Page No. 1 Executive summary 4 2 Objective of Project 3 Research Methodology and sampling Technique 4 Data Analysis And Interpretation 5 Findings and Suggestions 6 Conclusion 7 Bibliography EXECUTIVE SUMMARY Fundamental &Technical Analysis of Banking stocks” is the systematic study of the performance of banking companies stock’s in stock market and future value of the share price with help of fundamental analysis and technical analysis. While decision in share price based on actual movement of shares price measured more in money & percentage term & nothing else.

In the Analysis, calculations are based on FACTS & not on HOPE. The subject of Analysis is to determine future share price movement with the help of RATIO ANALYSIS, STUDY OF GRAPH. This analysis does not discuss how to buy & sell shares, but does discuss the methods, which enables the investor to arriving at buying & selling decision. The Technical Approach to investment is essentially a reflection of the idea that prices moves in a trend that are determined by the changing attitude of investor’s toward a variety of economic, monetary, political and psychological forces.

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Theart of technical analysis, for it is an art, is to identify a trend reversal at a relatively early stage and ride on that trend until the weight of the evidence shows or proves the trend has reversed. And the Technical analysis states that the support and resistance is enough for price prediction untill the new high or low occurs. OBJECTIVE It was good opportunity to familiarize myself with the stock market i. e. the capital market & their co-relation with economical environment through “Fundamental and Technical analysis of BANK NIFTY Stocks. The analysis of banking stock gives me the opportunity to understand thoroughly this behavioural pattern’s of different stocks in industry & overall capital market. The main objective of the project research is as follows. 1. To Study the Analysis and obtain the knowledge of stock market and banking industry. 2. To Study the present behaviour & predicting the future behaviour of bank stocks in Capital market. 3. To perform Technical analysis based on charts using support and resistance. 4. To compare other banking stock with Bank Nifty Index.

To analyze the performance of company’s through Balance Sheet & Technical graph for particular shares. SCOPE The fundamental & technical analysis of banking stocks ?         Study on the economical, industrial and company analysis for the project. ?         Selecting the sample from the available banking stock. ?         Evaluating each bank and its stock in the market. ?         Analysing each bank fundamentally and interpretation. ?          Technical analysis for its share traded in NSE and BSE. ?         Comparison of stock with Bank nifty. ?         Interpretation and concluding. RESEARCH METHODLOGY

During my project, I collected data through various sources primary & secondary. Primary source includes:- 1) Discussion with branch manager 2) Discussion with experts 3) Questionnaires for investors 4) Live trading in the market Secondary source includes:- 1) Various books related to stock market 2) Books and journals related to Banks. 3) Web sites were used as the vital information source. Reliance Money felt need of evaluating the price patterns of leading scripts mainly from the five main blue chip companies and also interested in determining the trends along with price performance in near future.

This equity analysis will facilitate to investor for profitable investment. Sampling technique The sample is taken from the population of 89 schedule bank where the information available in hand and most of the stocks are selected from the bank nifty, the sample size is 5 such as 1. State Bank Of India 2. Hdfc Bank 3. Panjab National Bank 4. Yes Bank Sample selection methods Sample is taken based on public and private sector bank mix. Large cap mid cap and mix. This sample will give the clear picture of the bank nifty. HDFC SECURITIES LTD. Company’s Mission To create reputation synonymous with quality, competitiveness, fairness and transparency dealings and be a responsible corporate citizen”. We are one of the leading stock broking companies in India and a subsidiary of HDFC Bank- a renowned private sector bank. As a stock broking company, we have completed 10 years of operation serving a diverse customer base of retail and institutional investors. There are millions of reasons why you can choose our services and here are a few of them: Your Interest is Our Priority Your financial needs and interests are our priority.

We simplify investing for you and provide 360-degree view on financial planning that suit your future goals and needs. One Stop Shop for Your Investments We offer a suite of products and services across various asset classes such as equity, gold, debt and real estate. Be it stocks, derivatives, mutual fund, fixed deposits, NCDs, insurance, bonds, currency derivatives or PMS, we have a product that suits each of your investment needs. Multiple Platforms & Seamless Trading You can trade with us via online, mobile, telephone or any of our branches.

These multiple platforms make your trading experience highly convenient and hassle-free. You can even place an order for IPO / NCD applications though your trading account online or through our 24 Hour Customer Care Number. Similarly, there is no need to issue cheques or delivery instructions. Through our 4-in-1 Advantage account, you can seamlessly move funds and securities within savings, demat and trading account. Our web portal is based on Web 2. 0 technology and our state-of-the art technology enables seamless trading experience on both the exchanges BSE and NSE.

Our mobile trading application is compatible to all smart phones such as smart phones such as Blackberry, Android, Windows, Java and iPhone. Once you activate mobile trading on your smart phone, you can place order in Equities & Derivatives and get Stock Quotes on the move. You can even create Multiple Personalized Market watch and track the stocks and other asset classes such as gold, bonds etc the way you want. Timely and Relevant Information We offer the right news and views that impacts your money. Our views are backed by extensive research.

We believe in empowering you with accurate and unbiased research so that you make an informed investment decision. Tracking your Portfolio Just investing money is not enough, you have to monitor your portfolio to ensure you money works as hard as you to build a robust financial portfolio. You can use our portfolio tracker to monitor your entire financial portfolio, which encompasses various asset classes. You can also make a watchlist of stocks and enrol for SMS alerts, which will help you track the markets closer to make a timely investment decision. Transparency

We empower you to take the right decisions and handle your own portfolio. Backed by our trusted pedigree, it is our constant endeavour to provide services in a transparent manner. We believe in offering high quality investment services in a cost effective manner to achieve your financial goals. Our Background We are a subsidiary of HDFC Bank – a renowned private sector bank of India. With a decade of experience in trading and a rating of A1+1, we have a proven pedigree in the financial services industry. Our Reach We cater to your investment needs through our 190 plus branches.

