UNIVERSITY OF MUMBAI

2008-2010
PROJECT ON
“EQUITY ANALYSIS”

Submitted By

VISHAL S NABDE
Roll. No. 18

Summer Internship for Academic Year

2009-2010

Specialization: FINANCE

Submitted in fulfilment of requirement of Masters in Management Studies

(MMS)

GUIDED BY

PROF: DR. A.R.PHOPALEY

TO

IBSAR INSTITUTE OF MANGEMENT

KARJAT
 IBSAR Institute of Management Studies

Dahivali, Karjat.

(Affiliated to Mumbai University)

Summer Internship Project

Academic Year 2009-2010

CERTIFICATE

This is to certify that the project work titled “EQUITY ANALYSIS” “is a

Bonafide work carried out by VISHAL S. NABDE, a candidate for the MMS

Examination of UNIVERSITY OF MUMBAI, under my guidance and

direction.

Date: Dr. A.R.Phopaley

Advisor

Place: Karjat

IBSAR, Karjat
 ACKNOWLEDGEMENT

At the outset I take opportunity to place on record my sincere obligation towards

our respected Lt. Col. J. L. Ram, Dr. Phopaley, whose dedicated initiative and
encouragement were source of inspiration and prime focus in the successful completion of
my project work.
I take this opportunity to thank all those who have been instrumental in bringing
out this Report and who have made it possible to finish my Summer Training successfully
at RELIGARE SECURITIES LIMITED(RSL), LATUR.
I am thankful to respected BRANCH MANAGER MR. VINOD PANDHARE &
finance dept. of RSL for giving there valuable and precious suggestions and guidelines and
encouragement extended to me for successful completion of this project. I would also like
to thank the library staff for providing me with the required books
It gives me immense pleasure in thanking Mr. Amol Kulkarni for giving me this
opportunity to take up Summer Placement in the esteemed Organization and also for
giving me the opportunity to associate myself with the Company.

It was a pleasure to be associated with the Organization and the people in various
other Departments of the Organization.
 DECLARATION

I Mr. Vishal Nabde student of master in management studies II nd year (3rd sem) at
“IBSAR” hereby declare that I have completed my research project titled “equity analysis”
as partial fulfilment of the requirement of the course curriculum for the academic
year 2009-10 under the guidance of Branch Manager Mr. Vinod Pandhare & members of
finance dept.

The data that has been collected by me is truly authentic and is not borrowed or copied
from any dissertation report. The project contains true and complete information

Signature of student

Vishal
nabde
 INDEX
S.NO. PARTICULARS PAGE NO.
Chapter 1. Introduction
Company Profile
Chapter 2. Equity Analysis
Chapter 3. Analysis of Indian Automobile
Industry
• Fundamental Analysis
a. Economy
b. Industry
c. Company
- Financial & Non-Financial
• Technical Analysis
a. Share Price Analysis
b. Moving Average
c. Moving Average Crossover
d. Bollinger Band
e. M.A.C.D
Chapter 4. Conclusion
Chapter 5. Bibliography
INTRODUCTION :-

COMPANY PROFILE

RELIGARE Securities Ltd. (RSL) is a wholly owned subsidiary of RELIGARE

Financial Services Ltd. (RFSL), a Company promoted by the late Dr. Parvinder Singh, Ex-
CMD of Ranbaxy Laboratories Ltd.

The primary focus of Religare Securities Ltd. is to cater to services in Capital

Market Operations to Institutional Investors. The Company is a member of the National
Stock Exchange (NSE) and OTCEI. The growing list of financial institutions with whom
RSL is empanelled as approved Broker is a reflection of the high levels of services
maintained by the Company.

As on date the Company is empanelled with UTI, IDBI, IFCI, SBI, BOI-MF,
Punjab National Bank, PNB-MF, Oriental Insurance, GIC, UTI-Offshore, ICICI Can bank
MF, Punjab & Sind Bank, Pioneer ITI, SUN F&C, IDBI Principal, Prudential ICICI, ING
Baring and J M Mutual Fund.

RELIGARE was founded with the vision of providing integrated financial care
driven by the relationship of trust. The bouquet of services offered by RELIGARE
includes Broking (Stocks and Commodities), Depository Participant Service, Advisory on
Mutual Fund Investments and Portfolio Management Services.

RELIGARE is a pioneer in the concept of partnership to reach multiple

Locations in order to effectively service its large base of individual clients. Besides the
reach of RELIGARE, the clients of the company greatly benefit by its strong research
capability, which encompasses fundamentals as well as technical knowledge.
GROUP :

RELIGARE in recent years has expanded its reach in health care and financial
services wherein it has multiple specialty hospital and labs which provide health care
services and multiple financial services such as secondary market equity services, portfolio
management services, depository services etc.

RELIGARE financial services group comprises of Religare Securities Limited,

RELIGARE Comdex Limited and RELIGARE Finvest Limited which provide services in
Equity, Commodity and Financial Services business & Religare Insurance Advisory Ltd.

RELIGARE SECURITIES LIMITED

1. Member of National Stock Exchange of India and Bombay Stock

Exchange of India.

2. Depository Participant with National Securities Depository

Limited (NSDL) and Central Depository Services Limited (CDSL).

3. A SEBI approved Portfolio Manager.

RSL provides platform to all segments of the investor to leverage the immense
opportunity offered by equity investing in India either on their own or through managed
funds in Portfolio Management.

The ARN No. of the Religare Securities Ltd. is 33764. The ARN No. is
required by to be available with the broker who deals on behalf of investors
or sell the mutual funds of the different companies present in the market.
Religare Enterprises Limited
DIRECTORS OF RELIGARE SECURITIES
LIMITED

Chairman : Mr. Harpal Singh

Managing Director : Mr. Sunil Godhwani
Director : Mr. Vinay Kumar Kaul
Director : Mr. Malvinder Mohan Singh
Director : Mr. Shivinder Mohan Singh

MISSION

To be India's first Multinational providing complete financial services solution across the
globe

VISION

Providing integrated financial care driven by the relationship of trust and confidence.
BROKERAGE :-

INTRADAY:- 3 paisa (.3%)

(NEGOTIABLE)
DELIVERY:- 30 paisa (.03%)
(NEGOTIABLE)

Competititors of Religare :-

There are several financial security companies playing their roles in Indian equity market.
But Religare faces competitions from these few companies.

