INTERNS PROJECT

EQUITY RESEARCH

MADE BY
MAHEK B GALA

Summer Interns Project at Aditya Birla Sunlife Insurance on Equity Research

Under : Nikesh Ruparel Made by Mahek Gala

Roll No : 14

SR NO 1

Topics covered Introduction to IPO Introduction to Equity Fundamental Analysis Technical Analysis IT SECTOR and INFOSYS ETFs

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Introduction to IPO
IPO stands for Initial Public Offering.
It means the new offer of shares from a company which was previously

unlisted at the exchange.

Investors do keenly wait for an IPO as they have an opportunity to

make good money.

This is known as listing gains

(eg : the value of a stock is perceived to be Rs 100 and the shares will be offered at a price less than 100 may be 80 so the difference is the listing gains)

Details of IPO process

Step 1 :Appointment of Lead Mangers, Registrar, Underwriters and Investment Banks. Step 2 :With the help of Underwriters & Investment Banks, company decides amount of money to be raised, number and type of security to be issued and this draft document is sent to SEBI for review. Step 3 :Once the draft document is approved by SEBI, it becomes an Offer document of the IPO. Step 4 :Then, Offer document is submitted to registrar of the issue and the stock

exchange.
Step 5 :Red Herring Prospectus & IPO Application Forms are distributed to investors through syndicate members.

 Step 6 :As per the issue date, issue opens for investors bidding. Investors fill the application forms and submit to the syndicate members, Syndicate members provide the bidding information to exchange.

Step 7 :After the bidding the bid information is shared with SEBI and Exchange by the lead managers.
Step 8 :Registrar after receiving all the information finalises the pattern of allotment. Step 9 :Finally, on 12th day after issue closure date, share of the issuer company gets listed in Stock Market for trading .

Types of Trading Account

1) Offline
2) Online Software Base
Features Real Time

Web Base
Connect from anywhere

2 sec price difference from original price.

Introduction to EQUITY
A stock or any other security representing an ownership interest.
In general, you can think of equity as ownership in any asset after all

debts associated with that asset are paid off. (eg, a car or house with no outstanding debt is considered the owner's equity because he or she can readily sell the item for cash. Stocks are equity because they represent ownership in a company)
Equity is one of the asset classes in terms of investment strategies.

 What is EQUITY INVESTMENT ???

Equity investments generally refers to the buying and holding of shares of stock on a stock market by individuals and firms expecting high returns.
How to invest in Equity Shares?

Investors can buy equity shares of a company from Security market that is from Primary market or Secondary market.
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.
Equity Share of any company can be analyzed through :
Fundamental Analysis Technical Analysis

Fundamental Analysis
Fundamental analysis is a technique that attempts to determine a securitys value by focusing on underlying factors that affect a Companys actual business and its future prospects. It also involves analyzing financial statements and health, company's management and competitive advantages, and its competitors and markets.

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 serves to answer questions, such as:
Is the companys 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?

 Fundamental factors can be grouped into two categories:

Qualitative Quantitative.

Qualitative: related to or based on the quality or character of something, often

as opposed to its size or quantity.

Quantitative capable of being measured or expressed in numerical terms.

(focuses on performance ratios, working capital ratios, liquidity ratios etc.)

Technical Analysis
Technical analysis is the process of analyzing a security's historical prices in

an effort to determine probable future prices.

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.

The time frame can be based on intraday (tick, 5-minute, 15-minute or

hourly), daily, weekly or monthly price data and last a few hours or many years.

What is Chart?
A chart is a graphical representation of data in which "the data is represented

by symbols , such as bars in a bar chart, lines in a line chart, or slices in a pie chart. A chart can represent tabular numeric data, functions or some kind of qualitative structures. What are the different charts used in technical analysis ???
Line Chart

Bar Chart
Candlestick Chart

Line chart

The line chart is one of the simplest charts. It is formed by plotting one price point, usually the close, of a security over a period of time. Connecting the dots, or price points, over a period of time, creates the line.

