AZHAR PROJECT

SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT OF FIVE MAJOR PLAYERS IN BANKING SECTOR

MAJOR PROJECT REPORT

Submitted by

AZHAR K.P

UNDER THE GUIDANCE OF

Mr.BIJU M.K.

Sr. Lecturer

In partial fulfillment

of the requirement for the Degree of

MASTER OF BUSINESS ADMINISTRATION

University of Calicut

DEPARTMENT OF MANAGEMENT SCIENCEMES COLLEGE OF ENGINEERING

(Affiliated to University of Calicut)KUTTIPURAM, KERALA, INDIA

2010

Project Report 2010 Cochin Stock Exchange

DEPARTMENT OF MANAGEMENT SCIENCE

MES COLLEGE OF ENGINEERING

KUTTIPPURAM, KERALA

PIN: 679573

(AFFILIATED TO UNIVERSITY OF CALICUT)

CERTIFICATE.

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Department of Management Science [2] MES College of Engineering


DECLARATION

I hereby declare that this project report titled “Security analysis and Portfolio

Management of Five major players in Banking Sector” is the original work

done by me under the guidance of BIJU M.K, faculty, MES College of

Engineering, Kuttipuram and submitted to the Calicut University in the partial

fulfilment of the requirement of the Master of Business administration degree.

I further declare that this report has not been submitted earlier either to this

institution or any other institution for the fulfilment of the requirement for any

course of studies. I also declare that no chapter of this manuscript in whole or

in part is lifted and incorporated in this report from any earlier work done by

others or me.

Date:

Place: Kuttipuram Azhar

K.P



ACKNOWLEDGEMENT

“Behind every successful effort, there lies a contribution from numerous sources

irrespective of their magnitude. My project is no exception and I take this opportunity to

express my sincere thanks to those helping hands wholeheartedly”.

First and foremost I thank God for his almighty support and mercy drop of blessings upon

me to complete my project successfully.

The satisfaction that accompanying the successful completion of the task would be

incomplete without mentioning the people who made it possible with the constant guidance

and encouragement all through the period of study.

I am indebted to my Project Guide Mr. Biju M.K (Faculty Guide), and all other faculties

and staff members of Department Of Management science for their valuable suggestions

and sincere co-operation rendered to me during the academic period.

I am profoundly thankful to Shri. Thomas George M.A GDIM (UK) PhD (External

Guide), Cochin Stock Exchange who was generous with time and effort to explain the

theoretical and practical aspects of Security Analysis and Portfolio Management.

I wish to pay my gratitude to my parents without whose support and inspiration, this

project would have remained a dream. Last but not least; I take this opportunity to thank all

my friends and others who have helped me directly or indirectly for the successful

completion of the project.

AZHAR K.P



TABLE OF CONTENTS

SERIAL NO

LIST OF CONTENTS PAGE NO

List of Tables

List of Charts

1 Chapter I – INTRODUCTION

Introduction to Study 2-3

Objective of the Study 3-4

Statement of the Problem 4

Significance of the Study 4

Scope of the Study 5

2 Chapter II Industry Profile 6-21

3 Chapter III Company Profile 22-27

4 Chapter IV Literature Review 28-31

5 Chapter V Research Methodology 32-43

6 Chapter VI Analysis and Interpretation 44-103

7 Chapter VII Findings, Suggestions and Conclusion 104-110

8 Chapter VIII Bibliography 111-112

9 Chapter IX Annexure 113-123



EXECUTIVE SUMMARY

This study was carried out at Cochin Stock Exchange during the month

of May 2010. The report is an outcome of a study undertaken in CSE on the

topic “Security Analysis and Portfolio Management of five major players in

Banking Sector”.

Out of the ten companies, which were taken on the basis of market

capitalization from the BSE list and ranked accordingly, five were selected to

conduct a detail study. The banks selected for the study are State Bank of

India, ICICI Bank, Punjab National Bank, AXIS Bank and HDFC Bank.

Indian banking companies is analyzed by taking up fundamental

analysis and technical analysis along with creating different mix of portfolio

within the selected securities. Fundamental analysis involves finding the

intrinsic value of the selected banking shares. It is also done to indentify the

misprice share there by assisting the prospective investor in making the buy or

sell decision.

Technical analysis was conducted to find the movement of stock price

over the period of time. Mathematical indicators used for Technical Analysis

are Exponential Moving Average, ROC and MACD.

It is rare to find investor investing their entire savings in a single

security. Instead, they tend to invest in a group of securities called portfolio.

Creation of portfolio helps to reduce risk without sacrificing returns. Portfolio

was constructed on the basis of Equal Weight, PE Ratio and Market

Capitalization. To find the optimal Portfolio Sharpe and Treynor Ratio were

used to evaluate the Portfolio.



All the data collected are secondary. The data were absorbed from

websites, magazines and books. For conducting Fundamental Analysis five

years data were taken. Technical analysis was conducted with eighteen

months of data. Portfolio was constructed on the basis of five years of data.

Fundamental Analysis revealed that all the banks have shown

consistently good performance and the performance is improving every year.

Therefore the performances of all these banks are likely to be much better in

the years to come. After analysing the Mathematical indicators it was found

that most of the companies are in bullish trend. After evaluating the three

portfolios which were constructed with the different proportions of the five

selected securities and measuring performance based on Sharpe and Treynor

Ratios, it has been found that, the portfolio based on P/E Ratio ranks highest.

From the overall study it is found that Banking Industry is booming in

India and it is the best time to invest in banking industry. It is viable for

investors to invest in the sector on a long term basis.



CHAPTER I

INTRODUCTION



INTRODUCTION TO THE STUDY

The banking scenario has witnessed significant development in the

recent years with the entry of private banks and their focus on retail banking and

convergence of services. The ongoing reforms process, growing use of technology,

increased competition and product innovation has all put the banking sector on a high

growth trajectory. Advancement in communication and information technology has

facilitated growth in internet banking, ATM network, and Electronic transfer of funds and

quick dissemination of information. Structural reforms in the banking sector have improved

the health of the banking sector. The forms recently introduced include the enactment of the

Securitization Act to step up loan recoveries, establishment of asset reconstruction

companies, initiatives on improving recoveries from Non-performing Assets(NP As)and

change in the basis of income recognition has raised transparency and efficiency in the

banking system. Spurt in treasury income and improvement in loan recoveries has helped

Indian Banks to record better profitability.

In the year 2002, return on assets in Indian banking was higher

compared to many emerging economies and the Moody's Bank Financial strength Index

(2002) placed India at 27.5, which is much better than 16.7 of Korea, 15.8 of Thailand and

12.5 of Japan. Similar to experience in other rapidly growing countries, India is making

sizable gains in expanding into consumer credit with tightening of credit administration

procedures. Major policy actions that led to sharp fall in the interest rates enabled banks to

post significant rise in operational profits. For instance trading profits of the public sector

banks shot up by Rs.3749 crores taking their net profits to an all time high of Rs.8301

crores in FY02.The enactment of Securitization Bill offered great opportunities to set up

loan recoveries that could further enhance the scope of greater profitability. These

developments have impacted the performance of bank stocks significantly and the bank

stocks are emerging as a major segment in the equity market.

The project titled “Security Analysis and Portfolio Management of Five Major

Players in Banking Sector is an attempt to analyze the Indian banking companies by

taking up fundamental analysis and technical analysis along with creating different mix of

portfolio within the selected securities. Fundamental analysis involves finding the intrinsic



value of the selected banking shares. It is also done to indentify the misprice share there by

assisting the prospective investor in making the buy or sell decision.

It is rare to find investor investing their entire savings in a single security. Instead,

they tend to invest in a group of securities called portfolio. Creation of portfolio helps to

reduce risk without sacrificing returns. The risk and return characteristics of portfolio differ

from those of individual securities combining to form a portfolio.

The project also examines the performance of various portfolio based on (1) Equal

Weight (2) P/E Ratio (3) Market Capitalization along with the performance evaluation by

Sharpe and Treynor Ratio.

Out of the ten companies, which were taken on the basis of market capitalization

from the BSE list and ranked accordingly, five were selected to conduct a detail study. Thus

the study is limited to five selected banking companies in India, they are;

STATE BANK OF INDIA

ICICI BANK

HDFC BANK

AXIS BANK

PUNJAB NATIONAL BANK

STATEMENT OF THE PROBLEM

A study on Security analysis, Portfolio construction and selection of securities from

the Indian banking Industry is undertaken to construct, analyze, select and evaluate a

portfolio consisting of five scrips from this sector to check whether the security analysis

and portfolio construction and selection helps an investor to reduce risk and achieve

efficiency in investment.



OBJECTIVES OF THE STUDY

To construct analyse, select and evaluate a portfolio consisting of five major selected

players in the Banking Industry.

To compute the intrinsic value of selected securities from Banking industry using

fundamental analysis and recommend for buy or sell option

To undertake the technical analysis of the securities and interpret them.

To recognize the suitability of the share for investment in long term.

SIGNIFICANCE OF THE STUDY

This demands the investors to be rational and scientific in his investment activity.

As such he needs to evaluate a lot of information about the past performance and the

expected future performance of the company, industry as a whole before taking the

investment decision. So the study will be helpful in finding the intrinsic value of the shares

and make decisions in their investments in Banking Sector. Optimal portfolio can be

selected using this study among the different portfolio basis in the Banking Sector. The

study will be a guide to other scholars and researchers in doing similar study in other

industries.

SCOPE OF THE STUDY

The scope of the study is limited to five selected banking companies in India. Investor

will be able to take right decision in case of investment which is already made in the

scrip of banking companies whether it is wise to hold on or to sell the shares.

The study helps the CSE in making assumptions regarding the performance of banking

industry in the stock market

The project will be helpful for other researchers and scholars in having a detailed study

regarding the performance of banking industry.

The study is done from April 18th to June 2nd 2010.



LIMITATIONS

The study was conducted only for a short period of 45 days.

Data collected were from secondary sources.

The effect of speculation, which has a direct bearing on security price is not considered.

The fundamental analysis considered the quantitative effects of company factors only,

even though the economy and industry factors significantly affect the share prices of the

shares.

The securities market, being a highly volatile one, the advice on investment options

based on this study is subject to changes.

Technical analysis was carried out using only the past eighteen month’s data.

Only five securities are used in the portfolio construction



CHAPTER II

INDUSTRY PROFILE



ABOUT THE INDUSTRY

CAPITAL MARKET

CAPITAL MARKET INTRODUCTION

The capital market is a market for financial assets, which have longer or

indefinite maturity. Generally, it deals with long-term securities which have maturity

period of above one year. The capital market may be further divided into three namely.

1. Industrial securities market

2. Government securities market

3. Long-term loan market

The industrial market, which deals with shares and debentures, can further

be divided into:

1. Primary market

2. Secondary Market

NEW ISSUE MARKET (PRIMARY MARKET)

Stocks available for the first time are offers through new issue market. The

issuer may be new company or an existing company. These issues may be of new type or

the security used in the past. In the new issue market the issuer can be considered as a

manufacturer. The issuing houses, investment bankers’ and brokers act as the channel of

distribution for the new issue.

SECONDARY MARKET

Secondary Market refers to a market where securities are traded after being

initially offered to the public in the primary market and / or listed on the stock Exchange.

Majority of the trading is done in the secondary market. Secondary market comprises of

equity markets and the debt markets.



STOCK EXCHANGE

Stock Exchange is an organized marketplace where securities are traded. These

securities are by the government, semi-government Bodies, Public sector undertakings and

companies for borrowing funds and raising resources. Securities are defined as monetary

claims and include stock, shares, debentures, bonds etc. If these securities are marketable

as in the case of Government stock, they are transferable by endorsement and are like

movable property. Under the securities Contract Regulation Act of 1956, securities trading

are regulated by the Central Government and such trading can take place only in Stock

Exchange recognized by the Government under this Act. At present there are 23 recognized

stock Exchanges in India. Of these major Stock Exchange, like Mumbai, Calcutta, Delhi,

Chennai, Hyderabad, Bangalore etc. are permanently recognized while a few are

temporarily recognized.

NATIONAL STOCK EXCHANGE (NSE)

With the liberalization of the Indian economy, it was found inevitable to lift the

Indian stock market trading system on par with the international standards. On the basis of

the recommendations of high powered Pherwani Committee, the National Stock Exchange

was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and

Investment Corporation of India, Industrial Finance Corporation of India, all Insurance

Corporations, selected commercial banks and others.

Trading at NSE can be classified under two broad categories:

(a) Wholesale debt market and

(b) Capital market.

Wholesale debt market operations are similar to money market operations -

institutions and corporate bodies enter into high value transactions in financial instruments

such as government securities, treasury bills, public sector unit bonds, commercial paper,

certificate of deposit, etc.

There are two kinds of players in NSE:

(a) Trading members



(b) Participants.

Recognized members of NSE are called trading members who trade on behalf of

themselves and their clients. Participants include trading members and large players like

banks who take direct settlement responsibility.

Trading at NSE takes place through a fully automated screen based trading

mechanism, which adopts the principle of an order driven market. Trading members can

stay at their offices and execute the trading, since they are linked through a communication

network. The prices at which the buyer and seller are willing to transact will appear on the

screen. When the prices match the transaction will be completed and a confirmation slip

will be printed at the office of the trading member.

OVER THE COUNTER EXCHANGE OF INDIA (OTCEI)

The traditional trading mechanism prevailed in the Indian stock markets gave way

to many functional inefficiencies, such as, absence of liquidity, lack of transparency,

unduly long settlement periods and binami transactions, which affected the small investors

to a great extent. To provide improved services to investors, the country's first ring less,

scrip less, electronic stock exchange OTCEI - was created in 1992 by country's premier

financial institutions – UTI, ICICI, and IDBI etc.