 ICICI Direct.com
 Share Khan (SSKI)
 Kotak Securities.com
 India Bulls
 HDFC Securities
 5paisa.com
 Motital Oswal
 IL&FS
 Karvy
WHAT’S THIS EQUITY ANALYSIS?
Professional investor will make more money & less loss than, who let their heart
rule. Their head eliminate all emotions for decision making. Be ruthless & calculating,
you are out to make money. Decision should be based on actual movement of share price
measured both in money & percentage term & nothing else. Greed must be avoided
patience may be a virtue, but impatience can frequently be profitable.
In Equity Analysis anticipated growth, calculations are based on considered
FACTS & not on HOPE. Equity analysis is basically a combination of two independent
analyses, namely fundamental analysis & Technical analysis. The subject of Equity
analysis, i.e. the attempt to determine future share price movement & its reliability by
references to historical data is a vast one, covering many aspect from the calculating
various FINANCIAL RATIOS, plotting of CHARTS to extremely sophisticated
indicators.

A general investor can apply the principles by using the simplest of tools: pocket
calculator, pencil, ruler, chart paper & your cautious mind, watchful attention. It should
be pointed out that, this equity analysis does not discuss how to buy & sell shares, but
does discuss a method which enables the investor to arrive at buying & selling decision.
The financial analysts always need yardsticks to evaluate the efficiency &
performances of any business unit at the time of investment. Fundamental analysis is
useful in long term investment decision. In Fundamental analysis a company s goodwill,
its performances, liquidity, leverage, turnover, profitability & financial health was
checked & analysis with the help of ratio analysis for the purpose of long term successful
investment.
Technical analysis refers to the study of market generated data like prices &
volume to determine the future direction of prices movements.
Technical analysis mainly seeks to predict the short term price travels. The focus of
technical analysis is mainly on the internal market data, i.e. prices & volume data. It
appeals mainly to short term traders.

It is the oldest approach to equity investment dating back to the late 19th century.

Assumptions for the Equity Analysis.

1. Works only in normal share-market conditions with great reliability, it also works
in abnormal share-market conditions, but with low reliability.

2. Equity analysis is purely based on the INVESTMENT PHILOSOPHY , so the

investment object has vital importance associated to return along with risk.

3. Cash management gets the magnitude role, because the scenario of equity analysis
is revolving around the term money

4. Portfolio management, risk management was up to the investor s knowledge.

5. Capital market trend is always a friend, whether it is short run or long run.

6. You are buying stock & not companies, so don t be curious or panic to do
postmortem of companies performances.

7. History repeats: investors & speculators react the same way to the same types of
events homogeneously.

8. Capital market has a typical market psychology along with other issues like;
perceptions, the crowd Vc the individual, tradition s & trust.

9. An individual perceptions about the investment return & associated risk may
differ from individual to individual.

10. Although the equity analysis is art as well as sciences so, it also has some
exceptions.

ANALYSIS OF AUTOMOBILE INDUSTRY

Over a period of more than two decades the Indian Automobile industry has been
driving its own growth through phases. With comparatively higher rate of economic
growth rate index against that of great global powers, India has become a hub of domestic
and exports business. The automobile sector has been contributing its share to the shining
economic performance of India in the recent years.
To understand this industry for the purpose of investment we need to analyze it by
following two approaches:
1). Fundamental Analysis (E.I.C Approach)
a. Economy
b. Industry
c. Company

2).Technical Analysis

EQUITY ANALYSIS.

ENVIRONMENT & ECONOMICAL ANALYSIS.

FUNDAMENTAL TECHNICAL
 ANALYSIS ANALYSIS
Fundamental Analysis.
Fundamental analysis is the study of economic, industry and company conditions
in an effort to determine the value of a company s stock. Fundamental analysis typically
focuses on key statistics in company s financial statements to determine if the stock price
is correctly valued.

Most fundamental information focuses on economic, industry and company

statistics.

The typical approach to analyzing a company involves four basic steps :

1 Determine the condition of the general economy.

2 Determine the condition of the industry.
3 Determine the condition of the company.
4 Determine the value of the company s stock

a). ECONOMY
Economic analysis is the analysis of forces operating the overall economy a country.
Economic analysis is a process whereby strengths and weaknesses of an economy are
analyzed. Economic analysis is important in order to understand exact condition of an
economy.

GDP and Automobile Industry

In absolute terms, India is 16th in the world in terms

of nominal factory output. The service sector is
growing rapidly in the past few years. This is the pie- chart
showing contributions of different sectors in Indian economy.
The per capita Income is near about Rs38,000 reflecting
improvement in the living standards of an average Indian.

Today, automobile sector in India is one of the key sectors of the economy in terms
of the employment. Directly and indirectly it employs more than 10 million people and if
we add the number of people employed in the auto-component and auto ancillary industry
then the number goes even higher.
As the world economy slips into recession hitting the demand hard and the banking
sector takes conservative approach towards lending to corporate sector, the GDP growth
has downgraded it to 7.1 per cent for 2008-09 and predicted it to be 6.5 per cent for FY
2009-10 Mr. Montek Singh (Planning Commission of India). Following is the graph
showing a trend of Indian GDP trend in past 3 years.
 Source:India Central Statistical Organization
The market value of Automobile Industry is more than US$8 bl. and Contribution in
Indian GDP is near about 5% and will be double by 2016. The automotive industry in
India grew at a computed annual growth rate (CAGR) of 11.5 percent over the past five
years, but growth rate in last FY2008-09 was only 0.7% with passenger car sales shows
1.31% growth while Commercial Vehicles segment slumped 21.7%.

Recession
All the major auto companies enjoyed the high growth ride till the mid 2008. But at the
end of the year, industry had to face the hard truth and witnessed the fall in sales compared
to last year. In December 2008, overall production fell by 22 % over the same month last
year. Global recession has hit the Indian auto industry, India is strong and growing
industry but the impact of recession is evident now on industry as sales & growth of
automobile companies have declined. Passenger Vehicles segment registered negative
growth.

One of its supporting facts is that the sales in December 2008 for passenger vehicles fell
by 13.86% over December 2007 Two Wheelers registered minor growth of 1.85 % during
April – December 2008. However, Two Wheelers sales recorded 15.43 percent fall in
December 2008 over the same month last year. Although the sector was hit by economic
slowdown, overall production (passenger vehicles, commercial vehicles, two wheelers and
three wheelers) increased from 10.85 million vehicles in 2007-08 to 11.17 million vehicles
in 2008-09. Passenger vehicles increased marginally from 1.77 million to 1.83 million
while two-wheelers increased from 8.02 million to 8.41 million. Total number of vehicles
sold including passenger vehicles, commercial vehicles, two-wheelers and three-wheelers
in 2008-09 was 9.72 million as compared to 9.65 million in 2007-08.

Inflation
Despite of negative inflation these days (-.21% on 22-Aug-09) we saw an increasing trend
of sales in auto sector. A moderate amount of inflation is important for the proper growth
of an economy like India because it attracts more private investment. The fall in wholesale
prices from a year earlier is mainly due to a statistical base effect and doesn’t suggest
contraction in demand, the Reserve Bank of India said few week back, while revising its
inflation forecast for the FY through March to around 5% from 4%.

