Vipin Internship Project....

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A

PROJECT REPORT

ON

STUDY OF FUNDAMENTAL ANALYSIS OF STOCK MARKET& PORTFOLIO MANAEMENT SERVICE

AT

SHAREKHAN LTD., JAIPUR

SUBMITTED TO

IASE UNIVERSITY{ RAJASTHAN }

SUBMITTED BY

VIPIN RATHIA

MBA {I st}

TAXILA BUSINESS SCHOOL

JAIPUR2008-2010


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ACKNOWLEGEMENT

I feel myself privilege for having an opportunity thank all of them who cooperateme through the project work.I extent my thanks to Mr.pathak director of TAXILA BUSINESS SCHOOL &DEAN Mr.rajat bohra for providing the needed co-operations also acknowledgewith deep sense of gratitude for valuable guidance and suggestion provided bymy project guide Mr.rohan Sharma during the project work.I also extend my thank to Mr. Tarun kacholia, Branch Manager and Mr.Premsagar of Share khan Securities ltd, jaipur. For providing me all the information,

guidance and encouragement.Last but not least; I would like to thank staff of TAXILA BUSINESS SCHOOL,and friends who contributed in every possible way for completing the project.

Project guide VIPIN RATHIAMr.rohan sharma MBA I


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STUDENT DECLARATION

This is to state that the entitled STUDY OF FUNDAMENTLEANALYSIS OF STOCK MARKET & PORTFOLIO MANAGEMENT SERVICE at

Share khan securies ltd, Jaipur is the original work carried out by me under theguidance of Mr.Tarun kacholia (Share khan) and Mr. Rohan Sharma as internalproject guide, programmed towards partial fulfillment of MBA course under IASEUniversity during the year 2009-2010.

Project guide VIPIN RATHIA

Mr.rohan sharma MBA I

INDEX


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CHAPTERNO.

PARTICULARS PAGE

NO

1

1.1

1.2

1.3

1.4

INTRODUCTION

OBJECTIVE OF PROJECT

SELECTION OF TOPIC

METHODOLOGY OF STUDY

LIMITATIONS OF PROJECT2

2.1

2.2

2.3

PROFILE OF ORGANIZATION

BACKGROUND & HISTORY OF ORGANIZATION

FLOW CHART OF ORGANITION

SERVICES OFFERED BY AN ORGANIZATION

3

3.1

3.2

3.3

3.4

3.5

FUNDAMENTAL ANALYSIS

INTRODUCTION

MEANING

EIC ANALYSIS FRAMEWORK

PORTFOLIO MANAGEMENT SERVICE

STRENGTHS & WEAKNESSES

4 CONCLUSION

5 RECOMMENDATIONS & SUGGETIONS

6 BIBLIOGRAPHY


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INTRODUCTION


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OBJECTIVES OF THE PROJECT

Under two years of full time course of MBA degree, a student has to undergodifferent training programs so as establish himself capable of managing at theplace of his job after the completion of the degree. One of such program ispreparation of the Project Report, which a student has to take in joining a specificorganization of the choice for a specific period depending upon specialization hehas opted for.

to draft technical analysis of the trade & investment in share

market.

To study the scope of technical analysis in share market.

To make the investment risk analysis.

To analyze the factor affecting to technical analysis.

To study the various theories which are comes under thetechnical analysis.

To make technical analysis of share market.

To analyze overall share market performance.


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SELECTION OF THE TOPIC

As a part of our syllabus whatever be study is going to be useful us in future. Buttoday its time to have specialization, so according to my interest in share market,I have chosen to do a project in share market. Share market is raising trend inIndia. Now a days people also be aware with it and can be a best option forinvestor to invest in it. It is only the sector which gives high returns in shortperiod.

Now a days share market is most popular sector compared to all sectors andpeople also more aware with it. It has a bright prospective for the investor inIndia. The movements of share price are a huge quantum of information that isavailable to investors. Technical analysis also helps in timing investment. And myexternal project guide Mr. Rohan sharma also suggested to me toChoose this topic for project.