If you are pressed for time, you can even get your investment and service relate queries answered through our 24-Hour Customer Care. Our call centre facility also offers services in 7 regional languages. Business Objectives The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets.

Organizational Goals HDFC’s main goals are to a) develop close relationships with individuals, b) maintain its position as the premier housing finance institution in the country, c) transform ideas into viable and creative solutions, d) provide consistently high returns to shareholders, and e) to grow through diversification by leveraging off the existing client base. Their housing needs. HDFC was promoted with an initial share capital of Rs. 100 million. HDFC Securities,

A trusted financial service provider promoted by HDFC Bank and JP Morgan Partners and their associates, is a leading stock broking company in the country, serving a diverse customer base of institutional and retail investors. HDFCsec. com provides investors a robust platform to trade in Equities in NSE and BSE, and derivatives in NSE. Our website will support you with the highest standards of service,convenienceand hassle-free trading tools. Our research team tracks the economy, industries and companies to provide you the latest information and analysis.

Our content offers financial information, analysis, investment guidance, news & views, and is designed to meet the requirements of everyone from a beginner to a savvy and well-informed trader. HDFC GROUP HDFC Ltd HDFC Bank HDFC Financial Service HDFC Life HDFC ERGO HDFC AMC SHARE HOLDINGS FOR HDFC SECURITIES KEY PEOPLE IN THE ORGANIZATION INTRODUCTION TO CAPITAL MARKETS Financial System The financial system of every economy consists of various constituents such as 1Financial Institutions 2Financial Companies 3Financial Markets 4Financial Instruments 5Financial Services 6Financial regulations

The financial market in India comprised of capital market and money market whereas the financial system of the country comprised of institutions, which operate the financial markets and the financial instruments with which the financial system is put into operation. Tax anomy of financial markets can be understood on functional, sectoral and institutional basis. On a functional basis we can divide financial markets into 1Money market (short term) 2Capital market (long term) The institutional classification can be made into 1 Organized financial market 2 Non-Organized financial market Capital Market Scenario

The stock market in India dates back to the 18th century when the East India Company was ruling the roost in the country and was perhaps the most dominant and powerful institution and its securities were traded. The securities trading were done in an unorganized form at Bombay and Calcutta in early 19th century. The decade of 90’s has witnessed several changes in reformation of capital market. Automation, transparency,. Strict surveillance, depository system, on line trading, investor’s protection, new rules and regulations, etc. are some of the activities which only reflect the growth of Indian capital market.

By any reckoning Indian corporate sector has grown very significantly in the last couple of decades whether to look at it in terms of public and private limited companies, their share capitalization, their sales turnover or their contribution to capital formation with this came the legislation of SEBI to act as a regulatory body to protect investors What is Capital Market? A Capital Market deals in financial assets, excluding coins and currency. The financial assets comprise of banking accounts, pension funds, provident fund, mutual fund, insurance policy, shares, debentures, and other securities.

If the stock exchanges are well regulated and function smoothly, then it is an indication of healthy capital market. Stock exchange provide a good leverage of the capital market and their relationship is directly proportional. India has multi-stock exchange system with 24 stock exchanges functioning across the country. In our country, capital markets are generally also known as security/stock market. The Indian capital market currently provides excellent investment opportunities to domestic and foreign investors in both equity and fixed income Segments.

The Indian Capital Markets can be broadly classified into three types of markets. 1Money market 2Primary market 3Secondary market Money market The money market is part of overall financial system and securities or capital market. It deals in short term financial assets whish can be readily converted into cash. Money market is a place for trading in money and short tern financial assets that are as liquid as money. It provides a platform for short term surplus funds of lenders or investors and short term requirements of borrowers, the instruments can be traded at low cost and are highly liquid.

Primary market Primary market is generally referred to the market of issues or market for new mobilization of resources by the companies and the government undertakings, for new projects as also for expansion, modernization, addition, and diversification and up gradation. Primary market operations include new issues of shares by new and existing companies, further and right issues to existing share holders, public offers, and issue of debt instruments such as debentures, bonds, etc. Raising money from capital market is cheap for the company and involves a low servicing cost.

The investors benefit by way of dividend and or capital appreciation. The following are the market intermediaries associated with the primary market 1 Merchant banker/book building lead manager 2 Registrar and transfer agent Underwriter/broker to the issue 4Advisor to the issue 5Banker to the issue 6Depository 7. Depository participant Defects in Indian Primary Market 1. Aggressive pricing and over pricing. 2. Price rigging before and during issues. 3. Poor, wrong and vague disclosures in offer documents. 4. Poor information accessibility. . Misleading projections subject to vague assumptions. 6. Delay in penal actions against the erring market intermediaries. 7. SEBI not assuming any responsibility for disclosure/offer documents. 8. Bunching of issues. 9. Existence of grey or unofficial market. 10. Lack of transparency 11. Uninformed and uneducated investors. Delay in listing and trading permission. The Secondary Market The secondary market is the market where scrips are traded. It is a market place, which provides liquidity to the scrips issued in the primary market.

Thus, the growth of secondary market is dependent upon primary market. More the number of companies entering the primary market, the greater is the volume at the secondary market. Trading activities in the secondary market are done through recognized exchanges, which are 24 in number including Over the Counter Exchange of India, National Stock Exchange of India, and Inter-connected Stock Exchange of India. Secondary market operations involves buying and selling of securities on the stock exchange through its members. The following intermediaries are involved in the secondary marker. Broker/member of Stock Exchange- buyer broker and selling broker 2Portfolio manager 3Investment advisor 4Share transfer agent 5Depository 6Depository participant. WORKING OF A BROKING FIRM Stock Broker According to SEBI Stock Broker is a member of a recognized stock exchange(s) and is engaged in buying, selling and dealing in securities. In other words broker is an intermediary who arranges to buy and sell securities on behalf of clients i. e. the buyer and the seller. A broker can deal in securities only after getting registered with SEBI. through stock exchanges.

