A PROJECT ON SYSTEMATIC RISK ANALYSIS IN AUTOMOBILE SECTOR

WITH SPECIAL REFFERENCE TO ANGEL BROKING

(Submitted in Partial Fulfillment of the Award of the Degree Of) MASTER OF BUSINESS ADMINISTRATION Submitted By MS LAKSHMI LATHA M.B.A H.T NO:

Under The Guidance Of Mrs. M.B.A (ASST.PROF) DEPARTMENT OF MANAGEMENT STUDIES RISHI UBR PG COLLEGE FOR WOMEN (AFFILIATED TO OSMANIA UNIVERSITY) HYDERABAD 2011-2013

DECLARATION

I here declare that the project report entitled SYSTEMATIC RISK ANALYSIS

IN AUTOMOBILE SECTOR has been prepared by me in partial fulfillment of

the requirements for the award of the degree of MASTER OF BUSINESS ADMINISTRATIONI also declare that this project work is a result of my effort and it has not been submitted to any other university for the award of any degree or diploma. PLACE: DATE: MS LAKSHMI LATHA

ACKNOWLEDGMENT
With a profound sense of thankfulness, I acknowledge my indebtedness to my company guide Mr.K.ANIRUDH (Finance Manager) Faculty Guide Mrs. SANJEEVA RANI M.B.A., for their valuable guidance, timely suggestions and constant encouragement. Their insightful criticisms and patience throughout the duration of this project have been instrumental in allowing this project to be completed. My sincere thanks are to the name of Director, Mr. G. SRIDHER REDDY (M.A) (P.hd)., name of HOD,SALEEMUNNISA (M.com, M.B.A) and all the staff members of Department of management studies, RISHI UBR PG COLLEGE For their consistent guidance in my project work. Their continual support and careful attention to the details involved in producing a document of this nature are very much appreciated.

MS LAKSHMI LATHA

CONTENT PAGE

CH. NO. CHAPTER -1 INTRODUCTION

PURTICULARS

PAGE NO.

NEED &IMPORTANT OF THE STUDY OBJECTIVES OF THE STUDY SCOPE OF THE STUDY RESEARCH METHODOLOGY LIMITATIONS OF THE STUDY

COMPANY PROFILE CHAPTER -2 INDUSTRY PROFILE CHAPTER -3 LETERATURE REVIEW CHAPTER-4 ANALYSIS & INTERRETATION OF THE STUDY CHAPTER -5 FINDINGS OF THE STUDY SUGGESTIONS CHAPTER-06 CONCLUSIONS BIBLIOGRAPHY

Chapter-1 INTRODUCTION

INTRODUCTION
In finance and economics, systematic risk (sometimes called aggregate risk, market risk, or undiversifiable risk) is vulnerability to events which affect aggregate outcomes such as broad market returns, total economy-wide resource holdings, or aggregate income. In many contexts, events like earthquakes and major weather catastrophes pose aggregate risksthey affect not only the distribution but also the total amount of resources. If every possible outcome of a stochastic economic process is characterized by the same aggregate result (but potentially different distributional outcomes), then the process has no aggregate risk. In finance, this concept is typically referred to as "systematic risk", but in economics it is typically referred to as "aggregate risk". The two labels describe the same concept. Systematic risk should not be confused with systemic risk, the risk of loss from some catastrophic event with potential to collapse an entire financial system. Properties of systematic risk Systematic or aggregate risk arises from market structure or dynamics which produce shocks or uncertainty faced by all agents in the market; such shocks could arise from government policy, international economic forces, or acts of nature. In contrast, idiosyncratic risk (sometimes called specific risk, unsystematic risk, residual risk, or diversifiable risk) is risk to which only specific agents or industries are vulnerable (and are uncorrelated with broad market returns). Due to the idiosyncratic nature of unsystematic risk, it can be reduced or eliminated through diversification; but since all market actors are vulnerable to systematic risk, it cannot be limited through diversification (but it may be insurable). As a result, assets whose expected returns are negatively correlated with broader market returns command higher prices than assets not possessing this property. In some cases, aggregate risk exists due to institutional or other constraints on market completeness. For countries or regions lacking access to broad hedging markets, events like earthquakes and adverse weather shocks can also act as costly aggregate risks. Robert Shiller has found that, despite the globalization progress of recent decades, country-level aggregate income risks are still significant and could potentially be reduced through the creation of better global hedging markets (thereby potentially becoming idiosyncratic, rather than

Aggregate, risks). Specifically, Shiller advocated for the creation of macro futures markets. The benefits of such a mechanism would depend on the degree to which macro conditions are correlated across countries. Systematic risk in finance Systematic risk plays an important role in portfolio allocation.[ Risk which cannot be eliminated through diversification commands returns in excess of the risk-free rate (while idiosyncratic risk does not command such returns since it can be diversified). Over the long run, a well-diversified portfolio provides returns which correspond with its exposure to systematic risk; investors face a trade-off between returns and systematic risk. Therefore, an investor's desired returns correspond with their desired exposure to systematic risk and corresponding asset selection. Investors can only reduce a portfolio's exposure to systematic risk by sacrificing returns. An important concept for evaluating an asset's exposure to systematic risk is Beta. Since Beta indicates the degree to which an asset's expected return is correlated with broader market outcomes, it is simply an indicator of an asset's vulnerability to systematic risk. Hence, the capital asset pricing model (CAPM) directly ties an asset's equilibrium price to its exposure to systematic risk. A simple example Consider an investor who purchases stock in many firms from most global industries. This investor is vulnerable to systematic risk but has diversified away the effects of idiosyncratic risks on his portfolio value; further reduction in risk would require him to acquire risk-free assets with lower returns (such as U.S. Treasury securities). On the other hand, an investor who invests all of his money in one industry whose returns are typically uncorrelated with broad market outcomes (Beta close to zero) has limited his exposure to systematic risk but, due to lack of diversification, is highly vulnerable to idiosyncratic risk.

OBJECTIVE OF THE STUDY

To measure the comparative beta analysis of selected Automobile Sector To evaluate the systematic risk analysis selected in BSE To evaluate the systematic risk between BSE returns and automobile returns To evaluate the systematic risk BSE and Automobile Stock S To evaluate the systematic risk analysis

NEED FOR THE STUDY

The study of risk management of selected banks data need for finding best returns to get for his deposits to overcome risk factors. Banks data collected information from BSE These date help in qualifying the overall potential / actual loss on account of Operational Risk and initiate measure for plugging these risk areas. Bank may suitably at a later date move to appropriate models for measuring and managing Operational Risk also after receipt of RBIs Guidance Note.

SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The project is based on tools like fundamental analysis and ratio analysis. The analysis is made by taking into consideration five companies i.e. TATA Motors, The scope is limited to only the fundamental analysis of the chosen stocks.