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METHODOLOGY OF STUDY

Methodology is process of collecting the information and helps to find out thesolutions to the topic selected by the researcher. Where as research help tostudy and find the techniques with proper process. It is a systematic way ofpresenting information.In order to collect the required information for the project following methods wereadapted.

Primary Method:-Source from where first hand information are gathered directly areCalled primary method. It gives more detailed information, whichis collected from following sources:

1. Interviews & discussions.

2. Observations.

Secondary Method :-Secondary data are collected by others. The degree of attachmentwith the original source is main difference between primary dataand secondary data.The data that are collected for another purpose and already existsSomewhere is called secondary data.

1. References from News papers.

2. References from Web sites.

3. References from magazines.


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LIMITATIONS OF STUDY

Every study or analysis has limitations and thus my project at Share khan ltd. hadsome limitations.

1. This project focuses on only fundamental analysis of share market.

2. Study of the market for limited period 2 monthly only.

3. The analysis was purely based on historical data.

The analysis does not involve the interaction with any Fund manager or technicalanalyst only the information from internet, news papers magazines are used.


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PROFILE

OF

ORGANIZATION


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BACKGROUND AND HISTORY OF ORGANIZATION

Share khan, one of the Indian leading brokerage house , is the retail arm of SSKIwith over 240 share shops in 110 cities, & Indias premier online trading portalwww.sharekhan.com , customers enjoy multi channel access to the stockmarket. Get everything you needed a Share khan out let!

All you have to do is walk in to organization of 588 share shop across 213 citiesin India to get a host of trading related service its friendly customer service staffwill also help you with any account related queries you may have.

A Share khan outlet offers the following services.1. Online BSE & NSE executives (Through bolt & NEAT terunals)

2. Free access to investment advice from Share khan research team.

3. Share khan value line a forthrightly publication with of recommendation, stocksto watch out for etc

4. Daily research report & market review (High noon, Eagle Eye)

5. Pre market report (Morning cuppa)

6. Daily trading calls based on technical analysis.

7. Cool trading product (During Derivatives, Trading fing & market strategy)

8. Personalized advice

9. Live market information10. Depository services: Demat & Remat transaction.11.Derivatives trading(Future & options)

12. Internet based online trading: Speed trade, speed trade plus.


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SHAREKHAN INVESTMENT PHILOSOPHY

Given the clients risk profile, maximize performance by adhering to a disciplinedinvestment approach backed by quality research.

ADEVENTAGES OF SHAREKHAN DERIVATIVES

We have SMS facility where you will be getting marketInformation as well as buy/sell calls.

Existing sales support available across 30 branches & 134Franchisees covering 87 cities.

Dedicated RM / Dealer support through messenger. You will beAssisted as market information buy / sell recommendation & otherInformation to guide you through.

Compliments the already existing derivatives related servicesBeing offered by Share khan.

Service of an acknowledged institutional & non institutionalResearch team already available


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FLOW CHART OF ORGANIZATION

CEO

Securities Corporate Finance

Broking

Head of Head of Executives Executives

Research Sales

Independent Sales Manager Executives Executives

Sector

Independent Manager Dealing Executives

Sector

The Organization structure is of Head office under which there are240 branches in 110 cities all over India.


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SERVICES OFFERED BY AN ORGANIZATION


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FUNDAMENTAL

ANALYSIS


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INTRODUCTION

The primary motive of buying a share is to sell it subsequently at higher price. Inmany cases, dividends are also expected. Thus, dividend and price changesconstitute the return from investing in share. Consequently, an investor would beinterest to know the dividend to be paid on the share in the future as also thefuture price of the share These value can only be estimated and not predicted

with certainty. These values are primarily determined by the performance of thecompany which in turn is influenced by the performance of the industry .to whichthe company belongs and general economic and socio-political scenario of thecountry.