Trading at OTCEI is done over the centers spread across the country. Securities

traded on the OTCEI are classified into:

i. Listed Securities

The shares and debentures of the companies listed on the OTC can be bought or

sold at any OTC counter all over the country and they should not be listed anywhere else

ii. Permitted Securities

Certain shares and debentures listed on other exchanges and units of mutual funds

are allowed to be traded

iii. Initiated debentures



Any equity holding at least one lakh debentures of particular scrip can offer them

for trading on the OTC.

BOMBAY STOCK EXCHANGE (BSE)

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875

as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even

older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-

profit making Association of Persons (AOP) and is currently engaged In the process of

converting itself into demutualised and corporate entity. It has evolved over the years into

its present status as the premier Stock Exchange in the country. It is the first Stock

Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of

India under the Securities Contracts (Regulation) Act, 1956.

The Exchange, while providing an efficient and transparent market for trading in

securities, debt and derivatives upholds the interests of the investors and ensures redresses

of their grievances whether against the companies or its own member- brokers. It also

strives to educate and enlighten the investors by conducting investor education

programmers and making available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides the policies

and regulates the affairs of the Exchange. The Governing Board consists of 9 elected

directors, who are from the broking community (one third of them retire every year by

rotation), three SEBI nominees, six public representatives and an Executive Director &

Chief Executive officer and a Chief Operating Officer. The Executive Director as the Chief

Executive Officer is responsible for the day-to-day administration of the Exchange and he

is assisted by the Chief Operating Officer and other Heads of Departments.

BANKING IN INDIA

Banking in India originated in the last decades of the 18th century. The oldest bank

in existence in India is the State Bank of India, a government-owned bank that traces its

origins back to June 1806 and that is the largest commercial bank in the country. Central



banking is the responsibility of the Reserve Bank of India, which in 1935 formally took

over these responsibilities from the then Imperial Bank of India, relegating it to commercial

banking functions. After India's independence in 1947, the Reserve Bank was nationalized

and given broader powers. In 1969 the government nationalized the 14 largest commercial

banks; the government nationalized the six next largest in 1980.

Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector

banks (that is with the Government of India holding a stake), 31 private banks (these do not

have government stake; they may be publicly listed and traded on stock exchanges) and 38

foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs.

According to a report by ICRA Limited, a rating agency, the public sector banks hold over

75 percent of total assets of the banking industry, with the private and foreign banks

holding 18.2% and 6.5% respectively.

Currently (2007), banking in India is generally fairly mature in terms of supply, product

range and reach-even though reach in rural India still remains a challenge for the private

sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks

are considered to have clean, strong and transparent balance sheets relative to other banks

in comparable economies in its region. The Reserve Bank of India is an autonomous body,

with minimal pressure from the government. The stated policy of the Bank on the Indian

Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been

true.



CHART No.1

STATE BANK OF INDIA (SBI)

SBI, started as Imperial Bank then named State Bank of India commenced

its operations from the year 1955, is the largest commercial bank in India in terms of

profits, assets, deposits, branches and employees. As of March 2008, the bank has had 21

subsidiaries and 10,000 branches. SBI offering the services of banking and as well as non-

banking services to their customers. It provides a whole range of financial services which

includes Life Insurance, Merchant Banking, Mutual Funds, Credit Cards, Factoring,

Security Trading & Primary dealership in the Money market. The Bank is actively involved

in non-profit activity called community services banking apart from its normal banking

activity.



The bank also concentrate in agriculture, for that it took initiative spotlight kharif

and spotlight rabi campaigns for higher disbursement. It introduced Automated Teller

Machine with Kishan Credit Cards in all circles to assist agriculture peoples, cumulatively

the bank has credit linked 7.68 Lac. Self Help Groups and disbursed loans to the extent of

Rs 3,468 Crs. so far. In the year 2001 the SBI Life was started. SBI is the only Bank to

have been permitted a 74% stake in the insurance business. The Bank's insurance

subsidiary "SBI Life Insurance Company" is a joint venture with Cardif S.A holds 26%

stake. SBI Life enjoys the unique distinction of being the first private sector life insurance

company in India to make profits for two consecutive years.

During the year 2004-05 SBI was the only one bank in India to ranked among top

100 banks in the world and also among the top 20 banks in Asia in the annual survey by

"The Banker" as well as in the same year bank received two prestigious awards for

technology from the same The Banker magazine. In the year 2005-06 the bank introduced

"SBI e-tax" an online tax payments facility for direct and indirect tax payment, the

centralized pension processing center also launched during the year. SBI made a

partnership with Tata Consultancy Services for setup C-Edg Technologies and consulting

services to the banking, financial services and insurance industry. The bank noted as The

most preferred bank in a survey by TV 18 in association with AC Nielsen-ORG Marg

along with SBI voted as The most preferred housing loan provider in AWAAZ consumer

awards for 2006. In the customer loyalty survey 2006-07 conducted by "Business World",

SBI has been ranked number One in all parameters of customer satisfication, service

orientation, customer care/ call center, customer loyalty and home loans. SBI Funds

(SBIFMPL) was judged "Mutual fund of the year" by CNBC/TV-18/CRISL. SBI FMBL

Equity schemes won 11 awards and ranging of the AMC in terms of Assets under

management remained at 7th position during the year 2006-07. SBI cards is in 2nd position

in the country under market share. During the year 2006-07 14.81 lac additional cards were

issued by SBI and they crossed the landmark of 3 million cards totally.

The strategic initiatives that SBI have launched business groups in 2007 namely

rural and agri business; treasury and marketing; corporate strategy and new business; and

fourth mid corporate group is on the anvil. They also introduced new products and services



such as web-based remittance, instant fund transfer, online-trading, comprehensive cash

management.

SBI opened its 10,000th branch in March 2008; it becomes only the second bank in

the world to have more than 10,000 branches after China's ICBC. SBI is pursuing

aggressive IT policy, where the Automated Teller Machines are now also enabled to pay

utility bills, college fees, book air-line tickets and accept donations, further bilateral sharing

of ATMs was extended to thirteen banks covering 15,700 Automated Teller Machines and

an Memorandum of Understanding has been signed with the Indian railways for installing

ATMs at 682 railway stations. Infrastructure fund, private equity, venture capital and

pension fund management are under in process to assist the customer in time. SBI is

targeting to emerge as the best rated bank among public, private, foreign and state -owned

banks by the end of the next fiscal. Employee Stock Option Scheme, where employees

have the option to pick up shares as per their needs is avail in SBI. SBI plans to implement

the mobile banking technology will soon with aim of customer will no be just "Branch

customers" but will be "Bank customer

ICICI BANK LTD.

ICICI Bank, a private sector bank under the house of ICICI was incorporated in the

year of 1994. It is a multi-specialist financial service provider with leadership position

across the spectrum of financial services in India. ICICI Bank is the 2nd largest bank in

India and Bank breaking into the top 100 financial institutions in the world, in terms of

market capitalization. It got this position in short time, because the bank doing what

customers want. ICICI running its business with six principal groups, such as Retail

Banking, Wholesale Banking, International Banking, Rural, Micro Banking and Agri-

Business, Government Banking and Corporate Centre. The Bank offers a wide spectrum of

domestic and international banking services to facilitate trade, investment

banking ,Insurance, Venture Capital, asset management, cross border business & treasury

and foreign exchange services besides providing a full range of deposit and ancillary

services for both individuals and corporate through various delivery Channels and

specialized subsidiaries. ICICI Bank has 14 subsidiaries, out of that 10 in domestic and rest



of 4 in international level such as UK, Canada and Russia. To efficiently distribute its

products and services, the bank has developed multiple access channels comprising lean

brick and mortar branches, ATMs, call centers and Internet banking. The Bank has

introduced the concept of mobile ATMs in the remote/rural areas. It has also extended its

mobile banking services to all cellular service providers across India and NRI customers in

USA, UK, Middle-East and Singapore.

The merger and acquisition are the key kind to bank. The Bank of Madura (BOM)

got merged with ICICI Bank during the period 2000-01 and in 2001 ICICI (Financial

Institution) merged with ICICI Bank. The two subsidiaries of ICICI Ltd viz ICICI Personal

Financial Services and ICICI Capital Services were also merged with the ICICI Bank on

March 2002. During May,2003 the bank has acquired Transamerica Apple Distribution

Finance Private Ltd and renamed it to ICICI Distribution Finance Private Limited which is

primarily engaged in financing in the two-wheeler segment.

Bank received many awards and recognitions during the year 2005-06. Some of

them are Best Bank in India by Euro money, Best Integrated Consumer Bank Site in Asia

by Global Finance, Best Cash Management-Country Awards in India by The Asset and

Best Secondary Offering by Finance Asia. ICICI Bank noted as Bank of the year 2006

India by The Banker, it was a award to ICICI Bank at second time from last year. During

the year 2006-07 also Bank acquired the number of awards. Samples are, Best Transaction

Bank in India by Asset Triple AAA, Best Bank of the Year 2006 by Business India,

National Award for Excellence in Energy Management by CII and Excellence in Multi

Channel Distribution by Asian Banker.

As on April 2007 Sangli Bank Ltd was merged with ICICI Bank Ltd. In the

Wholesale Banking segment, the bank has achieved a significant milestone in the market

making activity by expanding the product suite to include foreign exchange options. As on

May 2007 the bank have market capitalization of Rs 77,834 crore. In 2007 June ICICI

Bank has entered into an agreement with networking solutions provider GTL Ltd to lease

out its call centre facility at Mayhap worth of around Rs 100 crore for a period of 25 years.

In August of 2007 the bank has availed of a $200-million worth Line of Credit (LoC) from

The Export-Import Bank of Korea (Korea Exim bank) for the purpose of the Hong Kong



branch of ICICI Bank gets funds from Korea Exim bank, and the bank lends foreign

currency loans to domestic companies investing in Korea and the bank had taken a similar

LoC of $200 million from the Japan Bank for International Cooperation (JBIC) last year. In

2008 ICICI Bank, come a cropper in the global stage when it comes to their brand value,

which is $2,603 million, it reveals by the study of London-based consultancy Brand

Finance.

HDFC BANK LTD.

HDFC Bank, a private sector bank was incorporated in the year of 1994 by Housing

Development Finance Corporation Limited (HDFC), India's premier housing finance

company. HDFC was amongst the first to receive an 'in principle' approval from the

Reserve Bank of India (RBI) to set up a bank in the private sector. The Bank commenced

its operations as a Scheduled Commercial Bank in January 1995 with the help of RBI's

liberalization. HDFC Bank deals with three key business segments - Wholesale Banking

Services, Retail Banking Services, Treasury. It has entered the banking consortia of over 50

corporate for providing working capital finance, trade services, corporate finance and

merchant banking. It is also providing sophisticated product structures, sound advice and

fine pricing mainly in areas of foreign exchange and derivatives, money markets and debt

trading and equity research through its state-of-the-art dealing room.

Notable event was happened in the history of bank as well as Indian banking sector

in Feb. 2000, the Times Bank was amalgamated with HDFC bank. This was an important

milestone, being the first merger of two private sector banks. HDFC Bank was the first

Bank to launch an International Debit Card in association with VISA (Visa Electron). The

Bank launched its Credit Card business in 2001. In the same year HDFC Bank has became

the first private sector bank to be authorized by the Central Board of Direct Taxes (CBDT)

as well as the RBI to accept direct taxes. The taxes accepted at specified branches of the

bank. Also it has announced a strategic tie-up with a Bangalore-based business solutions

software developer Tally Solutions Pvt (TSPL) for developing and offering products and

services facilitating on-line accounting and banking services to SMEs (Small and Medium

Enterprises). In 2001-02 the bank was listed on the New York Stock Exchange in the form



of ADS and bank had alliance with LIC for provide online payment of insurance premium

to the customers.

Bank received plenty of awards to its credit, in the year 2003 bank received "Best

Local Bank in India" by Finance Asia, "Best Domestic Bank in India Region" in The Asset

Triple A Country Awards 2003. Apart from this, 'Best Bank in the Private Sector' for the

year 2003 in the Outlook Express Awards, 'Best New Private Sector Bank 2003' by the

Financial Express in the FE-Ernst & Young Best Bank's survey 2003. It was also figured in

the 'Best Under a Billion, 200 Best Small Companies for 2003' by Forbes Global and for

use of information technology the bank was awarded with 'Best IT user in Banking' at the

IT User Awards 2003 conferred by Economictimes.com & Nasscom. In the year of 2004 to

2005, "Best Domestic Commercial Bank" & "Best Cash Management Bank"- India- Asia

money Awards for Corporate Excellence of 2004-05, "Best Bank" - India - Finance Asia,

"Company of the Year "- The Economic Times Awards for Corporate Excellence 2004-05,

"Best Domestic Bank in India" - The Asset Triple A Country Awards 2005, "Most

Customer Responsive Company- Banking and Financial Services" - The Economic Times -

Avaya Global Connect Customer Responsiveness Awards 2005. During the year of 2006-

07 also bank received number of awards, The Asian Banker Achievement Award, Best

Listed Bank of India in 2006 by Business World, Euro money Award as Best Bank in

India, One of Asia Pacific's Best 50 Companies in 2006 by Forbes Magazine, Asia money

Award for Best Local Cash Management in Large and Medium segments, other than above

bank received " Best Bank in India " award continuously from the year 2003 to 2007

conferred by the magazine Business Today. The Financial Express rated 1st in India's Best

Banks 2007 under New Private Sector Bank under along with Axis Bank.

As on 2007 May, The Reserve Bank of India has allowed HDFC Bank to start a non

banking finance company. The NBFC, to be set up by HDFC Bank as a wholly owned

subsidiary and will undertake retail operations such as auto, personal loans etc.. As part and

apart from the regular banking activity, HDFC Bank and The Institute for Technology and

Management (ITM), Chennai gone under Memorandum of Understanding to promote co-

operation advancement of academic and business exchanges between the two.



AXIS BANK LTD.

