PROJECT REPORT ON

FUNDAMENTAL & TECHNICAL ANALYSIS OF FMCG SECTOR

IN

FINOABILITY

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT

OF
MASTER OF MANAGEMENT STUDIES

BY

VAIBHAV SHAMRAO KHARAT

ROLL NO 2021098

MMS-II (SEM III)

YEAR 2021 - 2023

LALA LAJPATRAI INSTITUTE OF MANAGEMENT

MAHALAXMI, MUMBAI – 400034
 PROJECT REPORT ON

FUNDAMENTAL & TECHNICAL ANALYSIS OF FMCG SECTOR

IN

FINOABILITY

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT

OF
MASTER OF MANAGEMENT STUDIES

BY

VAIBHAV SHAMRAO KHARAT

ROLL NO 2021098

MMS-II (SEM III)

YEAR 2021- 2023

LALA LAJPATRAI INSTITUTE OF MANAGEMENT

MAHALAXMI, MUMBAI - 400034
SUMMER INTERNSHIP PROJECT

SUBMITTED BY

VAIBHAV SHAMRAO KHARAT

ROLL NO – 2021098

MMS – II (SEM III)

YEAR 2021- 2023

 Certificate

This is to certify that the project work titled ―FUNDAMENTAL &

TECHNICAL ANALYSIS OF FMCG SECTOR‖ is a summer internship
work carried out by Mr. VAIBHAV SHAMRAO KHARAT.
The project was completed for ―FINOABILITY‖, under the guidance of
PIYUSH AGARWAL
I further certify that the said work has not been submitted in the part or in full,
to any other University.

Date: 9th January, 2023

_____________________ __________________________
Prof. Vikas Sharma Dr . C. Satyanarayana
Project Mentor Director
 DECLARATION

I,Mr. VAIBHAV SHAMRAO KHARAT, student of Lala Lajpatrai Institute

of Management of MMS II (Semester III) hereby declare that I have completed
the summer internship project on FUNDAMENTAL & TECHNICAL
ANALYSIS OF FMCG SECTOR with (FINOABILITY)in the Academic
year 2021 - 2023. The information submitted is true & original to the best of my
knowledge.

Vaibhav Shamrao Kharat.

 ACKNOWLEDGEMENT

At the outset of this project, I would like to express my profound thanks to a

few people without whose help, completion of this project would not have been
possible.
First and foremost, I would like to express sincere thanks to FINOABILITY
for giving me this opportunity to work with them.
The list is endless but to name a few special people, I would like to thank
Piyush Agarwal for being extremely supportive and guiding me throughout my
internship and giving me constant motivation and expert advice.
I would also like to thank the entire Equity Research Team of FINOABILITY
for providing me their precious time and making this internship a successful
learning experience.
I am very grateful to Dr. C. Satyanarayana, Director of Lala Lajpatrai Institute
of Management, for giving me the opportunity to do this project in
FINOABILITY.

I would also like to thank Prof. Vikas Sharma for being an excellent mentor
and helping me whenever I approached him/her.
Last but not the least; I take pride in thanking my parents Mr. Shamrao
Kharat& Mrs. Priyanka Kharat, siblings and friends for their much valued
support.
 EXECUTIVE SUMMARY

The Research has been taken forward in Two Parts, Fundamental Analysis & Technical
Analysis. For Fundamental Analysis of stocks, research on Industry & Companies is required
where the Large-cap funds have been taken for the Purpose of analysing. A Study has been
undertaken to analyse the large Cap equity Shares of Companies of the Industry.
Initially it would be, Index Formulation
(Large Cap Funds Choosen From the sector) -this helps us in taking various decision based
on the movement of the shares.

Further, Fundamental Analysis has been done where Topline, Bottomline, Ratio Analysis &
Ratio Ranking Approach would be used for Shortlisting Growth - Pick & Value - Pick
Stocks. This would serve as the purpose of recommendation for the company working for and
for investors keen to invest in FMCG Industry. Finally, the research will be Technical
Analysis which basically will reflect an idea that the movement of share price follows a trend
and the factors which affect the movement of price. Under technical analysis we would
forecast the future price movement of stocks based on past price movement of the stocks. The
motto behind technical analysis is to know the trend and demand of the stocks.

Hence, this research would help the investors with the right direction for investing their
money. Therefore, in order to achieve the goal of maximizing returns and minimizing risk,
investors need to consider both the risk factors as well as the return factors of various stocks
of an industry. The outcome we get would be used for the purpose of making decision
regarding investment, asset allocation and coverage of risk while investing and a fund sheet
would be made accordingly.
In short, it consists studying the large cap stocks of FMCG industry through fundamental and
technical analysis which is finding the growth and value picks by using the financial ratios,
funneling down the best stocks to do asset allocation and track the movement of the stocks
through the charts and historical data of companies and making buy, sell or hold decisions
based on the Analysis
 INDEX

SRNO. TITLE PAGE

NO.

Executive Summary

1 Introduction to Company 1

2 FMCG Industry 3

3 Objectives of the Project 9

4 Flow 10

5 Methodology 11

6 Introduction to capital Market 16

- Live trading 18

- Stock Market Index 19

7 Fundamental Analysis 20

- Stages for Fundamental Analysis 21

8 Technical Analysis 29

- Technical Analysis of selectedstocks 30

9 Findings 57

10 Conclusion 58

11 Recommendation 59

12 References 60
 INTRODUCTION

FINANCIAL SERVICEINDUSTRY – FINOABILITY PRIVATE LTD

ABOUT FINOABILITY PRIVATE LTD.:

Type Private Company

Traded as -

Industry Financial Services

Founded 2020

Headquarters Kolkata, West Bengal

Area Served India

Key People Piyush Agarwal (MD &CEO)

Products Finance

Website www.finoability.com

1
 HISTORY

Knowing that you’re on the right track and conquering challenges for funding your personal
financial goals is invaluable. The process of getting there lies in the answers to these
questions: How can you claim your future and achieve your retirement goals? How can you
fund your next dream? Have you set clear goals for financial independence?

