INTRODUCTION ABOUT THE TOPIC

The market for long term securities like bonds, equity stocks and
preferred stocks is divided into primary market and secondary market.
Primary market deals with the new issues of securities. Outstanding
securities are traded in the secondary market, which is commonly known
as stock market or stock exchange. In the secondary market, the investors
can sell or buy securities. Stock markets predominantly deal in the equity
shares. Well regulated and active stock market promotes capital formation.
The health of the economy is reflected by the growth of the stock market.
Stock broking is a growing industry in India. The main reason is that Indian
economy is one of the strongest in the world. As a result of that both foreign
and domestic investors are interested in investing in Indian stock market.

The topic selected for the study is “Security Analysis of selected power
sector securities listed in Bombay Stock Exchange” with reference to
Geojit Financial services Ltd, Coimbatore.

The study is done for the purpose of conducting fundamental analysis

and technical analysis of leading securities in the stock market. In the stock
market share price of companies are determined by the demand and supply
forces operating in the market. These demand and supply forces in turn are
influenced by a number of fundamental factors as well as certain
psychological or emotional factors. The combined impact of all these
factors is reflected in the share price movement. The price movements of
securities follow systematic and certain consistent patterns. Past
movements in the prices of shares help to identify trends and pattern. It is
useful for the prediction of future price movements. The companies

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selected are NTPC, RELIANCE, POWERGRID,
NHPC,TATAPOWER and ADANI POWER.

Security analysis is conducted by analyzing both the fundamental and

technical aspects. The technical analysis includes bar chart, Moving
Average & RSI (Relative Strength Index).

SECURITY ANALYSIS

An examination and evaluation of the various factors affecting the

value of a security is known as Security analysis. Security analysis refers
to the analysis of tradable financial instruments. Financial instruments can
be classified into debt securities, equities, or some hybrid of the two,
futures contracts and tradable credit derivatives are sometimes included.
Security analysis is typically divided into fundamental analysis, which
relies upon the examination of fundamental business factors such as
financial statements, and technical analysis, which focuses upon price
trends and momentum . Two analytical models When the objective of the
analysis is to determine what stock to buy and at what price, there are two
basic methodologies.

Fundamental analysis maintains that markets may misprice a security

in the short run but that the "correct" price will eventually be reached.
Profits can be made by trading the mispriced security and then waiting for
the market to recognize its "mistake" and re-price the security.

Technical analysis maintains that all information is reflected already in

the stock price, so fundamental analysis is a waste of time. Trends 'are your
friend' and sentiment changes predate and predict trend changes. Investors'
emotional responses to price movements lead to recognizable price chart
patterns. Technical analysis does not care what the 'value' of a stock is.
Their price predictions are only extrapolations from historical price
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patterns.

Investors can use both these different but somewhat complementary

methods for stock picking. Many fundamental investors use techniques
for deciding entry and exit points. Many technical investors use
fundamentals to limit their universe of possible stock to 'good' companies

Fundamental analysis

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. A method of security valuation which
involves examining the company's financials and operations, especially
sales, earnings, growth potential, assets, debt, management, products, and
competition. Fundamental analysis takes into consideration only those
variables that are directly related to the company itself, rather than the
overall state of the market or technical analysis data. The end goal of
performing fundamental analysis is to produce a value that an investor can
compare with the security's current price in hopes of figuring out what sort
of position to take with that security

Fundamental analysis is performed on historical and present data, but

with the goal of making financial forecasts. There are several possible

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 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

Tools for Fundamental Analysis

For fundamental analysis, the following ratios are used:

EPS = PAT / No of equity shares
DPS = Amount declared as dividend / No.
of equity shares
Pay out ratio = DPS / EPS
ROE = PAT / Net worth
P/E ratio = MPS / EPS
P/E Average = Average of the P/E range
Current ratio = Current assets / Current liabilities
Debt- Equity ratio = Debt capital / Owner’s capital
Interest coverage ratio = EBIT / Interest
N/P Margin = PAT / Net sales
TECHNICAL ANALYSIS

Technical analysis is a study of the market data in terms of factors

affecting supply and demand schedules, namely, prices, volume of trading,
etc. The technical analysis believes that share prices are determined by the
demand and supply forces operating the market. These

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demand and supply forces are in turn influenced by a number of
fundamental factors as well as certain psychological and emotional factors.
The combined impact of all these factors is reflected in the share price
movement. The technical analysis therefore concentrates on the movement
of share price. Technical analysis is the name given to forecasting
techniques that utilize historical share price data.