An investor who would like to be rational and scientific in his investment activityhas to evaluate a lot of information about the past performance and the expectedfuture performance of companies, industries and the economy as a whole beforetaking the investment decision. Such evaluation or analysis is calledFundamental Analysis


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MEANING OF FUNDAMENTAL ANALYSIS

Fundamental analysis is really a logical and systematic approach toEstimating the future dividends and share price. It is based on the basicPremise that share price is determined by a number of fundamentalFactors relating to the economy, industry and company. Hence, theEconomy fundamental, industry fundamental and company fundamental have tobe considered while analyzing the security for investment purpose. Fundamentalanalysis is, in other words, a detailed analysis of the fundamental factorsaffecting the performance of company. Each share is assumed to have aneconomic worth based on its presents and future earning capacity. This is calledas intrinsic value or fundamental value. The purpose of fundamental analysis is

to evaluate the present and future earning capacity of share based on theeconomy,Industry and company fundamental and thereby assess the intrinsic value of theshare. Fundamental analysis is the examination of the underlying forces thataffect the well being of the economy, industry groups, and companies. As withmost analysis, the goal is to derive a forecast and profit from future pricemovements. At the company level, fundamental analysis may involveexamination of financial data, management, business concept and competition.

At the industry level, there might be an examination of supply and demand forcesfor the products offered. For the national economy, fundamental analysis mightfocus on economic data to assess

The present and future growth of the economy. To forecast future stock prices,fundamental analysis combines economic, industry, and company analysis toderive a stock's current fair value and forecast future value. If fair value is notequal to the current stock price, fundamental analysts believe that the stock iseither over or under valued and the market price will ultimately gravitate towardsfair value. Fundamentalists do not heed the advice of the random walkers andbelieve that markets are weak-form efficient. By believing that prices do notaccurately reflect all available information, fundamental analysts look to capitalizeon perceived price discrepancies.


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EIC Analysis Framework

he analysis of economy, industry and company fundamentals constitute the mainactivity in the in the fundamental approach to security analysis. These can beviewed as different stages in the investment decisionmaking process and can bedepicted graphically with three concentric circles as shown in following figure.

EIC analysis framework

In this era globalization we may add one more circle to the diagram to representthe international economy.


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The logic of this three tier analysis is that the company performance depends notonly on its own efforts, but also on the general industry and economy factors. Acompany belongs to an industry and the industry operates within the economy.

As such, industry and economic factors affect the performance of a company.The multitude of factors affecting the performance of a company can be broadly

classified as:

1. Economy wide factors such as growth rate of the economy,inflation rate, foreign exchange rates, etc. which affect all companies.

2. Industry wide factors such as demand-supply gap in the industry,theemergence of substitute products, changes in government policy relating to theindustry, etc. These factors affect only those companies belonging to a specificindustry.

3. Company specific factors such as the age of its plant, the quality of

management, brand image of its products, its labour management relations, etc.These factors are likely to make a companies performance quite different fromthat of its competitors in the same industry. Fundamental analysis thus involvesthree steps:

1. Economy Analysis

2. Industry Analysis

3. Company Analysis


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ECONOMIC ANALYSIS

Fundamental analysis studies reasons of price changes at the

macroeconomic level and represents analysis of economic and politicalconditions in countries or separate industries. With the help of fundamentalanalysis influence of various events on currency, raw material or stock markets isestimated. The school of fundamental analysis appeared together withdevelopment of applied economic science. Knowledge of macroeconomic life ofsociety and its influence on price dynamics of different commodities was taken asthe basis. Generally all fundamental factors are estimated from two points ofview: how this news will influence the official discount rate of this or that country;

What are current conditions of the national economy

Background data for fundamental analysis are supplied via information channelsin the form of news. News may be divided in unexpected and planned(anticipated). Unexpected news include news of political (government dismissals,coups, wars, etc.) and natural origin (various natural disasters and climaticevents). The market is severely affected by wars. As a rule, the currency of thecountry, on which territory military activities take place, is getting cheaper.Natural disasters also lead to a fall of the national currency, since finances arerequired for recovery, which may give rise to inflation. Anticipated news includemeetings of commissions of central banks of different countries, where discountrates are discussed and changed, and issue of economical indicators. Economicconditions of the country are assessed by many indicators. Let us review

influence of the most important of them.

