A Study on the Equity Research in Banking Sector
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A STUDY ON THE EQUITY RESEARCH IN BANKING SECTOR Project submitted to the Madurai Kamaraj University in partial fulfillment of the requirements for the award of the Degree of Master of Business Administration Submitted By N. DINAKARAN (Reg. No. B029008) Under the Guidance of Dr. V. CHINNIAH DEPARTMENT OF MANGEMENT STUDIES MADURAI KAMARAJ UNIVERSITY MADURAI – 625 021. JANUARY 2012 Dr. V. CHINNIAH, M.Com., M.B.A., M.Phil., B.L., Ph.D., Professor, Department of Management Studies, Madurai Kamaraj University, Madurai 625 021 CERTIFICATE This is to certify that the project entitled “A STUDY ON THE WORKING CAPITAL MANAGEMENT AT MEENAKSHI MISSION HOSPITAL & RESEARCH CENTRE” submitted by Mr. N. DINAKARAN, I year MBA is a record of research work carried out by him for the degree of Master of Bussiness Administration, under my guidance. The subject of the dissertation is her original work and it has not previously formed the basis for the award of any degree, diploma, associateship, and any other similar titles of any university or institution. The project represents entirely an independent work on the part of the candidate. Place: Madurai-21 (Dr.V.CHINNIAH) Date: N. DINAKARAN, Department of Management Studies, Madurai Kamaraj University, Madurai – 625 021. DECLARATION I hereby declare that the project is entitled “A STUDY ON THE WORKING CAPITAL MANAGEMENT AT MEENAKSHI MISSION HOSPITAL & RESEARCH CENTRE” for the degree of Master of Bussiness Administration, is my original work and done under the supervision of Dr. V. CHINNIAH, M.Com., M.B.A., M.Phil., B.L., Ph.D., Professor, Department of Management Studies, Madurai Kamaraj University, Madurai and that it has not previously formed the basis for the award of any degree, diploma or other similar titles of any university or institution. Station : Madurai-21 (N.DINAKARAN) Date: ACKNOWLEDGEMENT First I would like to thank God and my beloved parents and the members of my family, for their blessings and prayers in making this dissertation a success. I owe a deep of sense of gratitude to my esteemed guide Dr. V. Chinniah, M.Com., M.B.A., M.Phil., B.L., Ph.D., Professor, Department of Management Studies, Madurai Kamaraj University, Madurai. His help in correcting the drafts and clarifying the doubts are greatly appreciated with deep sense of gratitude. I wish to express my sincere thanks to Dr.C. Chandran, M.B.A., Ph.D., Professor and Head of the Department of Management Studies, Madurai Kamaraj University for his encouragement and support and also for permitting me to do research work in the Department of Management Studies. I am very thankful to Dr. N. Sethuraman – Founder Chairman, Dr. V. N. Rajasekaran – Medical Director and Dr. N. Krishnamoorthy – Academic Director of MMHRC for permitting me to undergo summer project in their organization. I am also thankful to all the staffs of the Finance department of MMHRC for helping me to complete summer project in their organization. I wish to express my thanks to my classmates & my friends who have co- operated with me to complete this project. TABLE OF CONTENTS Page No Acknowledgement List of Tables List of Graphs CHAPTER 1. Introduction and Design of the Study 1 -11 1.1 Introduction 1.2 Scope of the Study 1.3 Objectives of the Study 1.4 Methodology 1.5 Limitation of the Study 1.6 Chapter Scheme II. Background of the study area 12 – 30 2.1Introduction 2.2 History of the Organisation 2.3 Objective of MMHRC 2.4 S.R.Trust 2.5 Quality Policy 2.6Location and Layout 2.7Organisation Principles 2.8 Future Plans 2.9 Departments In MMHRC 2.10 Recognition Awards and Acceleration 2.11 Social Activities 2.12 Summary III. The Analysis and Interpretation 31 – 87 3.1 Introduction 3.2 Gross Working Capital to Total Assets Ratio 3.3 Net Working Capital to Current liability Ratio 3.4 Gross Working Capital to Sales 3.5 Working Capital Turnover Ratio 3.6 Gross Profit Ratio 3.7 Net Profit Ratio 3.8 Current Ratio 3.9 Quick Ratio 3.10 Absolute Liquid Ratio 3.11 Debtors Turnover Ratio 3.12 Average Collection Period 3.13 Creditors Turnover Ratio 3.14 Cash as Percentage of Current Assets 3.15 Statement Of Changes In Working Capital 3.16 Regression Analysis 3.17 summary IV. Summary of Findings, Suggestions and Conclusion 88 – 92 4.1 Findings 4.2 Suggestions 4.3 Conclusion Bibliography Appendix Chapter-I INTRODUCTION & DESIGN OF THE STUDY Equity Analysis 1.1 Introduction 1.2 Concept of working capital 1.3 Need for working capital 1.3 Introduction to the variable 1.4 Scope of the study 1.5 Objectives of the study 1.6 Methodology of the study 1.7 Period of the study 1.8 Sources of data 1.9 Tools used 1.10 Limitations of the study. CHAPTER I - 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 skepticism and a stock market increasingly difficult to predict and contend with, if one looks hard enough there may still be a genuine aid for the 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 firsthand, humans expectations are neither easily quantifiable nor predictable. If prices are based on investor expectations, then knowing what a security should sell for (i.e., fundamental analysis) becomes less important than knowing what other investors expect it to sell for. That's not to say that knowing what a security should sell for isn't important--it is. But there is usually a fairly strong consensus of a stock's future earnings that the average investor cannot disprove Fundamental analysis and technical analysis can co-exist in peace and complement each other. Since all the investors in the stock market want to make the maximum profits possible, they just cannot afford to ignore either fundamental or technical analysis. FUNDAMENTAL ANALYSIS Fundamental analysis is a method of forecasting the future price movements of a financial instrument based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the financial instrument. It is the study of economic, industry and company conditions in an effort to determine the value of a company’s stock. Fundamental analysis typically focuses on key statistics in company’s 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. Fundamental analysis is the cornerstone of investing. The basic philosophy underlying the fundamental analysis is that if an investor invests re.1 in buying a share of a company, how much expected returns from this investment he has. The fundamental analysis is to appraise the intrinsic value of a security. It insists that no one should purchase or sell a share on the basis of tips and rumors. The fundamental approach calls upon the investors to make his buy or sell decision on the basis of a detailed analysis of the information about the company, about the industry, and the economy. It is also known as “top-down approach”. This approach attempts to study the economic scenario, industry position and the company expectations and is also known as “economic-industry- company approach (EIC approach)” Thus the EIC approach involves three steps: 1. Economic analysis 2. Industry analysis 3. Company analysis 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 macro economic environment is essential to understand the behavior of the stock prices. The commonly analyzed macro economic factors are as follows: Gross Domestic Product (GDP): GDP indicates the rate of growth of the economy. It represents the aggregate value of the goods and services produced in the economy. It consists of personal consumption expenditure, gross private domestic investment and government expenditure on goods and services and net exports of goods and services. The growth rate of economy points out the prospects for the industrial sector and the return investors can expect from investment in shares. The higher growth rate is more favorable to the stock market. Savings and investment: It is obvious that growth requires investment which in turn requires substantial amount of domestic savings. Stock market is a channel through which the savings are made available to the corporate bodies. Savings are distributed over various assets like equity shares, deposits, mutual funds, real estate and bullion.