BANGALORE

A REPORT ON
EQUITY RESEARCH: FUNDAMENTALAND
TECHNICAL ANALYSIS
OF
“FAST MOVING CONSUMER GOODS SECTOR”

By : Abhishek Ugreja
(308600)

SUMMER INTERNSHIP PROGRAM

AT
BHARTI AXA LIFE INSURANCE PVT LTD

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 ACKNOWLEDGEMENT
The internship I had at Bharti Axa Life Insurance was a fantastic opportunity for learning
and growing professionally. I feel really lucky to have had this chance. I'm also grateful
for meeting so many amazing people and professionals who guided me during my time
there.

I wish to extend my profound gratitude and express my utmost appreciation to Mr. Sonu
Singh, the Branch Manager at Bharti Axa Life Insurance Pvt. Ltd. Despite his demanding
schedule, Mr. Singh graciously dedicated his valuable time to liste n to me, offer invaluable
guidance, and steer me in the right direction, enabling me to successfully navigate through
my project duringthe training period attheir esteemed organization.

I would like to express my special thanks of gratitude to my faculty guide, Prof

Radhika Uttan , for her valuable guidance and support throughout the project. I
sincerely acknowledge her for extending her valuable guidance and critical reviews
on the project and for the moral support she provided during all the stages of this
project.

I extend my gratitude to Welingkar Institute , Bangalore for giving me this

excellent opportunity.

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 ABSTRACT
The FMCG (Fast Moving Consumer Goods) sector in India is the 4th largest and
most competitive industry, comprising a diverse range of products such as personal
care, household care, food and beverages, and packaged goods The FMCG product
group is an important contributor to the economy. The products included in the
FMCGgrouphavea quickturnover.Thefood& beverages segmentwastheleading
segmentthatgenerated
thehighest revenue
in theoverallmarket.

This report included equityearch

res on the FMCG sector using fundamental and
technical analysis. In this report first, the FMCG sector is studied in its current
scenario, its future outlook, etc. for further research companies have been picked in
thissectorbasedonvariousfinancial
parameters likeMarket,NetProfit,andSales.

The report also includes the additional learnings that have been acquired over the
course of the summer internship program like pitching clients and understanding
client behavior.

This report is of the project undertaken at Bharti Axa Life Insurance the main
purpose of the project is to have
-depth
in knowledge and understanding of “The
FMCG Sector”, as this sector is popular among investors, and this project will be
beneficial
to estimatethetrendandgoodperformancestocksandanalysisthefuture
of FMCGsectorin India.

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 SIP - EXECUTIVE SUMMARY

Name : Abhishek Ugreja

Enrolment Number: 308600
Organization : Bharti Axa life Insurance pvt.Ltd
Industry Type: Insurance Service Provider

TITLE: Equity Research of FMCG Sector

OBJECTIVE: The main objective of the training was to analyze the large-cap stocks in
the FMCG Sector and prepare a portfolio to allocate funds to them using Fundamental
Techniques.

BACKGROUND: A detailed analysis of how stocks are selected in the portfolio

fundamental techniques and how the index is calculated.

METHODOLOGY: The project is majorly based on secondary data collection where

online sites and articles are used to understand the sector and different articles and
literature reviews are read and understood for the research paper and their analysis is made.

FINDINGS: Full-fledged equity research has helped in determining and understanding of

how and what the industry is. Fundamental analysis has helped in understanding the ways
and the importance of the financial or non-financial ratios that are used while conducting
the research. A broader understanding of PE ratio, ROE, and EPS was established through
the research.

CONCLUSION: Fundamental & Technical Analysis 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 you
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 confirmed trade signal

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 2.1 FINANCIALSERVICE SECTOR
2.1.1 INTRODUCTION:
India has a diversified financial sector undergoing rapid expansion both in terms of
strong growth of existing financial services firms and new entities entering the
market. The sector comprises commercial banks, insurance companies, non-banking
financial companies, co-operatives, pension funds, mutual funds, and other smaller
financial entities. However, the financial sector in India is predominantly a banking
sector with commercial banks accounting for more than 64% of the total assets held
by the financialsystem.

The Government of India has introduced several reforms to liberalize, regulate, and
enhance this industry. The Governmentand Reserve Bank of India (RBI) have taken
various measures to facilitate easyaccess to finance for Micro, Small and Medium
Enterprises (MSMEs). These measures include launching a Credit Guarantee Fund
Scheme for MSMEs, issuing guidelines to banks regarding collateral requirements,
and setting up a Micro Units Development and Refina nce Agency (MUDRA). With
a combined push by the Government and private sector, India is undoubtedlyone of
the world's most vibrant capital markets.