AXIS Bank is one of the fastest growing bank in private sector. It was incorporated

in the year 1993 as "The Bank (UTI BANK LIMITED) ", which provided corporate and

retail banking products and was among the few banks to be granted a license under the new

guidelines issued in 1993 to carry on banking business in India. AXIS Bank formerly

known as UTI Bank is being promoted by Unit Trust of India (UTI), Life Insurance

Corporation of India (LIC), General Insurance Corporation of India (GIC) and its four

subsidiaries. The bank had two subsidiaries namely UBL Sales Limited and UBL Asset

Management Company and were incorporated in the year 2005 and 2006 respectively.

The bank has restructured its business into four strategic profit centers such as

Corporate, Retail, Merchant & Treasury Banking and Further the bank also provide mobile

banking services and mobile refill facilities for Airtel,Hutch, Orange and Idea cellular

service providers. In fact the bank is among the few Indian banks to have completely

centralized its database which enables possible for the bank to increasingly e-enable its

transaction processing capabilities.

In the year 2001,the bank along with Global Trust Bank (GTB) had a merger

proposal to create the largest private sector bank in swap ratio of 9 shares of UTI Bank for

4 shares of GTB but due to media's issues both the banks withdraw he merger proposal.

2003 was the year to AXIS, the bank was authorized to handle Government transactions

such as collection of Government taxes, to handle the expenditure related payments of

Central Government Ministries and Departments and pension payments on behalf of Civil

and Non-civil Ministries such as defense, posts, telecom and railways and AXIS is the first

private sector bank to be authorized for collection of Commercial Taxes in twin cities of

Hyderabad & Secunderabad. The bank has launched pre-paid Dollar denominated card

which is useful for outbound travelers and has tied up with 14 major full-fledged

moneychangers to market the cards and the 1st Indian bank to offer the International Travel

Currency Card and.

The bank raised $239.3 million through Global Depositary Receipts in 2005 and in

the same year the bank has won the award 'Outstanding Achievement Award' for the year

2005 from Indian Banks Association for IT Infrastructure, delivery capabilities and



innovative solutions. In the year of 2007 the bank again raised $218.67 million through

Global Depository Receipts. The bank has rated 1st rank under new private sector banks in

India's Best Banks for the year 2007 by The Financial Express magazine (The Express

Group).

In 2007, the bank has opened 153 new branches. This includes 43 extension

counters that have been upgraded to branches and the setting up of 8 Service

branches/CPCs. The Bank has opened four new overseas offices, with branches at

Singapore, Dubai and Hong Kong and a representative office in Shanghai and has signed

an agreement with the Luxembourg-based bank Banque Privee Edmond de Rothschild

Europe provide wealth management solutions to overseas Indians. 450 ATMs are opened

during the year of 2007. The total network of the bank as on April 2008, a customer base of

90 lakh, 655 branches in more than 407 cities and towns, 20 extension counters and 2778

ATMs across the


Punjab National Bank (PNB), established in the year 1895 at Lahore, undivided

India, has the distinction of being the first Indian bank to have been started solely with

Indian capital. The bank was nationalized in July 1969 along with 13 other banks. From its

modest beginning, the bank has grown in size and stature to become a front-line banking

institution in India at present. With its presence virtually in all the important centers of the

country, Punjab National Bank offers a wide variety of banking services which include

corporate and personal banking, industrial finance, agricultural finance, financing of trade

and international banking. Among the clients of the Bank are Indian conglomerates,

medium and small industrial units, exporters, non-resident Indians and multinational

companies.

A package was developed for corporate customers for fast remittance of funds from

different up-country branches to the controlling office during the year 1996. The Bank has

introduced a scheme for providing finance against mortgage of immovable property in the

year 2000. It commenced its Gold Business in the form of Gold Import Scheme in

September of the same year 2000. An International Co-branded Credit Card of Punjab

National Bank and Hongkong & Shanghai Banking Corporation (HSBC) was launched in



New Delhi in November of the year 2000. The scheme offers international quality gold for

sale to the Bank's clientele consisting of exporters and others at competitive prices. PNB

came out with its first Initial public offer (IPO) in March 2002 for 5,30,60,700 equity

shares of Rs 10 each. During the year 2002, the bank started its branch in M.G. Road,

Bangalore named as Mid-Corporate Branch (MCD) to provide its corporate clients with a

credit limit of Rs 3.5 crore and above. PNB made joint venture with Infosys for the

implementation of a Centralized Banking Solution for it. The Bank received the Best Bank

Award' for excellence in banking technology. PNB tied up with Cisco Systems for

networking 3,870 branches as part of its Rs 150 crore plan.

PNB has taken over Kozhikode-based Nedungadi Bank Ltd (NBL) in February of

the year 2003. The Bank has entered into an alliance with New India Assurance for selling

its general insurance products in the same year 2003. In June of the year 2003, PNB made

Memorandum of Understanding (MoU) with Principal Financial Services Inc. (USA) and

Vijaya Bank for joint venture partnership in Life Insurance, Pensions and Asset

Management’s (MF) business. The Bank has formed a strategic alliance with Infrastructure

Leasing and Financial Services Ltd (IL&FS) to set up a private equity fund for investing in

domestic companies. Entered an agreement with Oriental Bank of Commerce, Indian Bank,

UTI Bank and Global Trust Bank for sharing ATMs spread across the country. In the year

2004, PNB acquired the assets of Hindustan Transmission Product Limited (HTPL) under

Sarfaesi. The Bank had signed a corporate agency agreement with Export Credit Guarantee

Corporation of India Ltd (ECGC) for marketing ECGC's export credit insurance products

through the network of the bank's branches. A MoU was signed for the deployment of

various IT-related solutions between the bank and Intel. PNB and ICICI Bank had signed a

MoU for ATM network sharing. PNB implements Loans and Advances Data Desk for

Evaluations and Reports, (LADDER) system for rationalization of returns, asset

classification and provisioning, credit monitoring and NPA management.

The Bank has mandated the project worth of Rs 5-10 crore to Tata Consultancy

Services (TCS) for implement human capital management and payroll solution in the year

2004. The Bank branch at Kabul, Afghanistan has commenced soft opening on July 26th of

2004. PNB has launched its corporate Internet banking facility during November of the



year 2004. PNB has coveted as Best IT User in Banking & Financial Services Industry -

2004 - by NASSCOM in partnership with Economic Times. The Bank had unveiled ATM

at Edappal in the year of 2005. PNB had adjudged with Golden Peacock Award - for

Excellence in Corporate Governance - 2005 by Institute of Directors. During 2005-06, the

bank revamped its organizational structure. Seven new Zonal Offices were created. The

Bank received 'Best IT Team of the Year Award' - at the IDRBT Banking Technology

awards for the year 2005-06.

During the year 2006, PNB had tied up with MasterCard International to launch a

signature-based debit card and opened one new branch in Uttaranchal. Also during the

same year of 2006, the bank has made tie up with Indian Airlines for online booking of air

tickets and ties up with IDBI Capital. PNB had entered into MoU with India Infrastructure

Finance Company (IIFC) in October of the year 2007 with an aim to extend its cooperation

and support to IIFC in areas of creating a deal flow of infrastructure projects. RBI rejected

Punjab National Bank's proposal to float a credit card joint venture with insurer American

International Group Inc. (AIG) and Venture InfoTech Global Pvt. Ltd, a third-party

processor for credit card companies.

PNB aims to expand its base in the entire northern India region for providing

banking facilities at the doorsteps of the peoples. The Bank is serving over 3.5 crores

customers through 4540 Offices including 421 extension counters - largest amongst

Nationalized Banks. PNB is moving with the vision, to be India's most profitable Universal

Bank. Also wants to profitably serve the banking and the financial services needs of the

nation everyday and everywhere.



CHAPTER III

COMPANY PROFILE

ABOUT THE COMPANY

COCHIN STOCK EXCHANGE (CSE)

Cochin Stock Exchange limited is one of the premiers Stock Exchange in India.

Established in 1978, the exchange has undergone tremendous transformation over the

years. The exchange had a humble start with just 5 companies getting listed in 1978-79 and

at time of its incorporation it had only 14 members. Today the exchange has 508 members

and 240 listed companies. In 1989 the company went for computerization of its offices. In

order to keep pace with the changing scenario in the capital market CSE took various



initiatives including initiating trading in dematerialized shares. This has effected in the

purpose of bad deliveries coming down.

CSE introduced the facility of computerized trading called" Cochin Online Trading.

(COLT) on March 17, 1997. CSE also became a member with an objective of consolidating

the small, fragmented and less liquid markets into a national legal integrated liquid market.

With the enforcement of efficient margin system and surveillance CSE has successfully

prevented major defaults. Introduction of Fast Track System made CSE the stock exchange

with shortest settlement cycle in the country. The Cochin Stock Exchange (CSE) has been

playing a very vital role in the economic development of the country in general and Kerala

in particular.

Right from the beginning CSE has been striving hard so as to achieve the following

goals:

Providing investors with high level of liquidity where by the cost and time involved

in the entry and exit from the market becomes the least.

Bring in high tech solutions and make possible absolute transparency of all

operations.

Spread equity cult and to serve investors of the region.

Professional stock broking and investment management function.

Impart capital market knowledge to all intermediaries on a continuous basis.

ORGANISATIONAL STRUCTURE

Chart No.2

ORGANIZATIONAL STRUCTURE

Department of Management Science [30] MES College of EngineeringLegal Systems Members

hipSettlement

Listing Listing

BOARD OF DIRECTORS

EXECUTIVE DIRECTOR

Marketing and Public Relations

Finance


DEPARTMENTAL PROFILE

LEGAL DEPARTMENT

CSE has a full-fledged Legal Department, headed by Manager-Legal and is primarily

engaged in advising the management in the merits and demerits of legal issues involving the

exchange.

A major function undertaken by the department is to ensure that the various rules,

regulations and directives of SEBI with regard to trading in the Capital Market by brokers and

sub-brokers, are brought to the notice to members and the investing public. Manager-Legal is

the compliance officer as per the provisions of SEBI regulations and ensures strict compliance

of SEBI directives and guidelines.

Manager-Legal also functions as secretary to the board of directors. The three

important areas being looked after by the legal department are:

(a) Investor Grievance Service

(b) Arbitration

(c) Default

SYSTEM DEPARTMENT

It is the heart of the various operations of CSE. The department provides the

necessary technical supports for screen based trading and the computerized functioning of

all other departments.



The various activities of the department include: -

Developments of various software needed for the functioning of the

exchange.

Maintenance of Multex software, which provides online trading with NSE

and BSE.

The major back office system soft wares used are NESS and BOSS for NSE and

BSE trades calculations respectively. These soft wares are developed in-house by CSE.

These soft wares are used to maintain the entire records of all the trades that occur each day.

It also does all the required calculations for deductions and also creates all kinds of reports

needed by the brokers and their clients.

SETTLEMENT DEPARTMENT

Settlement department is a key department of the CSE. It is dealing with cash and

securities. It helps the broker in setting the matters related to their pay-in and payout,

recovery of dues and settling the matters related to the bad deliveries. This department is

headed by a Deputy Manager and assisted by two senior officers who look into the

operations involved in the settlement activities in CSE. CSE is following T+2 settlement

system (where T- dates of transaction).

SURVEIALLANCE DEPARTMENT

The Exchange has set up Surveillance Department to keep close watch on price

movements of scrip, detect market abuses like price rigging, monitor abnormal prices and

volumes which are not consistent with normal trading pattern etc. The main objectives of

the department are to provide a free and fair market, to arrest unsystematic risk from

entering into the system and to manage risks. The surveillance function at the exchange has

assumed greater importance in the last few years. SEBI has directed the stock exchanges to

setup a separate surveillance department with staff exclusively assigned for this function.

It also offers services like:



Keeping a close watch on the price movement of scrip’s.

Detect market manipulations like price rigging.

ADMINISTRATION DEPARTMENT

A legal officer with two Deputy Managers for administration and compliance and

management information system heads the department. Two senior officers looking after

public relations and administration form part of administration.

The major activities of this department include: -

Organizing council meeting, annual general meeting, extra ordinary general

meeting, council meetings etc.

Looking after the admission and expulsion of members.

Taking care of all related functions needed for the smooth functioning of the

exchange including regular payments of rent, bills, taxes, public relations etc.

Giving necessary guidelines and support to students and other who visit the

exchange for various activities.

LISTING

Listing means admission of the securities of a company to trading privileges on a

Stock Exchange. The principal objectives of listing are to provide ready marketability and

impart liquidity and free negotiability to stocks and shares; ensure proper supervision and

control of dealings therein; and protect the interests of shareholders and of the general

investing public.

FINANCE DEPARTMENT

This department takes care of the various financial transactions of CSE thus acting

as the life line of the organization. The department is headed by a Finance officer and

assisted by a Deputy Manager and several senior and junior officers.

The major activities of the department include:

Annual Report Generation

Fund Management

Interaction with bankers



Keeping general accounts of the CSE and Taxation

Maintaining of payrolls and cash register

Budgeting and Expense research

Maintenance of internal control system

Interaction with external and internal audits



CHAPTER IV

LITERATURE REVIEW

LITERATURE RIVIEW

As per the study of P Janaki Rao and S Durga Rao Investment decisions, in all

sectors, have been gaining paramount importance, warranting the investors to be

continuously cautious of risk and return involved in the same. The faculty ‘investment

analysis’ calls for planned and meaningful appraisal of both internal and external factors

affecting the returns. Ever since Indian economy opened its doors to MNCs, the Indian

banking sector has been witnessing bizarre changes in terms of new products and services

and stiff competition as well. The sort of IPOs that have been taking place in banking

sector are amazing. In the light of these recent developments, a careful analysis of the

profitability of Indian banking sector is inevitable. The present study attempts to analyze

the profitability of the three major banks in India: SBI, ICICI, and HDFC. The variables

taken for the study are Operating Profit Margin (OPM), Net Profit Margin (NPM), Return



on Equity (RoE), Earnings per Share (EPS), Price Earnings Ratio (PER), Dividends per

Share (DPS), and Dividends Payout Ratio (DPR). The study brings out the comparative

efficiency of SBI, ICICI, and HDFC.

