A PROJECT REPORT

ON

“A STUDY OF EQUITY RESEARCH ON BANKING SECTOR”

Submitted in Partial Fulfillment for the award of the Degree MASTERS

OF MANAGEMENT STUDIES

OPERATION

Under

UNIVERSITY OF MUMBAI

Submitted by

AKASH TEMBHARE
ROLL NO. MS2122080

Under the Guidance of

PROF. Rahul Mahajan

Batch 2021-2023

ASM’S INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES

THANE (W)
 DECLARATION

I, AKASH R. TEMBHARE the student of MMS Semester IV, Batch (2021-2023)

hereby declare that this project report submitted by me to the ASM’S Institute Of
Management & Computer Studies, (IMCOST), Thane.

Is a bonafied work undertaken by me and it is not submitted to any other

University or Institution for the award of any degree/diploma certificate or
published any time before.

Name of the Students: AKASH TEMBHARE

Roll Number: MS2122080

Signature of the Student:

 ACKNOWLEDGEMENT
I take this opportunity to express my gratitude and extend my thanks to all those who
helped and guided me to make this endeavor successful.

I would also like to thank our project guide, Prof. Rahul Mahajan who helped
me in the completion of project.

I cannot end this page without thanking my family and friends for their
support and encouragement while undertaking this project.

AKASH TEMBHARE
 INDEX

CHAPTER NO TABLE OF CONTENT PAGE NO

1 Execute summary 5

2 Objective of project 6

3 Research Methodology 7

4 Limitations of study 8

5 Introduction 9

6 Fundamental analysis 12

7 Quantitative factors 17

8 Data analysis and interpretation 38

9 conclusion 45

10 Appendix 46
 EXECUTE SUMMARY

The main aim of this project is to do equity research banking sector and
to find out the opportunities of investment in these sectors where returns
can be maximized. Indian Economy being one of the fastest developing
economies in the world, companies in India are growing at faster rate as
compared to their growth rate a decade back.

Many Indian companies are expanding their business globally with

mergers and acquisitions. As companies grow their shareholders are
benefitted with good dividend and capital appreciation on investment in
equity shares of such companies. Number of companies listed in stock
exchange (BSE & NSE) has been increasing every year with new IPOs
coming in the market.

In India people are realizing that equity has potential to give highest
return as compared to other investment avenues however people are not
aware how to do equity valuation, they just invest in shares based on
tips given by brokers, friends or family members.

Investing in equity shares based on tips is not the true investment but it
is clear gambling with your money which many of us would not like to
do with our hard earned money. Equity valuation begins with analysis
of the sector in which you want make investment; if the sector looks
positive then analyze various companies in the sector. A Company is
analyzed fundamentally to check its performance and financial strength.
Technical analysis is used to decide the right price to buy a stock so that
higher return on investment can be generated.

This report starts from the fundamental analysis where EIC (economy,
industry, Company) analysis of the four banks (ICICI Bank, HDFC
Bank, Punjab National Bank & Bank of Baroda) is done. Economy of
India and banking industry are analyzed on the basis of various factors
and indicators. Above mentioned four banks were analyzed based on the
various qualitative and quantitative factors.

5
After analyzing these banks, stock price is estimated using relative
valuation method. . The market price and P/E ratios have been taken to
calculate the EPS.

After the target price was calculated with the help of sector P/E and EPS
and finally the difference was taken between the target price and market
price to arrive at the best performing company

Then the technical analysis of the top Banks has been done. Technical analysis
is used to study stock chart patterns of these banks. The observed patterns are
tested with various oscillators and decision about particular stock is made.

Based on these factors, trend of a particular stock is observed and then the target
price is estimated. Finally the conclusion and recommendations are given with
respect to derived result

OBECTIVES OF PROJECT
 To Provide Overview of Banking sector and analysing stock of that sector

 To study about some of the major players in Banking sector which has
good investment prospects

 To identify growth drivers of the Banking sector

 To identify the Top line and the bottom line of the companies selectedunder
banking sector

 To justify the current investment in the chosen securities

 To Understand the movement and performance of stock

 To recommend increase/decrease of investment in a particular sector

 The main objective of project is to do fundamental analysis of banks

 To study present scenario of banks through its Net interest income & net
interest margin.

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This report will help the investors to know about the current growth prospects
of Indian economy and Banking sector.

They will get to understand various factors affecting banking sector and their
impact on the growth of banking sector.

This report will help them in comparing the above mentioned four banks and
their estimated future share prices, so that they can invest in better options.

RESEARCH METHODOLOGYAND DESIGN

 The project is on equity research analysis of the sectors. Hence study has to
be done on the basis of information and news available about thesectors
secondary data by various modes. This research has completed by doing
Fundamental analysis and Technical analysis of the companies
 Secondary data was collected from the internet, company websites. However
the main source of information is Annual Report issued by the companies and also
quarterly reports of the current year showing their performances in current market
scenario.
 Firstly data was analyzed on the basis of the industry. The industry i.e. financial
services sector were focused on and its performance and relation with the Indian
economy was monitored and then specific stocks were chosen to be invested in
depending upon the fundamentals of the company stocks. These stocks were
individually analyzed and then measured whether it would give maximum returns
if invested in.
 Though Primary data collection for preparing this project was not possible due
to time and money constraints. Thus, secondary data collection was been usedThe
research on the sectors and companies in those sectors is explained in the later part
of the report.
 While preparing this project, daily stock market prices were been tracked and
also the annual reports of the company analyzed were taken into consideration for
evaluation of company performance.
7
 Internet was a major source of information while preparing the project as most
of the data collected was gathered from various websites. Company websites were
a major source for collecting the annual reports of the company.

The knowledge thus gained from preliminary study forms the basis for future
detailed descriptive research. In the exploratory study, the various technical
indicators that are important for analyzing stock were actually identified and
important ones short were listed.

