AN

INTERIM REPORT
ON

LIVE TRADING, EQUITY RESEARCH,

FUNDAMENTAL ANALYSIS and TECHNICAL
ANALYSIS , OPTIONS , INSURANCE , IPO ,
MUTUAL FUNDS

By:
Sarthak Narang

18BSPHH01C1137

Aditya BirlaSunlife Insurance Pvt. Ltd

1
 AUTHORISATION
This is to certify that the submission of project report titled “Fundamental Analysis of Transport
and Logistic Sector - With Respect To Aditya Birla Group” is a bonafide work undertaken by
Sarthak Narang(18BSPHH01C1137), as a part of the summer internship program in a partial
fulfillment for the requirement of MBA program (2018-2020) of IBS - Hyderabad and is not
submitted to any other institution or university for award of any degree/ diploma certificate.
This project work was executed under the guidance of Mr Nikesh Ruparel Executive Assosiate
Partner at Aditya Birla Capital. This report will be formally submitted to Prof Padmavathi .
V, IBS-Hyderabad.
FACULTY GUIDE COMPANY GUIDE
Prof. Padmavathi V Mr. Nikesh Ruparel

2
 ACKNOWLEDGEMENT
A Report based on Index and Fundamental Analysis Based On Internship At Aditya Birla
Group I would like to express my deepest appreciation to Aditya Birla Capital for giving me
an opportunity to do my project. I have put my efforts in the project. However, it would not
have been possible without the kind support and help of many individuals and the
organization. I would like to extend my sincere thanks to all of them.
I would like to take this opportunity to thank and express my deep sense of gratitude to my
company guide Mr Nikesh Ruparel (Executive Assosiate Partner) at Aditya Birla Capital
for giving me the opportunity to work on a project at Aditya Birla Sun Life Insurance.
I am greatly indebted to her for providing valuable guidance at all stages of the study, her
advice, constructive suggestions, positive and supportive attitude and continuousness
encouragement, without which it would have not been possible to complete the project.
I would also like to thank and express my sincere gratitude to my faculty guide Prof.
Padmavathi V whose continuous cooperation and valuable guidance has been certainly
indispensable for my project work.

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 ABSTRACT:-
The internship project at Aditya Birla Sun Life Insurance titled “Fundamental analysis and
Ratio Analysis of Insurance Sector – with respect to Aditya Birla Group”, is based on
‘Fundamental Analysis’, which involves a brief study of financial statements.
A mutual fund is an investment vehicle made up of a pool of moneys collected from many
investors for the purpose of investing in securities such as stocks, bonds, money market
instruments and other assets. Mutual funds are operated by professional money managers,
who allocate the fund’s investments and attempt to produce capital gains and/or income for
the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the
investment objectives stated in its prospectus.

The aim of the training is to learn the various analysis so that the fund can be allocated in the
portfolio that we have made of a particular sector or the combination of different sectors large
cap stocks so that the probability of getting the profit and increasing the NAV should
increase. The goal of fundamental analysis is to derive a forecast and profit from future price
movements . The fundamental analysis has been used to make
a better portfolio. Fundamental analysis has been done to make the portfolio of the stocks of a
sector and calculating the NAV
The motive is to learn the skills on a financial analyst to improve the probability of getting
the profit from the portfolio.
Learning about the company i.e. Aditya Birla Sunlife Insurance has been done and also the
research on its products is being going on. Learned about the mutual funds and its types that
the company offer. Also the main business i.e. insurance is being learned during the training.
Project has been started in which the management of the fund has to be done by making a
portfolio using fundamental analysis and calculating NAV on that. Till now the analysis has
been going on and the result will be shown at the end of the training.

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TABLE OF CONTENTS
1. Introduction ……………………….………………………………6 – 10
2. Insurance…………………………………………………………….11 – 14
3. Mutual Funds……………………………………………………...15 – 21
4. IPO………………………………………………………………………22 – 24
5. Live Trading………………………………………………………….25– 27
6. INDEX…………………………………………………………………….28
7. Fundamental Analysis…………………………………………….29 – 31
8. Technical Analysis…………………………………………………..32-39
9. Options………………………………………………………………….40- 47
10.Project………………………………………………..………………….48-52
11.References……………………………………..………………………53

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INTRODUCTION
A US $43 billion corporation, the Aditya Birla
Group is in the League of Fortune 500. Anchored
by an extraordinary force of over 120,000
employees, belonging to 42 nationalities. Over 50
per cent of its revenues flow from its overseas
operations spanning 35 countries.
The Aditya Birla Group has been ranked fourth in
the world and first in Asia Pacific in the 'Top
Companies for Leaders' study 2011, conducted by Aon Hewitt, Fortune Magazine and RBL
(a strategic HR and leadership advisory firm). The Group has topped the Nielsen's Corporate
Image Monitor 2014-15 and emerged as the 'No.1 Corporate', the 'Best in Class', for the third
consecutive year.
Globally, the Aditya Birla Group is

The largest Indian MNC with manufacturing operations in the USA, wherein 95 per cent of
the workforce comprises Americans
Indian Scenario

6
 • A top fashion (branded apparel) and lifestyle player

• The largest manufacturer of grey cement, white cement and concrete

• The second-largest player in viscose filament yarn

• The largest producer in the chlor-alkali sector

• Among the top three mobile telephony companies

• A leading player in life insurance and asset management

• Among the top two supermarket chains in the retail business

Aditya Birla Group through Aditya Birla Financial Services Group (ABFSG), has a strong
presence across various financial services verticals that include life insurance, fund
management, distribution & wealth management, security based lending, insurance broking,
private equity and retail broking. The seven companies representing ABFSG are Birla Sun
Life Insurance Company, Birla Sun Life Asset Management Company, Aditya Birla Money,
Aditya Birla Finance, Birla Insurance Advisory & Broking Services, Aditya Birla Capital
Advisors and Apollo Sindhoori Capital Investment
Contribution to various sectors:
Aditya Group is a premium conglomerate capturing various sectors-
The Aditya Birla Group has its significant presence in almost every field ranging from
chemicals, minerals, cement, Grasim, fashion and retail, telecom services to financial service.

7
ADITYA BIRLA CAPITAL LIMITED
Aditya Birla Capital Limited (ABCL) is one of the largest financial services players in India.
Formerly known as Aditya Birla Financial Services Limited, ABCL is the holding company
of all the financial services businesses of the Aditya Birla Group. ABCL is committed to
serving the end-to-end financial needs of its retail and corporate customers under a unified
brand — Aditya Birla Capital.
As of December 31 st, 2018, total AUM of ABSLI stood at Rs. 389,548 million. ABSLI
recorded a gross premium income of Rs. 18,599 million in Q3 FY 2018-19 and registering a
y-o-y growth of 68% in Individual First Year Premium and currently ranked 7th in Individual
Business (Individual FYP adjusted for 10% single premium) (Source: IRDAI reported
Financials). ABSLI has a nation-wide distribution presence through 425 branches, 9
bancassurance partners, 6 distribution channels, over 83,000 direct selling agents, other
Corporate Agents and Brokers and through its website. The company has over 10,000
employees and more than 16 lac active customers.

8
Aditya Birla Capital Limited is the holding company of all the following financial services
businesses:
Aditya Birla Finance Limited

Aditya Birla Health Insurance Limited

Aditya Birla Housing Finance Limited

Aditya Birla Insurance Brokers Limited

Aditya Birla Myuniverse Limited

Aditya Birla PE Advisors Limited

Aditya Birla Sun Life Asset Management Company

Aditya Birla Sun Life Insurance

Aditya Birla Sun Life Mutual Fund

Aditya Birla Sun Life Pension Management Limited

Aditya Birla Asset Reconstruction Company Limited

ADITYA BIRLA SUN LIFE INSURANCE

Aditya Birla Sun Life Insurance Company Limited (ABSLI) is a subsidiary of Aditya Birla
Capital Ltd (ABCL). is one of the leading private sector life insurance companies in India.
ABSLI was incorporated on August 4, 2000, and commenced operations on January 17,
2001. ABSLI is ABSLI is a 51:49 a joint venture between the Aditya Birla Group and Sun
Life Financial Inc., a leading international financial services organization in Canada.
Formerly known as Birla Sun Life Insurance Company Limited, ABSLI is one of India's
leading life insurance companies offering a range of products across the customer's life cycle,
including children future plans, wealth protection plans, retirement and pension solutions,
health plans, traditional term plans and Unit Linked Insurance Plans ("ULIPs").
As of December 31 st, 2018, total AUM of ABSLI stood at Rs. 389,548 million. ABSLI
recorded a gross premium income of Rs. 18,599 million in Q3 FY 2018-19 and registering a
y-o-y growth of 68% in Individual First Year Premium and currently ranked 7th in Individual
Business (Individual FYP adjusted for 10% single premium) (Source: IRDAI reported
Financials). ABSLI has a nation-wide distribution presence through 425 branches, 9
bancassurance partners, 6 distribution channels, over 83,000 direct selling agents, other
Corporate Agents and Brokers and through its website. The company has over 10,000
employees and more than 16 lac active customers.
The Company offers a complete range of protection solutions to help secure your family's
future and provide financial support for your child's education, wealth with protection
solutions, health and wellness solutions, retirement solutions and savings with protection
solutions to help you stay financially secure in the future with small disciplined savings at
regular intervals. ABSLI puts people's need first and aims to protect what is dear to the
customer, with assurance. While, Life Insurance cannot prevent risk, it can definitely
compensate financial losses arising from risk.
ABCL, the holding company, is a universal financial solutions provider and one of the largest
financial services players in India. It is committed to serving the end-to-end financial needs

9
of its retail and corporate customers under a unified brand — Aditya Birla Capital. Delivering
a wide range of money solutions for protecting, investing and financing, Aditya Birla Capital
serves millions of customers across the country.
Apart from life insurance, ABCL has a significant presence across several business sectors
including NBFC, asset management, health insurance, housing finance, private equity,
general insurance broking, wealth management, broking, online personal finance
management and pension fund management.