Meeting your financial goals happens through precise and diligent planning—not by chance.
A customized portfolio can help you feel confident that you’ll achieve what you want out of
life, whether it’s early retirement, funding college educations for your kids or grandkids, real
estate, investment in a second home, or financing a new business venture.

To help you and your family discover and claim the future, we apply integrated expertise and
a systematic approach to:

1) Review and evaluate your Income, Assets & Investment Portfolio.

2) Establish and prioritize your financial goals and time frames for achieving them.

3) Develop strategies to address financial weaknesses and build on financial strengths.

4) Monitor and adjust the portfolio to reflect your changing goals and circumstances.

5) Protect and grow your assets.

2
 ABOUT FMCG INDUSTRY

Fast-moving consumer goods (FMCG) sector is India’s fourth-largest sector with household
and personal care accounting for 50% of FMCG sales in India. Growing awareness, easier
access and changing lifestyles have been the key growth drivers for the sector. The urban
segment (accounts for a revenue share of around 55%) is the largest contributor to the overall
revenue generated by the FMCG sector in India. However, in the last few years, the FMCG
market has grown at a faster pace in rural India compared to urban India. Semi-urban and
rural segments are growing at a rapid pace and FMCG products account for 50% of the total
rural spending.

MarketSize

The retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$ 840 billion
in 2017, with modern trade expected to grow at 20 25% per annum, which is likely to boost
revenue of FMCG companies. The FMCG market in India is expected to increase at a CAGR
of 14.9% to reach US$ 220 billion by 2025, from US$ 110 billion in 2020. According to
Nielsen, the Indian FMCG industry grew 9.4% in the January-March quarter of 2021,
supported by consumption-led growth and value expansion from higher product prices,
particularly for staples. The rural market registered an increase of 14.6% in the same quarter
and metro markets recorded positive growth after two quarters. Final consumption
expenditure increased at a CAGR of 5.2% during 2015-20. According to Fitch Solutions, real
household spending is projected to increase 9.1% YoY in 2021, after contracting >9.3% in
2020 due to economic impact of the pandemic. The FMCG sector's revenue growth will
double from 5-6% in FY21 to 10-12% in FY22, according to CRISIL Ratings. Price increases
across product categories will offset the impact of rising raw material prices, along with
volume growth and resurgence in demand for discretionary items, are driving growth. The
FMCG sector grew by 36.9% in the April-June quarter of 2021 despite lockdowns in various
parts of the country.

FMCG giants such as Johnson & Johnson, Himalaya, Hindustan Unilever, ITC, Lakmé and
other companies

3
 Key players in FMCG Industry:

1. Hindustan Unilever Ltd:

Hindustan Unilever Limited is India’s largest fastmoving consumer goods (FMCG) company
with a Historical presence in India of over 80 years. It is the largest in the list of top 5 FMCG
companies in India.

Nine Out of ten Indian households use one or more of HUL Brands. Divisions – Home and
Foods and Refreshment – include a portfolio of brands that serve consumers across the length
and breadth of India.

With over 40 brands across 12 distinct categories including Fabric Wash, Household Care,
Purifiers, Personal Wash, Skin Care, Hair Care, Colour Cosmetics, Oral Care, Deodorants,
Beverages, Ice Cream & Frozen Desserts and Foods, the Company is part of the daily life of
millions of consumers.

The Brand portfolio includes leading brands such as Surf Excel, Rin, Wheel, Sunlight, Vim,
Pure it, Lux, Lifebuoy, Dove, Fair & Lovely, Pond’s, Vaseline, Clinic Plus, Sunsilk,
Indulekha, Lakmé, Pepsodent, Closeup, Axe, Brooke Bond, BRU, Kwality Wall’s, Knorr and
Kissan.HUL is one of the top fmcg brands in India.

4
2. ITC Ltd:

Established in 1910, ITC Limited is a diversified conglomerate with businesses spanning Fast
Moving Consumer Goods comprising Foods, Personal Care, Cigarettes and Cigars, Branded
Apparel, Education & Stationery Products, Incense Sticks and Safety Matches; Hotels,
Paperboards, and Packaging, Agri-Business and Information Technology. ITC is among the
top fmcg brands in India.

Imperial Tobacco Company – Full Form

The Company was incorporated on August 24, 1910, under the name Imperial Tobacco
Company of India Limited. It is the second largest in the list of top 5 FMCG companies in
India.

As the Company’s ownership progressively Indianite, the name of the Company was changed
to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. In
recognition of the ITC’s multi-business portfolio encompassing a wide range of businesses,
the full stops in the Company’s name were removed effective September 18, 2001.

5
3. Nestle India Ltd:

Nestle India Ltd., incorporated in the year 1959, is a Large Cap company (having a market
cap of Rs 183,112.73 Crore) operating in FMCG sector.

Nestle India Ltd. key Products/Revenue Segments include Milk Products, Prepared Dishes &
Cooking aids, Confectionery, Beverages (Powdered), Export Incentives, Other Operating
Revenue for the year ending 31-Dec-2020.