SAMPLE DESIGN

 The sample of the stocks for the purpose of collecting primary and secondary
data has been selected on the basis of random sampling. The stocks are chosen in
an unbiased manner and each stock is chosen independent of the other stock
chosen. The stocks are chosen from the Banking sector .

LIMITATIONS OF THE STUDY

 This study has been conducted purely to understand equity analysis for
investors.
 The study is limited to the companies having equities.
 Suggestions and conclusions are based on the data of five years

8
INTRODUCTION TO EQUITY
What is equity?
In accounting and finance, equity is the residual claim or interest of the most junior
class of investors in assets, after all liabilities are paid. If valuations placed on
assets do not exceed liabilities, negative equity exists. In an accounting context,
Shareholders equity (or stockholders equity, shareholders’ funds, shareholders
capital or similar terms) represent the remaining interest in assets of a company,
spread among individual shareholders of common or preferred stock
This definition is helpful to understand the liquidation process in case of
bankruptcy. At first, all the secured creditors are paid against proceeds from assets.
Afterword, a series of creditors, ranked in priority sequence, have the next
claim/right on the residual proceeds .
Ownership equity is the last or residual claim against assets, paid only after all
other creditors are paid. In such cases where even creditors could not get enough
money to pay their bills, nothing is left over to reimburse owners’ equity. Thus
owner’s equity is reduced to zero. Ownership equity is also known as risk capital,
liable capital and equity
Equity Shares;-
An equity share, commonly referred to as ordinary share also represents the form
of fractional or part ownership in which a shareholder, as a fractional owner,
undertakes the maximum entrepreneurial risk associated with a business venture.
The holders of such shares are members of the company and have voting right.
DERIVATIVES;-
A derivative is a financial instrument that gets its value from some real good or
stock. It is the derived value of an underlying asset. It is, in its most basic form,
simply a contract between two parties to exchange value based on the action of a
real good or service.
Typically, the seller receives money in exchange for an agreement to purchase or
sell some good or service at some specified future date. Derivatives offer the some
degree of leverage or multiplication as a mortgage. For a small amount of money,
the investor can control a much larger value of company stock than would be
possible without use of these instruments.

9
This can work both ways, though. If the investor is correct, then more money can
be made than if the investment had been made directly into the company itself. The
losses are multiplied instead, however, if the investor is wrong.
The basic concept of a derivative contract remains the same whether the
underlying happens to be a commodity or a financial asset. However, there are
some features which are very peculiar to commodity derivative markets .
EQUITY INVESTMENT;-
Equity investment generally refers to buying and holding of shares of stock on a
stock market by individuals and firms in anticipation of income from dividend and
capital gain as the value of the stock rises.
It also sometimes refers to the acquisition of equity (ownership) participation in
private (unlisted) company or start up (a company being created or newly created).
When investment is in infant companies
it is referred to as venture capital investing and is generally understood to be higher
risk than investment in listed going-concern situation.

HOW TO INVEST IN EQUITY SHARES?

. Investors can buy equity shares of a company from security market that is from
primary market or secondary. The primary market provides the channel for sale of
new securities. Primary market provides opportunity to issuers of securities
Government as well as corporate, to raise resources to meet their requirements of
investment and/or discharge some obligations some obligations.
Investors can buy shares of a company through IPO (Initial Public Offerings) when
it is first time issued to the public.
Once shares are issued to the public it is traded in the secondary market. Stock
exchange only acts as facilitator for trading of equity shares. Anyone who wishes
to buy shares of company can buy it from an existing shareholder of a company.

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WHY SHOULD ONE INVEST IN EQUITY IN PARTICULAR?

Equities have the potential to increase in value over time. It also provides your
portfolio with the growth necessary to reach your long term investment goals
.research studies have proved that the equities have outperform most other forms of
investments in the long term.
Research studies have proved that investments in some shares with a longer tenure
of investment have yielded far superior returns than any other investment.
However this does not mean all equity investments would guarantee similar higher
returns. Equities are high in investment.
One need to study before investment. Purpose of equity research is to study
companies, analyze financials, and look at quantitative and qualitative aspects
mainly for decision: Whether to invest or not.
To be able to value equity, we need to first understand how equity is to be
analyzed.
Equity Share of any company can be analyzed through
 Fundamental Analysis
 Technical Analysis

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FUNDAMENTAL ANALYSIS
Fundamental Analysis is a method of evaluating a security that entails attempting
to measure its intrinsic value by examining related economic, financial and other
qualitative and quantitative factors.
Fundamental analysts attempt to study everything that can affect the security's
value, including macroeconomic factors (like the overall economy and industry
conditions) and company-specific factors (like financial condition and
management).
Fundamental analysis is about using real data to evaluate 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 Fundamental analysis
observes numerous elements that affect stock prices such as sales, price to earnings
(P/E) ratio, profits, earnings per share (EPS), as well as macroeconomic and
industry specific factors
The end goal of performing fundamental analysis is to produce a value that an
investor can compare with the security's current price, with the aim of figuring out
what sort of position to take with that security (underpriced = buy, overpriced =
sell or short).
Fundamental analysis of a business involves analyzing its financial statements and
health, its management and competitive advantages, and its competitors and
markets. When analyzing a stock, futures contract, or currency using fundamental
analysis there are two basic approaches one can use bottom up analysis and top
down analysis. The term is used to distinguish such analysis from other types of
investment analysis, such as quantitative analysis and technical analysis
Fundamental analysis is performed on historical and present data, but with the goal
of making financial forecasts .There are several possible objectives
 To conduct a company stock valuation and predict its probable priceevolution
 To make a projection on its business performance
 To evaluate its management and make projected decisions

Fundamental Analysis includes

1.Economic analysis
2. Industry analysis 12
3. Company analysis
On the basis of these three analyses the intrinsic value of the shares are determined.
This is considered as the true value of the share. If the intrinsic value is higher than
the market price it is recommended to buy the share. If it is equal to market price
then hold the share and if it is less than the market price then sell the shares.

