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1 INTRODUCTION
Stock investments are high risk high return investments requiring extensive preparation, knowledge, and understanding. Generally, a stock represents ownership within a company and is freely tradable in open markets. The performance of stock investments is updated every single day and can be monitored through a variety of electronic and print resources. In fact, the entire economy of the world rides on the various stock markets that are out there. The best way to break into the stock market is by getting help from a professional broker. There are plenty of them out there, but you need to look for one that will meet all of your needs. This person should also be able to talk to you, especially when you do not understand something that is going on. Make sure to take your time when you are looking and find the one that is best for you. Regardless of what you are going for, stock investments are one of the best ways to grow your wealth. There are tons of different choices out there when you are looking for such a chance to make money, so be sure that you take your time and are careful in finding the one that is perfect for you. Perhaps in a few years you will be able to look back and show how far a company has really come by how much money they have made you. Stock investments are important to people who want to grow their wealth. No matter what your end goal is, you should always consider the option to get stock investments along with your more low risk choices. You can often find a stock that will interest you and then you can claim some kind of ownership in a company that you philosophically back. Regardless of the goals, make sure to look at a variety of different stock investments before you choose which one to go with. There are different arenas for stock investment which are diversified in different sectors. Grouping stocks by sectors provides several advantages. First, it's more effective to gauge a particular company by comparing it to similar companies. This can cancel out economic effects that reach the entire sector while revealing gains or losses in market share or margins. Additionally, it's easier for investors to evaluate the economy as a whole by seeing which

sectors are performing best. Sectors can be divided in different ways. There are nine major sectors, each of which is further divided into individual industries. Basic Materials

As the name suggests, the basic materials sector is composed of companies that provide commodities and raw materials for business. This includes metals, from aluminum and copper to gold and silver, as well as oil, natural gas, chemicals, synthetics and more.

Conglomerates

Conglomerates are diversified companies that transcend traditional sector comparisons. Because they don't neatly fall into any individual category, they are grouped separately.

Consumer Staples

Consumer staples are retail products that are more or less essential for modern life. These include food, clothing, beverages and hygiene products. While companies in this sector do not typically grow quickly, they are often believed to be the best positioned in economic recession because consumers do not significantly reduce their purchases of staple products.

Financial

The financial sector is made up of investment and commercial banks as well as real estate trusts and credit card services companies. From regional banks to money center banks, companies that function in the financial sector are grouped together in this category of stocks.

Healthcare

The healthcare sector is very diverse. It includes medical service providers as well as insurance companies, equipment manufacturers and biotech companies. Within the healthcare sector you will find stocks of companies that own and run hospitals or long-term care facilities, as well as the companies that produce and deliver the drugs, equipment and products used in those facilities.

Industrial Goods

The industrial goods sector is where you'll find the stocks of heavy industry. Everything from cement to lumber, waste management to equipment manufacturing is included here. If it involves a factory or a hardhat, chances are it's in this sector.

Services

The services sector is one of the broadest of all. Most companies whose profits depend on providing a service rather than making a product are grouped into the services sector. This includes providers of cable TV and Internet, as well as trucking, airlines, publishing and auto repair.

Technology

The tech sector is one of the most exciting. This is where you'll find the stocks of household names like Microsoft, Apple and Google. It's also where you'll find stocks of companies that supply these bigger name stocks or produce hardware used in communications technology in general.

Utilities

Gas, water and electricity companies are heavily regulated, but are for-profit corporations nonetheless. Because profits are usually capped by state or federal regulations, growth in the utility sector is often muted, but predictable.

This study is centered on the analysis of the performance of five securities in power sector which forms a component of utility sector. The development of utility sector is very crucial for a developing country like India since it directly contributes to the infrastructural development. Power sector is therefore one of the priority sectors which paves the path towards progress and therefore the study of these securities is relevant in todays investment climate. Five companies in power sector are taken for the study which is selected on the basis of CAGR( Cumulative Annual Growth Rate). They are NTPC, Power Grid, Tata Power, Torrent Power and Reliance Infra.

The study is done with the guidance of experts in Hedge Equities, which is one of the leading stock broking firm based in Kerala. The firm endeavor to become a well reputed financial services super-mart catering to the evolving needs and unique requirements of clientele, and partnering with them to Build, Manage, and Grow their Wealth . Hedge Equities is coming together of 25 years of cutting edge experience of the founders in various industries backed with a strong expertise in global financial markets. The board comprises of veterans from six power houses in their respect area: FedEx securities, Baby Marine Exports, Thakker developers, Smart Financial, SM Hedge (CFO Videocon industries) and Padmasree Mohanlal.

1.3 OBJECTVES OF THE STUDY

To analyze the performance of five leading companies in power sector To Identify the risk, growth, and other related variables of the securities

selected. To Assess the future potential of the leading companies within the industry

1.2 SCOPE OF THE STUDY

The study is an attempt to analyze the financial and future investment prospective of the key players from power generation sector of the economy and to understand the performance of 5 major securities in power sector and to identify which among them is superior in terms of investment to capital investors and to Hedge Equities, a leading stock broking firm in particular for necessitating leads to their investment clients.

1.4 DURATION OF THE STUDY

The study was conducted for a period of 45 days, extending from 4 th April 2011 to 22nd May 2011

1.5 RESEARCH METHODOLOGY INTRODUCTION An appropriate method of research is behind the success of any survey. It provides a scientific framework of plan conduction research investigation. Research methodology is the way to systematically solve the research problem. The role of research related to business or to the economy as a whole greatly increased in modern times. The increasingly complex nature of business and government has focused attention on the use of research in solving of operational problems. Operation research and market search along with multinational

research are considered crucial and their result assists managers of any organization in more than one way in taking decisions.

RESEARCH

Research is a systematic method of finding solutions to problems. It is a search for knowledge. The systematic approach relating to generalization and formulation of theories is called research. The adoption of a proper methodology is an essential step in conducting any survey research study. Research can be defined as systematic and purposive investigation of facts with an object of determining cause and effective relationship among such facts and research relationship between two or more phenomena.

RESEARCH DESIGN

A research design is the arrangement of conditions for collection and analysis of data in manner that aims to combine relevance to the research purpose with economy in procedure.

TYPES OF RESEARCH

The methodology used in the study is both descriptive and analytical. SAMPLE DESIGN Sample size:

Five major power generation companies are selected for the study on the basis of their market capitalization. They are Reliance Infra, Tata Power, NTPC, Torrent Power and Power Grid.

TYPES OF DATA USED The source of data is secondary in nature. The secondary data are selected from historical data of closing price of selected equities in the websites of the exchanges and other links. FUNDAMENTAL ANALYSIS Fundamental Analysis is done on the based four years data available.

RATIOS USED: Earnings per share = Net profit No of equity shares

Dividend per share = Total dividend available equity shareholders No of Equity shares

Payout ratio

= Dividend per share Earning per share

Return on equity

Net profit available to equity share holders Shareholders fund

 Price Earnings Ratio = Price per share Earning per share

KEY RATIOS: The following are the key ratios used in realty sector.

Debt Equity Ratio Long term Debt equity Ratio Current ratio Fixed Assets Inventory Debtors Interest Cover Ratio PBDITM (%) PBITM (%) PBDTM (%) NPM (%) ROCE (%) RONW (%)

INTRINSIC VALUE CALCULATION

Dividend Payout ratio Average DPOR Average Retention ratio Average Return on Equity Long Term Growth Rate in Dividend and Earnings

 Normalised Average price Earnings Ratio Projected Earnings Per share Intrinsic Value Projected dividend per share

1.7 TEST OF HYPOTHESIS SIMPLE REGRESSION Regression analysis is a statistical technique in which we use observed data to relate a variable which is called dependent variable to one or more independent variable. Here market return is the dependent variable and stock price of various companies are the independent variables.

1.6 LIMITATIONS OF THE STUDY 1. The study may not reflect the over-all performance of the industry since only five securities in power sector is selected for the study. 2. Availability of primary data is very limited , hence most of the analysis is bsed on secondary data.

REVIEW OF LITERATURE
FUNDAMENTAL ANALYSIS

The intrinsic value of an equity share depends on a multitude of factors. The earnings of the company, the growth rate and the risk exposure of the company have a direct bearing on the price of the share. These factors in turn rely on the host of other factors like economic environment in which they function, the industry they belong to, and finally companies own performance. The fundamental school of thought appraised the intrinsic value of shares through; Economic Analysis Industry Analysis Company Analysis

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 and vice versa. When the level of economic is low, stock prices are also 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 macroeconomic environment is essential to understand the behavior of the stock prices. The commonly analyzed macro economic factors are as follows.

Gross Domestic Product GDP indicates the rate of the growth of the economy. GDP represents the aggregate value of the goods and services produced in the economy. GDP consists of personal consumption expenditure, gross private domestic investment and government expenditure on goods and services and net exports of goods and services. The growth rate of economy points out the prospects for the industrial sector and the return investors can expect from investment in shares. The higher growth rate is more favorable to the stock market.

Savings and investment

It is obvious that growth requires investment which in turn requires substantial amount of domestic savings. Stock market is a channel through which the savings of the investors are made available to the corporate bodies. Savings are distributed over various assets like equity shares, deposits, mutual fund units, real estate and bullion. The saving and investment patterns of the public affect the stock to a great extent. Inflation Along with the growth of GDP, if the inflation rate also increases, then the real rate of growth would be very little. The demand in the consumer product industry is significantly affected. The industries which come under the government price control policy may lose the market. The government control over this industry, affects the prices of the product and the profitability of the industry itself. Interest rates The interest rate affects the cost of financing to the firms. A decrease in interest rate implies lower cost of finance for firms and more profitability. More money is a available at a lower interest rate for the brokers who are doing business with borrowed money. Availability of cheap fund, encourages speculation and rise in the price of shares. Budget The budget draft provides an elaborate account of the government revenues and expenditures. A deficit budget may lead to high rate of inflation and adversely affect the cost of production. Surplus budget may result in deflation and adversely affect the cost of production. Hence, balanced budget is highly favorable to the stock market. The balance of payment The balance of payment is the record of a countrys money receipts from and payment abroad. The difference between receipts and payments may be surplus or deficit. Balance of Payment is a measure of the strength of rupee on external account. If the deficit increases, the rupee may depreciate against other currencies. , thereby affecting cost of imports. The industries involved in the export and imports are considerably affected by the changes in the foreign exchange rate.

Demographic factors The demographic data provides details about the population, age, occupation, literacy and geographic location. This is needed to forecast the demand for the consumer goods. The population by age indicates the availability of able work force. The cheaper labor force in India has encouraged many multinationals to start their ventures. Population, by providing labor and demand for products, affects the industry and stock market.

INDUSTRY ANALYSIS
An industry is a group of firms that have similar technological structure of production and produce similar products. For the convenience of the investors, the broad classification of the industry is given in financial dailies and magazines. Companies are distinctly classified to give a clear picture about their manufacturing products and process. These 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 into growth, cyclical, defensive and cyclical growth industry. Growth Industry The growth industries have special features of high rate of earnings and growth in expansion, independent of the business cycle. The expansion of the industry mainly depends on the technological change. Cyclical industry The growth and the profitability of the industry move along with the business cycle. During the boom period they enjoy growth and during depression they suffer a setback.. For example, the white goods like fridge, washing machine and kitchen range products command a good market in the boom period and slackens during the recession.

Defensive industry Defensive industry defies the movement of the business cycle. For example, food and shelter are the basic requirements of humanity. The food industry withstands recession and

depression. The stock of the defensive industries can be held by the investor for the income earning purpose. They expand and earn income in the depression period too, under the governments umbrella of protection and are counter-cyclical in nature. Cyclical growth industry This is a new type of industry that is cyclical and at the same time growing . For example, the automobile industry experiences period of stagnation, decline but they grow tremendously. The changes in the technology and introduction of new models help the automobile industry to resume their growth path.

COMPANY ANALYSIS
In the company analysis the investor assimilates the several bits of information related to the company and evaluates the presents and future values of the stock. The risk and return associated with the purchase. of the stock is analysed to take better investment decisions. The valuation process depends upon the investors ability to elicit information from the relationship and inter- relationship among the company related variables. The competitive edge of the company Major industries in India are composed of hundreds of individual companies. The large companies are successful in meeting the competition. Once the companies obtain the leadership position in the market, they seldom lose it. Over the time they would have proved their ability to withstand competition and to have a sizeable share in the market. The competitiveness of the company can be studied with the help of the market share, the growth of annual sales, the stability of annual sales.