Technical analysis is a method of evaluating securities by analyzing

statistics generated by market activity, such as past prices and volume.
Technical analysts do not attempt to measure a security's intrinsic value,
but instead use charts and other tools to identify patterns that can suggest
future activity. Technical analysts believe that the historical performance
of stocks and markets are indications of future performance.

TOOLS OF TECHNICAL ANALYSIS

 Relative Strength Index

 Simple Moving Average
 Line Chart
 Bar Chart

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1.1 REVIEW OF LITERATURE

Aber John(1976) in his study found that numerous empirical studies have
tested the profitability of technical trading rules in a variety of market for
the purpose of either uncovering profitable trading rules or testing market
efficiency, or both. The technical trading studies simulated only one or two
trading systems. In these studies, although transaction costs were deducted
to compute net returns of technical trading strategies, risk was not
adequately handled, statistical tests of trading profits and data snooping
problems were often disregarded, and out-of-sample verification along
with parameter (trading rule) optimization were not considered in the
testing procedure.

Goodman and John W Peavy (1983) in their study found that there is no
way of making an expected profit by extrapolating past changes in the
futures price, by chart or any other esoteric devices of magic or
mathematics. The market quotation already contains in itself all that can be
known about the future and in that
sense has discounted future contingencies as much as is humanly possible.

Philip O Regan (1988) explained that demonstrated that under a noisy

rational expectations model in which current prices do not fully reveal
private information (signals) because of noise (unobserved current supply
of a risky asset) in the current equilibrium price, historical prices (i.e.,
technical analysis) together with current prices help traders make more
precise inferences about past and present signals than do current prices
6
alone

Brown and David P (1989) in their article explained that results provide
evidence for a “predictive information link” between non-earnings
numbers and future earnings changes. They indicate that some non-
earnings numbers do contain information useful for predicting future
earnings changes that is not contained in either past or current earnings.

Edward (1992) found that also extends her test to include a “valuation
link” between the predicted future earnings changes and stock returns
during the annual report dissemination period. She finds evidence that this
valuation link does exist. The non-earnings accounting numbers are
therefore useful for predicting both future earnings and returns.

Demark and Thomas R (1994) explained that the history of technical

analysis dates back to at least the 18th century when the Japanese
developed a form of technical analysis known as candlestick charting
techniques. This technique was not introduced to the West until the 1970s.

Hackel and Kenneth S (1996) found that it has been stated that “the task of
research is to discover what information projects future earnings and, from
a financial statement analysis point of view, what information in the
financial statements does this”

Jan R (1998) explained that results show that receivables do provide

incremental information for the prediction of future sales, earnings and
profit margins.

Squires (2000) found that study the value relevance of capital expenditures
for explaining returns beyond the use of current earnings. Their findings
7
show that changes in the level of capital expenditure were strongly and
positively related to excess returns. This exhibits the fact that current
capital expenditure has good news for the future performance

8
of a firm and supports the use of capital expenditures for predicting future
earnings or returns.

Thomas Robinson (2002) in their study explained that Fundamental

analysis involves assessing a firm’s equity value based on the analysis of
published financial statements and other information without reference to
the prices at which a firm’s securities trade in the capital markets.

Palepu and Krishna (2004) found that technical analysis has been
extensively used among market participants such as brokers, dealers, fund
managers, speculators, and individual investors in the financial industry. 3
Numerous surveys indicate that practitioners attribute a significant role to
technical analysis. For example, futures fund managers rely heavily on
computer-guided technical trading systems, and about 30% to 40% of
foreign exchange traders around the world believe that technical analysis
is the major factor determining exchange rates in the short-run up to six
months.

Prasanna Chandra (2005) explained that Active portfolio management is

commonly partitioned into two types of activities: market timing, which
requires forecasts of broad-based market movements, and security
analysis, which requires the selection of individual stocks that are
perceived to be underpriced by the market.

V K Bhalla (2006) explained that security analysis Psychological and

Institutional Forces and the Determination of Exchange Rates,
Neoclassical economists, by their own admission, have had a terrible time
explaining foreign-currency prices. In large part, this is due to the fact that
they assume "economic" behavior to be independent of social and

9
cultural influences. But markets are social institutions. They "organize and
guide human social behavior through sanctions (formal and informal,
negative and positive), mores, norms, status, and shared worldviews".
Consequently, explaining economic exchange requires an understanding
of the behavior associated with the subculture of those in question.