About Sun Life Financial

Sun Life Financial is a leading international financial services organization providing

insurance, wealth and asset management solutions to individual and corporate Clients. Sun
Life Financial has operations in a number of markets worldwide, including Canada, the
United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia,
India, China, Australia,
Singapore, Vietnam, Malaysia and Bermuda. As of December 31, 2017, Sun Life Financial
had total assets under management of $975 billion.
Aditya Birla Sun Life Insurance has attained recognition as the ' Third Most Trusted Life
Insurance Company in the ‘Most Trusted Brands’ survey 2013 conducted by Brand Equity
(The Economic Times Group) with Neilsen.
Aditya Birla Sun Life Insurance believes that employee benefit plans provided by employers
to their employees play a very important role in increasing employee loyalty and
productivity. The company uses its vast expertise in helping organisations and groups design
customised group insurance solutions for their employees. ABSLI has an extensive
distribution reach of over 500 cities through its network of about 600 branches, 10500
empaneled advisors and over 150 partnerships with corporate agents, brokers and banks. The
Assets under Management (AUM) of Aditya Birla Sun Life Insurance is close to Rs.
30185 crore and has a robust capital base of over Rs. 3750 crore as on 31st March 2015.
Aditya Birla Sun Life ranks among the top seven private sector life insurance companies in
India and has won the prestigious ‘Good Corporate Citizen Award’ for the year 2009-10 in
Mumbai under the Banking and Financial Institutions category. This award aims to recognise
and honour conspicuous achievement by corporate in terms of service to the civic
community, in addition to outstanding operational

10
 INSURANCE
INTRODUCTION
Life Insurance is the key to good financial planning. On one hand, it safeguards money and
on the other, ensures its growth, thus providing one with complete financial well being. Life
Insurance can be termed as an agreement between the policy owner and the insurer, where the
insurer for a consideration agrees to pay a sum of money upon the occurrence of the insured
individual's or individuals' death or other event, such as terminal illness, critical illness or
maturity of the policy.
Life insurance plans, unlike mutual funds, are beneficial when you look at them as a long
term avenue of investment which also offers protection through life cover. Life insurance
policies are broadly categorized into 2 types; Traditional Plans and Unit Linked Insurance
Plans (ULIPs).

Traditional policies
They offer in-built guarantees and define maturity benefits through variety of products such
as guaranteed maturity value. The investment risk in traditional life insurance policies is
borne by life insurance companies. Additionally, the investment decisions are regulated to a
large extent by IRDAI rules and regulations, ensuring stable returns with minimal risk.
Investment income is distributed amongst the policy holders through annual bonus. These
policies are ideal for policy holders who are not market savvy and do not wish to take
investment risks.

Unit Linked Life Insurance Policies (ULIPs)

They provide a combination of risk cover and investment. More importantly they offer a
flexibility to decide the risk taking profile. ULIPs offer a complete selection of high, medium
and low risk investment options under the same policy. One can choose an appropriate policy
according to your risk taking appetite, coupled with the opportunity to switch between fund
options without any additional expense for specified number of switches.
ULIPs provide the flexibility to choose the sum assured and investment ratio in the annual
targeted premium. It also offers the flexibility of one time increase in investment portfolio,
through top-ups to avail investment opportunity offered by external environment or own
income flows.
Some special features of Unit Linked Life Insurance Policies (ULIPs) are:
• Provides flexibility in investments
• Provides flexibility in investments
• Liquidity
• Disciplined and regular savings
• Multiple benefits bundled in one product

LIFE INSURANCE PLANS

1. Endowment Plans
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 Endowment Plans are an ideal choice for the risk-averse customer. Endowments are
long-term, regular savings plans with a built-in life cover.
Provided one has paid all the premiums, at the end of the term the policyholder
receives the sum assured plus accrued / guaranteed bonuses that have been declared
over the years, as a lump sum. In case of the unfortunate death during the term of your
plan, the sum assured, will be paid out as a lump sum with the bonuses that the policy
is entitled to.
The benefits of Endowment Plans are as follows:
• Available as money back plans also.
• Option to avail a host of additional rider benefits.
• Cover your life for a longer period of time.
• Loan facility can be availed against most of the plans
2. Whole Life Insurance
These plans provide cover throughout your lifetime. The premium could be paid for
as long as a lifetime or for a limited period Unlike endowment plans they do not carry
a maturity value and pay the sum assured to the family in case of the unfortunate
death of the policyholder. A Whole Life Insurance plan assures that your family is
protected against financial loss that could lead to occurrence of death.
3. Term Plan
Term Insurance helps the customers in safeguarding their families from financial
worries that arise due to unfortunate circumstances. Term plans are pure risk cover
plans with or without maturity benefits. These pure risk plans cover your life at a
nominal cost Term plans also let’s one avail the benefit to cover your outstanding
debts like mortgage, home loan etc. In case of something happens to you, the financial
burden is borne by the insurance company and not your loved ones.
Term Plan offers the following benefits:
• High insurance Cover at lower costs.
• Financial security against loans and mortgages.
• Single premium payment option available.
• Available with host of Additional rider benefits.
4. Health insurance
The purpose of health insurance is to help to overcome unforeseen emergencies
without compromising on any other financial goal. Health insurance helps you pay for
all your medical expenses. insurance policy also gives you the benefit of covering
your loved ones under one plan to avoid any financial constraints arising on account
of a medical emergency. The benefits:
• Cashless hospitalization in all major hospitals pan India.
• Coverage of pre and post hospitalization expense.
• Coverage of all major day care treatments.
5. Retirement Plans
These plans make sure that you have support in the twilight years of your life. The
savings you set aside today become your wealth and support in the years to come.
Retirement plans are of two types:
• Immediate Annuity Plans

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 These plans allow one to convert a sum of money into a guaranteed series of
payments for a definite period or for life.
• Deferred Annuity Plans
This plan allows one to save regular amounts of money for a peaceful
retirement. This type of annuity has two main phases, the accumulation phase
which allows you to invest and save money into your account, and the payout
phase in which the plan is converted into regular annuity instalments and
payments are received. Retirement Plans offer benefits such as:
➢ An alternative to superannuation's and provident fund;
➢ Saving Tax
➢ Choice of Open Market Option, i.e., you have the option to purchase an
immediate annuity from your current insurer or from any other life insurer as
recognized by IRDAI.
6. Wealth plans
Wealth plans invest the premium in to the equity, debt and cash markets by allocating
units, which like any other mutual fund have a NAV. The insurer’s are free to switch
between one fund to another depending on the risk factor you wishes to bear. They
offer better returns than traditional endowment plans and offer a great deal of
flexibility along with great returns making them the finest product offering.
The benefits:
• Availability in single premium and regular premiums options
• Investment funds ranging from index funds to mid-cap funds and debt market
linked funds.
• Option to choose from a host of additional rider benefits Tax Benefits as per
existing tax laws.
• Flexibility to move from one investment fund to other by the way of switching
of funds.
• Option to infuse additional capital by the way of Top Ups to give your
investments a boost.

ADVANTAGES OF LIFE INSURANCE

Life Insurance provides the dual benefits of savings and security. The following benefits
explain why this investment tool should be an integral part of your financial plans.
Risk Cover - Life today is full of uncertainties; in this scenario Life Insurance ensures that
your loved ones continue to enjoy a good quality of life against any unforeseen event.
Planning for life stage needs- Life Insurance not only provides for financial support in the
event of untimely death but also acts as a long term investment. You can meet your goals, be
it your children's education, their marriage, building your dream home or planning a relaxed
retired life, according to your life stage and risk appetite. Traditional life insurance policies
i.e. traditional endowment plans, offer in-built guarantees and defined maturity benefits
through variety of product options such as Money Back, Guaranteed Cash Values,
Guaranteed Maturity Values.
Protection against rising health expenses- Life Insurers through riders or stand alone health
insurance plans offer the benefits of protection against critical diseases and hospitalization

13
expenses. This benefit has assumed critical importance given the increasing incidence of
lifestyle diseases and escalating medical costs.
Builds the habit of thrift- Life Insurance is a long-term contract where as policyholder, you
have to pay a fixed amount at a defined periodicity. This builds the habit of long-term
savings. Regular savings over a long period ensures that a decent corpus is built to meet
financial needs at various life stages.
Safe and profitable long-term investment- Life Insurance is a highly regulated sector. IRDAI,
the regulatory body, through various rules and regulations ensures that the safety of the
policyholder's money is the primary responsibility of all stakeholders. Life Insurance being a
long-term savings instrument, also ensures that the life insurers focus on returns over a long-
term and do not take risky investment decisions for short term gains.