In last FY despite of skyrocketing oil prices (crude oil price has already up to $130
compared to $20 per barrel five years back), Indian automobile Industry was not as much
affected and experts think that Indian automobile industry will continue to grow this year
despite all obstacles- oil price hike, higher interest rates. However, the effect of inflation
has affected every sector which is related to car manufacturing and production. The
increase in the price of fuel and the steel due to inflation has led to a slower growth rate of
the car industry in India. The effect of inflation has taken the rise in the price rate of the
cars by 3-4% which in turn suffices the need to meet the rise in price of the raw materials
to build a car. The car market and the car industry witnessed a fall of 8-9%.

FDI’s
In India FDI up to 100 percent, has been permitted under automatic route to this sector,
which has led to a turnover of USD 12 billion in the Indian auto industry and USD 3
billion in the auto parts industry. India enjoys a cost advantage with respect to casting and
forging as manufacturing costs in India are 25 to 30 per cent lower than their western
counterparts the Investment Commission has set a target of attracting foreign investment
worth US$ 5 billion for the next seven years to increase India's share in the global auto
components market from the existing 0.9 per cent to 2.5 per cent by 2015. FDI inflows in
Automobile Industry 2008-09 was Rs.5,212 Cr an increase of 47.25% compare to 2007-08,
while in April-May 2009 it was around Rs.497 Cr.
Source- FDI Statistics Govt. of India

Export
Society of Indian Automobile Manufacturers (SIAM), automobile sales
(including passenger

r vehicles, commercial vehicles, two-wheelers and three-wheelers) in the

overseas markets increased to 1.53 million units in 2008-09 from 1.23 million
units in 2007-08. Export of passenger vehicles increased from 218,401 in
2007-08 to 335,739 units in 2008-09.

There is a continuous increase in the export of automobiles since the financial year 2002-
03, except for the decline in the export of commercial vehichles in the financial year 2008-
09, which may be attributed to the global economic recession.
Despite recession, the Indian automobile market continues to perform better than most of
the other industries in the economy in coming future, more and more MNC’s coming in
India to setup their ventures which clearly shows the scope of expansion.

b.) INDUSTRY ANALYSIS (AUTOMOBILE)

The current trends of the global automobile industry reveal that in the developed countries
the automobile industries are stagnating as a result of drooping markets, whereas the
automobile industry in the developing nations, have been consistently registering higher
growth rates every passing year for their domestic flourishing domestic automobile
markets.
Being one of the fastest growing sectors in the world its dynamic growth phases are
explained by the nature of competition, Product Life Cycle and consumer demand. The
industry is at the crossroads with global mergers and relocation of production centers to
emerging developing countries.
In 2009, estimated rate of growth of India Auto industry is going to be 9% .The Indian
automobile sector is far from being saturated, leaving ample opportunity for volume
growth.
Segmentation of Automobile Industry

The automobile industry comprises of Heavy

vehicles (trucks, buses, tempos, tractors);
passenger cars; Two-wheelers; Commercial
Vehicles; and Three-wheelers. Following is
the segmentation that how much
each sector comprises of whole
Indian Automobile Industry.

Industrial Analysis of any industry can be done based on the following headings:

1. Industrial Life Cycle

2. SWOT Analysis
3. Industry Specific Index

1.) Industrial Life Cycle

The industrial life cycle is a term used for classifying industry vitality over time. Industry
life cycle classification generally groups industries into one of four stages: pioneer,
growth, maturity and decline.

In the pioneer phase, the product has not been widely accepted or adopted. Business
strategies are developing, and there is high risk of failure. However, successful companies
can grow at extraordinary rates. The Indian automobile sector has passed this stage quite
successfully.

In the growth phase, the product market has been established and there is at least some
historical guide to ground demand estimates. The industry is growing rapidly, often at an
accelerating rate of sales and earnings growth. Indian Automotive Industry is booming
with a growth rate of around 15 % annually. The cumulative growth of the Passenger
Vehicles segment during April 2007 – March 2008 was 12.17 percent. Passenger Cars
grew by 11.79 percent, Utility Vehicles by 10.57 percent and Multi Purpose Vehicles by
21.39 percent in this period. The Commercial Vehicles segment grew marginally at 4.07
percent. While Medium & Heavy Commercial Vehicles declined by 1.66 percent, Light
Commercial Vehicles recorded a growth of 12.29 percent. Three Wheelers sales fell by
9.71 percent with sales of Goods Carriers declining drastically by 20.49 percent and
Passenger Carriers declined by 2.13 percent during April- March 2008 compared to the
last year. Two Wheelers registered a negative growth rate of
7.92 % during this period, with motorcycles and
electric two wheelers segments declining by 11.90
percent and 44.93% respect. However, Scooters and
Mopeds segment grew by 11.64% and 16.63% respect.
The growth rate of the automobile industry in India is
greater than the GDP growth rate of the economy, so
the automobile sector can be very well be said to be in
the growth phase.

As the product matures, growth slows as penetration reaches practical limits. Companies
began to focus on market share rather than growth. Industry demand tends to follow the
overall economy, but the scope of growth of the automobile sector is very much possible
in India due to the increasing income of the middle class and their income as well as
standard of living.

2.) SWOT Analysis

A scan of the internal and external environment is an important part of the strategic
planning process. Environmental factors internal to the firm usually can be classified as
strengths (S) or weaknesses (W), and those external to the firm can be classified as
opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to
as a SWOT analysis. SWOT analysis of the Indian automobile sector gives the following
points:

Strengths
• Large domestic market
• Sustainable labor cost advantage
• Competitive auto component vendor base
• Government incentives for manufacturing plants
• Strong engineering skills in design etc
Weaknesses
• Low labor productivity
• High interest costs and high overheads make the production uncompetitive
• Various forms of taxes push up the cost of production
• Low investment in Research and Development
• Infrastructure bottleneck

Opportunities
• Commercial vehicles: SC ban on overloading
• Heavy thrust on mining and construction activity
• Increase in the income level
• Cut in excise duties
• Rising rural demand

Threats
• Rising input costs
• Rising interest rates
• Cut throat competition
 3.) Industry Specific Index

Industry specific index also called as sectoral index are those indices, which represent a
specific industry sector. All stocks in a sectoral index belong to that sector only. Hence an
index like the BSE auto index is made of auto stocks. Sectoral Indices are very useful in
tracking the movement and performance of particular sector.

BSE Auto Index comprises all the major auto stocks in the BSE 500 Index.