Dhanesh Kumar Khatri (2006) in their article found that a leading technical
analyst, provides a more specific definition: “The technical approach to
investment is essentially a reflection of the idea that prices move in trends
that are determined by the changing attitudes 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 that the trend has reversed.”

Stephan H Penman (2007) in his study found that Technical analysis

includes a variety of forecasting techniques such as chart analysis, pattern
recognit ion analysis, seasonality and cycle analysis, and computerized
technical trading systems.However, academic research on technical
analysis is generally limited to techniques that can be expressed in
mathematical forms, namely technical trading systems, although some
recent studies attempt to test visual chart patterns using pattern recognition
algorithms. A technical trading system consists of a set of trading rules that
result from parameterizations, and each trading rule generates trading
signals (long, short, or out of market) according to their parameter values.
Several popular technical trading systems are moving averages, channels,
and momentum oscillators.

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 Ran Canetti & IBM Research (2008) explained that Composable Formal
Security Analysis, a security property of a protocol is composable if it
remains intact even when the protocol runs alongside other protocols in the
same system. We describe a method for asserting composable security
properties, and demonstrate its usefulness. In particular, we show how this
method can be used to provide security analysis that is formal, relatively
simple, and still does not make un-justified abstractions of the underlying
cryptographic algorithms in use. It can also greatly enhance the feasibility
of automated security analysis of systems of realistic size.
Prasanna Chandra (2008) in his study he explained that Motivated by an
obvious gap between the widespread use of Bloomberg terminals in the
finance industry and the scant resources available to an instructor on how
to incorporate the available information through the terminal into a finance
course, we illustrate our experience using the terminal in an equity-focused
security analysis and portfolio management course. Our goal is to enable
students inexperienced with the terminal to prepare an analyst report. We
identify the most significant challenges we face and provide the
corresponding solutions. Our results are also applicable to other finance
courses including financial analysis, investments, and student managed
investment fund.

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1.2 INTRODUCTION OF THE STUDY

1.2.1 OBJECTIVES OF THE STUDY

 To study fundamental and technical analysis of securities in the

power sector.

 To evaluate the performance of the company.

 To analyze the movement of stock.
 To evaluate the risk and return of the selected securities.

1.2.2 NEED OF THE STUDY

The capital gains of an investor are on the performance of a particular

company’s stock in the stock market. The stronger the company’s share,
the more profit the investor gets. So it is necessary to ascertain, analyze
and interpret the share of various firms in order to know its position in the
market. Investors can make wise investment with the help of this analysis
Through this project, it tries to point out the company which ensure
maximum return and minimum risk in power sector where in investment
could be made.

1.2.3 SCOPE OF THE STUDY

The study is to analyze the financial strength and future investment
prospective of the key players from power sector of the economy.The
fundamental analysis is to determine the value of the shares. The technical
analysis is to predict the future stock behavior. Rational investors always
focus on maximum return which bears minimum risk. Hence, for them,
well diversified equity funds are the superlative opportunity available for

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the investment. .

1.2.4 LIMITATIONS

 Data considered only for past few months.

 Indian capital market is featured by the weak form of efficient
market hypothesis.
 The research will be confined to only 7 securities in the power
sector.

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2.1 INDUSTRY PROFILE

Capital Market
The market where investment funds like bonds, equities and
mortgages are traded is known as the capital market. The primal role of the
capital market is to channelize investments from investors who have
surplus funds to the ones who are running a deficit. The capital market
offers both long term and overnight funds. The financial instruments that
have short or medium term maturity periods are dealt in the money market
whereas the financial instruments that have long maturity periods are dealt
in the capital market. The different types of financial instruments that are
traded in the capital markets are equity instruments, credit market
instruments, insurance instruments, foreign exchange instruments, hybrid
instruments and derivative instruments.
A capital market is a market for securities (both debt and equity),
where business enterprises (companies) and governments can raise long-
term funds. It is defined as a market in which money is lent for periods
longer than a year, as the raising of short-term funds takes place on other
markets (e.g., the money market). The capital market includes the stock
market (equity securities) and the bond market (debt).

