A Summer Internship Project Report on

EQUITY ANALYSIS IN INDIAN STOCK MARKET AT

VENTURA SECURITIES, PATNA
Submitted in partial fulfilment of the requirement for the degree of
Master of Business Administration
(Affiliated to Central University of Jharkhand)
By

MANISH KUMAR
Roll No. CUJ/I/2013/IMBA/038

A study conducted for

VENTURA SECURITIES, PATNA

At

CENTRAL UNIVERSITY OF JHARKHAND, RANCHI

2013-2018

CERTIFICATE

This is to certify that Mr. MANISH KUMAR, student of Central University of

Jharkhand has completed his project report on EQUITY ANALYSIS IN INDIAN
STOCK MARKET AT VENTURA SECURITIES, PATNA in fulfilment of
Integrated Masters of Business Administration. He has successfully completed
the project under my constant guidance and support. The summer training has
been completed in total duration of 4 weeks (23rd May to 18th June 2016). This
has not been submitted elsewhere for the award of any degree

Mr. MUKESH KUMAR

Sr. MARKETING MANAGER
VENTURA SECURITIES , PATNA

DECLARATION

I hereby declare that the work incorporated in this report entitled A study on
Equity analysis at Ventura securities,Patna is the outcome of original
study undertaken by me Carried out under the Business Administration
Department Central University Of Jharkhand.

I further declare that the matter in this report has not been submitted by me as a
whole or in part at any other University or Institution for the award of any Degree
or Diploma.

Date-----------------------------Place- CUJ, Ranchi

Manish kumar
Integrate
d MBA
CUJ/I/2013/
IMBA/038
Centre for Business
Administration

ACKNOWLEDGEMENT

Accomplishment of a task with desired success calls for dedication towards work
and prompting guidance, co-operation and deliberation from seniors. At the
outset, I would like to Thanks Mr. J.P Verma and Mr. Vijay kumar sharma,
Assistant Professor, Central University of Jharkhand for his support
and professional approach in guiding me through the careful details of the
project.
I am very grateful to my company guides, Mr. Mukesh kumar and Mr.
Abhishek kumar who not only helped me on this topic but also helped me to
understand the nuances of capital market. In spite of having a very busy
schedule, they made sure in every way that we acquire the best possible
exposure and knowledge during our project.
I would be failing in my duty if I do no express my deep sense of gratitude to Sri
A.K Sarkar H.O.D. and all the faculty members for their valuable advice and
guidance in this project.
I am also thankful to our Branch head, Mr Afroz Sir.

TABLE OF CONTENTS
CHAPT
ER

TITLE
Executive Summary

Pg.
No.
5

About Ventura Securities

6-7

Introduction

8-11

1.1 Research Objective

1.2 Purpose of the Study
1.3 Scope of study
1.4 Types of Research
1.5 Sources of Data collection
1.6 Limitation
2

Research Methodology

12-27

2.1 Introduction
2.2 Fundamental Analysis
2.2.1 Economic Analysis
2.2.2 Industrial Analysis
2.2.3 Company Analysis
2.2.4 Financial Analysis
2.3 Technical Analysis
3

Data Analysis and Interpretations

28-50

Findings, suggestions and conclusion

51-53

Bibliography

54

EXECUTIVE SUMMARY
The automobile industry, one of the core sectors, has undergone
metamorphosis with the advent of new business and manufacturing
practices in the light of liberalization and globalization. The sector
seems to be optimistic of posting strong sales in the couple of year
in the view of a reasonable surge in demand. The Indian automobile
market is gearing towards international standards to meet the
needs of the global automobile giants and become a global hub.

A detailed analysis of automobile industry has been covered in

respect of past growth and performance. Under this project to
better understand the industry I have used fundamental tools to
make it more authentic and meaningful.
An economy-industry-company (EIC) approach has been followed
under Fundamental Analysis which covers effect of Recession, the
impact of inflation, FDIs, Export, and GDP etc. on Automobile
Industry. The Industry Analysis has been done with the help
of SWOT analysis and industry life cycle. For company analysis as a
part of fundamental tool we have undergone with the comparative
analysis of TATA motors the leading company, Maruti Suzuki Indias
largest car manufacturing and Mahindra and Mahindra along with
help of ratio analysis. The fundamental aspect consist of financial
and non-financial analysis of these companies. At the end
conclusion and recommendations have been specified so as to
make the project work more meaningful and purposeful.
India is 13th largest commercial vehicle market in the world. The
last five years industry has grown CAGR of 14%. Commercial
vehicles Industrys share in Indian automobile is 5.05% in the year
2011-12. The Industry which grew at a rate of above 25% over
2005-10 has grown by just 5% in FY12 so the economic fluctuation
affect greatly to Indian commercial vehicle Industry. Ability to
enhance and vary product mix, Sales and distribution service
network, Access to new technologies are the key success factor of
Indian commercial vehicle Industry.
An Indian railway is the only one competitor of Indian commercial
vehicle Industry but because of several advantage commercial
vehicle Industry ruled over the Indian railway. In near future we are
not seeing any substitute of commercial vehicle Industry. Indian
commercial vehicle Industry use sales promotional tool as
marketing tool most and for advertisement the print media is
preferred by the most of the Indian players.
Here we got chance to understand the fundamentals of Indian
commercial vehicles industry and also identifies the position of the
industry, that how they had built its image in the market.

Company profile of VENTURA SECURITIES

Our Mission
To build true relationships and strive towards customer delight, through
constant innovation on a strong foundation of dedicated and trained resources.
Incorporate in 1994, Ventura Securities Ltd is Mumbai,
India based popular stock broker. Ventura also provides wide range

of investment products and services though it's over 25 branches

and over 500 business partners (sub brokers) located across 300
cities in India. Ventura is a full service broker providing advisory
services to Institutions (Foreign and Domestic), High Net Worth and
Retail Investors with its core area of operations being stockbroking.
Ventura has considerable strength and domain knowledge in the
booming derivatives market in India. Financial services offered by
Ventura include trading in Equity, Derivatives, Commodity, Currency
Futures, investments in Mutual Funds, Insurance, Deposits and
Depository Services. Ventura provides commodity trading services
through Ventura Commodities Pvt. Ltd, an associate company which
is trading member of MCX and NCDEX. Ventura is a depository
participant (DP) of National Securities Depository Limited (NSDL).
Ventura offers 2in1 account which include an online trading account
and a demat account.
Trade In: BSE and NSE
Products and Services of Ventura
o

Equity
The Indian Equity Market is more popularly known as the
Indian Stock Market. The Indian equity market has become the third
biggest after China and Hong Kong in the Asian region. According to
the latest report by ADB, it has a market capitalization of nearly
$600 billion. As of March 2009, the market capitalization was around
$598.3 billion (Rs.30.13 lakh crore) which is one-tenth of the
combined valuation of the Asia region. The market was slow since
early 2007 and continued till the first quarter of 2009. A stock
exchange has been defined by the Securities Contract (Regulation)
Act, 1956 as and organization, association or body of individuals
established for regulating, and controlling of securities.

Commodity
Indian markets have recently thrown open a new avenue for retail
investors and traders to participate: commodity derivatives. For
those who want to diversify their portfolios beyond shares, bonds
and real estate, commodities is the best option. Till some months
ago, this wouldnt have made sense. For retail investors could have
done very little to actually invest in commodities such as gold and
silver or oilseeds in the futures market. This was nearly
impossible in commodities except for gold and silver as there was
practically no retail avenue for punting in commodities.

Currency Futures
Currency futures are contracts to exchange a certain amount of a
particular currency at a specific exchange rate on a specified date.
It is exactly like a futures contract on Nifty. Here the underlying
commodity is a currency exchange rate, such as an Indian Rupee to
US Dollar exchange rate. Up to now currency swap and currency
options were not traded on recognized stock exchanges

DERIVATIVES
The introduction of risk management instruments in India gained
momentum in the last few years due to liberalization process and
Reserve Bank of Indias (RBI) efforts in creating currency forward
market. Derivatives are an integral part of liberalization process to
manage risk. NSE gauging the market requirements initiated the
process of setting up derivative markets in India.

