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“FUNDAMENTAL AND TECHNICAL ANALYSIS OF STOCKS AND PERCEPTION
OF BROKING HOUSES ABOUT THEIR FUTURE PROSPECTS
EXECUTIVE SUMMARY
Equity analysis is the systematic study of the performance of companies in

stock market with help of fundamental analysis and technical analysis. Equity
analysis consists of fundamental analysis & technical analysis. While decision in
investment of shares should be base on actual movement of shares price measured
more in money & percentage term & nothing else. in equity analysis, calculations
are based on facts & not on hope. the subject of equity analysis, i.e. to attempt to
determine future share price movement with the help of ratio analysis, study of
graph. Equity analysis does not discuss how to buy &sell shares, but does discuss
the methods, which enables the investor to arriving at buying &selling decision.
the technical approach to investment is essentially a reflection of the idea that
prices moves in a trend that are determined by the changing attitude of investors
toward a variety of economic, monetary, political and psychological forces. The
art of technical analysis, for it is an art, is to identify a trend reversal at a relatively
early stage and ride on that trend until the weight of the evidence shows or proves
the trend has reversed.
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Fundamental Analysis
What is 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 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.
Fundamental analysis serves to answer questions, such as:
 Is the company’s revenue growing?
 Is it actually making a profit?
 Is it in a strong-enough position to beat out its competitors in the future?
 Is it able to repay its debts?
Approaches of fundamental analysis

While carrying out fundamental analysis, investors can use either of the following approaches
1. Top-down Approach: In this approach, an analyst investigates both international and national
economic indicators, such as GDP growth rates, energy prices, inflation and interest rates. The
search for the best security then trickles down to the analysis of total sales, price levels and foreign
competition in a sector in order to identify the best business in the sector.
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2. Bottom-up Approach: In this approach, an analyst starts the search with specific businesses,
irrespective of their industry/region.
Fundamental analysis of a business involves analyzing its financial statements and health, its
management and competitive advantages, and its competitors and markets. When applied
to futures and forex, it focuses on the overall state of the economy, interest rates, production,
earnings, and management. 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 price evolution,
 to make a projection on its business performance,
 to evaluate its management and make internal business decisions,
 to calculate its credit risk.
Steps in Fundamental Evaluation

Even though there is no one clear-cut method, a breakdown is presented below in the order an
investor might proceed. This method employs a top-down approach that starts with the overall
economy and then works down from industry groups to specific companies. As part of the
analysis process, it is important to remember that all information is relative. Industry groups are
compared against other industry groups and companies against other companies. Usually,
companies are compared with others in the same group.
Economic Forecast
First and foremost in a top-down approach would be an overall evaluation of the general
economy. The economy is like the tide and the various industry groups and individual companies
are like boats. When the economy expands, most industry groups and companies benefit and
grow. When the economy declines, most sectors and companies usually suffer. Many economists
link economic expansion and contraction to the level of interest rates. Interest rates are seen as a
leading indicator for the stock market as well.
Group Selection
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If the prognosis is for an expanding economy, then certain groups are likely to benefit more than
others. An investor can narrow the field to those groups that are best suited to benefit from the
current or future economic environment. If most companies are expected to benefit from an
expansion, then risk in equities would be relatively low and an aggressive growth-oriented
strategy might be advisable. A growth strategy might involve the purchase of technology,
biotech, semiconductor and cyclical stocks. If the economy is forecast to contract, an investor
may opt for a more conservative strategy and seek out stable income-oriented companies. A
defensive strategy might involve the purchase of consumer staples, utilities and energy-related
stocks.
Company Selection and Analysis
Once the industry group is chosen, an investor would need to narrow the list of companies before
proceeding to a more detailed analysis. Investors are usually interested in finding the leaders and
the innovators within a group. The first task is to identify the current business and competitive
environment within a group as well as the future trends. How do the companies rank according
to market share, product position and competitive advantage? Who is the current leader and how
will changes within the sector affect the current balance of power? What are the barriers to
entry? Success depends on an edge, be it marketing, technology, market share or innovation.A
comparative analysis of the competition within a sector will help identify those companies with
an edge and those most likely to keep it.
With a shortlist of companies, an investor might analyse the resources and capabilities within
each company to identify those companies that are capable of creating and maintaining a
competitive advantage. The analysis could focus on selecting companies with a sensible business
plan, solid management and sound financials.
Business Plan
The business plan, model or concept forms the bedrock upon which everything else is built. If
the plan, model or concepts stink, there is little hope for the business. For a new business, the
questions may be these: Does its business make sense? Is it feasible? Is there a market? Can a
profit be made? For an established business, the questions may be: Is the company’s direction ?
Is the company a leader in the market? Can the company maintain leadership?
Management
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In order to execute a business plan, a company requires top-quality management. Investors might
look at management to assess their capabilities, strengths and weaknesses. Even the best-laid
plans in the most dynamic industries can go to waste with bad management. Alternatively, even
strong management can make for extraordinary success in a mature industry. Some of the
questions to ask might include: How talented is the management team? Do they have a track
record? How long have they worked together? Can management deliver on its promises? If
management is a problem, it is some times best to move on.
Both: Quantitative and Qualitative
Neither qualitative nor quantitative analysis is inherently better than the other. Instead, many
analysts consider qualitative factors in conjunction with the hard, quantitative factors. Take the
Coca-Cola Company, for example. When examining its stock, an analyst might look at the
stock’s annual dividend pay-out, earnings per share, P/E ratio and many other quantitative
factors. However, no analysis of Coca-Cola would be complete without taking into account its
brand recognition. Anybody can start a company that sells sugar and water, but few companies
on earth are recognized by billions of people. It’s tough to put your finger on exactly what the
Coke brand is worth, but you can be sure that it’s an essential ingredient contributing to the
Company’s on-going success.
Intrinsic Value
Before we get any further, we have to address the subject of intrinsic value. One of the primary
assumptions of fundamental analysis is that the price on the stock market does not fully reflect a
stocks “real” value. After all, why would you be doing price analysis if the stock market were
always correct? In financial jargon, this true value is known as the intrinsic value. For example,
let’s say that a company’s stock was trading at $20. After doing extensive homework on the
company, you determine that it really is worth $25. In other words, you determine the intrinsic
value of the firm to be $25. This is clearly relevant because an investor wants to buy stocks that
are trading at prices significantly below their estimated intrinsic value. This leads us to one of the
second major assumptions of fundamental analysis: in the long run, the stock market will reflect
the fundamentals. There is no point in buying a stock based on intrinsic value if the price never
reflected that value. Nobody knows how long “the long run” really is. It could be days or
years. This is what fundamental analysis is all about. By focusing on a particular business, an
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investor can estimate the intrinsic value of a firm and thus find opportunities where he or she can
buy at a discount. If all goes well, the investment will pay off over time as the market catches up
to the fundamentals.
Ratio Analysis
Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication
of a firm's financial performance in several key areas. The ratios are categorized as Short-term
Solvency Ratios, Debt Management Ratios, Asset Management Ratios, Profitability Ratios, and
Market Value Ratios.
Ratio Analysis as a tool possesses several important features. The data, which are provided by
financial statements, are readily available. The computation of ratios facilitates the comparison
of firms which differ in size. Ratios can be used to compare a firm's financial performance with
industry averages. In addition, ratios can be used in a form of trend analysis to identify areas
where performance has improved or deteriorated over time.
The different types of ratios are:
1. LIQUIDITY RATIOS
1.1 Current Ratio: Current Ratio establishes the relationship between current Assets and current
Liabilities. It attempts to measure the ability of a firm to meet its current obligations.
Current Ratio = Current Assets / Current Liabilities
1.2 Quick/Acid Test Ratio: Quick Ratio also termed as Acid Test or Liquid Ratio. It is
supplementary to the current ratio. The acid test ratio is a more severe and stringent test of a
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firm's ability to pay its short-term obligations 'as and when they become due. Quick Ratio
establishes the relationship between the quick assets and current liabilities.
Quick Ratio = Quick Assets / Current Liabilities
Quick Assets = Current Assets – (Inventory + Prepaid Expenses)
2. PROFITABILITY RATIOS
Profitability Ratio is used to measure the overall efficiency or performance of a business
2.1 Gross Profit Margin: Gross Profit Ratio established the relationship between gross profit and
net sales. This ratio is calculated by dividing the Gross Profit by Sales
Gross Profit Margin= (Gross Profit / Net Sales) * 100
Gross profit = Revenue – Cost of Goods Sold
Higher Gross Profit Ratio is an indication that the firm has higher profitability. It also reflects the
effective standard of performance of firm's business.
2.2 Net Profit Margin: This ratio reveals the firm's overall efficiency in operating the business. Net
profit Ratio is used to measure the relationship between net profit (either before or after taxes)
and sales.
Net Profit = (Net Profit / Net Sales) * 100

2.3 Return on Investment (ROI): This ratio measures a return on the owner's or shareholders'
investment. This ratio establishes the relationship between net profit after interest and taxes
and the owner's investment.
ROI = (Net Profit / Investment) * 100

This ratio highlights the success of the business from the owner's point of view.It also
helps to the management for important decisions making.
2.4 Return on Capital Employed (ROCE): It is a relationship between operating profit of the
company and the capital employed. In this case, net operating profit is the profit before
interest and tax (NPBIT).
ROCE = (NPBIT / Capital Employed) * 100
Capital Employed = Total Assets – (Current Liabilities + Accumulated Losses + Fictitious Assets
+ Investments outside business + Capital WIP)
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2.5 Earnings Per Share (EPS): As the name says, it is the earnings or net profit attributable to each
equity share after all fixed obligations and other cost of capital is paid. It measures the earning
capacity of the concern from the owner's point of view and it is helpful in determining the price
of the equity share in the market place.
EPS = Net Profit after tax and Pref. dividend / No. of Equity Shares
2.6 Dividend Pay-out Ratio: This ratio highlights the relationship between payment of dividend on
equity share capital and the profits available after meeting tax and preference dividend. This
ratio indicates the dividend policy adopted by the top management about utilization of divisible
profit to pay dividend or to retain or both.
Dividend Pay-out Ratio = Dividend per share (DPS)/ EPS
OR
= Dividend Paid / Net Profit after tax and Pref. dividend