Bar Chart

Bar chart is the most popular charting method. The high, low and close are required to form the price plot for each period of a bar chart.

Candle Stick Chart

Candlestick charts have become quite popular in recent years. For a candlestick chart, the open, high, low and close are all required. White (clear) candlesticks form when the close is higher than the open and black (solid) candlesticks form when the close is lower than the open.

IT sector
IT is one of the most important industries in the Indian economy.

India's IT industry grew from 150 million US Dollars in 1990-1991 to a whopping

50 billion UD Dollars in 2006-2007.

This growth was due to liberalization in 90s. Information technology, and the hardware and software associated with the IT

industry, are an integral part of nearly every major global industry.

Owing to its easy accessibility and the wide range of IT products available, the

demand for IT services has increased substantially over the years.

Major IT companies
Tata Consultancy Services (TCS) Infosys Wipro

Infosys
Infosys Limited (NASDAQ: INFY) was started in 1981 by seven people with

US$ 250 and the 1st Indian Co to be listed in NASDAQ.

Infosys provides business consulting, technology, engineering and outsourcing

services to help clients in over 30 countries build tomorrows enterprise with a global foot print.
Infosys gives back to the community through the Infosys Foundation that

funds learning and education.

Services : IT, business consulting and outsourcing. Total equity : US$ 6.57 billion (2012). Share Holding : 574230451 (as on 31.6.12) Retained earnings : 20,924.00 (Rs in cr as on 31.3.12)

ETFs
Exchange Traded Funds (ETFs) are mutual fund units which investors buy/

sell through a distributor or directly from the AMC.

ETFs have relatively lesser costs as compared to a mutual fund scheme.

The auhtorised participants make money by offering the buy and sell quotes.
Therefore there are huge reductions in marketing expenses and commissions.

Assets that come under ETFs

Practically any asset class can be used to create ETFs. Silver, Gold, Indices (SPDRs, Cubes, etc), etc. In India, we have ETFs on Gold, Indices such as Nifty, Bank Nifty etc.)

The way Gold ETFs work

During New Fund Offer (NFO)

AMC decides of launching G-ETF Investors give money to AMC and AMC gives units to investors in return AMC buys Gold of specified quality at the prevailing rates from investors money
On an on going basis

Authorised Participants (typically large institutional investors) give money/ Gold to AMC AMC gives equivalent number of units bundled together to these authorized participants (AP) APs split these bundled units into individual units and offer for sale in the secondary market Investors can buy G-ETF units from the secondary markets either from the quantity being sold by the APs or by other retail investors Retail investors can also sell their units in the market.

Creation Units
1 Creation Unit = 100 ETF units NAV (Rs.) = 1050 Price of 1 gm of Gold (Rs.): 1000 So, 100 Units will cost (Rs.) = 1050 * 100 = 1,05,000 100 ETF will be equal to 100 gm of Gold Therefore, value of Portfolio Deposit (Rs.) = 1000 * 100 = 1,00,000 Hence Cash Component (Rs.) = 1,05,000 1,00,000 = 5,000

Thus it can be seen by depositing Gold worth Rs 1,00,000 as Portfolio Deposit and Rs. 5,000 as Cash Component, the Authorised Participant has created 1 Creation Unit comprising of 100 ETF units.

CONCLUSION
We all have personal biases, and every analyst has some sort of bias. There is

nothing wrong with this, and the research can still be of great value.
Check the track record of an analyst before taking any decision based on his

recommendation.
Corporate statements and press releases offer good information, but they should

be read with a healthy degree of skepticism to separate the facts from the spin.
Investors should become skilled readers to weed out the important information

and ignore the hype.

Keep long term horizon for investment but book profits at the right times.
Always keep diversified investment, do not invest all your money in the same

sector or in the same company.