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METHODOLOGY
DATA COLLECTION:
Primary data for a project is the first hand information regarding the project being

studied. In this regard the primary data for this project would be getting the necessary information from the company management by an interview, telephonic conversation or direct mail.
Secondary data for a project would be the collection of information that has a

bearing on the outcome of the project from secondary sources like news, press releases, internet etc. The data collected for this project was from a secondary source. The data was complied with the help of sources like News articles, Internet, Capitoline software. In this research, primary data could not be gathered as the company officials could not be contacted for a one to one interview or a telephonic interview

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LIMITATIONS
This study has been conducted purely to understand systematic risk analysis for

investors. The study is restricted to three companies based on Fundamental analysis. The study is limited to the companies having equities. Detailed study of the topic was not possible due to limited size of the project.
Suggestions and conclusions are based on the limited data of 2012

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CHAPTER-2 Review of literature

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Investment success is pretty much a matter of careful selection and timing of stock purchases coupled with perfect matching to an individuals risk tolerance. In order to carry out selection, timing and matching actions an investor must conduct deep security analysis. Investors purchase equity shares with two basic objectives; 1. To make capital profits by selling shares at higher prices. 2. To earn dividend income. These two factors are affected by a host of factors. An investor has to carefully understand and analyze all these factors. There are basically two approaches to study security prices and valuation i.e. fundamental analysis and technical analysis . The value of common stock is determined in large measure by the performance of the firm that issued the stock. If the company is healthy and can demonstrate strength and growth, the value of the stock will increase. When values increase then prices follow and returns on an investment will increase. However, just to keep the savvy investor on their toes, the mix is complicated by the risk factors involved. Fundamental analysis examines all the dimensions of risk exposure and the probabilities of return, and merges them with broader economic analysis and greater industry analysis to formulate the valuation of a stock. In Equity Analysis, anticipated growth and calculations are based on considered FACTS & not on HOPE. Equity analysis is basically a combination of two independent analysis, namely fundamental analysis & Technical analysis. The subject of Equity analysis, i.e. the attempt to determine future share price movement & its reliability by references to historical data is a vast one, covering many aspect from the calculating various FINANCIAL RATIOS, plotting of CHARTS to extremely sophisticated indicators. A general investor can apply the principles by using the simplest of tools: pocket calculator, pencil, ruler, chart paper & your cautious mind, watchful attention. It should be pointed out that, this equity analysis does not discuss how to buy & sell shares, but does discuss a method which enables the investor to arrive at buying & selling decision

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FUNDAMENTAL ANALYSIS
Fundamental analysis is a method of forecasting the future price movements of a financial instrument based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the financial instrument. It is the study of economic, industry and company conditions in an effort to determine the value of a companys stock. Fundamental analysis typically focuses on key statistics in companys financial statements to determine if the stock price is correctly valued. The term simply refers to the analysis of the economic well-being of a financial entity as The basic philosophy underlying the fundamental analysis is that if an investor invests in

opposed to only its price movements. Fundamental analysis is the cornerstone of investing.

buying a share of a company, how much expected returns from this investment he has .The fundamental analysis is to appraise the intrinsic value of a security. It insists that no one

should purchase or sell a share on the basis of tips and rumors. The fundamental approach calls upon the investors to make his buy or sell decision on the basis of a detailed analysis of the information about the company, about the industry, and the economy. It is also known as top-down approach. This approach attempts to study the economic scenario, industry position and the company expectations and is also known as economic-industry-company approach (EIC approach) Thus the EIC approach involves three steps: 1. Economic analysis 2. Industry analysis 3. Company analysis

ANALYSIS 2. INDUSTRY ANALYSIS 3. COMPANY ANALYSIS

1.ECONOMIC

ECONOMIC ANALYSIS
The level of economic activity has an impact on investment in many ways. If the economy grows rapidly, the industry can also be expected to show rapid growth and vice versa. When the level of economic activity is low, stock prices are low, and when the level of economic activity is high, stock prices are high reflecting the prosperous outlook for sales and profits of
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the firms. The analysis of macroeconomic environment is essential to understand the behavior of the stock prices. The commonly analyzed macro economic factors are as follows:
1. Gross Domestic Product (GDP): GDP indicates the rate of growth of the economy.

It represents the aggregate value of the goods and services produced in the economy. It consists of personal consumption expenditure, gross private domestic investment and government expenditure on goods and services and net exports of goods and services. The growth rate of economy points out the prospects for the industrial sector and the return investors can expect from investment in shares. The higher growth rate is more favorable to the stock market.
2. Savings and investment: It is obvious that growth requires investment which in turn

requires substantial amount of domestic savings. Stock market is a channel through which the savings are made available to the corporate bodies. Savings are distributed over various assets like equity shares, deposits, mutual funds, real estate and bullion. The savings and investment patterns of the public affect the stock to a great extent.
3. Inflation: Along with the growth of GDP, if the inflation rate also increases, then the

real growth would be very little. The effects of inflation on capital markets are numerous. An increase in the expected rate of inflation is expected to cause a nominal rise in interest rates. Also, it increases uncertainty of future business and investment decisions. As inflation increases, it results in extra costs to businesses, thereby squeezing their profit margins and leading to real declines in profitability.
4. Interest rates: The interest rate affects the cost of financing to the firms. A decrease

in interest rate implies lower cost of finance for firms and more profitability. More money is available at a lower interest rate for the brokers who are doing business with borrowed money. Availability of cheap funds encourages speculation and rise in the price of shares.
5. Tax structure: Every year in March, the business community eagerly awaits the

Governments announcement regarding the tax policy. Concessions and incentives given to a certain industry encourage investment in that particular industry. Tax reliefs given to savings encourage savings. The type of tax exemption has impact on the profitability of the industries.
6. Infrastructure facilities: Infrastructure facilities are essential for the growth of

industrial and agricultural sector. A wide network of communication system is a must

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for the growth of the economy. Regular supply of power without any power cut would boost the production. Banking and financial sectors also should be sound enough to provide adequate support to the industry. Good infrastructure facilities affect the stock market favorably.

INDUSTRY ANALYSIS
An industry is a group of firms that have similar technological structure of production and produce similar products and Industry analysis is a type of business research that focuses on the status of an industry or an industrial sector (a broad industry classification, like "manufacturing"). Irrespective of specific economic situations, some industries might be expected to perform better, and share prices in these industries may not decline as much as in other industries. This identification of economic and industry specific factors influencing share prices will help investors to identify the shares that fit individual expectations.

Industry Life Cycle: The industry life cycle theory is generally attributed to Julius
Groden sky. The life cycle of the industry is separated into four well defined stages.

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I.

Pioneering stage: The prospective demand for the product is promising in this stage and the technology of the product is low. The demand for the product attracts many producers to produce the particular product. There would be severe competition and only fittest companies survive this stage. The producers try to develop brand name, differentiate the product and create a product image. In this situation, it is difficult to select companies for investment because the survival rate is unknown.

II.

Rapid growth stage: This stage starts with the appearance of surviving firms from the pioneering stage. The companies that have withstood the competition grow strongly in market share and financial performance. The technology of the production would have improved resulting in low cost of production and good quality products. The companies have stable growth rate in this stage and they declare dividend to the shareholders. It is advisable to invest in the shares of these companies.

III.

Maturity and stabilization stage: the growth rate tends to moderate and the rate of growth would be more or less equal to the industrial growth rate or the gross domestic product growth rate. Symptoms of obsolescence may appear in the technology. To keep going, technological innovations in the production process and products should be introduced. The investors have to closely monitor the events that take place in the maturity stage of the industry.

IV.

Decline stage: demand for the particular product and the earnings of the companies in the industry decline. It is better to avoid investing in the shares of the low growth industry even in the boom period. Investment in the shares of these types of companies leads to erosion of capital.

Growth of the industry: The historical performance of the industry in terms of growth
and profitability should be analyzed. The past variability in return and growth in reaction to macro economic factors provide an insight into the future.

Nature of competition: Nature of competition is an essential factor that determines the

demand for the particular product, its profitability and the price of the concerned company scrips. The companies' ability to withstand the local as well as the multinational competition counts much. If too many firms are present in the organized sector, the competition would be severe. The competition would lead to a decline in the price of the product. The investor
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before investing in the scrip of a company should analyze the market share of the particular company's product and should compare it with the top five companies.

SWOT analysis: SWOT analysis represents the strength, weakness, opportunity and
threat for an industry. Every investor should carry out a SWOT analysis for the chosen industry. Take for instance, increase in demand for the industrys product becomes its strength, presence of numerous players in the market, i.e. competition becomes the threat to a particular company. The progress in R & D in that industry is an opportunity and entry of multinationals in the industry is a threat. In this way the factors are to be arranged and analyzed.