The market share The market share of the annual sales helps to determine a companys relative competitive position within the industry. If the market share is high, the company would be able to meet

the competition successfully. The companies in the market should be compared with like product groups, otherwise, the results will be misleading. Growth of sales The company may be leading company, but if the growth in sales is comparatively lower than another company, it indicates the possibility of the company losing the leadership. The rapid growth in sales would keep the shareholder in a better position than the one with the stagnant growth rate. Stability of sales If a firm has stable sales revenue, other things being remaining constant, will have more stable earnings. Wide variation in sales leads to variation in capacity utilization, financial planning and dividend. The fall in market indicates the declining trend of the company, even if the sales are stable in absolute terms. Sales forecast The company may be in a superior position commanding more sales both in monetary terms and physical terms but the investor should have an idea whether it will continue in future or not. For this purpose forecast is done.

TOOLS FOR COMPANY ANALYSIS Even though various tools are used for fundamental analysis some of the important tool includes Ratio Analysis and Intrinsic Value. RATIO ANALYSIS A financial ratio (or accounting ratio) is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm's creditors. Security analysts use financial ratios to compare the strengths and weaknesses in various companies.[1] If shares in a company are traded in a financial market, the market price of the shares is used in certain financial ratios. Financial ratios allow for comparisons

between companies between industries between different time periods for one company between a single company and its industry average

Two analytical models When the objective of the analysis is to determine what stock to buy and at what price, there are two basic methodologies 1. Fundamental analysis maintains that markets may misprice a security in the short run but that the "correct" price will eventually be reached. Profits can be made by trading the mispriced security and then waiting for the market to recognize its "mistake" and re price the security. 2. Technical analysis maintains that all information is reflected already in the

stock price. Trends 'are your friend' and sentiment changes predate and predict trend changes. Investors' emotional responses to price movements lead to recognizable price chart patterns. Technical analysis does not care what the

'value' of a stock is. Their price predictions are only extrapolations from historical price patterns.

Fundamentals: Quantitative and Qualitative Fundamental analysis is defined as researching the fundamentals, but that doesnt tell a whole lot unless you know what fundamentals are. The big problem with defining fundamentals is that it can include anything related to the economic well-being of a company. Obvious items include things like revenue and profit, but fundamentals also include everything from a companys market share to the quality of its management. The various fundamental factors can be grouped into two categories: quantitative and qualitative. The financial meaning of these terms isnt all that different from their regular definitions. The definitions of Quantitative and Qualitative fundamentals are given below Quantitative capable of being measured or expressed in numerical terms. Qualitative related to or based on the quality or character of something, often as opposed to its size or quantity. In the context, quantitative fundamentals are numeric, measurable

characteristics about a business. Its easy to see how the biggest source of quantitative data is the financial statements. You can measure revenue, profit, assets and more with great precision. Turning to qualitative fundamentals, these are the less tangible factors surrounding a business - things such as the quality of a companys board members and key executives, its brand-name recognition,patents or proprietary technology.

Quantitative Meets Qualitative Neither qualitative nor quantitative analysis is inherently better than the other. Instead, many analysts consider qualitative factors in conjunction with the hard, quantitative factors. Take the Coca-Cola Company, for example. When examining its stock, an analyst might look at the stocks annual dividend payout, earnings per share, P/E ratio and many

other quantitative factors. However, no analysis of Coca-Cola would be complete without taking into account its brand recognition. Anybody can start a company that sells sugar and water, but few companies on earth are recognized by billions of people. Its tough to put your finger on exactly what the Coke brand is worth, but you can be sure that its an essential ingredient contributing to the companys ongoing success. The Concept of Intrinsic Value Before we get any further, we have to address the subject of intrinsic value. One of the primary assumptions of fundamental analysis is that the price on the stock market does not fully reflect a stocks real value. After all, why would you be doing price analysis if the stock market were always correct? In financial jargon, this true value is known as the intrinsic value. For example, lets say that a companys stock was trading at $20. After doing extensive homework on the company, you determine that it really is worth $25. In other words, you determine the intrinsic value of the firm to be $25. This is clearly relevant because an investor wants to buy stocks that are trading at prices significantly below their estimated intrinsic value. This leads us to one of the second major assumptions of fundamental analysis: in the long run, the stock market will reflect the fundamentals. There is no point in buying a stock based on intrinsic value if the price never reflected that value. Nobody knows how long the long run really is. It could be days or years. This is what fundamental analysis is all about. By focusing on a particular business, an investor can estimate the intrinsic value of a firm and thus find opportunities where he or she can buy at a discount. If all goes well, the investment will pay off over time as the market catches up to the fundamentals.

Abstracts of literatures which appeared in various publications

Sreekumar (2008) reviews the market-oriented power sector reforms initiated in India in the early 1990s. It brings out a public interest oriented critique of the three phases of the reforms firstly, privatization of generation, secondly, state sector restructuring and finally, the ongoing reforms since the passage of the Electricity Act 2003. Reforms were taken up as a response to the crisis in the sector. The article questions the success of the process in solving the crisis. While acknowledging positive elements like increase in transparency and participation, it criticizes the process for neglect of development issues like rural electrification and energy efficiency. The article concludes with some thoughts on developing an alternate reform approach. Augustine (2007), tries to put forth a model pertaining to transportation because India is facing a huge increase in power consumption. The model is done with an aid of GAMS. (General Algebraic Modelling System). The power sector is represented in the model by production capacities, cost of production and transmission, demand for power and the distances between power plants and consumption centres. The author has considered major power generating areas of the country like Ranchi, Bhopal, bhubwaneshwar, dhanbad, Vishakhapatnam etc. The model described is very realistic, scalable and easy to implement, but has only considered coal, hydroelectric and natural gas technologies. It can be expanded to include other technologies and also can be made dynamic to provide solutions for different model Singh (2006) address the Power sector reforms in India. Reforms were initiated at a juncture when the sector was plagued with commercial losses and burgeoning subsidy burden. Investment in the sector was not able to keep pace with growing demand for electricity. This paper takes stock of pre-reform situation in Indian power sector and identifies key concerns that led to initiation of the process of reform. The paper discusses major policy and regulatory changes undertaken since the early 1990s. The paper also illustrates changes in the market structure as we move along the reform process. It also discuss some of the major provisions of the recently enacted Electricity Act 2003 that aims to replace the prevailing acts which govern the functioning of the power sector in the country. In this context, it discuss two issues arising out of it, namely open access and multi-year tariff that we think

would have a significant bearing on the performance of the sector in the near future. The paper also evaluates the reform process in the light of some of the regulatory changes undertaken. Finally, the paper briefly discusses the issues involved in introduction of competition in the power sector primarily through development of a market for bulk power Kumar, Khetan& Thapa (2005) highlights that India has set itself an ambitious target of more than doubling per-capita electricity consumption by 2011. Indian power sector, with current electricity shortages of over 11% of peak and 7% of energy, will be one of the key determinants to future growth. The Indian government has worked steadily to liberalise the sector and initiated reforms that culminated in the Electricity Act 2003. The Act brought together structural and regulatory reforms designed to foster competitive markets, encourage private participation and transform the states role from service provider to regulator. The Act afforded consumers the ability to directly source their electricity from suppliers using existing networks and recognised trading as a separate line of business. Despite the potential offered by the Indias power sector, investors have long been weary of the sectors bureaucracy and regulatory complexity. With a critical mass of progress in regulatory reforms and soaring economic growth, the Indian power sector is now primed for take off. How India deals with the remaining challenges of the restructuring process and emerging fuel shortages will dictate what happens in the years to come . The International Energy Outlook 2006 (IEO2006) projects strong growth for worldwide energy demand over the 27-year projection period from 2003 to 2030. Much of the growth in energy demand is among the developing countries in Asia, which includes China and India; demand in the region nearly triples over the projection period. Total primary energy consumption in the developing countries grows at an average annual rate of 3.0 percent between 2003 and 2030. In contrast, for the developed countrieswith its more mature energy-consuming nationsenergy use grows at a much slower average rate of 1.0 percent per year over the same period. This huge increase in projected demand of energy in India and China makes analysis of energy sector of these countries very important.

Banerjee (2004) says that the earliest electric power systems were distributed generation

(DG) systems intended to cater to the requirements of local areas. Subsequent technology developments driven by economies of scale resulted in the development of large centralized grids connecting up entire regions and countries. The design and operating philosophies of power systems have emerged with a focus on centralized generation. During the last decade, there has been renewed interest in DG. This paper reviews the different technological options available for DG, their current status and evaluates them based on the cost of generation and future potential. The relevance of these options for a developing country context is examined using data for India. Different definitions of DG have been proposed. Some have linked this to the size of the plant, suggesting that DG should be from a few kW to sizes less than 10 or 50MW. This provides a review of alternative definitions of DG and suggests that DG be defined as the installation and operation of electric power generation units connected directly to the distribution network or connected to the network on the customer site of the meter. DG is also referred to as dispersed generation or embedded generation. DG options can be classified based on the prime movers usedengines, turbines, fuel cells or based on the fuel source as renewable or non-renewable. There are a large number of possible system configurations. Swain, Singh and Kumar (2004) ,describes there were many inhibitors to growth in power sector but the main problem in the growth was Government Policy, which made it difficult for a private player to enter. This further created the problem that Indian entrepreneurs didnt have enough knowledge and experience in developing power projects. A whole new system was evolved where private players were invited to be an active participant. The system demanded financial, political and other major requirement in roads and communication. Some of the bold steps taken in the Act were moving generation and distribution out of License Raj, opening access to national grid and demolishing the Single Buyer model. The failure of the large structure and the changing global scenario has forced Government to think of ways to revive this fundamental infrastructure sector. Two ways that government can count on for future growth of this sector are Small Power Plants and Clean Development Mechanism

INDUSTRY & COMPANY PROFILE

FINANCIAL SERVICES INDUSTRY Financial services Organizations are striving to achieve increasingly ambitious profits and growth targets against a background of heightened risk, regulations and market pressures. Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are banks, credit card companies, insurance companies, consumer finance companies, stock brokerages, investment funds and some government sponsored enterprises. In economics, a financial market is a mechanism that allows people to buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis. Financial markets have evolved significantly over several hundred years and are undergoing constant innovations to improve liquidity. In general, the financial market divided into two parts, Money market and capital market. Securities market is an important, organized capital market where transaction of capital is facilitated by means of direct financing using securities as a commodity. Securities market can be divided into a primary market and secondary market. PRIMARY MARKET The primary market is an intermittent and discrete market where the initially listed shares are traded first time, changing hands from the listed company to the investors. It refers to the process through which the companies, the issuers of stocks, acquire capital by offering their stocks to investors who supply the capital. In other words primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new

issues to investors is called underwriting. In the case of a new stock issue, this sale is called an initial public offering (IPO). Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus. SECONDARY MARKET The secondary market is an on-going market, which is equipped and organized with a place, facilities and other resources required for trading securities after their initial offering. It refers to a specific place where securities transaction among many and unspecified persons is carried out through intermediation of the securities firms, i.e., a licensed broker, and the exchanges, a specialized trading organization, in accordance with the rules and regulations established by the exchanges. NSE was the first to introduce electronic screen based trading. BSE was forced to follow suit. The present day trading platform is transparent and gives investors prices on a real time basis. With the introduction of depository and mandatory dematerialization of shares chances of fraud reduced further. The trading screen gives you top 5 buy and sell quotes on every scrip. A typical trading day starts at 10 ending at 3.30 from Monday to Friday. BSE has 30 stocks which make up the Sensex .NSE has 50 stocks in its index called Nifty. FII s Banks, financial institutions mutual funds are biggest players in the market. Then there are the retail investors and speculators. The last ones are the ones who follow the market morning to evening; Market can be very addictive like blogging though stakes are higher in the former. ORIGIN OF INDIAN STOCK MARKET The origin of the stock market in India goes back to the end of the eighteenth century when long-term negotiable securities were first issued. However, for all practical purposes, the real beginning occurred in the middle of the nineteenth century after the enactment of the companies Act in 1850, which introduced the features of limited liability and generated investor interest in corporate securities. An important early event in the development of the stock market in India was the formation of the native share and stock brokers 'Association at Bombay in 1875, the precursor of the present day Bombay Stock Exchange. This was followed by the formation of

associations/exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). In addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently. Stock exchanges are intricacy inter-woven in the fabric of a nation's economic life. Without a stock exchange, the saving of the community- the sinews of economic progress and productive efficiency- would remain underutilized. The task of mobilization and allocation of savings could be attempted in the old days by a much less specialized institution than the stock exchanges. But as business and industry expanded and the economy assumed more complex nature, the need for 'permanent finance' arose. Entrepreneurs needed money for long term whereas investors demanded liquidity the facility to convert their investment into cash at any given time. The answer was a ready market for investments and this was how the stock exchange came into being. Stock exchange means any body of individuals, whether incorporated or not, constituted for the purpose of regulating or controlling the business of buying, selling or dealing in securities. These securities include: (i) Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; (ii) Government securities; and (iii) Rights or interest in securities. The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Ltd (NSE) are the two primary exchanges in India. In addition, there are 22 Regional Stock Exchanges. However, the BSE and NSE have established themselves as the two leading exchanges and account for about 80 per cent of the equity volume traded in India. The NSE and BSE are equal in size in terms of daily traded volume. The average daily turnover at the exchanges has increased from Rs 851 crore in 1997-98 to Rs 1,284 crore in 1998-99 and further to Rs 2,273 crore in 1999-2000 (April - August 1999). NSE has around 1500 shares listed with a total market capitalization of around Rs 9, 21,500 crore.