2.7 Dividend Yield Ratio: Dividend Yield Ratio indicates the relationship is established between
dividend per share and market value per share. This ratio is a major factor that determines the
dividend income from the investors' point of view.
Dividend Yield Ratio = DPS / MPS
2.8 Price-Earnings Ratio (P/E): This ratio highlights the earning per share reflected by market share.
Price Earnings Ratio establishes the relationship between the market price of an equity share
and the earning per equity share. This ratio helps to find out whether the equity shares of a
company are undervalued or not. This ratio is also useful in financial forecasting.
Price Earnings Ratio = MPS / EPS
2.9 Price-Earnings Growth Ratio (PEG): The price/earnings to growth ratio is a stock's price-to-
earnings ratio divided by the growth rate of its earnings for a specified time period. The PEG
ratio is used to determine a stock's value while taking the company's earnings growth into
account, and is considered to provide a more complete picture than the P/E ratio.
PEG = P/E /EPS Growth rate
3. TURNOVER RATIOS
Turnover Ratios may be also termed as Efficiency Ratios or Performance Ratios or

Activity Ratios. Turnover Ratios highlight the different aspect of financial statement to
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satisfy the requirements of different parties interested in the business. It also indicates the
effectiveness with which different assets are vitalized in a business. Turnover means the
number of times assets are converted or turned over into sales.
3.1 Inventory Turnover Ratio: Inventory turnover is a ratio showing how many times a company's
inventory is sold and replaced over a period of time. The days in the period can then be divided
by the inventory turnover formula to calculate the days it takes to sell the inventory on hand.
Inventory Turnover Ratio = COGS / Average inventory
3.2 Debtors Turnover Ratio: Debtor's Velocity indicates the number of times the receivables are
turned over in business during a particular period. In other words, it represents how quickly the
debtors are converted into cash. It is used to measure the liquidity position of a concern. This
ratio establishes the relationship between receivables and sales.
Debtors Turnover Ratio = Net Credit Sales / Average Debtors
3.3 Debtor’s Collection Period: This ratio indicates the efficiency of the debt collection period and
the extent to which the debt have been converted into cash.
Debtor’s Collection Period = 365 days or 12 months / Debtor’s Collection Period
3.4 Creditors Turnover Ratio:This ratio establishes the relationship between the net credit
purchases and the average trade creditors. Creditor's velocity ratio indicates the number of
times with which the payment is made to the supplier in respect of credit purchases.
Creditors Turnover Ratio = Net Credit Purchases / Average Creditors
3.5 Debt Payment Period = 365 days or 12 months / Creditors Turnover Ratio
3.6 Working Capital Turnover Ratio:This ratio highlights the effective utilization of working capital
with regard to sales. This ratio represents the firm's liquidity position. It establishes relationship
between cost of sales and networking capital.
Working Capital Turnover Ratio = Net Sales / Average Working Capital
4. SOLVENCY RATIOS
4.1 Debt Equity Ratio: This ratio is calculated to ascertain the firm's obligations to creditors in
relation to funds invested by the owners. This ratio also indicates all external liabilities to owner
recorded claims.
Debt Equity Ratio = Total long term debt / Shareholder’s Funds
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4.2 Proprietary Ratio: This is one of the variant of Debt-Equity Ratio. The term proprietary fund is
assets.
Proprietary Ratio = Net Worth / Total Assets
4.3 Capital Gearing Ratio: This is one of the Solvency Ratios. The tenn capital gearing refers to
describe the relationship between fixed interest and/or fixed dividend bearing securities and
the equity shareholders' fund.
Capital Gearing Ratio= Equity Share Capital / Fixed Interest Bearing Capital
4.4 Debt Service Coverage Ratio: Debt Service Ratio is also termed as Interest Coverage Ratio or
Fixed Charges Cover Ratio. This ratio establishes the relationship between the amount of net
profit before deduction of interest and tax and the fixed interest charges. It is used as a
yardstick for the lenders to know the business concern will be able to pay its interest
periodically.
Debt Service Coverage Ratio= NPBIT / Fixed Interest Charges
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REVIEW OF LITERATURE
Brown and Jennings (1989)
Brown and Jennings (1989) showed that technical analysis has value in a model in which prices
are not fully revealing and traders have rational conjectures about the relation between prices and
signals.
Neftci (1991) showed that a few of the rules used in technical analysis generate well-defined
techniques of forecasting, but even well-defined rules were shown to be useless in prediction if
the economic time series is Gaussian. However, if the processes under consideration are non-
linear, then the rules might capture some information. Tests showed that this may indeed be the
case for the moving average rule.
Taylor and Allen (1992)

report the results of a survey among chief foreign exchange dealers based in London in
November 1988 and found that at least 90 per cent of respondents placed some weight on
technical analysis, and that there was a skew towards using technical, rather than fundamental,
analysis at shorter time horizons. In a comprehensive and influential
study Brock, Lakonishok and LeBaron (1992) analyzed 26 technical trading rules using 90 years
of daily stock prices from the Dow Jones Industrial Average up to 1987 and found that they all
outperformed the market.
Blume, Easley and O’Hara (1994)
show that volume provides information on information quality that cannot be deduced from the
price. They also show that traders who use information contained in market statistics do better
than traders who do not. Neely (1997) explains and reviews technical analysis in the foreign
exchange market.
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Neely, Weller and Dittmar (1997)

Use genetic programming to find technical trading rules in foreign exchange markets. The rules
generated economically significant out-of-sample excess returns for each of six exchange rates,
over the period 1981
–
1995. Lui and Mole (1998)report the results of a questionnaire survey conducted in February
1995 on the use by foreign exchange dealers in Hong Kong of fundamental and technical
analyses. They found that over 85% of respondents rely on both methods and, again, technical
analysis was more popular at shorter time horizons.
Neely(1998) reconciles the fact that using technical trading rules to trade against US
intervention in foreign exchange markets can be profitable, yet, long term, the intervention tends
to be profitable.
LeBaron(1999) shows that, when using technical analysis in the foreign exchange market, after
removing periods in which the Federal Reserve is active, exchange rate predictability is
dramatically reduced.
Lo, Mama sky and Wang (2000) examines the effectiveness of technical analysis on US stocks
from 1962 to 1996 and finds that over the 31-year sample period, several technical indicators do
provide incremental information and may have some practical value. Fernandez-
Rodr´ıguez,
Gonz´alez-Martel and Sosvilla-Rivero (2000) apply an artificial neural network tothe Madrid
Stock Market and find that, in the absence of trading costs, the technical trading rule is always
superior to a buy and-hold strategy for both ‘bear’ market and ‘stable’ market episodes,
but not
in a ‘bull’ market. One criticism I have is that beating the market in the absence
of costs seems of little significance unless one is interested in finding a signal which will later be
incorporated into a full system. Secondly, it is perhaps naïve
to work on the premise that ‘bull’
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Technical Analysis
What is Technical Analysis?

Technical analysis is the study of prices as well as other statistics generated by market activity,
for the purpose of making profitable trading or investment decisions. It involves forecasting of
future financial price movements based on an examination of past price movements. Like
weather forecasting, technical analysis does not result in absolute predictions about the future.
Instead, technical analysis can help investors anticipate what is “likely” to happen to prices over
time. Technical analysis uses a wide variety of charts that show price over time.
Key Assumptions
Price is determined by Supply and Demand
Similar to fundamental analysis, technical analysis believes in the economic theories of supply
and demand. Supply and demand is significantly influenced by buyer and seller expectations,
thus market psychology and sentiment plays a key role.
Investor’s expectations can be different between different parties, because they receive new
information at different speeds, or perceive the same information differently. Expectations can
also be shaped by human emotions like greed and fear, as well as be affected by cognitive
limitations like behavioral biases and faulty thinking. All these will influence the supply and
demand, and thus, prices.
The Market Discounts Everything

Technical analysts believe that the market is always correct. Instead of trying to consider all the
fundamental factors that may influence the supply and demand of the asset, they believe that all
the dynamics are already factored into the asset prices themselves. Thus the focus and emphasis
is on what happens within the markets, instead of what happens outside.
Price Moves in Trends
A trend is a directional movement of prices that remain in effect long enough for it to be
identified, and profited from. Trends result from supply and demand. For example, if a bullish
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piece of news emerges, it will filter to the market participants at different speeds. As more and
more people receive and interpret the bullish information, demand increases and we see an
uptrend of higher and higher prices.
At the same time, the market creates an emotional feedback loop with its participants. If I bought
a share and its price rises, I will be happy, and may buy more again, or I may tell others to buy
too. Others who missed out on the buying earlier will also notice the up-move, and may join in
the buying on expectations that prices will rise further. All these buying causes prices to actually
rise, creating a feedback loop. Excessive feedback can sometimes create irrational exuberance
though, leading to the formation, and bursting, of bubbles.
Technical analysis assumes that after a trend has been established, the future price movement is
more likely to be in the same direction as the trend than to be against it. However, prices will
always eventually revert back to the mean. Most technical trading strategies are based on these
basic beliefs.
History Tends to Repeat Itself
The fourth assumption is that history tends to repeat itself, and that humans tend to behave
similarly to how they have in the past under similar circumstances. To quote famous author Mark
Twain, “History doesn’t repeat itself, but it does rhyme.”
The repetitive nature of price movements forms recognizable patterns that tend to have
predictable results. The patterns are never identical though, and thus are subject to personal
interpretation and biases from the technical analyst.
Patterns are Fractal in Nature