3. COMPANY ANALYSIS
In the company analysis the investor assimilates the several bits of information related to the company and evaluates the present and future values of the stock. The risk and return associated with the purchase of the stock is analyzed to take better investment decisions. The present and future values are affected by a number of factors.
A. Competitive edge of the company: Major industries in India are composed of

hundreds of individual companies. Though the number of companies is large, only few companies control the major market share. The competitiveness of the company can be studied with the help of the following.
B. Market share: The market share of the annual sales helps to determine a companys

relative competitive position within the industry. If the market share is high, the company would be able to meet the competition successfully. The companies in the market should be compared with like product groups otherwise, the results will be misleading.
C. Growth of sales: The rapid growth in sales would keep the shareholder in a better

position than one with stagnant growth rate. Investors generally prefer size and growth in sales because the larger size companies may be able to withstand the business cycle rather than the company of smaller size.
D. Stability of sales: If a firm has stable sales revenue, it will have more stable earnings.

The fall in the market share indicates the declining trend of company, even if the sales are stable. Hence the stability of sales should be compared with its market share and the competitors market share.
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E. Earnings of the company: Sales alone do not increase the earnings but the costs and

expenses of the company also influence the earnings. Further, earnings do not always increase with increase in sales. The companys sales might have increased but its earnings per share may decline due to rise in costs. Hence, the investor should not only depend on the sales, but should analyze the earnings of the company.

Financial analysis: The best source of financial information about a company is its own
financial statements. This is a primary source of information for evaluating the investment prospects in the particular companys stock. Financial statement analysis is the study of a companys financial statement from various viewpoints. The statement gives the historical and current information about the companys operations. Historical financial statement helps to predict the future and the current information aids to analyze the present status of the company. The two main statements used in the analysis are Balance sheet and Profit and Loss Account. The balance sheet is one of the financial statements that companies prepare every year for their shareholders. It is like a financial snapshot, the company's financial situation at a moment in time. It is prepared at the year end, listing the company's current assets and liabilities. It helps to study the capital structure of the company. It is better for the investor to avoid a company with excessive debt component in its capital structure. From the balance sheet, liquidity position of the company can also be assessed with the information on current assets and current liabilities.

Ratio analysis: Ratio is a relationship between two figures expressed mathematically.

Financial ratios provide numerical relationship between two relevant financial data. Financial ratios are calculated from the balance sheet and profit and loss account. The relationship can be either expressed as a percent or as a quotient. Ratios summarize the data for easy understanding, comparison and interpretations. Ratios for investment purposes can be classified into profitability ratios, turnover ratios, and leverage ratios. Profitability ratios are the most popular ratios since investors prefer to measure the present profit performance and use this information to forecast the future strength of the company. The most often used profitability ratios are return on assets, price earnings multiplier, price to book value, price to cash flow, and price to sales, dividend yield, return on equity, present value of cash flows, and profit margins.

a) Return on Assets (ROA)

ROA is computed as the product of the net profit margin and the total asset turnover ratios.
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ROA = (Net Profit/Total income) x (Total income/Total Assets) This ratio indicates the firm's strategic success. Companies can have one of two strategies: cost leadership, or product differentiation. ROA should be rising or keeping pace with the company's competitors if the company is successfully pursuing either of these strategies, but how ROA rises will depend on the company's strategy. ROA should rise with a successful cost leadership strategy because the companys increasing operating efficiency. An example is an increasing, total asset, turnover ratio as the company expands into new markets, increasing its market share. The company may achieve leadership by using its assets more efficiently. With a successful product differentiation strategy, ROA will rise because of a rising profit margin.

b) Return on Investment (ROI)

ROI is the return on capital invested in business, i.e., if an investment Rs 1 crore in men, machines, land and material is made to generate Rs. 25 lakhs of net profit, then the ROI is 25%. The computation of return on investment is as follows: Return on Investment (ROI) = (Net profit/Equity investments) x 100 As this ratio reveals how well the resources of a firm are being used, higher the ratio, better are the results. The return on shareholders investment should be compared with the return of other similar firms in the same industry. The inert-firm comparison of this ratio determines whether the investments in the firm are attractive or not as the investors would like to invest only where the return is higher.

c) Return on Equity
Return on equity measures how much an equity shareholder's investment is actually earning. The return on equity tells the investor how much the invested rupee is earning from the company. The higher the number, the better is the performance of the company and suggests the usefulness of the projects the company has invested in. The computation of return on equity is as follows: Return on equity = (Net profit to owners/value of the specific owner's Contribution to the business) x 100 The ratio is more meaningful to the equity shareholders who are invested to know profits earned by the company and those profits which can be made available to pay dividend to them.

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d) Earnings per Share (EPS)

This ratio determines what the company is earning for every share. For many investors, earnings are the most important tool. EPS is calculated by dividing the earnings (net profit) by the total number of equity shares. The computation of EPS is as follows: Earnings per share = Net profit/Number of shares outstanding The EPS is a good measure of profitability and when compared with EPS of similar other companies, it gives a view of the comparative earnings or earnings power of a firm. EPS calculated for a number of years indicates whether or not earning power of the company has increased.

e) Dividend per Share (DPS)

The extent of payment of dividend to the shareholders is measured in the form of dividend per share. The dividend per share gives the amount of cash flow from the company to the owners and is calculated as follows: Dividend per share = Total dividend payment / Number of shares outstanding The payment of dividend can have several interpretations to the shareholder. The distribution of dividend could be thought of as the distribution of excess profits/abnormal profits by the company. On the other hand, it could also be negatively interpreted as lack of investment opportunities. In all, dividend payout gives the extent of inflows to the shareholders from the company.

f) Dividend Payout Ratio

From the profits of each company a cash flow called dividend is distributed among its shareholders. This is the continuous stream of cash flow to the owners of shares, apart from the price differentials (capital gains) in the market. The return to the shareholders, in the form of dividend, out of the company's profit is measured through the payout ratio. The payout ratio is computed as follows: Payout Ratio = (Dividend per share / Earnings per share) * 100 The percentage of payout ratio can also be used to compute the percentage of retained earnings. The profits available for distribution are either paid as dividends or retained internally for business growth opportunities. Hence, when dividends are not declared, the entire profit is ploughed back into the business for its future investments.

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g) Dividend Yield
Dividend yield is computed by relating the dividend per share to the market price of the share. The market place provides opportunities for the investor to buy the company's share at any point of time. The price at which the share has been bought from the market is the actual cost of the investment to the shareholder. The market price is to be taken as the cum-dividend price. Dividend yield relates the actual cost to the cash flows received from the company. The computation of dividend yield is as follows Dividend yield = (Dividend per share / Market price per share) * 100 High dividend yield ratios are usually interpreted as undervalued companies in the market. The market price is a measure of future discounted values, while the dividend per share is the present return from the investment. Hence, a high dividend yield implies that the share has been under priced in the market. On the other hand a low dividend yield need not be interpreted as overvaluation of shares. A company that does not pay out dividends will not have a dividend yield and the real measure of the market price will be in terms of earnings per share and not through the dividend payments.

h) Price/Earnings Ratio (P/E)

The P/E multiplier or the price earnings ratio relates the current market price of the share to the earnings per share. This is computed as follows: Price/earnings ratio = Current market price / Earnings per share This ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company. Many investors prefer to buy the company's shares at a low P/E ratio since the general interpretation is that the market is undervaluing the share and there will be a correction in the market price sooner or later. A very high P/E ratio on the other hand implies that the company's shares are overvalued and the investor can benefit by selling the shares at this high market price.

i) Debt-to-Equity Ratio
Debt-Equity ratio is used to measure the claims of outsiders and the owners against the firms assets. Debt-to-equity ratio = Outsiders Funds / Shareholders Funds The debt-equity ratio is calculated to measure the extent to which debt financing has been used in a business. It indicates the proportionate claims of owners and the outsiders against
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the firms assets. The purpose is to get an idea of the cushion available to outsiders on the liquidation of the firm.

