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Mittal School of Business Faculty of MBA

Name of the faculty member: Dr. R. Karuppasamy

Course Code: FINM509 Course Title: Investment Banking

Academic Task No: 1 Academic Task Title: Investing and
trading
Date of Allotment: 15-2-2025 Date of Submission: 18-3-2025
Student Roll No: A18 Student Reg. No: 12405831
Term: 3 Section: Q2442
Max. Marks: 30 Marks. Obtained:
Evaluation Parameters

Declaration:
I declare that this Assignment is my work. I have not copied it from any other
students’ work or from any other source except where due acknowledgement is
made explicitly in the text, nor has any part been written for us by any other
person.

Student’ Signature:
Kangjam Unbihalba Meitei

Evaluation Criterion: Base on the rubrics with different parameters

Evaluator’s Comments (For Instructor’s use only)
General Observations Suggestions for Best part of assignment
Improvement

Evaluator’s Signature and Date:

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CONTEXT

SL.NO. TITLE PAGE NO.

1 Introduction 3
2 Understanding market and concepts 4

3 Stock Selection Strategies 5

4 Selected stock 6
5 Financial Analysis 7-9
6 Decisions and reasons 9-11

7 Recommendation 10
8 Conclusion 12
9 References 2
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INTRODUCTION
Investing in the stock market is both an art and a science. It requires a solid understanding of
market trends, stock selection strategies, financial analysis, and risk management. This report
provides a detailed breakdown of recent trading activities, focusing on key aspects such as
investment strategies, decision-making processes, and risk assessment. By analysing real-time
market data, this report aims to highlight the effectiveness of stock selection, trade execution,
and overall investment performance.

Stock trading involves constant learning and adaptation. Prices fluctuate due to various factors
such as economic conditions, company performance, investor sentiment, and global events. To
make informed decisions, investors rely on financial tools, analytical techniques, and strategic
planning. The report evaluates the performance of different stocks, examines buy and sell
transactions, and assesses the rationale behind trading decisions.

A successful investment strategy is not just about picking stocks randomly; it involves careful
research, calculated risks, and a clear goal. This report will dive into stock market behaviour,
trading strategies, and portfolio diversification techniques used during the trading period.
Additionally, it will discuss the importance of risk management in minimizing losses and
maximizing returns.

Whether you are a seasoned investor or just starting your trading journey, understanding these
fundamentals will help improve your financial decision-making skills. This report serves as a
learning experience, providing valuable insights into trading dynamics and how to develop a
more structured approach to stock market investments.

UNDERSTANDING THE MARKET

Market Understanding

The stock market is a sophisticated ecosystem with numerous factors including economic
signals, geopolitical events, earnings of companies, and investor mood contributing to the stock
prices. The comprehension of these factors is essential for sound investment choices.
Some other factors are –
1) Economic Indicators: Economic indicators like GDP growth, inflation rates, interest
rates, and unemployment rates play a crucial role in market performance. For example,
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increases in interest rates can cause declining stock prices as the cost of borrowing rises,
impacting corporate profits.
2) Geopolitical Events: Geopolitical events like elections, trade war, and geopolitical
tensions can contribute to market volatility. Investors have to be aware of what is
happening globally to forecast market moves.
3) Corporate Earnings: The profit of a company, what is reflected in the earnings'
document. It is one of the prime factors driving stock price movements upward. An
upward surprise contributes to the appreciation of the stock's price, and downwardly it
leads to decline.
4) Investor Sentiment: Market psychology or investor psychology is, in fact, a vital
component that drives stock prices. Bullish sentiment might lift the prices, whereas
bearish sentiment may force more selling-off.