Official discount rateODR or official discount rate is one of the key regulators of national monetarypolicy. ODR usually indicates at which rate the central bank issues credits toother banks. Besides ODR, Lombard rate and REPO rate are often used.Increase of ODR usually leads to tightening of monetary policy of the state andslowdown of the national economy growth, but it also causes increased foreign

investments to the national economy. Thus, in the short-term outlook, ODRincrease causes the national currency growth, but in the long-term outlook highrates hinder economic development of the country and leads to a fall of thenational currency exchange rate.


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FOMC and MeetingHeads of central banks of the leading countries have regular meetings to discussissues of economy regulation. Such meetings are called FOMC (Federal OpenMarket Committee), if the it is presided by the head of FED (Central Reserve

System of the United States of America) or Meeting, if the meeting takes placeon a neutral territory. The main issues of this meeting include: Change of ODR; Change of bank reserve rate; Mutual crediting of the coalition countries;FOMC or Meeting are held approximately once in two weeks, and many things inthe financial world depend on results of their decisions. Thus, increase of ODRby 0.25% USD may lead to USD growth by 100 pips and more within 10-15minutes. Dates and results of FOMC meetings have wide publicity in businesspress, the Internet, and you also can find links to information resources atour site.

InflationInflation is devaluation of paper money due to its emission in quantities,exceeding demands of commodity turnover, accompanied by increase ofcommodity prices and reduction of actual wages. Besides that, price increase iscaused by credit appreciation. High inflation adversely affects economy, sincehigh interest rates reduce production efficiency and determine redistribution ofcapital from production to intermediaries.

With low inflation or the absence thereof, interests of intermediaries suffer.Financial institutions suffer from low interest rates. Inflation level should beoptimal. With such a level, stable high production efficiency is observed, andintermediaries still can derive profits.

Budgetary deficitBudgetary deficit is the state budget surplus. High budgetary deficit leads to thenational depth growth and can cause inflation acceleration. Budgetary deficitlevel may be regulated by two methods. First increase of revenues. It can beachieved by increase of tax receipts, which will impose burden on taxpayers.

Excessively high taxes adversely affect production and stimulate development ofblack economy. The second method is reduction of production costs at theexpense of social programs. This leads to increased social tension and producesa general negative effect.


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Economic indicatorsEconomic indicators provide the most complete idea of the currentsituation in the national economy, but require extensive experience and practice.Let us review some of them and estimate their effect on price dynamics.

Trade balanceTrade balance is the difference between export and import ofcommodities. If the amount of prices of exported commodities exceeds theamount of prices of imported commodities, trade balance is positive; if importexceeds export, trade balance is negative. Positive balance, as well as reductionof negative balance, lead to increase of the national currency value.

Consumer price index (CPI)Consumer price index shows change of price level for commodities of theconsumer goods basket. CPI growth may lead to interest rate increase, whichconsequently cause increase of the national currency exchange rate.

Producer price index (PPI)Producer price index shows change of price level for industrial goods. Its effecton the exchange rate is similar with CPI.

GDP - Gross domestic product Gross domestic product is one of the basicindicators, showing the current situation in the national economy. GDP =consumption + government expenditures + investments + export + import. GDPhas a profound effect on the market. Its growth leads to increase of the nationalcurrency exchange rate.

Unemployment rateUnemployment is a social-economic phenomenon, when a part of the populationcannot find jobs. High unemployment level contributes to social tension,reduction of the middle class and lowering of the net mass of actual income ofthe population. With a low level of unemployment, workers lose motivation forconscientious work and interests of employers suffer.Unemployment growth, as a rule, is accompanied with a fall of thenational currency rate. However, for each country there is an officially permissiblelevel of effective unemployment.


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Non-farm payrollThis indicator shows quantity of new jobs, excluding the agricultural sector ofeconomy. Increase of this indicator characterizes employment growth and leadsto growth of the currency rate.