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MUTUAL FUNDS
INTRODUCTION
A Mutual Fund is a pool of funds formed by various people coming together and joining for a
common purpose of an investment avenue to generate returns in the long run. The Mutual
Fund is offered by an Asset Management Company (AMC) which is managed by a Fund
Manager who is a technical person having expertise and skill required to make investment
decisions of various companies. To hedge or protect the money of the investors, the
investment is not made into one stock only; instead the amount to be invested is divided
among the shares of various companies in various sectors so that in case of some industry not
performing well, the investors‟ money is safe as some other company may give great returns.
The money so collected is then invested into the capital market instruments such as various
kinds of shares, debentures, gold and other securities. The income thus earned from such
investments and the appreciation of capital realized is shared by its unit holders in the
proportion of the units held by them. Thus it is the most suitable investment option for the
common man as it provides an opportunity to invest into a well-diversified, professionally
managed basket of securities at a relatively low cost. Mutual Funds thrive at minimizing the
risk and maximization of returns through diversification.
With a desire to see one‟s own money making more money, people invest into shares of
companies, and for that is required help; which is basically the prime feature of the Mutual
Fund Industry wherein people from diverse backgrounds having little or no knowledge about
share prices or stocks but having money to invest come together for a common goal and pool
in their funds to form what is known as Mutual Funds.
How is a Mutual Fund set up?
A mutual fund is set up in the form of a trust that has a Sponsor, Trustees, Asset Management
Company (AMC). The trust is established by a sponsor(s) who is like a promoter of a
company and the said Trust is registered with Securities and Exchange Board of India (SEBI)
as a Mutual Fund. The Trustees of the mutual fund hold its property for the benefit of unit
holders. An Asset Management Company (AMC) approved by SEBI manages the fund by
making investments in various types of securities.
The trustees are vested with the power of superintendence and direction over the AMC. They
monitor the performance and compliance of SEBI regulations by the mutual fund. The
trustees are vested with the general power of superintendence and direction over AMC. They
manage the performance and compliance of SEBI Regulations by the mutual fund.
How do Mutual Fund Schemes Operate?

Why Mutual Funds?

Mutual funds seek to mobilize money from all possible investors.
Various investors have different investment preferences.

15
 Mutual funds mobilize different pools of money. Each such pool of money is called a
mutual fund scheme.
Every scheme has a pre-announced investment objective.

Benefits of Mutual Funds

Professional Management: MF offer investors the opportunity to earn an income or build
their wealth through professional management of their investible funds.

Portfolio Diversification: Mutual funds provide the benefit of diversification across

different sectors and companies. Mutual funds widen investments across various industries
and asset classes. Thus, by investing in a mutual fund, you can gain from the benefits of
diversification and asset allocation, without investing a large amount of money that would be
required to build an individual portfolio.
Liquidity: Mutual funds are usually very liquid investments. Unless they have a pre-
specified lock-in period, your money is available to you anytime you want .

Low transaction cost: Due to economies of scale, mutual funds pay lower transaction
costs. Pooling of large sum of money from many investors makes it possible for the mutual
fund to engage professional managers to manage the investment and also reduction in the
transaction cost.
Transparency: Funds provide investors with updated information pertaining to the
markets and schemes through factsheets, offer documents, annual reports etc.
Convenient Options: Investors can benefit from the convenience and flexibility offered
by mutual funds to invest in a wide range of schemes. Ability of withdraw only part of the
money from the investment account. Ability to invest additional amounts to the account.
Setting up systematic transactions like SIP, SWP,STP etc

On the basis of structure:

Open Ended Schemes
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Open Ended Funds have been in the market from long time back. Such schemes do not have
any particular maturity date and investment date. Usually investors can enter and exit from
these schemes at any particular time which is one of the most beneficial feature of such
schemes.

Close Ended Schemes

Close-ended mutual fund Schemes have a fixed or stipulated maturity period wherein the
investor can invest directly in the scheme which is at the time of the initial issue and
thereafter units of the scheme can be traded (bought/ sold) on the stock exchanges where the
scheme is listed. The market prices at the stock exchange could vary from the schemes‟ NAV
on account of demand and supply in the market, expectations from unit holders and also other
market factors. Usually a characteristic feature of close-ended schemes is that they are
generally traded at a discount to NAV (Net Asset Value); but closer to maturity date, the
discount narrows.

Interval Schemes

Interval Schemes are those schemes that combine the features of both open-ended and close-
ended schemes. The units of such scheme may be traded on the stock exchange or they may
be open for sale or even for redemption during pre-determined intervals at NAV (Net Asset
Value) related prices.
On the basis of nature of funds:
• Equity based Funds
• Debt based Funds
• Hybrid/Balanced Funds

Equity funds
Equity schemes invest the amounts that they collect from investors into stocks of various
companies listed on the stock exchanges as well as those that are unlisted. These schemes are
also called „Growth Schemes‟ because the idea behind such investments is to earn a high
return through the rise in the value of the investment. There is a general saying in the Indian

17
Mutual Fund Industry that a person should invest (100- current age) % of his
investments/savings into equity based funds as the person has a longer time horizon for the
investment.
Types of equity funds:
Diversified equity fund is a category of funds that invest in a diverse mix of securities that
cut across sectors and market capitalization. The risk of the fund‟s performance being
significantly affected by the poor performance of one sector or segment is low.
Diversified Equity Funds: • Investment in all types of equity classes
Market Segment based funds invest in companies of a particular market size. Equity stocks
may be segmented based on market capitalization as large- cap, mid-cap and small-cap
stocks.
• Large- cap funds invest in stocks of large, liquid blue-chip companies with stable
performance and returns.
• Mid-cap funds invest in mid-cap companies that have the potential for faster growth and
higher returns. These companies are more susceptible to economic downturns. Therefore,
evaluating and selecting the right companies becomes important. Funds that invest in such
companies have a higher risk, since the selected e companies may not being able to withstand
the slowdown in revenues and profits. Similarly, the price of the stocks also fall more when
markets fall.
• Small-cap funds invest in companies with small market capitalisation with intent of
benefitting from the higher gains in the price of stocks. The risks are also higher.
Sectoral Schemes : These are a variant of equity oriented schemes where the risk for the
investor is higher than the diversified equity schemes. The funds of such schemes are
invested into the shares of a particular sector only or it could be in companies that comply
with a particular theme only. The amounts collected by the Fund houses are deposited into
one particular sector on which the fund is based. Thus, there lies a significant risk of the
investor if that particular sector does not perform well. But as is a saying “Profit is the reward
for risk taking”, therefore there is also greater chance that the particular sector might do
exceptionally well and the returns are more than expected.
Sector Funds:
• Diversification within the sector
• Risk according to sector
Thematic funds invest in line with an investment theme. For example, an infrastructure
thematic fund might invest in shares of companies that are into infrastructure construction,
infrastructure tollcollection, cement, steel, telecom, power etc. The investment is thus more
broad-based than a sector fund; but narrower than a diversified equity fund and still has the
risk of concentration.
Thematic Funds:
• Diversification according to theme of the fund
• Risk according to the theme
Equity linked savings scheme (ELSS) : Equity linked savings schemes are also known as
tax savings schemes. These are like diversified equity schemes in terms of their portfolio
composition but they give investors a tax benefit that other schemes do not. Investors looking
at earning a higher return on their investments and save on the tax at the same time opt for
such schemes. Unlike normal equity schemes, ELSS carry a three year lock in period. If any
withdrawal is made before the lock-in period, then exit loads are charged to the amount of
funds.
Debt / Income Schemes
Income schemes invest their assets into debt instruments that are either of medium to long
term in duration. They main distinguishing factor of these schemes is that they are different in

18
terms of their investment objective. They only seek to generate some income rather than
building up capital. For e.g. bonds, debentures, government securities and other debt
instruments.
Debt Funds: • Investment in all types of Debt Securities
• Default and Interest Rate risk
Types of Debt Funds

1. Liquid Schemes : Liquid schemes are meant for very short term investors where the
investor horizon ranges from a couple of days to around a week or slightly more. The liquid
schemes invest the money into overnight call money market and extremely short term
options. Such schemes are majorly used by corporate when they have huge sums of money
lying idle for a shorter period of time.

2. Gilt Schemes : Gilt schemes invest their assets only in government securities. There can
be short term or long term schemes. These schemes have no credit risk which means that
there is no possibility of the investments of the scheme turning out to be worthless because
the issuing authority is the government itself. They are most recommended for people in the
higher age groups as they are mostly interested in getting some fixed returns rather than
taking risk by investing a major chunk in equity schemes.

3. Junk bond schemes or high yield bond schemes invest in companies that are of poor
credit quality. Such schemes operate on the premise that the attractive returns offered by the
investee companies makes up for the losses arising out of a few companies defaulting.

4. Fixed Maturity Plans (FMP): FMP‟s are plans that are in operation for a short period of
time but they act like a quasi fixed deposit for the investors. This is because the fund manager
selects the securities in the portfolio in such a manner that it matures on the same date as that
of the scheme. This results in the situation where the investor will get a return near the yield
of the investments when they were purchased because of reduced risk in the investment.
Unlike open ended schemes, wherein the investor can invest and exist at almost any time
during the investment period, here such option is not available. These funds mature after a
particular time period.