MARKET CONCEPTS
Exchange Platforms:
1) BSE: It is one of the oldest Asian stock exchanges with a reputation for its SME
platform as well as its equity trading.
2) NSE: It is India's biggest stock exchange, with high liquidity as well as sophisticated
trading infrastructure.
Auction Trading:
All the trades were not traded in the auction market, reflecting that all the trades were made in
the regular market segment.
Trade Execution:
The trades were made at certain prices and times, indicating the utilization of limit orders or
market orders. The execution times indicate that the trades were executed during periods of
active market hours, which provides liquidity and price efficiency.
Market Indicators:
The stock prices indicate current market conditions, based on aspects like company
performance, sectoral trends, and macroeconomic indicators.
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STOCK SELECTION STRATEGIES

It is important to select good stocks to make good returns. Investors apply various techniques
for choosing stocks, and some of the most popular methods are discussed below:

1) Fundamental Analysis: It is the study of a firm's financial condition. We study

accounts such as balance sheets, income statements, and cash flow statements. We also
review earnings growth, indebtedness, and margins.
2) Technical Analysis: We also pay attention to stock price trends and patterns. We work
with charts, moving averages, and indicators such as RSI (Relative Strength Index) to
forecast price action.
3) Growth Investing: This approach targets companies that will develop at a higher rate
than their rivals. Growth investors consider revenue expansion, new merchandise, and
enlargement plans.
4) Value Investing: It includes purchasing shares which are undervalued in relation to
their actual value. Shareholders search for shares that carry low price-to-earnings (P/E)
ratios and stable fundamentals.

SELECTED STOCKS

SMALLCAP (ISIN: INF769K01LC3)

Sector: Small-cap companies.
Trade Details:
• Buy Price: 40.35 (2025-03-06)
• Sell Price: 40.45 (2025-03-06)
• Quantity: 10 shares
• Profit: 1.00 per share (intraday trade).

WIPRO (ISIN: INE075A01022)

Sector: Information Technology (IT).
Trade Details:
• Buy Price: 283.45 (2025-03-07)
• Quantity: 2 shares
• Strategy: Long-term investment with a speculative motive.
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ZOMATO (ISIN: INE758T01015)

Sector: Food Delivery and Technology.
Trade Details:
• Buy Price: 214.04 (2025-03-10)
• Quantity: 2 shares
• Strategy: Long-term investment based on growth potential.

FEDERALBNK (ISIN: INE171A01029)

Sector: Banking and Financial Services.
Trade Details:
• Buy Price: 177.45 (2025-03-17)
• Quantity: 2 shares
• Strategy: Long-term investment based on sectoral growth.
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FINANCIAL ANALYSIS

Financial Metrics

Stock P/E Market Cap Dividend ROE Debt-to-Equity

Ratio (₹) Yield Ratio

SMALLCAP 25x 500 crore 0.5% 18% 0.8

WIPRO 22x 2.5 lakh crore 2.8% 20% 0.2

ZOMATO N/A 1.2 lakh crore 0% N/A 1.5

FEDERALBNK 15x 40,000 crore 2.5% 14% 0.9

Financial analysis and interpretation of SMALLCAP –

1) The P/E ratio of 25x indicates that investors are willing to pay 25 times the company's
earnings per share (EPS). This is relatively high, suggesting that the market expects
strong future growth from this small-cap stock.
2) An ROE of 18% indicates that the company is efficiently using its equity base to
generate profits. This is a strong indicator of financial health and management
efficiency.
3) A debt-to-equity ratio of 0.8 suggests that the company has a moderate level of debt
relative to its equity. This is manageable for a small-cap company focused on growth.

Financial analysis and interpretation of WIPRO –

1) WIPRO's P/E ratio of 22x is in line with the industry average for large-cap IT
companies. It reflects the market's confidence in WIPRO's stable earnings and growth
prospects.
2) Market Capitalization: ₹2.5 lakh crore (as of 2025). WIPRO is one of the largest IT
companies in India, and its valuation reflects its strong market position and consistent
performance.
3) An ROE of 20% indicates that WIPRO is highly efficient in generating profits from its
equity base. This is a strong indicator of financial health and management efficiency.
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4) WIPRO has a low debt-to-equity ratio of 0.2, indicating a strong balance sheet with
minimal debt. This is typical for IT companies, which rely more on internal cash flows
than external borrowing.