The company’s top management includes Mr. Suresh Narayanan, Mr. David S McDaniel,
Mr. Matthias C Lohner, Mr.Rajya Vardhan Kanoria, Dr.Swati A Piramal,
Ms.RamaBijapurkar, Ms.RoopaKudva, Mr.P R Ramesh. Company has B S R & Co. LLP as
its auditors. As on 30-09-2021, the company has a total of 9.64 Crore shares outstanding.

Nestlé is the world’s largest food and beverage company. The company has more than 2000
brands ranging from global icons to local favorites, and are present in 191 countries around
the world. After more than a century-old association with the country, today, NESTLÉ India
has a presence across India with 8 manufacturing facilities and 4 branch offices. It is the third
Largest in Top FMCG Companies in India.

6
4. Britannia Industries Ltd:

Britannia Industries is one of India’s leading Top FMCG Companies with a 100-year legacy.
Britannia is among the most trusted food brands and manufactures India’s favourite brands
like Good Day, Tiger, NutriChoice, Milk Bikis and Marie Gold which are household names
in India. Britannia’s product portfolio includes Biscuits, Bread, Cakes, Rusk, and Dairy
products including Cheese, Beverages, Milk, and Yoghurt.

Britannia Industries Ltd., incorporated in the year 1918, is a Large Cap company (having a
market cap of Rs 83,773.99 Crore) operating in FMCG sector.

The company’s top management includes Mr.Nusli N Wadia, Mr.KekiElavia, Dr.Y S P

Thorat, Dr.Ajay Shah, Mr.Ness N Wadia, Dr.Ajai Puri, Mr.KekiDadiseth, Mr.Jeh N Wadia,
Mr.Avijit Deb, Mr.Varun Berry, Mrs.Tanya Dubash. Company has Walker Chandiok& Co.
LLP as its auditors. As on 30-09-2021, the company has a total of 24.09 Crore shares
outstanding.

7
5. Godrej Consumer Products Ltd:

Godrej Consumer Products is a leading emerging markets company. As part of the over 122-
year young Godrej Group. Godrej Consumer Products Ltd enjoys the patronage of 1.15
billion consumers globally, across different businesses. It is fifth in the list of top 5 FMCG
companies in India.

Godrej Consumer Products Ltd., incorporated in the year 2000, is a Large Cap company
(having a market cap of Rs 95,498.85 Crore) operating in FMCG sector.

In line with the 3 by 3 approach to international expansion at Godrej Consumer Products,

building a presence in three emerging markets (Asia, Africa, and Latin America) across three
categories (home care, personal care, and hair care). The Company is Among the Top FMCG
Companies in India.

The company’s top management includes Mr.Adi Godrej, Mr.Sumeet Narang, Ms.Pippa
Tubman Armerding, Ms.NdidiNwuneli, Mr.Omkar Goswami, Mr.NarendraAmbwani,
Mr.Aman Mehta, Ms.Tanya Dubash, Mr.Jamshyd N Godrej, Mr.Nadir Godrej, Mr.Pirojsha
Godrej, Ms.Nisaba Godrej, Ms.IreenaVittal. Company has BSR & Co. LLP as its auditors.

8
 OBJECTIVES OF THE PROJECT

 To understand Fundamental & Technical Analysis.

 To Understand working of FINOABILITY PRIVATE LTD.

 To analyse the performance of the companies under FMCG sector through technical analysis.

 This report will help the investors to know about the current growth prospects of Indian
economy and FMCG sector. They will get to understand various factors affecting Banking
sector and their impact on the growth of these sector. This report will help them in comparing
the above mentioned four companies and their estimated future share prices, so that they can
invest in better options.

 The Report will also help FINOABILITY PRIVATE LTD Capital in their investment
decisions.

9
 FLOW

•To study the FMCG industry for the purpose of investing the capital
accumulating and selecting large cap funds of sector on the basis of
market capitalization.
1.

• After selecting stocks on the basis of market cap we move to calculate

index on daily basis for the trading purposes and track the share price
trend. The fundamental analysis is where the top line and bottom-line
approach was considered to find the value picks and growth pick stocks
2. by doing peer to peer comparison and asset allocation

•Further, the research would be analysing the risk associated with the
stocks selected for investment and formulate strategy to minimise the
risk through hedging.
3.

•Finally, it would be technical analysis to analyse the price movement of

stock selected and various trends and factors which affect the share
price.
4.

10
 RESEARCH METHODOLOGY AND DESIGN

Methodology is an essential part of research to find answer to research objectives and initiate
the same. Therefore, it figures as the important part of any study. This focuses on the design
and research method utilised in the study. In addition, procedure followed to collect, process
and analyse data is presented.

Sources of Data

Data was collected based on source.

 Secondary Data

SECONDARY DATA:

Secondary Data refers to data that was collected by someone other than the user. Secondary
data analysis can save time that would otherwise be spent collecting data, and particularly in
the case of quantitative data can provide larger and high – quality database that would be
unfeasible for any individual researcher to collect on their own. The sources of secondary
data are annual reports, browsing internet and through money control app.

It includes data gathered from the annual reports of the various companies coming under
FMCG sector.

Information is collected from the official websites, money control app and by doing sectoral
analysis using different methods.

11
 TYPES OF FINANCIAL STATEMENT ADOPTED –

 Balance Sheet

 Income Statement

The project is on equity research analysis of the sectors. Hence study has to be done on the
basis of information and news available about the sectors i.e. secondary data by various
modes. This research has completed by doing Fundamental analysis and Technical analysis
of the companies.