TYPES OF FUNDAMENTAL ANALYSIS

1. Qualitative factors
related to or based on the quality or character of something, often as
opposed to its size or quantity
2. Quantitative factors
Capable of being measured or expressed in numerical terms
QUALITATIVE FACTOR THE INDUSTRY
Each industry has differences in terms of its customer base, market share among
firms, industry-wide growth, competition, regulation and business cycles. Learning
about how the industry works will give an investor a deeper understanding of a
company’s financial health.
 Customer
Some companies serve only a handful of customers, while others serve millions. In
general, it’s negative if a business relies on a small number of customers for a large
portion of its sales because the loss of each customer could dramatically affect
revenues. For example, think of a military supplier who has 100% of its sales with
the Indian government.
One change in government policy could potentially wipe out all of its sales. For
this reason, companies will always disclose in their annual report if any one
customer accounts for a majority of revenue.
 Market Share
Understanding a company’s present market share can tell volumes about the
company’s business. The fact that a company possesses an 85% market share tells
you that it is the largest player in its market by far. Furthermore, this could also
suggest that the company possesses some sort of “economic moat” in other words,

13
a competitive barrier serving to protect its current and further earnings, along with
its market share.
Market share is important because of economies of scale. When the firm is bigger
than the rest of its rivals, it is in a better position to absorb the high fixed costs of a
capital -intensive industry
 Industry Growth
One way of examining a company’s growth potential is to first examine whether
the amount of customers in the overall market will grow. This is crucial because
without new customers, a company has to steal market in order to grow. In some
markets, there is zero or negative growth, a factor demanding careful
consideration.
For example, a manufacturing company dedicated solely to creating audio compact
cassettes might have been very successful in the 70’s, 80’s and early 90’s.
However that same company would probably have a rough time now due to the
advent of newer technologies, such as CDs and MP3s. The current market for
audio compact cassettes is only a fraction of what it was during the peak of its
popularity.
 Competition
Simply looking at the number of competitors goes a long way in understanding the
competitive landscape of a company. Industries that have limited barriers to entry
and a large number of competing firms create a difficult operating environment for
firms.
One of the biggest risk in a highly competitive industry is pricing power. This
refers to the ability of supplier to increase prices and pass those costs on to
customers. Companies operating in industries with few alternatives have the ability
to pass on costs to customers.
A great example of this is Wal-Mart. They are so dominant in the retailing
business, that Wal-Mart practically sets the price for any of the suppliers wanting
to do business with them. If you want to sell to Wal-Mart, you have little, if any,
pricing power

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QUALITATIVE FACTOR - THE COMPANY
Before diving into a company’s financial statements, let’s take a look
at some of the qualitative aspects of a company

 Business Model
One of the most important questions that should be asked is what exactly does the
company do? This is referred to as a company’s business model. It’s how a
company makes money? You can get a good overview of a company’s business
model by checking out its website or annual report.

 Competitive Advantage
Another business consideration for investors is competitive advantage. A
company’s long-term success is driven largely by its ability to maintain a
competitive advantage – and keep it. Powerful competitive advantages, such as
Reliance’s brand name and Microsoft’s domination of the personal computer
operating system, create a moat around a business allowing it to keep
competitors at bay and enjoy growth and profits. When a company can achieve
competitive advantage, its shareholders can be well rewarded for decades
 Management
A company relies upon management to steer it towards financial success. Some
believe that management is the most important aspect for investing in a company.
It makes sense – even the best business model is doomed if the leaders of the
company fail to properly execute the plan.
Every public company has a corporate information section on its website. Usually
there will be a quick biography on each executive with their employment history,
educational background and any applicable achievements.
Don’t expect to find anything useful here. Let’s be honest: We’re looking for dirt,
and no company is going to put negative information on its corporate website

15
  Instead here are a few ways for to get a feel formanagement:-

1. Management Discussion and Analysis (MD&A)

The Management Discussion and Analysis is found at the beginning of the annual
report. In theory, the MD&A is supposed to be frank commentary on the
management’s outlook. Sometimes the content is worthwhile, other items its
boilerplate.
One tip is to compare what management said in past years with what they are
saying now. Is it the same material rehashed? Have strategies actually been
implemented? If Possible, sit down and read the last five years of MD&As

2.past performance

Another good way to get a feel for management capability is to check and see how
executives have done at other companies in the past. You can normally find
biographies of top executives on company websites.
Identify the companies they worked at in the past and do a search on those
companies and their performance.

3.Conference Calls

Some of the big market capitalization companies have conference calls do that
management can address critical issues such as performance review, critical
developments etc.
The excerpts of these are later displayed on the company’s websites so as to enable
investors to access these.

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QUANTITATIVE FACTOR

Now as we know the qualitative factor of fundamental analysis let’s proceed to the
quantitative factor of the fundamental analysis. Quantitative factor include analysis
of financial statement of the company.
RATIO ANALYSIS

Financial ratios are tools for interpreting financial statements to provide a basis for
valuing securities and appraising financial and management performance. In
general, there are 3 kinds of financial ratios that a financial analyst will use most
frequently.
 working capital ratios
 Liquidity ratios
 Solvency ratios
These 3 financial ratios allow a good financial analyst to quickly and efficiently
address the following questions or concerns.

Working Capital ratio

 How quickly are debt paid ?
 How many Times is inventory turned ?
Liquidity ratio
 can the company continue to pay its liabilities and debts ?
Sovency ratios
 what is the level of debt in relation to other assests and to equity ?
 is the level of interest payable out of profit?