BSE AUTO Index 5 Year Chart

• Automobile Industry Index at BSE for 5 Year

COMPANY
Source:Google
finance.com

Above is the Indian Auto Industry Index(BSE) shows the up’s and down’s over the period
of 5 years. Intially in 2003 when major giants got listed on stock exchange TATA Motors,
Maruti Suzuki, etc. indian auto industry start picking up growth slowly in the first end of
1st quarter index reaches to its highest in his history. Than we saw a steady fall in the index
and in the mid 2006 reaches to years lowest point it again start booming and than year on
year we saw a up and down movement in the index as lots of new players came in Indian
market with foreign colaboration but when 2008 came with global slowdown it brings the
demand of automobile so low that index reaches to its lowest in past 5year . Most of the
company even shut down their manufacturing units for more than a week, production came
down because of less demand in the economy. Also no further launches were made in mid
or late 2008 and postponed to next year. We have also saw a fall in FDI’s in automobile
Industry. But in the beginning of 2009 right from 1st quarter auto industry again start
regaining and we saw a tremondous growth in auto industry which never seen before not
in india but all over the world. The demand of 2 and 4 Wheelers start increasing rapidly
which also force auto industry to employ more workers to meet demand and with in the 2 nd
quarter of FY2009-10 Auto index reaches to its highest ever crossed mark of 6000. And
this growth of industry will be carry further as festive season still to come, so there is a lot
of scope to growth in this industry.

c.) COMPANY ANALYSIS (Maruti Suzuki & TATA Motors)

The company analysis shows the longterm strenght of the company that what is the
financial Position of the company in the market where it stand among its competitors and
who are the key drivers of the company, what is the future plans of the company, what are
the policies of government towards the company and how the stake of the company
divested among different groups of people.

Profile of Maruti Suzuki

Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in
the car segment, both in terms of volume of vehicles sold and revenue earned. Until
recently, 18.28% of the company was owned by the Indian government, and 54.2% by
Suzuki of Japan. As of May 10, 2007, Govt. of India sold its complete share to Indian
financial institutions. With this, Govt. of India no longer has stake in Maruti Udyog.
The turnover for the fiscal 2008-09 stood at Rs. 203,583 Million & Profit After Tax at Rs.
12,187ml.Maruti Suzuki India Ltd. has sold a total of 84,808 vehicles in August 2009, an
increase of 41.6%, compared to 59,908 vehicles in the same period of 2008. The
company's domestic sales in August 2009 increased 29.3% to 69,961 vehicles, compared
to 54,113 vehicles in August 2008. Total passenger car sales in August 2009 increased
30.5% to 69,629 units, compared to 53,351 units in August 2008 The company's exports
increased 156.2% to 14,847 units, compared to 5,795 units in August 2008.

Profile of Tata Motors

Tata Motors Limited is India’s largest automobile company, reported gross revenue (stand-
alone) of Rs.28599.27 crores (2007-08: Rs.33093.93 crores) in 2008-09, a year marked by
severe demand contraction in the automobile industry. Revenues (net of excise) for the
year were Rs. 25660.79 crores compared to Rs.28739.41 crores in 2007-08, a decline of
10.7%. The Profit before Tax was Rs.1013.76 crores compared to Rs.2576.47 crores in
2007-08, a decline of 60.7%. The Profit after Tax for the year was Rs.1001.26 crores
compared to Rs.2028.92 crores, a decline of 50.7%.

It is the leader in commercial vehicles in each segment, and among the top three in
passenger vehicles with winning products in the compact, midsize car and utility vehicle
segments. The company is the world’s fourth largest truck manufacturer, and the world’s
second largest bus manufacturer.

Fundamental Analysis consist of following

Study of Balance sheet
Study of Profit and Loss a/c
Study of Ratios

Balance Sheet :
A financial statement that summarizes a company's assets, liabilities
and shareholders' equity at a specific point in time. These three balance sheet segments
give investors an idea as to what the company owns and owes, as well as the amount
invested by the shareholders.

The balance sheet must follow the following formula:

Assets = Liabilities + Shareholders' Equity

Each of the three segments of the balance sheet will have many accounts within it
that document the value of each. Accounts such as cash, inventory and property are on
the asset side of the balance sheet, while on the liability side there are accounts such as
accounts payable or long-term debt. The exact accounts on a balance sheet will differ by
company and by industry, as there is no one set template that accurately accommodates
for the differences between different types of businesses.

It's called a balance sheet because the two sides balance out. This makes sense: a
company has to pay for all the things it has (assets) by either borrowing money
(liabilities) or getting it from shareholders (shareholders' equity).

The balance sheet is one of the most important pieces of financial information
issued by a company. It is a snapshot of what a company owns and owes at that point in
time. The income statement, on the other hand, shows how much revenue and profit a
company has generated over a certain period. Neither statement is better than the other -
rather, the financial statements are built to be used together to present a complete picture
of a company's finances.

The balance sheet shows the financial condition of a business at a given point of
time. As per the Companies Act, the balance sheet of a company shall be in either the
account form or the report form.

Liabilities Assets
Share Capital Fixed Assets
Reserves and Surplus investments
Secured loans Current assets , loans & advances
UnSecured loans Miscellaneous expenditure
Current liabilities and provisions

Liabilities
Liabilities, defined very broadly, represent what the firm owes others. A liability
arises when a firm receives benefits or services and , in turn, promises to pay cash or
provide goods and services in future.

The format prescribed in the Companies Act classifies liabilities as follows : -

Share Capital: Share capital includes equity capital and preference capital. Equity
capital represents the contribution of equity shareholders who are the owners of the firm.
Equity capital, being the risk capital, carries no fixed rate of dividend. Preference capital
represents the contribution of preference shareholders and the dividend rate payable on it
is general fixed.

Reserve and Surplus: Reserve and Surplus comprise retained earnings as well as non
earnings items like share premium and capital subsidy. In common practice for
companies to transfer from the profit and loss account to various reserve accounts. This
process is called appropriation.

Secured loan: Secured loan are loans that are secured by a charge on the assets of the
firm. The charge may be created in the form of pledge or hypothecation of movable
assets such as inventories and debtors and or in the form of mortgage of immovable
assets such as land, building, and plant and machinery.

Unsecured loans: in contrast to secured loans, unsecured loans are loans which are not
secured by a charge on the assets of the firm.
Current liabilities and Provisions: current liabilities and provisions represent
obligations that are expected to mature within a year. Current liabilities include items
such as bills payable, sundry creditors, interest accrued etc. and provisions include items
such as provision for taxes, dividend, and other exp.

Assets
Assets are resources which are expected to provide a firm with future economic benefits,
by way of higher cash inflows or lower outflows. Assets are classified as follows under
the Companies Act:

Fixed Assets: fixed assets, also called non current assets, are assets that are expected to
produce benefits for more that one year. These assets may be tangible or intangible.
Tangible fixed assets include items such as land, buildings, plant and machinery,
furniture. Intangible assets include goodwill, patents, and copyrights.

Investment: investments represent financial securities owned by the firm. They are
divided into two categories, long term investment and current investment.

Current Assets: this category consists of cash and other assets which get converted into
cash or which result in cash savings, during the operating cycle of the firm. The major
components of current assets, loans and advances are: inventories, debtors, cash and bank
balances, other current assets and loans and advances.