SAMPLE DESIGN:

The sample of the stocks for the purpose of collecting primary and 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 stock chosen. The stocks are chosen from the
FMCG sector.

12
 ADVANTAGES AND LIMITATIONS OF THE STUDY

Advantages of Fundamental Analysis:

Fundamental Analysis is a good tool for long-term investments that try to achieve a growth of
capital as it will help to identify assets that represent a good value in longer-term investment.

One of the most notable but less obvious rewards of fundamental analysis is the development
of solid understanding of the business and industry due to the in-depth, extensive research
and analysis required to conduct fundamental analysis.

Disadvantages of Fundamental Analysis:

1. This study has been conducted purely to understand equity analysis for investors.

2. The study is restricted to three companies based on Fundamental Analysis.

3. The study is limited to the companies having equities.

4. Detailed study of the topic was not possible due to limited size of the project.

5. There was a constraint with regard to time allocation for the research study i.e. for a period of
30 days.

6. Suggestions and conclusions are based on the data of five years.

13
 INTRODUCTION TO EQUITY MARKET

A stock market, equity market or share market is the aggregation of buyers and sellers (a
loose network of economic transactions, not a physical facility or discrete entity) of stocks
(also called shares), which represent ownership claims on businesses; these may include
securities listed on a public stock exchange, as well as stock that is only traded privately.
Examples of the latter include shares of private companies which are sold to investor’s
through equity crowd funding platforms. Stock exchanges list shares of common equity as
well as other security types, e.g. corporate bonds and convertible bonds.

 APPROACHES TO INVESTING

STRATEGIES

Fundamental Technical Index

Analysis Analysis Method

14
Fundamental Analysis

Fundamental analysis refers to analysing companies by their financial statements found in

SEC filings, business trends, general economic conditions, etc.

Technical Analysis

Technical analysis studies price actions in markets through the use of charts and quantitative
techniques to attempt to forecast price trends regardless of the company's financial prospects.

Index Method

Additionally, many choose to invest via the index method. In this method, one holds a
weighted or unweighted portfolio consisting of the entire stock market or some segment of
the stock market (such as the S&P 500 or Wilshire 5000). The principal aim of this strategy is
to maximize diversification, minimize taxes from too frequent trading, and ride the general
trend of the stock market.

15
 INTRODUCTION TO CAPITAL MARKET (STOCKMARKET)

Capital market is a financial market where various debt and equities are being bought and sold.It’s
a place where different entities trade various financial institutions. The place includes stock
market, bond market, foreign exchange market and currency market.

Capital markets basically sell financial products like equity and debt securities. Equities are shares,
stocks that gives ownership in a company whereas, debt securities such as bonds are interest
bearing. In our report, we will only deal with stock market.

The market is divided into two categories:

 PRIMARY MARKET

 SECONDARY MARKET

PRIMARY MARKET:

This market is open to specific investors who directly buy securities from issuing company. These
types of securities are called Initial Public Offerings (IPO) or primary offerings.

SECONDARY MARKET:

It is a place where existing or already issued securities are being traded. For e.g.: New York Stock
exchange (NYSE) and NASDAQ. Capital Markets are important part of functioning modern
economy as they move money from people who have it to the people who need it for productive
use.

STOCK MARKET

Stock market is a collection of exchanges and markets where regular activity of buying, selling
and issuance of shares of public companies take place.

Though it is called an equity market or stock market and primarily known for trading stocks/
equities, and other securities like- corporate bonds, ETFs (exchange traded funds) and derivatives
based on stocks, commodities are also traded in stock market.

16
Indian stock exchange

Indian Stock Exchange is the oldest stock market in Asia. There are 2 stock exchanges in India:

- Bombay Stock Exchange (BSE)

- National Stock Exchange (NSE)

BSE: It is located in Dalal Street, Mumbai. It was established in 1875 and is Asia’s first stock
exchange.

The BSE became the first stock exchange to be recognized by the Indian Government under the
Securities Contracts Regulation Act. In 1986, it developed S&P BSE Sensex index, giving the
BSE a means to measure the overall performance of the exchange.

In 2000, the BSE used this index to open its derivatives market, trading S&P BSE SENSEX
futures contracts. It consists of top 30 companies.

NSE: In April 1992, the Bombay stock Exchange (BSE) crashed due to Harshad Mehta Scam.

So, Finance Minister urged the need of other stock exchange in competition to BSE. He told
Indian Development Bank (IDB) to take the project and create other stock exchange.

Thus, in November 1992, National Stock Exchange (NSE), the first electronically traded stock
exchange in India established.

17
 LIVE TRADING-INDEX METHOD

LIVE TRADING -

Live trading is an act of participating in the financial markets, which seeks to outperform
traditional buy-and-hold investing. Instead of waiting to profit from long-term investments in the
markets, traders seek short-term price movement in order to earn profit during both rising and
falling markets. These platforms are normally provided by internet based brokers like Share khan
and are accessible to every single individual who wants to make money from the market.

Meaning of Index -

 Stock market indexes measure the value of a segment of a country’s stock market by the method
of weighted average of selected stocks. These indexes help investors and analysts describe the
market and compare different investments. Stocks in numerical terms. As the stocks within an
index change value, the index value also changes accordingly.

 The stocks could be selected on the basis of the type of industry, market capitalisation or the size
of the company. The value of the stock market index is calculated using values of the underlying
stocks. Any change taking place in the prices of underlying stock impact the overall value of the
index. If the prices of most of the underlying stocks rise, then the index will rise and vice-versa. In
this way, a stock index reflects overall market sentiment and direction of price movements of
products in the financial, commodities or any other markets.