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EARNING PER SHARE
Earnings per share is calculated by dividing the net profit ( after interest, tax and
preference dividend) by the number of equity shares.
Earnings per share = Net profit after Interest, Tax and Preference Dividend/ No. of
Equity share.
P/E Ratio
In general, a high P/E suggests that investors are expecting higher earnings growth
in the future compared to companies with a lower P/E. However, the P/E ratio
doesn't tell us the whole story by itself. It's usually more useful to compare the P/E
ratios of one company to other companies in the same industry, to the market in
general or against the company's own historical P/E. It would not be useful for
investors using the P/E ratio as a basis for their investment to compare the P/E of a
technology company (high P/E) to a utility company (low P/E) as each industry has
much different growth prospects
The P/E is sometimes referred to as the "multiple", because it shows how much
investors are willing to pay per rupee of earnings. If a company were currently
trading at a multiple (P/E) of 20, the interpretation is that an investor is willing to
pay Rs.20 for Re.1 of current earnings.
It is important that investors note an important problem that arises with the P/E
measure, and to avoid basing a decision on this measure alone. The denominator
(earnings) is based on an accounting measure of earnings that is susceptible to
forms of manipulation, making the quality of the P/E only as good as the quality of
the underlying earnings number.
 Generally a high P/E ratio means that investors are anticipating
highergrowth in the future
 The average market P/E ratio is 20-25 times earnings
 The p/e ratio can use estimated earnings to get the forward looking P/Eratio

18
PEG RATIO
The PEG ratio that indicates an over or underpriced stock varies by industry and by
company type; though a broad rule of thumb is that a PEG ratio below one is
desirable. Also, the accuracy of the PEG ratio depends on the inputs used. Using
historical growth rates, for example, may provide an inaccurate PEG ratio if future
growth rates are expected to deviate from historical growth rates.
To distinguish between calculation methods using future growth and historical
growth, the terms "forward PEG" and "trailing PEG" are sometimes used
TECHNICAL ANALYSIS
Technical analysis is a financial term used to denote a security analysis discipline
for forecasting the direction of prices through the study of past market data,
primarily price and volume. Behavioral economics and quantitative analysis
incorporate technical analysis, which being an aspect of active management stands
in contradiction to much of modern portfolio theory.
Technical analysis employs models and trading rules based on price and volume
transformations, such as the relative strength index, moving averages, regressions,
inter-market and intra-market price correlations, business cycles, stock market
cycles or, classically, through recognition of chart patterns. Technical analysis
stands in contrast to the fundamental analysis approach to security and stock
analysis. Technical analysis analyzes price, volume and other market information,
whereas fundamental analysis looks at the actual facts of the company, market,
currency or commodity.
Most large brokerage, trading group, or financial institutions will typically have
both a technical analysis and fundamental analysis team. Simply put, technical
analysis is the study of prices, with charts being the primary tool. Technical
analysts are sometimes referred to as chartists because they rely almost exclusively
on charts for their analysis.
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, daily,
weekly or monthly price data and last a few hours or many year.
Technicians, as technical analysts are called are only concerned with two things
1.What is the current price ?
2.What is the history of price movement ?
19
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.
After all, the value of any asset is only what someone is willing to pay for it.

TYPES OF CHARTS
There are four main types of charts that are used by investors and traders
depending on the information that they are seeking and their individual skill levels.
The chart types are: the line chart, the bar chart, the candlestick chart and the point
and figure chart
 Line Chart

A line chart is a graphical representation of an asset's historical price action that

connects a series of data points with a continuous line. This is the most basic type
of chart used in finance, and it typically only depicts a security's closing price over

time. Line charts can be used for any timeframe, but they most often make use of
day-to-day price changes. 20
A line chart gives traders a clear visualization of where the price of a security has
traveled over a given time period. Because line charts usually only show closing
prices, they reduce noise from less critical times in the trading day, such as
the open, high, and low prices. Line charts are popular with investors and traders
because closing prices are a very commonly viewed piece of data related to a
security.

 BAR CHART

Bar charts consist of multiple price bars, with each bar illustrating how the
price of an asset or security moved over a specified time period. Each bar
typically shows open, high, low, and closing (OHLC) prices, although this may
be adjusted to show only the high, low, and close (HLC) A bar chart visually
depicts the open, high, low, and close prices of an asset or security over a
specified period of time. The vertical line on a price bar represents the high and
low prices for the period. The left and right horizontal lines on each price bar
represent the open and closing prices. Bar charts can be colored coded where if
the close is above the open it may be colored black or green, and if the close is
below the open the bar may be colored red.

21
 Candlestick chart

Candlestick charts are used by traders to determine possible price movement

based on past patterns. Candlesticks are useful when trading as they show four
price points (open, close, high, and low) throughout the period of time the
trader specifies. Many algorithms are based on the same price information
shown in candlestick charts. Trading is often dictated by emotion, which can be
read in candlestick charts.

 Point and Figure Chart

(P&F) is a charting technique used in technical analysis. Point and figure

charting does not plot price against time as time-based charts do.

Instead it plots price against changes in direction by plotting a column of Xs as

the price rises and a column of Os as the price fall.

22
Because point and figure charts are plotted on squared paper, 45 degree lines
may be used to define up trends and down trends from important highs and lows
on the chart allowing objective analysis of trends

TYPES OF CHARTING PATTERNS

There are hundreds of thousands of market participants buying and selling

securities for a wide variety of reasons: hope of gain, fear of loss, tax
consequences, short-covering, hedging, stop-loss triggers, price target triggers,
fundamental analysis, technical analysis, broker recommendations and a few
dozen more. Trying to figure out why participants are buying and selling can be
a daunting process. Chart patterns put all buying and selling into perspective by
consolidating the forces of supply and demand into a concise picture. As a
complete pictorial record of all trading, chart patterns provide a framework to
analyze the battle raging between bulls and bears. More importantly, chart
patterns and technical analysis can help determine who is winning the battle,
allowing traders and investors to position themselves accordingly. Chart pattern
analysis can be used to make short-term or long-term forecasts. The data can be
intraday, daily, weekly or monthly and the patterns can be as short as one day or
as long as many years. Gaps and outside reversals may form in one trading
session ,while broadening tops and dormant bottoms may require many months
to form.