ElectionsParliamentary, presidential and other elections also influence on currencyrates. Change of rates depends on pre-election promises of candidatesand historical preferences of winning political parties.Dynamics of prices of oil and energy sourcesThe market is influenced by dynamics of prices of oil and energysources. As a rule, when oil prices grow, currencies of energy-dependent

countries (Japan, Germany, Switzerland) are depreciated. Americandollar in such cases goes up, as a rule.

Stock market indicesStock market indices represent average cost of stocks (or cost of a shareportfolio) of the largest national companies or biggest companies of anindustry, selected according to certain parameters. For example:S&P (S&P-500, Standard & Poors) - chares of the biggest US companies;DJIA (DJIA-24, Dow Jones Industrial Average) - cost of elite shares of

the United States of America, Including General Motors, GeneralElectric, Motorola, etc.DAX (DAX-30, XETRA DAX) - larges production companies ofGermany;CAC - French Stock Index;FTSE (FTSE -500) - UK Stock Index;Nikkei-225 - index of 225 leading companies of Japan;TANKAN, TOPIX etc;Stock indices show the current situation at stock exchanges, which,therefore, influence the national currency rate. Growth of the stockmarket increases the national currency rate, since it reflects favorable

conditions in the corporate sector and vice versa - a fall of indices movesquotations down. Growth of prices of state bonds (T-bills, T-bonds) leadsto increase of the national currency value.


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INDUSTRY ANALYSIS

An investor ultimately invests his money in the securities of one or morespecific companies. Each company can be characterized as belonging to

an industry. The performance of companies would, therefore, beinfluenced by the fortune of the industry to which belongs. For thisreason an analyst has to undertake an industry analysis so as to the studyof fundamental factor affecting the performance of different industries.

At any stage in the economy, there are some industries which are fastgrowing while other stagnating or declining. If an industry of growing,thecompanies within the industry may also prosperous. The performance ofcompanies will depend, among among other things, upon the stage of theindustry to which the belong. Industry aalysis refer to an evaluation ofthe relative strengths and weaknesses of particular industries.

INDUSTRY LIFE CYCLE

Marketing experts believe that each product has a life cycle. They haveidentified four stage in the life of product, namely introduction stage,growth stage, maturity stage and decline stage. In the same way, anindustry is also said to have a life cycle. This industry life cycle theory isgenerally attributed Julius Grodinsky.

1. PIONEERING STAGE

This is first stage in the industrial life cycle of new indystry where thetechnology as well as the product are relatively new and have not reacheda stage of perfection. The Pioneering stage is characterized by rapidgrowth in demand for the out put industry. As a result there is grateopportunity for profit. Many companies compete with each othervigorously.As large number of companies attempt to capture their shareof the market, there arise high business mortality rates.Weah firm areeliminated and a lesser number of firms survive the pioneering stage.

2. EXPANTION STAGE

Once an industry has established itself enters stage of expantion orgrowth. The industry now include only those companies that havesurvived the pioneerin stage.These companies continue to becomestronger.Each economy finds market for itself and develops its owen


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strategies to sell and maintain its position in the market. The competitionamong the surviving companies brings about improved product at lowerprice. Companies in the expansion stage of an industry are quite attractive forinvestment purposes. Investors can get high returns at low risk becausedemand exceeds supply in this stage. Companies will earn increasing

amounts of profits and pay attractive dividends

3. STAGNATION STAGE

In this stage, the growth of the industry stabilizes. The ability of theindustry to growth appears to have been lost. Sales may be increasing butat a slower rate than that experienced by competitive industries or byoverall economy. The industry begins stagnate. The transition of theindustry from the expansion stage to the stagnation stage is often veryslow. Two important reasons for this transition are change in social habitsand development of improved technology.Sometimes an industry may stagnate only for a short period. By theintroduction of a technological innovation or a new product, it mayresume a process of growth, thereby starting a new cycle. Therefore, aninvestor or analyst has to monitor the industry developments constantlyand with diligence.