Miscellaneous Exp : this comprise of items such as preliminary exp, discount allowed on
issue of securities, interest paid out of capital during construction, and development
expenditure to the extent not written off or adjusted.

Profit and Loss a/c :

A financial report that - by summarizing revenues and expenses, and showing the
net profit or loss in a specified accounting period - depicts a business entity s financial
performance due to operations as well as other activities rendering gains or losses. Also
known as the "profit and loss statement" or "statement of revenue and expense".

The income statement is the most analyzed portion of the financial statements.
It displays how well the company can assure success for both itself and its shareholders
through the earnings from operations.

The companies act has prescribed a standard form for the balance sheet, but none
for the profit loss account. However, the companies act does require that the information
provided should be adequate to reflect a true and fair picture of the operations of the
company for the accounting period.
Structure of Profit and Loss a/c
Income
Sales
Expenditure
Material and other expenditure
Interest
Depreciation
Profit before tax
Provision for tax
Profit after tax

While a single step profit and loss account aggregates all revenues and expenses,
a multi step profit and loss account provides disaggregated information. Further, instead
of showing only the final profit measure, the profit after tax figure, it presents proft
measures at intermediate stages as well.

Following is the financial and Non-Financial analysis of Maruti Suzuki & TATA Motors.

• Financial Analysis

Balance Sheets
a.)
Maruti Suzuki TATA
Motors
b.) Income Statements

Maruti Suzuki TATA Motors

RATIO ANALYSIS OF TATA MOTORS AND MARUTI
SUZUKI
EPS measures the profit available to the
equity shareholders per share, that is,
the amount that they can get on every
share held. Till 2008 both the
companies had a rising EPS but in 2009
both of them fall and the effect more on
Tata motors as they bought two brands
Ford Motors and fall in sales results in
low EPS. But as trend shows TATA
motors have potential so an shareholder
expect better in future.

EPS = Net income- Dividends onPreferredStock

Average Outstanding shares

The trend shows that Tata’s net profit

margin is quite stable until it falls to 3.77
in 2009. While the net profit of India’s
no.1 car manufacturer Maruti Suzuki
shows a negative trend from 2007
onwards. But the future prospect for both
the company’s profit is higher. Profit
margins come down as recession hits
economy badly hence sales get reduced
and cost get increased very much.
Net profit Ratio = (Net profit) × 100
(Net sales)

Both giants of Automobile

industry shows positive trend in
Sales Revenue over the past 5year.
However recession brought
hurdles but both companies have
potential to grow in future as lots
of products are still to add in their
portfolio. Moreover increased
demand in foreign market also
seems to be a positive signal for
better future.

The quick ratio is a very stringent

measure of solvency. A general rule
of thumb suggests that the quick
ratio should be around 1. Maruti is
always showing a positive trend as
its ratio is always greater than 1
except in 2008, while TATA motors
was doing good till 2007, but the
performance decreased from 2008
onwards as shortage of cash was
there and current liabilities and
provision increased by Rs800Cr.

A high debt to equity ratio

suggests that a company has
financed its growth mostly
via debt. We see that the
debt –equity ratio of TATA
 motors is very high compared to that of Maruti. It means that a lot of debt is used
by TATA’s to finance its increased operations. Sometimes the cost of the debt
financing may outweigh the return that the company generates on the debt through
investment and business activities and can lead to bankruptcy. Maruti is going very
swiftly in this field.

Debt-Equity Ratio= Total Debt

Total Equity

The current ratio is a convenient and

reliable tool for measuring a company's
level of liquidity. The ratio acts as an
indication that the firm is able to
generate funds to make all needed
payments in the future; thus, the ratio
indicates whether the firm is likely to
be a going concern. Both the
companies possess a good ratio but the

ratio which is close to 2 is desirable, so we see in graph that Maruti has more strong
liquidity than TATA Motors as its current ratio is always greater than 1. Maruti is more
successful in paying off its liabilities. Expansion plans of TATA brought down its cash &
Bank Balance and increase of outside liabilities.

Tata motors and Maruti Suzuki both

the companies showed a positive trend
in paying dividends till 2008, but the
scenario changed in 2009 as both the
company’s dividend per share fell.
According to graph TATA’s dividend
was much higher than that of Maruti,
it always provided dividend of above
10 per share to its shareholders while
maruti stick to below 5 per share, even
though the fall in dividend in 2009,
still both the companies are earning good profit.

Dividend Per Share = Total amount of Dividend

Share Outstanding
 • Financial Analysis
1. Share Holding Pattern for Quarter Ended 30-June-09
Above is the updated share holding pattern
of TATA motors which shows that Indian
promoter share in the company is 41% that
means if they are not in the position to raise
further money from general public,
Company already raised huge money by
selling their large stake to institutional
investors about 27%. General Public also
have quite large stake in the company
compare to its competitors.
Being a venture of Japanese company
Suzuki big stake of the company is held by
foreign promoters which shows that they
can divest their part(small part) to raise
money in future. However institutional
investors also held 39% major stake in the
company but general public have very
small part which shows that less presence
of share in the secondary market hence low
volume trading in stock market.
 2.Ventures & Products
TATA Motors
Tata Motors is try to be in a position to dominate the Indian Auto industry, at least in four-
wheeler segment. Tata Motors have announced that they are interested in the idea of
designing electric cars. To take it a step further Tata has also initialized plans for the
manufacture of a hybrid car which it will market with Chryster in the U.S.
After the launch of Nano, Tata also apparently has its eye on the European and U.S.
markets. The company hopes to have a version for Europe by 2011 and one for the U.S
perhaps by 2012. Tata Motors, is now aiming to launch its cars in Indonesia and is also
planning to sell Nano in South America with the help of Fiat. After launching the world’s
cheapest car, Nano, Tata Motors is looking east, towards neighboring Myanmar to boost
its sales by setting up a truck manufacturing plant. As part of its expansion plans in
Southeast Asia, Tata Motors had inked a joint venture with Thailand’s Thonburi Auto
Assembly’s to manufacture up to 35,000 one tone pickup trucks a year over the next 3-5
years. Tata Motors, is searching options to pump approximately Rs. 8,000 cr. During the
next 3-4 years on capital expenditure and product development.

Maruti Suzuki
Maruti Suzuki has expanded the capacity at its Manesar plant to 1.7 lakhs unit per annum
from January 2009. By the year 2010, Suzuki Motors plan to increase their dealership in
India. This is a step to increase their sales to one million units as well as for a better
position in the Indian auto market. The expansion is estimated to cost $ 3.5 billion, out of
which a quarter will be assigned for amplifying leadership network to 1000 in number.
As Maruti Suzuki eyes one million sales by 2010, they have firmed up a massive
expansion plan of its service network and plans to expand it to 1700 towns and cities from
the current of about 1200. The company plans to increase the number of service stations
and workshops to over 3800 from about 2800 currently. They have also been coming with
specific sales promotion programmes targeted at interior regions, among them is the “Mera
Sapna Meri Maruti: New Panchayati Scheme”. The Haryana government has allotted 700
acres of land to Maruti Suzuki for hi – tech Research & Development complex at Rohtak.
The upcoming facility, will see an investment in the range of Rs. 1,000 cr. to 1,500 cr. And
will introduce world class R&D facilities into India. While the development of the allotted
land and construction of the test tracks will be completed in the first phase by 2012, the
overall R&D facilities will be progressively completed by 2015.