Capital markets consist of

1 Primary market

2 Secondary markets

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Primary market

The primary market is that part of the capital markets that deals with the
issuance of new securities. Companies, governments or public sector
institutions can obtain funding through the sale of a new stock or bond issue.
This is typically done through a syndicate of securities dealers. The process of
selling new issues to investors is called underwriting. In the case of a new
stock issue, this sale is an initial public offering (IPO). Dealers earn a
commission that is built into the price of the security offering, though it can
be found in the prospectus.

The primary markets are where new stock and bonds issues are sold (via
underwriting) to investors. The secondary markets are where existing securities
are sold and bought from one investor or trader to another, usually on a
securities exchange, over the counter, or elsewhere.

Features of primary markets are:

 This is the market for new long term equity capital. The primary
market is the market where the securities are sold for the first time.
Therefore it is also called the new issue market (NIM).
 In a primary issue, the securities are issued by the company directly
to investors.
 The company receives the money and issues new security
certificates to the investors.
 Primary issues are used by companies for the purpose of setting up
new business or for expanding or modernizing the existing business.

15
  The primary market performs the crucial function of
facilitating capital formation in the economy.
 The new issue market does not include certain other
sources of new long term external finance, such as loans
from financial institutions. Borrowers in the new issue
market may be raising capital for converting private
capital into public capital; this is known as "going
public."
 The financial assets sold can only be redeemed by the
original holder.

Methods of issuing securities in the primary market are:

1 Initial public offering;

2 Rights issue (for existing companies);

An initial public stock offering (IPO) referred to simply as

an "offering" or "flotation," is when a company issues
common stock or shares to the public for the first time. They
are often issued by smaller, younger companies seeking
capital to expand, but can also be done by large privately-
owned companies looking to become publicly traded.

A rights issue is offered to all existing shareholders

individually and may be rejected, accepted in full or
accepted in part. Rights are often transferable, allowing the
holder to sell them on the open market. A right to a share is
generally issued on a ratio basis (e.g. one-for-three rights

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 issue). Because the company receives shareholders' money
in exchange for shares, a rights issue is a source of capital.

Secondary market

The secondary market, also known as the aftermarket, is the

financial market where previously issued securities and financial
instruments such as stock, bonds, options, and futures are bought
and sold. The term "secondary market" is also used to refer to the
market for any used goods or assets, or an alternative use for an
existing product or asset where the customer base is the second
market (for example, corn has been traditionally used primarily for
food production and feedstock, but a second- or third- market has
developed for use in ethanol production).

Under a secondary market offering or seasoned equity

offering of shares to raise money, a company can opt for a rights
issue to raise capital. The rights issue is a special form of shelf
offering or shelf registration. With the issued rights, existing
shareholders have the privilege to buy a specified number of new
shares from the firm at a specified price within a specified time.
A rights issue is in contrast to an initial public offering (primary
market offering), where shares are issued to the general public
through market exchanges. With primary issuances of securities or
financial instruments, or the primary market, investors purchase
these securities directly from issuers such as corporations issuing
shares in an IPO or private placement, or directly from the federal
government in the case of treasuries.

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 After the initial issuance, investors can purchase from other
investors in the secondary market. The secondary market for a
variety of assets can vary from fragmented to centralized, and from
illiquid to very liquid. The major stock exchanges are the most
visible example of liquid secondary markets - in this case, for stocks
of publicly traded companies. . Exchanges provide a centralized,
liquid secondary market for the investors who own stocks that trade
on those exchanges. Most bonds and structured products trade “over
the counter,” or by phoning the bond desk of one’s broker-dealer.

Functions of Secondary market

Secondary marketing is vital to an efficient and modern capital

market. In the secondary market, securities are sold by and
transferred from one investor or speculator to another. It is
therefore important that the secondary market be highly liquid
(originally, the only way to create this liquidity was for investors and
speculators to meet at a fixed place regularly; this is how stock
exchanges originated, see History of the Stock Exchange). As a
general rule, the greater the number of investors that participate in a
given marketplace, and the greater the centralization of that
marketplace, the more liquid the market.

Fundamentally, secondary markets mesh the investor's

preference for liquidity (i.e., the investor's desire not to tie up his or
her money for a long period of time, in case the investor needs it to
deal with unforeseen circumstances) with the capital user's
preference to be able to use the capital for an extended period of time

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Stock Exchanges

Stock exchanges are open markets that trade financial assets.