The constitution of a broking firm may be a Proprietary Concern, a Partnership firm or a Corporate. Dematerialization and Rematerialization Dematerialization It is the process in which the physical form of holding securities is replaced with electronic (book-entry) form of holding. The securities held in dematerialized form are fungible. They do not bear any distinguishable features like distinctive number, certificate number. Once the shares are dematerialized they lose their identification feature in terms of share certificate distinctive number and folio numbers.

Each security is identified in the depository system by ISIN (International Securities) Identification number) this is a convenient method for preventing all the problems that occur with physical securities through dematerialization. Pre-requisites for dematerialization request 1. The registered holder of the securities should make the request 2. The request should be made in the prescribed dematerialization request form 3. Securities to be dematerialized must be recognized by a Depository as eligible. In other words only those securities whose ISIN has been activated by a Depository, can be dematerialized. . The company/issuer should have established connectivity with any Depository like NSDL, CDSL, Stock Holding Corporation ltd, only after this connectivity is established that the securities of the company/issuer are recognized to be “available for dematerialization” 5. The holder of securities should have a beneficiary account in the same name as it appears on the security certificates to be dematerialized INTRODUCTION BANK NIFTY Bank nifty is calculated on the basis of liquidity of stock and on the basis of market capailization. it is calculated by free flot method.

Bank Nifty consists of a list of 12 Banking stocks which are part of Bank Nifty. Bank Nifty is the second most popular index on National Stock Exchange of India after Nifty. CNX Bank Index is popularly known as Bank Index. Stocks weightage in bank nifty is determined based on their free float market cap outstanding. Bank Nifty index stocks are selected from banking stocks which are traded on National Stock Exchange of India, which are highly liquid and large capitalized. These banks consistent of 12 banks both public sector banks and private sector banks.

Bank Nifty Index provides investors a bench mark of banking stocks performance in Indian capital markets. CNX Bank Index (Bank Nifty) value is calculated on free float market capitalization method. Base date of calculation of Bank Nifty is January 01, 2000 and the starting index value of bank nifty is 1000. Bank Nifty is now highly represented in total market movement. After 2008-09, weight age of bank stocks started to increase even in nifty replacing earlier dominant Information Technology Stocks. Facts about market representation of Bank Nifty The CNX Bank Index represent about 15. 89%of the free float market apitalization of the stocks listed on NSE and 89. 06% of the free float market capitalization of the stocks forming part of the Banking sector universe as on  June 28, 2013. The total traded value for the last six months ending June 2013 of all the Index constituents is approximately 15. 55% of the traded value of all stocks on the NSE and 84. 49% of the traded value of the stocks forming part of the Banking sector universe. source : National Stock Exchange of India To be included in the bank index, a stock should be a banking stock with a free float market capitalization & company turnover of top 500 stocks.

It should also have a trading frequency of atleast 90%. Such Banking stock should also have positive net worth. Bank Index is rebalanced with changes, if any twice a year. The dates of re balancing are 31 January and 31 July . A six week prior notice is given to market if any changes are effected during such semi-annual bank nifty re-balancing reviews. Weightage of bank nifty stocks picture Name Market Cap(cr) Net Profit (cr) EPS P/E ratio Book Value Devidend payout ratio Axis Bank Ltd 50,781. 33 5,179. 43 120. 92 8. 97 151. 39 0. 1488587 Bank of Baroda 25,748. 38 4,480. 72 103. 58 5. 88 756. 64 0. 2075691 Bank of India 2,505. 57 2,749. 35 52. 73 3. 98 400. 88 0. 1896453 Canara Bank 10,496. 89 2,872. 10 64. 42 3. 68 561. 58 0. 1707544 HDFC Bank Ltd 153,624. 36 6,726. 28 31. 66 20. 29 151. 39 4. 3430195 ICICI Bank Ltd 117,831. 00 8,325. 47 79. 51 12. 85 578. 21 0. 2515406 IDBI Bank Ltd 8,449. 78 1,360. 72 14. 82 5. 74 137. 47 0. 0236167 Kotak Mahindra Bank Ltd 55,092. 05 1,360. 72 20. 2 35. 45 123 0. 1386138 Yes Bank 12,411. 28 1,300. 68 40. 95 8. 41 161. 14 0. 146501 Punjab National Bank 18,263. 97 4,747. 67 119. 31 4. 33 924. 45 0. 2263012 State Bank of India 118,881. 68 14,104. 98 179.. 98 9. 67 1445. 6 0. 23058117 Union Bank of India ,119. 75 2,157. 93 31. 17 3. 83 287. 96 0. 256657 FUNDAMENTAL ANALYSIS Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, and considers factors including interest rates, production, earnings, employment, GDP, housing, manufacturing and management. When analyzing a stock, futures contract, or currency using fundamental analysis there are two basic approaches one can use; bottom up analysis and top down analysis. 1] The term is used to distinguish such analysis from other types of investment analysis, such as quantitative analysis and technical analysis. Fundamental analysis is performed on historical and present data, but with the goal of making financial forecasts. There are several possible objectives: to conduct a company stock valuation and predict its probable price evolution, to make a projection on its business performance, to evaluate its management and make internal business decisions, to calculate its credit risk. Two analytical models

When the objective of the analysis is to determine what stock to buy and at what price, there are two basic methodologies 1. Fundamental analysis maintains that markets may misprice a security in the short run but that the "correct" price will eventually be reached. Profits can be made by purchasing the mispriced security and then waiting for the market to recognize its "mistake" and reprice the security. 2. Technical analysis maintains that all information is reflected already in the stock price. Trends 'are your friend' and sentiment changes predate and predict trend changes.