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The financial sector of India plays a crucial role in the country's economy, providing
essential services and facilitating economic growth and development. Here's an overview
of the economic analysis of the financial sector in India, including its key components
and recent trends

2.1.2 Market Size:

As of January 2023, AUM managed by the mutual funds industry stood at Rs.38.89 trillion
(US$ 518.15 billion) and the total number of accounts stood at 123.1 million. Inflow in
India's mutual fund schemes via systematic investment plans(SIP) increased by 17% to Rs.
1.05 lakh crore (US$ 13.98 billion) in November 2022 as compared to November 2021.
Equity mutual funds registered a net inflow of Rs. 22.16 trillion (US$ 294.15 billion) by the
end of December 2022.

Another crucial component of India’s financial industry is the insurance industry.

The insurance industry has been expanding at a fast pace. The total first-year premium of
life insurance companies reached US$ 37.1 billion in FY21. In FY22, premiums from new
businesses of life insurance companies in India stood at US$ 17.6 billion.
In the first 10 months of FY22, non-life insurance sector premiums reached Rs. 1.82 lakh crore
(US$ 24.18 billion).

In FY22, US$ 4.25 billion was raised across 45 initial public offerings (IPOs). The number
of companies listed on the NSE increased from 135 in 1995 to 21690 by December 2022.
According to the statistics by the Futures Industry Association (FIA), a derivatives trade
association, the National Stock Exchange of India Ltd. (NSE) emerged as the world’s largest
derivatives exchange in 2020 in terms number of contracts traded. NSE was ranked 4th
worldwide in cash equities by number of trades as per the statistics maintained by the World
Federation of Exchanges (WFE) for CY2020. India is expected to have 6.11 lakh HNWIs in
2025.

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 2.1.3 Investments:
In February 2021, the Reserve Bank of India (RBI) cleared the Rs. 34,250 crores (US$
4.7 billion) acquisition of Dewan Housing Finance Corporation (DHFL)by the Piramal
Group.

In August 2022 RBI relaxed the lending norms for gold loans by increasing the LTV from
75% to 90%.

In January 2021, the National Stock Exchange (NSE) launched derivatives on the Nifty
Financial Service Index. This service index is likely to provide institutions and retail
investors more flexibility to manage their finances.

In September 2022, Unified Payments Interface (UPI) recorded 3.65 billion transactions
worth Rs. 6.5 trillion (US$ 86.63 billion).

2.1.4 Government Initiatives:

The government has approved 100% FDI for insurance intermediaries and increased the FDI
limit in the insurance sector to 74% from 49% under the Union Budget 2021- 22.
The government allotted 9,000 crores for MSMEs in a credit guarantee scheme.

The Centre also introduced a digital rupee or a Central Bank Digital Currency (CBDC)
which would be issued by the RBI using blockchains.

PM Modi launched 75 Digital Banking Units (DBUs) in 75 districts across India to enhance
digital banking initiatives. in October 2022. 48 among them were accounted for by the PSUs
and private sector banks accounted for the rest.

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2.2 Industrial Analysis

The brokerage industry generated a revenue of INR 382.00 Bn in FY 2023, expanding

at a compound annual growth rate (CAGR) of 13.73% from FY 2019to FY 2023.

In FY 2022, full-service brokers accounted for a significant share (46.23%) of the

broking industry in India, followed by discount brokers (42.46%) and hybrid
brokers (11.31%).

In the post-COVID era, Technological advancements have brought smart features,

such as e-KYC, order management systems, analytical and charting tools, and
much more, to ease the investment journey for retail traders.

With today's investors being immensely tech-savvy and expecting cutting-edge tech
solutions for all their needs, brokers are increasingly investing in technology.

There is also an increased focus on fund-based activities, such as margin funding.

This is helping broker firms generate sustainable earnings. They are also expanding
the range of products and services to strengthen client relationships.

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4.1. KEY LEARNING DURING INTERNSHIP
This report is based on internship experience which was conducted at Bharti Axa Life
Insurance as a part of the internship program. The objective of the internship was to
pitch prospective clients about Bharti Axa’s products and services.

Given below is the detailed weekly breakdown of the work undertaken during
the internship:-

• Week 1 - During the first week of the internship we were introduced to what is Bharti
Axa Life Insurance‘s business how states they operates, and its corporate profile.
Equity Advisory and Portfolio Management Services to watch and understand the
products and clear ourconcept about these Products and Services.

• Week 2 – During the second week we were taught and introduced to all products and
services offered by the company such as Term insurance, ULIP Plans, Retirement
plans, and Fund Management along with given knowledge of derivatives and
important terminologies related to them.