Fractals refer to patterns that are similar at every scale. In other words, they “look the same from
near as from far”. Fractals are common and naturally occurring in the world we live in.
For instance coastlines are fractal. From a satellite image, the coast will look incredibly jagged,
but if we zoom in, smaller jagged edges emerge from each jagged edge. Go progressively deeper
and the complexity of the jags shows itself more.
Similarly, market prices follow a fractal nature. For example, if you look at a long-term price
chart over 10 years, and compare it to a short-term price chart over 10 weeks, you will not be
able to differentiate them. In fact, you can zoom in further to shorter and shorter time frames, and
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the patterns will all look similar. Thus when analysing trends, the length of the trend is
irrelevant. The basic technical principles can be applied to all time frames.
Types of Charts
Line Chart
The most basic form of price chart is the line chart. The simply chart provides information about
two variables, price and time, with price usually referring to the closing price of each period. In a
daily chart for instance, the price points will be plotted based on the daily closing price.
SBI Line graph for one year

Bar Charts
A more detailed form of chart is the bar chart. Each bar represents a fixed time frame of our
choice. It contains more information than a line chart, as it shows the opening, high, low, and
closing prices of a period. These four pieces of information is often referred to as OHLC, for
Open, High, Low and Close. Each bar is a vertical line showing the range (high and low). A long
line represents a wider trading range while a short line represents a narrow trading range. A short
horizontal line on the left of the bar indicates the opening price, while the closing price is
denoted by a short horizontal line on the right.
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SBI Bar chart for 3 months

Candlestick Charts
Candlestick charts originated in the seventeenth century in Japan, where they were used to trade
rice futures. They remained out of sight of most of the Western world, until Steve Nison wrote a
book in 1991 introducing candlestick analysis to Western traders. Today, practically all brokers
include candlestick charts in their platforms, and the charts have grown very popular because of
their ease of visual interpretation.
Candlestick charts are essentially similar to bar charts, in that they represent information of the
OHLC. Like bar charts, each candle represents price action over one specific chosen period (e.g.
one minute or one day).
The top and bottom of a rectangular box is used to show the open and close price. The box is
usually referred to as the real body. If prices went up over the period, the close will be above the
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open, and the body is shown in white (or commonly, green). If prices went down over the period,
the close will be below the open, and the body is shown in black (or commonly, red). The high
and low of the period is represented by thin vertical lines extending out from the body. These
lines are known as shadows, or wicks.
Types of Candlestick Patterns

Doji
A doji pattern is formed when the open and close are at the same, or very similar prices. This creates
a candlestick with a real body that looks like a horizontal line. A doji suggests that the market is in
equilibrium and is caught in indecision. If found within a trend, it can be a warning signal that the
trend is stalling and may reverse.
Harami
A harami pattern is a two-candlestick pattern. The first candle has a large body of either colour,
and it is followed by a candle with a small body completely within the boundaries of the large
body. The focus of the harami is on the body of the second candle being within the body of the
first candle, the shadows are not so important.
A harami indicates a contraction in volatility. Depending on how prices subsequently break, it
may signify the reversing of a trend, or an increase in the velocity of the existing trend.
Variants of harami candlestick patterns
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Morning Star and Evening Star

A morning star is a three-candlestick pattern that occurs at market bottoms. It begins with a
downward candle, with the second candle being a star, meaning that prices opened lower and its
body lies completely below the body of the first candle. However, the third candle rises, and
closes well within the range of the first candle. Ideally, the body of the third candle would not
touch the body of the star.
A morning star signifies that the downtrend is likely reversing. An evening star is similar to the
morning star, except that it appears at market tops, and signifies that the uptrend is likely
reversing.
Price Spikes
Sometimes, the market delivers a candle that looks like the trading activity went crazy. This
creates a price spike (sometimes known as a tail), where the shadow is abnormally long, and the
high or the low is very far away from the preceding trend.
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In some cases, a spike can turn out to be an anomaly. A spike downwards suggests that some
people panicked and were selling at such a high quantity and at such a frantic pace that the few
buyers around were able to buy at abnormally low prices. Conversely, a spike upwards suggests
that some people were buying at such a high quantity and at such a frantic pace that the few
sellers around were able to sell at abnormally high prices. Subsequent candles will show the
price resuming its prior trend with a normal trading range. Such situations are especially likely to
happen when the liquidity of the market is low, for example when significant news
announcements are to be released very shortly.
In other cases, a spike can signify the start of a trend after a breakout, or the end of a trend. For
example, at the end of an accelerated trend, the final candle may be a huge spike indicating the
last burst of buying before exhaustion sets in. This is also sometimes known as the climax.
As we can thus see, spikes have to be analyzed and interpreted based on the context in which it is
happening. Because of their potential significance, they should serve as a signal for us to look
closer into the current price action. Some traders will pay especial attention to where the spike
closed, as it sums up the market sentiment after the entire trading period of the candle.
Support and Resistance

Support and resistance represent key junctures where the forces of supply and demand meet.
Prices are driven down by excessive supply and driven up by excessive demand. When supply
and demand are equal, prices move sideways as bulls and bears slug it out for control.
Support is defined as the price level where there is buying interest that could overcome previous
selling pressure. Traders are more willing to buy at these levels. Whenever price falls to a
support level, more buyers come in. Because demand now exceeds supply, the price is pushed
back up.
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Conversely, resistance is defined as the level where there is selling interest that could overcome
previous buying pressure. Traders are more willing to sell at these levels. Whenever buyers push
the price up to a resistance level, sellers will come in to sell. Because supply exceeds the demand
at this level, prices fall back down.
Trends
The trend of a market is the general direction of its price. In order to determine the trend, we
refer to the direction of price action built up to give us an idea of the trend in the market.
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An uptrend describes a market where the general direction of price is upwards. It is
characterized by the formation of a series of higher highs and higher lows.
A downtrend describes a market where the general direction of price is downwards. It is

characterized by the formation of a series of lower highs and lower lows.
Basic Charts and Patterns

The following 6 basic chart patterns are grouped into 3 main categories – continuation patterns,
key reversal patterns and consolidation patterns.
1. Continuation Pattern: Triangles
A continuation pattern is defined as a temporary diversion in the behaviour of a market, which
will eventually continue its existing trend. In other words, in a trending market, a continuation
pattern is a brief pause or consolidation, before the market continues the precedent trend.
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Triangles are continuation patterns that form mid-trend as a result of price consolidation.
Triangles are formed when price action tightens into a coil. The highs and lows form smaller
ranges as price moves towards the apex of the triangle.
Symmetrical Triangle: A symmetrical triangle consists of two converging trend lines, that join
a series of lower highs, and higher lows, with the apex formed near the centre of the price.
A symmetrical triangle consists of two converging trendlines, that join a series of lower highs,
and higher lows, with the apex formed near the centre of the price.
Ascending Triangle: An ascending triangle consists of an upward slope formed by connecting

the higher lows, and a flat top as the highs are not significantly higher. The price should also hit
both lines at least twice.
Descending Triangle: A descending triangle consists of a downward slope formed by

connecting the lower highs, and a flat bottom as the lows are not significantly lower. The price
should also hit both lines at least twice.
Page 22
2. Continuation Patterns: Flag

Flags are continuation patterns that form mid trend as a result of price consolidation. In order for
a flag pattern to start forming, it must first have a flagpole. The flagpole is the sharp rally or drop
that precedes the flag itself.
A bullish flag consists of two parallel trendlines that join a series of lower highs, and lower
lows. It is preceded by a bullish rally, and results in a break out to the upside.
A bearish flag consists of two parallel trendlines that join a series of higher highs, and higher
lows. It is preceded by a bearish decline, and results in a break out to the downside.
3. Key Reversal Patterns: Double tops and Double Bottoms

Double Top: A double top is a key reversal pattern that forms at the end of an uptrend, after an
extensive rally. Price tests a resistance level twice, before going into an extended decline. The
breakout happens in the direction of a downtrend. A double top is formed when price first forms
a high, pulls back from it and retests the high. The low formed by the pullback marks the
neckline of the double top.
Page 23
For the double top, the measuring objective is the vertical distance measured from the top to the
neckline. The minimum objective is then found by projecting the measuring objective down from
the neckline.
Double Bottom: Double bottoms are exactly like double tops, except that they form at the end of
a downtrend, after an extensive decline. The breakout happens in the direction of an uptrend. A
double bottom is formed when price first forms a low, pulls back from it and retests the low. The
high formed by the pullback marks the neckline of the double bottom.
4. Reversal Pattern: Head & Shoulder and Inverted Head & Shoulder
Head & Shoulder: Head and shoulders is a reversal pattern that forms at the end of an uptrend,
after an extensive rally. Price will then form a peak, then a higher peak, followed by a lower
peak, before going into an extended decline. The lows formed by the pullback marks the
neckline of the head and shoulders pattern.
Page 24
Inverted Head & Shoulder: An inverted head and shoulders is basically the opposite of a head
and shoulders key reversal pattern. It forms at the end of a downtrend, after an extensive decline.
Price will then form a low, then the lower low, followed by a higher low, before going into an
extended incline. The highs formed by the pullback marks the neckline of the inverted head and
shoulders pattern.
5. Consolidation Patterns: Triangles

Triangles are formed when price action tightens into a coil. The highs and lows form smaller ranges
as price moves towards the apex of the triangle. This is caused by the fight between the buyers and
sellers. Depending on the side which the chart pattern breaks out, it can either be a continuation or
reversal pattern.
Page 25
5. Consolidation Patterns: Rectangles