The BSE has over 6000 stocks listed and has a market capitalization of around Rs 9, 68,000 crore. Most key stocks are traded on both the exchanges and hence the investor could buy them on either exchange. Both exchanges have a different settlement cycle, which allows investors to shift their positions on the bourses. The primary index of BSE is BSE Sensex comprising 30 stocks. NSE has the S&P NSE 50 Index (Nifty) which consists of fifty stocks. The BSE Sensex is the older and more widely followed index. Both these indices are calculated on the basis of market capitalization and contain the heavily traded shares from key sectors. The markets are closed on Saturdays and Sundays. Both the exchanges have switched over from the open outcry trading system to a fully automated computerized mode of trading known as BOLT (BSE on Line Trading) and NEAT (National Exchange Automated Trading) System. It facilitates more efficient processing, automatic order matching, faster execution of trades and transparency; the scrip's traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F' and 'Z' groups. The 'A' group shares represent those, which are in the carry forward system (Badla). The 'F' group represents the debt market (fixed income securities) segment. The 'Z' group scrip's are the blacklisted companies. The 'C' group covers the odd lot securities in 'A', 'B1' & 'B2' groups and Rights renunciations. The key regulator governing Stock Exchanges, Brokers, Depositories, Depository participants, Mutual Funds, FIIs and other participants in Indian secondary and primary market is the Securities and Exchange Board of India (SEBI) Ltd. Stock Exchanges are structured marketplace where affiliates of the union gather to sell firm's shares and other securities. India Stock Exchanges can either be a conglomerate/ firm or mutual group. The affiliates act as intermediaries to their patrons or as key players for their own accounts. Stock Exchanges in India also assist the issue and release of securities and other monetary tools incorporating the fortification of revenues and dividends. The book keeping of the trade is centralized but the buying and selling is associated to a particular place as advanced marketplaces are mechanized. The buying and selling on an exchange is only open to its affiliates and brokers.

The securities traded on a stock exchange include shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a local and central location for at least record keeping, but trade is less and less linked to such physical place, as modern markets are electronic networks, which gives them advantage of speed and cost transactions. Trade on an exchange is by members only and stock and share holders. The initial offering of stock and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market.

There are 22 stock exchanges in India, the first being the Bombay Stock Exchange (BSE), which began formal trading in 1875, making it one of the oldestin Asia. Over the last few years, there has beena rapid change in the Indian securities market, especially in the secondary market. Advanced technology and online-based transactions have modernized the stock exchanges. In terms of the number of companies listed and total market capitalization, the Indian equity market is considered large relative to the countrys stage of economic development. The number of listed companies increased from 5,968 in March 1990 to about 10,000 by May 1998 and market capitalization has grown almost 11 times during the same period.The debt market, however, is almost nonexistent in India even though there has been a large volume of Government bonds traded. Banks and financial institutions have been holding a substantial part of these bonds as statutory liquidity requirement. The portfolio restrictions on financial institutions statutory liquidity requirement are still in place. A primary auction market for Government securities has been created and a primary dealer system was introduced in 1995. There are six authorized primary dealers. Currently, there are 31 mutual funds, out of which 21 are in the private sector. Mutual funds were opened to the private sector in 1992. Earlier, in 1987, banks were allowed to enter this business, breaking the monopoly of the Unit Trust of India (UTI), which maintains a dominant position. Before 1992, many factors obstructed the expansion of equity trading. Fresh capital issues were controlled through the Capital Issues Control Act. Trading practices were not transparent, and there was a large amount of insider trading. Recognizing the importance of increasing investor protection, several measures were enacted to improve the fairness of

the capital market. The Securities and Exchange Board of India (SEBI) was established in 1988. Despite the rules it set, problems continued to exist, including those relating to disclosure criteria, lack of broker capital adequacy, and poor regulation of merchant bankers and underwriters. There have been significant reforms in the regulation of the securities market since 1992 in conjunction with overall economic and financial reforms. In 1992, the SEBI Act was enacted giving SEBI statutory status as an apex regulatory body. And a series of reforms was introduced to improve investor protection, automation of stock trading, integration of national markets, and efficiency of market operations. India has seen a tremendous change in the secondary market for equity. Its equity market will most likely be comparable with the worlds most advanced secondary markets within a year or two. The key ingredients that underlie market quality in Indias equity market are: exchanges based on open electronic limit orderbook; nationwide integrated market with a large numberof informed traders and fluency of short or long positions; and no counterparty risk. Among the processes that have already started and are soon to be fully implemented are electronic settlement trade and exchange-traded derivatives. Before 1995, markets in India used open outcry, a trading process in which traders shouted and handsignaled from within a pit. One major policy initiated by SEBI from 1993 involved the shift of all exchanges to screen-based trading, motivated primarily by the need for greater transparency. The first exchange to be based on an open electronic limit order book was the National Stock Exchange (NSE), which started trading debt instruments in June 1994 and equity in November 1994. In March 1995, BSE shifted from open outcry to a limit order book market. Currently, 17 of Indias stock exchanges have adopted open electronic limit order. Before 1994, Indias stock markets were dominated by BSE. In other parts of the country, the financial industry did not have equal access to markets and was unable to participate in forming prices, compared with market participants in Mumbai (Bombay). As a result, the prices in markets outside Mumbai were often different from prices in Mumbai.These pricing errors limited order flow to these markets. Explicit nationwide connectivity and implicit movement toward one national market has changed this situation (Shah and Thomas, 1997). NSE has established satellite communications which give all trading members of NSE equal access to the market. Similarly, BSE and the Delhi Stock Exchange are both expanding the

number of trading terminals located all over the country. The arbitrages are eliminating pricing discrepancies between markets. Despite these big improvements in microstructure, the Indian capital market has been in decline during the last three years. The amount of capital issued has dropped from the level of its peak year,1994/95, and so have equity prices. In 1994/95, Rs276 billion was raised in the primary equity market. This figure fell to Rs208 billion in 1995/96 and to Rs142 billion in 1996/97. The BSE-30 index or Sensex, the sensitive index of equity prices, peaked at 4,361 in September 1994 and fell during the following years. A leading cause was that financial irregularities and overvaluations of equity prices in the earlier years had eroded public confidence in corporate shares. Also, there was a reduced inflow of foreign investment after the Mexican and Asian financial crises. In a sense, the market is now undergoing a period of adjustment. Thus, it is time for regulatory authorities to make greater efforts to recover investors confidence and to further improve the efficiency and transparency of market operations. The Indian capital market still faces many challenges if it is to promote more efficient allocation and mobilization of capital in the economy. First, market infrastructure has to be improved as it hinders the efficient flow of information and effective corporate governance. Accounting standards will have to adapt to internationally accepted accounting practices. The court system and legal mechanism should be enhanced to better protect small shareholders rights and their capacity to monitor corporate activities. Second, the trading system has to be made more transparent. Market information is a crucial public good that should be disclosed or made available to all participants to achieve market efficiency. SEBI should also monitor more closely cases of insider trading. Third, India may need further integration of the national capital market through consolidation of stock exchanges. The trend all over the world is to consolidate and merge existing stock exchanges.Not all of Indias 22 stock exchanges may be able to justify their existence. There is a pressing need to develop a uniform settlement cycle and common clearing system that will bring an end to unnecessary speculation based on arbitrage opportunities. Fourth, the payment system has to be improved to better link the banking and securities industries. Indias banking system has yet to come up with good electronic funds transfer (EFT) solutions. EFT is important for problems such as direct payments of dividends through bank accounts, eliminating counterparty risk, and facilitating foreign institutional investment. The capital market cannot thrive alone; it has to be integrated with the other

segments of the financial system. The global trend is for the elimination of the traditional wall between banks and the securities market. Securities market development has to be supported by overall macroeconomic and financial sector environments. Further liberalization of interest rates, reduced fiscal deficits, fully market-based issuance of Government securities, and a more competitive banking sector will help in the development of a sounder and a more efficient
capital market in India.

TRADING PATTERN OF THE INDIAN STOCK MARKET Indian Stock Exchanges allow trading of securities of only those public limited companies that are listed on the Exchange(s). They are divided into two categories:

TYPES OF TRANSACTIONS The flowchart below describes the types of transactions that can be carried out on the Indian stock exchanges:

THE INDIAN SECURITIES MARKET BEFORE 1992 HAD THE FOLLOWING CHARCTERISTICS:
Fragmented regulation; multiplicity of administration. Primary markets not in the mainstream of the financial system. Poor disclosure in prospectus. Prospectus and balance sheet not made available to investors. Investors faced problems of delays (refund,transfer, etc.) Stock exchanges regulated through the Securities Contracts (Regulations) Act. No inspection of stock exchanges undertaken. FIIs also permitted to invest in unlisted securities and corporate and Government debt. The Depositories Act enacted to facilitate the electronic book entry transfer of securities through depositories. Guidelines for Offshore Venture Capital Funds announced. SEBI regulations for venture capital funds become effective. Stock Exchanges run as brokers clubs; management dominated by brokers. Merchant bankers and other intermediaries unregulated. No concept of capital adequacy. Mutual fundsvirtually unregulated with potential for conflicts of interest in structure. Poor disclosures by mutual funds; net asset value (NAV) not published; no valuation norms. Private sector mutual funds not permitted. Takeovers regulated only through listing agreement between the stock exchange and the company. No prohibition of insider trading, or fraudulent and unfair trade practices.

REGULATION OF BUSINESS IN THE STOCK EXCHANGES Under the SEBI Act, 1992, the SEBI has been empowered to conduct inspection of stock exchanges. The SEBI has been inspecting the stock exchanges once every year since 199596. During these inspections, a review of the market operations, organizational structure and administrative control of the exchange is made to ascertain whether:

the exchange provides a fair, equitable and growing market to investors the exchanges organization, systems and practices are in accordance with the Securities Contracts (Regulation) Act (SC(R) Act), 1956 and rules framed there under

the exchange has implemented the directions, guidelines and instructions issued by the SEBI from time to time

The exchange has complied with the conditions, if any, imposed on it at the time of renewal/ grant of its recognition under section 4 of the SC(R) Act, 1956.

During the year 1997-98, inspection of stock exchanges was carried out with a special focus on the measures taken by the stock exchanges for investors protection. Stock exchanges were, through inspection reports, advised to effectively follow-up and redress the investors complaints against members/listed companies. The stock exchanges were also advised to expedite the disposal of arbitration cases within four months from the date of filing. During the earlier years inspections, common deficiencies observed in the functioning of the exchanges were delays in post trading settlement, frequent clubbing of settlements, delay in conducting auctions, inadequate monitoring of payment of margins by brokers, nonadherence to Capital Adequacy Norms etc. It was observed during the inspections conducted in 1997-98 that there has been considerable improvement in most of the areas, especially in trading, settlement, collection of margins etc.