A chart pattern is a distinct formation on a stock chart that creates a trading

signal, or a sign of future price movements. Chartists use these patterns to
identify current trends and trend reversals and to trigger buy and sell signals.
The theory behind chart patterns is based on this assumption. The idea is that
certain patterns are seen many times, and that these patterns signal a certain
high probability move in a stock. Based on the historic trend of a chart pattern
setting up a certain price movement, chartists look for these patterns to
identify trading opportunities 23
 Head and Shoulders

On the technical analysis chart, the formation occurs when a market trend is in
the process of reversal either from a bullish of berish trend; a characteristic
pattern takes shape and is recognized as reversal formation.

 Double Tops and Bottoms

Double top and bottom patterns are chart patterns that occur when the
underlying investment moves in a similar pattern to the letter "W" (double
bottom) or "M" (double top). Double top and bottom analysis is used
in technical analysis to explain movements in a security or other investment,

24.
 Triple Tops And Bottoms

Price patterns are seen in identifiable sequences of price bars shown

in technical analysis charts. These patterns can be used by to examine past
price movements and predict future ones for a particular trading instrument.
Readers should already be familiar with trendlines continuation price patterns
and reversal price patterns.

 Rounding Bottom

A rounding bottom is a chart pattern used in technical analysis and is identified

by a series of price movements that graphically form the shape of a "U".
Rounding bottoms are found at the end of extended downward trends and
signify a reversal in long-term price movements. This pattern's time frame can
vary from several weeks to several months and is deemed by many trader are
occurrence. Ideally, volume and price will move in tandem, where volume
confirms the price action.

25
 Triangles

Triangle patterns are aptly named because the upper and lower trendlines
ultimately meet at the apex on the right side, forming a corner. Connecting the
start of the upper trendline to the beginning of the lower trendline completes
the other two corners to create the triangle. The upper trendline is formed by
connecting the highs, while the lower trendline is formed by connecting the
lows

 Cup and Handle

A cup and handle price pattern on a security's price chart is a technical

indicator that resembles a cup with a handle, where the cup is in the shape of a
"u" and the handle has a slight downward drift.

26
The cup and handle is considered a bullish signal, with the right-hand side of
the pattern typically experiencing lower trading volume. The pattern's
formation may be as short as seven weeks or as long as 65 weeks.

A cup and handle is a technical chart pattern that resembles a cup and handle
where the cup is in the shape of a "u" and the handle has a slight downward drift.

A cup and handle is considered a bullish signal extending an uptrend, and it is

used to spot opportunities to go long.

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INTRODUCTION OF BANKING SECTOR
India is considered among the top economies in the world, with tremendous
potential for its banking sector to flourish. The last decade witnessed a significant
upsurge in transactions through ATMs, as well as internet and mobile banking.
Influenced by the global financial turmoil and repercussion of the subprime crisis,
the global banking sector has witness some of the largest and best known names
succumb to multi-billion dollar write-offs and face near bankruptcy.
However, the Indian banking sector has been well shielded by the central bank and
has managed to sail through most of the crisis with relative ease, the sector is also
looking forward to consolidation and investments on the FDI front
Public sector banks have been very proactive in their restructuring initiatives be it
in technology implementation or pruning their loss assets. Retail lending that
formed a significant portion of the portfolio for most banks in the last two years
lost some weightage on the banks portfolios due to their risk weightage. The
monetary stimuli (reduction in repo rate, cash reserve ratio and statutory liquidity
ratio) offered to the banks by the RBI made things easier.
The repo rate is unchanged at 8% currently where the new credit policy will be
announced soon. Recently Reserve bank Deputy Governor R Gandhi expressed
concern over bad loans and said banks should strengthen their internal credit
appraisal systems to minimise the risk of default.
The growing NPAs are the biggest challenge for the banking sector with the
increase in bad loans which needs to be resolved The country's banking industry
looks set for greater transformation
With the Indian Parliament passing the Banking Laws (Amendment) Bill in 2012,
the landscape of the sector has duly changed.
The bill allows the Reserve Bank of India (RBI) to make final guidelines on
issuing new licenses, which could lead to a greater number of banks in the country.
The style of operation is also slowly evolving with the integration of modern
technology into the banking industry. In the next 5-10 years, the sector is expected
to create up to two million new jobs driven by the efforts of the RBI and the
Government of India to expand financial services into rural areas.
Two new banks have already received licences from the government, and the RBI's
new norms will offer incentives to banks to spot bad loans and take necessary
recourse to curb the practices of rogue borrowers.

28
STRUCTURE OF INDIAN BANKING SYSTEM
The banking system of the country is an important pillar holding up the
financial system of the country economy . The major role of banks in aq
financial system is mobilization of deposite and disbursement of credit to
various sectors of economy . The existing elaborate banking structure of india
has evolved over several decades
Reserve bank of india is the central bank of country and regulates the banking
system of india .The structure of the banking system in india can be brodly
divided into scheduled banks , non scheduled bank and development banks
Banks that are included in the second scheduled of the reserve bank of india.act
1934 are considered to be scheduled banks.all scheduled banks enjoys following
facilities . such as banks become eligible for debits/loans on the bank rate from
the RBI such a bank automatically acquires the membership of clearing house
All india banks which are not included in the second section of reserve bank of
india act 1934. They are not eligible to borrows from the RBI for normal
banking purpose except for emergencies

26
MARKET SIZE

The Indian banking system consists of 12 public sector banks, 22 private sector
banks, 44 foreign banks, 43 regional rural banks, 1,484 urban cooperative banks
and 96,000 rural cooperative banks in addition to cooperative credit institutions.
As of August 2021, the total number of ATMs in India reached 213,570.

According to the RBI, bank credit stood at Rs. 109.56 trillion (US$ 1.48
trillion), as of September 24, 2021. Credit to non-food industries stood at Rs.
155.95 trillion (US$ 2.11 trillion), as of September 24, 2021.
Asset of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion)
in FY20.

Total assets across the banking sector (including public, private sector and
foreign banks) increased to US$ 2.52 trillion in FY20.