A rectangle consolidation pattern is formed when price tightens to trade within a horizontal support
and resistance. Unlike the triangle consolidation pattern, the price does not converge over time. The
pattern is said to materialise only when it breaks either the support or resistance convincingly.
Analysis of Rural Electrification Corporation
Vision
To act as a competitive, client-friendly and development-oriented organization for financing and
promoting projects covering power generation, power conservation, power transmission and
power distribution network in the country.
Mission
To facilitate availability of electricity for accelerated growth and for enrichment of quality of life
of rural and urban population.
About
Page 26
Rural Electrification Corporation Limited (REC), a listed NAVRATNA Public Sector Enterprise
under Ministry of Power, Government of India, was incorporated on July 25, 1969 under the
Companies Act 1956. REC is a Non-Banking Financial Company with 'Infrastructure Finance
Company' status. Our main objective is to finance and promote power sector projects all over the
country.
REC provides loan assistance to various State Power Utilities, Private Sector Project Developers,
Central Power Sector Utilities and State Governments for investments in Power Generation,
Power Transmission, Power Distribution and other system improvement schemes/initiatives,
through its Corporate Office located at New Delhi, 18 project offices and 3 sub offices, located
in most States in the country. As on 31.03.16, REC has a loan book of over Rs. 2,00,000 crore
and net worth of Rs. 28,618 crore.
The company is led by Dr. P. V. Ramesh, IAS, who was Special Chief Secretary, Environment,
Forest, Science & Technology and Development Commissioner in the Government of Andhra
Pradesh.
REC has huge scope in the coming year as Finance Minister Mr.Arun Jaitley announced 100%
rural electrification by May 2018. This will give an impetus by states and centre for rural
electrification, which will help the company to increase its loan book.
Page 27
REC Quarterly Results: Income Statement
PARTICULARS Dec'16 Sep' 16 Jun' 16 Mar' 16 Dec' 15
Net Sales/Income from operations 5,572.84 5,755.86 5,889.52 6,015.38 5,987.25
Other Operating Income 73.51 200.96 64.13 48.76 30.7
Total Income From Operations 5,646.35 5,956.82 5,953.65 6,064.14 6,017.95
EXPENDITURE
Employees Cost 39.74 41.55 36.85 35.71 32.71
Depreciation 1.32 1.83 0.56 1.37 1.34
Provisions And Contingencies 15.33 121.42 356.53 464.39 259.06
Other Expenses 54.33 71.6 50.71 56.78 158.22
P/L Before Other Inc. , Int., Excpt. Items & Tax 5,535.63 5,720.42 5,509.00 5,505.89 5,566.62
Other Income 311.4 151.73 97.08 20.33 19.5
P/L Before Int., Excpt. Items & Tax 5,847.03 5,872.15 5,606.08 5,526.22 5,586.12
Interest 3,373.14 3,425.48 3,553.35 3,753.53 3,706.61
P/L Before Exceptional Items & Tax 2,473.89 2,446.67 2,052.73 1,772.69 1,879.51
P/L Before Tax 2,473.89 2,446.67 2,052.73 1,772.69 1,879.51
Tax 719.49 695.4 631.87 609.83 509.65
P/L After Tax from Ordinary Activities 1,754.40 1,751.27 1,420.86 1,162.86 1,369.86
Prior Year Adjustments -- -- -- -2.83 --
Net Profit/(Loss) For the Period 1,754.40 1,751.27 1,420.86 1,160.03 1,369.86
Equity Share Capital 1,974.92 1,974.92 987.46 987.46 987.46
EPS
Basic EPS 8.88 8.87 14.39 11.75 13.87
Page 28
Diluted EPS 8.88 8.87 14.39 11.75 13.87
Balance Sheet
PARTICULARS Mar' 16 Mar'15
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 987.46 987.46

Total Share Capital 987.46 987.46
Reserves and Surplus 27,630.30 23,869.57
Total Reserves and Surplus 27,630.30 23,869.57
Total Shareholder’s Funds 28,617.76 24,857.03
NON-CURRENT LIABILITIES
Long Term Borrowings 1,38,789.43 1,31,168.32

Deferred Tax Liabilities [Net] 49.75 107.32
Other Long Term Liabilities 9.5 36.16
Long Term Provisions 1,295.03 1,007.09
Total Non-Current Liabilities 1,40,143.71 1,32,318.89
CURRENT LIABILITIES
Short Term Borrowings 6,349.93 734
Other Current Liabilities 30,389.52 24,811.40
Short Term Provisions 852.05 453.71
Total Current Liabilities 37,591.50 25,999.11
TOTAL CAPITAL AND LIABILITIES 2,06,352.97 1,83,175.03
ASSETS
NON-CURRENT ASSETS
Tangible Assets 117.83 72.5
Intangible Assets 0.91 1.43
Capital Work-In-Progress 30.37 7.39
Intangible Assets Under Development 1.21 0
Fixed Assets 150.32 81.32
Page 29
Non-Current Investments 2,317.46 1,174.81

Deferred Tax Assets [Net] 0 0
Long Term Loans And Advances 1,57,794.10 1,64,213.78
Other Non-Current Assets 101.06 77.13
Total Non-Current Assets 1,60,362.94 1,65,547.04
Foreign Currency Monetary Item Translation Difference A/C 0 0
CURRENT ASSETS
Current Investments 149.16 438.66
Cash And Cash Equivalents 1,728.55 522.9
Short Term Loans And Advances 795.26 1,100.24
OtherCurrentAssets 43,317.06 15,566.19
Total Current Assets 45,990.03 17,627.99
TOTAL ASSETS 2,06,352.97 1,83,175.03
Cash Flow Statement

PARTICULARS Mar' 16 Mar' 15
A. Cash Flow from Operating Activities :
Net Profit before Tax 8,045.21 7,427.04
Adjustments for:
1. Profit (-) / Loss on Sale of Fixed Assets 0.38 0.09
2. Depreciation & Amortization 5.45 6.76
3. Provisions and Contingencies 1,089.85 802.96
4. Interest on Commercial Paper 285.91 300.03
5. Excess Provision written back (0.07) -
6. Profit on sale/redemption of investments (12.29) -
7. Loss/ Gain(-) on Exchange Rate fluctuation 666.13 259.99
8. Dividend from Subsidiary Co. (10.01) (0.35)
9. Dividend from Investments (3.05) (3.63)
10. Interest on Investments/ Govt. Securities (85.97) (149.18)
11. Provision for Interest on Advance Income Tax - 1.38
12. Discount on Bonds written off 3.99 4.83
13. Interest Accrued on Zero Coupon Bonds 76.17 70.39
Operating Profit Before Changes In Operating 10,061.70 8,720.31
Assets & Liabilities
Page 30
Increase / Decrease :
1. Loan Assets (21,733.35) (31,005.84)
2. Other Operating Assets 27.89 (366.08)
3. Operating Liabilities 936.54 944.51
Cash flow from Operations (10,707.22) (21,707.10)
1. Income Tax Paid (including TDS) (2,539.74) (2,284.67)
2. Income Tax refund 42.00 -
Net Cash Flow from Operating Activities (13,204.96) (23,991.77)
B. Cash Flow from Investing Activities
1. Sale of Fixed Assets 0.86 0.18
2. Purchased Fixed Assets (104.63) (7.64)
3. Invested in Energy Effi. Services Ltd. (124.00) -
4. Invested in Bonds of Indian Bank -
5. Invested in Bonds of Vijaya Bank (500.00) -
6. Invested in Syndicate Bank Bonds (500.00) -
7. Redemption of 8% Govt. of MP Power Bonds-II 94.32 94.32
8. Sale of Long-term Investments 762.53 -
9. Profit on sale/redemption of investments 12.29 -
10. Interest in Investments/ Govt. Securities 106.05 154.10
11. Dividend from Subsidiary Co. 10.01 0.35
12. Dividend from Investments 3.05 3.63
Net Cash Flow from Investing Activities (739.52) 244.94
C. Cash Flow from Financing Activities
1. Issue of Bonds (Net of redemptions) 14,972.72 21,806.74
2. Raising of Term Loans/ STL from Banks/ FIs (459.07) (955.40)
3. Raising of Foreign Currency Loan (2,607.56) 6,344.25
4. Funds received from GOI for disbursement 4,436.52 3,421.17
5. Disbursement of grants (4,691.45) (3,639.69)
6. Repayment of Govt. Loan (3.07) (4.86)
7. Payment of Final Dividend (266.61) (172.81)
Page 31
8. Payment of Interim Dividend (1,184.95) (789.97)

9. Payment of Corporate Dividend Tax (293.47) (187.26)
10. Premium on issue of securities 0.28 -
11. Issue of Commercial Paper (Net of repayments) 5,246.79 (2,745.74)
Net Cash flow from Financing Activities 15,150.13 23,076.43
Net Increase/Decrease in Cash & Cash Equivalents 1,205.65 (670.40)
Cash & Cash Equivalents as at the beginning 522.54 1,192.94
Cash & Cash Equivalents as at the end of the year 1,728.19 522.54
Components of Cash & Cash Equivalents
- Balances with Banks in:
Accounts with RBI and other Banks 923.68 131.69
Undisbursed DDUGJY, AG&SP, NEF and Others 34.17 54.94
Unpaid Dividend Accounts # 2.73 2.62
Short-term Deposits with Scheduled Banks 767.61 333.29
Total Cash & Cash Equivalents 1,728.19 522.54
Page 32
Financial Ratios:
Per Share Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12
Basic EPS (Rs.) 56.99 53.27 47.43 38.66 28.53
Diluted EPS (Rs.) 56.99 53.27 47.43 38.66 28.53
 EPS of the company has been increasing every year since the last 5 years, creating wealth for its
shareholders.
 Diluted EPS for all the years is same as basic EPS, meaning that the company has not issued any
convertible securities, which will dilute the existing shareholder’s powers and rights in the company.
Investment Valuation Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12
Dividend Per Share 17.1 10.7 9.5 8.25 7.5
Net Operating Profit Per Share (Rs) 239.39 204.86 172.34 136.91 104.69
EV/EBITDA (X) 7.16 8.52 8.09 8.54 9.24