Technical analysis:
Technical analysis refers to the study of market generated data like prices and volume to determine the future direction of prices movements. Technical analysis mainly seeks to predict the short-term price travels. It is important criteria for selecting the company to invest. It also provides the base for decision-making in investment. It is one of the most frequently used yardstick to check and analyze underlying price progress. For that matter a variety of tools are used. The Technical analysis is helpful to general investor in many ways. It provides important & vital information regarding the current price position of the company. Technical analysis involves the use of various methods for charting, calculating and interpreting graph & chart to assess the performances & status of the price. It is the tool of financial analysis, which not only studies but also reflecting the numerical & graphical relationship between the important financial factors. The focus of technical analysis is mainly on the internal market data, i.e. prices & volume data. It appeals mainly to short term traders. It is the oldest approach to equity investment dating back to the late 19th century.

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CHAPTER-3 INDUSTRY PROFILE&COMPANY PROFILE

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INDUSTRY PROFILE
India is a developing country. Nowadays many people are interested to invest in financial markets especially on equities to get high returns, and to save tax in honest way. Equities are playing a major role in contribution of capital to the business from the beginning. Since the introduction of shares concept, large numbers of investors are showing interest to invest in stock market. In an industry plagued with skepticism and a stock market increasingly difficult to predict and contend with, if one looks hard enough there may still be a genuine aid for the The automotive industry in India is one of the largest in the world and one of the fastest growing globally. India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 5 million by 2015 and more than 9 million by 2020. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads. The majority of India's car manufacturing industry is based around three clusters in the south, west and north. The southern cluster near Chennai is the biggest with 35% of the revenue share. The western hub near Maharashtra is 33% of the market. The northern cluster is primarily Haryana with 32%. Chennai, is also referred to as the "Detroit of India with the India operations of Ford, Hyundai, Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. Chennai accounts for 60% of the country's automotive exports. Gurgaon and Manesar in Haryana form the northern cluster where the country's largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor near Pune, Maharashtra is Maruti Suzuki the western cluster are with also companies set to like General up in Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, . Ford, and Peugeot-Citroen plants
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come

Gujarat. Kolkata with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country The price of a security represents a consensus. It is the price at which one person agrees to buy and another agrees to sell. The price at which an investor is willing to buy or sell depends primarily on his expectations. If he expects the security's price to rise, he will buy it; if the investor expects the price to fall, he will sell it. These simple statements are the cause of a major challenge in forecasting security prices, because they refer to human expectations. As we all know firsthand, humans expectations are neither easily quantifiable nor predictable. If prices are based on investor expectations, then knowing what a security should sell for (i.e., fundamental analysis) becomes less important than knowing what other investors expect it to sell for. That's not to say that knowing what a security should sell for isn't important--it is. But there is usually a fairly strong consensus of a stock's future earnings that the average investor cannot disprove Fundamental analysis and technical analysis can co-exist in peace and complement each other. Since all the investors in the stock market want to make the maximum profits possible, they just cannot afford to ignore either fundamental or technical analysis.

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INDIAN AUTOMOBILE INDUSTRY

Indian automobile industry has demonstrated a phenomenal growth to this day. Today, the Indian automobile industry presents a galaxy of varieties and models meeting all possible expectations and globally established industry standards. Some of the leading names echoing in the Indian automobile industry include Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Hyundai Motors, Hero Honda and Hindustan Motors in addition to a number of others. During the early stages of its development, Indian automobile industry heavily depended on foreign technologies. However, over the years, the manufacturers in India have started using their own technology evolved in the native soil. The thriving market place in the country has attracted a number of automobile manufacturers including some of the reputed global leaders to set their foot in the soil looking forward to enhance their profile and prospects to new heights. Following a temporary setback on account of the global economic recession, the Indian automobile market has once again picked up a remarkable momentum witnessing a buoyant sale for the first time in its history in the month of September 2009. The automobile sector of India is the seventh largest in the world. In a year, the country manufactures about 2.6 million cars making up an identifiable chunk in the worlds annual production of about 73 million cars in a year. The country is the largest manufacturer of motorcycles and the fifth largest producer of commercial vehicles. Industry experts have visualized an unbelievably huge increase in these figures over the immediate future. The figures published by the Asia Economic Institute indicate that the Indian automobile sector is set to emerge as the global leader by 2012. In the year 2009, India rose to be the fourth largest exporter of automobiles following Japan, South Korea and Thailand. Experts state that in the year 2050, India will top the car volumes of all the nations of the world with about 611 million cars running on its roads. At present, about 75 percent of Indias automobile industry is made up by small cars, with the figure ranking the nation on top of any other country on the globe. Over the next two or three years, the country is expecting the arrival of more than a dozen new brands making compact car models. Recently, the automotive giants of India including General Motors (GM), Volkswagen, Honda, and Hyundai, have declared significant expansion plans. On account of its huge market potential, a very low base of car ownership in the country estimated at about 25 per 1,000 people, and a rapidly surging economy, the nation is firmly set on its way to
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become an outsourcing platform for a number of global auto companies. Some of the upcoming cars in the India soil comprise Maruti A-Star (Suzuki), Maruti Splash (Suzuki), VW Up and VW Polo (Volkswagen), Bajaj small car (Bajai Auto), Jazz (Honda) and Cobalt, Aveo (GM) in addition to several others.

History of the Automobile industry in India

The economic liberalization that dawned in India in the year 1991 has succeeded in bringing about a sustained growth in the automotive production sector triggered by enhanced competitiveness and relaxed restrictions prevailing in the Indian soil. A number of Indian automobile manufacturers including Tata Motors, Maruti Suzuki and Mahindra and Mahindra, have dramatically expanded both their domestic and international operations. The countrys active economic growth has paved a solid road to the further expansion of its domestic automobile market. This segment has in fact invited a huge amount of India-specific investment by a number of multinational automobile manufacturers. As a significant milestone in its progress, the monthly sales of passenger cars in India exceeded 100,000 units in February 2009. The beginnings of automotive industry in India can be traced during 1940s. After the nation became independent in the year 1947, the Indian Government and the private sector launched their efforts to establish an automotive component manufacturing industry to meet the needs of the automobile industry. The growth of this segment was however not so encouraging in the initial stage and through the 1950s and 1960s on account of nationalization combined with the license raj that was hampering the private sector in the country. However, the period that followed 1970s, witnessed a sizeable growth contributed by tractors, scooters and commercial vehicles. Even till those days, cars were something of a sort of a major luxury. Eventually, the country saw the entry of Japanese manufacturers establishing Maruti Udyog. During the period that followed, several foreign based companies started joint ventures with Indian companies. During 1980s, several Japanese manufacturers started joint-ventures for
29

manufacturing motorcycles and light commercial-vehicles. After this, automotive component and automobile manufacturing growth remarkably speed-up to meet the demands of domestic and export needs. Experts have an opinion that during the early stages the policies and the treatment by the Indian government were not favorable to the development of the automobile industry. However, the liberalization policy and various tax reliefs announced by the Indian government over the recent past have pronounced a significantly encouraging impact on this industry segment. Estimates reveal that owing to several boosting factors, Indian automobile industry has been growing at a pace of about 18% per year. Therefore, global automobile giants like Volvo, General Motors and Ford have started looking at India as a prospective hot destination to establish and expand their operations. Like many other nations Indias highly developed transportation system has played a very important role in the development of the countrys economy over the past to this day. One can say that the automobile industry in the country has occupied a solid space in the platform of Indian economy. Empowered by its present growth, today the automobile industry in the country can produce a diverse range of vehicles under three broad categories namely cars, two-wheelers and heavy vehicles.