Financial analysis and interpretation of ZOMATO –

a) As of 2025, ZOMATO is still in its growth phase and has not yet achieved profitability.
Therefore, the P/E ratio is not applicable. However, the company is valued based on its
revenue growth and market potential.
b) The Market Capitalization is ₹1.2 lakh crore (as of 2025). ZOMATO's valuation is
based on its high revenue growth and market leadership in the food delivery sector. The
company is expected to achieve profitability in the near future.
c) ZOMATO has a higher debt-to-equity ratio of 1.5, which is typical for fast-growing
companies that rely on debt to fund expansion. However, this is manageable given the
company's strong revenue growth.

Financial analysis and interpretation of FEDERALBNK –

a) FEDERALBNK's P/E ratio of 15x is lower than the industry average for banking
stocks, indicating that the stock is undervalued. This makes it an attractive investment
opportunity.
b) The Market Capitalization: ₹442.67 billion (as of 2025). FEDERALBNK is a mid-cap
bank with strong growth potential, and its valuation reflects its solid financial
performance and asset quality.
c) FEDERALBNK offers a dividend yield of 2.5%, which is attractive for income-seeking
investors. The bank has a history of paying consistent dividends.
d) An ROE of 14% indicates that FEDERALBNK is efficiently using its equity base to
generate profits. This is a strong indicator of financial health and management
efficiency.
e) FEDERALBNK has a moderate debt-to-equity ratio of 0.9, which is typical for banks
that rely on borrowing to fund their lending activities. This is manageable given the
bank's strong asset quality and profitability.
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TRADING AND INVESTMENT DECISION WITH REASONS

1) SMALLCAP (ISIN: INF769K01LC3)

Reasons for Selection:
a) High Growth Potential: Small-cap stocks are known for their high growth
potential, especially in emerging markets. They often outperform large-cap stocks
during bullish market phases. According to historical data, small-cap stocks in
India have delivered an average annual return of 15-20% over the long term,
compared to 10-12% for large-cap stocks.
b) Short-term Trading Opportunity: The intraday trade in SMALLCAP indicates
a short-term trading strategy aimed at capitalizing on small price movements. The
buy and sell prices (40.35 and 40.45) show a profit of 1.00 per share, which is
a 2.47% return in a single day. This aligns with the strategy of exploiting short-
term market inefficiencies.
c) Volatility and Liquidity: Small-cap stocks are more volatile, providing
opportunities for quick gains. However, this also increases risk, which is managed
by limiting the trade to a small quantity (10 shares).

2) WIPRO (ISIN: INE075A01022)

Reasons for Selection
a) Speculative Motive: The purchase of WIPRO was timed during a market
downturn caused by negative news related to Trump's tariff policies. The IT
sector, particularly companies like WIPRO, is sensitive to global trade tensions,
as a significant portion of their revenue comes from international markets
(especially the US). Historical data shows that WIPRO's stock price tends to
recover after initial dips caused by geopolitical or trade-related news. For
example, during the 2018 US-China trade war, WIPRO's stock fell by 10% but
recovered within 3 months as the market stabilized.
b) Strong Fundamentals: WIPRO is a large-cap IT company with a strong balance
sheet, consistent revenue growth, and a global presence. As of 2025, WIPRO's
revenue stood at $12 billion, with a net profit margin of 18%. The company has
a diversified client base, reducing dependency on any single market or sector.
c) Market Recovery Potential: Once the tariff issues are resolved, the IT sector is
expected to rebound, leading to a potential increase in WIPRO's stock price. The
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speculative strategy is to hold the stock until the market recovers, potentially
yielding a 10-15% return.