5. Floating rate funds invest largely in floating rate debt securities i.e. debt securities where
the interest rate payable by the issuer changes in line with the market.

a) For example, a debt security where interest payable is described as „5year Government
Security yield plus 1%‟, will pay interest rate of 7%, when the 5- year Government Security
yield is 6%; if 5-year Government Security yield goes down to 3%, then only 4% interest will
be payable on that debt security.
b) The NAVs of such schemes fluctuate lesser than debt funds that invest more in debt
securities offering a fixed rate of interest.

6. Money Market/ Liquid Funds: Money market/ Liquid funds invest in safer short-term
instruments such as Treasury Bills, Certificates of Deposit and Commercial Paper for a
period of less than 91 days. The aim of Money Market

19
/Liquid Funds is to provide easy liquidity, preservation of capital and moderate
income. These funds are ideal for corporate and individual investors looking for
moderate returns on their surplus funds.

Liquid Funds: Investment in Money Market Securities

High liquidity - low return - least risky Liquid Funds
Hybrid Funds
Hybrid funds have an investment charter that provides for investment in both debt and
equity. Some of them invest in gold along with either debt or equity or both. The risk
and return in the scheme will depend upon the allocation to each asset class and the
type of securities in each asset class that are included in the portfolio. The risk is
higher if the equity component is higher. Similarly, the risk is higher if the debt
component is invested in longer-term debt securities or lower rated instruments.
Hybrid Funds: • Combination of Equity and Debt
• Different asset allocation according to objective
Types of Hybrid Funds:
1. Debt-oriented Hybrid funds invest primarily in debt with a small allocation to
equity. The equity allocation can range from 5 percent to 30 percent and is stated in
the offer document. The debt component is conservatively managed to earn coupon
income, while the equity component provides the booster to the returns.
2. Monthly Income Plan is a type of debt-oriented hybrid fund that seeks to declare a
dividend every month. There is no guarantee that a dividend will be paid each month.
3. Multiple Yield Funds generate returns over the medium term with exposure to multiple
asset classes, such as equity and debt.
4. Capital Protected Schemes are close-ended schemes, which are structured to ensure that
investors get their principal back, irrespective of what happens to the market. This is ideally
done by investing in Zero Coupon Government Securities whose maturity is aligned to the
scheme‟s maturity. (Zero coupon securities are securities that do not pay a regular interest,
but accumulate the interest, and pay it along with the principal when the security matures).
5. Balanced Funds : Balanced funds invest in both equities and fixed income instruments in
line with the pre-determined investment objective of the scheme. These funds provide both
stability of returns and capital appreciation to investors.
These funds with equal allocation to equities and fixed income securities are ideal for
investors looking for a combination of income and moderate growth. They generally have an
investment pattern of investing around 60% in Equity and 40% in Debt instruments.

Arbitrage funds take opposite positions in different markets / securities, such that the risk is
neutralized, but a return is earned. For instance, by buying a share in BSE, and
simultaneously selling the same share in the NSE at a higher price. Most arbitrage funds take
contrary positions between the equity market and the futures and options market. („Futures‟
and „Options‟ are commonly referred to as derivatives. These are designed to help investors
to take positions or protect their risk in some other security, such as an equity share. They are
traded in exchanges like the NSE and the BSE.

20
Some popular objectives of a mutual fund Fund Investment in:
are:
Fund Objective:
Equity (Growth) Only in stocks
Debt (Income) Only in fixed-income securities
Money Market (including Gilt) In short-term money market instruments (including
government securities)
Balanced Partly in stocks and partly in fixed-income securities, in
order to maintain a 'balance' in returns and risk

Systematic approach to investments

Systematic Investment Plan help investor invest amounts regularly through a
Systematic Investment Plan. It is an investment strategy wherein an investor needs to
invest the same amount of money in a particular mutual fund at every stipulated time
period.
Benefits of SIP Simple and disciplined approach towards investment which help to
achieve long term goals.
Investment possible with small sum of money invested regularly to accumulate
wealth
Based on concept of Rupee Cost Averaging so it also reduces risk.
Flexible intervals like Daily/ Weekly/ Fortnightly/ Monthly basis.
Timing of the market is not necessary
Disciplined approach towards Investment helps in controlling the emotions
Rupee Cost Averaging is an approach in which you invest a fixed amount of money
at regular intervals. This in turn ensures that you buy more shares of an investment
when prices are low and less when they are high. By investing on a fixed schedule,
you avoid the complex or even impossible duty of trying to figure out the exact best
time to invest. The rupee cost averaging effect - averages out the costs of your units
and hence lessens the results of short-term market fluctuation on your investments.

Systematic Withdrawl Plan

Systematic Withdrawal Plan (SWP) is a service offered by mutual funds which
provides investors with a specific amount of payout at a pre-determined time intervals,
like monthly, quarterly, half-yearly or annually. It means basically a person can
withdraw amounts regularly through a Systematic Withdrawal Plan.
Investors in India, opt for Mutual Fund SWP for either of the two reasons: I. To meet
living requirements; usually after their retirement. II. For the purpose of tax planning.
This Project is a great learning opportunity as the Project help me to understand the
market, the investors psychology in the market and also what kind of schemes and
offerings do they prefer. The Project enables me to do the financial planning of clients
in accordance to their risk appetite while keeping in view market scenario. Further I
would be doing the comparison of clients portfolio and schemes by statistical tools to
enhance my knowledge regarding the products.

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 IPO – Initial Public Offer
An initial public offering, or IPO, is the very first sale of stock issued by a company to the
public. Prior to an IPO the company is considered private, with a relatively small number of
shareholders made up primarily of early investors (such as the founders, their families and
friends) and professional investors (such as venture capitalists or angel investors. The public,
on the other hand, consists of everybody else – any individual or institutional investor who
wasn’t involved in the early days of the company and who is interested in buying shares of
the company. Until a company’s stock is offered for sale to the public, the public is unable to
invest in it. You can potentially approach the owners of a private company about investing,
but they're not obligated to sell you anything. Public companies, on the other hand, have sold
at least a portion of their shares to the public to be traded on a stock exchange. This is why an
IPO is also referred to as "going public."

A privately held company has some benefits that are forfeited once it goes public. For
example, its owners do not have to disclose much financial or accounting information about
the company. In the United States, it is easy and relatively inexpensive to found a private
company, and most small to medium sized businesses are private. But large companies can be
private too. For example, IKEA, Publix Supermarkets, Mars Candy, and Hallmark Cards are
all privately held.

Public companies have thousands of shareholders and are subject to strict rules and
regulations. They must form a board of directors and they must report auditable financial and
accounting information every quarter. Public companies are overseen by governing bodies
like SEBI . In addition, public companies must adhere to regulations and requirements set
forth by the stock exchanges where their shares are listed. Being on a major stock exchange
carries a considerable amount of prestige. Historically, only private companies with strong
fundamentals and proven profitability potential could qualify for an IPO and it wasn't easy to
get listed. Today, with competition among many stock exchanges, listing requirements have
relaxed a bit.

The process involved in IPO:

UNDERWRITING:
IPO is done through the process called underwriting. Underwriting is the process of raising
money through debt or equity.
The first step towards doing an IPO is to appoint an investment banker. Although
theoretically a company can sell its shares on its own, on realistic terms, the investment bank
is the prime requisite. The underwriters are the middlemen between the company and the
public. There is a deal negotiated between the two.

22
E.g. of underwriters: Goldman Sachs, Credit Suisse and Morgan Stanley to mention a
few.
The different factors that are considered with the investment bankers include:

• The amount of money the company will raise

• The type of securities to be issued
• Other negotiating details in the underwriting agreement

The deal could be a firm commitment where the underwriter guarantees that a certain
amount will be raised by buying the entire offer and then reselling to the public, or best
efforts agreement, where the underwriter sells securities for the company but doesn’t
guarantee the amount raised. Also to off shoulder the risk in the offering, there is a syndicate
of underwriters that is formed led by one and the others in the syndicate sell a part of the
issue.

FILING WITH THE SEBI:

Once the deal is agreed upon, the investment bank puts together a registration statement to be
filed with the SEBI. This document contains information about the offering as well as
company information such as financial statements, management background, any legal
problems, where the money is to be used etc. The SEBI then requires cooling off period, in
which they investigate and make sure all material information has been disclosed. Once the
SEBI approves the offering, a date (the effective date) is set when the stock will be offered to
the public.

RED HERRING:
During the cooling off period, the underwriter puts together there herring. This is an initial
prospectus that contains all the information about the company except for the offer price and
the effective date. With the red herring in hand, the underwriter and company attempt to hype
and build up interest for the issue. With the red herring, efforts are made where the big
institutional investors are targeted (also called the dog and pony show).
As the effective date approaches, the underwriter and the company decide on the price of the
issue. This depends on the company, the success of the various promotional activities and
most importantly the current market conditions. The crux is to get the maximum in the
interest of both parties.
Finally, the securities are sold on the stock market and the money is collected from investors.

How does IPO work in India:

The IPO process starts when the company lodges a registration declaration in accordance
with SEBI. The entire listing declaration is then studied by the SEBI. This is followed by the
prelude brochure proposed by the sponsor and then an authorized catalog prior to the share
offering. The value and time of the IPO are then determined.

23
Applying for an IPO in India:
When a firm proposes a public issue or IPO, it offers forms for submission to be filled by the
shareholders. Public shares can be bought for a limited period only. The submission form
should be duly filled up and submitted by cash, cheque or DD prior to the closing date, in
accordance with the guidelines mentioned in the form.

