………… 24

• Research …………………………………………….…. 24

• Commodities………………………………… 24

• Mortgages…………………………………...…. 25

• Home loans…………………………………..…… 25

• Personal loans……………………………………….….… 25
 • Invest in MF…………………………………….…… 25

• Apply for IPOs………………………………………. 25

• Wealth management service…………………………… 26

 Key features….……………………………………..……. 26

 Salience feature of India Infoline………………..…………. 26

4. Theoretical Framework
Indian Financial System…………………………………………... 30

 Financial Instruments………………………………………... 31

• Money Market Instruments……………………………….. 31

o Call/Notice-Money Market………………… 32

o Inter-Bank Term Money………………….. 32

o Certificate of Deposits……………………. 33

o Commercial Paper………………………………… 33

• Capital Market Instruments……………………………….. 34

o Hybrid Instruments…………………………….…… 34

 Indian capital market …………………………... 35

 Capital market……………………………………. 36

• Industrial security market………………… 36

o Primary market………………………………… 37

o Secondary market……………………………… 37

• Government security market…………………………… 37

• Long term loan market…………………………….…… 37

 Indian equity market…………………………………………... 37

• Definition of equity …………………….…… 39

• Market value of share……………………...…… 39

• General…………………………………………. 39

• Business and Economics…………………..…… 40

• Organization………………………………. 40

• Advantage and disadvantage of equity finance…… 40

 Stock market prediction………..…………………..…..… 41

• Prediction methods…………………………… 42

o Fundamental analysis……………………..…… 42

o Technical analysis………………………...… 42

 The role of stock exchange………………………...…… 42

 Alternative equity investment……………………………. 44

• Contract For Differences(CFDs)………….. …….. 44

• Equity Derivatives.....……………………….…………….. 45

• Stock index future………………………………………….. 46

• ETFs (Exchange Trade Funds)………………… ………. 47

• Ethical investing……….……………………………….. 47

• Islamic investment…………………………………. 48

• Offshore equity investment…………………… 49

 Difference between Debt and Equity…………………... 50

  Share price determination…………………………………… 53

 Stock market bubble……………………………………………… 54

 Stock market crash…………………………………………. 54

5. Research Methodology
Research Methodology………………………………..…………. 57

 Problem statement…………………………………………… 57

 Research objectives…………………………………….. 57

• Primary objective………………………………… 57

• Secondary objective……………………………… 57

 Scope of the study………………………………………… 58

 Research design………………………………… 58

 Data collection………………………………..…………….. 59

 Importance of the study………………………………………… 59

 Analysis and interpretation…………………………………….. 60

 Limitations of the study…………………………………... 60

CRAMEL Model………………………………... 60
6. Financial Analysis

 Forecast macroeconomics influences…………………………….. 63

 Determine industry effects……………………………………... 63

 Perform firm analysis………………………………... 63

 Company Vs. Stock Analysis………………………….. 65

• Defensive company Vs. Defensive stock………………... 66

 • Cyclical company Vs. Cyclical Stock…………………… 66

• Speculative company Vs. Speculative Stock……………. 66

• Growth stock Vs. Value Stock………………………... 66

 Market capitalization of firms………………………….. 67

 What are Large cap, Mid cap and Small cap in market apitalization.68

• Firms of Large Cap

1. Bharat Heavy Electric Ltd. ……………… 70

2. Reliance Industrial Infrastructure Ltd. ………… 71

3. Reliance Natural Resource Ltd. ……………………… 72

• Firms of Mid Cap

1. India Infoline Ltd.………… ………….. 73

2. Jet Airways (India) Ltd. …………………… 75

3. Ispat Industry Ltd. …………………………… 76

4. Orchid Chemical and Pharmaceutical Ltd………....… 77

• Firms of Small Cap

1. Arvind Ltd……………………………………. 78

 Significant factors for company analysis. …………. 79

 Various tools of financial statement analysis.……… …… 80

 Graphical analysis of profitable measures

1. P/E Ratio (01/12/2010) …………… 83

2. Net sales of the firms (Cr.) …………………………… 84

3. EPS (Rs.) …………………………… 85

4. Book value per share (Rs.) …………….….….. 86

 5. Equity share capital (Cr.) …………………….. 87

6. Dividend per share (Rs.) ……………..… 88

7. Operating profit per share (Rs.) ……………. 89

8. Gross profit margin (%)……………..…... 90

9. Net profit margin (%)…………………. 91

10. Long term debt/equity capital………………

92

11. Total debt/ equity capital……………..…

93

12. Fixed asset turnover ratio…………………..

94

13. Current ratio…………….…..…

95

14. Quick Ratio (Acid Test) ……………..…..…

96

15. Dividend payout ratio (Net profit) ……………..…

97

 Ranking structure of the firms………………….. 98

 7. Conclusion………………………… 100

8. Bibliography

 Books…………………………………..…. 103

 Magazine…………………………………….….... 103

 Websites ………………………………... 103

 Detailed Information Of guide

Name : kaushal Patel

Address : Shop no. 4, J.D. Complex,

35,Ravindra park soc.,

Swami Vivekanand Bridge Road,

Adajan Patia,

Surat-395009

Designation : Channel partner [FAN: Branch Manager]

Special Field Of Work: Advisor in finance and all types of investments schemes

Experience : 3 years experience as a Franchisee manager in IndiaInfoline