Directors:
Sajid Malik:
Co-promoter of Ventura and Director A chartered accountant by
qualification, Sajid Malik is also the Promoter and Managing Director
of Genesys International, a company with focus on GIS mapping and
engineering designing services, listed on the NSE and BSE.
Hemant Majethia
Co-promoter of Ventura, CEO and Director With over 2 decades of
experience in capital market intermediation and equity research
Hemant Majethia is well connected and respected in market circles
for his technocratic approach to stock broking. He is a chartered
accountant by qualification and has been instrumental in the
development of the online platform "POINTER".
Juzer Gabajiwala
Director A member of the Institute of Chartered Accountants of India
and The Institute of Company Secretaries of India, heads the HR and
operations functions at Ventura. He initiated the launch of the
alternate products platforms for mutual fund distribution and
insurance. He also spearheaded the wealth management and NRI
cell. Prior to joining Ventura, has been associated with the IIT group
and the TATA group

CHAPTER. 1
INTRODUCTION

INTRODUCTION
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 scepticism 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 Day Trader and Short Term Investor. 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 first
hand, 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.
1.1

RESEARCH OBJECTIVE
A study on Equity analysis in Indian stock market at Ventura
Securities, Patna
The objective of this project is to deeply analyse our Indian
Automobile Industry for investment purpose by monitoring
the growth rate and performance on the basis of historical
data. The main objectives of the Project study are:
Detailed analysis of Automobile industry which is geari
ng towards international standards
Analyze the impact of qualitative factors on industrys
and companys prospects
Comparative analysis of three tough competitors TATA
Motors, Maruti Suzuki and Mahindra and Mahindra
through fundamental analysis.
Suggesting as to which companys shares would be
best for an investor to invest.

1.2

PURPOSE OF THE STUDY

1.3

To know how the economic environment has an effect on the

investment decisions.
To know how the market price of the share are fixed on the basis
of various proponents.
To study the share price movement of the company
To study how the overall industrial circumstances play a crucial
role in the specific company.
To know about the trend of number of volume traded.
To predict or forecast the future price movements.
To identify the pattern of fluctuation.
To know the financial strength of the company by the ratio
analysis.

SCOPE OF THE STUDY

This project is a learning device for a finance student mastering

up Investment analysis in a practical basis.
Through this project I would study the various methods of the
fundamental and technical analysis.
The project would also be an effective tool for the investors who
are thinking to invest in automobile industry.
The ratio analysis conduct in the research will be useful for those
who want to analyse the financial statement of the company.
The economic analysis conducted in the research can also be
used for the fundamental analysis of other Indian firm. The
following sources have been sought for the preparation report.

1.4 TYPE OF RESEARCH

Descriptive and analytical research has been undertaken to draw
a conclusion as Investment Analysis is a combined study of both
Qualitative and Quantitative factors which form the main basis of
Analysis.
Research design or research methodology is the procedure of
collecting, analysing and interpreting the data to diagnose the
problem and react to the opportunity in such a way where the costs
can be minimized and the desired level of accuracy can be achieved
to
arrive
at
a
particular
conclusion.
The methodology used in the study
for the completion of the project and the fulfilment of the project
objectives. The sample of the stocks for the purpose of collecting
secondary data has been selected on the basis of Random
Sampling. The stocks are chosen in an unbiased manner and
each stock is chosen independent of the other stocks chosen. The
stocks are chosen from the automobile sector. The sample size for
the number of stocks is taken as 3 for fundamental analysis
of stocks as fundamental analysis is very exhaustive and requires
detailed study.
1.5 SOURCES OF DATA COLLECTION

The entire data used in the report had been collected from the
secondary sources; as such there were no need of any data from
the primary sources. The following sources have been sought for
the preparation report:
Tata Motors annual report, its available financial database for
the investors in its official website.
Maruti Suzuki annual report, its available financial database
for the investors in its official website.
Mahindra and Mahindra annual report, its available financial
database for the investors in its official website.
The data collected for the technical analysis derived from the
websites
likewww.moneycontrol.com
and
www.investopaedia.com
The data collected for the economic analysis was mainly
derived from the government bodies website, such as
website of RBI, Ministry of Statistics and Programme
Implementation.
Also website of some international bodies has been
extensively consulted for the purpose of collecting facts, such
as International Automotive Association and Society of Indian
Auto Manufacturers (SIAM).
Also, various text books on Security analysis and portfolio
management (like Punithavathy Pandian, S. Kevin), Financial
Management (M.Y.Khan, Prasanna Chandra and I.M.Pandey)
were consulted for the topic.
1.6 LIMITATIONS

This study has been conducted purely to understand Equity

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.
There was a constraint with regard to time allocation for the
research study i.e. for a period of 45 days.
Suggestions and conclusions are based on the limited data of
five years

CHAPTER. 2
RESEARCH
METHODOLO
GY

1.1INTRODUCTION
Equity Analysis is the analysis of critical factors that affect the value
of a stock. The intrinsic value of a stock depends on a plethora of
factors. Investment Analysis is a combination of fundamental and
technical analysis, constituting attributes which have an effect on
the investors before he invests on some stock.
Investment success is pretty much a matter of careful selection and
timing of stock purchases coupled with perfect with matching to an
in individual risk tolerance. In order to carryout selection, timing and
matching actions an investors must conduct deep security analysis.
Investors purchase equity shares with two basic objective:
To make capital profits by selling shares at higher prices.
To earn dividend income.
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.

Equity
Analysis

Fundament
al Analysis

Economic
Analysis

Industry
Analysis

Technichal
Analysis

Company
analysis

Traditional

Modern

2.2 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
value of a companys stock.

in an effort

to determine the

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 opposed to only its price
movements.
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

2.2.1 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 the firms. The analysis of
macroeconomic environment is essential to understand the
behaviour of the stock prices. The commonly analysed
macroeconomic factors are as follows:

Gross Domestic Product (GDP).

Savings and investment.

Inflation.
Interest rates.
Tax structure.
Infrastructure facilities.

2.2.2 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 i
ndustryclassification, 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.

Declinestage
Maturity and
stabilization
stage:
Rapid growth
stage:

Pioneering
stage

Growth of the industry:

The historical performance of the industry
in
terms
of
growth
and profitability should be analyzed. The past variability in return an
d growth in reaction to macroeconomic 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

concernedcompany scrips. The companies' ability to withstand the l

ocal as well as themultinational 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 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 bear ranged and
analysed.
2.2.3 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.
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:

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 grou
ps otherwise, the results will be misleading.

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 with stand the business cycle rather than the
company of smaller size.

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.
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 sin crease 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.
2.2.4 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 infor
mation aids toanalyze the present status of the company. The two
main statements used in the analysis are Balance sheet and Profit
and Loss Account. 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.

a) Return on Assets (ROA)

ROA is computed as the product of the net profit margin and the
total asset turnover ratios.
ROA = (Net Profit/Total income) x (Total income/Total As
sets)
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
mayachieve leadership by using its assets more efficiently. With a s
uccessful productdifferentiation 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
investments) x 100

(ROI)

(Net

profit/Equity

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.
c) 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
outstanding

share

Net

profit/Number

of

shares

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.

d) 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 sha
reholder. Thedistribution of dividend could be thought of as the distr
ibution 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 pay-out gives the extent
of inflows to the shareholders from the company.
e) Dividend Pay-out 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 pay-out 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.
f) 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.

g) 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 the
firms assets. The purpose is to get an idea of the cushion available
to outsiders on the liquidation of the firm.
2.3 Industry profile of stock market
2.3.1 Financial market
Finance is the pre-requisite for modern business and financial
institutions play a vital role in the economic system. It is through
financial markets and institutions that the financial system of an
economy works. Financial markets refer to the institutional
arrangements for dealing in financial assets and credit instruments
of different types such as currency, cheques, bank deposits, bills,
bonds, equities, etc. Financial market is a broad term describing any
marketplace where buyers and sellers participate in the trade of
assets such as equities, bonds, currencies and derivatives. They are
typically defined by having transparent pricing, basic regulations on
trading, costs and fees and market forces determining the prices of
securities that trade. Generally, there is no specific place or
location to indicate a financial market.
Classification of Financial market

Financial
maket

Organised
market

Capital
market

Governmet
securities
market

long term
loan market

Industrial
securities
market

Primary
market

call money
market

Unorganise
d market

Money
market

Money
lenders,
Indigenuos
Bankers

commercial
market

Treasury bill
market

secondry
market

Capital Market
The capital market is a market for financial assets which have a long
or indefinite maturity. Generally, it deals with long term securities
which have a period of above one year. In the widest sense, it
consists of a series of channels through which the savings of the
community are made available for industrial and commercial
enterprises and public authorities. As a whole, capital market
facilitates raising of capital. Capital market consists of primary
market and secondary market.
Primary market:
Primary market is a market for new issues or new financial claims.
Hence it is also called as New Issue Market. It basically deals with
those securities which are issued to the public for the first time.
Secondary market:
Secondary market is a market where existing securities are traded.
In other words, securities which have already passed through new
issue market are traded in this market. Generally, such securities
are quoted in the stock exchange and it provides a continuous and
regular market for buying and selling of securities. This market
consists of all stock exchanges recognized by the government of
India.