Advantages and Disadvantages of an IPO:

Advantages Disadvantages

• Stronger capital base • Short-term growth pressure

• Increases other financing prospects • Disclosure and confidentiality

• Better situated for making acquisitions • Costs – initial and ongoing

• Owner diversification • Restrictions on management

• Executive compensation • Loss of personal benefits

• Increase company and personal prestige • Trading restrictions

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 LIVE TRADING

What is live trading?

Online trading is basically the act of buying and selling financial products through an
online trading platform. These platforms are normally provided by internet based brokers
and are available to every single person who wishes to try to make money from the market.
INDEX
An index is an indicator or measure of something, and in finance, it typically
refers to a statistical measure of change in a securities market. In the case of
financial markets, stock
and bond market indices consist of a hypothetical portfolio of securities representing a
particular market or a segment of it. (You cannot invest directly in an index.) The S&P
500 and the US Aggregate Bond Index are common benchmarks for the American
stock and bond markets, respectively. In reference to mortgages, it refers to a
benchmark interest rate created by a third party. Each index related to the stock and
bond markets has its own calculation methodology. In most cases, the relative change
of an index is more important than the actual numeric value representing the index. For
example, if the Financial Times Stock Exchange (FTSE) 100 is at 6,670.40, that
number tells investors the index is nearly seven times its base level of 1,000. However,
to assess how the index has changed from the previous day, investors must look at the
amount the index has fallen, often expressed as a percentage.

Relationship between Trading Indices, Mutual Funds and Exchange-Traded Funds

25
 When putting together mutual funds and exchange-traded funds (ETFs), fund sponsors
attempt to create portfolios mirroring the components of a certain index. This allows
an investor to buy a security likely to rise and fall in tandem with the stock market as a
whole or with a segment of the market.

Indexes are also often used to as benchmarks against which to measure the
performance of mutual funds and ETFs. For instance, many mutual funds compare
their returns to the return in the Standard & Poor's 500 to give investors a sense of
how much more or less the managers are earning on their money than they would
make in an index fund.

Examples of Trading Indices

The Standard & Poor's 500 is one of the world's best known indices and one of the
most commonly used benchmarks for the stock market. It includes 70% of the total
stocks traded in the United States. Conversely, the Dow Jones Industrial Average
(DJIA) is also a very well- known index, but it only represents stock values from 30
of the nation's publicly traded companies. Other prominent indices include the DJ
Wilshire 5000; the MSCI EAFE, which includes foreign stocks based in Europe,
Australasia and the Far East; and the Lehman Brothers Aggregate Bond Index.

Definition of Indexed Annuity

Like mutual funds, indexed annuities are tied to a trading index. However, rather than
the fund sponsor trying to put together an investment portfolio likely to closely mimic
the index in question, these securities feature a rate of return that follows a particular
index but typically have caps on the returns they provide. For example, if an investor
buys an annuity indexed to the Dow Jones and it has a cap of 10%, its rate of return
will be between 0 and 10%, depending on the annual changes to that index. Indexed
annuities allow investors to buy securities that grow along with broad market segments
or the total market.

Mortgage Index
Adjustable-rate mortgages (ARMs) feature interest rates that adjust over the life of the loan.
The adjustable interest rate is determined by adding a margin to an index. One of the most
popular mortgage indices is the London Interbank Offer Rate (LIBOR). For example, if a
mortgage indexed to the LIBOR has a 2% margin and the LIBOR is 3%, the interest rate on
the loan is 5%.

Index Funds
Because you cannot invest directly in an index, index funds are created to track their
performance. These funds incorporate securities that closely mimic those found in an
index, thereby allowing an investor to bet on its performance, for a fee. An example

26
 of a popular index fund is the Vanguard S&P 500 ETF, which closely mirrors the
S&P 500 index.
Some of the important indices in India are:
Benchmark indices – BSE Sensex and
NSE Nifty Sectoral indices like BSE
Bankex and CNX IT
Market capitalization-based indices like the BSE Small cap and
BSE Midcap Broad-market indices like BSE 100 and BSE 500.

The trading in the internship is mostly in Nifty 50. And for sectoral fund analysis, sector wise
indexes have been taken. The trading is being done on TRADE TIGER by SHAREKHAN.

WAYS OF MAKING PROFIT IN STOCK MARKET:-

1. First way is a basic Buy sell situation in which we buy the stock at a lower
pricing predicting that its price will increase in future and sell it at a higher
price to make profit.
2. In second case we do SHORT SELLING. Short selling is the sale of a security
that is not owned by the seller or that the seller has borrowed. Short selling
is motivated by the belief that a security's price will decline, enabling it to be
bought back at a lower price to make a profit. In simple words we sell the
share at a higher price predicting that it will decline in the future and buy it
at a lower price to make profit.

27
 INDEX
An index is an indicator or measure of something, and in finance, it typically refers to a
statistical measure of change in a securities market. In the case of financial markets , stock
and bond market indices consist of a hypothetical portfolio of securities representing a
particular market or a segment of it.

A stock market index is created by selecting a group of stocks that are representative of the
whole market or a specified sector or segment of the market. An Index is calculated with
reference to a base period and a base index value. An Index is used to give information about
the price movements of products in the financial, commodities or any other markets.

Financial indexes are constructed to measure price movements of stocks, bonds, T-bills and
other forms of investments. Stock market indexes are meant to capture the overall behaviour
of equity markets.

In the investment world, however, risk is inseparable from performance and, rather than being
desirable or undesirable, is simply necessary. Understanding risk is one of the most important
parts of a financial education.
Indices and index-linked investment products provide considerable benefits. But it is equally
important to know the associated risk that comes as part of such exposure. Important concepts
and terminologies are associated with Indices. For e.g. Beta helps us to understand the concepts
of passive and active risk. Impact cost represents the cost of executing a transaction in a given
stock, for a specific predefined order size, at any given point of time. These concepts are
important for to understanding indices and investment opportunities.

28
FUNDAMENTAL ANALYSIS
Fundamental analysis is a method of evaluating a security in an attempt to measure its
intrinsic value, by examining related economic, financial and other qualitative and
quantitative factors. Fundamental analysts study anything that can affect the security's value,
including macroeconomic factors such as the overall economy and industry conditions, and
microeconomic factors such as financial conditions and company management. The end goal
of fundamental analysis is to produce a quantitative value that an investor can compare with a
security's current price, thus indicating whether the security is undervalued or overvalued.
Fundamental analysis uses real, public data in the evaluation a security's value. Although
most analysts use fundamental analysis to value stocks, this method of valuation can be used
for just about any type of security. For example, an investor can perform fundamental
analysis on a bond's value by looking at economic factors such as interest rates and the
overall state of the economy. He can also look at information about the bond issuer, such as
potential changes in credit ratings.

For stocks and equity instruments, this method uses revenues, earnings, future growth, return
on equity, profit margins and other data to determine a company's underlying value and
potential for future growth. In terms of stocks, fundamental analysis focuses on the financial
statements of the company being evaluated. One of the most famous and successful
fundamental analysts is the so-called "Oracle of Omaha", Warren Buffett, who is well known
for successfully employing fundamental analysis to pick securities. His abilities have turned
him into a billionaire.

STEPS FOR DOING SECTORAL FUNDAMENTAL ANALYSIS:-

• Select a sector for doing the analysis (for e.g. Pharma, Automobile, and Telecom
etc.).
• As the investment in mutual funds is long term, therefore take large cap (5000cr. Mkt
value) stocks also if there’s less stocks.
• Check the last closing share price of every stock in the list and note it down.
• Get the P/E value of every stock. It can be calculated or can be seen in the company
details.

[P/E = Price / EPS (Earnings Per Share)]

• Calculate Industrial P/E by taking the average of the P/E’s of the stocks in the list.
• Calculate EPS by multiplying P/E by Price of the stock.
• By comparing the P/E value of the stock by the Industrial P/E we can see if the stock
is overvalued or undervalued.

29
 • If the value is above Industrial P/E then it’s overvalued and If below then
Undervalued. Overvalued stock shows that its value will decrease in future and
undervalued shows that its price will increase. So it’s obvious to buy the U.V. stock
and sell O.V.stock.
• We can calculate the future price i.e. LTPT (long term price target) by multiplying the
industrial P/E by EPS of that particular stock.

Finding the value pick stocks:

• Next step is to take all the undervalued stocks and analyzing their revenue and profit.
The motive is to see weather both of them are increasing or decreasing.
• Also we’ll see the topline factors on the company according to the sector in which it’s
lying.
• If both revenue and profit is increasing then we will definitely take that stock. If both
have decreased then it will be rejected.
• If one is increasing and the other is decreasing then it will be considered by seeing
topline factors.
• We will reject some stocks after this analysis and the left one will be value pick
stocks.

Finding the growth pick stocks:

• We will take all the Overvalued stocks and calculate their PEG value.

[PEG = P/E / EPS growth]

• The EPS growth is the percentage growth in the EPS of the company compared to last
financial year.
• The value that we will put in the EPS growth should be the percentage value. For e.g.
If the EPS has increased by 20% then we will right the value 20, not 0.2.
• If the EPS has decreased then the stock is removed. And we will take the stocks
whose PEG value is 1 or below that. 1.1 can be considered but not above that,
• We will be having the list of growth pick stocks after this analysis.