 Dividend per share also has been increasing every year since the last 5 years and has increased
around 70% in the year 2016.
 Net Operating Profit per share has more than doubled in the last 5 years. For the year ending March
2016, it has increased by 17%.
 Company’s EBITDA multiple fell to a 5 year low in the year ending March 2016
Profitability Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12
Net Profit Margin(%) 23.8 26 27.52 28.23 27.25
Return On Capital Employed(%) 12.85 12.29 12.42 11.87 10.84
Return On Net Worth(%) 19.66 21.16 22.66 21.87 19.1
 Company’s Net Profit Margin has been falling since last 4 years showing that the company has not
performed as profitability as it was in past.
 ROCE of the company has increased in slowly indicating that the company has used its capital more
efficiently.
 Company’s Return on Net worth has been stable through years between 19% and 23%, though it has
come down in the past two years.
Page 33
Liquidity And Solvency Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12
Current Ratio 1.22 0.68 0.71 0.69 1.01
Quick Ratio 1.22 0.68 0.71 0.69 1.01
Long Term Debt Equity Ratio 4.85 5.28 5.33 5.21 5.19
 REC’s liquidity position is poor as seen from its current and quick ratios, which are well below the
standard ratio of 2:1, and it also indicates that company will have very few current assets balance
after paying all its current liabilities. Also, these ratios for last few years were below 1, indicating that
company did not even have enough sufficient current assets to pay all its current liabilities.
 Company’s long term debt to equity ratio is also very high signifying that the company uses lot of
borrowed funds and is highly levered.
Debt Coverage Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12
Interest Cover 1.56 1.63 1.65 1.64 1.59
Total Debt to Owners Fund 5.07 5.31 5.45 5.35 5.36
 Interest Coverage ratio of REC shows that the profits are sufficient to pay the interest, but has been
falling since last 3 years.
Page 34
Fibonacci Retracements
Support Support Support Pivot Resistance Resistance Resistance

3 2 1 Point 1 2 3
Fibonacci 147.22 149.65 152.08 155.54 159.95 162.48 165.55
Price Movement Analysis
Page 35
RECLTD (NSE Code: RECLTD) has closed at 155.45 as on

07-Mar-2017 down by -2.4 or -1.52% below previous close at
Price Action UP
157.85. The 1 Month Returns is 10.21% and 1 Year Return is
81.01%
The total volume traded on NSE is 5105539 shares. The total
Volume NUETRAL volume is 1.37 times the 10-Day average volume stood at
3723866 shares.
52 Week The distance from 52-Week HIGH is 2.81% with 52-Week

STRONG UP
High & Low HIGH at 159.95
Moving Closed above Simple Moving Averages 100,50,15,

STRONG UP
Averages Closed below Simple Moving Averages 200,
Relative
Strength UP 14-Day RSI at 60.10
Index
Average
Directional NUETRAL ADX is at 22.06. There is no significant Trend for the stock
Index
Bollinger Stock is Trading Near Bollinger Band Top
BUY
Bands BB Top161.49 and BB Bottom 137.94 with Expanding Bands.
TECHNICALLY
MACD According to MACD, stock Technically Strong
STRONG
Page 36
Angel Broking’s View about REC

Outlook: Neutral
Company scenario and Future prospects:
The economic downturn in previous government (2012- 2014) and delay in government
approvals and lack of gas availability led to stalled many power generation project. Along with
this inefficient way of running state electricity board led to an abnormal level of debt. Therefore,
it hurt SEB/Public & Private generation company’s cash flow and impaired the company’s
ability to pay the debt.
REC, mainly provide finance to SEB and power company with the aim of rural electrification.
Looking at SEB ailing financial position and struggling power sector, Power ministry Mr. Piyush
Goyal unveiled Financial Restructure Package (FRP) - “UDAY.” In which state government
would take over debt (75%) of the SEB in phase manner and cost of this debt will be set at 8 to
9% against currently charged ~+12% by REC. Hence, it will reduce interest cost by 300bps for
SEB.
However, FRP would dent NIM,RoE of power sector lender like PFC & REC. Loans to SEB’s
(70-80%) dominate the loan book of REC.
At ~4.91x times its trailing 12 months price-to-earnings (P-E) multiple, Rural Electrification
Corp. Ltd (REC) is one of the cheapest stocks in the infrastructure financing industry.
The largely reason behind this are a) weak business outlook. The slow progress of reforms and
poor financial condition of the state electricity boards mean that demand for loans can remain
tepid for some time. B) Deteriorating asset quality.
The REC has got an extension till march 31, 2017 to recognize its NPAs on 180 DPD basis as
against RBI guidelines on recognizing it on 150/120 DPD by FY16/FY17. It will directly shift to
90DPD from1 April 2017 onwards.
Valuations and Overview:
The company has an ROE of 21.05% and currently trading at valuation PE of 4.91x and P/BV of
0.85x of TTM earnings. We have a Neutral view for Rural Electrification Corporation Limited
considering tepid growth prospect, stubbornly high bad asset and shifting for recognising NPA
from 180 DPD to 90 DPD (would worsen asset quality for midterm) Upside Risk: Successful
implementation of UDAY financial restructure package.
Page 37
Analysis of HPCL
Vision
To be a World Class Energy Company known for caring and delighting the customers with high
quality products and innovative services across domestic and international markets with
aggressive growth and delivering superior financial performance. The Company will be a model
of excellence in meeting social commitment, environment, health and safety norms and in
employee welfare and relations.
Mission
"HPCL, along with its joint ventures, will be a fully integrated company in the hydrocarbons
sector of exploration and production, refining and marketing; focusing on enhancement of
productivity, quality and profitability; caring for customers and employees; caring for
environment protection and cultural heritage.
It will also attain scale dimensions by diversifying into other energy related fields and by taking
up transnational operations."
About
HPCL is a Government of India Enterprise with a Navratna Status, and a Forbes 2000 and
Global Fortune 500 company. It had originally been incorporated as a company under the
Indian Companies Act 1913.
HPCL owns & operates 2 major refineries producing a wide variety of petroleum fuels &
specialties, one in Mumbai (West Coast) of 6.5 Million Metric Tonnes Per Annum (MMTPA)
capacity and the other in Visakhapatnam, (East Coast) with a capacity of 8.3 MMTPA. HPCL
also owns and operates the largest Lube Refinery in the country producing Lube Base Oils of
international standards, with a capacity of 428 TMT. This Lube Refinery accounts for over 40%
of the India's total Lube Base Oil production. Presently HPCL produces over 300+ grades of
Lubes, Specialities and Greases. HPCL in collaboration with M/s Mittal Energy Investments Pvt.
Ltd..is operating a 9 MMTPA capacity Refinery at Bathinda with 49% equity in Punjab and also
holds an equity of about 16.95% in the 15 MMTPA Mangalore Refinery and Petrochemicals Ltd.
(MRPL).
Page 38
Fundamental Analysis
HPCL Quarterly Results: Income Statement

Particulars Dec'16 Sep'16 Jun'16 Mar'16 Dec'16
Net Sales/Income from operations 48,485.57 42,030.64 44,779.25 42,125.96 42,937.59
Total Income From Operations 48,555.61 42,102.53 44,840.77 42,195.24 43,006.87
EXPENDITURE
Consumption of Raw Materials 11,963.69 9,898.54 10,039.50 8,479.21 10,460.36
Purchase of Traded Goods 32,021.10 27,869.38 30,276.44 25,668.07 26,829.52
Increase/Decrease in Stocks -1,577.36 72.55 -2,233.20 460.06 497.24
Power & Fuel -- -- -- -- --
Employees Cost 610.42 605.1 614.46 460.66 691.31
Depreciation 633.56 615.95 610.84 675.36 695.95
Other Expenses 2,734.45 2,396.06 2,516.73 4,465.91 2,288.02
P/L Before Other Inc. , Int., Excpt. Items & Tax 2,169.75 644.95 3,016.00 1,985.97 1,544.47
Other Income 287.82 546.91 275.26 407.85 203.2
P/L Before Int., Excpt. Items & Tax 2,457.57 1,191.86 3,291.26 2,393.82 1,747.67
Interest 52.95 116.41 139.49 191.34 163.92
P/L Before Exceptional Items & Tax 2,404.62 1,075.45 3,151.77 2,202.48 1,583.75
P/L Before Tax 2,404.62 1,075.45 3,151.77 2,202.48 1,583.75
Tax 814.31 374.13 1,053.39 649.54 542.5
P/L After Tax from Ordinary Activities 1,590.31 701.32 2,098.38 1,552.94 1,041.25
Prior Year Adjustments -- -- -- -- --
Extra Ordinary Items -- -- -- -- --
Net Profit/(Loss) For the Period 1,590.31 701.32 2,098.38 1,552.94 1,041.25
Equity Share Capital 1,015.88 1,015.88 338.63 338.63 338.63
Reserves Excluding Revaluation Reserves -- -- -- -- --
Equity Dividend Rate (%) -- -- -- -- --
EPS Before Extraordinary
Basic EPS 15.65 6.9 61.97 45.86 10.25
Diluted EPS 15.65 6.9 61.97 45.86 10.25
Page 39
EPS After Extra Ordinary
Basic EPS 15.65 6.9 61.97 45.86 10.25
Diluted EPS 15.65 6.9 61.97 45.86 10.25
Balance Sheet
I. EQUITY AND LIABILITIES Mar’16 Mar’15
(1) Shareholders’ Funds
(a) Share Capital 339.01 339.01
(b) Reserves and Surplus 18,017.09 15,683.08
18,356.10 16,022.09
(2) Non-Current liabilities
(a) Long - Term Borrowings 10,633.48 14,855.83
(b) Deferred Tax Liabilities (Net) 4,810.46 4,103.60
(c) Other Long Term Liabilities 9,450.58 8,286.61
(d) Long - Term Provisions 431.27 581.47
25,325.79 27,827.51
(3) Current Liabilities
(a) Short - Term Borrowings 3,888.54 2,199.81
(b) Trade Payables
(A) total outstanding dues of MSME
(B) total outstanding dues of creditors other than MSME 6,587.07 8,935.65
(c) Other Current Liabilities 14,587.91 10,168.06
(d) Short - Term Provisions 1,725.52 2,397.52
26,789.04 23,701.04
TOTAL 70,470.93 67,550.64
II. ASSETS
1) Non - Current Assets
(a) Fixed Assets
(i) Tangible Assets 33,211.12 28,852.05
(ii) Intangible Assets 234.65 210.76
Page 40
(iii) Capital Work - in - Progress 1,876.94 3,474.42