REFORMS IN INDIAN SECURITIES MARKET SINCE 1992

The development in Indian securities market since 1992 can be summarized as follows: Capital Issues (Control) Act of 1947 repealed and the office of Controller of Capital Issues abolished; control over price and premium of shares removed. Companies now free to raise funds from securities markets after filing prospectus with the Securities and Exchange Board of India (SEBI). The power to regulate stock exchanges delegated to SEBI by the Government. SEBI introduces regulations for primary and other secondary market intermediaries, bringing them within the regulatory framework. Reforms by SEBI in the primary market include improved disclosure standards, introduction of prudential norms, and simplification of issue procedures. Companies required to disclose all material facts and specific risk factors associated with their projects while making public issues. Listing agreements of stock exchanges amended to require listed companies to furnish annual statement to the exchanges showing variations between financial projections and projected utilization of funds in the offer document and actual figures. This is to enable shareholders to make comparisons between performance and promises. SEBI introduces a code of advertisement for public issues to ensure fair and truthful disclosures. Disclosure norms further strengthened by introducing cash flow statements. New issue procedures introducedbook building for institutional investorsaimed at reducing costs of issue. SEBI introduces regulations governing substantial acquisition of shares and takeovers and lays

CURRENT MARKET SCENARIO IN INDIA

all the conveniences of life may not be possible with a single salary, especially if you stay in the city where cost of living is very high. This is the reason why both partners in a household (nuclear family) work to meet both ends meet satisfactorily or even beyond expectations. Many people have started investing in the stockmarket as an additional source of income to be able to meet lifestyle changes.In sync with the changing career trends and with the share markets platform gaining grounds, financial institutes have introduced short term as well as long term courses on finance, insurance, stock broking, and related subjects, helping aspirants build careers or professionals enhancing their qualification tags with additional degrees. And a particular section of ambitious people undertake short term courses on stock market trading to be able to manage their own stock portfolios thus having an influence on their financial futures. Share markets in India comprise primarily of NSE share and BSE share with share brokers managing the transactions. The SEBI is the governing body in India, controlling the activities of the stock exchanges, and stock brokers too function under SEBI guidelines. To open trading accounts to be able to buy and sell shares like NSE share or BSE share, you will have to seek the services of stock brokers. Many a broker functions online through the medium of brokerage platforms. Once you get registered at such an online trading platform, you can get tips and suggestions from expert brokers, helping you take your investing goals to the next level.

It is moving in the right direction that matters in share markets trading. Market analysts and experts advise investors not to invest in individual NSE share or individual BSE share given the market volatility and the high risks involved. And as aforementioned those who manage their own portfolios including experts are at least able to decipher, take risks, and buy individual stocks without paying heed to the brokers' advice. Their deep knowledge about the market and their ability to select the right stocks help them experience a win-win situation.

Share markets across the world are recuperating with traces of recession still visible in few nations. The Indian stock market is fast recovering and the emerging opportunities have led

to the steady inflows of foreign investments. Investing in India has thus become a trend which is likely to gain more impetus in the near future. It is the promotion oriented user friendly policies of the Indian government that have led to this sudden surge. And owing to the increased quantum of foreign investment inflows, India is emerging as one of the best performing markets.

THE INDIAN POWER SECTOR: AN OVERVIEW

Decades of economic planning in India following independence placed significant emphasis on the development of the power sector. Electricity generation capacity with utilities in India had grown from 1713 MW in December 1950 to over 124,287 MW by March 2006 (CEA, 2006a). However, per capita electricity consumption remains much lower than the world average and even lower than some of the developing Asian economies Investment in the sector has not been able to improve access and keep pace with the countrys growing demand for electricity (Singh, 2006). As on March 2005, the official statistics state that 85% of Indias 587,000 villages have been electrified. However, the recent population census (2001) reveals that 44.2% of the households do not have access to electricity. Consumers, who are connected to the grid, also face severe power shortages. The energy shortage was recorded to be 7.4% (7.1%) in 200405 (200304). The peak shortage was estimated to be 10.5% (11.2%) in 200405 (200304). The last decade of the previous century witnessed some of the worst power supply situations to date. Peaking shortages reached 20.49% in 1992 93 and energy shortages reached 11.7% in 199697 (CEA, 2005a, 2006a). Power shortages are real and are hurting the competitiveness of the economy. Due to the lack of a reliable grid supply, industrial units are installing generators. While about 21% of Chinese firms and 17% of Brazilian firms own electricity generators, 61% of the Indian firms have generators installed to cope with power shortages. Real cost of power in India is 39% higher than that in the PRC (WB / IFC, 2004). The Sixteenth Electric Power Survey projects a capacity requirement of about 100,000 MW for the period 200212 (CEA, 2001). Apart from generation capacity addition and associated network strengthening, additional investment is required to extend the transmission and distribution network to meet the requirement of the unserved population. A new rural

electrification scheme, Rajiv Gandhi Grameen Vidyutikaran Yojana, was introduced in April 2005. It aims to electrify all villages and provide access to all households within five years. The Indian power sector requires an investment of Rs.9000 billion (approximately USD200 billion) at 200203 prices to finance generation, transmission, sub-transmission, distribution and rural electrification projects (GOI, 2005a). IEA (2003a) estimates the total investment requirement in the Indian power sector (for the period 200030), including generation, refurbishment, transmission and distribution, to be USD665 billion. Such requirements reflect the foreseeable economic growth in the years to come. The poor financial status and operational efficiency of SEBs/state utilities is imposing a heavy burden on the economic resources of the respective state governments. On the financial side, the lack of expenditure prudence and skewed tariff structure has led to a deterioration of the financial health of state utilities5. The gap between the average cost of supply and average tariff increased from 50 paise/kWh in 199697 to 110 paise/kWh in 200102. The number of subsidized categories, assisted by the growing network and rural electrification drive, increased. However, an increasing number of consumers, including industrial and commercial consumers have acquired captive power generation capacities that provide better economy, quality and reliability. Poor operational and technical efficiency, along with the above factors, has resulted in ballooning financial losses in the sector. The commercial losses of SEBs (before subsidy) during 200102 were estimated to be Rs.331.77 billion as compared to Rs.113.05 billion during 199697. After including the subsidy payable by state governments, the above figures are Rs.248.37 billion and Rs.46.74 billion, respectively. The average consumer tariff for state utilities during 200405 (200304) is estimated to be 359.39 paise (361.00 paise). After including electricity departments in the Union Territories, this is estimated to be 276.54 paise (274.29 paise). The gap between average cost of supply and average tariff declined from 114.83 paise/kWh in 2000 01 to 82.85 paise/kWh in 2004 05 (RE) 86.71 (provisional). The loss on the sale of power is expected to remain over Rs. 277.29 billion (lower than the Rs. 304.27 billion registered in 200102). The transmission and distribution losses remain abysmally high, being over 40% in some states. A significant proportion of this loss is of a non-technical nature, primarily due to theft

of electricity. This is further worsened by the poor payment record of customers, a situation which keeps collection efficiency low in many states. This leads to cash flow problems for utilities resulting in delayed payments for purchased power, coal, and rail transportation. The SEB dues reached Rs.25,727 Cr. in Feb. 2001 (GOI, 2001). The Ahluwalia committee recommendations led to a one-time settlement of SEB dues through their securitisation as state bonds in favour of the debtors. A tripartite agreement was signed to ensure that such a precarious situation would not develop in the future. In the case of the failure of a states utilities to pay dues, the creditors can have recourse to the states plan allocations and its share of central taxes. A natural-monopoly-public-utility argument was used to justify government ownership of the sector, barring some exceptions. The sector retained a legal monopoly status leading to the development of vertically integrated state electricity boards (SEBs). Historically, however, there were islands of private licensees in a few urban regions. The lack of competition, accompanied by political influence and operational inefficiency, has steered the sector towards the abyss of financial distress. Persistent political interference, even in the era of independent regulation, has reduced hopes for a speedy recovery. A lack of project management expertise and accountability has led to inordinate delays in planned investments and has exasperated misgivings regarding the sector. The task of bridging the capacity shortages through large-scale investments cannot be completely entrusted to public planning, which has often slipped over its targets. Policymakers recognized this in the early 1990s and opened up the sector for greater private participation. Encouraged by favourable policy developments and the advent of independent regulation, greater private participation is becoming visible in the sector, though not to the extent desirable. The existing ownership structure of the generating capacity is dominated by CPSUs and state utilities. Only 13.4% of the generating capacity in the country is owned by the private sector. Nearly all of the inter-state transmission capacity is owned by the Central Transmission Utility (CTU), Power Grid Corporation of India Ltd. (PGCIL). All intra-state transmission capacity is owned by the respective state transmission utilities. Under a recent initiative, a joint venture between public (PGCIL) and private (a Tata group company) investor is constructing a transmission line, which is nearing completion. Other private

investors such as Reliance Energy Ltd. have recently applied to the CERC for transmission licensees. Apart from the privatisation of distribution utilities in Orissa and Delhi, private distribution licensees have been operating for decades in the urban areas like Mumbai, Kolkata (Calcutta), Surat, Ahmedabad and Noida. A number of policy developments, as discussed in the next section, in the sector have emphasised the increasing role for private investors and reforms of the sector to improve its financial performance.

REGULATIONS AND RESULTING PROBLEM.

Being a highly regulated sector, not surprisingly policies and regulations are playing a pivotal role in the development of this sector. Over the years, the government has realized the importance of the private sector participation. The Electricity Act, 2003 was a turning point in the reforms process which removed the need for license for generation projects, encouraged competition through international competitive bidding, identified transmission as a separate activity and invited a wider public and private sector participation among other things. Some of the other major reforms that have been implemented over the years include: unbundling of SEBs,tax benefits, Accelerated Power Development and Reform Program (APDRP) for distribution, permission for trading ofpower, etc7. Furthermore, the National Tariff Policy of 2006 encouraged private investment in the transmission sector through competitive bidding. In addition, the allocation of captive coal blocks to private companies was one of the many noteworthy reforms, increasing the fuel security for the end use project. Aided by the ambitious plan to add around 78.7 GW of additional generation capacity in the 11th plan by the year 2012, according to CRISIL Research estimates, about INR 7,50,000 crore is likely to be invested in the power sector over the next five years by 2013-14. Of this, INR 4,80,000 crore is expected to be invested in the power generation space. Nearly half of the investments in the power generation space is likely to be made by the private sector8. Along with generation this has opened up opportunities in the transmission sector as well.In order to encourage private sectors in transmission line business, Government of India issued guidelines for private sector participation. These developments have given rise to new opportunities for the private sector especially in the power generation space. As a result, there have been a plethora of new projects announced by the private sector companies many

of whom are negligible or have no prior experience in this sector. This has given birth to the adage of Plans vs. Plants by clearly distinguishing between growth and value utilities

Challenges and Risks in Power Sector

India has historically failed to meet its power sector targets by a significant margin and with tremendous opportunities ahead, the power sector continues to be affected by the shortfall both on generation as well as transmission side. The various proposals in generation and transmission are currently under different implementation stages. However,the power sector in India has been plagued with a set of problems for meeting the planned targets which are as follows; Project Execution Needs to be expedited India has historically failed to meet its power sector targets by a significant margin and with tremendous opportunities ahead, the power sector continues to be affected by the shortfall both on generation as well as transmission side. For example, for the current installed capacity of around 152 GW, the inter-regional transmission capacity is only about 20 GW (13 percent of the installed capacity). The various proposals in generation and transmission are currently under different implementation stages. However, the power sector in India has been plagued with a set of problems for meeting the planned targets. Although measures have been defined by the policymakers and stakeholders in a sense of complacency that the issues will indeed be resolved and India will plug the supply deficit of power to resolve the same but looking at the past record, it can be estimated that the resolution measures may not be implemented.The biggest indicator of a poor track record is the inability to meet targets on the power generation capacity additions. Variance with the target has been as high as 50 percent in the past.

Fuel Availability While additional gas supply from KG Basin has eased shortage to a limited extend, supply constraints for domestic coal remain and are expected to continue going forward. the main international market for coal supply to India Indonesia, poses significant political and legal

risks in the form of changing regulatory framework towards foreign companies. Similarly, coal evacuation from mines in South Africa is constrained by their limited railway capacity and the capacity at ports is controlled by a group of existing users making it difficult for a new entrant to ensure reliable evacuation. Coal is the mainstay of the power production in India and is expected to remain so in the future. Additional power generation is likely to require incremental amount of coal transportation by Indian Railways within the country and increasing unloading at ports in India for imported coal. In both cases India currently faces capacity shortage.

Equipment Shortage Equipment shortages have been a significant reason for India missing its capacity addition targets for the 10th five year plan. While the shortage has been primarily in the core components of Boilers, Turbines and Generators, there has been lack of adequate supply of Balance of Plant (BOP) equipment as well. These include coal-handling, ash handling plants, etc. Apart from these, there is shortage of construction equipment as well.

Financial Rapid build up of the generation capacity is being aided by setting up of Ultra Mega Power Projects (UMPPs) each of which is 4000 MW. However, the execution of the Ultra Mega Power Projects (UMPP) is a significant challenge as India has not witnessed an execution of such a large scale power project before. Furthermore, with each UMPP costing above INR 16,000 Crore, financing such a large project is a critical constraint for any developer. In addition, considering the high financial stake involved through private investments, delay in payments may put severe pressure on developers/suppliers to meet the performance commitments.