4. DECAY STAGE

From stagnation stage the industry passes to the decay stage. This occurs

when the products of the industry are no longer in demand. New productsand new technology have come to the market. Customer have changetheir habits, Style & liking. As a result, the industry becomes obsoleteand gradually ceases to exist. Thus, changes in social habits, changes intechnology and declining demand are the causes of decay of an industry.The industry life cycle approach has important implications for theinvestor. It gives an insight into the apparent merits of investment in agiven industry at a given time. An industry usually exhibits lowprofitability in the pioneering stage, high profitability in the expansionstage, medium but steady profitability in the stagnation stage anddeclining profitability in the decay stage. The profit associated with thedifferent stages in the life of an industry can be illustrated in the form ofan inverted S curve as shown in following graph:


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Company Analysis

With a shortlist of companies, an investor might analyze the resourcesand capabilities within each company to identify those companies that are

capable of creating and maintaining a competitive advantage. Theanalysis could focus on selecting companies with a sensible businessplan, solid management and sound financials.

Business PlanThe business plan, model or concept forms the bedrock upon which allelse is built. If the plan, model or concepts stink, there is little hope forthe business. For a new business, the questions may be these: Does its

business make sense? Is it feasible? Is there a market? Can a profit bemade? For an established business, the questions may be: Is thecompany's direction clearly defined? Is the company a leader in themarket? Can the company maintain leadership?

ManagementIn order to execute a business plan, a company requires top-qualitymanagement. Investors might look at management to assess theircapabilities, strengths and weaknesses. Even the best-laid plans in the

most dynamic industries can go to waste with bad management (AMD insemiconductors). Alternatively, even strong management can make forextraordinary success in a mature industry (Alcoa in aluminum). Some ofthe questions to ask might include: How talented is the managementteam? Do they have a track record? How long have they workedtogether? Can management deliver on its promises? If management is aproblem, it is sometimes best to move on.

Financial AnalysisThe final step to this analysis process would be to take apart the financialstatements and come up with a means of valuation. Below is a list ofpotential inputs into a financial analysis.

Accounts Payable Good Will


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Accounts Receivable Gross Profit Margin

Acid Ratio Growth

Amortization Industry

Assets Current Interest Cover

Assets Fixed International

Book Value Investment

Brand Liabilities - Current

Business Cycle Liabilities - Long-term

Business Idea Management

Business Model Market Growth

Business Plan Market Share

Capital Expenses Net Profit Margin

Cash Flow Pageview Growth

Cash on hand Pageviews

Current Ratio Patents

Customer Relationships Price/Book Value

Days Payable Price/Earnings

Days Receivable PEG

Debt Price/Sales

Debt Structure Product


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Debt:Equity Ratio Product Placement

Depreciation Regulations

Derivatives-Hedging R & D

Discounted Cash Flow Revenues

Dividend Sector

Dividend Cover Stock Options

Earnings Strategy

EBITDA Subscriber Growth

Economic Growth Subscribers

Equity Supplier Relationships

Equity Risk Premium Taxes

Expenses Trademarks

Weighted Average Cost of Capital

The list can seem quite long and intimidating. However, after a while, aninvestor will learn what works best and develop a set of preferredanalysis techniques. There are many different valuation metrics and muchdepends on the industry and stage of the economic cycle. A completefinancial model can be built to forecast future revenues, expenses andprofits or an investor can rely on the forecast of other analysts and applyvarious multiples to arrive at a valuation. Some of the more popularratios are found by dividing the stock price by a key value driver.

Ratio Company Type

Price/Book Value Oil

Price/Earnings Retail


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Price/Earnings/Growth Networking

Price/Sales B2B

Price/Subscribers ISP or cable company

Price/Lines Telecom

Price/Page views Web site Biotech

Price/Promises

This methodology assumes that a company will sell at a specific multipleOf its earnings, revenues or growth. An investor may rank companiesBased on these valuation ratios. Those at the high end may be consideredOvervalued, while those at the low end may constitute relatively goodValue.

Putting it All TogetherAfter all is said and done, an investor will be left with a handful ofCompanies that stand out from the pack. Over the course of the analysisProcess, an understanding will develop of which companies stand out asPotential leaders and innovators. In addition, other companies would beconsidered laggards and unpredictable. The final step of the fundamental

Analysis process is to synthesize all data, analysis and understanding intoActual picks.