2. Government Policies Towards Indian Automobile Industry

 Automobile industry in India also received an unintended boost from stringent
government auto emission regulations over the past few years. This ensured that vehicles
produced in India conformed to the standards of the developed world.

Though it has an advantage in India, thanks to low costs and government policies it soon
faces stiff competition from it multinational competitors all eyeing for a share in the ever
growing Indian auto sector. The policies adopted by Government will increase competition
in domestic market, motivate many foreign commercial vehicle manufactures to set up
shops in India, whom will make India as a production hub and export to nearest market.

• Bring in a minimum foreign equity of US $ 50 Million if a joint venture involved

majority foreign equity ownership
• Automatic approval for foreign equity investment upto 100% of manufacture of
automobiles and component is permitted
• FIIs including overseas corporate bodies (OCBs) and NRIs are permitted to invest
up to 49 per cent of the paid-up equity capital of the investee company, subject to
approval of the board of directors and of the members by way of a special
resolution. .
• Investments in making auto parts by a foreign vehicle maker will also be
considered a part of the minimum foreign investment made by it in an auto-making
subsidiary in India. The move is aimed at helping India emerge as a hub for global
manufacturing and sourcing for auto parts.
• Specific component of excise duty applicable to large cars and utility vehicles will
be reduced to 15,000 rupees per vehicle from 20,000 rupees earlier.
• The Proposal by the Govt. to set up an expert group to advise on a viable and
sustainable system of pricing petroleum products, as this will surely had an impact
on the Automobile Industry.
The announced reduction on the basic customs on bio-diesel is great news for all
companies working on environmental saving technologies.
Technical analysis
Technical analysis refers to the study of market generated data like prices &
volume to determine the future direction of prices movements. Technical analysis mainly
seeks to predict the short term price travels. It is important criteria for selecting the
company to invest. It also provides the base for decision-making in investment. The one
of the most frequently used yardstick to check & analyze underlying price progress. For
that matter a verity of tools was consider.

This Technical analysis is helpful to general investor in many ways. It provides

important & vital information regarding the current price position of the company.
Technical analysis involves the use of various methods for charting, calculating &
interpreting graph & chart to assess the performances & status of the price. It is the tool
of financial analysis, which not only studies but also reflecting the numerical & graphical
relationship between the important financial factors.

The focus of technical analysis is mainly on the internal market data, i.e. prices &
volume data. It appeals mainly to short term traders. It is the oldest approach to equity
investment dating back to the late 19th century.

Basic premises of technical analysis:

1. Market prices are determined by the interaction of supply & demand forces.
2. Supply & demand are influenced by variety of supply & demand affiliated
factors both rational & irrational.
3. These include fundamental factors as well as psychological factors.
4. Barring minor deviations stock prices tend to move in fairly persistent trends.
5. Shifts in demand & supply bring about change in trends.
6. This shift s can be detected with the help of charts of manual & computerized
action, because of the persistence of trends & patterns analysis of past market
data can be used to predict future prices behaviors.

Drawbacks / limitations of technical analysis:

1 Technical analysis does not able to explain the rezones behind the
employment or selection of specific tool of Technical analysis.
2 The technical analysis failed to signal an uptrend or downtrend in time.
3 The technical analysis must be a self defeating proposition. As more & more
people use, employ it the value of such analysis trends to reduce.

Usually the following tools & instruments are used to do the technical analysis:

Price Styles
Price in a chart can be displayed in three styles: bar, line, and candlestick.
Bar: It gives the detailed information about every aspect.

Line:
A line chart simply connects the closing prices from one period to the next. This
type of chart is ideal for securities with no high or low price data i.e., mutual funds or that
is even with the equity in case of base price.
Japanese Candlestick: A candlestick is black if the closing price is lower than the
opening price. A candlestick is white if the closing price is higher than the opening price.
Price Patterns:
Overview:
A basic principle of technical analysis is that security prices move in trends. We
also know that trends do not last forever. They eventually change direction and when
they do, they rarely do so on a dime. Instead, prices typically decelerate, pause, and then
reverse. These phases occur as investors form new expectations and by doing so,
shift the security's supply/demand. .
The changing of expectations often causes price patterns to emerge. Although no
two markets are identical, their price patterns are often very similar. Predictable price
behavior often follows these price patterns. Chart patterns can last from a few days to
many months or even years. Generally speaking, the longer a pattern takes to form, the
more dramatic the ensuing prices move.

Head and Shoulders:

The Head-and-Shoulders price pattern is the most reliable and well-known chart
pattern. It gets its name from the resemblance of a head with two shoulders on either
side. The reason this reversal pattern is so common is due to the manner in which trends
typically reverse. .
An up-trend is formed as prices make higher-highs and higher-lows in a stair-step
fashion. The trend is broken when this upward climb ends. As you can see in the
illustration (Intel, INTC), the "left shoulder" and the "head" are the last two higher-highs.
The right shoulder is created as the bulls try to push prices higher, but are unable to do
so. This signifies the end of the up-trend. Confirmation of a new down-trend occurs
when the "neckline" is penetrated.

During a healthy up-trend, volume should increase during each rally. A sign that
the trend is weakening occurs when the volume accompanying rallies is less than the
volume accompanying the preceding rally. In a typical Head-and-Shoulders pattern,
volume decreases on the head and is especially light on the right shoulder.
Following the penetration of the neckline, it is very common for prices to return
to the neckline in a last effort to continue the up-trend. If prices are then unable to rise
above the neckline, they usually decline rapidly on increased volume. An inverse (or
upside-down) Head-and-Shoulders pattern often coincides with market bottoms. As with
a normal Head-and-Shoulders pattern, volume usually decreases as the pattern is formed
and then increases as prices rise above the neckline

Rounding Tops and Bottoms:

Rounding tops occur as expectations gradually shift from bullish to bearish. The
gradual, yet steady shift forms a rounded top. Rounding bottoms occur as expectations
gradually shift from bearish to bullish.Volume during both rounding tops and rounding
bottoms often mirrors the bowl-like shape of prices during a rounding bottom. Volume,
which was high during the previous trend, decreases as expectations shift and traders
become indecisive. Volume then increases as the new trend is established

Double Tops and Bottoms

A double top occurs when prices rise to a resistance level on significant volume,
retreat, and subsequently return to the resistance level on decreased volume. Prices then
decline marking the beginning of a new down-trend.
A double bottom has the same characteristics as a double top except it is upside
is down.
Tops T1 & T2 are almost at the same level & trend violated the support line
formed with the help of bottom B1 hence, a Double top reversal pattern has been formed.
To measure the likely downward reaction, measure the distances between the intervening
bottom & the double tops. Deduct these distances from the intervening bottom & that will
be the downward target of the double top reversal pattern.