Investors' emotional responses to price movements lead to recognizable price chart patterns. Technical analysis does not care what the 'value' of a stock is. Their price predictions are only extrapolations from historical price patterns. Investors can use any or all of these different but somewhat complementary methods for stock picking. For example many fundamental investors use technicals for deciding entry and exit points. Many technical investors use fundamentals to limit their universe of possible stock to 'good' companies. Fundamental analysis includes: 1. Economic analysis 2.

Industry analysis 3. Company analysis The analysis of a business' health starts with financial statement analysis that includes ratios. It looks at dividends paid, operating cash flow, new equity issues and capital financing. The earnings estimates and growth rate projections published widely by Thomson Reuters and others can be considered either 'fundamental' (they are facts) or 'technical' (they are investor sentiment) based on your perception of their validity. The fundamental analysis consist of financial ratios to gauge the company’s over all performance. 1. Price/Earnings (P/E) Ratio

Price/Earnings or P/E ratio is the ratio of a company's share price to its earnings per share. It tells whether the share price of a company is fairly valued, undervalued or overvalued. Formula P/E Ratio = Current Share Price Earnings per Share Leading and Trailing P/E Ratio If the EPS is the figure for the current period the P/E ratio is called trailing P/E ratio. For better analysis the EPS should be the one expected to prevail in the next reporting period, say next year. P/E ratio calculated based on expected P/E ratio is called leading P/E and is a more meaningful estimate of the company's justified P/E ratio.

Analysis For financial analysis justified P/E ratio is calculated using dividend discount method. P/E Ratio = Expected Payout Ratio Required Rate of Return ? Dividend Growth Rate If the justified P/E calculated using dividend discount analysis is higher than the current P/E ratio the share is undervalued and should be purchased. If the justified P/E is lower than P/E ratio the share is overvalued and should be sold. 2. Dividend Payout Ratio Dividend payout ratio is the ratio of dividend per share divided by earnings per share.

It is a measure of how much earnings a company is paying out to its shareholders as compared to how much it is retaining for reinvestment. Formula Dividend Payout Ratio = Dividend per Share Earnings per Share Dividend payout ratio can also be calculated as total dividends divided by net income. 3. Return On Equity (ROE) Ratio Return on equity or return on capital is the ratio of net income of a business during a year to its stockholders' equity during that year. It is a measure of profitability of stockholders' investments. It shows net income as percentage of shareholder equity. Formula

The formula to calculate return on equity is: ROE = Annual Net Income Average Stockholders' Equity Net income is the after tax income whereas average shareholders' equity is calculated by dividing the sum of shareholders' equity at the beginning and at the end of the year by 2. The net income figure is obtained from income statement and the shareholders' equity is found on balance sheet. You will need year ending balance sheets of two consecutive financial years to find average shareholders' equity. Analysis Return on equity is an important measure of the profitability of a company.

Higher values are generally favorable meaning that the company is efficient in generating income on new investment. Investors should compare the ROE of different companies and also check the trend in ROE over time. However, relying solely on ROE for investment decisions is not safe. It can be artificially influenced by the management, for example, when debt financing is used to reduce share capital there will be an increase in ROE even if income remains constant. 4. Return On Assets (ROA) Ratio Return on assets is the ratio of annual net income to average total assets of a business during a financial year.

It measures efficiency of the business in using its assets to generate net income. It is a profitability ratio. Formula The formula to calculate return on assets is: ROA = Annual Net Income Average Total Assets Net income is the after tax income. It can be found on income statement. Average total assets are calculated by dividing the sum of total assets at the beginning and at the end of the financial year by 2. Total assets at the beginning and at the end of the year can be obtained from year ending balance sheets of two consecutive financial years. Analysis Return on assets indicates the number of cents earned on each dollar of assets.

Thus higher values of return on assets show that business is more profitable. This ratio should be only used to compare companies in the same industry. The reason for this is that companies in some industries are most asset-insensitive i. e. they need expensive plant and equipment to generate income compared to others. Their ROA will naturally be lower than the ROA of companies which are low asset-insensitive. An increasing trend of ROA indicates that the profitability of the company is improving. Conversely, a decreasing trend means that profitability is deteriorating.

CAGR Compounded Annual Growth Rate. The YOY growth rate of an investment over a specified period of time. The compound annual growth rate is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered. This can be written as follows: Capital Adequacy Ratio (CAR), also known as Capital to Risk (Weighted) Assets Ratio (CRAR), is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss and complies with statutory Capital requirements. Formula

Capital adequacy ratios (CARs) are a measure of the amount of a bank's core capital expressed as a percentage of its risk-weighted asset. Capital adequacy ratio is defined as: TIER 1 CAPITAL = (paid up capital + statutory reserves + disclosed free reserves) - (equity investments in subsidiary + intangible assets + current & b/f losses) TIER 2 CAPITAL = A) Undisclosed Reserves + B) General Loss reserves + C) hybrid debt capital instruments and subordinated debts where Risk can either be weighted assets () or the respective national regulator's minimum total capital requirement. If using risk weighted assets, ? 10%. [1]

The percent threshold varies from bank to bank (10% in this case, a common requirement for regulators conforming to the Basel Accords) is set by the national banking regulator of different countries. Two types of capital are measured: tier one capital ( above), which can absorb losses without a bank being required to cease trading, and tier two capital ( above), which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors. Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and other risks such as credit risk, operational risk etc.

In the most simple formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's depositors and other lenders. Banking regulators in most countries define and monitor CAR to protect depositors, thereby maintaining confidence in the banking system. [1] CAR is similar to leverage; in the most basic formulation, it is comparable to the inverse of debt-to-equity leverage formulations (although CAR uses equity over assets instead of debt-to-equity; since assets are by definition equal to debt plus equity, a transformation is required).