Whether associated with a company or acting as an individual, a
stock exchange is the place where stocks are bought and sold. There
are a number of major stock exchanges around the world and each
of these plays a part in determining the overall financial and
economic condition of any economy. Stock exchanges deal with a
number of financial instruments such as stocks, bonds and equities.
Both corporate and government bonds are traded in stock exchanges.
Equities include popular investment options, rights issues, bonus
issues, and all other forms of shares and stocks. The actual trading
of stocks takes place through mediators such as financial advisors,
brokerage houses, and stockbrokers A stock exchange, (formerly a
securities exchange) is a corporation or mutual organization
which provides "trading" facilities for stock brokers and traders,
to trade stocks and other securities. Stock exchanges also provide
facilities for the issue and redemption of securities as well as other
financial instruments and capital events including the payment of
income and dividends. The securities traded on a stock exchange
include: shares issued by companies, unit trusts, derivatives,
pooled investment products and bonds. To be able to trade a security
on a certain stock exchange, it has to be listed there. Usually there is
a central location at least for recordkeeping, but trade is less and less
linked to such a physical place, as modern markets are electronic
networks, which gives them advantages of speed and cost of
transactions. Trade on an exchange is by members only. The initial
offering of stocks and bonds to investors is by definition done in the
primary market and subsequent trading is done in the secondary

19
market. A stock exchange is often the most important component
of a stock market. Supply and demand in stock markets are driven
by various factors which, as in all free markets, affect the price of
stocks (see stock valuation).

There is usually no compulsion to issue stock via the stock

exchange itself, nor must stock be subsequently traded on the
exchange. Such trading is said to be off exchange or over-the-
counter. This is the usual way that derivatives and bonds are
traded. Increasingly, stock exchanges are part of a global market for
securities.

The role of stock exchanges

The main role of a stock exchange is to facilitate the transactions

associated with both the buying and selling of securities. Buyers and
sellers of shares and stocks can track the price changes of securities
from the stock markets in which they operate. The ups and downs of
stock indexes help the investors to speculate on the return on
investment (ROI) of various investment options. Stock exchanges
also serve as a source of capital formation for listed companies.
Business entities that are listed in a particular stock exchange can
issue shares to the public and sell those shares in that market. To take
part in these transactions, listed companies need to abide by the
rules and requirements of that market. The stock exchanges protect
the interests of both buyers and sellers by assuring a timely transfer
of money. The participants of a stock market are required to operate
within the specified transaction limits fixed by the regulatory
authority of that stock market Speed and transparency are vital for

20
all stock market transactions. The companies listed in a stock
exchange need to provide proper guidance regarding business
performance and prospects, mergers and acquisitions, stock prices,
dividends and other information at all times. Investors make their
investment decisions based on the information obtained from these
companies, and the comments of analysts who track those
companies.

Bombay Stock Exchange

Bombay Stock Exchange is the oldest stock exchange in Asia

with a rich heritage, now spanning three centuries in its 133 years of
existence. What is now popularly known as BSE was established as
"The Native Share & Stock Brokers' Association" in 1875

Stock Exchanges Operations :

With the help of stockbrokers, the buyers and sellers

participating in a stock market carry out their transactions. The
brokers representing selling parties take their orders to the stock
exchange floor and then find brokers representing parties willing to
invest in similar stocks. If both parties agree to trade at the fixed
price, the transaction takes place. The size of the world stock market
was estimated at about $36.6 trillion US at the beginning of October
2008. The total world derivatives market has been estimated at about
$791 trillion face or nominal value, 11 times the size of the entire
world economy. The value of the derivatives market, because it is

21
stated in terms of notional values, cannot be directly compared to a
stock or a fixed income security, which traditionally refers to an
actual value. Moreover, the vast majority of derivatives 'cancel'
each other out (i.e., a derivative 'bet' on an event occurring is offset
by a comparable derivative 'bet' on the event not occurring.). Many
such relatively illiquid securities are valued as marked to model,
rather than an actual market price.

The stocks are listed and traded on stock exchanges which are
entities of a corporation or mutual organization specialized in the
business of bringing buyers and sellers of the organizations to a
listing of stocks and securities together

A transaction on a stock exchange must be made between two

members of the exchange — an ordinary person may not walk into
the New York Stock Exchange (for example), and ask to trade
stock. Such an exchange must be done through a broker.