Bottom B1 & B2 are almost at the same level & trend violated the resistances level
formed with the help of top T1 hence; a Double bottom reversal pattern has been formed.
To measure the likely upward reaction, measure the distances between the intervening top
& the double bottom. Deduct these distances from the intervening top & that will be the
upward target of the double bottom reversal pattern.
Tops T1, T2 & T3 are almost at the same level & trend violated the support line formed
with the help of bottom B1 because the B1 is the lowest bottom hence, a triple top reversal
pattern has been formed. To measure the likely downward reaction, measure the distances
between the intervening bottom & the triple tops. Deduct these distances from the
intervening bottom & that will be the downward target of the triple top reversal pattern.

Bottom B1, B2 & B3 are almost at the same level & trend violated the resistances
level formed with the help of top T1 because the T1 is the heights top hence, a triple
bottom reversal pattern has been formed. To measure the likely upward reaction, measure
the distances between the intervening top & the triple bottom. Deduct these distances
from the intervening top & that will be the upward target of the triple bottom reversal
pattern.
Implication of DOW THEORY

The Dow Theory is valid even in today’s volatile and technology driven market. The Dow
Theory addresses not only technological analysis and price action, but also price
philosophy.Dow Theory is broken down into six basic tenets.

Accumulati Public
on

Excess
Upstrea
m

The first tenet of Dow Theory is that the market has three trends; Up trends are defined
as a time when successive rallies in a security price close at levels higher than those
achieved in previous rallies; Downtrends, which are defined as when the market makes
lower lows and lower highs and Corrections, which are defined as a move after the
market makes a move sharply in one direction where the market recedes in the opposite
direction before continuing in its original direction.
In the graph shown above, it is shown that the share prices of Tata motors were increasing
in the year 2009, but it then suddenly decreased near the month of June’2009, but then
started increasing again.
The second tenet of Dow Theory is that trends have three phases; Accumulation, Public
participation and Excess. The accumulation phase is one in which the expert traders are
actively taking positions which are against the majority of people in the market. The public
participation phase, which is when the public at large catches on to what the experts know
and begin to trade in the same direction and in the Excess phase, where rampant
speculations occur and the “smart money” starts to exit their positions.
 Upstrem

Primary
trend

Deviati

The third tenet of Dow Theory is that the market counts all news, meaning that once news
is released it is quickly reflected in the price of an asset.
In the case of Tata motors, as the market started recovering after December’2008, the
share prices started increasing but they again saw a decline, which may be attributed to the
news of breach of JLR contract with Ford Motors which may cause Rs.3bl panelty. The
sales of Tata motors decreased by 4% in June end’ 2009 which can be one more reason for
the decline in stock prices of Tata motors.
The above graph also illustrates the sixth tenet, which says that trends exist until definitive
signals prove that they have ended. The market may show moves which are against the
primary trend but this do not mean that the trend is over and the market will normally
resume its prior trend.
In the case of Tata motors, when the prices were decreasing during recession, the stock
price even increased once, but the market then again followed its prior trend of declining
prices.
SENSEX AND TATA MOTORS

Tenet four of Dow Theory is that the averages must confirm each other, that means that the
performance of related industries should move in one direction for the health of a
particular industry. When the performances diverge, it is warning that change is in the air.
However, we can see that the movement of stock prices of Tata motors and SENSEX are
more or less in the same direction. One thing which very clear is TATA motors react very
badly whenever there is a negative sentiments comes in market results SENSEX comes
down, and TATA motors also comes down. Different sets of colored line in above chart
prove this fact.

Tenet five is that Trends are confirmed by volume. In case of Tata motors, when the
people stopped investing during recession, prices went down and after recession, when
people came back to the market, prices also increased.
 1. Resistance & Support Level
This Technical tool helps in telling that what would be the price band of share price in
which it move in near future on the basis of past high and low levels made by a particular
scrip. Resistance Level shows the price above which share price will not move in normal
case on the other hand Support level shows the minimum share price which can be touched
by share or crossing of this share will not be there in normal market condition Following is
the Resistance & Support level of Maruti Suzuki & TATA Motors for the period of 2
months:

Resistance
Level
Rs.1425

Support level
RS.1275 approx.

(1-Jul-09 to 7-Sept- Resistance

Level
Rs.490 approx.

Support Level
Rs.430 approx.

As it is seen in the past 4

months TATA share price
moved up and it keeps
making on new level so
perfect resistance level
for this share is not easy
to predict as performance
of this share is very good
The above band of resistance and support level shows that the pricecompare
of shares will
to move in
all scrips of
between this range only until unless any wrong reaction came out in economy or when any
correction takes place the prices will move in between this band only.
 2. Simple Moving Average (50 periods)-Medium Term

A Moving Average is an indicator that shows the average value of a security's price over a
period of time. The method of interpreting a moving average is to compare the relationship
between a moving average of the security's price with the security's price itself. In above
figure we have compare the share price of Tata Motor and Maruti with moving average of
50 period of Tata Motors, Maruti respectively.
A buy signal is generated when the security's price rises above its moving average and a
sell signal is generated when the security's price falls below its moving average. It is
designed to keep you in line with the security's price trend by buying shortly after the
security's price bottoms and selling shortly after it tops. Yellow area in the graph indicates
buy signal and Green area indicates sell signal. In the near future both the companies show
buy signal as their security prices rises above its moving average. It shows that both
companies are performing better, so industry as whole is also performing outstanding. So
keeping a hold position for the companies would be profitable in future.

3. Long Term Simple Moving Average (200 periods)

In the above chart Moving Average is an indicator that shows the average value of a
security's price over a period of time. We have compare the share price of Tata Motor and
Maruti with moving average of 200 period of Tata Motors, Maruti respectively by taking
share prices of 5 year to take out the Moving average for 200 periods. This Tool of 200
Periods tells us about the position of share to buy or sell for a long period say for 9-12
months.

A buy signal is generated when the security's price rises above its moving average and a
sell signal is generated when the security's price falls below its moving average. Yellow
area in the graph indicates Buy signal and Green area indicates Sell signal. In the near
future both the companies show Buy signal as their security prices rises above its moving
average. This shows that an investor can kept a hold position or can buy for longer period
of time but as we can see in case of Maruti the moving average line is also rising which
shows that Buy n hold position for very long period could be unprofitable a minor
correction in the share price can bring down the share price line and then moving average
line will easily cross the share price line.