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PORTFOLIOS

Advisory Products

Why Sharekhan Advisory Products Wide product range to meet diverse needs of clients Disciplined Approach Dedicated Product manager backed by Research Performance track record

Share khan Advisory Products :

>Derivatives Portfolio>Nifty Portfolio>Mini Portfolio

>123 Portfolio >Smart Trade Portfolio >Top Picks >Portfolio Doctor

Products TIME HORIZON

Short Long

Derivatives Portfolio Top Picks Portfolio

Nifty Portfolio Mutual Funds

Mini Portfolio 123 Portfolio

Smart Trade Portfolio Portfolio Doctoring


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Derivatives Portfolio

A model portfolio run by the Sharekhan derivative Team centrally

Ideal for Traders looking for aggressive returns with medium risk Aggressive leverage Actively managed Super Strike Rate

Nifty Portfolio

Nifty Portfolio Key facts/Rules

Is a trading portfolio managed by Sharekhan Technical team whichgenerated calls in Index(Both Nifty & Bank Nifty)

Is meant for traders who wants to trade short & Long in Index

Ticket Size Rs. 3 lakhs

Max EOD Exposure 6 Lots

Min Exposure 0 Lots

Expected Upside 1-8%

Stop Loss 1-4%

Reporting Shall be done to clients at the End of day & also a Monthly report will be sent

Drawdown 30%

Nifty Portfolio

Portfolio Rules

Call for Segment Only Derivative Segment calls

Min Investment per call

20-25 % of corpus as Margin

(Quantity also specified)

Time frame of call Max : 1 month Min : 1 day

Monitoring Derivative Team


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Mini Portfolio

Nifty Portfolio Key facts/Rules

Is a trading portfolio managed by Sharekhan Technical team whichgenerated calls in

Is meant for traders who wants to trade short & Long in Index

Ideally For the Small Investors

Mini Portfolio Key facts/Rules

Strategy Used In MiniNifty

One lot at a time ,Maximum Two lots when both portfolio have sameopinion

Once the price is 20-30 points above the position the stop loss is revised

to the price position including brokerage & taxes

Maximum Stop Loss is 50 points

All profits earned are distribute at the end of the month

No transaction if the portfolio reduced 15% first and next 20%.

Ticket Size Rs. 50,000 & above

Max EOD Exposure 2 Lots

Min Exposure 0 Lots

Expected Upside 1-8%

Stop Loss 1-4%

Reporting Shall be done to clients at the End of day & also a Monthly report

Drawdown 20%

Mini Portfolio


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123 Portfolio

Is a cash market delivery portfolio

Calls will be generated by Advisory team in consultation with ResearchTeam (Both Fundamental & technical)

Is meant for short term delivery clients with Time frame of 1-3Months

123 Portfolio Key facts/ Rules

Smart Trades Portfolio

A model portfolio run by the Sharekhan Advisory Team centrally

Delivery calls are generated by the Advisors based on the market pulse(Not based on fundamental research)

Ideal for Short-term Investor looking for aggressive returns with mediumrisk

Aggressive No leverage Actively managed

Ticket size Rs. 3 lacs & above

No of stocks in portfolio Max.5

Upside returns potential 10-20%

Downside risk 5-10%

Stop loss No stop loss will be given

Reporting

Shall be done to clients at the End of day & also a Monthly

report will be sent

Product draw down 25% of clients corpus

123 Portfolio - Rules


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STP: Trading Rules

Top Picks Portfolio

A compilation of the Best Stock Ideas from the Sharekhan basket

Released monthly

Ideal for every Investor.Picked by the highly acclaimed Sharekhan Research Team

Quality Stock Selection Effective for long term &

medium term Excellent Track Record Good Strike Rate

Portfolio Doctor

Comprehensive analysis of your existing portfolio

Recommendations for improvement on a continuous basis based onMarket Outlook

Analysis of your existing portfolio Recommendations from Sharekhan Creation of a Model Portfolio

Portfolio Rules

Call for Segment Only Cash Segment calls

Min Investment per call 10 % of corpus

Time frame of call Max : 1 month Min : 1 day

Monitoring Advisory Team


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STRENGTHS & WEAKNASSES

Strengths of Fundamental Analysis

Long-term TrendsFundamental analysis is good for long-term investments based on long-termTrends, very long-term. The ability to identify and predict long-termEconomic, demographic, technological or consumer trends can benefitPatient investors who pick the right industry groups or companies.