Money Market
Money markets are the markets for short-term, highly liquid
debt
securities.
Moneymarket securities are generally very safe investments which r
eturn relatively lowinterest rate that is most appropriate for
temporary cash storage or short term time needs. It consists
of a number of sub-markets which collectively constitute the money
market namely call money market, commercial bills market,
acceptance market, and Treasury bill market.
Derivatives Market
The derivatives market is the financial market for
derivatives, financial instrument like futures contracts or options,
which are derived from other forms of assets. A derivative is a
security
whose price
is dependent upon
or derived from one or more underlying assets. The derivative itself
is merely a contract between two or more parties. Its value is
determined by fluctuations in the underlying asset. The important
financial derivatives are the following:
Forwards
Futures
Options
Swaps
.
Foreign Exchange Market
It is a market in which participants are able to
buy,
sell,
exchange
and
speculate
on
currencies. Foreign exchange markets are
made up of
banks, commercial
companies,
central
banks,
investment
management firms, hedge funds, and retail forex brokers and
investors. The forex market is considered to be the largest financial
market in the world. It is a worldwide decentralized over-thecounter financial market for the trading of currencies. Because the
currency markets are large and liquid, they are believed to be the
most efficient financial markets. It is important to realize that the
foreign exchange market is not a single exchange, but is
constructed of a global network of computers that connects
participants from all parts of the world.
Commodities Market
It is a physical or virtual marketplace for buying,
selling
and
trading
raw
or
primary products. For investors' purposes there are currently about
50 major commoditymarkets worldwide that facilitate investment tr
ade in nearly 100 primarycommodities. Commodities are split into
two types: hard and soft commodities. Hard commodities are
typically natural resources that must be mined or extracted (gold,
rubber, oil, etc.), whereas soft commodities are agricultural
products or livestock (corn, wheat, coffee, sugar, soybeans, pork,
etc.)

2.3.2 Indian Financial Markets

India Financial market is one of the oldest in
the world and is considered to be the fastest growing and best
among all the markets of the emerging economies. The history of
Indian capital markets dates back 200 years toward the end of
the18th century when India was under the rule of the East India
Company. The development of the capital market in India
concentrated around Mumbai where no less than 200 to 250
securities brokers were active during the second half of the 19th
century.
The financial market in India today is more developed than
many
other
sectors
becauseit was organized long before with the securities exchanges
of Mumbai, Ahmadabad and Kolkata were established as early as
the 19th century. By the early 1960s the total number of securities
exchanges in India rose to eight, Including Mumbai, Ahmadabad and
Kolkata apart from Madras, Kanpur, Delhi, Bangalore and Pune.
Today there are 21 regional securities exchanges in India in addition
to the centralized NSE (National Stock Exchange) and OTCEI
(Over the Counter Exchange of India).
FINANCIAL MARKET REGULATIONS
Regulations are an absolute necessity
in the face of the growing importance of capital markets throughout
the world. The development of a market economy is dependent on
the development of the capital market.
The regulation of a
capital
market
involves
theregulation of securities; these rules enable the capital market to
function more efficiently and impartially .A well regulated market
has the potential to encourage additional investors to partake, and
contribute in, furthering the development of the economy. The chief
capital market regulatory authority is Securities and Exchange
Board of India (SEBI).
o

SEBI
SEBI is the regulator for the securities market in India. It is the apex
body to develop and regulate the stock market in India It was
formed officially by the Government of India in 1992 with SEBI Act
1992 being passed by the Indian Parliament. Chaired by C B
Bhave, SEBI is headquartered in the popular business district of
Bandra Kurla-complex in Mumbai and has Northern, Eastern,
Southern and Western regional offices in New Delhi , Kolkata,
Chennai and Ahmedabad. In place of Government Control, a
statutory and autonomous regulatory board with defined
responsibilities, to cover both development & regulation of the
market, and independent powers has been set up.

Stock Exchange in India

Stock Exchanges are an organized marketplace, either corporation o
r mutualorganization, where members of the organization gather to
trade
company
stocks
or other
securities.
As per the Securities Contracts Regulation Act, 1956 a stock exchan

ge is anassociation, organization or body of individuals whether inco

rporated or not, established for the purpose of assisting, regulating
and controlling business in buying, selling and dealing in securities.
Stock exchanges facilitate for the issue and redemption of securities
and other financial instruments including the payment of income
and dividends.
The
record
keeping
is
central but trade is linked to such physical place because modern m
arkets arecomputerized. The trade on an exchange is only by
members and stock broker do have a seat on the exchange.
List of Stock Exchanges in India
Bombay Stock exchange
A very common name for all traders in the stock
market, BSE, stands for Bombay Stock Exchange. It is the oldest
market not only in the country, but also in Asia. In the early days,
BSE was known as "The Native Share & Stock Brokers Association.
"It was established in the year 1875 and became the first stock
exchange in the country to be recognized by the government. In
1956, BSE obtained a permanent recognition from the Government
of India under the Securities Contracts (Regulation) Act, 1956.In the
past and even now, it plays a pivotal role in the development of the
country's capital market.
This is recognized worldwide and its index,
SENSEX,
is
also
tracked
worldwide. Earlier it was an Association of Persons (AOP), but now it
is ademutualised and corporatised entity incorporated under the pro
visions of theCompanies Act, 1956, pursuant to the BSE
(Corporatisation and Demutualization) Scheme, 2005 notified by the
Securities and Exchange Board of India (SEBI).
National Stock Exchange of India Limited
The National Stock Exchange of India Limited has genesis in
the
report
of
the
HighPowered Study Group on Establishment of New Stock Exchange
s, whichrecommended promotion of a National Stock Exchange by
financial institutions (FIs)to provide access to investors from all
across the country on an equal footing. Based on the
recommendations, NSE was promoted by leading Financial
Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax- paying company unlike
other stock Exchange in the country. On its recognition as a stock
exchange under the Securities Contracts (Regulation)Act, 1956 in
April 1993, NSE commenced operations in the Wholesale Debt
Market(WDM) segment in June 1994. The Capital Market (Equities)
segment commenced operations in November 1994 and operations
in Derivatives segment commenced in June 2000.

NSE GROUP National Securities Clearing Corporation Ltd.

(NSCCL)
It is a wholly owned subsidiary, which was incorporated in
August 1995 and commenced clearing operations in April 1996. It
was formed to build confidence in clearing and settlement of
securities, to promote and maintain the short and consistent
settlement cycles, to provide a counter-party risk guarantee and to
operate a tight risk containment system.

NSE.IT Ltd.
It is also a wholly owned subsidiary of NSE and is its IT
arm. This arm of the NSE is uniquely positioned to provide products,
services and solutions for the securities industry. NSE.IT primarily
focuses on in the area of trading, broker front-end and back-office,
clearing and settlement, web-based, insurance, etc. Along with this,
italso provides consultancy and implementation services in Data Wa
rehousing,
Business Continuity Plans, Site Maintenance and Backups, Stratus M
ainframeFacility Management, Real Time Market Analysis & Financial
News.

India Index Services & Products Ltd. (IISL)

It is a joint venture between NSE and CRISIL Ltd. to provide
a variety of indices and index related services and products for the
Indian Capital markets. It was set up in May 1998. IISL has a
consulting and licensing agreement with the Standard and Poor's
(S&P), world's leading provider of investible equity indices, for cobranding equity indices.

National Securities Depository Ltd. (NSDL)

NSE joined hands with IDBI and UTI to promote
dematerialization
of
securities.
Thisstep was taken to solve problems related to trading in physical s
ecurities. Itcommenced operations in November 1996.