4. TATA MOTORS MACD

Sell

Overboug Buy
Overso

Above graph shows the MACD of TATA motors for the period of 6 months. The MACD
is the difference between a 26-day and 12-day exponential moving average. A 9-day
exponential moving average(EMA), called the "signal" (or "trigger") line is plotted on top
of the MACD to show buy/sell opportunities. here are three popular ways to use the
MACD: crossovers, overbought/oversold, and divergences.
Crossovers: Yellow area shows that there was situation when sell position occurred in the
end of month June till mid of July as MACD curve below EMA or Signal line shows a sell
situation otherwise we saw a buy position of TATA Motors most of the time Light Green
area shows that investor want to buy and wan to be in hold position. The trend of buying is
seems to be over here or in coming few days and a selling or booking of profit could be
seen hence MACD line could fall below EMA in coming time.

MARUTI SUZUKI MACD

 Overboug Overso

Crossover: The above graph shows the MACD of Maruti Suzuki, here Yellow area shows
the selling position as MACD line is below EMA line the Light Green area shows the buy
position which occur last time in the end of July but now buy position for Maruti is created
as EMA or signal line seems to be below MACD line and it will probably continue in near
future.
For both TATA Motors & Maruti Suzuki
Overbought/Oversold: The amount of green lines in above graph on the up side shows
the overbought situation by the investor which mean that investor buy more shares at this
time and oversold situation occurs when green line is on the downside.

Moving Average Crossover

20 Periods
S

50 Periods
A crossover occurs when a faster Moving Average (i.e. a shorter period Moving Average-
20 periods) crosses either above a slower Moving Average (i.e. a longer period Moving
Average-50 periods) which is considered a bullish crossover or below which is considered
a bearish crossover. M.A.C helps in telling buying opportunities when the shorter moving
average crosses above the longer moving average and selling opportunities when the
shorter moving average crosses below the longer moving average. Following is the MAC
of TATA Motors & Maruti Suzuki to understand the position of both companies average
share movement
Above is the MAC graph of TATA Motors for the period of 6 months in which ‘S’ denote
the selling situation or position whereas ‘B’ is the point after approx 1 month when we saw
a bounce back in share prices hence a buy signal occurs which is because, longer moving
average of 50 periods cut shorter moving average from the lower side and shows a holding
position of shares in coming future also. The increasing trend in the prices after buy signal
of shares shows that good amount of profit could be achieved in future if stick with hold
position.
A move below the moving average suggests that the bears are in control of the price
action and that the asset will likely move lower, above yellow circle shows that area when
price fall below average price and then it move onto lower side.
Below is the MAC graph of Maruti Suzuki for past 6 months in which we haven’t see any
sell position till yet the movement of share price is always on the positive side that is
increasing so we can say that buying opportunities is always there in case of Maruti
Suzuki. A cross above a moving average suggests that the bulls are is in control and that
the price may be getting ready to make a move higher and Maruti Share Prices show that
trend of moving up prices.

Bu
No Sell Position or
Always Position of
 5. BOLLINGER BAND
Bollinger bands are used to measure a market’s volatility. Basically, this little tool tells us
whether the market is quiet or whether the market is LOUD! When the market is quiet, the
bands contract; and when the market is LOUD, the bands expand.

TATA Motors

On the graph it can be seen the overall trend of the market and quick reference for supply
and demand as well as support and resistance areas by using a 20 days moving average and
2 standard deviation in calculating the Bollinger Bands. As we can see in the graph is that
the at most of the time the graph lies between the middle band and the upper band which
Maruti
shows an increasing price trend in the market and it’s called Riding the Band. When the
Suzuki
stock is outside the upper end of the Bollinger band it is considered as ‘OVERBOUGHT’,
which means that stock has gone up too fast and when a stock is outside the lower band it
is ‘OVERSOLD’. An oversold stock has gone down too fast. During the months of April,
May, mid July and mid august the stock of TATA motors crossed the upper band which
means that during these periods the prices rose very fast, while in mid of July the stock
went below the lower band, i.e. The prices fell too fast and are susceptible to bargain
hunting. The overbought and oversold stocks are apt to reverse course. It’s also seen that
the volatility increased to new highs after July because the bands started to widen. It’s
better to buy stocks when it touches the lower band, but in regards all other technical
factors should be considered while buying.
Initially the bands show slight slope and lie approximately parallel to each other, this
means that the price of the stock is oscillating up and down between the bands through a
channel. The stock also shows overbought many times during the six months but it did not
show any oversold trend, therefore it becomes an important factor in determining the price
trend as it tells that the prices have not fallen very fast in these six months. During the june
month the bands contracted very much which shows low volatility, but then onwards the
bands started to widen which creates high volatility and looking at the future scenario it
may be analysed that the stock will see a fall as at the end of august the band was
overbought, because when price is trading near the upper or lower Bollinger band line,
there is a possibility of trend reversal.
The buy and sell signals are not given when prices reach the upper or lower bands. Such
levels merely indicate that prices are high or low on a relative basis. A security can
become overbought or oversold for an extended period of time. Knowing whether or not
prices are high or low on a relative basis can enhance the interpretation of other indicators,
and it can assist with timing issues in trading.
CONCLUSION

Indian Automobile Industry is in the growth phase and the expected growth
rate is 9-10% for FY2009-10 as compared to last year growth rate which was just 0.7%
and the above facts and figures in our study also support this truth.

The Indian auto market is still untapped. The majority of the people in country
don’t own a four wheeler and all the major auto companies are trying to increase their
sales by several moves. Like TATA has launch NANO the people’s car and now TATA
motors is also planning to come out with an electric car as well as hybrid car, moreover in
two wheeler segment many companies like Mahindra and Mahindra grow even more than
expectations.

From the Technical Analysis of both companies i come to know that the share
price of Maruti will move in the band of Rs.1275 to Rs.1425 and that of TATA Motors
will move in the range of Rs. 430 to Rs. 490 if certain correction made in the market.

I have also come to know that share price movement of TATA Motors is just
according to the movement of SENSEX, whenever there is a negative sentiment in the
market regarding TATA Motors there is a steep fall in the stock price of TATA Motors but
we have seen quick recovery in its share prices to regain its primary trend E.g. as we seen
in last 3-4 months TATA recovers approx.90% after downfall.

By analyzing the current trend of Indian Economy and Automobile Industry I

can say that being a developing economy there is lot of scope for growth and this industry
still have to cross many levels so there is huge opportunities to invest in and this is proving
as more and more foreign Companies setting up there ventures in India.
BIBLIOGRAPHY

www.bseindia.com
www.googlefinance.com
www.yahoofinance.com
www.google.co.in
www.moneycontrol.com
www.worldfact.com
www.rbi.org.in
FDI statistic government of India
India Central Statistical Organization
Economic Times