Land Acquisition and Environment Clearance Land Acquisition poses an increasingly significant challenge in the Indian Power sector. Power plants and utilities face major constraints and delays regarding the availability of land and obtaining the requisite environment and other clearances for the projects. The new Bill

relating

to

land.acquisition

has

continued

to

face

political

opposition

Manpower Shortage There is a general consensus that shortage of talent in the construction sector is a long term problem and is likely to continue to push up project costs and risks. The flow of talent into construction and power sector has been gradually drying up as candidates have sought an alternative and often more lucrative career options. Investment in existing employees is also crucial in order to offer better-defined career structures, with a greater focus on training and higher salaries where possible.

HEDGE EQUITIES
Hedge Equities is a coming together of over 25 years of cutting edge experience of our founders in various industries backed with a strong expertise in global financial markets. Our Board comprises of veterans from six power houses in their respective fields: Fedex Securities, Baby Marine Exports, Thakker Developers, Smart Financial, S.M.Hegde (CFO ? Videocon Industries), and Padmashree Mohan Lal.

Hedge Equities is one of the leading Financial Services Company in India, specialized in offering a wide range of financial products, tailor made to suit individual needs.As a first step to make our presence Global, Hedge Equities have initiated operations in Middle East to cater to the vast Non Resident Indian (NRI) population in that region.Ever since our inception, we have spanned our presence all over India through our Meticulous Research, High Brand Awareness, Intellectual Management and Extensive Industry knowledge.We at Hedge believe in creating a new breed of Investors who take judicious decisions through us

Vision
Ever since its inception, Hedge Equities has been a household name among the masses owing our success to timely Professional financial assistance to our clients. This aptly articulates our vision of 'Evolving into a financial supermarket which will be a one stop shop for all financial solutions.

Mission
To create an ethical and sustainable financial services platform for our customers and partner them to build business, to provide employees with meaningful work, selfdevelopment and progression, and to achieve a consistent and competitive growth in profit and earnings for our shareholders and staff.

Social Corporate Responsibility

Being a Responsible Corporate Citizen, Hedge Equities has initiated a Non Profit movement Hedge Yuva which focuses on educating the masses about Stock Market. The movement has also formulated various scholarship programs for young and dynamic youth

The HEDGE Advantage

At Hedge Equities, the needs of our Customers stand before everything else. SEBI Registered Portfolio Manager with a dedicated Wealth Management Services desk that aims to provide objective guidance tailored to meet each customers individual needsStrong Research Team backed with best of breed data mining and analysis. Industry leading technology solutions that make portfolio administration simpler and

cost effective. A Global Outlook blended with a Local Flavor and backed with a growing network of

over 120 service outlets., 450 qualified employees, and over 200 support associates. The Trust and Goodwill of over 20,000 satisfied customers. Member of BSE, NSE, MCX, MCXSX,NMC, and Depository Participant in CDSL Rated as the top brand by the investor community of Asianet channel

Upcoming Projects

Drawing inspiration from our qualitative performance of last two years, Hedge

Equities has outlined ambitious and profitable plans for the future. We are all set to open 100

new Hi-Tech service outlets across India and register a pan India presence. The 2010-2011 financial year will also witness our entry into other global markets with proposed marketing offices in New York, London and Singapore. Hedge Credits & Finance Limited, a 100 Crore NBFC will be functional in the early half of 2011. The new financial services firm would provide Margin Funding as well as securitized loans(e.g., gold loans) to our customer base.

DATA ANALYSIS & INTERPRETATION

NTPC LTD
Indias largest power company, NTPC was set up in 1975 to accelerate power development in India. NTPC is emerging as a diversified power major with presence in the entire value chain of the power generation business. Apart from power generation, which is the mainstay of the company, NTPC has already ventured into consultancy, power trading, ash utilisation and coal mining. NTPC ranked 341st in the 2010, Forbes Global 2000 ranking of the Worlds biggest companies. NTPC became a Maharatna company in May, 2010, one of the only four companies to be awarded this status. The total installed capacity of the company is 34,194 MW (including JVs) with 15 coal based and 7 gas based stations, located across the country. In addition under JVs, 5 stations are coal based & another station uses naptha/LNG as fuel. The company has set a target to have an installed power generating capacity of 1,28,000 MW by the year 2032. The capacity will have a diversified fuel mix comprising 56% coal, 16% Gas, 11% Nuclear and 17% Renewable Energy Sources(RES) including hydro. By 2032, non fossil fuel based generation capacity shall make up nearly 28% of NTPCs portfolio. NTPC has been operating its plants at high efficiency levels. Although the company has 17.75% of the total national capacity, it contributes 27.40% of total power generation due to its focus on high efficiency In October 2004, NTPC launched its Initial Public Offering (IPO) consisting of 5.25% as fresh issue and 5.25% as offer for sale by Government of India. NTPC thus became a listed company in November 2004 with the Government holding 89.5% of the equity share capital. In February 2010, the Shareholding of Government of India was reduced from 89.5% to 84.5% through Further Public Offer. The rest is held by Institutional Investors and the Public. At NTPC, People before Plant Load Factor is the mantra that guides all HR related policies. NTPC has been awarded No.1, Best Workplace in India among large organisations and the best PSU for the year 2010, by the Great Places to Work Institute, India Chapter in collaboration with The Economic Times.

The concept of Corporate Social Responsibility is deeply ingrained in NTPC's culture. Through its expansive CSR initiatives, NTPC strives to develop mutual trust with the communities that surround its power stations.

COMPANY PROFILE
Company name Address : : NTPC Ltd NTPC Bhawan Scope Complex, 7-Institutional Area Lodi Road, New Delhi - 110003, New Delhi. Year of Establishment : 1975 Chairman : Mr. R S Sharma 29, 394MW Rs 10 532555 NTPC

Production Capacity : Face value of share BSE scrip code NSE code : : :

BOOK VALUE OF NTPC LTD.

ITEMS BOOK VALUE MAEKET: HIGH LOW EPS DPS 129.00 3.25 1.00 113.00 3.44 1.20 165.25 4.02 1.20 175.35 4.85 1.50 283.30 290.75 241.35 238.90 MARCH 2007 58.94 MARCH 2008 65.81 MARCH 2009 71.55 MARCH 2010 77.21

PAY OUT POLICY OF NTPC LIMITED

Items EPS DPS Pay Out Ratio

March 2007 8.33 3.20 3.84

March 2008 8.99 3.50 3.9

March 2009 9.95 3.60 3.6

March 2010 10.59 3.80 3.6

PAY OUT RATIO INFERENCE

The percentage of earnings paid to shareholders in dividends is DPOR. It measures the relationship between the earnings belonging to the equity shareholders and dividend actually paid to them. The payout ratio is higher in 2008 whereas it is consistent in the past 2 years.

RETURN ON EQUITY OF NTPC LTD

Items

March 2007 (in crores)

March 2008 (in crores) 824.50 7414.80 89.92

March 2009 (in crores) 824.50 8201.30 99.46

March 2010 (in crores) 824.50 8728.20 105.85

Share Capital PAT ROE

8245.50 6864.70 83.25

ROE =

INFERENCE This ratio measures the profitability of the capital invested in the business by equity shareholders. It measures the business success and the managerial efficiency. Equity shareholders earns more profit on the capital invested during the financial year 2009-10 while its shows a satisfactory profitability during the other three years.

DIVIDEND YIELD RATIO OF NTPC LTD

Items DPS MPS March 2007 3.20 250.90 March 2008 3.50 180.60 1.94 March 2009 3.60 235.65 1.53 March 2010 3.80 200.65 1.89

Dividend Yield 1.28 Ratio

Dividend Yield Ratio = INFERENCE Dividend yield ratio is the relationship between dividends per share and the market value of the shares. It is calculated to evaluate the relationship between dividends per share paid and the market value of the shares. In other words it shows what percentages return a company pays out to shareholders in the form of dividends. Dividend Yield Ratio is consistent over the four years.

PRICE EARNING RATIO OF NTPC LTD

Items Market High Low Closing Price EPS PE Ratio March 2007 283.30 129.00 250.90 8.33 30.12 March 2008 290.75 113.00 180.60 8.99 20.09 March 2009 241.35 165.25 235.65 9.95 23.68 March 2010 238.90 175.35 200.65 10.59 18.95

P/E RATIO =

INFERENCE This ratio establishes the relationship between the stock price and the companys earnings. It gives an idea of what the market is willing to pay for the companys earnings. The P/E ratio is greater in the year 2007 whereas it is lower during the year 2010

THE INTRINSIC VALUE CALCULATION OF NTPC LTD

Dividend Pay Out Ratio

=
= = 0.37 1 - Average DPOR 1 - 0.37 0.63 Sum of ROE for 4 years 4

Average DPOR for 4 years

Average Retention ratio = = Average Return on Equity =

= = Long term growth rate in dividend and earnings = = = 94.62 Average Retention Ratio * Average Return on Equity 0.63 * 94.62 59.61%

Normalized average P/E ratio

= = = 23.21%

Projected EPS for 2011 2012

EPS for the current year * ( 1 + growth rate )

= = Intrinsic Value =

10.59 (1 + 59.23%) 16.86 Projected EPS * Normalized Average Price Earnings Ratio

= = Projected Dividend Per Share For the Year 2011 - 2012 =

16.86 * 23.21 391.32

Dividend for the current Year *

( 1 + Growth rate ) = = 3.80* ( 1 + 0.59 ) 6.05

INFERENCE
The calculated intrinsic value of the company is 391.32, which is higher than the current market price (168.85). The projected EPS of the scrip is 16.86 which is an increase over the present EPS which is 10.59. DPS of the share is estimated at RS 6.05.

Year

Index (x)

Return

y
12.11 3612.01 5402.25 44.49 12.25 12.27 15.15 14.69 y 54.36 150.06 150.55 229.52 215.80 = =745.93

xy
42.63 -737.43 1113.53 -97.98 xy =320.75

2007 2008 2009 2010

3.48 -60.10 73.50 -6.67 x = 10.21

CALCULATION OF CORRELATION

Correlation (r)

[ [

=
=

0.71

CALCULATION OF STANDARD DEVIATION OF INDEX RETURN

Standard Deviation ( =

47.55

= =

CALCULATION OF STANDARD DEVIATION OF STOCK RETURN

Standard Deviation ( =

= 1.34
CALCULATION OF BETA

rim * im

2 m

0.02

CALCULATION OF ALPHA
= = = - x 7.95 - 0.008 * 2.55 13.54

POWER GRID
POWERGRID, the Central Transmission Utility (CTU) of the country, is engaged in power transmission business with the mandate for planning, co-ordination, supervision and control over complete inter-State transmission system. POWERGRID, as on July 2009, owns and operates about 71,600 ckt kms of transmission lines at 800/765 kV, 400 kV, 220 kV & 132 kV EHVAC & +500 kV HVDC levels and 122 sub-stations with transformation capacity of about 81,200 MVA.

Recognizing the role of POWERGRID in the overall development of transmission and power sector, Govt. of India has conferred Navratna upon status to POWERGRID in May` 08, the highest honour for a Public Sector Enterprise. For overall co-ordination at national level, POWERGRID has implemented National Load Despatch Centre (NLDC) at Delhi with back up at Kolkata, which has been commissioned in February, 2009. NLDC shall be the apex body to ensure integrated operation of the national power system.

The Company recently received Three National Awards for meritorious performance in the field of Transmission sector for system availability and early completion of project for the year 2007-08, All India Organization of Employers Industrial Relations award 2007-08, and IEEMA Power Awards 2009 for Excellence in Power Transmission. Further, POWERGRID has been conferred the The First DSIJ PSU Awards 2009 by Dalal Street Group of Publications for being one of the largest transmission utilities in the world. POWERGRID has been contributing significantly towards development of Indian power sector by undertaking coordinated development of power transmission network along with effective and transparent operation of regional grids and through continuous innovations in technical & managerial fields. Recognizing the role of POWERGRID in the overall development of transmission and power sector, Govt. of India has conferred Navratna upon status to POWERGRID in May` 08, the highest honour for a Public Sector Enterprise.

COMPANY PROFILE
Company name Address : : Power Grid Corporation of India Ltd B-9 Qutab Institutional Area, Katwaria Sarai, New Delhi110016, New Delhi Year of Establishment Chairman Production Capacity Face value of share BSE scrip code NSE code : : : : : : 1989 Mr. S K Chathurvedi 77,217MVA Rs 10 532898 POWERGRID

BOOKVALUE OF POWER GRID LTD.