• Week 3 – We were tasked with crafting a refined pitch aimed at engaging prospective
clients regarding our insurance, advisory, and service offerings. Our pitch underwent
meticulous review and enhancement to ensure its effectiveness. Concurrently, we
diligently updated our comprehension of our products, enabling us to provide
comprehensive and adept responses to client inquiries.

• Week 4 – We practiced our pitch with our Relationship Managers and they taught us
how to improve our pitch and make it more confident along with that we were given a
project to do research on stock edge as per the parameters given.

• Week 5 – We did data mining for prospective clients' data, prepared a database for
client calls, and were taught mock trading and charts and patterns of candlesticks.

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 INDEX

So, every day we need to update the market cap, and price and maintain record of
change in the index. A stock market index is a basket of stocks reflective of an industry,
sector, or the entire market itself. It is a selection of stocks put together In a basket with
a weighted average of their aggregate prices being tracked as one. This cumulative
price reflects the state of the underlying class of stocks. So, for example, the S&P BSE
Sensex (or the 30-stock Sensex) is tracked widely by institutions and FIIs and is often
called the true reflection of the Indian stock markets. It is the weighted average of 30
well- established and financially sound stocks drawn from different industrial sectors
of the Indian economy.

Similarly, in the same way, I have calculated the index of the FMCG Sector. The base value
is considered as 1000 and the index is prepared.

For index calculation of the stocks in the Financial Service Sector, we have taken into
consideration large-cap stocks i.e., stocks with a market capitalization of more than
INR 20,000 crores.

Method of Calculation of Index:

1. Took large capital companies of the FMCG sector having a market

capitalization of more than INR 20,000 crore.
2. Calculate of weightage of each stock as per the total market capital. 3.
Calculation of percentage change i.e., changes in stock price compared to the
previous day. (Current price–Previous price)/Previous price.
4. Percentage of change in accordance with the weightage of the stock.
5. Also, Index calculation has been started withbaseindex1000.

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 15th May, 2024 Index
NAME Weights
Market %
Previous Close %Change 875.6662973
Cap(in Index
close price in
cr) change
price
ITC 521790.00 424.45 29.33% 427.15 0.64% 0.008% 0.081718841
HUL 618633.00 2451.7 32.02% 2468 0.66% 0.010% 0.097403026
NESTLE 209172.00 21745.85 11.63% 21875.7 0.60% 0.007% 0.068022544
JUBLIANT 1.63% -0.006% -0.064127431
FOODWORKS 30871.00 461.60 458 -0.78%

MARICO LTD 67911.00 499.85 3.56% 502.50 0.53% 0.024% .02384455146

GODREJ 5.15% 0.150% 1.448768368
CONSUMER 101268.00 923.35 939.20
PRODUCTS 1.72%

DABUR 91972.00 536.45 5.24% 537.95 0.28% 0.011% 0.110042427

BRITANNIA 6.08% 0.054% 0.515398481
108387.00 4511.05 4527.10 0.36%
INDUSTRIES
COLGATE – 2.41% 0.018% 0.176633522
PALMOLIVE 43784.00 1575.35 1584.55 0.58%
(INDIA)
ADANI 2.97% -0.046% 0.445361901
WILMER
52501.00 415.45 396.40 -4.59%

Total 18,46,289 100% Index as of15TH 875.8963

May

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

Technical analysis approach has been classified into two types based on the duration:

1. Long-term technical analysis (period of more than a year, 2-5years)

2. Short-term analysis (period less than a year)

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 RATIOS FOR FINANCIAL SERVICE
SECTOR
SR. RATIOS EXPLANATION FORMULA
NO.
1. Debt to Equity debt-to-equity (D/E) ratio is used to Total Debts /
Ratio evaluate a company’s financial Shareholder’s funds
leverage and is calculated by dividing a
company’s total liabilities by its
shareholder equity. The D/E ratio is an
important metric in corporate finance.
Itis a measure of the degree to which a
company is financing its operations
withdebt rather than its own resources.
Debt-to-equity ratio is a particular type
of gearing ratio.
2. Return on Equity EPS is an important measure of Net income/Total
management performance because it shareholder’s fund.
shows how much money the company
is making for its shareholders; EPS
Ratio is a good indicator of the rate at
which companies have grown earning
per share. Stocks with higher EPS are
typically more desirable than those
with lower EPS.
3. PE ratio The P/E ratio tell show much the EPS/current share
market is willing to pay for a price.
4. EPS EPS is an important
company’s earnings. A measure
higher ofP/E Total Earnings/
management
ratio means performance because
that the market it
is more Outstanding
shows how much money the
willing to pay for the earnings of the
Shares.
company
company asisthe market
makinghas for its
high hopes
shareholders;
for the future EPS ofRatio
the is share
a goodand
indicator
therefore of thebidrate
it has at price.
up the whichOn
companies
the other have
hand,grown earning
a lower per to
price
share. Stocks
earnings ratiowith higher the
indicates EPS market
are
typically
does not more desirable
have much than those
confidence in the
with lower EPS.
future of the share. The average P/E
ratio depends on market and economic
conditions. P/E ratio may also
varyamong different industries and
companies.