NSE Facts
o It uses
satellite communication technology
to energize participation from around 400 cities in India.
o NSE can handle up to 1 million trades per day.
o It is one of the largest interactive VSAT based stock exchanges in
the world.
o The NSE- network is the largest private wide area network in India
and the first extended C- Band VSAT network in the world.
o Presently more than 9000 users are trading on the real timeonline NSE application. Today, NSE is one of the largest exchanges
in the world and still forging ahead. At NSE, we are constantly
working towards creating a more transparent, vibrant and
innovative capital market.
OVER THE COUNTER EXCHANGE OF INDIA
OTCEI was incorporated in 1990 as a section 25
company under the companies Act1956 and is recognized as a

stock exchange under section 4 of the securities Contracts

Regulation Act, 1956. The exchange was set up to aid enterprising
promotes in raising finance for new projects in a cost effective
manner and to provide investors with a transparent and efficient
mode of trading Modelled along the lines of the NASDAQ market of
USA, OTCEI introduced many novel concepts to the Indian capital
markets such as screen-based nationwide trading, sponsorship of
companies, market making and scrip less trading. As a measure of
success of these efforts, the Exchange today has 115 listings and
has assisted in providing capital for enterprises that have gone on
to build successful brands for themselves like VIP Advanta, Sonora
Tiles & Brilliant mineral water, etc.
Need for OTCEI:
Studies by NASSCOM, software technology parks
of India, the venture capitals funds and the governments IT tasks
Force, as well as rising interest in IT, Pharmaceutical, Biotechnology
and Media shares have repeatedly emphasized the need for a
national stock market for innovation and high growth companies.

2.3 Technical Analysis

Technical Analysis is a security analysis methodology for forecasting
the direction of prices through the study of past market data,
primarily price and volume.
This is a process of identifying trend reversals at an early stage to
formulate the buying and selling strategies. Using several
indicators, investors analyses the relationship between pricevolume and supply-demand for the overall market, as well as for the
individual stock. During an upswing, the number of shares traded is
greater than before, and in a downswing, the number of shares
traded dwindles.
The rationale behind technical analysis is that share price behavior
repeats itself over time and analysts attempts to derive methods to
predict this repetition. A technical analyst looks at the past data so
that to patterns. He then looks at currents price data to see if any of
the established patterns are applicable and, if so, extrapolations 1
can be made to predict the future price movements.
The basic premise of technical analysis is that prices move in trends
or waves which may be upward or downward. It is believed that the
present trend are influenced by the past trend and the projection of
future trends is possible by an analysis of past price trends. A
technical analyst, therefore, analyses the price and volume
movements of individuals securities as well as the market index.
Thus, Technical analysis is really a study of past or historical price
and volume movements so as to predict the future stock price
behavior.

Assumptions:The market always moves in a trend. Expect for minor deviations,

the stock prices move in a trends. The price may create definite
patterns too. The trend may be increasing or decreasing.
Interactions of supply and demand determine the market value of
scrip. The market discounts everything. The price of the security
quoted represents the hopes, fear and inside information of the
market players.
Technical analysis believes that past prices predict the future.
Basic principles of technical analysis:The basic principles on which technical analysis is based are as
follows:
o The market value of a security is related to demand and supply
factors of a security.
o There are both rational and irrational factors which surrounds the
supply and demand factors of a security.
o Security prices behave in a manner that their movement is
continuous in a particular direction for some length of time.
o The shifts in demand and supply can be detected through charts
prepared specially to show market action.
o Patterns which are projected by charts records price movements
and these recorded patterns are used by analysts to make forecasts
about the movement of prices in future.
Objective of the technical analysis: To understand and identify the Overbought and Oversold price
levels as derived from using all the historical data available.
To identify reversal patterns that might occur in overbought or
oversold regions, so as to profit from contra trend trades.
To maximize the gains from all sorts of trading activities, and
minimize risk and losses arising from such activities.
To identify the price levels where chances of a profitable trade
are less, and recognize 'price-patterns' in and at such levels if
and when they occur to avoid such trades.
Purpose of technical analysis
It identifies a pattern of fluctuations It enables trader to make sense
of the short term fluctuation Short term experiences and it help in
predicting the future
Movements of stock prices. It enables
effective decision making.Since most traders buy and sells stocks
on the same day, they need to decide quickly on the purchase and
sale price, so technical analysis help them in deciding.
Charts Used in Technical Analysis
Charts are a valuable and easiest of tools used in technical analysis.
The graphical presentation of data helps the investor to find out the
trend of prices without any difficulty. Charts also have a following
uses:

Help to spot current trends for buying and selling Indicate the
probable future action of the market by projection Show historical
movements Indicate the key areas of support and resistance A chart
represents of the demand and supply of a stock or commodity. The
horizontal axis represents time, with the price drawn as a line
connecting consecutive closing values. More sophisticated charts
will show more detail; bar charts also include the range from high to
low, candlestick charts include the open price along with a color and
fill which reflects change relative to the previous close. The basic
data on which the chart is drawn are
Date Price Band (Open, High, Low & Close) Volume
The different charts used in technical analysis are:
Line Chart
Bar chart
Candlestick Chart
Line chart
The most basic of the three charts is the line chart because it
represents only the closing prices over a set period of time. The line
is formed by connecting the closing prices over the time frame. Line
charts do not provide visual information of the trading range for the
individual points such as the high, low and opening prices. However,
the closing price is often considered to be the most important price
in stock data compared to the high and low for the day and this is
why it is the only value used in line charts.
Bar Chart
The bar chart expands on the line chart by adding several more key
pieces of information to each data point. The chart is made up of a
series of vertical lines that represent each data point. This vertical
line represents the high and low
for the trading period, along with
the closing price. The close and
open are represented on the
vertical line by a horizontal dash.
The opening price on a bar chart is
illustrated by the dash that is
located on the left side of the
vertical bar. Conversely, the close
is represented by the dash on the
right. Generally, if the left dash
(open) is lower than the right dash
(close) then the bar will be shaded black, representing an up period
for the stock, which means it has gained value. A bar that is colored
red signals that the stock has gone down in value over that period.
When this is the case, the dash on the right (close) is lower than the
dash on the left (open).
Fig Structure of a Bar Char
Candlestick Chart
Another type of chart used in technical analysis is the
candlestick chart, so called because the main component of
the chart representing prices looks like a candlestick, with a

thick body and usually a line extending above and below it,
called the upper shadow and lower shadow, respectively. The
top of the upper shadow represents the high price, while
The bottom of the lower shadow represents the low price.
Patterns are formed both by the body and the shadows.
Candlestick patterns are most useful over short periods of
time, and mostly have significance at the top of an uptrend or
the bottom of a downtrend, when the patterns most often
signify a reversal of the trend.
While the candlestick chart shows basically the same
information as the bar chart, certain patterns are more
apparent in the candlestick chart. The candlestick chart
emphasizes
opening
and
closing
prices.
The
top
and
bottom of the
real
body
represents
the
opening
and
closing
prices.
Whether the top
represents
the
opening
or
closing
price
depends on the
colour of the real
bodyif it is white/ blue/green, then the top represents the
close; black / red or some other dark colour, indicates that
the top was the opening price. The length of the real body
shows the difference between the opening and closing prices.
Obviously, white/green/blue real bodies indicate bullishness,
while black/red real bodies indicate bearishness, and their
pattern is easily observable in a candlestick chart.
Fig. Structure of a Candlestick Chart

CHAPTER. 3
DATA ANALYSIS
&
INTERPRETATIONS

3. ANALYSIS OF AUTOMOBILE INDUSTRY

Over a period of more than two decades the Indian

Automobile industry has been driving its own growth through
phases. With comparatively higher rate of economic growth rate
index against that of great global powers, India has become a hub
of domestic and exports business. The automobile sector has been
contributing its share to the shining economic performance of India
in the recent years. To understand this industry for the purpose of
investment we need to analyze it by the following approach:
3.1. Fundamental Analysis
Fundamental
analysis
is
the study
of economic, industry
and company conditions in an effort to determine the value of a
company s stock. Fundamental analysis typically focuses on key
statistics in company s financial statements to determine if the
stock price is correctly valued. Most fundamental information
focuses on economic, industry and company statistics. The typical
approach to analysing a company involves three basic steps:
A. Economic Analysis
Economic analysis is the analysis of forces operating the overall
economy a country. Economic analysis is a process whereby
strengths and weaknesses of an economy are analyzed. Economic
analysis is important in order to understand exact condition of an
economy
The performance of a company depends on the performance of the
economy, as it impact the companies in the numerous ways.
For example:

If the economy is booming or tremendously growing

nation income increases
demand of the goods increases (steel products)
hence the industry and the companies in general tend to be more prosperous

caus
es
On the other hand

If the economy is in recession or the growth

national income decreases
demand of the goods decreases (steel products)
hence the industries and the companys growth, in general, will dwindle.

caus
es

Gross Domestic Product

The Economy of India is the seventh-largest in the world by nominal
GDP and the third-largest by purchasing power parity (PPP). The
Indian economy has the potential to become the world's 3rd-largest

Therefore, the analysis of the macro-economic environment is

essential to understand the behaviour of the stock prices like The
earnings of the company, present economic conditions of the
country, the GDP rate, savings and investment scenario, Inflation,
Interest rates, Budget and Fiscal conditions, Tax Structure, balance
of Payment, FDIs, FIIs, International Economic conditions, Business
Cycles and Investor Psychology, Infrastructure facilities and
demographic factor are taken into consideration

GDP

$2.28 trillion (nominal;

2016)
$8.64 trillion (PPP; 2016
GDP rank
7th (Nominal) / 3rd (PPP)
GDP growth
7.9% ( FY 2015-16 Q4(JanMar 2016)
GDP per capita
$1,747 (nominal; 129th;
2016)
$6,598 (PPP; 108th; 2016)
GDP by sector
Agriculture: 16.1%
Industry: 29.5%
Services: 54.4% (2015)
economy by the next decade, and one of the largest economies by
mid-century.

India ranks second worldwide in farm output. Agriculture and allied

sectors like forestry, logging and fishing accounted for 17% of the
GDP and employed 49% of the total workforce in 2014. Industry
accounts for 26% of GDP and employs 22% of the total
workforce. According to the World Bank, India's industrial
manufacturing GDP output in 2015 was 6th largest in the world on
current US dollar basis ($559 billion). India's services sector has the
largest share in the GDP, accounting for 57% in 2012, up from 15%
in 1950.It is the 7th largest in the world by nominal GDP, and third
largest when purchasing power is taken into account. The services
sector provides employment to 27% of the work force.
Today, automobile sector in India is one of the key sectors of the
economy in terms of the employment. Directly and indirectly it
employs more than 10 million people and if we add the number of
people employed in the auto-component and auto ancillary industry
then the number goes even higher .As the world economy slipped
into recession hitting the demand hard and the banking sector takes
conservative approach towards lending to corporate sector, the GDP
growth has downgraded it to 7.1 per cent for 2008-09 and it has
increased to 8.6% in2010 by overcoming the setbacks of recession.
Recession
Auto industry in India had been hit hard by ongoing global
financial recession. But it is in a good shape now. Much of this
optimism resulted from renewed interest being shown in India auto
industry by reputed overseas car makers. Nissan Motors which is a
well known Japanese car making company regarded India
automobile market as a global car manufacturing hub for future and
invested huge amount in our market. There are some other
automobile companies of world who have shown interest in India

auto market. Major names among these are General Motors, Skoda
Auto and Mercedes-Benz. These companies have major plans lined
up for India auto industry. These are few signs of the revolutionized
auto industry after recession.
Inflation
The rise in inflation will have adverse impact on the industry
that will not only see interest rates getting further hardened but
also a drop in demand due to the squeeze in purchasing power. The
effect of inflation has affected every sector which is related to car
manufacturing and production. The increase in the price of fuel and
the steel due to inflation has led to a slower growth rate of the car
industry in India.
Inflation typically results in the following;
High raw material cost Non availability of cheap credit due to rise in
interest rates.
Low earnings
Fig. Inflation Rate for the period(May 2015-April2016)
Interest Rates
Interest Rates have a direct impact on the economy. The base rate
of banks affects the cost of borrowed funds. The base rate is the
minimum rate of interest at which banks lend to anyone. It is the
floor rate below which the RBI will not allow banks to lend.

Fig. Interest rate chart for private banks, w.e.f. January 2015
Foreign Direct Investment
The definition of Foreign Direct Investment includes different
elements, namely equity capital ,reinvested earnings of foreign
companies, inter-company debt transactions, short and long term
loans ,financial leasing, trade credits, investment made by Foreign
venture capital investors and so on. FDIs help in the upgrading of
technology, skills and managerial capabilities and bring the much

needed capital into the economy. They also help in providing

employment opportunities. Inflow of capital helps the economy to
grow and has a positive impact on the stock market.
The automobile sector in the Indian industry is one of the high
performing sectors of the Indian economy. This has contributed
largely in making India a prime destination for many international
players in the automobile industry who wish to set up
their businesses in India. Automatic approval for foreign equity
investment up to 100 per cent of manufacture of automobiles and
component is permitted.
Countries

Inflows (million
USD)
Mauritius
50,164
Singapore
11,275
USA
8,914
UK
6,158
Netherlands
4,968
FDI : inflow in India in 2015

Inflow %
42.00
9.00
7.00
5.00
4.00

Balance of Payment
The balance of payments is the record of a countrys money
receipts from abroad and payments to foreign countries. The
difference between receipts and payments may be a surplus or
deficit. Balance of payments is a measure of the strength of the
rupee on the external account. If the deficit increases, the rupee
value may depreciate against other currencies, thereby affecting
the cost of imports. A favourable balance of payment has a positive
effect on the stock market.

Fig.Trade balance and Balance of Payment(BoP) for the period

(2003-2013)
Exports and imports
Despite recession, the Indian automobile market continues to
perform better than most of the other industries in the economy in
coming future; more and more MNCs coming in India to setup their
ventures which clearly shows the scope of expansion. During AprilJanuary 2010, overall automobile exports registered a growth rate
of 13.24 percent.

B. Industrial Analysis
An analysis of the performance, prospects and problems of
an industry of interest is known as industry analysis. The economic
analysis gives an indication about the direction of the economy and the
stock market. Industry analysis is required because the return and risk
level of industries differ. The risk factors in an automobile industry differs
that from those of the IT or telecom industries. Consumer spending have
greater impact on the automobile industry than on the IT industry. Thus
concentrating on the Automobile industry we discuss about the following
factors
Global Automobile Industry.
The automotive industry is a wide range of companies and
organizations
involved
in
the design, development, manufacture, marketing,
and selling of motor vehicles. It is one of the world's most
important economic sectors by revenue. The automotive industry
does not include industries dedicated to the maintenance of
automobiles following delivery to the end-user, such as automobile
repair shops and motor fuel filling stations. Today, the modern
global
automotive
industry
encompasses
the
principal
manufacturers, General Motors, Ford, Toyota, Honda, Volkswagen,
and Daimler Chrysler, all of which operate in a global competitive
marketplace. It is suggested that the globalization of the
automotive industry, has greatly accelerated during the last half of
the 1990's due to the construction of important overseas facilities
and establishment of mergers between giant multinational
automakers.

fig. contribution by major producers

Indian Automobile Industry

India is the ninth largest in the world with an annual production of over 2.3
million units in 2008. In 2009, India emerged as Asia's fourth largest
exporter of automobiles, behind Japan, South Korea and Thailand. The
Automobile Industry is one of the fastest growing sectors in India. The
increase in the demand for cars, and other vehicles, powered by the
increase in the income is the primary growth driver of the automobile
industry in India. In 2009, estimated rate of growth of India Auto industry
is going to be 9% .The Indian automobile sector is far from being
saturated, leaving ample opportunity for volume growth.
Segmentation of Automobile Industry
The automobile industry comprises of Heavy vehicles (trucks, buses,
tempos, tractors); passenger cars; Two-wheelers; Commercial Vehicles;
and Three-wheelers. Following is the segmentation that how much each
sector comprises of whole Indian Automobile Industry.
The automotive industry in India is one of the larger markets in the
world. It had previously been one of the fastest growing markets globally,
but is currently experiencing flat or negative growth rates India's
passenger car and commercial vehicle manufacturing industry is the sixth
largest in the world, with an annual production of more than 3.9 million
units in 2011. According to recent reports, India overtook Brazil and
became the sixth largest passenger vehicle producer in the world (beating
such old and new auto makers as Belgium, United Kingdom, Italy, Canada,
Mexico, Russia, Spain, France, Brazil), grew 16 to 18 percent to sell around
three million units in the course of 2011 and 2012. In 2009, India emerged
as Asia's fourth largest exporter of passenger cars, behind Japan, South
Korea, and Thailand. In 2010, India beat Thailand to become Asia's third
largest exporter of passenger cars.
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 (after China) fastest
growing automobile market in the world in that year. According to the
Society of Indian Automobile Manufacturers, annual vehicle sales are