(b) Non - Current Investments 6,000.06 5,867.52
(c) Long - Term Loans and Advances 1,573.40 1,429.86
(d) Other Non - Current Assets 86.03 116.55
42,982.20 39,951.16
(2) Current Assets
(a) Current Investments 4,994.62 5,378.97
(b) Inventories 12,709.12 12,972.26
(c) Trade Receivables 4,192.66 3,603.05
(d) Cash and Bank Balances 19.69 17.07
(e) Short - Term Loans and Advances 5,295.52 5,306.52
(f) Other Current Assets 277.12 321.61
27,488.73 27,599.48
TOTAL 70,470.93 67,550.64
Page 41
Cash Flow Statement

Particulars Mar'16 Mar'15
A. Cash Flow From Operating Activities
Net Profit/(Loss) before Tax & Extraordinary Items 5,738.07 4,154.12
Adjustments for :
Depreciation / Amortization 2,666.77 1,971.15
Loss/(Profit) on Sale/write off of Fixed Assets/ CWIP 19.45 (67.30)
Amortization of Foreign Currency Monetary Item 251.61 36.13
Amortization of Capital Grant (1.94) (0.55)
Spares Written off 0.41 1.06
Provision for Diminution in Value of Non-Current Investment 282.10 -
Provision for Diminution in Value of Current Investments - (605.04)
(Profit)/Loss on Sale of Current Investment 35.86 34.08
Finance Costs 640.14 706.58
Exchange Rate Difference on Loans (unrealized) 279.33 376.70
Provision for Doubtful Debts & Receivables 27.02 13.30
Bad Debts written off 9.62 -
Interest Income (379.66) (409.86)
Share of Profit from PII (0.77) (0.59)
Dividend Received (87.45) (55.09)
Operating Profit before Changes in Assets and Liabilities 9,480.56 6,154.69
(Increase) / Decrease in Assets and Liabilities :
Trade Receivables (623.46) 1,849.01
Loans and Advances and Other Assets (166.43) 5,110.20
Inventories 262.74 5,794.99
Liabilities and Other Payables (930.46) (305.65)
Sub Total - (ii) (1,457.61) 12,448.55
Cash Generated from Operations (i) + (ii) 8,022.95 18,603.24
Less : Direct Taxes / FBT refund / (paid) - Net 1,214.22 762.15
Net Cash from Operating Activities ( A ) 6,808.73 17,841.09
B. Cash Flow From Investing Activities
Purchase of Fixed Assets (4,704.59) (4,176.23)
Page 42
interest capitalized)
Sale of Fixed Assets 15.97 109.81
Purchase of Investments (296.53) (14.75)
Investment in Subsidiary (125.00) -
Sale Proceeds of Oil bonds 352.42 321.04
Loan given to Subsidiary (84.00) -
Capital refunded from PII 4.95 -
Interest received 384.09 413.71
Dividend Received 87.45 55.09
Net Cash Flow generated from / (used in) Investing Activities (B) (4,365.24) (3,291.33)
C. Cash Flow From Financing Activities
Long term Loans raised 4,988.29 4,478.58
Long term Loans repaid (6,637.80) (2,741.43)
Short term Loans raised / (repaid) 1,615.65 (14,927.14)
Capital Grant Received 13.28 -
Finance Cost paid (674.84) (764.69)
Dividend paid (1,749.18) (613.58)
Net Cash Flow generated from Financing Activities ( C ) (2,444.60) (14,568.26)
Net Increase / (Decrease) in Cash and Equivalents (1.11) (18.50)
Opening Balance of Cash and Cash Equivalents
Cash and Cash Equivalents
Cash on hand 7.81 12.58
Cheques Awaiting Deposit 1.07 0.15
With Scheduled Banks:
On Current Accounts 0.27 14.92
On Non-operative Current Accounts 0.01 0.01
Closing Balance of Cash and Cash Equivalents
Cash and Cash Equivalents 9.16 27.66
Cash on hand 7.67 7.81
Cheques Awaiting Deposit 0.12 1.07
With Scheduled Banks: 0.25 0.27
On Current Accounts 0.01 0.01
Page 43
On Non-operative Current Accounts 8.05 9.16

Net Increase / (Decrease) in Cash and Cash Equivalents (1.11) (18.50)
Page 44
Financial Ratios:
Per Share Ratios Mar-16 Mar-15 Mar-14 Mar-13 Mar-12
Basic EPS (Rs.) 114.07 80.72 51.2 26.72 26.92
Diluted EPS (Rs.) 114.07 80.72 51.2 26.72 26.92
Book Value 541.46 472.61 442.82 404.9 387.08
Dividend / Share(Rs.) 34.5 24.5 15.5 8.5 8.5
 Company’s EPS growth is dynamic for the past 4 years with a growth of more than 40% in the year
March 2016. Also, the diluted EPS is same as basic EPS, showing that the company has not issued
any convertible securities.
 Book value of the company has also increased in the last 5 years to 541.46 for the year March 2016.
 The company pays healthy dividend every year and is also increasing since last 4 years.
Profitability Ratios Mar-16 Mar-15 Mar-14 Mar-13 Mar-12
Net Profit Margin (%) 2.15 1.32 0.77 0.43 0.51
Return on Net worth / Equity (%) 21.04 17.05 11.54 6.59 6.94
Return on Capital Employed (%) 8.84 6.23 4.1 2.74 3.2
Return on Assets (%) 5.48 4.04 2.23 1.18 1.28
 The company’s profitability is increasing every year as indicated by Net profit margin, ROE, ROCE
and ROA.
 Except year March 2013, these indicators have been increasing at a good rate.
Liquidity &Solvency Ratios Mar-16 Mar-15 Mar-14 Mar-13 Mar-12
Current Ratio (X) 1.03 1.16 1.13 0.88 0.86
Quick Ratio (X) 0.55 0.62 0.59 0.5 0.41
Total Debt/Equity (X) 0.79 1.06 2.13 2.36 2.09
 Current and quick ratios of the company are below the standard and quick ratio indicates that
company does not have sufficient funds to pay for the short term obligations fully.
 Inventory ratio has been increasing consistently indicating that company’s products are sold at a
fast rate and there is not much pile up of the stocks.
Page 45
 Debt to equity ratio for the current year has dropped below one because company redeemed
debentures, repaid term loans from a couple of bank and Oil Industry Development Board.
Valuation Ratios Mar-16 Mar-15 Mar-14 Mar-13 Mar-12
Enterprise Value (Cr.) 41,133.26 39,077.61 42,396.17 41,976.32 37,531.65
EV/EBITDA (X) 4.55 5.72 6.82 7.83 7.28
Price/BV (X) 1.45 1.38 0.7 0.7 0.78
Earnings Yield 0.15 0.12 0.17 0.09 0.09
 EV of HPCL increased yoy except the year March 2015, but EV multiple is falling every year
indicating that either the company is undervalued or there are not much future prospects of the
company. Given the strong financials, growth and good business line, it is wrong to say that the
company does not have good future prospects.
 Company’s price/bv multiple has increased almost twice in last 3 years, showing good retention
rate, creating shareholder’s wealth.
Debt Coverage Ratios Mar-16 Mar-15 Mar-14 Mar-13 Mar-12
Interest Coverage Ratio 9.97 6.87 3 1.67 1.55
 HPCL’s interest coverage ratio is well above the standard ratio, indicating that the company has
sufficient profits to pay off its interest obligations, and carry on operations and dividend payments
after that. A high ICR also states that the company can take borrowed funds to increase
shareholder’s wealth.
Management Efficiency Ratios Mar-16 Mar-15 Mar-14 Mar-13 Mar-12
Inventory Turnover Ratio 15.58 16.75 12.38 12.58 9.17
Debtors Turnover Ratio 46.07 45.57 42.93 48.64 57.35
Total Assets Turnover Ratio 5.5 6.29 4.77 4.49 4.4

 Inventory ratio of HPCL is increasing except for the last year, showing that the company’s inventory
is moving and there is not much pile up of inventory.
 High debtor’s turnover ratio shows that the company realises its credit sales proceeds in short time
without long wait
 Asset turnover ratio shows how good the assets of the company are used to generate revenue. The
company has been using its assets efficiently.
Page 46
Technical Analysis
Support Support Support 1 Resistance 1 Resistance 2 Resistance 3

3 2
Fibonacci 478.76 501.05 520.39 542.03 551.7 565.46
Price Movement
HINDPETRO has closed at 515.05 as on 08-

Mar-2017 down by -12.75 or -2.42% below
Price Action DOWN previous close at 527.80.
The 1 Month Returns is -10.14% and 1 Year
Return is 105.61%
Page 47
The total volume traded on NSE is 2840638

VOLUME NUETRAL shares. The total volume is 1.41 times the 10-
Day average volume stood at 2020720 shares.
52 WEEK HIGH &
UP
LOW
MOVING Closed above Simple Moving Averages 100,50,