Exports of Automobile Industry

Today, India is among the worlds largest producers of small cars. The New York Times has rated India as a very strong engineering base with an incomparable expertise in the arena of manufacturing a number of low-cost, fuel-efficient cars has encouraged the expansion plans of the manufacturing facilities of a number of automobile leaders like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki.

30

On 22 February 2010, Hyundai motors exported its 10,00,000th car, the feat which was achieved by the firm in just over 10 years. Hyundai Motors is the largest passenger car exporter and the second largest car manufacturer in the country. In the similar lines, General Motors has announced its plans to export not less than 50,000 cars made in India by the year 2011. In yet another proposal, Ford Motors is to setup a manufacturing facility costing about US$500 million in India with an annual capacity of 250,000 cars. The firm has stated that the facility will play a major part in its strategic plan to make India a hub for its global production business. In yet another significant move, Fiat motors has stated that it will source a big volume of auto components from India worth about US$1 billion. In the year 2009, India overtook China by emerging as the fourth largest exporter of cars in Asia.

VARIOUS SEGMENTS OF THE INDIAN AUTOMOBILE INDUSTRY

Motor cycles manufacture makes up the major share in the twowheeler segment of the Indian automobile industry. About 50% of the motorcylcles are manufactured by Hero Honda. While Honda manufactures about 46% of the scooters, TVS produces 82% of the mopeds running on the Indian roads. About 40% of the three-wheelers manufactured in India are used for transporting goods with Piaggio manufacturing 40% of the vehicles sold in the Indian market. On the other hand, Bajaj has emerged as the leader in manufacturing three-wheelers used for passenger transport. The firm produces about 68% percent of the three wheelers used for passenger transport in India. The Indian passenger vehicle segment is dominated by cars which make up about 80% of it. Maruti Suzuki manufactures about 52% of passenger cars while the firm enjoys a complete monopoly in the manufacture of multi-purpose vehicles. In the utility vehicles segment Mahindra makes up a 42% share. Tata Motors is the leader in the Indian commercial vehicles market while it holds more than 60% share. Tata Motors also enjoys the credit of being the worlds fifth largest manufacturer of medium and heavy commercial vehicles.
31

POTENTIAL OF INDIAN AUTOMOBILE INDUSTRY

There is a very stiff competition in the automobile industry segment in India. This has helped many to realize their dreams of driving the most luxurious cars. During the recent past, a number of overseas companies have started grabbing a big chunk of the market share in both domestic and export sales. Every new day dawns in India with some new launches by active players in the Indian automobile arena. By introducing some low cost cars, the industry had made it possible for common men to buy cars for their personal use. With some innovative strategies and by adopting some alternative remedial measures, the Indian automobile industry has successfully come unaffected out of the global financial crisis. While the automobile industry in India is the ninth largest in the world, the country emerged as the fourth largest automobiles exporter on the globe following Japan, South Korea and Thailand, in the year 2009. Over and above, a number of automobile manufacturers based in India have expanded their operations around the globe also giving way for a number of reputed MNCs to enthusiastically invest in the Indian automobile sector. Nissan Motors has revealed its prospective plans to export 250,000 vehicles produced in its India plant by the year 2011. General Motors has also come up with similar plans. During the current fiscal year, the Indian automobile industry rode high on the resurgence of consumer demand in the country as a result of the Governments fiscal stimulus and attractively low interest rates. As a result the total turnover of the domestic automobile industry increased by about 27 per cent. A reply produced in the Lok Sabha recently has quoted data from the Society of Indian Automobile Manufacturers and has revealed that the total turnover of the Indian automobile Industry in April-February 2009-10 was 1,62,708.77 crore. This is a remarkable achievement compared with the total revenue of Rs 1,28,384.53 crore reported during the same period of last fiscal year. Specifically, the segment of commercial vehicles witnessed the biggest jump in revenues by 31 per cent by reporting Rs 38,845.09 crore. During the same period, the passenger vehicle segment in the country witnessed a growth of 27 per cent over the last fiscal year by reporting a total revenue of Rs 76,545.96 crores. These figures imply a highly prospective road lying immediately ahead of the Indian automobile industry.

32

Predictions made by Ernst and Young have estimated that the Indian passenger car market will have a growth rate of about 12 percent per annum over the next five years to reach the production of 3.75 million units by the year 2014. The analysts have further stated that the industrys turnover will touch $155 billion by 2016. This achievement will succeed in consolidating Indias position as the seventh largest automobiles manufacturer on the globe, eventually surging forth to become the third largest by the year 2030 behind China and the US. The Automotive Mission Plan launched by the Indian government has envisaged that the country will emerge as the seventh largest car maker on the globe thereby contributing more than 10 percent to the nations $1.2-trillion economy. Further, industry experts believe that the nation will soon establish its stand as an automobile hub exporting about 2.75 million units and selling about a million units to be operated on the domestic roads.

33

COMPANY PROFILE
History & development
Angel Broking is the retail broking arm of SSKI, an organization with more than eight decades of trust & credibility in the stock market. It is India's leading retail financial Services Company with We have over 250 share shops across 115 cities in India. While our size and strong balance sheet allow us to provide you with varied products and services at very attractive prices, our over 750 Client Relationship Managers are dedicated to serving your unique needs. Angel Broking is lead by a highly regarded management team that has invested crores of rupees into a world class Infrastructure that provides our clients with real-time service & 24/7 access to all information and products.

Our flagship Angel Broking Professional Network offers real-time prices, detailed data and news, intelligent analytics, and electronic trading capabilities, right at your fingertips. This powerful technology complemented by our knowledgeable and customer focused Relationship Managers. We are creating a world of Smart Investor. Angel Broking offers a full range of financial services and products ranging from Equities to Derivatives enhance your wealth and hence, achieve your financial goals. Angel Broking' Client Relationship Managers are available to you to help with your financial planning and investment needs. To provide the highest possible quality of service, Angel Broking provides full access products and services through multi-channels. to all our

In a shot span of 22 years since inception, the Angel Group has emerged as one of the top five retail stock broking houses in India, having membership of BSE, NSE and the two leading Commodity Exchanges in the country i.e. NCDEX & MCX. Angel Broking is also registered as a Depository Participant with CDSL.

34

General information
Angel Broking's tryst with excellence in customer relations began in 1987. Today, Angel has emerged as one of the most respected Stock-Broking and Wealth Management Companies in India. With its unique retail-focused stock trading business model, Angel is committed to providing Real Value for Money to all its clients.
The group is promoted by Mr. Dinesh Thakkar, who started this business as a sub-broker in 1987 with a team of 3. Today the angel group is managed by a team of 1937 direct employees and has a nationwide network comprising of 21 Regional hubs, 124 branches and 6810 sub brokers & business associates. Angel is 100% focused on retail stock broking business unlike any other larger national broking house. The group currently services more than 5.9 thousand retail clients. Angel Bookings meeting with excellence in customer relations began more than 20 years ago. Angel Group has emerged as one of the top 3 retail broking houses in India and incorporated in 1987. It has memberships on BSE, NSE and the leading commodity exchanges in India NCDEX & MCX. Angel is also registered as a depository participant with CDSL.