projected to increase to 4 million by 2015, no longer 5 million as

previously projected.
The majority of India's car manufacturing industry is based around
three clusters in the south, west and north. The southern cluster consisting
of Chennai is the biggest with 35% of the revenue share. The western hub
near Mumbai and Pune contributes to 33% of the market and the northern
cluster around the National Capital Region contributes 32%. Chennai,
houses
the
India
operations
of Ford,
Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan
Motors, Daimler, Caparo, Mini, and Datsun. 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 the
western
cluster
with
companies
like General
Motors,
Volkswagen, Skoda, Mahindra
and
Mahindra, Tata
Motors, Mercedes
Benz, Land Rover, Jaguar Cars, Fiat and Force Motors having assembly
plants in the area. Nashik has a major base of Mahindra and Mahindra with
a
SUV
assembly
unit
and
an
Engine
assembly
unit.
Aurangabad with Audi, Skoda and Volkswagen also forms part of the
western cluster. Another emerging cluster is in the state of Gujarat with
manufacturing facility of General Motors in Halol and further planned
for Tata Nano at their plant in Sanand. Ford, Maruti Suzuki and PeugeotCitroen plants are also set to come up in Gujarat. Jamshedpur with Tata
Motors,
Kolkata with Hindustan
Motors, Noida with Honda and Bangalore with Toyota are some of the
other automotive manufacturing regions around the country.

Table -Evolution of Indian Auto Industry

Challenges faced by the Indian Automobile Industry

o As we move into the new millennium, the Indian Automobile
Industry faces some tremendous opportunities and also great
challenges. The growth in automobile sales has been impressive for
the past ten years since liberalization began.
o However, with liberalization, the Indian customer has been
presented with a wide range of choices in automobiles, to suit every
requirement and budget. The market has turned into a buyers
market where the customer is being wooed by the manufacturers
and the dealers with a range of freebies unheard of before in India.

o
o

o
o
o
o

Financing has become so easy that an automobile is within every

aspirant's reach.
Competition has meant that manufacturers' margins have been
squeezed severely and they are all under pressure to cut costs to be
profitable and competitive.
Some of the older manufacturers like Premier Automobiles
(manufacturers of Premier cars), Automobile products of India
(manufacturers
of
Lambretta
scooters)
and
Ideal
Jawa
(manufacturers of Jawa and Yezdi motorcycles) have closed shop.
Hindustan Motors (manufacturers of Ambassador and Contessa
cars) is in trouble due to the declining sales of its cars, as most
customers prefer the newer models available in the market.
Even the dominant player Maruti has seen its market share decline
rapidly due to its models being old and jaded and is in addition
facing labour problems in its plant.
To add to the problems, come April 2001, under the WTO
agreement, India will have to permit import of fully built
automobiles, which hitherto was not permitted.
The foreign manufacturers such as GM, Ford and Daimler Chrysler
will almost certainly import vehicles from their large portfolio of
models and makes, further segmenting the market into niches,
although how competitive they are in terms of price remains to be
seen.

Industry life cycle

The industrial life cycle is a term used for classifying industry life
over time. Industry life cycle classification generally groups
industries into one of four stages: pioneer, growth, maturity and
decline.
In the pioneer phase, the product has not been widely accepted or
adopted. Business strategies are developing, and there is high risk
of
failure. However, successful
companies
can grow
at extraordinary rates. The Indian automobile sector has
passed this stage quite successfully. The industry is growing
rapidly, often at an accelerating rate of sales and earnings growth
Indian Automotive Industry is booming with a growth rate of
around 15 % annually. The growth rate of the automobile
industry in India is greater than the GDP growth rate of the
economy, so the automobile sector can be very well be said to be in
the growth phase.
Swot analysis:
A scan of the internal and external environment is an important part
of the strategic planning process. Environmental factors internal to
the firm usually can be classified as strengths (S) or weaknesses
(W), and those external to the firm can be classified as opportunities
(O) or threats (T). Such an analysis of the strategic environment is
referred to as a SWOT analysis. SWOT analysis of the Indian
automobile sector gives the following points:

weaknesses
Low labor productivity High interest

strengths
Large domestic market
Sustainable labor cost advantage
Competitive auto component vendor
base
Government incentives for
manufacturing plants
Strong engineering skills in design etc

costs and high overheads make the

production uncompetitive
Various forms of taxes push up the
cost of production
Low investment in Research and
Development
Infrastructure bottleneck
swot analysis

Threats
Ignorance of Research & development
Rising interest rates
Cut throat competition

opportunities
Increasing challenges in consumer
demands, technology
development, and globalization.
Heavy thrust on mining and
construction activity
Increase in the income level
Cut in excise duties

C. COMPANY ANALYSIS
The company analysis shows the long-term strength of the
company that what is the financial position of the company in the
market, where it stands among its competitors and who are the key
drivers of the company, what are the future plans of the company,
what are the policies of government towards the company and how
these take of the company divested among different groups of
people.
Here, I have taken three companies namely
TATA Motors, Maruti Suzuki and Mahindra and Mahindra for the
purpose
of
Fundamental
analysis.
Tata Motors Limited is India's largest automobile company, with con
solidated revenues of Rs. 92,519 crores (USD 20 billion) in 2009-10.
It is the leader in commercial vehicles in each segment, and among
the top three in passenger vehicles with winning products in the
compact, midsize car and utility vehicle segments. The company is
the world's fourth largest truck manufacturer, and the world's
second largest bus manufacturer. Maruti Suzuki is a subsidiary of
Suzuki Motor Corporation Japan. More than half the numbers of cars
sold in India wear Maruti Suzuki badge. They offer a full range
of cars from entry level Maruti 800 & Alto to stylish hatchback
Ritz, A star, Swift, Wagon R, Estillo and sedans Dzire, SX4 and
Sports Utility Vehicle Grand Vitara. Since inception, it has produced
and sold over 7.5 million vehicles in India and exported over
500,000 units to Europe and other countries. Its turnover for the
fiscal2008-09 stood at Rs. 203,583 Million & Profit after Tax at Rs.
12,187 Million.
The Mahindra Groups Automotive Sector is in the business of
manufacturing and marketing utility vehicles and light commercial
vehicles, including three-wheelers. Itis the market leader in utility
vehicles in India since inception, and currently accounts for about
half of Indias market for utility vehicles. The Automotive Sector
continues to be a leader in the utility vehicle segment with a diverse
portfolio that includes mass transport as well as new generation

vehicles like Scorpio, Bolero and the recently launched Xylo and tuv
300
D. Financial analysis
RATIO ANALYSIS OF TATA MOTORS, MARUTI SUZUKI ANDMAHINDRA &
MAHINDRA
1. EPS
Fig. Earning per
share chart
Interpretations
EPS measures the
profit available to
the
equity
shareholders
per
share, that is, the
amount that they
can get on every
share held. EPS of
TATA it is continuously decreases from 2011 to 2015 and Maruti had a rising EPS.
The effect is more on Tata motors because of the slump in domestic and
international markets and sharp fall in sales and net profits which resulted in low
EPS. Mahindra is not much affected as its sales have increased from the previous
year. But as trend shows Mahindra motors has potential so a shareholder can
expect better in future. So for investment Maruti is good .
2. SALES

Fig.
sales
chart

Interpretations

Maruti and Mahindra show a positive trend in sales over the past five years.
Though slowdown in the economy brought hurdles but these companies have
potential
to
grow in future as lots of products are still to add in their portfoli. Moreover increa
sed demand in foreign market also seems to be a positive signal for
better future. TATA has witnessed a decline in sales of each segment. Maruti and
Mahindra are going swiftly
3. OPERATING PROFIT MARGIN
Fig Operating Profit
Ratio trend chart

Interpretations
Here we can see that this graph shows that operating profit of TATA declines year
to year and Maruti and Mahindra has little fluctuation in operating profit, it
means these both companies comes in growth situation in the future . These
both companies are supportive to investors.
4. RETURN ON CAPITAL EMPLOYED (ROCE)

Fig Return on capital employed chart

Here we can see that this graph shows that ROCE of

TATA declines year to year and Maruti and Mahindra has little fluctuation in ROCE
, it means these both companies came in growth situation in the future . These
both companies are supportive to investors.
5. INVENTORY TURNOVER RATIO

Fig Inventory Turnover

Ratio trend chart
Here
TATA
has
decreasing situation in
last five year and Maruti
and Mahindra has little
fluctuation in ITR. So
Maruti and Mahindra is
supportive to investors.