18
  STEPS TO CALCULATE STOCK MARKET INDEX (FMCG SECTOR)

1. Note down the Daily closing price of the stocks (as per your sector).

2. Calculate the Market Capitalization by multiplying the closing price with No. of shares.

3. Next step in the process is to calculate the Weightage of all the stocks by dividing the individual
market cap with total market capitalization.

4. Percentage Change in price is calculated by - (Current Price- Base Price)/ Base Price*100

5. Change in weightage is calculated by multiplying Weightage with percent change in price.

6. Last step is to calculate the Final Value - (Change in weightage*1000/100) assuming base to be
1000

19
 FUNDAMENTAL ANALYSIS:

 Fundamental analysis is the examination of the underlying forces that influence the prosperity of
the economy, business groups, and organizations. Similarly, as with most analysis, the objective is
to derive a forecast and benefit from future price movements. At the organization level,
Fundamental analysis may include examination of financial information, the board, business idea
and competition.

 At the business level, there may be an examination of supply and demand forces for the fair value.

 Fundamentalists don't need the counsel of the random walkers and trust that markets are weak
form efficient. By trusting that prices don't accurately reflect all accessible data, fundamental
analysts look to capitalize on perceived price discrepancies.

20
STAGES FOR DOING SECTORAL FUNDAMENTAL ANALYSIS:

Selection of company &

considering its P/E Ratio

Finding Value Pick Stocks (Undervalued Stocks)

Finding Grwoth Pick Stocks (Overvalued Stocks)

Ranking

Allocation of Funds

NAV

21
 STAGE 1: SELECTION OF COMPANY & CONSIDERING ITS P/E
RATIO:

Steps:
1. Select a sector for doing the analysis (for Ex- Cement, Automobile, telecom etc.)

2. As the investment in mutual funds is long term, therefore take large cap stocks from that
sector and some mid cap stocks.

3. Get the P/E value of every stock. It can be calculated or can be seen in the company details.

4. Calculate Industrial P/E by taking the average of the P/E’s of the stocks in the list.

5. Industrial P/E we can see if the stock is overvalued or undervalued.

6. If the value is above Industrial P/E then it’s overvalued and If below then Undervalued.

COMPANY P/E RATIO VALUE

Hindustan Unilever Ltd 65.2 Overvalued

ITC Ltd 20.0 Undervalued

Nestle India Ltd 82.4 Overvalued

Britannia Industries Ltd 54.0 Undervalued

Godrej Consumer 51.8 Undervalued

Products Ltd

22
 STAGE2: FINDING VALUEPICK STOCKS (UNDERVALUEDSTOCKS)

The stocks which are undervalued are judges on the basis of top line and bottom line i.e.,
revenues and profits and the following is done:

 If both the top line and bottom line either increases or one increases and the other decreases,
then we chose those stocks to be value picks and consider them to be hidden gems for the
industry.

 If both decrease, we reject those stocks.

UNDERVALUED PROFIT REVENUE PICK

PICKS COMPARISON COMPARISON
OF 2021 TO 2022 OF 2021 TO 2022

ITC Ltd Declining Declining REJECT

Britannia Industries Growing Growing BUY

Ltd

Godrej Consumer Growing Growing BUY

Products Ltd

Explanation – There is an increase in revenue and decrease in the profit. Hence, the
company should be selected.

23
 STAGE 3: FINDING GROWTH PICK STOCKS (OVERVALUED
STOCKS)

 WewilltakeP/ERatio ofalltheOvervaluedstocksandcalculatetheirPEGvalue.

[PEG=P/ERatio /EPS growth]

 ThestockswhichareovervaluedareconsideredtobegrowthpickstocksonthebasisoftheirPEGRatio
s.
 IfthePEGratioisgreaterthan1, wewillrejectthose stocks.

 IfthePEGratioislessthan1, wewillconsiderthosestocksasgrowthpick stocks.

 PEGratio iscalculated.

 TheEPSgrowthispercentagegrowthinEPSofthecompanycomparedtolastfinancialyear.

COMPANY P/E EPS EPS EPS PEG RESULT

RATIO 2020 2021 GROWTH RATIO
(%)

Hindustan 65.2 31.17 34.03 8.40 4.55 REJECT

Unilever Ltd

Nestle India 82.4 204.16 215.98 5.47 4.42 REJECT

Ltd

24
 STAGE 4: RANKING

 Now when we have value pick and growth pick stocks list, we’ll see how much investment
should be done in which stock and for that we have to rank them. The highest ranked will get
the maximum allocation of the fund and the lowest ranked will have minimum.

 The ranking is done by comparing the important financial ratios of the sector in which the
companies are lying. And we also see the factors of the companies. Ranking is given to all
the value pick stocks separately and the growth pick stocks separately. The highest ranked
stock will get the highest investment in value pick stocks and growth pick stocks.

.
INVENTORY TURNOVER ROCE
COMPANY RATIO RANK RATIO ROA
BRITANNIA LTD 8.52 1 45.3 23.4
GODREJ CONSUMER
LTD 2.95 2 19.7 12

As we can observe here, Britannia Industries Ltd. is ranking high and should be allocated
funded with maximum funds.

25
 STAGE 5: ALLOCATION OF FUNDS

As a mutual fund manager we will allocate the fund according to the ranking of the stocks.

Assumed figure – Rs.1 Crores are available for investment.