Indian banks are increasingly focusing on adopting integrated approach to risk

management. The NPAs (Non-Performing Assets) of commercial banks has
recorded a recovery of Rs. 400,000 crore (US$ 57.23 billion) in FY19, which is
highest in the last four years.

RBI has decided to set up Public Credit Registry (PCR), an extensive database
of credit information, accessible to all stakeholders. The Insolvency and
Bankruptcy Code (Amendment) Ordinance, 2017 Bill has been passed and is
expected to strengthen the banking sector. Total equity funding of microfinance
sector grew 42% y-o-y to Rs. 14,206 crore (US$ 2.03 billion) in 2018-19.

As of October 10, 2021, the number of bank accounts—opened under the

government’s flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan
Yojana (PMJDY)’—reached 43.57 crore and deposits in the Jan Dhan bank
accounts totalled Rs. 1.45 trillion (US$ 19.46 billion).

Rising income is expected to enhance the need for banking services in rural
areas, and therefore, drive the growth of the sector.

India is the world's largest market for Android-based mobile lending apps,
accounting for 82% of all online lenders worldwide. India currently has 887
active lending apps.

27
GOVERNMENT INITIATIVES
In November 2021, RBI launched the ‘RBI Retail Direct Scheme’ for retail
investors to increase retail participation in government securities. The RBI
introduced new auto debit rules with a mandatory additional factor of
authentication (AFA), effective from October 01, 2021, to improve the safety
and security of card transactions, as part of its risk mitigation measures

In September 2021, Central Banks of India and Singapore announced to link

their digital payment systems by July 2022 to initiate instant and low-cost fund
transfers.

In August 2021, Prime Minister Mr. Narendra modi launched e-RUPI, a

person and purpose-specific digital payment solution. e-RUPI is a QR code or
SMS string-based e-voucher that is sent to the beneficiary’s cell phone.

Users of this one-time payment mechanism will be able to redeem the voucher
at the service provider without the usage of a card, digital payments app, or
internet banking access

ROAD AHEAD
Enhanced spending on infrastructure, speedy implementation of projects and
continuation of reforms are expected to provide further impetus to growth in the
banking sector.

All these factors suggest that India’s banking sector is poised for a robust
growth as rapidly growing businesses will turn to banks for their credit needs.

Also, the advancement in technology has brought mobile and internet banking
services to the fore.

The banking sector is laying greater emphasis on providing improved services

to their clients and upgrading their technology infrastructure to enhance
customer’s overall experience as well as give banks a competitive edge.

India’s digital lending stood at US$ 75 billion in FY18 and is estimated to

reach US$ 1 trillion by FY23 driven by the five-fold increase in the digital
disbursements. By 2025, India's fintech market is expected to reach Rs. 6.2
trillion (US$ 83.48 billion). 28
 Performance of public sector bank (PsB)

 PSBs recorded Np of Rs 31,820 cr FY 2020-21, highest in last 5 financial

years.

 Net profit of Rs 31,145 cr for the first half of fy 2021-22 almost equal to
that of fy 2020-21

 PsB Has a effected recovery of rs 5,49,327 during the last 7 financial year

 PSBs are adequately capitalised and CRAR of PSBs as on September 2021

is 14.4%, against regulatory requirement is 11.5% (including CCB)

 CET1 of PSBs was at 10.79% as on September 2021 against regulatory

requirement is 8%.

 PSBs recorded year-on-year credit growth of 11.3% in personal loans, 8.3%

in agriculture loans and overall credit growth of 3.5%, as on September 2021.

 Under credit outreach program launched on October 2021 psbs has

sanctioned an aggregate loan amount of Rs 61,268 crs

 During the COVID-19 pandemic, PSBs have performed well in various

Government schemes like ECLGS (launched in May 2020 to provide relief
particularly to the MSME sector amidst the COVID-19 pandemic), LGSCAS
and PM SVA Nidhi.

 Of the extended limit of Rs.4.5 lakh crore of ECLGS provided by the

Government, 64.4% or Rs 2.9 lakh crore, sanctioned up to Nov. 2021.

Over 13.5 lakh small units survived pandemic due to ECLGS, saved MSME
loans worth Rs 1.8 lakh crore from slipping into non-performing assets, and
saved livelihood for approx. 6 crore families.

PSBs have performed well and, supported by various policy measures, provided
the required impetus to the economy for coming out of shackles of pandemic
induced stress.

bankers were confident that PSBs are adequately capitalised and banks are
prepared for any stress scenarios in future.

29
Porter’s 5 forces analysis of banking sector

Supply :- Liquidity is Controlled By the reserve bank of india

Demand :- India is a growing economy and demand for credit is high through it
could be cyclic

Barriers to entry:- Licensing requirement , investment in technology and

branch network capital and regulatory requirement

Bargaining power of supplies;- High during the period of tight liquidity. Trade
unions in public sector Banks can be anti reforms and orchestrate strikes.
Depositor may invest else where if interest rates fills.

Bargaining power of customers:- For good creditworthy borrowers bargaining

power is high Due to availability of large number of banks

Competition:- There are public sector banks , private sector and foreign banks
along with non banking financial companies competing in the similar businesss
segments . plus the Rbi is all set to issue New banking licenses soon

30
 KEY INDICATORS OF THE TOP BANKS IN THE INDIAN
BANKING INDUSTRY

Current account and Savings account

The CASA ratio stands for current and saving account ratio. CASA ratio of a
bank is the ratio of deposits in current and saving accounts to total deposits. A
higher CASA ratio indicates a lower cost of funds, because banks do not usually
give any interests on current account deposits and the interest on saving
accounts is usually very low 3-4%

.If a large part of a bank's deposits comes from these funds, it means that the
bank is getting those funds at a relative lower cost. It is generally understood
that a higher CASA ratio leads to higher net interest margin.