There are three types of stock broking service.

 Execution-only, which means that the broker will only

carry out the client's instructions to buy or sell.

 Advisory dealing, where the broker advises the client

on which shares to buy and sell, but leaves the final
decision to the investor

 Discretionary dealing, where the stockbroker

ascertains the client's investment objectives and then
makes all dealing decisions on the client's behalf

Roles similar to that of a stockbroker include investment

advisor, and financial advisor. A stockbroker may or may not be

22
also an investment advisor.
Stockbrokers also sometimes or exclusively trade on their own
behalf, as a principal, speculating that a share or other financial
instrument will increase or decline in price. In such cases the term
broker makes little sense and the individuals or firms trading in
principal capacity sometimes call themselves dealers, stock traders
or simply traders.

23
COMPANY PROFILE

GEOJIT FINANCIAL SERVICES LTD

Geojit is a leading retail financial services company in India with a growing

presence in the Middle East. The company rides on its rich experience in the
capital market to offer its clients a wide portfolio of savings and investment
solutions. The gamut of value-added products and services offered ranges from
Equities and Derivatives to Mutual Funds, Life & General Insurance and third
party Fixed Deposits. The needs of over over 9,87,000 clients are met via
multichannel services - a countrywide network of over 479 offices, phone service,
dedicated Customer Care Centre and the Internet.

Geojit has membership in, and is listed on, the National Stock Exchange
(NSE) and the Bombay Stock Exchange (BSE). In 2007, global banking major
BNP Paribas joined the company’s other shareholders - Mr. C. J. George,
Founder and Managing Director, Kerala State Industrial Development
Corporation (KSIDC) and Mr. Rakesh Jhunjhunwala – when it bought a stake
and became the single largest shareholder.

The company also has a strategic presence in the Middle East region in the
form of joint ventures and partnerships. Barjeel Geojit Securities, its joint venture
with the Al Saud Group, is headquartered in Dubai, in the United Arab Emirates,
and has branches in Abu Dhabi, Al Ain, and Sharjah. Aloula Geojit Capital
Company, the joint venture with the Al Johar Group in Saudi Arabia is
headquartered in Riyadh with a branch in Dammam. BBK Geojit Securities KSC,
located in Kuwait, is a joint venture with Bank of Bahrain, Kuwait and JZA. QBG
Geojit Financial Services LLC is the joint venture with QBG and National
Securities Company and is based in Oman. In addition, the company has a

24
business partnership with Bank of Bahrain and Kuwait in Bahrain.

Mission of company

To provide a wide range of products and services in the field of mutual funds,
wealth management and financial advisory with a commitment to:
 Highest standards of quality at reasonable cost.
 Meeting the general and sophisticated financial needs of our retail and
institutional clients.
 Developing, encouraging and rewarding superior performance of our
employees.
 Strengthening mutually beneficial relationships with our stakeholders
with long-term focus.

Products and services

Equity

In keeping with its tradition of personalized service, Geojit Financial

Services Limited provides Customized Equity Advisory Group to clients based
on their profile. Equity Research is an inherent strength of GFS. Converting that
research to advice is the main function of Equity Advisory. The investment ideas
identified by the research team are presented and communicated with conviction
to clients by advisory team.GFS Equity Advisor proactively helps you take
informed equity investment decisions and build a healthy portfolio giving the best
fit to your investment and trading needs.

25
Derivatives

Futures & options are derivatives, which use equity as their

underlying. Hence Equity Advisory Group (EAG) will also act as advisors for
F&O & help take informed decisions while trading in these derivative
instruments. Since derivatives instrument provide good leverage opportunity, it
is a great tool for speculation. Leverage is a double edge sword for which one
requires an equity advisor. The advisors will also help with various strategies
like Bull Spread, Bear Spread, Cover call writing, hedging strategies etc. This is
to help to make better trading returns. Portfolio management
Geojit Financial Services Ltd brings with more than 2 decades of experience &
expertise in equity research and stock broking. Geojit Financial Services Ltd is
one of the leading portfolio service providers, with asset under management
worth Rs. 590 Crores.
Online trading

Clients trade online through “My Broker platform”. Broker with

complete research support from MOSL which helps the clients to make right
decision at right time. They can choose trading a/c which suits their trading
habit’s & preference and trade anywhere, anytime. Buying and selling is as easy
as click of a button.