ITEMS BOOK VALUE MAEKET: HIGH LOW EPS DPS

MARCH 2007 28.85

MARCH 2008 32.68

MARCH 2009 32.16

MARCH 2010 37.88

167.50

156.00

130.00

121.45

83.15 8.33 3.20

52.00 8.99 3.50

71.50 9.95 3.60

91.80 10.59 3.80

PAY OUT POLICY OF POWER GRID PVT LIMITED

Items EPS DPS Pay Out Ratio March 2007 3.25 3.20 0.31 March 2008 3.44 3.50 0.35 March 2009 4.02 3.60 0.30 March 2010 4.85 3.80 0.31

PAY OUT RATIO INFERENCE

The payout ratio is consistent for all the four years without much variation ranging between 0.30 and 0.35

RETURN ON EQUITY OF POWER GRID LTD

Items

March 2007 (in crores)

March 2008 (in crores) 4208.84 1448.47 34.41

March 2009 (in crores) 4208.84 1690.61 40.17

March 2010 (in crores) 4208.84 2040.94 48.49

Share Capital PAT ROE

3787.41 1229.37 32.46

INFERENCE ROE is showing a fluctuating trend over the four years and the share holders got maximum profitability on the capital invested during the year 2010 whereas it is minimum in the year 2007 which shows that equity shareholders earn comparatively higher profit in the year 2010and lower in the year 2007.

DIVIDEND YIELD RATIO OF POWER GRID LTD

Items DPS MPS March 2007 3.20 143.95 March 2008 3.50 83.5 1.42 March 2009 3.60 110.15 1.09 March 2010 3.80 98.30 1.53

Dividend yield 0.70 Ratio

INFERENCE It shows the percentage return a company pays out to shareholders in the form of dividends. It is comparatively higher in the year 2010 and lower in the year 2007

PRICE EARNING RATIO OF POWER GRID LTD

Items Market High Low Closing Price EPS PE Ratio March 2007 167.50 83.15 143.95 3.25 44.29 March 2008 156.00 52.00 83.15 3.44 24.27 March 2009 130.00 71.50 110.15 4.02 27.40 March 2010 121.45 91.80 98.30 4.85 20.27

INFERENCE P/E Ratio is greater in the year 2007 and is lower in the year 2010 which shows that market provides more return during 2007 and less return in the year 2010.

THE INTRINSIC VALUE CALCULATION OF POWER GRID LTD

Dividend Pay Out Ratio

=
=

Average DPOR for 4 years

= 0.32

Average Retention ratio

1 - Average DPOR

= = Average Return on Equity =

1 - 0.32 0.68 Sum of ROE for 4 years 4 = = 38.88 Average Retention Ratio * Average Return on Equity = = 0.68 * 38.88 26.43%

Long term growth rate in dividend and earnings

Normalized average P/E ratio

= = = 29.06% EPS for the current year * ( 1 + growth rate ) = = 4.85 (1 + 26.66%) 6.14 Projected EPS * Normalized Average Price Earnings Ratio = = 6.14 * 29.06 178.47

Projected EPS for 2011 2012

Intrinsic Value

Projected Dividend Per Share

For the Year 2011 - 2012

Dividend for the current Year * ( 1 + Growth rate )

= =

1.50* ( 1 + 0.26 ) 1.899 or 1.90

INFERENCE
The calculated intrinsic value of the company is 178.47, which is higher than the current market price (97.65). The projected EPS of the scrip is 6.14 which is an increase over the present EPS which is 4.85. DPS of the share is estimated at RS 1.9.

TABLE 8
Year Index (x) 2007 2008 2009 2010 3.48 -60.10 73.50 -6.67 12.11 3612.01 5402.25 44.49 8.29 10.40 13.10 8.58 68.72 108.16 171.61 73.62 28.85 -625.04 962.85 -57.23 Return

xy

x = 10.21

y =40.37

=105.53

xy =309.43

CALCULATION OF CORRELATION
Correlation (r) =
[ [ ] ]

=
=

0.12

CALCULATION OF STANDARD DEVIATION OF INDEX RETURN

Standard Deviation ( =

47.55

= =

CALCULATION OF STANDARD DEVIATION OF STOCK RETURN

Standard Deviation ( =

= 1.47
CALCULATION OF BETA

rim * im

2 m

0.003

CALCULATION OF ALPHA
= = = - x 10.09 -( 0.003 * 2.55) 10.08

TATA POWER
Recognised as Indias largest private sector power utility, with a reputation for trustworthiness, built up over nearly nine decades, Tata Power surges ahead into yet another year with plans of sustained growth, greater value to consumer and reliable power supply.Led by a powerful vision, Tata Power pioneered the generation of electricity in India. It has now successfully served the Mumbai consumers for over ninety years and has spread its footprints across the nation. Today, it is the countrys largest private player in the sector. Apart from Mumbai and Delhi, the company has generation capacities in Jojobera, Jharkhand and Karnataka.

Tata Power has an installed power generation capacity of about 3000 Mega Watts, with the Mumbai power business, which has a unique mix of Thermal and Hydro Power, generated at the Thermal Power Station, Trombay, and the Hydro Electric Power Stations at Bhira, Bhivpuri and Khopoli, accounting for 1797 MW. Its diverse generation capability facilitates the company in producing low cost energy, thereby giving its consumers a greater value for money. Among its many achievements that Tata Power can proudly boast of are the installation and commissioning of Indias first 500 MW unit (at its Thermal Power Generating Station, Trombay) the 150 MW Pumped Storage Unit at its Hydro Generating Station, Bhira, and environmental control systems like the Flue Gas Desulphurisation plant.Tata Power has a first of its kind joint venture with Power Grid Corporation of India for the 1200 km Tala Transmission Project. Corporate Social Responsibility Tata Power is committed to setting high standards in its pursuit of social responsibility and remaining sensitive to the issues of resource conservation, environment protection and enrichment and development of local communities in its areas of operations. The company has a simple philosophy that guides its activities in these matters, Giving back is a means towards going ahead".

COMPANY PROFILE Company name Address : : Tata Power Company Ltd Bombay House, 24 Homi Mody Street, Mumbai, 400001, Maharashtra Year of Establishment Chairman Production Capacity BSE Scrip Code NSE Code : : : : : 1919 Mr. R N Tata 2300MW 500400 TATA POWER

TABLE 1

BOOK VALUE OF TATA POWER LTD.

ITEMS BOOK VALUE MAEKET: HIGH LOW EPS DPS 472.35 35.21 9.50 530.10 39.42 10.50 602.00 41.65 11.50 1190.00 39.93 12 1476.00 1649.80 1490.00 1517.70 MARCH 2007 302.73 MARCH 2008 362.11 MARCH 2009 390.36 MARCH 2010 447.68

PAY OUT POLICY OF TATA POWER LIMITED

Items EPS DPS Pay Out Ratio March 2007 35.21 9.50 0.27 March 2008 39.42 10.50 0.26 March 2009 41.65 11.50 0.27 March 2010 39.93 12 0.30

PAY OUT RATIO INFERENCE

DPOR is comparatively higher in the year 2010 whereas it is consistent for the other three years with slight variation.

RETURN ON EQUITY OF TATA POWER CO LTD

Items

March 2007 (in crores)

March 2008 (in crores) 220.72 896.90 394.12

March 2009 (in crores) 221.44 922.20 416.46

March 2010 (in crores) 237.33 947.65 399.03

Share Capital PAT ROE

197.92 696.80 352.06

INFERENCE

ROE is greater in the year 2009 during which equity shareholders made maximum return in comparison with other four years and least in the year 2007.

DIVIDEND YIELD RATIO OF TATA POWER LTD

Items DPS MPS March 2007 9.50 1470.05 March 2008 10.50 749.15 1.40 March 2009 11.50 1381.45 0.83 March 2010 12 1365.55 0.88

Dividend yield 0.65 Ratio

INFERENCE

DYR is greater in the year 2008 and lower in the year 2007 which shows that shareholders made greater percentage return on their holdings during 2008 and least in 2007.

P/E RATIO OF TATA POWER CO LTD

Items Market High Low Closing Price EPS PE Ratio March 2007 1476.00 472.35 1470.05 35.21 41.75 March 2008 1649.80 530.10 749.15 39.42 19.00 March 2009 1490.00 602.00 1381.45 41.65 33.17 March 2010 1517.70 1190.00 1365.55 39.93 34.20

INFERENCE P/E Ratio is showing a fluctuating trend throughout the years where it is 41.75 in the year 2007 and declined to the 19.00 in the following year where the other two years P/E shows remain more or less consistent.

THE INTRINSIC VALUE CALCULATION OF TATA POWER LTD

Dividend Pay Out Ratio

=
= = 0.28 1 - Average DPOR 1 - 0.28

Average DPOR for 4 years

Average Retention ratio

= =

= Average Return on Equity =

0.72 Sum of ROE for 4 years 4

= = Long term growth rate in dividend and earnings = = = 390.48 Average Retention Ratio * Average Return on Equity 0.72 * 390.48 281.92%

Normalized average P/E ratio

= = = 32.03

Projected EPS for 2011 2012

EPS for the current year * ( 1 + growth rate )

= = Intrinsic Value =

39.93 (1 + 2.82%) 152.50 Projected EPS * Normalized Average Price Earnings Ratio

= =

152.50 * 32.03 4884.60

Projected Dividend Per Share For the Year 2011 - 2012 = Dividend for the current Year * ( 1 + Growth rate ) = = 12 ( 1 + 2.82) 45.83

INFERENCE The calculated intrinsic value of the company is 4884.60, which is higher than the current market price (1206.10). The projected EPS of the scrip is 152.50 which is an increase over the present EPS which is 39.93. DPS of the share is estimated at RS 45.83.

year

Index (x)

Return

y
12.11 3612.01 5402.25 44.49 7.61 6.96 7.32 9.90 y =31.79 57.91 48.44 53.58 98.01 =257.94

xy
26.48 -418.30 538.02 -66.03 xy =80.17

2007 2008 2009 2010

3.48 -60.10 73.50 -6.67 x = 10.21

CALCULATION OF CORRELATION
Correlation (r) =
[ [ ] ]

=
=

0.37

CALCULATION OF STANDARD DEVIATION OF INDEX RETURN

Standard Deviation ( =

47.55

= =

CALCULATION OF STANDARD DEVIATION OF STOCK RETURN

Standard Deviation ( =

= 1.15
CALCULATION OF BETA

rim * im

2 m

0.008

CALCULATION OF ALPHA
= = = - x 7.95 -( 0.008 * 2.55) 7.93

RELIANCE INFRA Reliance Infrastructure, a part of Reliance Group, is India's largest infrastructure company with turnover of over Rs.15,690 crore and market capitalization of over Rs. 24,450 crore as on March 31, 2010. Reliance Infrastructure Limited is Indias leading utility company having presence in across the value chain of power business i.e. Generation, Transmission, Distribution, EPC and Trading and the largest infrastructure company by developing projects in all high growth areas in infrastructure sector i.e. Roads, Highways, Metro Rails, Airports and Speciality Real Estate. Our presence spans across three verticals: - Engineering, Procurement and Construction - Energy

- Infrastructure

Engineering, Procurement and Construction . Our EPC division is ushering this energy revolution with power plant projects. Along with full service project advisory capabilities, we manage power plants on a turnkey basis and provide industry specialist services such as fuel management advice and fiscal advice. Our the turnover of the division was Rs 557 crore (US$ 120 million) and order book position of over Rs 18,530 crore (US$ 4 billion) as on June 30, 2010. Energy This comprehensive sphere of influence extends our vision of a highly developed India within our realms. We distributed more than 36 billion units of electricity to 30 million consumers and generate 941 MW of electricity from our power stations. Our transmission division is developing 5 transmission projects, with total project outlay of Rs 6,640 crore (US$ 1.4 billion). Infrastructure RInfra has a significant presence in the construction of roads, metros, airports and real estate. Infrastructure is decidedly the most visible and important form of development in a nation. We signify this with our 11 road projects of 970 kms worth about Rs 12,000 crore (US$ 2.6 billion). We are currently implementing 3 metro rail projects in Mumbai and Delhi.

COMPANY PROFILE Company name Address : : Reliance Infrastructure Ltd Reliance Energy Centre Santa Cruz (East), Mumbai, 40055, Maharashtra Year of Establishment Production Capacity : : 1929 941MW

BOOK VALUE OF RELIANCE INFRA LTD.

