FUNDAMENTAL ANLAYSIS OF BHARTI AIRTEL
SUBJECT:- SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
Dr. Hussain Yaganti
1. Devisetty Yeswanth 2008A7PS038H 2. G Sai Kaushik 2008A2PS300H
BITS PILANI HYDERABAD CAMPUS
Fundamental analysis is the examination of the underlying forces that affect the well being of the company, industry groups and companies. As with most analysis the goal is to develop a forecast of future price movement and profit from it. At the company level, fundamental analysis may involve examination of financial data, management, business concept and competition. At the industry level their might be an examination of supply and demand forces of the products. For the national economy fundamental analysis might focus on economic data to asses the present and future growth of the economy. Fundamental analysis is a method of evaluating a security by attempting to measure its intrinsic value by examining related economy, financial and other qualitative and quantitative factors. Three phase of the fundamental analysis are: A. Understanding of the Macro Economic environment and developments (Economy analysis) B. Analyzing the prospectus of the industry to which the firm belongs(Industry analysis) C. Assessing the projected performance of the company( Company analysis)
The economy is like the tide and the various industry groups and individual companies are like boats. When economy expands most industry groups and companies benefits and grows, when the economy declines, most sectors and companies usually suffer. The stock market does not operate in a vacuum it is an integral part of the whole economy of a country, more so in a free economy like that of United States and to some extent in mixed economy like ours. To gain an insight into the complexities of stock market one needs to develop a sound economic understanding and be able to interpret the impact of important economic indicators on stock markets. India’s GDP Growth rate
India's economy grew 8.2% compared to the same period a year earlier between October and December, government data showed on March 1.
Quarterly GDP for Q3 of 2010-11 is estimated at Rs. 12,61,664 crores, as against Rs. 11,66,145 crores in Q3 of 2009-10, showing a growth rate of 8.2 per cent over the corresponding quarter of previous year.
The economic activities which registered significant growth in Q3 of 2010-11 over Q3 of 2009-10 are: agriculture, forestry & fishing at 8.9 per cent, construction at 8.0 percent, trade, hotels, transport and communication at 9.4 per cent, and financing, insurance, real estate and business services at 11.2 per cent.
In communication sector, the total stock of telephone connections (including WLL and cellular) registered growth rate of 40.0 per cent, respectively in Q3 of 2010-11 over Q3 of 2009-10.
Interpretation: As we saw that GDP growth rate of India’s shows increasing trend. Even though there are some ups and downs it is constantly maintaining an increasing trend. When it comes to the communications sector it has registered high growth rates. We can safely assume that the Indian economy is strong and will not be going into a depression anytime soon. India’s Inflation Rate: The inflation rate in India was last reported at 8.82 percent in February of 2011. From 1969 until 2010, the average inflation rate in India was 7.99 percent reaching an historical high of 34.68 percent in September of 1974 and a record low of -11.31 percent in May of 1976. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power.
Interpretation: As the below graph shows that inflation rate is rising year by year. Inflation in economy is not good from investor’s point of view. When inflation rate rises it becomes the reason of extra costs to business, thereby squeezing their profit margin and leading to real...