Banks CASA Ratio Date

HDFC Bank 52% 2017

SBI 43.81% 2017

Yes Bank 26% 2020

Kotak Mahindra Bank 51% March 2018

ICIC bank 51% Feb 2017

Karnataka Bank 28.91% March 2020

IndusInd Bank 42.00% March 2021

Bank Deposite grew 11.9 per cent year-on-year during 2020-21 compared to
8.8 per cent in 2019-20 on the back of high growth in current account and
savings account (CASA) deposite .

The share of CASA deposits increased to 43.7 per cent in March 2021
compared to 41.7 per cent a year ago, according to the Reserve Bank of India
(RBI's) Deposits with Scheduled Commercial banks.

31
Net Interest Margin(NIM)

Net Interest Income (NII) at Rs 4,084.60 crore in September 2021 down 1.51%
from Rs. 4147.1406 crore in September 2020.

Quarterly Net Profit at Rs. 1,126.11 crore in September 2021 up 145.93% from
Rs. 457.90 crore in September 2020.

Operating Profit stands at Rs. 3,286.91 crore in September 2021 up 9.03%

from Rs. 3,014.65 crore in September 2020.

Indian Bank EPS has increased to Rs. 9.04 in September 2021 from Rs. 4.05 in
September 2020.

Indian Bank shares closed at 174.30 on October 28, 2021 (NSE) and has given
53.70% returns over the last 6 months and 194.18% over the last 12 months.

32
NPA’s : -
According to the ratings agency, surge in loan loss provisions, along with a decline
in revenue, will hurt the profitability of banks, leading to a deterioration of
capitalization. It said that if the government makes more capital infusions into
PSBs, as it has in the past few years,

it will mitigate capital pressures for them. The government had infused 70,000
crore into state-owned banks in FY20. In FY19, it had infused over 1 trillion, with
the last round of 48,239 crore in February 2019, allowing six banks to exit the
Reserve Bank of India’s (RBI) prompt corrective action (PCA) framework.

Meanwhile, India Ratings and Research said in a note on 30 January that it has
placed the rating of most of the PSBs on rating watch evolving.

It said that while the proposed amalgamation could give them economies of scale
in the long term, credit growth and asset recovery could suffer in the short term.

33
Growth of Bank credit:-

The banking system's credit growth, which had languished for a year-and-a-half,
has rocketed to the highest level since the COVID-19 outbreak, according to
Reserve Bank of India (RBI) data.

The recovery was aided by festival-time demand for retail loans. As of November
5, total outstanding non-food credit grew 7.3 per cent from a year ago period to Rs
110.9 lakh cr

The outstanding credit rose by Rs 1.35 lakh er between October 8 and November
5, the RBI data showed. The last time loan growth hit 7 per cent was in April 2020
and remained in a range of 5.1 per cent to 6.9 per cent since then.

Meanwhile, supporting the rebound in demand for retail loans, Care Ratings said
that the year-on-year (YoY) bank credit jumped by 180 basis points (bps) from the
year-ago level of 5.1 per cent in the fortnight ended October 23, 2020, which is
also a 40-bps improvement from the previous fortnight.

The credit growth, it added, remained dull throughout the second wave of the
COVID-19 pandemic, however, post the government eased the curbs, since June
2021, bank credit growth bettered gradually from 5.7 per cent (fortnight, June 04,
2021) to 6.8 per cent (fortnight, October 22, 2021).

34
Evaluation of Banking Stock
It is said that the banking sector reflects the economy's health. The sector acts as a
funnel providing the funds that corporates need to expand their business. When the
economy is expanding, as is happening in India currently, banks lend more and
hence profit more.Banking stocks are evaluated on the basis of price/book value
multiples but again these valuations are given premium or discount considering the
categories such as public sector banks and private banks.Data was collected on all
the private and public sector banks having market cap of more than 5000 crores
and accordingly banks were selected. After collecting data of all the banks the
banks were analysed on the basis of value picks, growth picks, top line and bottom
line factor.

Earning per share

EPS indicate the overall quality of earnings, the main thing on which analysis was
done is at the growth in EPS over the past years to understand how volatile the
EPS is and to see if they are an underachiever or overachiever.

 Price To Earning

After having EPS figures the analysis was done on P/E which reflect the future
growth of the company. By comparing price and earnings per share for a
company the analysis was on the market’s stock valuation of a company and its
shares relative to the income the company is actually generating. Stocks with
higher forecast earnings growth usually have a higher P/E, and those expected
to have lower earnings growth usually have a lower P/E

Price Earning Of growth

This valuation technique is better than just looking at a P/E because it takes three
factors into account; the price, earnings and earnings growth rates. The theory goes
that as the percentage rises over 100% the stock becomes more and more
overvalued, and as the PEG ratio falls below 100% the stock becomes more and
more undervalued. The theory is based on a belief that P/E ratios should
approximate the long- term growth rate of a company’s earnings.

The analysis was also made on the basis of top line and bottom line factors, the
top line which is net interest income and the bottom line which is net interest
margin. All the banks were analysed on net interest income and net interest margin

35
 PRIVATE SECTOR BANKS

Company Las Change EPS P/C P/E

t
pric
e
Kotak 1826.15 7.90 37.74 46.13 48.39
mahind
ra
ICICI 749.55 -0.50 29.83 23.89 25.13
bank
HDFC 1512.65 6.35 63.30 23.04 23.,90
Bank
Axis 787.30 4.45 37.75 19.28 20.86
Bank
Indusln 955.55 -0.30 53.26 16.71 17.94
d bank
Dhanlaxm 13.17 -0.30 0.92 9.02 14.90
i bank
DCB 80.20 -1.15 8.11 8.08 9.89
Bank

Price Earning has been continuously high

Company 52wk 52wk Current

name high low Market cap
Kotak 2,252.45 1,627.25 374,544.96Cr
mahindra
ICICI 859.70 531.00 517,313.00Cr
BANK
HDFC 1,724.30 1,353.10 832,570.39Cr
BANK
Induslnd 1,241.85 811.10 73,642.73Cr
bnk
Dhanlaxmi 20.20 12.93 331.95Cr

36
 PUBLIC SECTOR BANKS

COMPANY LAST % Change 52Wk high 52wk low Marketcap(cr)