Unlike traditional leverage, however, CAR recognizes that assets can have different levels of risk. TECHNICAL ANALYSIS The methods used to analyze securities and make investment decisions fall into two very broad categories: Fundamental Analysis and Technical Analysis. Fundamental analysis involves analyzing the characteristics of a company in order to estimate its value. Technical analysis takes a completely different approach; it doesn’t care one bit about the “value” of a company or a commodity. Technicians (some time called chartists) are only interested in the price movement in the market.

Despite all the fancy and exotic tools it employs, technical analysis really just studies supply and demand in a market in an attempt to determine what direction, or trend will continue in the future. In other words, technical analysis attemptsto understand the emotions in the market by studying the market itself, as opposed to its components. If you understand the benefits and limitation of technical analysis it can give you a new set of tools or skills than will enable you to better trader or investor. Definition: Technical analysis is a method of evaluating the securities by analyzing the tatistics generated by themarket activity, such as past price and volume. In technical analysis, analyst use charts and othertools to identify patterns that can suggest future activity. Just as there are many investment styles on fundamental side, there is also much different type of technical traders. Some rely on chart patterns. In any case, technical analysts exclusive use of Assumptions: 1. The Market Discounts Everything A major criticism of technical analysis is that it only considers price movement, ignoring thefundamental factors of the company.

However, technical analysisassumes that, at any given a time,a stocks price reflects everything that has or couldaffect the company- including Fundamental Factors. Technical analysts believe that the company’s fundamentals, along with broader economic factors and market psychology, are all priced into the stock, removing the need to actually consider these factors separately. This only leaves the analysis of price movement, which technical theory views as a product of supply and demand for a particular stock in the market. 2. Price Moves In Trends In technical analysis, price movements are believed to follow trends.

This means that after a trend has been established, the future price movement is more likely to be in the same direction as the trend that to be against it. Most technical trading strategies are based on this assumption. 3. History Tends To Repeat Itself Another important idea in technical analysis is that history tends to repeat itself, mainly in terms of price movement. The repetitive nature of price movement is attributed to market psychology; in other words, market participants tend to provide a consistent reaction to similar market stimuli over time.

Technical analysis uses chats patterns to analyze market movements and understand trends. Although many of these charts have been use for more than 100 years they are still believed to be relevant because they illustrate patterns in price movements that often repeat themselves. Type of Charts There are four types in charts as shown bellow Line charts The most basic of the four charts is the line chart because it represents only the closing prices over a set period of time. The line is formed by connecting the closing prices over the time frame.

Line charts do not provide visual information of the trading range for the individual points such as the high, low and opening prices. However, the closing price is often considered to be the most important price in stock data compared to the high and low for the day and this is why it is the only value used in line charts. Area charts Area charts are useful for emphasizing the magnitude of change over time. Stacked area charts are also used to show the relationship of parts to the whole. Area charts are like line charts, but the areas below the lines are filled with colors or patterns.

You can select the following formats: stacked, 100 percent stacked, or three-dimensional. Bar chart A style of chart used by some technical analysts, on whom as illustrated below, the top of the vertical line indicates the highest price a security traded at during the day,and the bottom represents the lowest price. The closing price is displayed on the right side of the bar, and the opening price is shown on the left side of the bar. A single bar like the one below represents one day of trading. These are the most popular type of chart used in technical analysis.

The visual representation of price activity over a given period of time is used to spot trends and patterns. Candlestick The candlestick chart is similar to a bar chart, but it differs in the way that it is visually constructed. Similar to the bar chart, the candlestick also has a thin vertical line showing the period's trading range. The difference comes in the formation of a wide bar on the vertical line, which illustrates the difference between the open and close. And, like bar charts, candlesticks also rely heavily on the use of colors to explain what has happened during the trading period.

A major problem with the candlestick color configuration, however, is that different sites use different standards; therefore, it is important to understand the candlestick configuration used at the chart site you are working with. There are two color constructs for days up and one for days that the price falls. When the price of the stock is up and closes above the opening trade, the candlestick will usually be white or clear. If the stock has traded down for the period, then the candlestick will usually be red or black, depending on the site.

If the stock's price has closed above the previous day's close but below the day's open, the candlestick will be black or filled with the color that is used to indicate an up day There are many trading strategies based upon patterns in candlestick charting Charts are one of the most fundamental aspects of technical analysis. It is important that you clearly understand what is being shown on a chart and the information that it provides. Now that we have an idea of how charts are constructed, we can move on to the different types of chart patterns.

Technical analysis Indicators. Support and resistance represent key junctures where the forces of supply and demand meet. In the financial markets, prices are driven by excessive supply (down) and demand (up). Supply is synonymous with bearish, bears and selling. Demand is synonymous with bullish, bulls and buying. These terms are used interchangeably throughout this and other articles. As demand increases, prices advance and as supply increases, prices decline. When supply and demand are equal, prices move sideways as bulls and bears slug it out for control.

SUPPORT What Is Support? Support is the price level at which demand is thought to be strong enough to prevent the price from declining further. The logic dictates that as the price declines towards support and gets cheaper, buyers become more inclined to buy and sellers become less inclined to sell. By the time the price reaches the support level, it is believed that demand will overcome supply and prevent the price from falling below support. Support does not always hold and a break below support signals that the bears have won out over the bulls.

A decline below support indicates a new willingness to sell and/or a lack of incentive to buy. Support breaks and new lows signal that sellers have reduced their expectations and are willing sell at even lower prices. In addition, buyers could not be coerced into buying until prices declined below support or below the previous low. Once support is broken, another support level will have to be established at a lower level. RESISTANCE What Is Resistance? Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further.