ITEMS BOOK VALUE MAEKET: HIGH LOW EPS DPS

MARCH 2007 378.13

MARCH 2008 433.76

MARCH 2009 466.07

MARCH 2010 574.81

2219.40

2641.00

1404.50

1224.00

445.00 35.07 5.30

352.75 45.86 6.30

428.00 50.39 7

751.15 47.03 7.10

PAY OUT POLICY OF RELIANCE INFRA LIMITED

Items EPS DPS Pay Out Ratio March 2007 35.07 5.30 0.15 March 2008 45.86 6.30 0.14 March 2009 50.39 7 0.14 March 2010 47.03 7.10 0.15

PAY OUT RATIO INFERENCE

DPOR is consistent in all the four years where it is 0.15 in th3 year 2007 and reduced to 0.14 in the year 2008 and 2009 and reaches to the previous level of 0.15 in the year 2010 wth one point increase

RETURN ON EQUITY OF RELIANCE INFRA CO LTD

Items

March 2007 (in crores)

March 2008 (in crores) 235.62 1084.63 460.33

March 2009 (in crores) 226.07 1138.88 503.77

March 2010 (in crores) 244.92 1151.69 470.231

Share Capital PAT ROE

228.57 801.45 350.64

INFERENCE

ROE is maximum in the year 2010 during which the equity shareholders made maximum return and least in the year 2007 during which they made least return.

DIVIDEND YIELD RATIO OF RELIANCE INFRA LTD

Items DPS MPS March 2007 5.30 2135.45 March 2008 6.30 579.50 1.09 March 2009 7 1146.75 0.61 March 2010 7.10 843.20 0.84

Dividend yield 0.25 Ratio

INFERENCE

It is higher in the year 2008 and lower in 2007 which signifies that the shareholders made more return during the year 2008 and less return during the year 2007 respectively.

PRICE EARNING RATIO OF RELIANCE INFRA LTD

Items Market High Low Closing Price EPS PE Ratio March 2007 2219.40 445.00 2135.45 35.07 60.89 March 2008 2641.00 352.75 579.50 45.86 12.63 March 2009 1404.50 428.00 1146.75 50.39 22.76 March 2010 1224.00 751.15 843.20 47.03 17.93

INFERENCE

It is showing a highly fluctuating trend with steep ups and downs throughout the year where it is 60.89 in 207 and it reaches to 17.93 in 2010 showing a downward trend.

THE INTRINSIC VALUE CALCULATION OF RELIANCE INFRA LTD

Dividend Pay Out Ratio

=
= = 0.15 1 - Average DPOR

Average DPOR for 4 years

Average Retention ratio

= = Average Return on Equity =

1 - 0.15 0.85 Sum of ROE for 4 years 4

= = Long term growth rate in dividend and earnings = = = 446.24 Average Retention Ratio * Average Return on Equity 0.85 * 446.24 379.30 %

Normalized average P/E ratio

= = = 28.56

Projected EPS for 2011 2012

EPS for the current year * ( 1 + growth rate )

= = Intrinsic Value =

47.03 (1 + 3.82) 226.45 Projected EPS * Normalized Average Price earning ratio

226.45 * 28.55

= Projected Dividend Per Share For the Year 2011 - 2012 =

6465.82

Dividend for the current Year * ( 1 + Growth rate )

= =

7.10 ( 1 + 3.82) 34.22

INFERENCE
The calculated intrinsic value of the company is 6465.82, which is higher than the current market price (557.15). The projected EPS of the scrip is 226.45 which is an increase over the present EPS which is 47.03. DPS of the share is estimated at RS 34.22.

year

Index (x)

Return

y
12.11 3612.01 5402.25 44.49 6.56 6.56 6.22 8.08 43.03 43.03 38.69 65.29

xy
22.83 -394.26 457.17 -53.89

2007 2008 2009 2010

3.48 -60.10 73.50 -6.67

x = 10.21

y =27.42

=190.04

xy =31.89

CALCULATION OF CORRELATION
Correlation (r) =
[ [ ] ]

-0.09

CALCULATION OF STANDARD DEVIATION OF INDEX RETURN

Standard Deviation ( =

47.55

= =

CALCULATION OF STANDARD DEVIATION OF STOCK RETURN

Standard Deviation ( =

= 0.72
CALCULATION OF BETA

rim * im

2 m

0.001

CALCULATION OF ALPHA
= = = - x 6.86 -( 0.001 * 2.55) 6.85

TORRENT POWER
Torrent Power is one of the leading brands in the Indian power sector, by the Rs. 8200 crore Torrent Group a group committed to its mission of transforming life by serving two of the most critical needs - healthcare and power. Torrent Pharmaceuticals Ltd., the flagship company of the Torrent Group, is a major player in the Indian pharmaceuticals industry with a vision of becoming a global entity in the arena. With an all-round experience in generation, transmission and distribution of power, and a proven track record of implementing large power projects, Torrent Power is the most experienced private sector player in Gujarat.

Torrent Power foresaw the prospects in the power sector much before the liberalization, when it took-over an ailing power cable company in 1989 (now known as Torrent Cables Limited) and successfully turned it around. The high points of Torrents foray into power however were the acquisitions of two of the Indias oldest utilities The Surat Electricity Company Ltd and The Ahmadabad Electricity Company Ltd. Torrent turned them into first rate power utilities comparable with the best, in terms of operational efficiencies and reliability of power supply. Torrent has a generation capacity of 1647.5 MW and distributes power to more than 3 million customers annually in Ahmadabad, Gandhinagar, Surat, Bhiwandi and Agra.

The company is currently implementing a 1200 MW gas based power project at Dahej in South Gujarat. The project, called the DGEN Power Project, is being implemented in a phased manner starting with a 400 MW first phase. It is also in the process of expanding the capacity of its SUGEN plant near Surat. Distribution Franchise business is one area which Torrent Power has been aggressively pursuing as part of its expansion plans.

COMPANY PROFILE Company name Address : : Torrent Power Ltd Torrent House Off Ashram Road, Ahmedabad-38009, Gujarat Year of Establishment Chairman : : 1929 Mr Sudhir Mehta

Production Capacity

500MW

BOOK VALUE OF TORRENT POWER LTD.

ITEMS BOOK VALUE MAEKET: HIGH LOW EPS DPS 56.55 1.92 0.40 50.25 5.26 1.20 60.10 7.36 2 260.15 16.86 3 208.70 268.00 368.70 375.00 MARCH 2007 77.98 MARCH 2008 85.32 MARCH 2009 98.94 MARCH 2010 109.95

PAY OUT POLICY OF TORRENT POWER LIMITED

Items EPS DPS Pay Out Ratio March 2007 1.92 0.40 0.21 March 2008 5.26 1.20 0.23 March 2009 7.36 2 0.27 March 2010 16.86 3 0.18

PAY OUT RATIO INFERENCE

DPOR is maximum during the year 2009 and then there is a steep fall in the year 2010 where it comes down to 0.18

RETURN ON EQUITY OF TORRENT POWER CO LTD

Items March 2007 (in crores) Share Capital PAT ROE 63.27 16.99 26.85 March 2008 (in crores) 63.27 33.29 52.62 March 2009 (in crores) 63.37 46.59 73.64 March 2010 (in crores) 63.27 106.79 168.66

INFERENCE Above table depicts that there is a fluctuating trend in the ROE since it is 26.85 in the year 2007 and rises to the extent of 168.66 in the year 2010.

DIVIDEND YIELD RATIO OF RELIANCE INFRA LTD

Items DPS MPS March 2007 0.40 190.40 March 2008 1.20 74.15 1.62 March 2009 2 322.70 0.62 March 2010 3 276.40 1.09

Dividend yield 0.21

Ratio

INFERENCE DYR is comparatively higher in the year 2008 and lower in 2007 resulting more return to shareholders in 2008 and vice versa.

P/E RATIO OF TORRENT POWER LTD

Items Market High Low Closing Price March 2007 208.70 56.55 190.40 March 2008 268.00 50.25 74.15 March 2009 368.70 60.10 322.70 March 2010 375.00 260.15 276.40

EPS PE Ratio

35.07 99.17

45.86 14.10

50.39 43.85

47.03 16.40

INFERENCE P/E Ratio is showing a highly fluctuating downward trend showing 99.17 in the year 2007 and reaching to 16.40 in the year 2010.

THE INTRINSIC VALUE CALCULATION OF TORRENT POWER LTD

Dividend Pay Out Ratio

Average DPOR for 4 years

= = 0.22 1 - Average DPOR 1 - 0.22 0.78 Sum of ROE for 4 years 4 = = 80.44 Average Retention Ratio * Average Return on Equity = = 0.78 * 80.44 62.74 %

Average Retention ratio

= = =

Average Return on Equity

Long term growth rate in dividend and earnings

Normalized average P/E ratio

= = = 43.38%

Projected EPS for 2011 2012

EPS for the current year * ( 1 + growth rate )

= =

16.86 (1 + 0.63) 26.86

Intrinsic Value

Projected EPS * Normalized Average Price earning ratio

= = Projected Dividend Per Share For the Year 2011 - 2012 =

26.86 * 43.38 1165.19%

Dividend for the current Year * ( 1 + Growth rate )

= =

3 ( 1 + 0.63) 4.89

INFERENCE The calculated intrinsic value of the company is 1189.08, which is higher than the current market price (245.30). The projected EPS of the scrip is 26.86 which is an increase over the present EPS which is 16.86. DPS of the share is estimated at RS 4.89.

Year

Index Return (x)

xy

2007 2008 2009 2010

3.48 -60.10 73.50 -6.67 x = 10.21

12.11 3612.01 5402.25 44.49

3.35 8.05 9.95 20.97 y =42.32

11.22 64.80 99.00 439.74 =614.76

11.66 -483.81 731.33 -139.87 xy =119.31

CALCULATION OF CORRELATION
Correlation (r) =
[ [ ] ]

=
=

0.009

CALCULATION OF STANDARD DEVIATION OF INDEX RETURN

Standard Deviation ( =

47.55

= =

CALCULATION OF STANDARD DEVIATION OF STOCK RETURN

Standard Deviation ( =

= 6.46
CALCULATION OF BETA

rim * im

2 m

0.001

CALCULATION OF ALPHA
= = = - x 10.58 - (0.001 * 2.55) 10.58

COMPARISON OF COMPANIES INTRINSIC VALUE WITH CURRENT MARKET PRICE

COMPANIES

INTRINSIC VALUE

CURRENT MARKET

PRICE NTPC POWER GRID TATA POWER RELIANCE INFRA TORRENT POWER 391.32 178.47 4884.60 6465.82 1189.08 168.85 97.65 1206.10 557.15 245.30

INFERENCE
The calculated intrinsic value of NTPC is 391.32, which is greater than the current market price(168.85).

 The calculated intrinsic value of POWER GRID is 178.47, which is greater than the current market price(97.65).

The calculated intrinsic value of TATA POWER is 4884.60, which is greater than the current market price(557.15).

The calculated intrinsic value of RELIANCE INFRA is 6465.82, which is greater than the current market price(557.15).

The calculated intrinsic value of TORRENT POWER is 1189.08, which is greater than the current market price(245.30).

It is better to buy those shares of the company whose intrinsic value is greater than current market price since those shares can be regarded as under priced shares and gives an expectation of rise in share price in the future period. Similarly, it advisable to sell the shares of those company whose intrinsic value is less than current market price since they are over priced and there is likely decline in the share value in the future. In the above case, it is advisable to buy the shares of all the five companies since intrinsic value is less than current market price.

BETA COMPARISON OF COMPANIES COMPANIES

NTPC

BETA
0.02

POWER GRID TATA POWER RELIANCE INFRA TORRENT POWER

0.0003 0.008 0.001 0.001

INFERENCE

Normally beta value of a share ranges between 0 and 2.5. For a risk free investment beta will be equal to zero and more risky investments have a beta value closer to 2.5 If beta is greater than 1, the shares tend to go up faster than the market in a rising market and fall more than the market in a declining market If beta is less than 1, the shares will generally experience smaller than average gains in a rising market and smaller than average falls in a declining market. If the beta is equal to 1, the shares are expected to follow the market.

Here all the companies beta is less than one and therefore they are defensive shares and there is not very sensitive towards market fluctuations and experience smaller than average gains in a rising market and smaller than average falls in a declining market. Those investors who are ready to take only moderate risk can purchase these shares.

ALPHA COMPARISON OF COMPANIES COMPANIES

NTPC POWER GRID TATA POWER RELIANCE INFRA TORRENT POWER ALPHA 13.54 10.06 7.93 6.85 10.58

INFERENCE
Alpha is a measure of a securitys risk relative to the market. An alpha of 1.0 means the fund outperformed the market 1.0 %. A positive alpha is the extra return awarded to the investor

for taking additional risk rather than accepting the market return. A fund with a low beta and a high alpha is an ideal one. This means a fund has outperformed the index while posing less risk than the index .Here, for all the companies alpha is greater than beta which signifies low risk and high return.