6. DEBTORS TURNOVER RATIO

Fig Debtors Turnover
Ratio trend chart
TATA and Maruti has
increasing trend in
last 5 year, its good
sign for investors , but
Mahindra
has
decreasing trend in
last 5 year it means
Mahindra
debtors
payback
period
is
long. So it is not good
sign for investors.

7. DEBT-EQUITY RATIO
Fig Debt to Equity ratio
trend chart
Here
TATA
has
increasing trend and
Mahindra and Maruti
has decreasing trend.
It means TATA not
recover debt rapidly
compared with Maruti
and Mahindra. Maruti
and
Mahindra
is
supportive
to
investors.

8. CURRENT RATIO
Fig. Current
trend chart

Ratio

The
company
has
gradually reduced its
currents liabilities, ,it
can be seen that the
company is dependent
mostly on long term
funds to finance its
current assets and as a
result current liabilities
have largely reduced
and use of long term
liabilities
have
increased, which can be
said as a wise decision from the company.

9. INTEREST COVERAGE RATIO

Fig. Interest Coverage Ratio trend chart

Here TATA has decreasing trend but Maruti and Mahindra have
increasing .So TATA not indicates good sign for investment but
Maruti and Mahindra shows good sign for investment .
10.

DIVIDEND PAYOUT RATIO

Fig. Dividend Payout Ratio
trend chart

As
the
company
has
ignored debt financing and
has
reduced
interest
paying, it has gradually
increased
its
dividend
paying capabilities to hold
shareholders
trust
over
them, in a bad situation like
this.it has moved on to
become unleveraged and
has opted to remit huge dividends in order to attract & hold shareholders.

3.2 Technical Analysis

DATA ANALYSIS
1. MARUTI SUZUKI

Table-1 . Historical Data analysis chart of Maruti Suzuki

(9-5-2016 to 10-6-2016) (BSE)

DTAE

9/5/201
6
10/5/20
16
11/5/20
16
12/5/20
16
13/5/20
16
16/5/20
16
17/5/20
16
18/5/20
16
19/5/20
16
20/5/20
16
23/5/20
16
24/5/20
16
25/5/20
16
26/5/20
16
27/5/20
16
30/5/20
16
31/5/20
16
1/6/201
6
2/6/201
6
3/6/201
6
6/6/201
6
7/6/201
6
8/6/201
6
9/6/201
6
10/6/20
16

OPEN
PRICE
(RS)

HIGH
PRICE
(RS)

LOW
PRICE
(RS)

CLOSE
PRICE
(RS)

3833.3
0
3856.3
0
3800

3877

3829.4
5
3836.4
5
3790

3856.2
0
3846.9
5
3889.8
5
3862.9
5
3844.6
0
3880.3
0
3949.1
5
3914.2
0
3926.8
5
3947.0
5
3911.5
5
3917.5
0
4053.6
0
4117.1
5
4141.3
5
4073.1
5
4167.9
0
4161.6
5
4183.8
5
4220.1
0
4135.1
5
4143.2
0
4169.4
5
4169.4
5
4152.4
0

3861.4
0
3865
3875
3885.3
0
3910

3856.2
0
3899
3908.0
5
3879.9
5
3892

3950

3968.4
5
3935.1
0
3942.3
0
3958.9
0
3965

3930

3937

3942.1
5
4055

4065

3900
3890

4118
4141
4073
4175
4156.5
0
4200
4214
4160
4150
4142.1
5
4161

4127.9
5
4158.3
0
4152.0
5
4184.7
5
4199

3845.6
0
3830.5
5
3844.0
5
3885.3
0
3808
3880
3885
3900
3891.4
0
3941.1
0
4030
4093
4055.1
0
4058.3
6
4151

4189.0
5
4231.3
0
4224

4127.2
5
4179.0
5
4121

4188.8
0
4171.6
5
4190.5
0
4192

4122.8
0
4124.1
5
4138
4150

MOVIN
G
AVERA
GE OF
CLOSI
NG
PRICE
3834.1
0
3836.7
5
3860.4
5
3863.0
2
3863.5
0
3860.6
8
3892.8
5
3915.7
3
3930.7
3
3928.8
2
3928.4
7
3927.6
7
3966.3
3
4034.3
8
4108.5
2
4112.1
2
4126.6
5
4132.9
0
4171.2
0
4186.0
5
4171.7
7
4154.7
7
4145.9
2
4154.9
7
4146.9
2

VOLU
ME

46053
39266
72028
19098
0
70785
29865
55189
14768
1
51188
47830
28752
23677
61439
82422
52734
41971
6242
58362
37135
63352
51197
0
30404
32367
73221
69759

REPRESENTATION OF CLOSING PRICE AND MOVING AVERAGE LINE

GRAPH OF CLOSING PRICE:
Fig Closing price and
moving average graph
line
The closing
Price set through Moving
average indicates upward
direction or unstable trend
line fitted on closing price of
the share during the study
period, so from this It
conclude
that it will
be
highly lucrative to invest in
Maruti suzuki and also it involves a moderate risk as the prices are gaining much.

REPRESENTATION OF OPENING AND CLOSING PRICE ON LINE GRAPH:

Fig
Opening
Closing
price
line

and
graph

INTERPRETATION
The movement of opening
and
closing
price
indicates a steadiness and
slight increase during the
study period and the
situation is good from the
investors point of view,
as the overall market
capitalization of Maruti Suzuki is increasing during the study period.

CANDLESTICK CHART:
Fig.Candlestick
chart
INTERPRETATION
Its shows stock has
good opening price
at
maximum
numbers of days
compare to closing
price on the same
day of the study
period.
It
represents a clear
picture of stock
price at which the
investors
will
decide to invest (since the black body and the white bodies show trend),thus
we predict the investment decisions.
REPRESENTATION OF LINE CHART-TOTAL VOLUME W.R.T. DAYS

Fig.Volume volatility graph

INTERPRETATION
The above chart shows the huge
volatility in demand /volume sales
of the share as a result of which
the price the price is also little bit
volatile, as it is visible from the
line chart of opening & closing
price w.r.t. days, it indicates good
sign for investors.

2. TATA MOTORS
Table-. Historical Data analysis chart of TATA Motors (9-52016 to 10-6-2016) (BSE)

DATE

OPEN
PRICE
(RS)

HIGH
PRICE
(RS)

LOW
PRICE
(RS)

CLOSE
PRICE
(RS)

VOLUM
E

403.35

MOVIN
G
AVERAG
E OF
CLOSIN
G PRICE
397.75

9/5/201
6
10/5/20
16
11/5/20
16
12/5/20
16
13/5/20
16
16/5/20
16
17/5/20
16
18/5/20
16
19/5/20
16
20/5/20
16
23/5/20
16
24/5/20
16
25/5/20
16
26/5/20
16
27/5/20
16
30/5/20
16
31/5/20
16
1/6/201
6
2/6/201
6
3/6/201
6
6/6/201
6
7/6/201
6
8/6/201
6
9/6/201
6
10/6/20
16

401

405.25

395.55

401

401.85

387.20

388.90

396.98

748851

386

391.90

376.05

380.10

390.78

1034617

384

388

380

387.20

385.40

575091

390

393.80

385.85

390

385.77

803589

393.80

396.75

389.60

392.55

389.92

500083

391.50

395

387.30

389.90

390.82

554187

384

387.40

381.80

385

389.15

935847

385.25

393.15

383.10

387.70

387.53

1297826

386.25

392.50

383.30

384.55

385.75

591312

388

389.90

380.55

382.75

385

523527

384.40

392

382.35

389.25

385.52

541437

393.55

399.70

393.55

397

389.67

507837

399

401.70

396.85

399.30

395.18

318249

400

404.65

395.95

403.50

399.93

672984

405.40

421.90

401.60

420.55

407.78

1171008

456.30

463.90

444.15

458.20

427.42

48511

455.70

458.20

446.25

449.20

442.65

720409

445

460.30

443.95

453.20

453.52

1105284

456.55

461.75

452.30

453.90

452.10

784791

457.25

464.90

450.50

460.75

455.95

608593

466.95

467

458.65

463.05

459.23

1169024

465

468.70

462.95

466.30

463.37

3469132

467.80

470.25

464.75

466.70

465.35

473127

467.90

467.90

458.10

458.95

463.40

255395

749845

REPRESENTATION OF CLOSING PRICE AND MOVING AVERAGE LINE

GRAPH OF CLOSING PRICE:
Fig Closing price and
moving average graph
line
Interpretation
The closing Price set through
Moving average indicates
downward or stable trend
line fitted on closing price of
the share during the study
period, so from this It
conclude that it will not be
highly lucrative to invest in
Tata Motors and also it
involves a moderate risk as
the prices are not gaining much.
REPRESENTATION OF OPENING AND CLOSING PRICE ON LINE GRAPH:
Fig Opening and Closing
price graph line
INTERPRETATION
The movement of opening and
closing
price
indicates
a
steadiness and slight decrease
during the study period and the
situation is not good from the
investors point of view, as the
overall market capitalization of
Tata Motors is decreasing
during the study period.