The logic dictates that as the price advances towards resistance, sellers become more inclined to sell and buyers become less inclined to buy. By the time the price reaches the resistance level, it is believed that supply will overcome demand and prevent the price from rising above resistance. Resistance does not always hold and a break above resistance signals that the bulls have won out over the bears. A break above resistance shows a new willingness to buy and/or a lack of incentive to sell. Resistance breaks and new highs indicate buyers have increased their expectations and are willing to buy at even higher prices.

In addition, sellers could not be coerced into selling until prices rose above resistance or above the previous high. Once resistance is broken, another resistance level will have to be established at a higher level headed. Take a look at the chart below. ECONOMIC ANALYSIS Industry groups and companies are expected to benefit and grow. When the economy declines, The economic analysis aims at determining if the economic climate is conclusive and is capable of encouraging the growth of business sector, especially the capital market. When the economy expands, most sectors and companies usually face survival problems.

Hence, to predict share prices, an investor has to spend time exploring the forces operating in overall economy. Exploring the global economy is essential in an international investment setting. The selection of country for investment has to focus itself to examination of a national economic scenario. It is important to predict the direction of the national economy because economic activity affects corporate profits, not necessarily through tax policies but also through foreign policies and administrative procedures Tools for Economy Analysis The most used tools for performing economic analysis are

Gross Domestic Product (GDP) Monetary policy and Liquidity Inflation Interest rates International influences Fiscal policy Influences on long term expectations Influences on short term expectations 1) Gross Domestic product GDP is one measure of economic activity. This is the total amount of goods and services produced in a country in a year. It is calculated by adding the market values of all the final goods and services produced in a year. It is a gross measurement because it includes the total amount of goods and services produced, of which some merely replace goods that have depreciated or have worn out.

It is domestic production because it includes only goods and services produced within the country. The 5 years GDP growth of the country is shown in the below chart. The GDP dropped to decade low of 4% and is the major concern to the business and trade and economy. The GDP is slagging in the term from 2011. In the current quarter the GDP growth is at 4. 8% this will influence the economy negatively so India will not attract the investors. If the foreign investors will not invest there will be more deficit. The current account deficit is also rising due to poor export and rise in imports.

The current account deficit is at 5. 6% to GDP which means India need to pay more than it receives results in Balance of payment will be more and reserves will come down, the government is trying hard to reduce the CAD gap. In the third quarter of 2013, Indian economy advanced 4. 8 percent over a year earlier, up from 4. 4 percent in the previous three-month period, led by a surge in agriculture production and construction. Although third quarter figures came above market expectations, the economy grew below 5 percent for the fourth straight quarter.

Activities in finance, insurance, real estate and business services recorded the highest growth rate (10 percent yoy), followed by production of electricity, gas and water supply (7. 7 percent yoy). Agricultural production accelerated again in the September quarter and increased 4. 6 percent yoy. Production of coarse cereals, pulses and oilseeds are expected to grow by 4. 9 percent, 1. 9 percent and 14. 9 percent respectively during the Kharif season of 2013-14 compared with a year ago. Construction output accelerated to 4. 3 percent, up from 2. 8 percent in the previous quarter.

Mining shrank for the second straight quarter (-0. 4 percent), although at a slower pace than in the previous three-month period (-2. 8 percent). Manufacturing recovered from previous quarter’s contraction and grew 1 percent. 2. Inflation Inflation can be defined as a trend of rising prices caused by demand exceeding supply. Over time, even a small annual increase in prices of say 1 % will tend to influence the purchasing power of the nation. In others word, if prices rise steadily, after a number of years, consumers will be able to buy only fewer goods and services assuming income level does not change with inflation.

India Inflation Rate The inflation rate in India was recorded at 7 percent in October of 2013. Inflation Rate in India is reported by the Ministry of Commerce and Industry, India. From 1969 until 2013, India Inflation Rate averaged 7. 7 Percent reaching an all time high of 34. 7 Percent in September of 1974 and a record low of -11. 3 Percent in May of 1976. In India, the wholesale price index (WPI) is the main measure of inflation. The WPI measures the price of a representative basket of wholesale goods.

In India, wholesale price index is divided into three groups: Primary Articles (20. 1 percent of total weight), Fuel and Power (14. 9 percent) and Manufactured Products (65 percent). Food Articles from the Primary Articles Group account for 14. 3 percent of the total weight. The most important components of the Manufactured Products Group are Chemicals and Chemical products (12 percent of the total weight); Basic Metals, Alloys and Metal Products (10. 8 percent); Machinery and Machine Tools (8. 9 percent); Textiles (7. 3 percent) and Transport, Equipment and Parts (5. percent). This page contains - India Inflation Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. Actual Previous Highest Lowest Forecast Dates Unit Frequency 7. 00 6. 46 34. 68 -11. 31 7. 29 | 2013/11 1969 - 2013 Percent Monthly 3. Interest rate Interest rate is the price of credit. It is the percentage fee received or paid by individual or organization when they lend and borrow money. In general, increases in interest rate, whether caused by inflation, government policy, rising risk premium, or other factors, will lead to reduced orrowing and economic slowdown. India Raises Policy Repo Rate to 7. 75% The Reserve Bank of India has raised its policy repo rate for the second consecutive month by 25 basis points to fight high inflation and rolled back an emergency measure put in place in July to support the rupee. Reserve Bank has decided to: reduce the marginal standing facility (MSF) rate by 25 basis points from 9. 0 per cent to 8. 75 per cent. policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7. 5  per cent to 7. 75 per cent. cash reserve ratio (CRR) unchanged at 4. per cent of net demand and time liability and increase the liquidity provided through term repos of 7-day and 14-day tenor from 0. 25 per cent of NDTL of the banking system to 0. 5 per cent with immediate effect. 4. International influences Rapid growth in overseas market can create surges in demand for exports, leading to growth in export sensitive industries and overall GDP. In contrast, the erection of trade barriers, quotas, currency restrictions can hinder the free flow of currency, goods, and services, and harm the export sector of an economy. 5. Fiscal policy