As per the study of Prof VR Ganesh in his article ‘Analysis Of Banking Industries’

he explains, the banking industry is and always has been one of the most important aspects

of all industries. The reason being, every other industry needs banks to take part in any

investments or financial movements as a way to better their position in their industries.

We will look at how and why the banking industry has been able to hold this position for so

long through the Competitive Landscape, Porter’s Five Forces Analysis, Major Segments

of the Industry, the Industry Life cycle, and The PESTEL Factors. These tools will help

provide data and a thorough analysis of the performance in the banking industry. Within

the banking industry there are a lot of competitors which offer the same services but for

some reason some are doing better than others. A Strategic Group Analysis has been done

to show the comparison between top competitors.

As per the study of Sree Ram G Banking Sector in India is one of the growing

sectors with great dynamics. There are various factors which affect the share prices of

Banking Companies. This report is all about how various factors (Internal and External)

affect the Banking Sector Share Prices. In this report a detailed analysis of the factors

affecting the share prices is carried on and a model is developed to study the effect of

various factors on the share prices. Here, various internal factors (Bank‟s Profitability,

Income, Expenses, and News about the Bank.) and external factors (Government policies,

CRR, Repo Rate, Reverse Repo Rate, Rules and Regulations.) are considered which affect

the prices of the shares of Bank. Data‟s are collected for all the quantifiable factors and for

the rest factors a theoretical explanation is given in detail. Using SPSS a model is

developed which shows the regression and correlation co-efficient between the share prices

and various factors affecting the same.

According to Daniel Giamodiurs and Laonnis D Vrontos in their article studies

the impact of modeling time-varying covariances/correlations of hedge fund returns in

terms of hedge fund portfolio construction and risk measurement. We use a variety of static

and dynamic covariance/correlation prediction models and compare the optimized



portfolios’ out-of-sample performance. We find that dynamic covariance/correlation

models construct portfolios with lower risk and higher out-of-sample risk-adjusted realized

return. The tail-risk of the constructed portfolios is also lower. Using a mean-conditional-

value-at-risk framework we show that dynamic covariance/correlation models are also

successful in constructing portfolios with minimum tail-risk.

According to Kwan, Clarence C.Y.A simple ranking model for optimal portfolio

construction under institutional procedures for short selling is introduced. The study

justifies this approach and offers economic insights, including those concerning short

selling's hedging impact in a portfolio context. The ranking model can be used to analyze

various treatments of the short-sale proceeds and margin deposits. It is also found to be

superior to other portfolio models in that it does not rely on assumptions that exaggerate

short-sale benefits for maintaining analytical tractability.

THEORETICAL PERSPECTIVE

SECURITY ANALYSIS

Securities analysis refers to the analysis of trading securities from the point of view

of their prices, returns and risks. All investments are risky and the expected return is related

to their risk. Their analysis will help in understanding the behavior of security prices and

the market in decision-making for investment. If it is an analysis of only one scrip, it is

called microanalysis of a company. If it is an analysis of market of securities, it is referred

to as a macro picture of the behavior of the market.

It is mainly out in two approaches namely: Fundamental analysis and Technical

analysis. Under fundamental analysis the share value depends on the intrinsic worth of the

share. It is basically an economy industry-company analysis. It considers the external as



well as the internal factors that determine a company’s efficient functioning. In technical

analysis the price moves in a predictable manner and in waves and trends. The present

prices are the result of past trends and can accordingly be predicted. Thus securities

analysis forms the first step towards devising an efficient portfolio of securities

FUNDAMENTAL ANALYSIS

Fundamental Analysis is really a logical and a systematic approach to estimating

the future dividends and share price. It is based on the economic premise that shares price

is determined by a number of fundamental factors relating to the economy, industry and

company. Hence, the economy fundamentals, industry fundamentals and company

fundamentals have to be considered while analyzing a security for investment purpose

Each of the shares is assumed to have an economic worth based on its present and

future earning capacity. This is called its intrinsic value or fundamental value. The purpose

of fundamental analysis is to evaluate the present and future –earning capacity of the share

based on the economy, industry and company fundamentals and there by assess the

intrinsic value of the share with the prevailing market price to arrive at an investment

decision. If the market price of the share is lower than the intrinsic value, as the investor is

decide to buy the share as it is under priced. The price of such share is expected to move up

in future to match with its intrinsic value.

On the contrary, when the market price of the share is higher than its intrinsic

value, it is perceived to be over priced the market price of such share is expected to come

down in the future and hence the investor would decide to sell such a share. Fundamental

Analysis thus provides an analytical frame work for investment decision making. This

analytical frame work is known as E-I-C framework (Economy-Industry-Company

Analysis).

The fundamental Analysis insists that no one should purchase or sell a share on the

basis of tips or rumors. The fundamental approach calls up on the investor to make his buy

or sell decision on the basis of a detailed analysis of the information about the company,



industry to which the company belongs, and economy. This results in informed investing.

For this the fundamental Analysis makes use of EIC framework of analysis.

Fundamental Analysis involves three steps:

1. Economy Analysis

2. Industry Analysis

3. Company Analysis

ECONOMY ANALYSIS

The performance of the company depends on the performance of the economy. If

the economy is booming, incomes rise and demand for goods will increase, the industries

and companies in general tend to be prosperous. On the other hand, if the economy is in

recession, the performance of companies will be generally bad.

Investors are considered with those variables in the economy, which affect the

performance of the company in which they tend to invest. A study of these economic

variables would give an idea about future corporate earnings and payment of dividend and

interest to investors.

Macro Economic Analysis

The macro economy is the overall economic environment in which all firms operate.

The key variables commonly used to describe the state of the macro economy are:

Growth rate of gross domestic product

Industrial growth rate and interest rates

Agriculture and monsoons

Savings and Investments

Government Budget and deficit

Price level and inflation

Balance of Payments, Forex reserves and exchange rate

Infrastructural Facilities and arrangements



INDUSTRY ANALYSIS

An investor ultimately invests his money in the securities of one or more specific

companies. Each company can be characterized as belonging to an industry. The

performance of the companies would therefore, be influenced by the fortunes of the

industry to which it belongs.

At any stage of economy, there are some industries, which are fast growing and

others are stagnating or declining. If an industry is growing the companies within the

industries may also be prosperous. The performance of the companies will depend, among

other things, upon the state of industry to which they belong. Industry analysis refers to the

evaluation of the relative strength and weakness of particular industries.

COMPANY ANALYSIS

It is the final stage of fundamental analysis. The economy analysis helps the

investor a broad outline of the prospects of the growth in the economy. The industry

analysis helps the investor to select the industry in which investment would be rewarding.

Now he has to decide the company in which he should invest his money. Company

Analysis provides the answer to this question.

It deals with the estimation of return and risk of individual shares. This calls for

information. Many pieces of information influence investment decisions. Information

regarding companies can be broadly classified into two broad categories: Internal &

External. Internal information consists of data and events made public by companies

concerning their operations. The internal information sources include annual reports to

shareholders, public and private statements of officers of the company, the company’s

financial statements etc. External sources of information are those generated independently

outside the company. These prepared by investment services and the financial press.

TECHNICAL ANALYSIS

Technical analysis is the name given to forecasting technique that utilize historical

share price data. Prices of securities in the stock market fluctuate daily on account of

continuous buying and selling. Stock prices move in trend and cycles and are never stable.



The rationale behind technical analysis is that share price behavior repeats itself over time

and analysts attempt to derive methods to predict this repetition. He looks at current price

data to see if any of the established patterns are applicable and, if so, extrapolations can be

made to predict the future price movements. The data used is primarily past share prices.

Other statistics such as volume of trading and stock market indices are also utilized to some

extent.

TOOLS FOR TECHNICAL ANALYSIS

Charting is the key in technical analysis and security prices are what is charted. The

charts form patterns which are studied to reveal the underlying trends. Often share price

movements are erratic and gauging the underlying trend becomes difficult. So as to

smoothen out the apparent erratic movements of share price and highlight the underlying

trend, mathematical tools are used.

EXPONENTIAL MOVING AVERAGE (EMA)

Moving averages are mathematical indicators of the underlying trend of the price

movement. An exponential moving average, also called Exponential Weighted Moving

Averages(EWMA), applies weighing factors which decrease exponentially. The weighing

for each older data point decreases exponentially, giving much importance to recent

observations while still not discarding older observations entirely.

EMA= (Current Closing Price – Previous EMA) x Factor + Previous EMA

Where Factor = 2/(n+1)

The EMA for the first day is taken as the closing price of that itself. The EMA from

the second day onwards is calculated using the above formula. A 5 day average would

indicate the short term trend. A 50 day average would indicate medium term trend and a

200 day average would represent the trend line. When the prices of the share intersects and

moves above or below this trend line, it may be taken as the sign of trend reversal.

RATE OF CHANGE INDICATOR (ROC)



ROC is a popular oscillator which measure the rate of change of the current price as

compared to the price a certain number of days or weeks back.The formula used is

ROC = Current Price Price ‘n’ period ago

MOVING AVERAGES CONVERGANCE AND DIVERGENCE (MACD)

MACD is an oscillator that measures the convergence and divergence between two

exponential moving averages. It is called so as it continuously converges and diverges

away from the horizontal reference line. The reference line represents the points, where the

two EMAs have identical values. A short term EMA and long term EMA are calculated

with help of the closing price data.12 day and 48 day EMAs constitute a popular

combination. The difference between the short term EMA and long term EMA represents

the MACD.

The MACD values for different days are derived by deducting the long term EMA

for each day from the corresponding short-term EMA for the day. These MACD values are

plotted on an XY graph with MACD values on the Y axis and tome periods on X axis. The

MACD line would oscillate across the zero line.

PORTFOLIO CONSTRUCTION

Portfolio construction is the process of blending securities in a manner that they

give maximum return at a minimum of risk.

Now that the securities for inclusion in the Portfolio, we proceed with the portfolio

construction, by deciding on how much amount should the investor allocate to each

security. In the present study three different ways of allocation are chosen, based on:

1. Equal amount to the five scrips.

2. Amount in proportion to their projected Price Earnings Ratio.

3. Amount in proportion to their projected EPS.



PORTFOLIO ANALYSIS

From a given set of securities, any number of portfolios can be constructed by an

investor, by choosing different set of securities and also varying the proportion of

investment in each security. A rational investor attempts to find out most efficient one from

those portfolios. The efficiency of each portfolio can be evaluated only in terms of the

expected return and risk of the portfolio as such. Thus, determining the expected return and

risk of different portfolios is a primary step in portfolio management designated Portfolio

Analysis.

PORTFOLIO RETURN

All investment are characterized by the expectation of a return. In fact, investment

is made with the primary objective of deriving a return. The return may be in the form of

yield plus capital appreciation. Different types of investment promise different rates of

return. The return from an investment depends upon the nature of the investment, the

maturity period etc.

Portfolio returns refers to the total return that may be received if the entire securities

are put together. It need not be the integration of the returns of individual securities. If the

portfolio is well diversified, the returns from the portfolio will be higher than those from

individual securities.

Portfolio return can be calculated using the following formula:

Portfolio return, Rp = ap +βp Rm

Rm = market return

PORTFOLIO RISK

Risk is the potential for variability in returns. An investment whose returns are fairly stable

is considered to be a low-risk investment where as an investment whose returns fluctuate

significantly is considered to be a high risk investment.Risk can be mainly classified into

‘systematic’ and ‘unsystematic’.Systematic risk is expressed as beta(β) and unsystematic

risk is expressed as (a).



Portfolio risk refers to the risk faced due to the ivestment in the entire portfolio. The more

the diversification of the investment in various securities, the lower will be the risk.

Portfolio risk can be calculated using the following formula:

Portfolio Risk σ²p= β²p σ²m + σ²ει

CHAPTER V

RESEARCH METHODOLOGY



RESEARCH METHODOLOGY

This is basically an Analytical research depends on the publicly available data.

The method used in the study is the fundamental and technical analysis of some specific

companies in banking industry. The companies are selected based on market

capitalization. The fundamental analysis includes Economic analysis, Industry analysis

and Company analysis.

SOURCES OF DATA

Data for the study is collected from the secondary sources. Data is collected from

the websites like www.bseindia.com, www.indiabulls.com, www.capitaline.com. Company

websites, books, newspapers and periodicals is also be referred to during the study.

POPULATION AND SAMPLE

According to the Indian Banking Industry estimates there are a total of 274

commercial banks operating in India out of which 223 banks are in the public sector and 51

banks are in the private sector. This total 274 banks have been taken as the population for

the study. On the basis of high market capitalization, the top five were selected to perform

the detailed study. Financial data which is relevant to 5 years is taken as the sample size

for fundamental analysis and eighteen months for technical analysis.

PERIOD OF STUDY


http://www.bseindia/

http://www.equitymaster.com/

http://www.indiabuilt.com/


The period of study is conducted for a period of 45 days from April 18th to June 2nd 2010.

BASIS FOR SELECTION OF COMPANIES

Out of the ten companies which were taken on the basis of high market

capitalization, the top five were selected to perform the detailed study. The ten banking

companies and their market capitalizations in the order of their ranking are given in the

table below.