RANKING:

Now when we have value pick and growth pick stocks list, we’ll see how much investment
should be done in which stock and for that we have to rank them. The highest ranked will get
the maximum allocation of the fund and the lowest ranked will have minimum. The ranking
is done by comparing the important financial ratios of the sector in which the companies are
lying. And we also see the factors of the companies. Ranking is given to all the value pick
stocks separately and the growth pick stocks separately. The highest ranked stock will get the
30
highest investment in value pick stocks and growth pick stocks. As a mutual fund manager
we will allocate the fund according to the ranking of the stocks. After the allocation of the
funds the daily NAV (net asset value) is calculated of the portfolio according to the change in
the price of the stocks.

NAV= AUM / NUMBER OF SHARES,

AUM = asset under management.

FUND ALLOCATION :-

After alloting rank to different companies , the fund is allotted to the companies , the
company with the lowest total is considered the best company and is allotted the maximum
amount

31
 TECHNICAL ANALYSIS

Technical analysis is the examination of past price movements to forecast future price
movements. Technical analysts are sometimes referred to as chartists because they rely
almost exclusively on charts for their analysis.

32
Technical analysis is applicable to stocks, indices, commodities, futures or any tradable
instrument where the price is influenced by the forces of supply and demand. Price refers to
any combination of the open, high, low or close for a given security over a specific
timeframe. The time frame can be based on intraday (tick, 5-minute, 15-minute or hourly),
daily, weekly or monthly price data and last a few hours or many years. In addition, some
technical analysts include volume or open interest figures with their study of price action.

Price Discounts Everything:

This theorem is similar to the strong and semi-strong forms of market efficiency. Technical
analysts believe that the current price fully reflects all information. Because all information is
already reflected in the price, it represents the fair value and should form the basis for
analysis. After all, the market price reflects the sum knowledge of all participants, including
traders, investors, portfolio managers, buy-side analysts, sell-side analysts, market strategist,
technical analysts, fundamental analysts and many others. It would be folly to disagree with
the price set by such an impressive array of people with impeccable credentials. Technical
analysis utilizes the information captured by the price to interpret what the market is saying
with the purpose of forming a view on the future.

Prices Movements are not Totally Random:

Most technicians agree that prices trend. However, most technicians also acknowledge that
there are periods when prices do not trend. If prices were always random, it would be
extremely difficult to make money using technical analysis.

33
A technician believes that it is possible to identify a trend, invest or trade based on the trend
and make money as the trend unfolds. Because technical analysis can be applied to many
different timeframes, it is possible to spot both short-term and long-term
trends .
The price is the end result of the battle between the forces of supply and demand for the
company's stock. The objective of analysis is to forecast the direction of the future price. By
focusing on price and only price, technical analysis represents a direct approach.
Fundamentalists are concerned with why the price is what it is. For technicians, the why
portion of the equation is too broad and many times the fundamental reasons given are highly
suspect.

Overall Trend:
The first step is to identify the overall trend. This can be accomplished with trendlines,
moving averages or peak/trough analysis. As long as the price remains above its
uptrend line, selected moving averages or previous lows, the trend will be considered
bullish.
Support: Areas of congestion or previous lows below the current price mark support
levels. A break below support would be considered bearish.
Resistance: Areas of congestion and previous highs above the current price mark the
resistance levels. A break above resistance would be considered bullish.
Momentum: Momentum is usually measured with an oscillator such as MACD. If
MACD is above its 9-day EMA (exponential moving average) or positive, then
momentum will be considered bullish, or at least improving.
Buying/Selling Pressure: For stocks and indices with volume figures available, an
indicator that uses volume is used to measure buying or selling pressure. When

34
Chaikin Money Flow is above zero, buying pressure is dominant. Selling pressure is
dominant when it is below zero.
Relative Strength: The price relative is a line formed by dividing the security by a
benchmark. For stocks it is usually the price of the stock divided by the S&P 500. The
plot of this line over a period of time will tell us if the stock is outperforming (rising)
or underperforming (falling) the major index.
The final step is to synthesize the above analysis to ascertain the following:
Strength of the current trend.
Maturity or stage of current trend.
Reward to risk ratio of a new position.
Potential entry levels for new long position.
Support/Resistance:
Simple chart analysis can help identify support and resistance levels. These are usually
marked by periods of congestion (trading range) where the prices move within a confined
range for an extended period, telling us that the forces of supply and demand are deadlocked.
When prices move out of the trading range, it signals that either supply or demand has started
to get the upper hand. If prices move above the upper band of the trading range, then demand
is winning. If prices move below the lower band, then supply is winning.

Pictorial Price History:

Even if you are a tried and true fundamental analyst, a price chart can offer plenty of valuable
information. The price chart is an easy to read historical account of a security's price
movement over a period of time. Charts are much easier to read than a table of numbers. On
most stock charts, volume bars are displayed at the bottom. With this historical picture, it is
easy to identify the following:
Reactions prior to and after important events.
Past and present volatility.
Historical volume or trading levels.
Relative strength of a stock versus the overall market.
Assist with Entry Point:
Technical analysis can help with timing a proper entry point.
Some analysts use fundamental analysis to decide what to buy and technical analysis
to decide when to buy. It is no secret that timing can play an important role in
performance. Technical analysis can help spot demand (support) and supply
(resistance) levels as well as breakouts. Simply waiting for a breakout above
resistance or buying near support levels can improve returns. It is also important to
know a stock's price history. If a stock you thought was great for the last 2 years has
traded flat for those two years, it would appear that Wall Street has a different
opinion. If a stock has already advanced significantly, it may be prudent to wait for a
pullback. Or, if the stock is trending lower, it might pay to wait for buying interest and
a trend reversal.

35
Technical Analysis
Analyst Bias:
Just as with fundamental analysis, technical analysis is subjective and our personal
biases can be reflected in the analysis. It is important to be aware of these biases when
analyzing a chart. If the analyst is a perpetual bull, then a bullish bias will overshadow
the analysis. On the other hand, if the analyst is a disgruntled eternal bear, then the
analysis will probably have a bearish tilt.

Open to Interpretation:
Furthering the bias argument is the fact that technical analysis is open to
interpretation. Even though there are standards, many times two technicians will look
at the same chart and paint two different scenarios or see different patterns. Both will
be able to come up with logical support and resistance levels as well as key breaks to
justify their position. While this can be frustrating, it should be pointed out that
technical analysis is more like an art than a science, somewhat like economics.
Too Late:
Technical analysis has been criticized for being too late. By the time the trend is
identified, a substantial portion of the move has already taken place. After such a large
move, the reward to risk ratio is not great. Lateness is a particular criticism of Dow
theory.
Always Another Level:
Even after a new trend has been identified, there is always another "important" level
close at hand. Technicians have been accused of sitting on the fence and never taking
an unqualified stance. Even if they are bullish, there is always some indicator or some
level that will qualify their opinion.
Trader's Remorse:
Not all technical signals and patterns work. When you begin to
study technical analysis, you will come across an array of patterns and indicators with
rules to match. For instance: A sell signal is given when the neckline of a head and
shoulders pattern is broken. Even though this is a rule, it is not steadfast and can be
subject to other factors such as volume and momentum. In that same vein, what works
for one particular stock may not work for another. A 50-day moving average may
work great to identify support and resistance for IBM, but a 70-day moving average
may work better for Yahoo. Even though many principles of technical analysis are
universal, each security will have its own idiosyncrasies.

Technical analysts consider the market to be 80% psychological and 20% logical.
Fundamental analysts consider the market to be 20% psychological and 80% logical.

36
A price chart is a sequence of prices plotted over a specific timeframe. In statistical
terms, charts are referred to as time series plots.

(Current Chart for Minnesota Mining & Manufacturing)

On the chart, the y-axis (vertical axis) represents the price scale and the x-axis (horizontal
axis) represents the time scale. Prices are plotted from left to right across the x-axis with the
most recent plot being the furthest right.

TRADING BASED ON SUPPLY AND DEMAND ZONE:-

After opening the chart of a stock in any brokerage interface, we use the following steps to
see the demand and supply zone:-
STEPS TO IDENTIFY DEMAND ZONE:-
1. Start with the current price on the chart.

2. Look left and down until you find origin of a strong rally in the prices.

3. Draw proximal and distal lines and extend them forward.

4. Proximal line is drawn at the top of the candle body.

5. Distal line is drawn at the bottom of the candle body.

37
6. Time period will be set for 30 days, 5 minutes for long term investment trading and daily,
5 minutes for intraday trading.

7. In demand zone we buy the stock and sell it further at a higher price for making profit.

BUYING ENTERIES:-
1. Limit entry
2. Zonal entry
3. Confirmation entry
STEPS TO IDENTIFY SUPPLY ZONE:-
1. Start with the current price on the chart.
2. Look left and up until you find the origin of a strong drop in the price.
3. Draw proximal and distal line and extend them

38
CANDLE STICK IN TRADING
It shows the growth or decline of a particular stock for a particular time period.

DIFFERENT TYPES OF PATTERNS:-

• Cup and handle
• Triple Bottom
• Head and Shoulder
• Inverse Head and Shoulder
• Rounding Bottom
• Double Bottom

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 OPTIONS
Introduction to Options
An Option is a contract that gives the right, but not an obligation, to buy or sell the
underlying asset on or before a stated date/day, at a stated price, for a price. The party taking
a long position i.e. buying the option is called buyer/ holder of the option and the party taking
a short position i.e. selling the option is called the seller/ writer of the option.
The option buyer has the right but no obligation with regards to buying or selling the
underlying asset, while the option writer has the obligation in the contract. Therefore, option
buyer/ holder will exercise his option only when the situation is favourable to him, but, when
he decides to exercise, option writer would be legally bound to honour the contract.
Options may be categorized into two main types:‐
Call Options
Put Options
Option, which gives buyer a right to buy the underlying asset, is called Call option and the
option which gives buyer a right to sell the underlying asset, is called Put option.