The fiscal policy of the government involves the collection and spending of revenue. In particular, fiscal policy refers to the efforts by the government to stimulate the economic directly, through spending. Governments of developing countries typically spend resources equivalent to a range between 15 and 30 percent of GDP. Hence, small changes in the efficiency with which those resources are used could have major impacts on GDP and on the attainment of the government’s objectives whichever these are. The first challenge that policymakers, outside parties or applied researchers face is he measurement of efficiency. Empirical and theoretical measures of efficiency are based on ratios of observed output levels to the maximum that could have been obtained given the level of input utilization. This maximum constitutes the efficient frontier which is generally used as a benchmark for measuring the relative efficiency of the observations. This website presents some of the World Bank's research project in this area, provides some databases and software used, as well a summary literature and links to other websites that have been useful in our project.

In this sense, this overview is far from exhaustive and should be considered as work in progress. FISCAL POLICY FOR 2013-14 The fiscal policy of 2013-14 has been calibrated with two fold objectives - first, to aid economy in growth revival; and second, to bring down the deficit from2012-13 level so as to leave space for private sector credit as the investment cycle picks up. Having undertaken mid-year course correction to contain government spending within sustainable limits during the current financial year, Budget 2013-14 provides for a measured increase in plan expenditure by 6. per cent over the budgeted estimates of last year. However, this marks an increase of 29. 6 per cent over the revised estimates of 2012-13. A growth of 10. 8per cent has been provided for Non-plan expenditure in BE 2013-14 over RE 2012-13 keeping in view the requirements for Defence, Subsidies, Interest payments, Finance Commission Grants and increase in salaries and pensionary payments etc. This would result in overall expenditure increase of 16. 3 per cent in BE 2013-14 over RE 2012 13. As a result of these measures, fiscal deficit is estimated to come down to4. per cent of GDP, in keeping with the revised roadmap for fiscal consolidation announced by the government. As percentage of GDP, total expenditure is estimated to remain at same level in BE 2013-14 as in RE 2012-13 at 14. 3 per cent. INDUSTRY ANALYSIS Banks have played a critical role in the economic development of some developed countries such as Japan and Germany and most of the emerging economies including India. Banks today are important not just from the point of view of economic growth, but also financial stability.

In emerging economies, banks are special for three important reasons. First, they take a leading role in developing other financial intermediaries and markets. Second, due to the absence ofwell-developed equity and bond markets, the corporate sector depends heavily on banks to meet its financing needs. Finally, in emerging markets such as India, banks cater to the needs of a vast number of savers from the household sector, who prefer assured income and liquidity and safety of funds, because of their inadequate capacity to manage financial risks. Definition of banks

In India, the definition of the business of banking has been given in the Banking Regulation Act, (BR Act),1949. According to Section 5(c) of the BR Act, 'a banking company is a company which transacts the business of banking in India. ' Further, Section 5(b) of the BR Act defines banking as, 'accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw, by cheque, draft, order or otherwise. ' This definition points to the three primary activities of a commercial bank which distinguish it from the other financial institutions.

These are: (i) maintaining deposit accounts including current accounts, (ii) issue and pay cheques, and (iii) collect cheques for the bank's customers. The total assets of Indian banks, which are regulated by the Reserve Bank of India (RBI) and the Ministry of Finance (MoF), were pegged at Rs 82,99,220 crore (US$ 1564. 8 billion) during FY12. Further, the revenues of Indian banks grew almost four fold from US$ 11. 8 billion to US$ 46. 9 billion over the decade spaning 2001-2010. The prognosis for Indian banks looks positive with the domestic credit as a percentage of the GDP having grown substantially over the last decade.

This was primarily because the conventional policies of the RBI have worked well to limit India’s exposure to the sub-prime crisis of 2008, which stemmed when regulators eased their grip on financial corporations, thereby leading to the high risk leveraging of assets. Though the government is working hard to control inflation rates, the industry expects full implementation ofBasel III (currently banks in India are following Basel II) norms by March 2018. This will require a considerable credit raise, especially for public sector anks; however, an assessment of the assets of private sector banks such as ICICI and Kotak Mahindra reveals that they already have sufficient capital, and will sail through this change. This report analyses the current state of the banking industry, and its future growth potential. It provides perspectives on how various factors, such as the financial crisis of 2008, the Eurozone crisis, the implementation of Basel III, the Union Budget and other government initiatives are expected to influence the industry.

The report also highlights certain key challenges, such as controlling nonperforming assets and financial inclusion, before moving on totalk about the growth prospects of the industry in coming years. HISTORY OF BANKING IN INDIA Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades India’s banking system has several outstanding achievements to its credit.

The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons for India’s growth. The government’s regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases.

They are as mentioned below: Early phase from 1786 to 1969 of Indian Banks. Nationalization of Indian Banks and up to 1991 prior to Indian. Banking sector Reforms. New phase of Indian Banking System with the advent of Indian. Financial & Banking Sector Reforms after 1991. Phase I The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks.

These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly European shareholders. In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948.

There were approximately 1100 banks, mostly small. To streamline the functioning and activities of banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking System. During those days public has lesser confidence in the banks.

As an aftermath deposit mobilisation was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to traders. Phase II Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalised Imperial Bank of India with extensive banking facilities on a large scale specially in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI and to handle banking transactions of the Union and state government all over the country.

Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on 19th July 1969, major process of nationalisation was carried out. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were nationalized. Second phase of nationalisation Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership. The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country: 1. 949: Enactment of Banking Regulation Act. 2. 1955: Nationalisation of State Bank of India. 3. 1959: Nationalisation of SBI subsidiaries. 4. 1961: Insurance cover extended to deposits. 5. 1969: Nationalisation of 14 major banks. 6. 1971: Creation of credit guarantee corporation. 7. 1975: Creation of regional rural banks. 8. 1980: Nationalisation of seven banks with deposits over 200 crores. After the nationalization of banks, the branches of the public sector bank India raised to approximately 800% in deposits and advances took a huge jump by 11000%.

Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions. Phase III This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name, which worked for the Liberalization of Banking Practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced.

The entire system became more convenient and swift. Time is given more importance than money. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure. Banking in India originated in the first decade of 18th century with The General Bank Of India coming into existence in 1786.

This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank Of India being established as “ The Bank Of Calcutta” in Calcutta in June 1806. Couple of Decades later, foreign Banks like HSBC and Credit Lyonnais Started their Calcutta operations in 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of British Empire and due to which banking actively took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank set up in 1865.

By 1900, the market expanded with the establishment of banks like Punjab National Bank in 1895 in Lahore; Bank of India in 1906 in Mumbai-both of which were founded under private ownership. Indian Banking Sector was formally regulated by Reserve Bank Of India from 1935. After India’s independence in 1947, the Reserve Bank was nationalised and given broader powers. SBI Group The Bank of Bengal, which later became the State Bank of India. State Bank of India with its seven associate banks commands the largest banking resources in India. Nationalization

The next significant milestone in Indian Banking happened in late 1960s when the then Indira Gandhi government nationalized on 19th July 1949, 14 major commercial Indian banks followed by nationalisation of 6 more commercial Indian banks in 1980. The stated reason for the nationalisation was more control of credit delivery. After this, until 1990s, the nationalized banks grew at a leisurely pace of around 4% also called as the Hindu growth of the Indian economy. After the amalgamation of New Bank of India with Punjab National Bank, currently there are 19 nationalized banks in India.

Liberalization- In the early 1990’s the then Narasimha rao government embarked a policy of liberalization and gave licences to a small number of private banks, which came to be known as New generation tech-savvy banks, which included banks like ICICI and HDFC. This move along with the rapid growth of the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the sectors of banks, namely Government banks, Private Banks and Foreign banks.

However there had been a few hiccups for these new banks with many either being taken over like Global Trust Bank while others like Centurion Bank have found the going tough. The next stage for the Indian Banking has been set up with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in Banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning.

The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more. CURRENT SCENARIO Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs.

According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18. 2% and 6. 5% respectively. India’s Rs 77 trillion (US$ 1. 25 trillion)-banking industry is the backbone to the economy. The sector emerged strong from global financial turmoil and proved its mettle when the developed economies were shaking. RBI manages the country's money supply and foreign exchange and also serves as a bank for the Government of India and for the country's commercial banks.

As of now, public sector banks account for 70 per cent of the Indian banking assets. India’s banking sector is on a high-growth trajectory with around 3. 5 ATMs and less than seven bank branches per 100,000 people, according to a World Bank report. Policymakers are making all the efforts to provide a facilitating policy framework and infrastructure support to ensure meaningful financial inclusion. Apart from that, financial institutions are collaborating with other service providers (in the fields of telecom, technology and consumer product providers) to create an enabling environment. Online Banking Do-it-yourself’ is the new banking norm. Just an access to high-speed internet and user-friendly smart-phone applications have made people shift to alternative channels of banking. For instance, in ING Vysya Bank, 80 per cent of demand draft volumes generate through real time gross settlement (RTGS) and national electronics funds transfer (NEFT) while for HDFC Bank, 82 per cent of all transactions come from non-bank channels, with net banking and mobile banking accounting for 44 per cent of all transactions. "Most online transactions are real-time and do not involve paper-based transactions, thus saving customer time.

We are witnessing rapid customer adoption for net banking over and above their normal account related transactions. They are now viewing net banking as a single stop for all their banking requirements," said Tejas Maniar, Head, net banking, HDFC Bank, said. Some banks like ICICI Bank have endeavoured to take a step further and introduce social media-based banking apps. ‘Pockets’ by ICICI allows its customers to have the convenience of banking while they are on Facebook. Similarly, Kotak Mahindra Bank is working on online personal finance management tools, shopping cart and an e-relationship manager.

Bankers reveal that customers use their net-banking facility for non-account related matters like bills payment, viewing credit card statements, ticket booking etc. For banks, online banking helps save costs too. The cost of doing a transaction at a teller counter ranges from Rs 40 to Rs 50 (US$ 0. 65- 0. 81) per transaction while in the case of net banking this lowers significantly to Rs 2 to Rs 3 (US$ 0. 032-0. 048) per transaction. Key Statistics According to the Reserve Bank of India (RBI)’s ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’, March 2013, Nationalised Banks accounted for 52. per cent of the aggregate deposits, while the State Bank of India (SBI) and its Associates accounted for 22 per cent. The share of New Private Sector Banks, Old Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13. 6 per cent, 5. 1 per cent, 4 per cent and 2. 9 per cent,respectively. Nationalised Banks accounted for the highest share of 51 per cent in gross bank credit followed by State Bank of India and its Associates (22. 7 per cent) and New Private Sector Banks (14 per cent). Foreign Banks, Old Private Sector Banks and Regional Rural Banks had shares of around 4. per cent, 5 per cent and 2. 5 per cent, respectively. Banks’ credit (loan) growth increased to 18 per cent for the fortnight ended September 6, 2013, while deposits grew by 13. 37 per cent showed the data by RBI. Functions of Commercial Banks The main functions of a commercial bank can be segregated into three main areas: (1) Payment System (2) Financial Intermediation (3) Financial Services. 1. Payment System Banks are at the core of the payments system in an economy. A payment refers to the means by which financial transactions are