Table No.1

Banks and Market Capitalization Rate

SL.NO BANKING COMPANIESMARKET CAPITALISATION as

on 31st March 2010

1 STATE BANK OF INDIA 1,31.991.55

2 ICICI BANK 97,210.81

3 HDFC BANK 84,458.26

4 AXIS BANK 67,386.42

5 PUNJAB NATIONAL BANK 51,954.08

6 BANK OF INDIA 49,632.96

7 KOTAK MAHINDRA BANK 48,376.23

8 BANK OF BARODA 42,039.21

9 CANARA BANK 33,369.75



10 UNION BANK 27,329.29

TOOLS OF ANALYSIS

Fundamental Analysis: Ratios Used

Earnings per share = Profit after tax No of Equity Shares

Dividend per share = Amount declared as dividendNo. Of equity shares

Payout Ratio = Dividend Per ShareEarnings per share

Return on equity = Profit after tax Net worth

Net worth = Share capital + Reserves and Surplus

Price earnings ratio = Market price of share Earning per share

Price Earning Average = Average of the price earning range

THE INTRINSIC VALUE CALCULATION

Dividend Pay Out Ratio [DPOR] = Dividend Per Share Earnings Per Share



Average DPOR for 5 years = Sum of DPOR for 5 years 5

Average Retention ratio = 1-Average DPOR

Average return on Equity = Sum of ROE for 5 years 5

Growth in equity [g] = Average Retention Ratio Average Return on Equity

Normalized Average Price Earnings ratio = Sum of PE ratios for 5 years 5

Long Term Growth Rate InDividends and Earnings = Normalized PE Ratio X Average Retention Ratio

Projected earnings per share

= Earnings per share for current year X (1+growth in equity[g])

Intrinsic value = Projected Earnings per Share Normalized Average Price Earnings RatioProjected Dividend per share = Dividend for the current year X (1+ growth in equity[g])

TECHNICAL TOOLS:

1. Mathematical Indicators:

a. Exponential Moving Average (MA):

EMA = [(current closing price – previous EMA)*factor] + previous EMA

2. Oscillators:

a. Rate of Change Indicator (ROC):

ROC = (current price / price ‘n’ periods ago.) * 100

b. Moving Average Convergence and Divergence



PORTFOLIO ANALYSIS AND CONSTRUCTION

1. SHARPE RATIO

Sharpe Ratio = Rp -Rf / σp

Where,

Rp = Realized return on the portfolio

Rf = Risk free rate of return

.σp = Standard deviation of portfolio return

4. TREYNOR RATIO

Treynor Ratio = Rp – Rf / βp

Where,

Rp = Realized return on the portfolio

Rf = Risk free rate of return

.βp = Portfolio Beta

TOOLS FOR PRESENTATION

Pie Diagram

Bar Diagram

Line Graph

( Microsoft Excel 2007 and AnalyzerXL was used for making charts)



CHAPTER VI

ANALYSIS

AND

INTERPRETATION



The analysis is done using Fundamental analysis and technical analysis and

Portfolio Construction and evaluation is conducted to find the optimal portfolio. Five

companies were selected for the study on the basis of Market Capitalization. Five years of

data are used to do the fundamental Analysis and Eighteen months of data are selected to

do the Technical Analysis. Portfolio is constructed on the basis of Equal Weight, Market

Capitalization and PE Ratio. Treynor and Sharpe Ratio is used to evaluate the Portfolio.

ANALYSIS AND INTERPRETATION OF SBI

Table No.2

SHARE HOLDING PATTERN OF SBI

SHARE HOLDING PATTERNSHARES [%]

Foreign 94243276.00 14.84426

Institutions 93464733.00 14.72163

Govt. Holding 122428.00 0.019284

Non Promoter Corp. Hold. 28339401.00 4.46374

Promoters 377207200.00 59.41392

Public and Others 41503184.00 6.537168

Total 63,48,80,222.00 100.00

(Source: Secondary Data)

Chart No.3




STATE BANK OF INDIA - RATIO ANALYSIS

Table No.3

BOOK VALUE

ITEMS 2004 – 05 2005 – 06 2006 - 07 2007 - 08 2008 – 09

Mkt.: High

Low

961.95

552.50

1378.70

684.15

2475.25

845.00

2540.00

991.10

1376.40

894.00

EPS 80.01 81.77 83.91 103.94 133.16

DPS 12.5 14.0 14.0 21.5 21.5


CHART No. 4




Table No.4

PAY-OUT POLICY

ITEMS 2004 – 05 2005 – 06 2006 - 07 2007 - 08 2008 – 09

Reported EPS 80.01 81.77 83.91 103.94 133.16

DPS 12.50 14.0 14.0 21.50 21.5

PAY-OUT RATIO 0.1562305 0.171212 0.166845 0.206850 0.161460


CHART No.5




Table No. 5

RETURN ON EQUITY

ITEMS 2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 – 09

Equity Share Capital 526.3 526.3 526.3 631.47 634.88

Reserves and Surplus 23545.84 27117.79 30772.26 48401.19 48401.19

NET WORTH 24072.14 27644.09 31298.56 49032.66 49036.07

PAT 4304.52 4406.67 4541.31 6729.12 8505.24

ROE (%) 17.881750 15.940731 14.509645 13.723751 17.344865


CHART No.6




Table No.6

NORMALIZED PRICE EARNING RATIO

ITEMS 2004 – 05 2005 - 06 2006 - 07 2007 - 08 2008 – 09

Reported EPS 80.01 81.77 83.91 103.94 133.16

Mkt.: High

Mkt.: Low

961.95

552.50

1378.70

684.15

2475.25

845

2540.00

991.10

1376.40

894.00

Mkt.: High/EPS

Mkt.: Low/EPS

12.022872

6.905387

16.860707

8.366760

29.498868

10.070313

24.437175

9.535309

10.336437

6.713728

Average P/E 9.464130 12.613734 19.784591 16.986242 8.525083


CHART No.7




INTRINSIC VALUE CALCULATION:

Dividend declaredDividend Pay-Out Ratio = ------------------------

EPS

Dividend Pay-out Ratio for 5 YearsAvg. Dividend Pay-out Ratio = ------------------------------------------------

5

0.156231+0.171212+0.166845+0.206850+0.16146

= ------------------------------------------------------------- 5

= 0.172520

Average Retention Ratio = 1 - Average Dividend Pay-out Ratio

= 1 – 0.172520

= 0.82748

Sum of ROE for 5 Years



Average Return on Equity = ------------------------------- 5

17.88175+15.940731+14.509645+13.723751+17.344865

= ----------------------------------------------------------- 5

= 15.8801484

Long term Growth Rate in Equity (g) = Average Retention Ratio x Avg. ROE

= 0.82748 x .15880

= .1314050

Sum of PE Ratios for 5 YearsNormalized Avg. PE Ratio = -------------------------------------

5

9.464130+12.613734+19.784591+16.986242+8.525083

= ----------------------------------------------------------------------- 5

= 13.474756

Projected EPS for = EPS for Current year x (1+g)

= 133.16 x (1+.1314050)

= 150.657890

Intrinsic Value = Projected EPS x Normalized Avg. PE Ratio

= 150.657890x 13.474756

= 2030.07830

Projected DPS = Dividend for Current Year x (1+g)

= 21.5 x (1+.1314050)

= 24.3252075

INTERPRETATION

The stock is said to be over priced as the intrinsic value of the security

(2030.07830) is lesser than current market price2269.45 (31st March2010). This means that



the investor should sell the share as the price of the security may go up in future. The short

term and long term solvency of the company is unsatisfactory. The projected earnings per

share (EPS) and the dividend per share (DPS) of the security is estimated to be 150.65 and

24.32 respectively.

SBI TECHNICAL ANALYSIS

CHART No: 8


INFERENCE

The 200 day EMA is rising, shows a long term bullish trend for the stock. The

increasing 50 day EMA shows medium term bullish trend as well. Only the 5 day EMA



shows a small downturn, which is not very significant for the long term investors. From the

chart it is clear that both medium term and long term trend of this scrip is bullish.

CHART No: 9


INFERENCE

It is very clear from the chart the ROC line is above the zero line, which is the

overbought zone. Ideally, one should sell a share that is overbought. Hence it is highly

advisable to sell this share at this level.

CHART No: 10




INFERENCE

MACD line is above the zero line and do not show any trend of turning down which

means it is bullish and indicates a buying opportunity.

ANALYSIS AND INTERPRETATION OF ICICI BANK

Table No: 7

SHARE HOLDING PATTERN OF ICICI BANK


Foreign 72,77,84,145.00 65.37469

Institutions 24,64,56,670.00 22.13847

Govt. Holding 0.00 0.00

Non Promoter Corp. Hold. 5,26,12,667.00 4.72604

Promoters 0.00 0.00

Public and Others 8,63,97,160.00 7.7608

Total 1,11,32,50,642.00 100.00


CHART No: 11




ICICI BANK- RATIO ANALYSIS

Table No.8

BOOK VALUE

ITEMS 2004 - 05 2005 – 06 2006 – 07 2007 - 08 2008 – 09

Mkt.: High

Low

615.90

330.05

925.00

440.00

1348.00

791.15

1465.00

282.15

537.95

252.75

EPS 25.99 27.35 32.88 36.02 36.11

DPS 8.5 8.5 10.0 11.0 11.0


CHART No.12




Table No: 9

PAY-OUT POLICY

ITEMS 2004 - 05 2005 – 06 2006 – 07 2007 - 08 2008 -09

Reported EPS 25.99 27.35 32.88 36.02 36.11

DPS 8.5 8.5 10.0 11.0 11.0

PAY-OUT RATIO 0.327049 0.310786 0.304136 0.305386 0.304625


CHART No.13




Table No. 10

RETURN ON EQUITY

ITEMS 2004 - 05 2005 – 06 2006 - 07 2007 - 08 2008 – 09



NET WORTH 12549.96 22205.99 24313.26 46470.21 50035.29

PAT 2005.20 2540.07 3110.22 4157.73 4019.16

ROE (%) 15.9777401 11.4386703 12.7922787 8.9470867 8.032651


CHART No.14




Table No.11


ITEMS 2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 – 09

Reported EPS 25.99 27.35 32.88 36.02 36.11

Mkt.: High

Low

615.90

330.05

925.00

440.00

1348.00

791.15

1465.00

282.15

537.95

252.75

Mkt.: High/EPS

Mkt.: Low/EPS

23.697576

12.699115

33.820841

16.087751

40.997567

24.061740

40.671849

7.833148

14.897535

6.999446

Average P/E 18.198346 24.954296 32.529654 24.252499 10.948491


CHART NO.15






EPS Dividend Pay-out Ratio for 5 Years

Avg. Dividend Pay-out Ratio = ---------------------------------------------- 5

0.327049+0.310786+0.304136+.305386+0.304625= -------------------------------------------------------------

5

= 0.310396


= 1 – 0.310396

= 0.689604

Sum of ROE for 5 YearsAverage Return on Equity = -------------------------------



5

15.97774+11.43867+12.792279+8.947087+8.032651= -------------------------------------------------------

5

= 11.437685%


= 0.68904 x 0.114377

= 0.078875


5

18.198346+24.954296+32.529654+24.252499+10.948491

= ----------------------------------------------------------------------5

= 22.176657


= 36.11 x (1+0.078875)

= 38.958176

Intrinsic Value = Projected. EPS x Normalized Avg. PE Ratio

= 38.958176 x 22.176657

= 863.962112


= 11.00 x (1+0.078875)

= 11.867625

INTERPRETATION



The stock is said to be over priced as the intrinsic value of the security (863.96) is

less than current market price875.70 (31st March 2010). This means that the investor should

sell the share as the price of the security may come down in future. The short term and long

term solvency of the company is unsatisfactory. The projected earning per share (EPS) and

the dividend per share (DPS) of the security is estimated to be 38.95 and 11.86 respectively

ICICI BANK TECHNICAL ANALYSIS

CHART No: 16




INFERENCE

The 200 day EMA indicates a trend reversal. The medium term EMA shows an upward

trend and is good for investors to hold the shares. The short term EMA also is on the rise,

which further assures the investor to stay invested in this share.

CHART No: 17




INFERENCE

The ROC line is moving from above the zero line, which is the oversold region. Those who

want to invest in this share can now get ready to buy this share, since it is advisable to buy

when the share is oversold.

CHART No: 18


INFERENCE

The MACD line above the zero line indicates a bullish trend. It is showing a decline

in the trend reversal. An investor can hold this share for a lesser period.