Expiration Day:
The day on which a derivative contract ceases to exist. It is the last trading date/day of the
contract. Like in case of futures, option contracts also expire on the last Thursday of the
expiry month (or, on the previous trading day, if the lastThursday is a trading holiday). In our
example, since the last Thursday (i.e.25 APRIL, 2019). (Please note that Weekly Options
expire on Thursday of each week.
Weekly Options are the Exchange Traded Options based on a Stock or an Index with shorter
maturity of one or more weeks. If the expiry day of the Weekly Options falls on a trading
Holiday, then the expiry will be on the previous trading day.)
Spot price (S):
It is the price at which the underlying asset trades in the spot market. In our examples, it is
the value of underlying viz. 10154.20.
Strike price or Exercise price (X): Strike price is the price per share for which the underlying
security may be purchased or sold by the option holder. In our examples, strike price for both
call and put options is 10000.
In the money (ITM) option:
This option would give holder a positive cash flow, if it were exercised immediately. A call
option is said to be ITM, when spot price is higher than strike price. And, a put option is said
to be ITM when spot price is lower than strike price. In our examples, call option is in the
money.
At the money (ATM) option:
At the money option would lead to zero cash flow if it were exercised immediately.
Therefore, for both call and put ATM options, strike price is equal to spot price.
Out of the money (OTM) option:
Out of the money option is one with strike price worse than the spot price for the holder of
option. In other words, this option would give the holder a negative cash flow if it were
exercised immediately. A call option is said to be OTM, when spot price is lower than strike

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price. And a put option is said to be OTM when spot price is higher than strike price. In our
examples, put option is out of the money.

Option Trading Strategies

Bullish Vertical Spread using Calls
A bull spread is created when the underlying view on the market is positive but the trader
would also like to reduce his cost on position. So he takes one long call position with lower
strike and sells a call option with higher strike. As lower strike call will cost more than the
premium earned by selling a higher strike call, although the cost of position reduces, the
position is still a net cash outflow position to begin with. Secondly, as higher strike call is
shorted, all gains on long call beyond the strike price of short call would get negated by
losses of the short call. To take more profits from his long call, trader can short as high strike
call as possible, but this will result in his cost coming down only marginally, as higher strike
call will fetch lesser and lesser premium.

Bullish Vertical Spread using Puts

Here again, the call on the market is bullish, hence, the trader would like to short a put
option. If prices go up, trader would end up with the premium on sold puts. However, in
case prices go down, the trader would be facing risk of unlimited losses. In order to put
a floor to his downside, he may buy a put option with a lower strike. While this would
reduce his overall upfront premium, benefit would be the embedded insurance against
unlimited potential loss on short put. This is a net premium receipt strategy.

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Bearish Vertical Spread using calls
Here, the trader is bearish on the market and so he shorts a low strike high premium call
option. The risk in a naked short call is that if prices rise, losses could be unlimited. So,
to prevent his unlimited losses, he longs a high strike call and pays a lesser premium.
Thus in this strategy, he starts with a net inflow.

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Bearish Vertical Spread using puts
Here, again the trader is bearish on the market and so goes long in one put option by
paying a premium. Further, to reduce his cost, he shorts another low strike put and
receives a premium.

Straddle
This strategy involves two options of same strike prices and same maturity. A long straddle
position is created by buying a call and a put option of same strike and same expiry whereas a
short straddle is created by shorting a call and a put option of same strike and same expiry.
Let us say a stock is trading at Rs 6,000 and premiums for ATM call and put options are
257 and 136 respectively.
Long Straddle
If a person buys both a call and a put at these prices, then his maximum loss will be equal to
the sum of these two premiums paid, which is equal to 393. And, price movement from here
in either direction would first result in that person recovering his premium and then making
profit. This position is undertaken when trader’s view on price of the underlying is uncertain
but he thinks that in whatever direction the market moves, it would move significantly in that
direction.
Now, let us analyze his position on various market moves. Let us say the stock price falls
to 5300 at expiry. Then, his pay offs from position would be:
Long Call: ‐ 257 (market price is below strike price, so option expires worthless)
Long Put: ‐ 136 ‐ 5300 + 6000 = 564
Net Flow: 564 – 257 = 307
As the stock price keeps moving down, loss on long call position is limited to premium
paid, whereas profit on long put position keeps increasing.
Now, consider that the stock price shoots up to 6700.
Long Call: ‐257 – 6000 + 6700 = 443
Long Put: ‐136
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Net Flow: 443 – 136 = 307
As the stock price keeps moving up, loss on long put position is limited to premium paid,
whereas profit on long call position keeps increasing.
Short Straddle
This would be the exact opposite of long straddle. Here, trader’s view is that the price of
underlying would not move much or remain stable. So, he sells a call and a put so that
he can profit from the premiums. As position of short straddle is just opposite of long
straddle, the pay off chart would be just inverted.
Strangle
This strategy is similar to straddle in outlook but different in implementation, aggression
and cost.
Long Strangle
As in case of straddle, the outlook here (for the long strangle position) is that the market
will move substantially in either direction, but while in straddle, both options have same
strike price, in case of a strangle, the strikes are different. Also, both the options (call
and put) in this case are out‐of‐the‐money and hence the premium paid is low.
Let us say the cash market price of a stock is 6100. 6200 strike call is available at 145 and
6000 put is trading at a premium of 140. Both these options are out‐of‐the‐money.
If a trader goes long on both these options, then his maximum cost would be equal to
the sum of the premiums of both these options. This would also be his maximum loss in
worst case situation. However, if market starts moving in either direction, his loss would
remain same for some time and then reduce. And, beyond a point (BEP) in either
direction, he would make money. Let us see this with various price points.
If spot price falls to 5700 on maturity, his long put would make profits while his long call
option would expire worthless.
Long Call: ‐ 145
Long Put: ‐140 – 5700 + 6000 = 160
Net Position: 160 – 145 = 15
As price continues to go south, long put position will become more and more profitable
and long call’s loss would be maximum limited to the premium paid.
In case stock price goes to 6800 at expiry, long call would become profitable and long
put would expire worthless.
Long Call: ‐145 – 6200 + 6800 = 455
Long Put: ‐140
Net Position: 455 – 140 = 315
Short Strangle
This is exactly opposite to the long strangle with two out‐of‐the‐money options (call and
put) shorted. Outlook, like short straddle, is that market will remain stable over the life
of options. Pay offs for this position will be exactly opposite to that of a long strangle
position.
Covered Call
This strategy is used to generate extra income from existing holdings in the cash market.

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If an investor has bought shares and intends to hold them for some time, then he would
like to earn some income on that asset, without selling it, thereby reducing his cost of
acquisition. So how does an investor continue to hold on to the stock, earn income and
reduce acquisition cost? Lets us see:
Suppose an investor buys a stock in the cash market at Rs. 1590 and also sells a call
option with a strike price of 1600, thereby earning Rs. 10 as premium. If the stock price
moves up from 1590 level, he makes profit in the cash market but starts losing in the option
trade. For example, if Stock goes to 1640,
Long Cash: Profit of 1640 – 1590 = 50
Short Call: – 1640 + 1600 + 10 = ‐30
Net Position: 50 – 30 = 20
If the stock moves below 1590 level, he loses in the cash market, but gets to keep the
premium as income. For example, if Stock goes to 1520,
Long Cash: 1520 – 1590 = ‐70
Short Call: + 10 (Long call holder will not exercise his right as he can buy the stock from
the market at a price lower than strike, so he will let the option expire and the seller
gets to keep the premium)
Net Position: ‐70 + 10 = ‐60

The most important factor in this strategy is the strike of the sold call option. If strike is close
to the prevailing price of underlying stock, it would fetch higher premium upfront but would
lock the potential gain from the stock early. And, if strike is too far from the current price of
underlying, while it would fetch low upfront premium, would provide for longer ride of
money on underlying stock. One has to decide on this subject based on one’s view on the
stock and choice between upfront premium from the option and potential gain from
underlying.