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 AUM (Asset Under Management:

Assets Under Management refers to the total market value of the assets
that a mutual fund scheme manages at a given point in time.

NAV Calculation:

NAV or Net Asset Value is the unit price of a mutual fund scheme. The performance
of a particular scheme of a Mutual Fund is denoted by Net Asset Value(NAV). NAV is
the market value of the securities held by the scheme. Mutual fund units are bought or
sold on the basis of NAV.

Example:

AUM=Rs1,10,000
No. units = 11,000

NAV=AUM/no. of units

=Rs1,10,000/11,000

=Rs10/unit

There will be no effect on NAV due to the addition of new investors or if existing
investments redeem the investment. The NAV is affected only by the change in share
prices

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 12. FINDINGS

Fundamental Analysis helped in choosing the correct portfolio for my

sector using all the necessary steps, like selecting the value pick and
growth pick stocks, analyzing and ranking them as per the ratios and then
allocating funds to them and calculating NAV comparing it with the
benchmark index.

The equity market may be risky, but after analyzing the stock, and their
trends, reading the news properly, and entering the market at the right
time, we may end up making profits.
From this study, I got to know about the selection of stock in the portfolio
using PE and PEG ratios. I tracked these stocks for these 2 months and
saw the fluctuation and changes in these stocks. Investment is for the long
term; anyone should not rely on intraday trading for regular income or
wealth appreciation. A mutual fund is one of the best available investment
options for the equity market, with less knowledge about equities.
The fund can be analyzed and further revised. The new sector PE and long-term
price target need to be updated. We can use this method to select our portfolio
also. By selecting the sector, that will excel in the future and considering sector
PE, we can select stocks for our portfolio. To make this fund more valuable,
more research for these companies can be done. Financial modeling forever
company should be done to derive the forecasted value. The related news about
companies, top line, and bottom line should be updated with time.

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 14. LIMITATIONS

1. As the sourcing of data is done through different websites, authenticity is not

guaranteed.

2. Lot of dependence on secondary data

3. Lot of dependence on Macroeconomics factors that sometimes overpowers the

technical and fundamental analysis.

4. Past performance is just for reference and does not indicate future returns

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 15.CONCLUSION.

Fundamental & Technical Analysis 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 you
systematic returns.

The direct relationship across many other local, economic, and global forces involved
makes equity markets unpredictable. As a result, a better grasp of the equity market
through equity research can help investors gain a better understanding of market changes
and aid in the process of accomplishing financial goals. As a result, equity research is a
top priority, and research analysts' findings are closely monitored by all stakeholders,
from huge corporations to individual investors who put a portion of their cash in the
stock market.

The research comprises a thorough understanding of fundamental and technical analysis

in order to identify the stocks in the FMCG sector that are performing well and lucrative.
A stock's valuation provides an accurate picture of its performance in contrast to the
sector as a whole. As a result, we used financial ratios to determine the top-performing
equities. Fundamental analysis is concerned with the success of a company based on
historical data, such as price values and ratios. After performing the fundamental
analysis, we could determine the allocation of funds.In allocating assets, you are
balancing the risks and rewards of your portfolio and keeping your financial goals in
mind. Technical analysis, on the other hand, is a unique method of spotting trends and
patterns in the movement of a stock. As a result, detecting and discovering several trend-
setting events in long-term charts is an art. In this project, we looked at all of the stocks
that were chosen based on fundamental research to see how they moved, in order to help
investors, get the most out of their investments in this sector.

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 16. REFRENCES

• https://en.wikipedia.org/wiki/Oil_and_gas_industry_in_India

• https://www.irdai.gov.in/

• https://www.ibef.org/industry/insurance-sector-india.aspx

• https://en.wikipedia.org/wiki/Bajaj_Allianz_Life_Insurance

• https://www.bajajallianzlife.com/

• www.moneycontrol.com

• www.investopedia.com

• www.nseindia.com

• https://economictimes.indiatimes.com/

• https://in.tradingview.com/

• https://www.nseindia.com

• https://stocksandsecurities.adityabirlacapital.com/about-us

• https://www.ibef.org/industry/financial-services-india

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