PRICE
SBI 515.45 0.52 549.05 321.15 460,019.10

BANK OF 105.40 -0.24 118.85 61.80 54,506.16

BARODA
CANARA 238.25 -0.46 272.80 124.35 43,221.65
BANK
PNB 37.70 -0.92 47.60 31.50 41,511.53

IOB 19.20 -1.26 29.00 14.45 36,292.63

UNION 43.35 -0.91 54.80 32.20 29,628.63

BANK
BANK OF 52.50 0.57 101.45 48.80 21,543.72
INDIA

Company name CEPS EPS P/C P/E

SBI 36.23 32.51 13.76 15.34
Bank of baroda 11.14 8.60 9.67 12.52
Canara bank 32.21 27.69 7.11 8.27
PNB 4.37 3.49 8.56 10.72
IOB 0.93 0.80 20.05 23.31

As the February2022 state bank of india has a market cap of $61.95 Billions as 12.37%
change since last year 2021 which was $55.12B .As rhe share price has been increased
by 0.06% a day .

As of Feb 22 Bank of baroda has a market cap of $7.46 billions at 28.15% change has
been made since last year 2021 which was approx $5.68 Billions . as the share price has
been increased by 2.77% in a single day

37
Axis Bank

Axis bank limited Formally known as UTI bank (1993 - 2007) is an Indian
banking and financial service company headquater in Mumbai . It sells
financial services to large and mid-size companies, SMEs and retail businesses.

.
Net Interest Q4FY21- FY21- 29,239 Q4FY21-11% FY21- 16%
Income 7,555
Net interest FY20 =3.51% Fy21= 3.53% Growth
margin =0.56%
CASA Ratio FY20 – 39% Fy21- 42% G = 7.69%
Gross NPA FY20- 4.55% FY21- 3.70%

Currently, Axis bank's market share in many segments of banking is not very
high. If bank gets its act together, increases its market share in segments, like
retail loans, credit cards, fee based income, auto finance, it would be able to
increase its overall margins at faster pace. First indication of any market share
increase would be taken positively by street

As the Market Cap value of axis bank is 241,630Cr current price of share is rs
787 . As The research and the analysis done on this company it was found that
axis bank has Good p/e. which is of favourable and indicates of potential
Growth in stock price.
38
Balance sheet

39
ICIC Bank

Icici bank limited is an Indian multinational bank and financial

services company Headquartered in the city of vadodara india. It
offers a wide range of banking products and financial services for the
corporate and retail customers through a variety of delivery channels
The bank has a network of 5,275 branches and 15,589 atms across india and
has a presence in 17 countries

Net interest FY20-332.67 FY21-389.89 Growth–

income 16.89%
Net interest FY20-3.73% FY21-3.69% Dec -1.07%
Margin

After doing analysis on ICICI bank it was found that it is a value pick
stock.

SWOT:-

Strength ;- 1) Strong Annual Eps growth

2) Effectively Using shareholders Fund return of equity(RoE)
Improving since last 2 years.

Weakness 1) Decline in net profit with falling profit margin(QoQ)

2) Decline net clash flow . companies not able to Generate net cash

Opportunity 1) Street Favorite High Analyst Rating with at atleast 20%

upside
40
Balance sheet

40
HDFC BANK

HDFC BANK Limited is an Indian banking and financial services company

headquartered in the city of Mumbai india.

It is India's largest private sector bank by assets and world's 10th largest bank
by market capitalization as of April 2021 It is the third largest company by
market capitalization of $122.50 billion on the Indian stock exchanges.

HDFC Bank provides a number of products and services including whole sale
banking ,retail banking, loans ,two wheeler loans, personal loans. Along with
this various digital products are Pay zapp and Smart buy.

 The Bank net interest Income and plus other income Increased By 12.1% to
Rs 26,627.0 cr For the quarter Ended Dec 31,2021 From Rs 23,760.8cr For the
quarter Ended in Dec 31 ,2020

 Companys annual revenue growth of 36.63% outperformed its 3 years CACR

of 20.11% .

As per the analysis The current price of HDFC stock is Rs 2,441.15 and its
gaining profit Day by day as the current situation this stock is worth buying.

41
Balance Sheet

42
CONCLUSION

Indian banks have analyzed positively on development,resource quality and benefit with other
local banks in the course of the most recent couple of years. The managing an account file has
developed at an intensified yearly rate of more than 51 for every penny since April 2001 when
contrasted with a 27 for each penny development in the market record for a similar period.

Strategy producers have rolled out some outstanding improvements in approach and direction
to help fortify the area. These progressions incorporate reinforcing prudential standards,
improving the installments framework and coordinating controls amongst business and co-
agent banks. Nonetheless, the cost of intermediation stays high and bank entrance is restricted
to just a couple of client fragments and topographies.

While bank loaning has been a noteworthy driver of GDP development and work, occasional
cases of the “disappointment” of some powerless banks have frequently debilitated the
dependability of the framework.

Basic shortcomings,for example, a divided industry structure, confinements on capital

accessibility and arrangement, absence of institutional help foundation, prohibitive work laws,
powerless corporate administration and incapable controls past Scheduled Commercial Banks
(SCBs), except if tended to, could truly debilitate the wellbeing of the part.

Further, the powerlessness of bank administrations (with some prominent special cases) to
enhance capital distribution, increment the profitability of their administration stages and
enhance the execution ethic in their associations could truly influence future execution

43
SUGGESTIONS
An investor must look into what kind of business is company doing , Visibility of business
its past track record capital needs of the company for the expansion

One must focus on its key financial ratios such as earning per ratio , price earning ratio, dept
equity ratio Dividends per share

One must also check whether the company is generating Cash flow

Bargaining is the most factor which shows the true worth of the company , as an investor
need to choose valuation parameters which suits its business
Reference

 www.screener.in
 www.moneycontrol.com
 www.investopedia.com
 www.ETmarkets.com

46