REPRESENTATION OF LINE CHART-TOTAL VOLUME W.R.T. DAYS

Fig.
Volume
graph

volatility

INTERPRETATION
The above chart shows the
huge volatility in demand
volume sales of the share as
a result of which the price
the price is also little bit
volatile, as it is visible from
the line chart of opening &
closing price w.r.t. days

CANDLESTICK CHART
Fig. Candlestick chart
INTERPRETATION
Its shows stock has lower
opening
price
at
maximum numbers of
days compare to closing
price on the same day of
the study period. It
represents not a clear
picture of stock price at
which the investors will
decide to invest (since
neither the black body
nor the white bodies show any trend),thus we cannot predict the investment
decisions.

3. MAHINDRA & MAHINDRA

Table-. Historical Data analysis chart of M&M(9-5-2016

to 10-6-2016) (BSE)

DTAE

OPEN
PRICE
(RS)

HIGH
PRICE
(RS)

LOW
PRICE
(RS)

CLOSE
PRICE
(RS)

VOLUM
E

1349.45

MOVIN
G
AVERAG
E OF
CLOSIN
G PRICE
1333.75

9/5/201
6
10/5/20
16
11/5/20
16
12/5/20
16
13/5/20
16
16/5/20
16
17/5/20
16
18/5/20
16
19/5/20
16
20/5/20
16
23/5/20
16
24/5/20
16
25/5/20
16
26/5/20
16
27/5/20
16
30/5/20
16
31/5/20
16
1/6/201
6
2/6/201
6
3/6/201
6
6/6/201
6
7/6/201
6
8/6/201
6
9/6/201
6
10/6/20
16

1335.1

1357

1330.50

1351.40

1352.95

1333

1350.40

1343.43

27250

1340

1353.95

1315.05

1346.15

1349.23

38531

1353

1363.85

1330.50

1331.80

1344.17

178922

1332

1332

1303

1313.10

1331.78

35705

1313

1321

1306

1318.30

1321.15

22071

1228.80

1351

1320

1341.40

1323.67

44918

1341.95

1342

1312.25

1320.10

1328.08

343874

1321.5

1328

1305.65

1309.35

1326.33

66586

1315.80

1322.40

1290

1294.05

1310.05

27062

1300.20

1301

1279.5

1286.35

1296.37

34512

1272.5

1303.55

1261.05

1296.25

1290.95

35826

1297.1

1318

1297.1

1312.15

1297.17

190220

1312.50

1343

1307

1337.10

1315.22

362396

1339.10

1361.95

1326

1335.15

1328.18

105270

1340

1351.20

1314.10

1331.80

1334.55

253340

1338.3

1344.0

1316.1

1324.70

1328.95

3492

1331

1349.70

1326

1333.85

1328.97

109067

1346.80

1346.80

1329.55

1332.70

1329.77

72513

1343

1359.25

1342

1353.45

1333.25

265621

1358

1386.40

1358

1369.60

1345.40

77915

1375

1386

1372

1377.85

1360.30

60981

1380

1397

1380

1384.70

1377.98

104817

1385.15

1392.75

1365

1376.65

1379.22

113148

1371

1404

1363.75

1382.9

1378.52

101083

39060

REPRESENTATION OF CLOSING PRICE AND MOVING AVERAGE LINE

GRAPH OF CLOSING PRICE:
Fig Closing price and
moving average graph
line
Interpretation
The closing Price set
through Moving average
indicates little fluctuation
in
trend line fitted on
closing price of the share during the study period, so from this It conclude that
it will not be highly lucrative to invest in Mahindra and also it involves a
moderate risk as the prices are not gaining much.

REPRESENTATION OF OPENING AND CLOSING PRICE ON LINE GRAPH:

Fig Opening and
Closing price graph
line
INTERPRETATION
The
movement
of
opening and closing price
indicates little increase
during the study period
and the situation is good
from the investors point
of view, as the overall
market capitalization of
Mahindra is increasing
during the study period.

REPRESENTATION OF LINE CHART-TOTAL VOLUME W.R.T. DAYS

Fig. Volume volatility graph

INTERPRETATION
The above chart shows the huge
volatility in demand /volume
sales of the share as a result of
which the price the price is also
little bit volatile, as it is visible
from the line chart of opening &
closing price w.r.t. days. Its
shows good sign for investors.

CANDLESTICK CHART

Fig. Candlestick chart

INTERPRETATION
Its shows stock has low
opening price at maximum
numbers of days compare to
closing price on the same
day of the study period. It
represents a clear picture of
stock price at which the
investors will decide to invest
(since neither the black body
nor the white bodies show any trend),thus we predict the investment decisions.

CHAPTER. 4
FINDINGS,
SUGGESATION
&
CONCLUSION

4.1FINDINGS
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:
o

o
o
o
o

4.2

The Maruti and Mahindra companies were performing well till 2015
with a positive trend in the earnings per share. But TATA had
downward trend. Especially, TATA has witnessed a steep fall till
2015.
The sales trend has been upward and positive in case of all the
three companies. The sales growth looks upward and positive till
2015, TATAs sales have declined whereas Maruti and Mahindra
have maintained the same upward positive trend.
The return on capital employed (ROCE) has been fluctuating since
2011 and the year 2015witnessed low returns in case of all the
companies amongst which TATA has the least rate of return.
Compared to the three companies, Maruti and Mahindra have good
rate of return.
In case of interest coverage ratio, TATA has decreasing trend but
Maruti and Mahindra have increasing trend till 2015.
In case of debtors turnover ratio TATA and Maruti have increasing
trend but Mahindra has decreasing trend during 2011 to 2105.
Maruti and Mahindra had a stable dividend payout ratio since 2011.
TATA has increased their payout ratio in which shows a higher
payout ratio.
By analysing 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.

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 and Maruti
would be a better option for an investor compared to TATA. 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

payout ratio. The return on capital employed 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. In spite of the general economic slowdown, the
sales of Maruti Suzuki increased. 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 Capital employed is
much higher compared to TATA and Maruti. 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 2011.

Few Suggestions for Right Stock Selection

There are three factors which an investor must consider for selecting the
right stocks.
Business:
Balance Sheet:
Bargaining:
Investment rules
Invest for long term in equity markets
Align your thought process with the business cycle
of the company.
Set the purpose for investment.
Long term goals should be the objective of equity
investment.
Disciplined investment during market volatility helps
attains profits.
Planning, Knowledge and Discipline are very crucial for
investment.
4.3

CONCLUSION

The automotive industry in India is one of the largest in the world with an
annual production of 23.37 million vehicles in FY 2014-15, following a growth
of 8.68 per cent over the last year. India emerged as Asias fourth largest
exporter of automobiles, behind Japan, South Korea and Thailand.
A runway 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 devastating effect on the automotive sector. Maruti
suzuki company has a trend of growth from till 215. TATA Motors, which was
trying to consolidate its leadership position in the market.

 In spite 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.
One factor favouring 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 theco
mpanies 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.

Bibliography

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april 17). Retrieved april 17, 2014, from
www.investopedia.com.
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www.moneycontrol.com.

3. www.economictimes.indiatimes.com/prices.cms
4. www.wikipedia.com/automotiveindustry
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6. (2011-15). Annual Report. Mahindra and Mahindra
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