TESTING OF HYPOTHESIS USING SIMPLE REGRESSION METHOD

FOR THE YEAR 2007-08
H0 : The influence of stock price on market return is not significant.

H1: The influence of stock price on market return is significant.

M odel Sum m ary Std. Error of the Es timate 149.5644

Model 1

R .989 a

R Square .979

A djusted R Square .967

a. PREDICTORS: STOCK PRICE OF NTPC, POWER GRID, TA TA POWER, RELIA NCE INFRA

ANOVAb Sum of Squares 7195700 156586.6 7352286 Mean Square 4 1798925 7 22369.517 11

Model 1

df

Regression Residual Total

F 80.419

Sig. .000 a

a.

Independent Variable: stock price of NTPC, Pow er Grid, Tata Pow er, Reliance Infra, Torrent Pow er

b. Dependent Variable: mreturn2007to2008

a Coe fficients

Model 1

(Cons tant) 2007TO2008 STOCK PRICE OF NTPC 2007TO2008 STOCK PRICE OF RELIANCE 2007TO2008 STOCK PRICE OF TATA 2007TO2008 STOCK PRICEOF TORRENT POWER

Unstandardiz ed Coef f icients B Std. Error 17.753 481.582 12.977 3.548

Standardi zed Coef f icien ts Beta

t .037

Sig. .972 .008

.535

3.658

.578

.396

.422

1.458

.188

-.234

.423

-.094

-.553

.598

2.458

4.957

.143

.496

.635

a. Dependent Variable: mreturn2007to2008

INFERENCE
It is found that regression value is 0.979 and the significance level reported by the output is zero, since it is less than 0.05% level of significance, the chance of rejecting a null hypothesis which is true is nil and therefore the null hypothesis can be rejected. Hence there is a significant influence of stock price and market return.

FOR THE YEAR 2008-2009

H0 : The influence of stock price on market return is not significant. H1: The influence of stock price on market return is significant.
Model Sum m ary Std. Error of the Es timate 39.5676

Model 1

R .999 a

R Square .997

A djusted R Square .995

a. PREDICTORS: STOCK PRICE OF NTPC, POWER GRID, TA TA POWER, RELIA NCE INFRA , TORRENT POWER

ANOVAb Sum of Squares 3471593 9393.554 3480987 Mean Square 694318.6 1565.592

Model 1

df 5 6 11

Regression Residual Total

F 443.486

Sig. .000 a

a. a. Independent Variable: STOCK PRICE OF NTPC, POWER GRID, TATA POWER, RELIANCE INFRA, TORRENT POWER b. Dependent Variable: MRETURN 2008T02009

a Coe fficients

Model 1

(Cons tant) 2007TO2008 STOCK PRICE OF NTPC 2008TO2009 STOCK PRICE 0F POWER GRID 2008TO2009 STOCK PRICE OF RELIA NCE INFRA 2008TO2009 SR OF TA TA POWER 2008TO2009 SR OF TORRENT POWER

Unstandardiz ed Coef f icients B Std. Error 388.777 198.942 -1.881 1.854

Standardi zed Coef f icien ts Beta

t 1.954 -1.014

Sig. .098 .350

-.053

7.130

3.176

.136

2.245

.066

1.265

.213

.712

5.945

.001

.380

.278

.174

1.365

.221

1.925

.623

.080

3.089

.021

a. Dependent V ariable: MRETURN 2008T02009

INFERENCE
It is found that regression value is 0.997 and the significance level reported by the output is zero, since it is less than 0.05% level of significance, the chance of rejecting a null hypothesis which is true is nil and therefore the null hypothesis can be rejected. Hence there is a significant influence of stock price and market return.

FOR THE YEAR 2009-2010

H0 : The influence of stock price on market return is not significant. H1: The influence of stock price on market return is significant.

M o d el Su m m ar y Std. Error of the Es timate 95.5898

Model 1

R .966 a

R Square .933

A djusted R Square .877

a. PREDICTORS: STOCK RETURN OF NTPC, POWER GRID, TA TA POWER, RELIA NCE INFRA , TORRENT POWER

ANOVAb Sum of Squares 761250.9 54824.506 816075.4 Mean Square 152250.2 9137.418

Model 1

df 5 6 11

Regression Residual Total

F 16.662

Sig. .002 a

a. a. Independent Variable: STOCK RETURN OF NTPC, POWER GRID, TA TA POWER, RELIANCE INFRA, TORRENT POWER b. Dependent Variable: MRETURN 2009TO2010

a Coe fficients

Model 1

(Cons tant) 2009TO2010 STOCK PRICEOF NTPC 2009TO2010 STOCK PRICE OF POWER GRID 2009TO2010 STOCK PRICE OF RELIANCE INFRA 2009TO2010 STOCK PRICEOF TATA POWER 2009TO2010 SR OF TORRENT POWER

Unstandardiz ed Coef f icients B Std. Error 548.779 759.872 1.158 3.684

Standardi zed Coef f icien ts Beta

t .722

Sig. .497 .764

.049

.314

2.081

7.499

.055

.278

.791

.723

.373

.407

1.937

.101

.640

.513

.342

1.249

.258

1.302

.924

.364

1.408

.209

a. Dependent Variable: MRETURN 2009TO2010

INFERENCE
It is found that regression value is 0.933 and the significance level reported by the output is zero, since it is less than 0.05% level of significance, the chance of rejecting a null hypothesis which is true is nil and therefore the null hypothesis can be rejected. Hence there is a significant influence of stock price and market return.

FOR THE YEAR 2010-2011

H0 : The influence of stock price on market return is not significant. H1: The influence of stock price on market return is significant.

M o d el Su m m ar y Std. Error of the Es timate 849.2887

Model 1

R .623 a

R Square .389

A djusted R Square -.121

a. PREDICTORS: STOCK RETURN OF NTPC, POWER GRID, TA TA POWER, RELIA NCE INFRA , TORRENT POWER

ANOVAb Sum of Squares 2752327 4327748 7080075 Mean Square 550465.4 721291.3

Model 1

df 5 6 11

Regression Residual Total

F .763

Sig. .608 a

a. a. Independent Variable: STOCK RETURN OF NTPC, POWER GRID, TA TA POWER, RELIANCE INFRA, TORRENT POWER b. Dependent Variable: MRETURN 2010TO2011

a Coe fficients

Model 1

(Cons tant) 2010TO2011 STOCK -31.037 PRICE OF NTPC 2010TO2011 STOCK PRICE OF 50.935 POWER GRID 2010TO2011 STOCK PRICE OF 3.576E-02 RELIA NCE INFRA 2010TO2011 STOCK .280 PRICE OF TA TA POWER 2010TO2011 STOCK PRICE OF 11.171 TORRENT POWER

Unstandardiz ed Coef f icients B Std. Error -11.323 9657.333 46.942

Standardi zed Coef f icien ts Beta

t -.001 -.661

Sig. .999 .533

-.458

84.830

.300

.600

.570

3.813

.009

.009

.993

6.512

.024

.043

.967

15.056

.607

.742

.486

a. Dependent V ariable: MRETURN 2010TO2011

INFERENCE
It is found that regression value is 0.383 and the significance level reported by the output is zero, since it is less than 0.05% level of significance, the chance of rejecting a null hypothesis which is true is nil and therefore the null hypothesis can be rejected. Hence there is a significant influence of stock price and market return.

FINDINGS, SUGGESTIONS & CONCLUSION

5.1 FINDINGS
Five listed securities from power sector are selected for the study. They are securities of NTPC, Power Grid, Tata Power, Reliance Infra and Torrent Power. 1. NTPC LTD The stock price is found to be under priced as the intrinsic value of the security (391.32) is higher than the current market price(168.85) as on 31st March 2010. For the last 4 years, EPS of the company is showing an increasing trend. It is 8.33 in 2007, 8.99 in 2008, 9.95 in 2009 and 10.59 in 2010 which shows that there is an increase in the companys earnings consistently which provides better scope to the investors. ROE of the company is showing an upward trend. It was 83.25 in 2007 and reached to105.85 in 2010. The projected Earning per Share and Dividend per Share of the company for the year 2011 are 16.86 and 6.05. The calculated beta of the company is 0.02 and alpha is13.54. When alpha is greater than beta it signifies low risk and high return and therefore this is an ideal security for investment.

2. POWER GRID The stock price is found to be under priced as the intrinsic value of the security (178.47) is higher than the current market price(97.65) as on 31st March 2010.

ROE of the company is showing an upward trend showing 32.459 in 2007 and reaching to 4208.84 in 2010. The projected Earning per Share and Dividend per Share of the company for

the year 2011 are 16.86 and 6.05. The calculated beta of the company is 0.003 and alpha is10.08. When alpha is greater than beta it signifies low risk and high return and therefore this is an ideal security for investment.

3. TATA POWER

The stock price is found to be under priced as the intrinsic value of the security (4884.60) is higher than the current market price(120.10) as on 31st March 2010. ROE of the company is showing a fluctuating trend. It was 352.06 in 2007 and reached to 399.30 in 2010. The projected Earning per Share and Dividend per Share of the company for the year 2011 are 152.50 and 45.83. The calculated beta of the company is 0.008 and alpha is 7.93. When alpha is greater than beta it signifies low risk and high return and therefore this is an ideal security for investment.

4.

RELIANCE INFRA

The stock price is found to be under priced as the intrinsic value of the security (6465.82) is higher than the current market price(557.15) as on 31st March 2010. ROE of the company is showing a fluctuating trend. It was 350.63 in 2007 and reached to 470.23 in 2010. The projected Earning per Share and Dividend per Share of the company for the year 2011 are 226.45 and 34.19. The calculated beta of the company is 0.001 and alpha is 6.85. When alpha is greater than beta it signifies low risk and high return and therefore this is an ideal security for investment.

5.

TORRENT POWER

The stock price is found to be under priced as the intrinsic value of the security (1189.08) is higher than the current market price(245.30) as on 31st March 2010. ROE of the company is showing an upward trend. It was 26.85 in 2007 and reached to 168.66 in 2010. The projected Earning per Share and Dividend per Share of the company for the year 2011 are 27.41 and 4.88.

 The calculated beta of the company is 0.001 and alpha is 10.58. When alpha is greater than beta it signifies low risk and high return and therefore this is an ideal security for investment.

SUGGESTIONS 1. NTPC LTD

The calculated intrinsic value of security is 391.32 which is higher than the current market price 168.85(as on 31st March 2010), therefore security is under priced. So the researchers recommend to buy the securities. If the investors already have the shares they are advised to hold them and sell in the future to earn profit.

2. POWER GRID

The calculated intrinsic value of security is 178.47 which is higher than the current market price 97.65(as on 31st March 2010), therefore security is under priced. So the researchers recommend to buy the securities. If the investors already have the shares they are advised to hold them and sell in the future to earn profit

3.

TATA POWER

The calculated intrinsic value of security is 4884.60 which is higher than the current market price 1206.10 (as on 31st March 2010), therefore security is under priced. So the researchers recommend to buy the securities. If the investors already have the shares they are advised to hold them and sell in the future to earn profit .

4.

RELIANCE INFRA

The calculated intrinsic value of security is 4884.60 which is higher than the current market price 1206.10 (as on 31st March 2010), therefore security is under priced. So the researchers recommend to buy the securities. If the investors already have the shares they are advised to hold them and sell in the future to earn profit .

5 TORRENT POWER The calculated intrinsic value of security is 245.30 which is higher than the current market price 245.30 (as on 31st March 2010), therefore security is under priced. So the researchers recommend to buy the securities. If the investors already have the shares they are advised to hold them and sell in the future to earn profit.

CONCLUSION

In terms of investment criteria people invest in businesses , which are growing comtinously . They invest in those shares which can increase their earnings at a reasonable pace, but care should be taken not to overpay them.Since the main objective of the study was the fundamental analysis of five major players of the power utility sector such as NTPC,Power Grid,Tata Power, Reliance Infra and Torrent Power. These companies are analysed in terms of Return on equity ,Dividend Payout Ratio,Price Earnings Ratio, Intrinsic Value, Beta and Alpha .

To conclude , successful investment means managing the risk and not avoiding it.It involves first making an investment decision and next protecting and promoting the capital value of such investments.

BIBLIOGRAPHY BOOKS 1. VK BHALA, INVESTMENT MANAGEMENT. S CHAND PUBLICATIONS, NEW DELHI 2. PUNITHAVATHY PANDIAN, SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

WEBSITES 1. www.bseindia.com 2. www.nseindia.com 3. www.moneycontrol.com 4. www.ntpc.com 5. www.powergrid.com 6. www.tatapower.com 7. www.relianceinfra.com 8. www.torrentpower.com 9. www.hedgeequities.com