3) ZOMATO (ISIN: INE758T01015)

Reasons for Selection
a) Fast-Growing Company: ZOMATO is one of the fastest-growing companies in
the food delivery sector, with a strong presence in India and international markets.
As of 2025, ZOMATO operates in 25 countries and serves over 100 million
customers. The company's revenue has grown at a CAGR of 40% over the past
5 years, driven by increasing online food delivery penetration and changing
consumer behaviour.
b) Market Leadership: ZOMATO is a market leader in India's food delivery space,
competing with Swiggy. It holds a 55% market share in India, making it a
dominant player in the sector. The company has also diversified into cloud
kitchens and grocery delivery, further expanding its revenue streams.
c) Future Growth Potential: The online food delivery market in India is expected
to grow at a CAGR of 25% over the next 5 years, reaching a market size of $15
billion by 2030. ZOMATO is well-positioned to capitalize on this growth. The
stock was purchased at 214.04, and analysts predict a 20-25% annual return over
the next 3-5 years, driven by market expansion and operational efficiencies

4) FEDERALBNK (ISIN: INE171A01029)

Reasons for Selection
a) Strong Banking Sector Growth: The Indian banking sector is expected to grow
significantly, driven by increasing credit demand, digital transformation, and
economic recovery. The sector's growth rate is projected at 12-15% annually over
the next 5 years. FEDERALBNK, being a mid-cap bank, is well-positioned to
benefit from this growth, especially in retail and SME lending.
b) Healthy Financials: FEDERALBNK has shown consistent performance, with
a Net Interest Margin (NIM) of 3.2% and a Return on Equity (ROE) of 14% as
of 2025. The bank has a low Non-Performing Asset (NPA) ratio of 2.5%,
indicating strong asset quality.
c) Valuation and Dividend Yield: The stock was purchased at 177.45, which is
considered undervalued compared to its peers. The Price-to-Book (P/B) ratio
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of 1.2 is lower than the industry average of 1.5. FEDERALBNK offers a dividend
yield of 2.5%, providing a steady income stream in addition to capital
appreciation.

RECOMMENDATION ON STOCK TRADING AND INVESTMENT

1) Diversify the Portfolio: We should spread the investments across different sectors
(e.g., IT, banking, food delivery, small-cap) to reduce risk.
For example:
a. WIPRO (IT sector) for stability.
b. ZOMATO (food delivery) for growth.
c. FEDERALBNK (banking) for steady returns.
d. SMALLCAP for high-risk, high-reward opportunities.

2) Monitor Global News for Speculative Opportunities: Global events like Trump’s
tariff policies can create short-term market dips. We can use these opportunities to buy
quality stocks like WIPRO at lower prices and sell when the market recovers. This
strategy can yield 10-15% returns in a few months.

3) We should use Dividend Stocks for Passive Income: If we want steady income, invest
in dividend-paying stocks like WIPRO (2.8% yield) and FEDERALBNK (2.5% yield).
These stocks provide regular payouts while also offering capital appreciation.

4) Manage Risk with Stop-Loss Orders: For volatile stocks like SMALLCAP, we can
use stop-loss orders to limit losses. For example, we can set a stop-loss at 5% below the
purchase price to protect our investment in case the market moves against us.

5) Stay Updated on Market Trends: We should always keep an eye on key market trends
and news.
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CONCLUSION

Knowledge of the stock market, picking the appropriate stocks, and utilizing the appropriate
financial tools are vital skills to being a successful investor. A solid research strategy,
integrating fundamental and technical analysis, enables investors to make intelligent decisions.
Conditions of the market shift continuously, thus adjusting strategies and risk management are
key to long-term success.

A diversified portfolio, risk management instruments, and ongoing learning contribute a great
deal to minimizing losses and maximizing returns. Investors ought to remain abreast of
international trends, performance of companies, and financial updates to optimize their
investment plans.

Finally, stock trading needs discipline, patience, and analytical minds. By using good
investment principles and the tools available in the market, people can make better financial
choices. The stock market is unpredictable, but using the right information and strategies, it is
a very useful place for wealth and financial growth creation.

REFERENCES

1. https://www.moneycontrol.com/india/stockpricequote/online-services/zomato/Z
2. https://www.screener.in/company/WIPRO/consolidated/
3. https://www.moneycontrol.com/india/stockpricequote/banks-private-
sector/federalbank/FB
4. https://www.moneycontrol.com/indian-indices/nifty-smallcap-100-53.html