Rashmi Investments
It is a channel partner of Angel broking, it was started in the year 2009 (Oct 1 st) as a one men business, by three young and energetic persons but business was register under the name of Ajith sing. Initially it has 10 clients with trading worth of Rs 10 lakhs. but today Rashmi is grown as a part of angel with 510 clients with the turnover of Rs 7 crores. The success of any business depend on the key persons of the organization, here also the four people day and night work for the development of Rashmi. They are Mr Ajith sing: - Proprietor and authorized sub broker of Angel Mr vivek: Mr Ram: Miss Sunitha: Business development officer commodity market analyst and specialist in future andoption customer relationship officer

35

Today Rashmi investment has sufficient clients even though it focuses on customer acquisition and building the good relationship with the present clients. Rashmi is not preparing any trading tips for its client, but it circulates the tips to its customer which is given by angel. One of the other strategy adopted by Rashmi is giving education about the equity and commodity market to its customer. Every week end it call a meeting with its clients and share all the new things which is happening in market.
The Rashmi invest is a growing firm, now it work with Angel as a partner but it has its own vision and mission. I hope it will reach its goal as soon as because all employees in the organization work in coordinated manner and Rashmi is able to create it own name in their field within a short span

of time.

Angels presence
Nation- wide network of 21 regional hubs Presence 124 cities 6800 + sub brokers & business associates 5.9 lakh + clients

Angel group companies

Angel Broking Ltd. Member on the BSE and Depository Participant with CDSL

Angel Capital & Debt Market Ltd.

Membership on the NSE Cash and Futures & Options Segment

Angel Commodities Broking Ltd. Angel Securities Ltd.

Member on the NCDEX & MCX Member on the BSE

ANGELS BUSINESS

36

MANAGEMENT TEAM
SR. NO Name Mr. Dinesh Thakkar Mr. Lalit Thakkar Mr. Amit Majumdar Mr. Rajiv Phadke Mr. Vinay Agrawal Mr. Nikhil Daxini Mr. Hitungshu Debnath Mr. Mudit Kulshreshtha Designation & Department Founder Chairman & Managing Director Director Research Executive Director Strategy and Finance Executive Director HR & Corp Executive Director Equity Broking Executive Director - Sales and Marketing Executive Director - Distribution & Wealth Management Executive Director Operations

1 2 3 4 5 6 7 8

MILESTONES
October, 2009 Major Volume Driver Award by BSE for 2008-09

37

May, 2009

Wins Award for Broking House with Largest Distribution Network & Best Retail Broking House

August, 2008 November, 2007 December, 2006 September, 2006 July, 2006 October, 2006 October, 2005 September, 2004 April, 2004 April, 2003 November, 2002 March, 2002 November, 1998 December, 1997

Crossed 500000 trading accounts Major Volume Driver for 2007 Created 2500 business associates Launched Mutual Fund and IPO business Launched the PMS function Major Volume Driver award for 2006 Major Volume Driver award for 2005 Launched Online Trading Platform Initiated Commodities Broking division First published research report Angels first investor seminar Developed web-enabled back office software Angel Capital and Debt Market Ltd. Incorporated Angel Broking Ltd. Incorporated

ANGELS LOGO, VISION

38

39

ANGELS ORGANIZATIONAL STRUCTURE

Products of angel broking

40

Online- trading

Specially designed for the net know-how traders and investors who prefer operating from their home or office through the internet. The investor can access state of the art technology via trading on BSE, NSE, F & O, MCX and NCDEX through 3 unique e-trading softwares.

Features of Online trading at Angel

speed. Competitive brokerage rates Optimum margins Online fund transfer Personalized service Off line services Technology. Back office infrastructure E contract notes cum bills Multiple exchange on a single screen Investor use the latest technology to generate efficient uptime and greater stability to gain high

Commodities

A commodity is a basic good representing a monetary value. Commodities are most often used as inputs in the production of other goods or services. With the advent of new online exchange, 41

commodities can now be traded in futures markets. When they are traded on an exchange, Commodities must also meet specified minimum standards known as basic grade. Types of Commodities Precious Metals : Gold and Silver Base Metals Energy Pulses Spices Others : Copper, Zinc , Steel and Aluminum : Crude Oil, Brent Crude and Natural Gas : Chana , Urad and Tur : Black Pepper, Jeera, Turmeric , Red Chili : Guar Complex, Soy Complex, Wheat and Sugar

Benefits at Angel Three different online products tailored for traders & investors. Single Screen customized market-watch for MCX / NCDEX with BSE / NSE. Streaming Quotes and real time Rates. Intra-day trading calls. Research on 25 Agro Commodities, Precious and Base Metals, Energy products and Polymers. An array of daily, weekly and special research reports. Highly skilled analysts with professional industry experience.

Active relationship management desk. Seminars, workshops and investment camps for investors

commodities services
Agro Tech Speak : Mainly gives the investors insight into and a forecast for agro commodities viz. pulses (urad, channa etc); reports on oil complex (soybeans castor etc.) along with spices with reports on kapas guar seed.

Call Evaluation : A report designed for evaluating the calls given by the angel research team

where the reports are classified in 3 broad categories viz. achieved, triumph, not achieved along with the trade recommendations.

Commodities Tech Speak : This report mainly equips the investors dealing in MCX segment

in commodities like gold, silver, crude oil, copper etc with the market insight and expert recommendation on the trading strategies

Angel commodity advantages

42

 Top Quality Research

Professionally qualified analysts with rich industry experience Research on 25 agro commodities, precious metals, base metals, energy products and polymers E-Broking Single screen customized market watch for MCX / NCDEX with BSE / NSE Streaming quotes and intraday calls DP Facilities in Commodities Trading on CDSL 24x7 Online Back-office Efficient Risk Management Competitive Brokerage Rates

Depositary participant services

Angel Broking Ltd. is a DP services provider though CDSL. They offer depository services to create a seamless transaction platform to execute trades through Angel group of companies and settle these transactions through Angel Depository services.

Portfolio management services

Successful investing in Capital Markets demands ever more time and expertise. Investment Management is an art and a science in itself. Portfolio Management Services (PMS) is one such service that is fast gaining eminence as an investment avenue of choice for High Net worth Investors (HNI). PMS is a sophisticated investment vehicle that offers a range of specialized investment strategies to capitalize on opportunities in 43

the market. The Portfolio Management Service combined with competent fund management, dedicated research and technology, ensures a rewarding experience for its clients. Angel PMS brings with it years of experience, expertise, research and the backing of India's leading stock broking house. At Angel, experienced portfolio management is the difference. It will advise you on a suitable product based on factors such as your investment horizon, return expectations and risk tolerance.

Investment Advisory Services

To derive optimum returns from equity as an asset class requires professional guidance and advice. Professional assistance will always be beneficial in wealth creation. Investment decisions without expert advice would be like treating ailment without the help of a doctor. DEPOSITARY PARTICIPANT SERVICES Angel Broking Ltd. is a DP services provider though CDSL. They offer depository services to create a seamless transaction platform to execute trades through Angel group of companies and settle these transactions through Angel Depository services.

Fundamental research services

The Sunday Weekly Report This weekly report is the ace of all reports. It offers a comprehensive market overview and likely trends in the week ahead. It also presents few top picks based on an in-depth analysis of technical and fundamental factors. It gives short term and long term outlook on these scrips, their price targets and trading strategies. Another unique feature of this report is that it provides an updated view of about 70 prominent stocks on an ongoing basis.

44

The Industry Watch This report provides an in-depth analysis of specific industries which are likely to outperform others in the economy. It analyzes their strengths and weaknesses and ascertains their future outlook. The final view is arrived at after thorough interaction with industry experts. Also comparative performances of various companies in the sector are evaluated and top picks are recommended.

Stock Analysis : Angels stock research has performed very well over the past few years and the Angel Model Portfolio has consistently outperformed the benchmark indices. The fundamentals of select scrip are thoroughly analyzed and an actionable advice is provided along with investment rationale for each scrip.

Flash News : Key developments and significant news announcements that are likely to have an impact on markets / scrip are flashed live on trading terminals. Flash news keeps the market participants updated on an online basis and helps them to reshuffle on their holdings.