ANALYSIS AND INTERPRETATION OF HDFC BANK



SHARE HOLDING PATTERN OF HDFC BANK

Table No.12


Foreign 20,30,58,960.00 47.76234772

Institutions 4,50,40,249.00 10.59410545

Govt. Holding 6,102.00 0.001435277


Promoters 8,24,43,000.00 19.39176303


Total 42,51,44,428.00 100.00


CHART No: 19


HDFC BANK- RATIO ANALYSIS



Table No.13

BOOK VALUE

ITEMS 2004 - 05 2005 – 06 2006 - 07 2007 – 08 2008 – 09

Mkt.: High

Low

748.55

461.15

1150.00

620.00

1799.00

890.00

1825.00

800.00

1124.00

774.00

EPS 20.84 27.04 34.55 43.42 50.67

DPS 4.5 5.5 7.0 8.5 8.5


CHART No: 20


Table No.14

PAY-OUT POLICY



ITEMS 2004 - 05 2005 – 06 2006 – 07 2007 – 08 2008 – 09

Reported EPS 20.84 27.04 34.55 43.42 50.67

DPS 4.5 5.5 7.0 8.5 8.5

PAY-OUT RATIO 0.215931 0.203402 0.202605 0.195762 0.167752


CHART No.21


Table No.15

RETURN ON EQUITY



ITEMS 2004 - 05 2005 - 06 2006 – 07 2007 – 08 2008 – 09

Equity Share 309.88 313.14 319.39 354.43 425.14


NET WORTH 4519.85 5299.53 6433.15 11497.23 11567.94

PAT 665.56 870.78 1141.45 1590.18 2152.09

ROE (%) 14.726245 16.431268 17.743252 13.830984 18.603917


CHART No: 22


Table No.16




ITEMS 2004 - 05 2005 – 06 2006 – 07 2007 – 08 2008 – 09

Reported EPS 20.84 27.04 34.55 43.42 50.67

Mkt.: High

Mkt.: Low

748.55

461.15

1150

620

1799

890

1825.00

800.00

1124.00

774.00

Mkt.: High/EPS

Mkt.: Low/EPS

35.918906

22.128119

42.529586

22.928994

52.069465

25.759768

42.031322

18.424689

22.182751

15.275311

Average P/E 29.023513 32.729290 38.914617 30.228006 18.729031


CHART No: 23



Dividend declared



Dividend Pay-Out Ratio = ------------------------ EPS

Dividend Pay-out Ratio for 5 YearsAvg. Dividend Pay-out Ratio = --------------------------------------------

5

0.215931+0.203402+0.202605+0.195762+0.167752= ---------------------------------------------------------------

5

= 0.197090


= 1 – 0.197090

= 0.80291

Sum of ROE for 5 YearsAverage Return on Equity = ------------------------------- 5

14.726245+16.431268+17.743252+13.830984+18.603917 = -----------------------------------------------------------

5

= 16.267133

Long term Growth Rate in Equity (g)= Average Retention Ratio x Avg. ROE

= 0.80291 x 0.162671

= 0.130610


5

29.023513+32.729290+38.914617+30.228006+18.729031= -----------------------------------------------------------------------

5

= 29.924891




= 50. 67 x (1+0.130610)

= 57.288009

Intrinsic Value = Projected. EPS x Normalized Avg.PRatio

= 57.288009 x 29.924891

= 1714.337425


= 85 x (1+0.130610)

= 9.610185

INTERPRETATION

The stock is said to be under priced as the intrinsic value of the security (1714.34)

is higher than current market price 1700.40 (31st March 2010). This means that the investor

should buy the share as the price of the security may come up in future. The short term and

long term solvency of the company is unsatisfactory. The projected earnings per share

(EPS) and the dividend per share (DPS) of the security is estimated to be 57.2 and 9.6

respectively

HDFC BANK TECHNICAL ANALYSIS

CHART No: 24




INFERENCE

The 200 day, 50 day, 5 day EMA lines are showing increasing trend. This is an

indicator of the current upward trend continuing for a longer period either on the short

term, medium term and long term. The investor can stay invested in this share.

CHART No: 25




INFERENCE

The ROC line is in the overbought region at present and indicates a selling

opportunity. But as it is clear from the graph this is slowly changing and is taking a

downward turn.

CHART No: 26


INFERENCE

The MACD line above the zero line is a clear indicator or the bullish trend which is

visible in this share for some time now. It may go even higher. It may go even higher. The

investor can stay invested in this share for now.

ANALYSIS AND INTERPRETATION OF AXIS BANK



Table No.17

SHARE HOLDING PATTERN OF AXIS BANK

SHARE HOLDING PATTERN SHARES [%]

Foreign 12,52,00,444.00 34.877114

Institutions 3,78,47,989.00 10.54332225



Promoters 15,22,27,205.00 42.4059645


Total 35,89,75,929.00 100.00


CHART No: 27


AXIS BANK - RATIO ANALYSIS



Table No.18

BOOK VALUE

ITEMS 2004 – 05 2005 – 06 2006 – 07 2007 - 08 2008 - 09

Mkt.: High

Low

315.00

169.10

512.90

221.50

1025.00

399.00

1291.00

362.80

575.50

278.50

EPS 11.81 16.87 22.62 28.91 45.87

DPS 2.8 3.5 4.5 6.0 6.0


CHART No: 28


Table No.19

PAY-OUT POLICY



ITEMS 2004 – 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09

Reported EPS 11.81 16.87 22.62 28.91 45.87

DPS 2.8 3.5 4.5 6.0 6.0

PAY-OUT RATIO 0.237087 0.207469 0.198939 0.207541 0.130804


CHART No: 29


Table No.20

RETURN ON EQUITY



ITEMS 2004 - 05 2005 – 06 2006 - 07 2007 - 08 2008 – 09



NET WORTH 2408.19 2872.18 3393.23 8768.50 8769.21

PAT 334.58 485.08 659.03 1071.03 1645.21

ROE (%) 13.893422 16.888914 19.421907 12.214518 18.761211


CHART No: 30


NORMALIZED PRICE EARNING RATIO OF AXIS BANK

Table No.21

NORMALIZED PRICE EARNING RATIO:



ITEMS 2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 – 09

Reported EPS 11.81 16.87 22.62 28.91 45.87

Mkt.: High

Mkt.: Low

315.00

169.10

512.90

221.50

1025.00

399.00

1291.00

362.80

575.50

278.50

Mkt.: High/EPS

Mkt.: Low/EPS

26.672312

14.318374

30.403082

13.129816

45.313882

17.639257

44.655828

12.549291

12.546327

6.071506

Average P/E 20.495343 21.766449 31.476570 28.602560 9.308917


CHART No: 31




EPS




5

0.237087+0.207469+0.198939+0.207541+0.130804

= ----------------------------------------------------------------5

= 0.196368


= 1 – 0.196368

= 0.803632


=13.893422+16.888914+19.421908+12.214518+18.761211

---------------------------------------------------5

= 16.235995


= 0.803632 x 0.16235995

= 0.130478


5

20.495343+21.766449+31.476570+28.602560+9.308917

--------------------------------------------------------5

= 22.329978




= 28.91 x (1+0.130478)

= 32.68212


= 32.68212 x 22.329978

= 729.791021


= 6 x (1+0.130478)

= 6.782868

INTERPRETATION


less than current market price 988.70 (31st March 2010). This means that the investor

should sell the share as the price of the security may come down in future. The short term

and long term solvency of the company is unsatisfactory. The projected earnings per share


respectively.



AXIS BANK TECHNICAL ANALYSIS

CHART No: 32


INFERENCE

The long, medium and short term EMA are in a bullish trend. All are showing a

upward trend. Investor with a long term investment perspective can still buy this share at

the current rate.



CHART No: 33


INFERENCE

The ROC line is above the zero line at present and if it crosses the zero line from

above to below it is a selling opportunity otherwise it is a buying opportunity.

CHART No: 34


INFERENCE

The MACD line above the zero line and it is a bullish trend. But it may go down as the

MACD is just above the zero line. The investor may hold the share for a short term period.



ANALYSIS AND INTERPRETATION OF PNB

Table No.22

SHARE HOLDING PATTERN OF PNB


Foreign 5,77,84,916.00 18.32681821

Institutions 5,77,73,633.00 18.32323975


Non Promoter Corp. Hold. 34,10,941.00 1.081799542

Promoters 18,22,41,300.00 57.79887568


Total 31,53,02,500.00 100.00


CHART No: 35




PNB - RATIO ANALYSIS

Table No.23

BOOK VALUE

ITEMS 2004 - 05 2005 – 06 2006 – 07 2007 - 08 2008 – 09

Mkt.: High

Low

521.00

337.55

584.90

300.00

700.00

400.00

721.00

332.35

544.00

286.20

EPS 43.98 44.81 47.26 62.77 94.11

DPS 6.0 9.0 10.0 13.0 13.0


CHART No: 36




Table No.24

PAY-OUT POLICY

ITEMS 2004 - 05 2005 – 06 2006 – 07 2007 - 082008 – 09

Reported EPS 43.98 44.81 47.26 62.77 94.11

DPS 6.0 9.0 10.0 13.013.0

PAY-OUT RATIO 0.136426 0.200848 0.211595 0.2071050.138136


CHART No: 37




Table No. 25

RETURN ON EQUITY:

ITEMS 2004 - 05 2005 – 06 2006 – 07 2007 - 08 2008 – 09



NET WORTH 7848.81 9073.98 10111.61 10782.65 10782.65

PAT 1410.12 1439.31 1540.08 2048.76 2967.08

ROE (%) 17.966036 15.861948 15.230809 19.000524 27.517169


CHART No: 38


NORMALIZED PRICE EARNING RATIO PNB



Table No.26

NORMALIZED PRICE EARNING RATIO:

ITEMS 2004 - 05 2005 – 06 2006 – 07 2007 - 08 2008 – 09

Reported EPS 43.98 44.81 47.26 62.77 94.11

Mkt.: High

Mkt.: Low

521.00

337.55

584.90

300.00

700.00

400.00

721.00

332.35

544.00

286.20

Mkt.: High/EPS

Mkt.: Low/EPS

11.846294

7.675080

13.052890

6.694934

14.811680

8.463817

11.486379

5.294727

5.780470

3.041122

Average P/E 9.760687 9.873912 11.637749 8.390553 4.410796


CHART No: 39






EPS


5

0.136426+0.200848+0.211595+0.207105+0.138136= ---------------------------------------------------------------

5

= 0.178822


= 1 – 0.178822

= 0.821178


17.966036+15.861948+15.230809+19.000524+27.517169= ------------------------------------------------------

5

= 19.115297


= 0.821178 x 0.191153

= 0.156971


5

9.760687+9.873912+11.637749+8.390553+4.410796= -----------------------------------------------------------------

5

= 8.814739




= 62.77 x (1+0.156971)

= 72.623070


= 72.623070 x 8.814739

= 640.153407


= 13 x ((1+0.156971)

= 15.040623

INTERPRETATION


less than current market price 906.85 (31st March 2010). This means that the investor

should sell the share as the price of the security may come down in future. The short term

and long term solvency of the company is unsatisfactory. The projected earnings per share


respectively.

PNB TECHNICAL ANALYSIS



CHART No: 40


INFERENCE

The 200 day EMA is rising, shows a long term bullish trend for the stock. The

increasing 50 day EMA shows medium term bullish trend as well. Only the 5 day EMA

shows a small downturn, which is not very significant for the long term investors. From the

chart it is clear that both medium term and long term trend of this scrip is bullish.

CHART No: 41




INFERENCE

The ROC line is above the zero line, which is the overbought zone. Ideally, one

should sell a share that is overbought. Hence it is highly advisable to sell this share at this

level

CHART No: 42


INFERENCE

Since the MACD line is showing is above the zero line it i still the bullish trend and

it does not show any signs of downward turn now and hence is a buying opportunity.

COMPARISON OF MARKET VALUE WITH INTRINSIC VALUE

Table No: 27



ITEMS SBI ICICI HDFC AXIS PNB

MARKET VALUE 2269.45 875.7 1700.4 988.7 906.85

INTRINSIC VALUE 2030.07 863.96 1714.33 729.79 640.15


CHART No: 43

INTERPRETATION

For all of these Banks except HDFC the market price is higher than the intrinsic

value, the scrip is considered to be over priced and it is not suitable for the investment

purposes. So investor cannot hold his investment in these stock or sell additional shares to

the market. Out of these SBI AXIS and PNB Bank have a significant difference in the

market value and the intrinsic value. So the investment in these two stocks are said to be

less attractive.



PORTFOLIO MANAGEMENT

CALCULATION OF ALPHA AND BETA

STATE BANK OF INDIA

Return = Closing – Opening * 100 Opening

2004-05 2005-06 2006-07 2007-08 2008-09

Opening 642.60 584.80 913.65 1105.25 1776.35

Closing 656.95 968.05 992.90 1598.85 1066.55


SBI Return (Y)

2.23

65.538.6744.65-39.95

Β Calculation

Years Y X (Index Return) X2 XY1 2.23 11.86 140.65 26.442 65.53 63.18 4648.51 4467.833 8.67 11.98 143.52 103.864 44.65 37.35 1395.02 1667.675 -39.95 -36.42 1326.41 1454.97Total 81.13 92.95 7654.11 7720.77(Source: Secondary Data)

B = n∑XY – (∑X) (∑Y = (5 * 7720.77) – (92.95 * 81. 13) = 1.04

n∑X2 - (∑X)2 (5 * 7654.11) – 8639.70

α = y¯ – B¯X¯ = 81.13 – 1.04 * 92.95 = -3.11 5 5

The Expected Return from SBI, when the Index moves up by 18% can be calculated as:

Ri = α+β(Rm) = -3.11 + 1.04(18) = 15.61



ICIC1 BANK


2004-05 2005-06 2006-07 2007-08 2008-09

Opening 315.20 360.20 590.25 865.90 879.90

Closing 393.00 589.25 853.10 770.10 332.60


ICICI Return (Y)

24.68

63.5844.53-11.06-62.17

β Calculation

Years Y X (Index Return) X2 XY1 24.68 11.86 140.65 292.702 63.58 63.18 4648.51 4334.883 44.53 16.98 143.52 533.464 -11.06 37.35 1395.02 -413.095 -62.17 -36.42 1326.41 2264.23Total 59.56 92.95 7654.11 7012.18(Source: Secondary Data)

β = n∑XY – (∑X) (∑Y) = (5 * 7012.18) – (92.95 * 59.56) = 0.996

n∑X2 - (∑X)2 (5 * 7654.11) – 8639.70

α = y¯ – β¯X¯ = 59.56 – 0.97 * 92.95 = 6.6 5 5


Ri = α+β(Rm) = 6.6 + 0.97(18) = 11.32





2004-05 2005-06 2006-07 2007-08 2008-09

Opening 375.10 346.20 433.05 503.40 550.90

Closing 393.30 471.20 471.65 508.15 410.90


PNB Return (Y)

4.85

36.108.910.94-25.41

β Calculation


β = n ∑XY – (∑X) (∑Y) = (5 * 3586.08) – (92.95 * 25.39) = 0.52

n∑X2 - (∑X)2 (5 * 7654.11) – 8639.70

α = y¯ – β¯X¯ = 25.39 – 0.52 * 92.95 = -4.59 5 5


Ri= α+β(Rm) = -4.59 + 0.52(18) = 4.77



AXIS BANK


2004-05 2005-06 2006-07 2007-08 2008-09

Opening 155.15 230.10 347.05 467.85 924.30

Closing 242.05 356.35 490.15 781.15 414.50

AXIS Return (Y)