Protective Put
Any investor, long in the cash market, always runs the risk of a fall in prices and thereby
reduction of portfolio value and MTM losses. A mutual fund manager, who is anticipating a
fall, can either sell his entire portfolio or short futures to hedge his portfolio. In both cases, he
is out of the market, as far as profits from upside are concerned. What can be done to remain
in the market, reduce losses but gain from the upside? Buy insurance!
By buying put options, the fund manager is effectively taking a bearish view on the market
and if his view turns right, he will make profits on long put, which will be useful
to negate the MTM losses in the cash market portfolio.
Let us say an investor buys a stock in the cash market at 1600 and at the same time buys
a put option with strike of 1600 by paying a premium of Rs 20.
Now, if prices fall to 1530 from here:
Long Cash: Loss of 1600 – 1530 = ‐ 70
Long Put: Profit of – 20 – 1530 + 1600 = 50
Net Position: ‐20
For all falls in the market, the long put will turn profitable and the long cash will turn

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loss making, thereby reducing the overall losses only to the extent of premium paid (if
strikes are different, losses will be different from premium paid)
In case prices rise to 1660
Long Cash: Profit of 1660 – 1600 = 60
Long Put: Loss of 20
Net Position: 60 – 20 = 40

Collar
A collar strategy is an extension of covered call strategy. Readers may recall that in case
of covered call, the downside risk remains for falling prices; i.e. if the stock price moves
down, losses keep increasing (covered call is similar to short put).To put a floor to this
downside, we long a put option, which essentially negates the downside of the short
underlying/futures (or the synthetic short put).
In our example, we had assumed that a trader longs a stock @ 1590 and shorts a call option
with a strike price of 1600 and receives Rs. 10 as premium. In this case, the BEP was 1580. If
price fell below 1580, loss could be unlimited whereas if price rose above
1600, the profit was capped at Rs. 20.
To prevent the downside, let us say, we now buy an out‐of‐the‐money put option of strike
1580 by paying a small premium of Rs. 7.
Now, if price of underlying falls to 1490 on maturity:
Long Stock: ‐1590 + 1490 = ‐100
Short Call: 10
Long Put: ‐7 – 1490 + 1580 = 83
Net Position: ‐100 + 10 + 83 = ‐ 7 (in case of covered call this would have been ‐90)
If price rises to 1690 on maturity:
Long Stock: ‐1590 + 1690 = 100
Short Call: 10 – 1690 +1600 = ‐ 80
Long Put: ‐ 7
Net Position: 100 – 80 – 7 = 13 (in case of covered call this would have been + 20)
Butterfly Spread
As collar is an extension of covered call, butterfly spread is an extension of short straddle.
We may recollect that downside in short straddle is unlimited if market moves
significantly in either direction. To put a limit to this downside, along with short
straddle, trader buys one out of the money call and one out of the money put.
Resultantly, a position is created with pictorial pay‐off, which looks like a butterfly and
so this strategy is called “Butterfly Spread”.
Butterfly spread can be created with only calls, only puts or combinations of both calls
and puts. Here, we are creating this position with help of only calls. To do so, trader has
to take following positions in three different strikes and same maturity options:
Long Call 1 with strike of 6000 and premium paid Rs. 230
Short Call 2 with strike of 6100 and premium received Rs. 150
Long Call 3 with strike of 6200 and premium paid of Rs. 100
Short Call 2 with strike of 6100 and premium received Rs. 150

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Let us see what happens if on expiry price is:
Less than or equal to 6000
Equal to 6100
More than or equal to 6200
Case I: Price at 6000
Long Call 1: ‐230
Short Call 2: 150
Long Call 3: ‐ 100
Short Call 2: 150
Net Position: ‐230 + 150 – 100 + 150 = ‐30
For any price lower than 6000, all calls will be out‐of‐the‐money so nobody will exercise.
Hence buyers will lose premium and sellers/ writers will get to keep the premium. In all these
situations, trader’s loss would be flat Rs. 30.
Case II: Price at 6100
Long Call 1: ‐ 230 – 6000 + 6100 = ‐ 130
Short Call 2: 150
Long Call 3: ‐ 100
Short Call 2: 150
Net Position: ‐ 130 + 150 – 100 + 150 = 70
This is the maximum profit point for this position. Both the shorted calls earn the spremium
for the trader. This entire premium is kept by the trader for all prices less than
or equal to 6100.
Case III: Price at 6200 or higher
Long Call 1: ‐ 230 – 6000 + 6200 = ‐ 30 (This will keep increasing as price rises)
Short Call 2: 150 – 6200 + 6100 = 50 (This will start getting losses as price increases)
Long Call 3: ‐ 100
Short Call 2: 150 – 6200 + 6100 = 50 (This will start getting losses as price increases)
Net Position: ‐ 30 + 50 – 100 + 50 = ‐ 30
From 6200 or higher, the long calls will start making money for the trader whereas the short
calls will be in losses.

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PROJECT

INDEX

TRANSPORT
AND REAL
LOGISTICS CEMENT MEDIA ESTATE STEEL
SECTOR SECTOR SECTOR SECTOR SECTOR
Date INDEX INDEX INDEX INDEX INDEX
06-Mar 1022.711 1007.955 986.1 1020.076 1001.01
07-Mar 1022.9 1006.48 948.92 1016.31 992
08-Mar 1031.62 1005.6 924.15 1014.56 971.77
11-Mar 1059.2 1055.25 942.7 1024.68 1003.589
12-Mar 1052.24 1060.11 957.76 1050 1004.875
13-Mar 1079.7183 1060.7 933.65 1052.728 970.9
14-Mar 1074.1983 1059.16 945.84 1075.777 969.9
15-Mar 1072.2783 1026.47 970.02 1075.47903 958.9
18-Mar 1081.2328 1028.31 969.33 1098.2638 987.43
19-Mar 1081.6508 1010.71 952.6 1121.95 988.18
20-Mar 1131.2008 1002.47 925.73 1153.61 971.42
22-Mar 1137.5832 994.24 914.73 1161.71 963.17
25-Mar 1115.5132 968.49 871.6252 1141.56 935.5
26-Mar 1131.8122 986.34 890.3132 1151.348 946.7882
27-Mar 1125.1352 996.45 898.8662 1146.574 946.73
28-Mar 1149.4012 991.3 957.1332 1165.36 946.3
RESET RESET RESET RESET RESET
01-Apr 1004.4 1052.45 1019.07 993.63 1031.2
02-Apr 1136.5416 1041.9 1005.79 1010.4533 1044.2
03-Apr 1123.24885 1022.43 976.033 1010.95 1057.87
04-Apr 1,096.58 1031.61 993.443 1018.86 1061.7
05-Apr 1092.47 1052.94 994.373 1029.88 1087.23
08-Apr 1082.5136 1037.57 973.373 997.32 1080.1
09-Apr 1075.33 1045.66 967.343 1004.95 1079.8
10-Apr 1074.2 1043.256 961 1005.071 1065.9
11-Apr 1069.58 1089.62 965.4 998.74 1042
12-Apr 1053.555 1106.24 984.8 1010.68 1050.15
15-Apr 1075.3 1111.56 1005 1024.03 1084.15
16-Apr 1121.1 1118.23 1011.73 1015.28 1085.92
18-Apr 1110.3 1103.61 964.273 996.71 1060.6
22-Apr 1067.71 1070.16 945.873 1040
23-Apr 1062.3421 1057.66 947.6 1013.6
24-Apr 1061.8 1071.812 939.133 1030.5
25-Apr 1061.6 1090.2 936.28 1018.8
26-Apr 1064.25 1088 935.2 1044.7

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 30-Apr 1071.24 1075.44 935 1046.33
02-May 1089.05 1063.6 931.1 1051.95
03-May 1099.45 1061.43 912.7 1059.1
06-May 1088.6868 1044 844.7 1022.95
07-May 1088.21 1042.58 828.5 992.95
08-May 1078.803 1018.48 864.223 990

FUNDAMENTAL ANALYSIS

➢ Started the fundamental analysis in Transport and Logistic sector. As I have to

manage and allocate the fund, I have given 100cr. (not real) for the
investment.
➢ Firstly I chose the Large Cap and Mid Cap stocks in the sector. One can
find it from number of sources, I used moneycontrol for this.

➢ There are two types of factor Topline Factors and Bottomline Factors.
➢ Next step is to calculate undervalued and overvalued stocks . To
calculated the undervalue and overvalued stock I have calculated the PE
Ratio of the large cap and mid cap companies .
➢ Formula for PE Ratio is Price/EPS . Industry PE Ratio is 34.23 .
➢ The companies having PE Ratio more than Industry PE they are
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 considered overvalued and the companies having PE Ratio of
less than Industry PE they are considered undervalued .
➢ So this is the list of stocks which are undervalued and overvalued .

➢ To calculate the Value Picks out of undervalued stocks we check whether the
Revenue and Profit of company are increasing or decreasing . The companies whose
both Revenue and Profit are decreasing are discarded .
➢ Out of these undervalued companies none of them has negative revenue and profit
this all are considered as value picks .

➢ To calculate the growth picks out of overvalued companies we have calculated the
PEG Ratio . Formula for PEG Ratio is PE/EPS . Out of the overvalued companies one
company has the PEG Ratio of more than 1 thus it is rejected so there is only one
Growth Pick .

➢ Now next step is checking different ratios of our growth pick and value pick . So
these are the ratios I have taken .

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➢ And these are the ranks provided to these companies on the basis of their ratios.

➢ The company with the least total is considered as the best company so coming to the
fund allocation I have alloted 100 cr to these on the basis of the total of the ratios .

Technical Analysis Chart Patterns:-

Interglobe Aviation :-

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Container Corp-

Allcargo:-

Future Supply:-

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 REFERENCES
• A brief of what Insurance is, extracted from www.lifeinscouncil.org.
• Insurance sector governing body information extracted from
www.irdai.gov.in.
• Information of Aditya birla group and their product offerings.
Extracted from;
https://www.adityabirla.com/about-us/vision-values
http://www.lifeinsurance.adityabirlacapital.com/
https://www.investopedia.com/
www.moneycontrol.com
• A brief analysis of Insurance sector in India
Extracted from;
https://www.equitymaster.com/
https://www.edelweiss.in/
www.ibef.org

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