UP
AVERAGES Closed below Simple Moving Averages 200,15,
Relative Strength
DOWN 14-Day RSI at 44.63
Index
Average ADX is at 24.50. There is no significant Trend
NUETRAL
Directional Index for the stock
Stock is Trading Near Bollinger Band Top
Bollinger Bands BUY BB Top589.88 and BB Bottom 500.01 with
Expanding Bands.
TECHNICALLY
MACD According to MACD, stock is Technically Week
WEEK
Page 48
Angel Broking’s View about HPCL
Outlook: Positive
Outlook & Valuations:
Hindustan Petroleum Corporation Limited (HPCL) is engaged in the business of refining of
crude oil and marketing of petroleum products. It operates through two segments namely
downstream, and Exploration and Production of Hydrocarbons. HPCL has decided to experiment
with dynamic fuel pricing at its fuel retail outlets. If HPCL kicks off dynamic pricing, it could
well be a market changing phenomena where other fuel retailers may have to follow suit.
Dynamic fuel pricing is a common phenomenon internationally. The company has a 26% market
share in the fuel retailing segment and are doing well on the marketing front. The company has a
RoE 28.3% and is trading at a valuation P/E of 9.6x and P/B of 2.7x of TTM earnings which
seems to be fairly valued stock. India's biggest oil and gas producer ONGC may buy the
government's 51.11 per cent stake in HPCL and follow it up with an open offer to acquire
additional 26 per cent from other shareholders of HPCL. The deal for the 77.11 per cent stake
would be worth Rs 44,000crore or roughly around USD 6.6billion at current market prices.
ONGC acquires stake in HPCL, then the fundamentals of the company will remain the same and
will be a positive for HPCL stock. Hence we are Positive on Hindustan Petroleum Corporation
Limited.
Page 49
Analysis of Manappuram Finance

Vision
Our enduring vision is to energise the vast stock of privately held gold in India. India's
households own about 18,000 tons of gold, the equivalent of two thirds of the country's GDP, of
which hardly 10 per cent is monetised. We hope to unlock the value of this gold to the benefit of
the common people of India most of whom have savings in the form of gold jewellery.
Mission
Our purpose is to bring convenience to the lives of the ordinary people of India, to "make life
easy" for them. We provide them with "instant" credit at reasonable rates of interest against their
used gold jewellery to enable them to meet their requirements for short term funds.
About
Manappuram Finance Ltd. is one of India’s leading gold loan NBFCs. Promoted by Shri. V.P.
Nandakumar, the current MD & CEO, its origins go back to 1949 when it was founded in the
coastal village of Valapad (Thrissur District) by his late father Mr. V.C. Padmanabhan. The firm
was involved in pawn broking and money lending carried out on a modest scale. Shri
Nandakumar took over the reins in 1986 after his father expired.
Since then, it has been a story of unparalleled growth with many milestones crossed.
Incorporated in 1992, Manappuram Finance Ltd. has grown at a rapid pace. Today, it has 3,747
branches across 28 states/UTs with assets under management (AUM) of nearly Rs.13,0140
million and a workforce of 19,372.
Achievements
Soon after it commenced its operations, the company gathered several “firsts” to its credit. The
first non banking financial company (NBFC) in Kerala to receive a Certificate of Registration
issued by the RBI, it was also among the earliest to go for an IPO in 1995. In 2007, it became the
first Kerala based NBFC to receive investment from foreign institutional investors (FIIs) when
the celebrated PE fund, Sequoia Capital, invested Rs.700 million along with Hudson Equity
Holdings. Sizable foreign investment was received during two QIPS in 2010 when a total of
Rs.12,450 million was raised. Manappuram Finance Ltd. was the first NBFC in Kerala to obtain
the highest short term credit rating of A1+ from ICRA. In 2010, it became the first Kerala-based
Page 50
NBFC to offer ESOPs (Employee Stock Option Plan) to its middle and senior management
functionaries.
Page 51
REC Quarterly Results: Income Statement

Particulars Dec '16 Sep '16 Jun '16 Mar '16 Dec '15
Net Sales/Income from operations 788.45 751.5 671.53 602.5 570.89
Total Income From Operations 790.39 753.92 674 604.58 573.9
EXPENDITURE
Employees Cost 103.09 110.33 104.94 100.79 103.03
Depreciation 14.56 14.61 14.72 14.46 13.64
Admin. And Selling Expenses 7.34 17.05 10.13 10.11 14.02
Provisions And Contingencies 27.95 13.39 13.43 9.09 6.65
Other Expenses 78.86 66.22 66.22 64.86 71.79
P/L Before Other Inc. , Int., Excpt. Items & Tax 558.59 532.32 464.55 405.26 364.79
Other Income 0.32 0.87 1.37 0.6 2.08
P/L Before Int., Excpt. Items & Tax 558.91 533.2 465.92 405.87 366.87
Interest 268 259.71 234.42 215.59 216.34
P/L Before Exceptional Items & Tax 290.92 273.49 231.5 190.28 150.53
Exceptional Items -- -- -- -- --
P/L Before Tax 290.92 273.49 231.5 190.28 150.53
Tax 101.03 93.79 82.26 65.44 53.27
P/L After Tax from Ordinary Activities 189.88 179.7 149.25 124.84 97.26
Prior Year Adjustments -- -- -- -- --
Extra Ordinary Items -- -- -- -- --
Net Profit/(Loss) For the Period 189.88 179.7 149.25 124.84 97.26
Equity Share Capital 168.32 168.32 168.27 168.24 168.24
EPS Before Extra-Ordinary
Basic EPS 2.26 2.14 1.77 1.48 1.16
Diluted EPS 2.26 2.14 1.77 1.48 1.16
Page 52
Particulars Mar'16 Mar'15

EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 168.24 168.24
Total Share Capital 168.24 168.24
Reserves and Surplus 2,568.57 2,459.13
Total Reserves and Surplus 2,568.57 2,459.13
Total Shareholders’ Funds 2,736.81 2,627.37
NON-CURRENT LIABILITIES
Long Term Borrowings 1,115.13 1,550.29
Other Long Term Liabilities 123.78 109.39
Total Non-Current Liabilities 1,238.91 1,659.68
CURRENT LIABILITIES
Short Term Borrowings 6,767.24 5,299.77
Trade Payables 23.25 24.21
Other Current Liabilities 1,077.87 1,673.46
Short Term Provisions 66.79 47.69
Total Current Liabilities 7,935.16 7,045.13
Total Capital And Liabilities 11,910.88 11,332.18
ASSETS
NON-CURRENT ASSETS
Tangible Assets 186.81 167.11
Intangible Assets 3.02 4.32
Capital Work-In-Progress 0 0.88
Fixed Assets 189.83 172.32
Non-Current Investments 324.19 167.64
Deferred Tax Assets [Net] 39.08 29.62
Long Term Loans And Advances 210.05 85.83
Other Non-Current Assets 97.94 131.23
Total Non-Current Assets 861.1 586.63
CURRENT ASSETS
Current Investments 0 211.82
Cash And Cash Equivalents 491.93 682.61
Short Term Loans And Advances 10,179.07 9,269.15
OtherCurrentAssets 378.78 581.98
Total Current Assets 11,049.78 10,745.55
Page 53
Total Assets 11,910.88 11,332.18
Page 54
Financial Ratios
Per Share Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12
Basic EPS (Rs.) 4.01 3.22 2.69 2.48 7.06
Diluted EPS (Rs.) 4.01 3.22 2.69 2.48 7.03
Dividend / Share(Rs.) 1.8 1.8 1.8 1.5 1.5
 Manappuram’s EPS has been increasing since last 4 years, at good rate and is expected to reach 2012
levels in coming quarters.
 It gives stable dividend since last 3 years. The dividend is low as compared to other big NBFCs is
because the company is still in growth stage and has higher retention rate.
Profitability Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12

Net Profit Margin (%) 15.23 13.7 10.76 9.4 22.61
Return on Networth / Equity (%) 12.32 10.3 9.07 8.53 24.84
Return on Capital Employed (%) 8.48 6.31 5.35 5.4 17.06
Return on Assets (%) 2.83 2.38 2.08 1.63 4.89
 Net Profit margin of company is increasing stating that the company is doing business profitably.
 ROE of the company has also been increasing since last 4 years, increasing shareholder’s wealth.
 ROCE of the company has also increased indicating that the company is using funds profitably and
efficiently.
 ROA is increasing, though at a slower rate, indicating that the company uses its assets profitably.
Liquidity & Solvency Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12

Current Ratio (X) 1.39 1.53 1.57 1.38 1.36
Quick Ratio (X) 1.39 1.53 1.57 1.38 1.36
Total Debt/Equity (X) 2.88 2.61 2.68 3.35 3.49
Long Term Debt Equity Ratio 0.41 0.59 0.58 0.56 0.45
 Liquidity position of company appears sound with current and quick ratio above 1, but current ratio
could have been better. Company’s current and quick ratios are equal as it does not have any
inventories to maintain.
 Company’s long term debt to equity ratio is below 1, stating that company is less leveraged.
Page 55
Debt Coverage Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12

Interest Coverage Ratio 1.59 1.47 1.33 1.26 1.81
 Company generates sufficient profits to pay the interest obligations for its debt. Since the interest
coverage ratio is not high, employing borrowed funds for increasing shareholder’s wealth may not be
viable.
Valuation Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12

Enterprise Value (Cr.) 10,330.45 8,888.75 7,646.97 9,128.23 10,042.51
EV/EBITDA (X) 7.1 6.64 5.33 5.86 4.98
Price/BV (X) 1.07 1.04 0.73 0.75 1.07
 Company’s EV has increased consistently since last 4 years and its EV multiple has also increased,
indicating that company has good future prospects.
 Company’s P/BV has recovered from a slump in the year ending March 2013 and March 2014,
showing that company has implemented good retention rate.
Page 56
Technical Analysis
Support Support Support 1 Resistance 1 Resistance 2 Resistance 3

3 2
Fibonacci 84.00 89.4 92.33 97.47 101.13 105.80
Price Movement
Indicator Analysis Signal (0 - 10)
RSI is 54.6. According to RSI analysis, Manappuram is

RSI 9
technically strong.
MACD: 3.34 and Signal Line: 4.44. According to MACD
MACD 3
analysis, Manappuram is marginally weak.
Page 57
According to simple moving average analysis, Manappuram is

Simple Moving
facing resistance from its 20-day simple moving average at 3
Average
98.8575 and support level is at 85.5.
Price just got below it's 20-day exponential moving average which
is a negative signal. According to exponential moving average
Exponential
analysis, Manappuram is facing resistance from it's 20-day 2
Moving Average
exponential moving average at 96.48408 and support level is at
89.7.
%b is 0.233. According to bollinger bands, Manappuram is

Bollinger Bands 3
technically weak.
Fibonacci According to Fibonacci retracement, price is above all levels.