56.01

54.8641.2366.96-555.15

β Calculation


β = n∑XY – (∑X) (∑Y) = (5 * 9408.06) – (92.95 * 163.91) = 1.07

n∑X2 - (∑X)2 (5 * 7654.11) – 8639.70

α = y¯ – β¯X¯ = 163.9 – 1.07 * 92.95 = 12.89 5 5


R i= α+β(Rm) = 12.89 + 1.07(18) = 32.15



HDFC BANK


2004-05 2005-06 2006-07 2007-08 2008-09

Opening 375.90 537.20 826.60 1026.15 1514.85

Closing 544.25 773.50 949.40 1379.95 967.85


HDFC Return (Y)

44.78

43.9814.8528.63-36.10

β Calculation


β = n∑XY – (∑X) (∑Y) = (5 * 6091.63) – (92.95 * 96.14) = 0.72

n∑X2 - (∑X)2 (5 * 7654.11) – 8639.70

α = y¯ – β¯X¯ = 96.14 – 0.72 * 92.95 = 5.84 5 5


Ri = α+β(Rm) = 5.84 + 0.72(18) = 18.80



CALCULATION OF INDEX RETURNS (X)

2004-05 2005-06 2006-07 2007-08 2008-09

Opening 2074.68 2406.95 4112.59 4379.37 5769.05

Closing 2320.86 4048.24 4605.89 6015.47 3667.79


INDEX Return (X)

11.86

63.18

11.98

37.35

-36.42



PORTFOLIO CONSTRUCTION

1. BASED ON EQUAL WEIGHT

2. BASED ON PE RATIO

3. BASED ON MARKET CAPITALIZTION

ALFHA, BETA AND RETURN

BANKS ALFA BETA RETURN

SBI -3.1 1.04 15.61

ICICI -6.6 0.996 11.32

HDFC 5.84 0.72 18.80

AXIS 12.89 1.07 32.15

PNB -4.89 0.52 4.77


MARKETVARIENCE CALCULATIONS

Market Variance = N∑X² – (∑X)² N²

= 5*7654.11 – 8639.70 25= 1185.2

WORKING NOTEX (INDEX RELATION) X²11.86 140.6563.18 4648.5111.98 143.5237.35 1395.02-36.42 1326.41TOTAL = 92.95 TOTAL = 7654.11(Source: Secondary Data)



PORTFOLIO BASED ON EQUAL WEIGHT

Table No: 28Scrips Weight age PercentageSBI 0.20 20ICICI 0.20 20HDFC 0.20 20PNB 0.20 20AXIS 0.20 20TOTAL 1.00 100(Source: Secondary Data)

PORTFOLIO ALPHA & PORTFOLIO BETACOMPANY α (Alpha) β (Beta) Weight α*W β*WSBI -3.11 1.04 0.20 -0.622 0.208ICICI -6.6 0.966 0.20 -1.32 0.199HDFC 5.84 0.72 0.20 1.168 0.144PNB -4.59 0.52 0.20 -0.918 0.104AXIS 12.89 1.07 0.20 2.578 0.214TOTAL 4.43 4.32 1.00 0.886 0.869(Source: Secondary Data)

PORTFOLIO RETURN

Rp = αp+βpRm

0.886+(0.869*18.59)

= 17.04

PORTFOLIO RISK

σ²p = β²p* σ²m

σp = √0.755*1185.2 = 29.91

(Note: Residual Variance has been ignored)



PORTFOLIO BASED ON P/E RATIO

Table No: 29Scrips P/E Ratio Weight age PercentageSBI 13.47 0.14 14ICICI 22.17 0.23 23HDFC 29.92 0.30 30PNB 22.32 0.23 23AXIS 8.81 0.10 10TOTAL 96.69 1 100(Source: Secondary Data)

PORTFOLIO ALPHA AND BETASecurity Alpha Beta Weight α*weight β *weight

SBI -3.11 1.04 0.14 -0.435 0.145ICICI -6.6 0.966 0.23 -1.518 0.229HDFC 5.84 0.72 0.30 1.752 0.216PNB -4.59 0.52 0.23 -0.459 0.052AXIS 12.89 1.07 0.10 2.964 0.246TOTAL 4.43 4.32 1 2.304 0.888(Source: Secondary Data)

PORTFOLIO RETURN

Rp = αp+βpRm

2.30+(0.888*18.59)

= 18.807

PORTFOLIO RISK


σp = √0.8570*1185.2 = 30.57




PORTFOLIO BASED ON MARKET CAPITALIZATIONTable No: 30

Scrip’s Market Capitalization Weight age PercentageSBI 1,31.991.55 0.30 30

ICICI 97.210.81 0.22 22

HDFC 84,458.26 0.20 20

PNB 51,954.08 0.12 12

AXIS 67,386.42 0.16 16

TOTAL 433001.12 1 100


Security Alpha Beta Weight α*weight β *weightSBI -3.11 1.04 0.30 -0.933 0.312

ICICI -6.6 0.966 0.22 -1.452 0.212

HDFC 5.84 0.72 0.20 1.168 0.144

PNB -4.59 0.52 0.12 -0.550 0.062

AXIS 12.89 1.07 0.16 2.062 0.171

TOTAL 4.43 4.32 1 0.295 0.901


PORTFOLIO RETURN

Rp = αp+βpRm

0.295+(0.901*18.59)

= 17.04

PORTFOLIO RISK


σp = √0.8118*1185.2 = 31.01




PORTFOLIO EVALUATION

It is the last step in the process of portfolio management. Through portfolio evaluation

investors tries to find out how well the portfolio has performed. Portfolio evaluation

comprises of performance measurement and performance evaluation. Sharpe ratio(S.R) and

Treynor ratio(TR) are the two statistical tools used in the performance measurement.

SHARPE RATIO

SR = Rp-Rf σpTREYNOR RATIO

TR = Rp-Rf Bp

RISK FREE (Rf) FACTORS

Rf value is taken as

Rf = 6.76



SR CALCULATION

Based on Equal Weight

Rp=17.04

σp=29.91

Βp=0.869

S.R = 17.04-6.764 = 0.343 29.91

Based on PE Ratio

Rp=18.80

σp =30.57

βp=0.888

SR = 18.80-6.764 = 0.393 30.57

Based on Market Capitalization

Rp=17.04

σp =31.04

βp=0.926

SR = 17.04-6.764 = 0.331 31.04



T R CALCULATION

Based on Equal Weight

TR = 17.04-6.764 = 11.82 0.869

Based on PE Ratio

TR = 18.80-6.764 = 13.55 0.888

Based on Market Capitalization

TR = 17.04-6.764 = 11.405 0.901

Comparison of SR & TR

SR RANK TR RANK

Bases on Equal Weight 0.343 II 11.82 II

Based on P/E Ratio 0.393 I 13.55 I

Based on Market Capitalization 0.331 III 11.405 III


INFERENCEFrom the portfolio evaluation using Treynor and Sharpe Ratio it is found that Portfolio based on PE Ratio is ranked best among the other types of portfolios.



CHAPTER VII

FINDINGS, SUGGESTIONS

&

CONCLUSION



FINDINGS

1. FUNDAMENTAL ANALYSIS

STATE BANK OF INDIA.

The stock is said to be over priced as the intrinsic value of the security is less than

market price.

This means that the investor should sell the share as the price of the security may

come down in future.

In the year 2009, the Net-profit margin, the Return on Equity (ROE) and Earnings

per Share (EPS) has slightly increased, and Average P/E ratio has decreased

slightly.

The projected Earnings per Share (EPS) and Dividend per Share (DPS) of the

security is estimated to be Rs. 150.68 and Rs. 24.325 respectively.

ICICI BANK.


market price.



In the year 2009, the Net-profit margin, Return on Equity (ROE) and Average P/E

ratio has slightly decreased.

Earnings per Share (EPS) have increased slightly.

The projected Earnings per Share (EPS) and the dividend per share (DPS) of the

security is estimated to be 38.96and 118.67 respectively



HDFC BANK

The stock is said to be under priced, as the intrinsic value of the security is higher

than market price.

This means that the investor should buy the share as the price of the security may

come up in future.

In the year 2009, the Net-profit margin has slightly increased, Earnings per Share

(EPS) and the Return on Equity (ROE) has increased slightly.

Average P/E ratio have decreased. .

The projected Earnings per Share (EPS) and the dividend per share (DPS) of the

security is estimated to be 57.29 and 96.1 respectively.

AXIS BANK


market price.


come less in future.


(EPS) and the Return on Equity (ROE) has increased.

Average P/E ratio have decreased..


security is estimated to be Rs. 32.68 and Rs. 67.82 respectively.





market price.




(EPS) and the Return on Equity (ROE) has increased.

Average P/E ratio has decreased.


security is estimated to be Rs. 72.62 and Rs.150.41 respectively

2. TECHNICAL ANALYSES

The short term EMA 5 days gives a slightly bearish trend for all scrips except SBI

and PNB

The medium and long term EMA is bullish for all scrips.

ROC graphs give sell advice on SBI, PNB, ICICI and HDFC bank scrips and buy

for ICICI.

MACD graphs for all scrips indicate a bullish trend.

The long term and medium term predictions are bullish for all the selected banking

scrips. This means investor can hold the shares or new investor can buy the shares.



3. PORTFOLIO CONSTRUCTION ANALYSIS AND SELECTION

After evaluating the three portfolios which were constructed with the different

proportions of the five selected securities and measuring performance based on Sharpe and

Treynor Ratios, it has been found that, the portfolio based on P/E Ratio ranks highest. This

has a Sharpe ratio of 0.393 and Treynor ratio of 13.55. This confirms investor’s trust in the

PE Ratio in buying a company’s scrip.



SUGGESTIONS

STATE BANK OF INDIA

The present trend suggest the investors to sell the shares for long term investment, as the

intrinsic value of share is lesser than the market value.

ICICI BANK

As the market price of the share is overvalued when compared to the intrinsic value, it is

advisable for the investors to sell the shares for long term investment. Because the market

price of the shares may decrease in future.

HDFC BANK

There has been a significant difference between the market value and the intrinsic

value. Hence the present trend recommends the investors to buy the share for long term

investment.

AXIS BANK

Since the market price is higher than the intrinsic value, such a share is considered to be

over priced and it is suitable for the investment purpose. If necessary more shares can be

sold.


The stock price is said to be over priced as the intrinsic value of the security is lesser than

the market price. Here the investor cannot hold the existing shares.



CONCLUSION

The focus of the study was construction of Portfolio and its evaluation to find the

optimal portfolio and Security analysis on the selected five securities in the banking sector.

Out of the ten companies, which were taken them on the basis of market capitalization

from the BSE (Bombay Stock Exchange) list, five companies were selected to perform the

detailed study. Data were selected from the secondary sources. The analysis was done with

five years data. Both relevant fundamental and technical analysis were used for the

analysis.

The fundamental analysis had shown the real position of the Indian economy,

which is in a booming stage and the stock market indicating the best buying and selling

opportunities. Selected banks have been analyzed for their performance in the last five

years. This analysis revealed that all the banks have shown consistently good performance

and the performance is improving every year. Therefore the performances of all these

banks are likely to be much better in the years to come.

This is the best time to invest money in shares, especially in banking sector. Now

the market is moving up from the financial crisis. So the investors recommended to buy the

shares. The intrinsic values of shares are higher than the current market price of shares. It

indicates the coming movement of shares. Based on three portfolios (PE ratio Market

Capitalization and Equal Weight), we invest on the basis of PE Ratio was more profitable.



CHAPTER VIII

BIBLIOGRAPHY



BIBLIOGRAPHY

DONALD E. FISCHER AND RONALD J. JORDAN, Security Analysis and

portfolio Management New Delhi: Prentice-Hall of India Private Ltd. 1998.

KWAN, CLARENCE, Optimal Portfolio, bx.businessweek.com/...clarence-

kwan/12078054773844019468-9d5eff11ed4199d58fbb3e424021f9d

P JANAKI RAO & S DURGA RAO, Investment decisions, Work911/article.htm

PRASANNA CHANDRA. Investment Analysis and Portfolio management, New

Delhi: Tata Mc Graw – Hill Publishing Company Limited, 2002

Prof. VR GANESH, Analysis of Banking Industries, www.