Technical research service :

Nifty Tracker : Nifty Futures is the most traded instrument with highest volumes in F & O and excellent liquidity. The team tracks the Nifty Future and generates calls based on unique trading system which is a result of their focused research over the past few years. The objective is to generate positive returns for traders who are looking for a high risk / high reward product.

Online Chart : An online forum to help clients, specifically day trader is judging the directions of the market and stocks which are in the limelight.

Intraday Calls : For day traders, Angel provides intra-day calls with entry, exit and stop loss levels during market hours. These calls are flashed on their terminals. Their analysts continuously track the calls and provide recommendations according to the market movements.

Position Calls : 45

Angels Position Trading Calls are based on thorough analysis of the price movement in select scrips. These calls are for a 10-15 day time span with stop loss and target levels. These calls are flashed on their terminals during market hours.

Derivative Strategies : Their analysts take view on the Nifty and select stocks based on the derivatives data and technical tools. Suitable Derivative Strategies are devised, which are flashed on their terminals and published in their reports.

Futures Calls : A customized product for HNIs to help them trade with leveraged position; wherein clients are advised on the stocks with entry, exit and stop loss level for short term benefits. Over and above this, financial status of the calls is monitored at all times.

SWOT Analysis of Angel Broking

A SWOT analysis focuses on the internal and external environments, examining strengths and weaknesses in the internal environment and opportunities and threats in the external environment.

STRENGTH Service OPPORTUNITIES Distribution network Ever increasing market Marketing Improving technology Products Unfulfilled needs of customers. Education level

WEAKNESS

THREATS Competition from Banks New competitors Lack of specialist in commodity Technology based business market Heavy market volatility

Competitive analysis
Follower: - The follower is just blindly following the other player, which is leader and challenges. - The players like 5 paisa, Motilal Oswal, HDFC Securities, Kotakstreet are the followers.
46

Leader: -

CHAPTER IV DATA ANALYSIS & INTERPRETATIONS

47

DATA ANALYSIS
TATA MOTORS JAN -12 MONTH RETURNS
WEEKS WEEK1 WEEK2 WEEK3 WEEK4 WEEK5 Date 1/2/2012 1/9/2012 1/16/2012 1/23/2012 1/30/2012 Open 182 202 205.9 220.55 238 Close 203.15 208.8 218.9 239.9 247.95 return(x) 11.62 3.37 6.31 8.77 4.18

The above graph represents Tata motors stock gain or loss particular period

48

FEB -12 MONTH RETURNS

WEEK WEEK1 WEAK 2 WEAK 3 WEAK 4 Date 2/6/2012 2/13/2012 2/20/2012 2/27/2012 Open 250.6 258 273.9 266.4 Close 257.1 273.9 265.4 267.45 return(x) 2.59 6.16 -3.10 0.39

The above graph represents Tata motors stock gain or loss particular period

49

MARCH -12 MONTH RETURNS

Date 3/5/2012 3/12/2012 3/19/2012 3/26/2012 Open 267 282.1 287.75 273.4 Close 279.2 286.7 272.95 275.7 return(x) 4.57 1.63 -5.14 0.84

The above graph represents TATA MOTORS stock gain or loss particular period

50

MARUTHI JAN-12
weeks week1 week2 week3 week4 week5 Date 1/2/2012 1/9/2012 1/16/2012 1/23/2012 1/30/2012 Open 923 949.9 970 1084 1204 Close 949.75 977.05 1103.5 1210.65 1240.85 RETURN(X) 2.90 2.86 13.76 11.68 3.06

The above graph represents MARUTHI stock gain or loss particular period

51

weeks week1 week2 week3 week4

Date 2/6/2012 2/13/2012 2/20/2012 2/27/2012

Open 1250 1242.2 1321.55 1285.1

Close 1244.6 1321.55 1285.25 1330.55

RETURN(X) -0.43 6.39 -2.75 3.54

The above graph represents MARUTHI stock gain or loss particular period

52

weeks week1 week2 week3 week4

Date 3/5/2012 3/12/2012 3/19/2012 3/26/2012

Open 1320.7 1351 1377.5 1315

Close 1341.35 1374.35 1306.55 1350.5

RETURN(X) 1.56 1.73 -5.15 2.70

The above graph represents MARUTHI stock gain or loss particular period

53

MAHINDRA &MAHINDRA JAN -2012

WEEKS WEEK 1 WEEK 2 WEEK 3 WEEK 4 WEEK 5 Date 1/2/2012 1/9/2012 1/16/2012 1/23/2012 1/30/2012 open 691 655.9 689 658 694.2 close 656.25 691.95 656.4 698.1 710.6 RETURN(X) -5.03 5.50 -4.73 6.09 2.36

The above graph represents Mahindra stock gain or loss particular period

54

FEB-12
WEEKS WEEK 1 WEEK 2 WEEK 3 WEEK 4 Date 2/6/2012 2/13/2012 2/20/2012 2/27/2012 open 720 692 749.3 730 close 691.05 749.3 729.25 679.85 RETURN(X) -4.02 8.28 -2.68 -6.87

The above graph represents MAHINDRA stock gain or loss particular period

55

MARCH-2012

WEEKS WEEK 1 WEEK 2 WEEK 3 WEEK 4

Date 3/5/2012 3/12/2012 3/19/2012 3/26/2012

open 681 688 684 688

close 676.25 676.95 688.75 696.9

RETURN(X) -0.70 -1.61 0.69 1.29

The above graph represents MARUTHI stock gain or loss particular period

56

TOYOTA MOTORS
weeks week1 week2 week3 week4 week5 Date 1/3/2012 1/9/2012 1/17/2012 1/23/2012 1/30/2012 Open 67.39 68.5 67.93 71.23 72.93 Close 68.51 68.26 71.4 73.57 76.47 returns 1.66 -0.35 5.11 3.29 4.85

57

TOYOTA FEB
weeks week1 week2 week3 week4 Date 2/6/2012 2/13/2012 2/21/2012 2/27/2012 Open 77.58 78.8 83.17 82.99 Close 78.39 83.36 84.54 81.57 returns 1.04 5.79 1.65 -1.71

58

SCRIPS BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO BAJAJAUTO

Seri es EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ

Date 02-Jan-12 03-Jan-12 04-Jan-12 05-Jan-12 06-Jan-12 07-Jan-12 09-Jan-12 10-Jan-12 11-Jan-12 12-Jan-12 13-Jan-12 16-Jan-12 17-Jan-12 18-Jan-12 19-Jan-12 20-Jan-12 23-Jan-12 24-Jan-12 25-Jan-12 27-Jan-12 30-Jan-12 31-Jan-12

Prev Low Last Close RETURN( Close Price Price Price X) 1591. 4 1442 1466.3 1475.5 -7.28 1475. 1492.2 5 1450 5 1494.5 1.29 1494. 1414. 1425.5 5 55 1427 5 -4.61 1425. 55 1420 1469 1468.6 3.02 1468. 1441. 1456.7 6 1 1456.5 5 -0.81 1456. 1448.4 75 1445 1445.5 5 -0.57 1448. 1408. 1422.3 45 65 1422 5 -1.80 1422. 1425. 35 1 1433 1429.5 0.50 1429. 1456.9 5 1428 5 1456.9 1.92 1456. 1456. 9 9 1478 1475.6 1.28 1475. 1420. 1430.0 1430.7 6 9 5 5 -3.04 1430. 1407. 1423.5 75 2 1423.6 5 -0.50 1423. 1427. 1454.2 55 1 5 1452.5 2.03 1452. 1440. 1454.7 5 1 1453 5 0.15 1454. 1471.2 1467.7 75 1425 5 5 0.89 1467. 1561.3 75 1461 1565 5 6.38 1561. 1574.5 35 1551 1569.5 5 0.85 1574. 1555. 1580.6 55 85 1577 5 0.39 1580. 1568. 1587.8 65 9 1588 5 0.46 1587. 1539.7 85 1524 1540.1 5 -3.03 1539. 75 1526 1552 1550.2 0.68 1550. 1532. 1601 1601.3 2 2 3.30