Key Features:
Single platform for multiple exchange BSE & NSE
(Cash & F&O), Mutual Funds & IPO.
Tick by tick market watch (BSE / NSE / F&O).
Single window Order placement with instant confirmation.
Instant funds transfer from any of our 19 listed banks.
After Market Order (AMO) can place orders in advance
before market opens.

26
 Call and trade facility.

Mutual funds

Mutual funds offer the ideal platform to participate in the Equity &
Debt market indirectly through professional management. Mutual funds are
becoming the most popular investment vehicles offering various kinds of
schemes with different investment objectives

Commodities
Over the years commodities markets have been experiencing
tremendous progress, which is evident from the fact that the trade in this
segment is standing as the boon for the global economy today. The promising
nature of these markets has made them an attractive investment avenue for
investors.

Initial Public Offerings (IPOs)

Book Building and Fixed Price Issue are the two types of Initial
Public Offerings (IPOs) through which a public company can raise money in
the capital market. In a book building public issue the bids are received at
different price levels and the demand for the issue is built up over a period of
time.

Marginal funding

Geojit Financial Services understand needs and help the trader to meet their
liquidity requirements. Company offer Margin funding to individuals and
corporate. Company provide finance for investment in primary market issues
and also possess expertise in financing for short-term requirements, to buy
securities from secondary markets.

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 3 RESEARCH METHODOLOGY
3.1 Research Type
The segment identified for conducting the study is power Sector in India.
The number of companies selected for the study is Seven. Analytical study
is used to conduct the study.

3.2 Data collection

secondary data is collected from websites, Books and magazines.
3.3 SAMPLING METHOD:
The study requires judgmental sampling method. The sampling method adopted
for the research is Judgmental sampling method.
JUDGMENTAL SAMPLING:
Judgmental sampling is a non-probability sampling technique where the
researcher selects units to be sampled based on their knowledge and professional
judgment.

3.4 Tools for analysis

 Fundamental Analysis
 Technical Analysis

For fundamental analysis, the following ratios are used:

 EPS
 DPS
 Payout ratio
 ROE
 P/E ratio
 Current ratio
 Debt- Equity ratio

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 Interest coverage ratio
 N/P Margin and G/P ratio.

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 For technical analysis, the following tools are used:
 Relative strength index
 day moving average
 50 day moving average
 Line chart and candlestick char

Analysis and Interpretation of data

Analysis of data is a process of inspecting, cleaning, transforming, and
modeling data with the goal of highlighting useful information, suggesting
conclusions, and supporting decision making. Data analysis has multiple facts
and approaches, encompassing diverse techniques under a variety of names, in
different business, science, and social science domains.

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ADANI POWER
Table No:4.1.1
Share Price details of Adani Power
for the year ended 2017-2018
Face value 10
Market capitalization (Cr) 15,369.90
52 week high 58.20
52 week low 15.20
Interpretation:
The face value of Adani Power is Rs 10 each. Their market capitalization
is Rs 15,369.90 cr. The highest value for 52 week is Rs 58.20 and the
low for the same is Rs 15.20.
Table No:4.1.2
Pay Out Ratio of Adani Power
for the year ended 2017-2018
EPS(Earning per share) -3.40
Dividend yield % 0
Interpretation:
The Earnings Per Share of Adani Power is ‘0’, their dividend yield ratio
is also ‘0’.

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 Table No: 4.1.3
Return on Equity of
Adani Power for the year
ended 2017-2018
SHARE CAPITAL 15369.9
RESERVE AND SURPLUS 5682.19
NET WORTH 4494.2
PROFIT AFTER TAX (PAT) -1180.78
RETURN ON NET WORTH (%) 16.20

Interpretation:
The net worth of Adani Power is Rs.4494.2 Cr. their profit
after tax is -1180.78 and their return on net worth is 16.20.

Table No: 4.1.4

Key Ratios of
Adani Power for
the year ended
2017-2018
CURRENT RATIO 0.88
DEBT EQUITY RATIO 39.07
GROSS PROFIT RATIO (%) 14.51
NET PROFIT RATIO (%) -10.28
INTEREST COVERAGE RATIO
PRICE EARNING RATIO 0

Interpretation :
The current ratio of Adani Power is .88 and their debt equity ratio is
39.07. the gross profit ratio is 14.51 percentage and net profit ratio is
-10.28 percentage. Their interest coverage ratio is nil.

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33