Woopdia.com/business_article/095345432.htm

SREE RAM G, Banking sector in Inida, www.jomfp.in/article.asp?issn=0973-

029X;year=2008

DANIEL GIAMODIURS AND LAONNIS S VRONTOS, Impact of modeling

time varying covariance/correlation, www.aueb.gr/pages_en/cv/en/1240.pdf

S. KEVINN, Portfolio Management, New Delhi: Prentice-Hall of India Private Ltd.

2003.

www.bse-inda.com

www.capitaline.com

www.indiabuilts.com

www.equitymaster.com

www.economywatch.com

www.cochinstockexchange.com

www.money.rediff.com


http://www.cochinstockexchange.com/

http://www.economywatch.com/

http://www.equitymaster.com/

http://www.indiabuilts.com/

http://www.capitaline.com/

http://www.bse-inda.com/

http://www.jomfp.in/article.asp?issn=0973-029X;year=2008

http://www.jomfp.in/article.asp?issn=0973-029X;year=2008


CHAPTER XI

ANNEXURE

Punjab National Bank Industry :Banks - Public Sector

BALANCE SHEET



Year Mar 09 Mar 08 Mar 07 Mar 06 Mar 05

SOURCES OF FUNDS :

Capital + 315.30 315.30 315.30 315.30 315.30

Reserves Total + 14,338.33 12,003.04 10,120.16 9,061.06 7,846.00

Deposits + 209,760.50 166,457.23 139,859.67 119,684.92 103,166.89

Borrowings + 4,374.36 5,446.56 1,948.86 6,664.87 2,718.29

Other Liabilities & Provisions + 18,151.15 14,826.64 10,285.14 9,623.64 12,222.24

TOTAL LIABILITIES 246,939.64 199,048.77 162,529.13 145,349.79 126,268.72

APPLICATION OF FUNDS :

Cash & Balances with RBI+ 17,058.25 15,258.15 12,372.03 23,394.55 9,460.20

Balances with Banks & money at Call+ 4,354.89 3,572.57 3,273.49 1,397.14 1,628.83

Investments + 63,385.18 53,991.71 45,189.84 41,055.31 50,672.83

Advances + 154,702.99 119,501.57 96,596.52 74,627.37 60,412.75

Fixed Assets + 2,397.11 2,315.52 1,009.82 1,030.23 965.23

Other Assets + 5,041.22 4,409.25 4,087.43 3,845.19 3,128.88

Miscellaneous Expenditure not written off 0.00 0.00 0.00 0.00 0.00

TOTAL ASSETS 246,939.64 199,048.77 162,529.13 145,349.79 126,268.72

Contingent Liability+ 103,650.26 96,951.50 66,758.42 53,035.43 43,001.29

Bills for collection 7,561.84 7,104.56 7,942.25 5,704.17 4,046.07

Punjab National BankIndustry :Banks - Public Sector

PROFIT AND LOSS ACCOUNT

Year Mar 09(12) Mar 08(12) Mar 07(12) Mar 06(12) Mar 05(12)

INCOME :

Interest Earned + 19,326.16 14,265.02 11,236.14 9,584.15 8,459.85

Other Income + 3,224.42 2,026.46 1,932.71 1,901.00 2,186.36

Total 22,550.58 16,291.48 13,168.85 11,485.15 10,646.21

II. Expenditure

Interest expended + 12,295.30 8,730.86 6,022.91 4,917.39 4,453.11

Payments to/Provisions for Employees 2,924.38 2,461.54 2,352.45 2,114.98 2,121.23

Operating Expenses & Administrative Expenses + 663.76 563.61 485.00 455.22 384.44



Depreciation + 191.06 170.23 194.80 186.64 183.28

Other Expenses, Provisions & Contingencies+ 1,712.66 1,072.78 1,945.94 1,777.05 1,457.07

Provision for Tax + 1,701.32 1,264.75 739.21 412.83 494.64

Deferred Tax + -41.46 -31.50 -120.50 172.73 142.32

Total 19,447.02 14,232.27 11,619.81 10,036.84 9,236.09

III. Profit & Loss

Reported Net Profit 3,090.88 2,048.76 1,540.08 1,439.31 1,410.12

Extraordinary Items + 1.18 0.70 -254.38 1.89 0.46

Adjusted Net Profit 3,089.70 2,048.06 1,794.46 1,437.42 1,409.66

Prior Year Adjustments + 0.00 0.00 -13.27 0.00 0.00

Profit brought forward 0.00 15.52 183.49 0.00 0.00

IV. Appropriations

Transfer to Statutory Reserve + 772.72 512.19 385.02 359.83 352.53

Transfer to Other Reserves + 1,572.74 1,072.54 850.03 680.28 859.93

Trans. to Government /Proposed Dividend + 737.78 479.55 459.73 215.71 197.66

Balance carried forward to Balance Sheet 7.64 0.00 15.52 183.49 0.00

Equity Dividend % 200.00 130.00 100.00 90.00 60.00

Earnings Per Share-Unit Curr 94.63 62.77 47.26 44.81 43.98

Book Value-Unit Curr 416.74 341.98 321.65 287.79 248.93

Axis Bank Ltd Industry :Banks - Private Sector

BALANCE SHEET


SOURCES OF FUNDS :

Capital + 359.01 357.71 281.63 278.69 273.80

Reserves Total + 9,854.58 8,410.79 3,111.60 2,593.49 2,134.39

Deposits + 117,374.11 87,626.22 58,785.60 40,113.53 31,712.00

Borrowings + 10,185.48 5,624.04 5,195.60 2,680.93 1,781.41






Investments + 46,330.35 33,705.10 26,897.16 21,527.35 15,048.02

Advances + 81,556.77 59,661.15 36,876.48 22,314.23 15,602.92

Fixed Assets + 1,072.89 922.85 673.19 567.71 518.44

Other Assets + 3,781.95 2,832.33 1,944.57 1,733.50 2,127.44

Miscellaneous Expenditure not written off

0.00 0.00 0.00 0.00 0.00

TOTAL ASSETS 147,758.86 109,625.67 73,309.71 49,784.63 37,799.76





Axis Bank Ltd Industry :Banks - Private Sector



INCOME :

Interest Earned + 10,835.49 7,005.32 4,461.66 2,888.79 1,924.16

Other Income + 2,977.69 1,810.78 1,013.02 731.73 433.24

Total 13,813.18 8,816.10 5,474.68 3,620.52 2,357.40

II. Expenditure


Payments to/Provisions for Employees 997.66 670.25 381.35 240.20 176.86

Operating Expenses & Administrative Expenses +

991.58 755.40 487.53 338.11 247.49

Depreciation + 188.67 158.11 111.86 92.19 81.58

Other Expenses, Provisions & Contingencies+ 1,700.79 1,166.10 504.38 408.17 154.79

Provision for Tax + 1,095.52 725.59 412.60 296.11 153.72

Deferred Tax + -137.09 -159.39 -81.36 -55.73 15.40

Total 11,986.41 7,736.02 4,809.68 3,129.61 2,022.82

III. Profit & Loss

Reported Net Profit 1,815.36 1,071.03 659.03 485.08 334.58

Extraordinary Items + -4.97 -8.49 -1.70 -1.01 -1.54

Adjusted Net Profit 1,820.33 1,079.52 660.73 486.09 336.12



Prior Year Adjustments + 0.00 0.00 -31.81 0.00 0.00

Profit brought forward 1,553.87 1,029.07 731.04 197.41 182.10

IV. Appropriations


Transfer to Other Reserves + 146.78 26.84 15.64 -282.37 147.88


Balance carried forward to Balance Sheet 2,348.09 1,553.87 1,029.07 731.04 197.41

Equity Dividend % 100.00 60.00 45.00 35.00 28.00



HDFC Bank Ltd Industry :Banks - Private Sector

BALANCE SHEET


SOURCES OF FUNDS :

Capital + 425.38 354.43 319.39 313.14 309.88

Reserves Total + 14,220.95 11,142.81 6,113.76 4,986.39 4,209.97

Deposits + 142,811.58 100,768.59 68,297.94 55,796.82 36,354.25

Borrowings + 2,685.84 4,594.92 2,815.39 2,858.48 4,790.01






Investments + 58,817.55 49,393.53 30,564.80 28,393.96 19,349.81

Advances + 98,883.05 63,426.90 46,944.78 35,061.26 25,566.30

Fixed Assets + 1,706.73 1,175.09 966.67 855.08 708.32

Other Assets + 6,444.72 4,477.15 3,796.39 2,357.57 1,407.55


0.00 0.00 0.00 0.00 0.00

TOTAL ASSETS 183,358.67 133,251.01 91,319.29 73,586.87 51,505.98





HDFC Bank Ltd Industry :Banks - Private Sector PROFIT AND LOSS ACCOUNT


INCOME :

Interest Earned + 16,332.26 10,115.00 6,647.93 4,475.34 3,093.49

Other Income + 3,470.71 2,283.15 1,594.59 1,213.64 731.08

Total 19,802.97 12,398.15 8,242.52 5,688.98 3,824.57

II. Expenditure


Payments to/Provisions for Employees 2,238.20 1,301.35 776.86 486.82 276.67


1,580.23 1,135.40 856.26 750.19 431.92

Depreciation + 359.91 271.71 219.60 178.59 144.07

Other Expenses, Provisions & Contingencies+ 3,414.28 2,521.93 1,571.60 1,090.37 677.41

Provision for Tax + 1,054.31 866.25 581.88 359.56 333.89

Deferred Tax + 0.00 -192.58 -96.58 12.17 -20.51

Total 17,558.03 10,791.17 7,089.07 4,807.20 3,159.01

III. Profit & Loss

Reported Net Profit 2,244.94 1,590.20 1,141.45 870.78 665.56

Extraordinary Items + 2.85 0.43 -0.68 0.19 0.14

Adjusted Net Profit 2,242.09 1,589.77 1,142.13 870.59 665.42



Prior Year Adjustments + 0.00 0.00 0.00 0.00 0.00

Profit brought forward 2,574.63 1,932.03 1,455.02 602.34 405.32

IV. Appropriations


Transfer to Other Reserves + 304.51 197.52 117.16 -395.99 142.44


Balance carried forward to Balance Sheet 3,455.57 2,574.63 1,932.03 1,455.02 602.34

Equity Dividend % 100.00 85.00 70.00 55.00 45.00



ICICI Bank Ltd Industry :Banks - Private Sector

BALANCE SHEET


SOURCES OF FUNDS :

Capital + 1,463.29 1,462.68 1,249.34 1,239.83 1,086.76

Reserves Total + 48,419.73 45,357.53 23,413.92 21,316.16 11,813.20

Deposits + 218,347.82 244,431.05 230,510.19 165,083.17 99,818.77

Borrowings + 67,323.69 65,648.43 51,256.03 38,521.91 33,544.50






Investments + 103,058.31 111,454.34 91,257.84 71,547.39 50,487.35

Advances + 218,310.85 225,616.08 195,865.60 146,163.11 91,405.15

Fixed Assets + 3,801.62 4,108.90 3,923.42 3,980.71 4,038.04

Other Assets + 24,712.26 21,196.67 17,144.26 13,327.24 9,574.82


0.00 0.00 0.00 0.00 0.00

TOTAL ASSETS 379,849.60 400,417.12 345,312.44 252,058.67 168,435.34

Contingent Liability+ 834,683.00 1,211,082.33 562,959.91 395,033.67 268,153.74




ICICI Bank Ltd Industry :Banks - Private Sector



INCOME :

Interest Earned + 31,092.55 30,788.34 21,995.59 14,306.13 9,409.89

Other Income + 8,176.26 8,878.85 6,962.95 5,062.22 3,539.67

Total 39,268.81 39,667.19 28,958.54 19,368.35 12,949.56

II. Expenditure


Payments to/Provisions for Employees 1,971.70 2,078.90 1,616.75 1,082.29 737.41


1,952.99 1,922.20 1,510.44 1,126.66 850.41

Depreciation + 678.60 578.35 544.78 623.79 590.36


Provision for Tax + 1,793.31 1,569.53 944.32 661.87 176.49

Deferred Tax + -471.67 -713.36 -446.43 -134.68 342.51

Total 35,476.48 35,470.26 25,811.39 16,801.93 10,944.36

III. Profit & Loss


Extraordinary Items + 11.37 45.23 85.37 5.60 -1.65



Profit brought forward 2,436.32 998.27 293.44 188.22 53.09



IV. Appropriations

Transfer to Statutory Reserve + 940.00 1,040.00 780.00 636.00 502.00

Transfer to Other Reserves + 1,068.43 302.31 571.12 933.02 645.01

Trans. to Government /Proposed Dividend + 1,376.37 1,377.37 1,054.27 865.83 723.06

Balance carried forward to Balance Sheet 2,809.65 2,436.32 998.27 293.44 188.22

Equity Dividend % 110.00 110.00 100.00 85.00 85.00



State Bank of India Industry :Banks - Public Sector

BALANCE SHEET


SOURCES OF FUNDS :

Capital + 634.88 631.47 526.30 526.30 526.30

Reserves Total + 57,312.82 48,401.19 30,772.26 27,117.79 23,545.84

Deposits + 742,073.13 537,403.94 435,521.09 380,046.06 367,047.52

Borrowings + 53,713.68 51,727.41 39,703.33 30,641.24 19,184.31






Investments + 275,953.96 189,501.27 149,148.88 162,534.24 197,097.91

Advances + 542,503.20 416,768.20 337,336.49 261,800.94 202,374.45

Fixed Assets + 3,837.85 3,373.48 2,818.87 2,752.93 2,697.69

Other Assets + 38,344.14 45,015.80 25,533.20 22,512.51 18,579.79


0.00 0.00 0.00 0.00 0.00

TOTAL ASSETS 965,042.95 722,125.08 566,806.13 494,160.62 460,071.94





State Bank of India Industry :Banks - Public Sector

PROROFIT AND LOSS ACCOUNT


INCOME :

Interest Earned + 63,788.43 48,950.31 37,242.33 35,979.57 32,428.00

Other Income + 12,694.31 9,487.11 7,429.04 7,528.16 7,121.73

Total 76,482.74 58,437.42 44,671.37 43,507.73 39,549.73

II. Expenditure


Payments to/Provisions for Employees 9,747.31 7,785.87 7,932.59 8,123.05 6,907.35


2,927.84 2,382.81 1,942.13 1,808.99 1,506.06

Depreciation + 763.14 679.98 602.39 763.68 752.21


Provision for Tax + 5,971.52 3,823.50 3,014.61 1,682.71 2,447.22

Deferred Tax + -1,055.10 -219.43 -19.83 357.89 -230.62

Total 67,219.51 51,603.30 40,041.56 38,643.06 35,245.21

III. Profit & Loss


Extraordinary Items + -1.71 7.00 4.52 1.37 -0.52



Profit brought forward 0.34 0.34 0.34 0.34 0.34

IV. Appropriations

Transfer to Statutory Reserve + 5,291.79 4,839.07 3,358.11 2,933.77 2,482.10

Transfer to Other Reserves + 1,740.26 366.52 321.16 632.74 1,070.80

Trans. to Government /Proposed Dividend + 2,089.18 1,523.53 862.04 840.16 751.62

Balance carried forward to Balance Sheet 0.34 0.34 0.34 0.34 0.34

Equity Dividend % 290.00 215.00 140.00 140.00 125.00


AZHAR PROJECT

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