6.5
Retracement Major support is at 94.2636 and 90.7. Resistance level is 105.8.
Average True
ATR: 3.32 NA
Range
Average
ADX is 38.4 which meansMANAPPURAM is in a trend. NA
Directional Index
Page 58
Angel Broking’s View about Manappuram Finance
Outlook: Positive
Quarterly Financial Performance:

Particulars 3QFY17 3QFY16 YoY% 3QFY17 QoQ%
Net Interest Income (NII) 580 378 53% 543 7%
Net Interest Margins (NIM) 15.9% 14.5% 14% 15.80% 1%
Net Profit (PAT) 204 101 101% 194 5%
Net Non Performing Assets (NNPA) 2% 0.90% 1.1% 0.60% 14%
 NII up by 53% led by 38% YoY AUM growth and improvement in margins by 140bps YoY to 15.8%.
 MGFL’s cost of fund declined by 70bps YoY to 9.9% due to lower cost of fund from banks as well as
mutual fund which resulted in increase in margin.
Company scenario and Future prospects:
From FY08 to FY12, MFL gold loan AUM have grown substantial to 116bn in FY14 from 8Bn
in FY08, due to a relaxed regulatory environment and soaring gold prices. However, the
continuous drop in gold price since 2012, and announcement of stricter guidelines by the RBI
(restricting the LTV ratio to 60% and then 75%, and removing the priority sector tag for gold
loans). These guidelines were unanticipated for gold lending company, which led to a plentiful
decline in AUM and profitability.
FY12 to FY14 was a very tough period for the company but it took few notably good step to
surmount this hurdle. It seems now MFL is in the second phase of strong growth of AUM and
profitability, as they have taken steps such as a) Entered into related business to enhance
operating leverage, lessen dependence on gold loan and use excess capital (CAR-21%). (Home
loan, CV Loan & Microfinance), b) Moved to shorter tenure gold loan to de-risk himself from
gold price volatility.
On the regulatory front, everything resembles to be stable after RBI’s acceptance of the KUB
Rao Committee’s recommendation to increase the LTV to 75% makes the business viable for
gold NBFCs and actually it de-risked the business model of gold NBFCs.
AUM grew strongly by 38% YoY (1% QoQ) to Rs.14,600cr led by non gold portfolio which
resulted a increase in proportion of non gold portfolio to 16% of AUM as against 7% YoY.
Within non gold portfolio, microfinance segment grew by 5% QoQ to Rs.1650 cr despite
Page 59
demonetization impacting collection efficiency and disbursements of microfinance sector.

Management targets non gold portfolio proportion of AUM to reach 25% by FY18.
MGFL surpassed through the demonetization phase with strong operational performance and
also guided for improvement in asset quality with pending auctions getting completed by end of
FY17. With sharp improvement in return ratios and strong growth momentum to continue led by
better monsoon, we expect higher valuation multiple to sustain.
At CMP it, dividend yield is at 2.17% and consistently reporting RoE of +10%.
Valuations and Outlook:
Manappuram Finance has a RoE of 11.2% for FY16 and currently trading at a valuation of
12.67x PE and 2.64X P/BV on TTM basis. MFL management has taken various positive steps to
improve business mix and structure (AUM). Considering steady loan book growth, improving
return ratio, high dividend yield and stable regulatory environment, therefore, we have a Positive
view on Manappuram Finance Ltd.
Key risk for company in near term would be spike in NPA (Non – Performing Asset) and any
sort of government scheme to attack unaccounted gold holding.
SUGGESTIONS
Investors should invest in mutual funds by doing fundamental and technical

Analysis and investors should not buy what they don’t understand as at cab be
Creating lost to the investors
• Breakdown of neckline by head and shoulder pattern, buyers should sell the
Holding stock and minimize loss.
• For a trader it is vital to be in touch with the current happenings, news regarding
The merger, takeovers, regulations, de-regulations, quarterly results, etc.
• Don’t get emotionally attached to the stock
Page 60
• Investment should be done on a regular basis with consistency

• Always use earned saved tension free money with bigger time frame
• When a reasonable profit has already been made, one cannot overcome the greed and sell
the stock for taking the profit
• Inactivity
• Portfolio should not be empty at any point of time means; there should always be
Some cash and some stock in the portfolio at any point of time
• Times to trade–always buy good stocks in bad times and sell stocks in good times
Taking help of macros and technical.
Conclusion :
Stock market or capital market provides the industry with a lot of capital needed by the industry,
which leads to the growth of the industry and economy as a whole; hence the stock market plays
an important role in the development of the industry.
Sometimes Using Technical and fundamental analysis individually leads to incorrect results
hence both Fundamental and technical analysis should be used at a time to get the desired result.
•
F u n d a m e n t a l a n a l ys t s s t u d y e v e r yt h i n g f r o m t h e o v e r a l l e c o n o m y a n d
i n d u s t r y conditions, to the financial condition and management of companies before deciding
on any particular stock.
•
Technical analyst’s look for peaks, bottoms, trends, patterns and other factors affecting a stock's
price movement and then make buy/sell decisions based on those factors.
•
Page 61
Stock market or capital market provides the industry with a lot of capital needed by the industry,
which leads to the growth of the industry and economy as a whole; hence the stock market plays
an important role in the development of the industry.
References:
Books referred Security Analysis and Portfolio Management- Fisher and Jordan Investment Analysis
and Portfolio Management-Prasanna Chandra Websites;
-
www.rbi.com
-
www.sebi.com
-
www.bse.com
-
www.nseindia.com
-
www.icicidirect.com
-
www.equitymaster.com
-
www.moneycontrol.com
Page 62
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“FUNDAMENTAL AND TECHNICAL ANALYSIS OF STOCKS AND PERCEPTION

OF BROKING HOUSES ABOUT THEIR FUTURE PROSPECTS

Equity analysis is the systematic study of the performance of companies in

What is Fundamental Analysis?

Approaches of fundamental analysis

Steps in Fundamental Evaluation

Net Profit = (Net Profit / Net Sales) * 100

ROI = (Net Profit / Investment) * 100

= Dividend Paid / Net Profit after tax and Pref. dividend

Turnover Ratios may be also termed as Efficiency Ratios or Performance Ratios or

Taylor and Allen (1992)

Blume, Easley and O’Hara (1994)

Neely, Weller and Dittmar (1997)

What is Technical Analysis?

The Market Discounts Everything

Patterns are Fractal in Nature

SBI Line graph for one year

SBI Bar chart for 3 months

Types of Candlestick Patterns

Variants of harami candlestick patterns

Morning Star and Evening Star

Support and Resistance

An uptrend describes a market where the general direction of price is upwards. It is

characterized by the formation of a series of higher highs and higher lows.

A downtrend describes a market where the general direction of price is downwards. It is

Basic Charts and Patterns

Ascending Triangle: An ascending triangle consists of an upward slope formed by connecting

Descending Triangle: A descending triangle consists of a downward slope formed by

2. Continuation Patterns: Flag

3. Key Reversal Patterns: Double tops and Double Bottoms

5. Consolidation Patterns: Triangles

5. Consolidation Patterns: Rectangles

Analysis of Rural Electrification Corporation

REC Quarterly Results: Income Statement

PARTICULARS Dec'16 Sep' 16 Jun' 16 Mar' 16 Dec' 15

Net Sales/Income from operations 5,572.84 5,755.86 5,889.52 6,015.38 5,987.25

Other Operating Income 73.51 200.96 64.13 48.76 30.7

Total Income From Operations 5,646.35 5,956.82 5,953.65 6,064.14 6,017.95

Employees Cost 39.74 41.55 36.85 35.71 32.71

Depreciation 1.32 1.83 0.56 1.37 1.34

Provisions And Contingencies 15.33 121.42 356.53 464.39 259.06

Other Expenses 54.33 71.6 50.71 56.78 158.22

Other Income 311.4 151.73 97.08 20.33 19.5

Interest 3,373.14 3,425.48 3,553.35 3,753.53 3,706.61

P/L Before Tax 2,473.89 2,446.67 2,052.73 1,772.69 1,879.51

Tax 719.49 695.4 631.87 609.83 509.65

Prior Year Adjustments -- -- -- -2.83 --

Equity Share Capital 1,974.92 1,974.92 987.46 987.46 987.46

Basic EPS 8.88 8.87 14.39 11.75 13.87

Diluted EPS 8.88 8.87 14.39 11.75 13.87

Equity Share Capital 987.46 987.46

Long Term Borrowings 1,38,789.43 1,31,168.32

Non-Current Investments 2,317.46 1,174.81

Cash Flow Statement

8. Payment of Interim Dividend (1,184.95) (789.97)

Basic EPS (Rs.) 56.99 53.27 47.43 38.66 28.53

Diluted EPS (Rs.) 56.99 53.27 47.43 38.66 28.53

Investment Valuation Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12

Dividend Per Share 17.1 10.7 9.5 8.25 7.5

EV/EBITDA (X) 7.16 8.52 8.09 8.54 9.24

Profitability Ratios Mar'16 Mar'15 Mar'14 Mar'13 Mar'12

Net Profit Margin(%) 23.8 26 27.52 28.23 27.25

Return On Capital Employed(%) 12.85 12.29 12.42 11.87 10.84