RANK COMPANY NOOFSHARES PRICE ALLOCATION ALLOCATED

1 Britannia 14496 3448 5,00,00,000 4,99,82,208

Industries
Ltd

2 Godrej 72280 691.75 5,00,00,000 4,99,99,690

Consumer
Products Ltd
Cash in Hand 17,482

TOTAL 1,00,00,000

NAV 10

This figure shows the NAV calculation of the portfolio. It is to be continued further to
see the growth in NAV. As the price of stock changes, the AUM changes by which the
NAV changes as follows

26
 24th May 2021

RANK COMPANY NO OF PRICE ALLOCATION ALLOCATED

SHARES

1 Britannia 14496 3379.1 5,00,00,000 4,89,83,433.6

Industries Ltd

2 Godrej 72280 808.30 5,00,00,000 5,84,23,924

Consumer
Products Ltd

Cash in Hand

17,482

TOTAL 10,74,07,357.6

NAV 10.74

24th June 2021

RANK COMPANY NO OF PRICE ALLOCATION ALLOCATED

SHARES

1 Britannia 14496 3689.1 5,00,00,000 53477193.6

Industries Ltd

2 Godrej 72280 870.40 5,00,00,000 62912512

Consumer
Products Ltd

Cash in Hand

17,482

TOTAL 116389705.6

NAV 11.64

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 24th July 2021

RANK COMPANY NO OF PRICE ALLOCATION ALLOCATED

SHARES

1 Britannia 14496 3482 5,00,00,000 50475072

Industries Ltd

2 Godrej 72280 976.55 5,00,00,000 70585034

Consumer
Products Ltd

Cash in Hand

17,482

TOTAL 121060106

NAV 12.11

24th August 2021

RANK COMPANY NO OF PRICE ALLOCATION ALLOCATED

SHARES

1 Britannia 14496 3812.1 5,00,00,000 55260201.6

Industries Ltd

2 Godrej 72280 1013.15 5,00,00,000 73230482

Consumer
Products Ltd

Cash in Hand

17,482

TOTAL 128490683.6

NAV 12.85

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 TECHNICAL ANALYSIS

Technical Analysis is the prediction of future financial price movements based on an

examination of past price movements. Technical analysis uses a wide variety of charts that
show price over time. Technical Analysis helps in identifying long term trend by analyzing
the price movements over a certain duration. There are different shapes that are formed while
doing this analysis and these trends help us to predict buy and sell point.

The objective of analysis is to forecast the direction of the future price. By focusing on price
and only price, technical analysis represents a direct approach while Fundamentalists are
concerned with why the price is what it is.

Based on the duration of analysis, technical analysis can be categorized into two types:

1. Long term technical analysis (2-5 years)

2. Short term technical analysis (<1 year)

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 Steps in Technical Analysis-

1. Study the past movement in share price and identify the trends and establish patterns.
2. Look at the current movement in the share price and identify the trends and establish patterns.

The basic principle behind Technical Analysis-

1. The market value of a share is related to the demand and supply factors prevailing in the
market.

2. There are both rational factors which surrounds the supply and demand factors of security.

3. Security prices behaves in a manner that their movements are continuous in particular
direction for some length of time.

4. Trends in stock prices have been seen to change when there is shift in demand and supply.

5. The shift in demand and supply factors can be detected through charts prepared specifically
to show market action.

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 Advantages of Technical Analysis:

 In case of pure technical analysis, there is very little or no room for interpretation. Thus, the
system becomes Mechanical.

 Technical analysis helps traders and investors alike to review their investment decisions
faster. This is because prices tend to discount, i.e. anticipate, fundamental information much
before an actual event takes place.

 All results and indicators can be tested and verified historically.

 The advent of low-priced personal computer systems had made the use of technical analysis
even less difficult to test and employ.

 Today no of technical analysis charting software are available which will help you to
generate buy and sell signals for you.

 Technical analysis is considered to be a disciplined approach as it makes use of stoploss

theory.

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 Disadvantages of Technical Analysis:
 Technical Analysis is not a valid scientific approach because most methods studyprices based
upon price related data. Therefore, it is necessary that a trader continuously review his trading
systems to check its work ability.

 The basis of technical analysis may be easy to learn but rather difficult to implement and
master.

 Most traders tend to oscillate between different approaches and thus fail to follow through
with their analysis in a consistent manner, and this ultimately results into losses more often
than profit.

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 THERE ARE 3 TYPE OF TRENDS:

1. UPWARD TREND:

2. DOWNTREND TREND:

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3. SIDEWAYS:

These trends can analyse securities in long term as well as in short term.
In long term, chart pattern is used whereas in short term, Candlestick pattern is used.
A change in the price direction of an asset is called trend reversal. Trend reversal can occur
upside or downside. Following an uptrend, a reversal would be to the downside. Following a
downtrend, a reversal would be to the upside. Trend reversals are based on overall price
direction and are not typically based on one or two periods/bars on a chart.
There are 6 possibilities in trend reversal: -

1. Up trend, a reversal would go downside.

2. Up trend, a reversal would go sideways.

3. Down trend, a reversal would go upside.

4. Down trend, a reversal would go sideways.

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5. Sideways, a reversal would go upside.

6. Sideways, a reversal would go downside.

CANDLESTICKS AND CANDLESTICK PATTERNS

A candlestick is a type of price chart used in technical analysis that displays the high, low,
open, and closing prices of a security for a specific period. It originated from Japanese rice
merchants and traders to track market prices and daily momentum hundreds of years before
becoming popularized in the United States. The wide part of the candlestick is called the "real
body" and tells investors whether the closing price was higher or lower than the opening price
(black/red if the stock closed lower, white/green if the stock closed higher).