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60

SYSTAMATIC RISK ANALYSIS OF AUTOMOBILES

RETURNS( X) X*Y -32.44 -35.62 -253.79 -24.50 -116.14 -109.50 -125.74 -93.72 -78.70 -87.16 -127.63 -104.19 -84.36 -98.89 -94.04 -60.14 -1494.12

s.no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 sum N NXY X*Y NX2 (X)2

bajaj -7.28 1.29 -4.61 3.02 -0.81 -0.57 -1.80 0.50 1.92 1.28 -3.04 -0.50 2.03 0.15 0.89 6.38 -1.15 16 14556.00 1715.06 14556.00 2232405.9 928

X2 236.26 -45.86 1170.86 -74.00 93.71 62.39 226.58 -47.11 -150.85 -111.88 387.93 52.43 -171.55 -15.32 -84.04 -383.54 909.75 236.26 -45.86 1170.86 -74.00 93.71 62.39 226.58 -47.11 -150.85 -111.88 387.93 52.43 -171.55 -15.32 -84.04 -383.54 909.75

NXY-X*Y NX2-(X)2

12840.94 2217849. 99 -0.01

61

CHAPTER V FINDINGS, SUGGESTIONS & CONCLUSION

62

FINDINGS
From the data analysis and interpretations of the ratios of three companies viz. Tata Motors, Maruti Suzuki and Mahindra and Mahindra, the following findings have been given:
The three companies were performing well till 2008 with a positive trend in the

earnings per share. But there was a downward trend in 2009 but again from 2010 it was upward. Especially, TATA has witnessed a steep fall in the year 2009.
The sales trend has been upward and positive in case of all the three companies. The

sales growth looks positive but in the year 2009, TATAs sales have declined whereas Maruti and Mahindra have maintained the same upward positive trend.
In case of dividend per share, there were fluctuations during the period 2007- 2011.

Due to recession, the dividends per share have declined in all the three companies. Tatas dividend has fallen drastically while Maruti stick to below 5 per share. Mahindra has made a slight reduction from rs.11.5 per share in 2008 to rs.10 per share this year.
The return on investment has been fluctuating since 2007 and the year 2011 witnessed

low returns in case of all the companies amongst which TATA has the least rate of return. Compared to the three companies, Mahindra has the highest ROI in 2009.
Maruti had a stable dividend payout ratio since 2007. TATA and Mahindra have

increased their payout ratio in which Mahindra shows a higher payout ratio. By analyzing the current trend of Indian Economy and Automobile Industry I have found that being a developing economy there is lot of scope for growth and this industry still has to cross many levels so there are huge opportunities to invest in and this is being proved as more and more foreign companies are setting up there ventures in India. Increase in income level, increase in consumer demand, technology development, globalization, foreign investments are few of the opportunities which the industry has to explore for developing the economy.

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SUGGESTIONS
By analyzing the automobile industry with the help of fundamental analysis, it has been revealed that this industry has a lot of potential to grow. So recommending investing in Automobile industry with no doubt is going to be a good and smart option because this industry is booming like never before not only in India but all over the world. The three giants of Indian Automobile industry viz. TATA Motors, Maruti Suzuki and Mahindra and Mahindra have outperformed in the industry. From the company analysis, we can know that Mahindra would be a better option for an investor compared to TATA and Maruti. In view of the slump in the domestic and international market, TATA has recorded a slowdown in sales and income level. Its Earnings per share has also declined drastically. It has reduced its dividend per share from rs.15 in the previous year to rs.6 in 2009. The return on investment is also very low. In view of all these, TATA is not a better option for an investor. The global turmoil in financial markets has affected Maruti also. The company is maintaining a stable position. Its sales have grown over past five years. Inspite of the general economic slowdown, the sales of Maruti Suzuki increased from Rs 21200 Crore to Rs 23381 Crore. As it is maintaining a stable position, it can be recommended that for now Maruti share price shows that its a time to hold the position or buy more shares as there is scope of further rise in share prices. Despite the challenging business environment, Mahindra has maintained its upward sales level. Its Return on Investment is much higher compared to TATA and Maruti. The dividend per share is rs.10 which is higher amongst the three companies. The company has potential to grow. It would be the best option for the investor. Investing in Maruti Suzuki for long time could be a good option whereas in TATA motors there is a chance of getting correction, as it already went on high side in a very short period of time and is experiencing a downfall from 2008. Holding the shares for long time could be a wrong step and at this point of time those who invested earlier can book their profits. As Mahindras shares are undervalued, the investor can buy these shares. This is because a relatively lower P/E would save investors from paying a very high price that does not justify the value of an investment.

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CONCLUSION
The collapse in market place witnessed unprecedented turbulence in the wake of global financial meltdown. A runaway inflation touching a high point of 12% early in the year, the tight monetary policies followed by the authorities for most of the year to control inflation with the consequent high interest rates and weak consumer demand, have collectively had a devastating effect on the automotive sector. During the financial year 2008-09 the there is downfall in the growth of the company. The main reason behind this downfall is because of the global recession. The downfall of net profit during the financial year 2008-09 is 29.6% over the financial year 2007-2008. TATA Motors, which was trying to consolidate its leadership position in the market, also had to face the impact of global meltdown. Amid the crippling economic crisis, Tata purchased Britains Jaguar Land Rover (JLR) from Ford Motor Company. Acquiring JLR saddled Tata with some tough losses. Dividends and earnings remain low. Inspite of it being a tough year for all the companies across the globe and in India, Mahindra has given a satisfactory performance. At present its shares are undervalued giving it a potential for growth. Global recession had a dampener effect on the growth of automobile industry but it was a short term phenomenon. The industry is bouncing back. One factor favoring this point is that India has become a hot destination for companies of diverse nature to invest in. Cut throat competition among top companies, lots of new car and vehicle model launches at regular intervals keeps the Indian auto sector moving. A continuous effort at cost cutting and improving productivity will help the companies in making reasonable profits despite the impact of higher commodity prices and weaker rupee. The analysis gives an optimistic view about the industry and its growth which recommends the investors to keep a good watch on the major players to benefit in terms of returns on their investments. Indian Automobile Industry is in the growth phase and the expected growth rate is 9-10% for FY2009-10 compare to last year growth rate which was just 0.7% and the above facts and figures in our study also support this truth. Indian Automobile has a lot of scope for both two wheelers and four wheelers due to development in infrastructure of the country and especially
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the rural sector in which demand of two wheeler has increased even in recession. According to Indian Statistical Organization the per capita income (Rs.38000) is increasing and national income at the rate of 14.4% which shows potential to buy vehicle in auto industry. The growth rate of Indian Automobile is so fast that by 2016 Indian Industry will be world 7 largest manufacturer in all sections. The Indian auto market is still untapped the majority of the people in country dont own a four wheeler and all the major auto companies are trying to increase their sales by several moves. Like TATA has launch NANO the peoples car and now TATA motors is also planning to come out with an electric car as well as hybrid car, moreover in two wheeler segment many companies like Mahindra and Mahindra grow even more than expectations. By analyzing the current trend of Indian Economy and Automobile Industry we can say that being a developing economy there is lot of scope for growth and this industry still have to cross many levels so there is huge opportunities to invest in and this is proving as more and more foreign Companies setting up there ventures in India.

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BIBLIOGRAPHY

www.nseindia.com www.bseindia.com www.investopedia.com www.moneycontrol.com www.indiainfoline.com www.sebi.gov.in www.tatamotors.com www.marutisuzuki.com www.mahindra.com www.yahoofinance.com

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