Value SpottingSound fundamental analysis will help identify companies that represent aGood value. Some of the most legendary investors think long-term andValue. Graham and Dodd, Warren Buffet and John Neff are seen as thechampions of value investing.Fundamental analysis can help uncover companies with valuable assets, aStrong balance sheet, stable earnings, and staying power.

Business AcumenOne of the most obvious, but less tangible, rewards of fundamental

Analysis is the development of a thorough understanding of the business.After such painstaking research and analysis, an investor will be familiarWith the key revenue and profit drivers behind a company. Earnings andEarnings expectations can be potent drivers of equity prices. Even someTechnicians will agree to that. A good understanding can help investors

Avoid companies that are prone to shortfalls and identify those thatContinue to deliver. In addition to understanding the business,Fundamental analysis allows investors to develop an understanding of theKey value drivers and companies within an industry. A stock's price isHeavily influenced by its industry group. By studying these groups,Investors can better position themselves to identify opportunities that are

High-risk (tech), low-risk (utilities), growth oriented (computer), valueDriven (oil), non-cyclical (consumer staples), cyclical (transportation) orIncome-oriented (high yield).


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Knowing Who's WhoStocks move as a group. By understanding a company's business,Investors can better position themselves to categorize stocks within theirRelevant industry group. Business can change rapidly and with it the

Revenue mix of a company. This happened to many of the pure InternetRetailers, which were not really Internet companies, but plain retailers.Knowing a company's business and being able to place it in a group canMake a huge difference in relative valuations.

Weaknesses of Fundamental Analysis

Time ConstraintsFundamental analysis may offer excellent insights, but it can be

Extraordinarily time-consuming. Time-consuming models often produceValuations that is contradictory to the current price prevailing on WallStreet. When this happens, the analyst basically claims that the wholeStreet has got it wrong. This is not to say that there are not misunderstoodCompanies out there, but it is quite brash to imply that the market price,

And hence Wall Street is wrong.

Industry/Company SpecificValuation techniques vary depending on the industry group and specifics

Of each company. For this reason, a different technique and model isRequired for different industries and different companies. This can getQuite time-consuming, which can limit the amount of research that can be?Performed. A subscription-based model may work great for an InternetService Provider (ISP), but is not likely to be the best model to value anOil Company.

SubjectivityFair value is based on assumptions. Any changes to growth or multiplier

Assumptions can greatly alter the ultimate valuation. FundamentalAnalysts are generally aware of this and use sensitivity analysis to presentA base-case valuation, a best-case valuation and a worst-case valuation.However, even on a worst-case valuation, most models are almost alwaysBullish, the only question is how much so. The chart below shows ho


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CONCLUSION

>Working with Sharekhan was a great experience.

>I pursued the knowledge in one of the upcoming segments of the market, which

will b of great help to me in the future..

>Demat account is safe for trading of shares, as it is secured with password.

People have a little knowledge about Demat, trading, but only by name.

>We also learnt new thing and different marketing techniques which will definitely

help us in brightening our future by applying it in our personal and professional

life.

Suggestion

>My first suggestion is that Sharekhan should have to advise those people who

want to invest their money.

>Sharekhan should take a suitable step towards awareness of people to the

Insurance and its importance in the life.

BIBLIOGRAPHY

www.wikipedia.com

www.google.com

www.demat.com

www.Sharekhan.com

References from magazines
http://www.wikipedia.com/http://www.google.com/http://www.karvy.com/http://www.wikipedia.com/http://www.google.com/http://www.karvy.com/

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