CLASSIFICATION OF CANDLESTICKS

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 BULLISH:

 Closing price closes HIGH from previous candle.

 Shows DEMAND force.

 Reacts to POSITIVE factors.

BEARISH:

 Closing price closes LOW from previous candle.

 Shows SUPPLY force.

 Reacts to NEGATIVE factors.

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 CANDLESTICK PATTERNS

HAMMER & HANGING MAN:

 Both Candles have SMALL BODY and a LONG TAIL.

 When the Candle is formed in a DOWNTREND it is called as a HAMMER.

 When the Candle is formed in a UPTREND it is called as a HANGINGMAN.

 Both are REVERSAL SIGNALS but it is better to wait for confirmation candle of the Trend
Reversal.

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 INVERTED HAMMER & SHOOTING STAR:

 Both Candles have SMALL BODY and a LONG TAIL.

 When the Candle is formed in a DOWNTREND it is called as a INVERTED HAMMER.

 When the Candle is formed in a UPTREND it is called as a SHOOTING STAR.

 It is better to wait for colour changing candle to confirm the Trend Reversal.

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 BULLISH & BEARISH ENGULFING:

 Engulfing pattern is formed with the help of Two candles.

 It is formed when the body of 2nd candle covers the body of 1st candle.

 The colour of the 1st candle should be of the following Trend & the 2nd candle should be the
Trend Reversal.

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 PIERCING LINE & DARK CLOUD COVER:

 It is a Two Candle pattern and Reversal Indicator.

 In both the patterns the 2nd candle covers 50% or more of the 1st candle's real body.

 The 2nd candle should be of opposite colour of the 1st candle.

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 BULLISH & BEARISH HARAMI:

 HARAMI is formed when the body of the 2nd candle is placed within the vertical range of
the 1st candle.

 A Bullish Harami is formed on the Down Trend.

 A Bearish Harami is formed on an Up Trend.

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 DIFFERENT CHARTS AND THEIR ANALYSIS IN LONG TERM

Technical Analysis helps in identifying long term trend by analysing the change in price over
a period of time. There are different shapes and curves that are formed while doing this
analysis and these curves help us to predict bid and ask point.Money can be easily made
using this indicator as per the market situations.

Different types of chart patterns & graphs are used for analyzing the trends. Most frequently
used chart patterns are mentioned below-

1. Rounding bottom
2. Cup with handle
3. Bump and Run reversal
4. Head & Shoulder (Top and Bottom)
5. Double Top
6. Double Bottom
7. Flag, pennant

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ROUNDING BOTTOM:

Rounding bottom is a long-term reversal pattern that is mostly used for weekly charts. It is
also known to as a saucer bottom, and depicts a long consolidation period that change from a
bearish bias to a bullish bias. A rounding bottom could be thought of as a head and shoulders
bottom without readily identifiable shoulders. The head shows the low and is fairly central to
the pattern. The patterns of volume are same and confirmation comes with a resistance
breakout. While symmetry is preferable on the rounding bottom, the left and right side do not
have to be equal in time or slope.

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CUP WITH HANDLE:

A Cup and Handle chart represents a bullish continuation pattern in which the upward trend
has paused but will follow an upward direction once the pattern is confirmed. Pattern of the
price shows what looks like a cup, which is preceded by an upward trend. The handle follows
the cup formation and is formed by a generally downward/sideways movement in the
security's price. After the price movement pushes above the resistance lines formed in the
handle, the upward trend can continue. There is a long time frame for this type of pattern,
with the span ranging from several months to more than a year.

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BUMP AND RUN REVERSAL:

The Bump and Run Reversal (BARR) is a type of reversal pattern that takes shape, after
excessive speculation drives prices up too far, too fast. There are three main stages to the
pattern: lead-in, bump and run.

Lead-in Stage: The first part of the pattern is a lead-in phase that can last 1 month or longer
and forms the basis from which to draw the trend line. During this phase, prices advance in
an orderly manner and there is no excess speculation. The trend line should be moderately
steep. If it is toosteep,thentheensuingbumpisunlikelytobesignificantenough.

BumpStage:Thebumpformswithasharpadvance,andpricesmovefurtherawayfromthelead-in
trend line. Ideally, the angle of the trend line from the bump's advance should be about
50%greaterthanthe angleofthetrendlineextendingupfromthelead-inphase.
Run Stage: The run phase begins when the pattern breaks support from the lead-in trend
line.Priceswillsometimeshesitateorbounceoffthetrendlinebeforebreakingthrough.Oncethebreak
occurs,therunphasetakes overandthedeclinecontinues.

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HEAD AND SHOULDER (TOP):
The pattern contains three successive peaks with the middle peak (head) being the highest
and the two outside peaks (shoulders) being low and roughly equal. The reaction lows of each
peak can be connected to form support, or a neckline. Depending on the relationship between
the two low points, the neckline can slope up, slope down or be horizontal. This determines
the selling point.

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HEAD AND SHOULDERS (BOTTOM):
As a major reversal pattern, the head and shoulders bottom forms after a downtrend, and its
completion marks a change in trend. The pattern contains three successive troughs with the
middle trough (head) being the deepest and the two outside troughs (shoulders) being
shallower. Ideally, the two shoulders would be equal in height and width. The reaction highs
in the middle of the pattern can be connected to form resistance, or a neckline. This
determines the buying point.

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DOUBLE TOP:
Double top is a major reversal pattern that are formed after an extended uptrend. As the name
suggests, the pattern is drawn up of two consecutive peaks that are roughly equal, with a
moderate trough in between. Although there can be variations, the classic double top marks at
least an intermediate change, if not long-term change, in trend from bullish to bearish.
Different double tops can form along the way up, but until key
support is broken, a reversal cannot be confirmed.

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DOUBLE BOTTOM:
Double bottom is a type of reversal pattern that forms after an extended downtrend. As the
name implies, this pattern is made up of two consecutive troughs that are roughly equal, with
a moderate peak in between. Although there can be variations, the classic double bottom
usually marks an intermediate or long-term change in trend. Many potential double bottoms
can form along the way down, but until key resistance is broken, a reversal cannot be c
confirmed.

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FLAG, PENNANT:
Flags and Pennant is continuation pattern that mark a small consolidation before the previous
move resumes. These patterns are usually preceded by a sharp advance or decline with heavy
volume and mark a mid-point of the move. This determines buy point.

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 TECHNICAL ANALYSIS OF SELECTED STOCKS

Following stocks for the FMCG sector have been selected for technical analysis which will
all chart patterns:

1. Hindustan Unilever Ltd

2. ITC Ltd
3. Nestle India Ltd
4. Britannia Industries Ltd
5. Godrej Consumer Products Ltd

Assumptions:
1. We will consider the Time Frame (TF) of 1day, 1hour & 15mins.
2. Target 2.5% or 3%
3. Stoploss 1%

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HINDUSTAN UNILEVER LTD

Date: October 2022

Pattern: Double Bottom
Target: 4.32%
Stop-loss: 2.20%

Double Bottom is formed with sharp two bottoms, where at one point we have placed
neckline, which gives indication to take an entry into trade. Keeping target 4.32% by
considering height of the bottoms and keeping the same as target at the expected breakout.
Also, stop-loss being half of the Target i.e. 2.20%.

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ITC LTD

Date: February 2022

Pattern: Flag pattern
Target: 6.10%
Stop-loss: 2.23%

Flag pattern is formed where the prior bullish price is the pole of flag and this pole height is
considered as a target of the trade and being placed of the expected breakout. Flag indicates
heavy consolidation in between price movement.

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NESTLE INDIA LTD

Date: April 2022

Pattern: Head & Shoulder
Target: 3.56%
Stop-loss: 2.14%

Head & Shoulder is a Bearish reversal pattern which is formed and shows that bears have
won in breaking down the pattern, when it cuts the neckline.
When price cuts neckline the price first retests the level and then falls down to target.

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BRITANNIA INDUSTRIES LTD

Date: May 2022

Pattern: Rounding bottom
Target: 1.27%
Stop-loss: 0.56%

Rounding Bottom is bullish reversal pattern where bulls gain strength gradually in process
the price form round shape at the bottom and eventually breaks the neckline formed.

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GODREJ CONSUMER PRODUCTS LTD

Date: Sept 2022

Pattern: Double top
Target: 1.16%
Stop-loss: 0.44%

Double Top is a bearish reversal pattern wherein bears win against bulls and the price falls
after the neckline is breached. The target is set on the basis of height of a top.

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 FINDINGS

After doing fundamental and technical analysis of FMCG sector, I obtained that:

 Created own large cap mutual Fund of FMCG sector and in 1 month the NAV reached 12.85
from 10 which is a POSITIVE sign.

 Got to know different investment areas where money can be invested by portfolio managers
where can minimize risk and expand gains.

 Learned the concept of derivatives and how it is traded in market.

 Technical Analysis can be considered for the short term view depending upon time frame
opportunity.

 Both Fundamental and Technical analysis has their own importance and can we used
according to the view.

 Fundamental analysis ease down the long term view by filtering the stocks from various
ratios.

 Whereas, Technical analysis can bring multiple trades as it does not undertake company’s
financial health and just trades on price movements.

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 CONCLUSION

Equity research plays a very crucial role in order to make wise investment decisions. After
having accessed your risk capacity and tolerance followed by time horizon and intention of
investment, the individual portfolio can fetch your systematic returns.

Relative valuation model is one such method for value analysis. One can use long term and

short-term technical analysis along with fundamental analysis to determine a confirm trade
signal. By calculating long term target price investor one can achieve maximum profit and
also get an idea for how much period they should hold the stock.

Fundamental analysis also works as the key for technical analysis. Fundamental helps you to
search for suitable stocks based on financial factors and technical analysis helps you search
for a suitable stock by studying and interpreting price charts. Creating wealth takes time,
share market also gives returns with time though it can take a few years. As we traded, we
realized trading on intraday doesn’t give much returns but intraday or derivatives can give
good benefits on the returns

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 RECOMMENDATIONS

Before investing in a company, one should always do his/her homework regarding the
company/business the person wants to invest and also invest according to one’s risk capacity
as it differs from person to person.

The decision to buy or sell a stock should not depend on what your friends or relatives say. It
is always prudent to invest systematically and with patience in the right shares or funds. As
the stock market is always volatile, an investor should be ready to absorb calculated risk and
decide a necessary course of action.

By diversifying a portfolio across asset classes, you can help earn optimum returns with
minimum risk. The kind and level of diversification can vary from investor to investor, and it
can help cope up with volatility.

Future and options are less explored by the traders; many companies are not giving call or put
options. Strategies of options can help to gear the profit from market and also insure to
reduce the risk of loss.

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 REFERENCES

https://www.moneycontrol.com

https://www.investopedia.com/

www.nseindia.com

https://www.equitymaster.com

https://www.screener.in/

https://www.tickertape.in/

www.economictime.com

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