literature review on it sector

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Introduction

EQUITY SHARES DEFINITION
Securities representing equity ownership in a corporation, providing voting rights, and entitling the holder to a share of the company's success through dividends and/or capital appreciation. In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, other debt holders, and preferred shareholders have been satisfied. Typically, common shareholders receive one vote per share to elect the company's board of directors (although the number of votes is not always directly proportional to the number of shares owned). The board of directors is the group of individuals that represents the owners of the corporation and oversees major decisions for the company. Common shareholders also receive voting rights regarding other company matters such as stock splits and company objectives. In addition to voting rights, common shareholders sometimes enjoy what are called "preemptive rights". Preemptive rights allow common shareholders>to maintain their proportional ownership in the company in the event that the company issues another offering of stock. This means that common shareholders with preemptive rights have the right but not the obligation to purchase as many new shares of the stock as it would take to maintain their proportional ownership in the company. Also called junior equity or common stock. EQUITY ANALYSIS

            The amount of capital that a company can issue as per its memorandum represents the authorized capital. The amount offered by the company to the investors is called the issued capital. That part of the issued capital that has been subscribed to by the investors is called the paid-up capital. Typically the issued, subscribed and paid-up capitals are the same            The par value is stated in the memorandum and written on the share scrip. The par value of equity shares is generally Rs 10(the most popular denomination) or Rs 100.infrequently; one comes across par values like Re1, Rs 5, Rs 50 and Rs 1000. The issue price is the price at which the equity share is issued. When the issue price exceeds the par value, the difference is referred to as the share premium. Note that the issue price cannot be, ordinarily, lower than the par value. The book value of an equity share is equal to,

   Paid-up Equity capital + Reserves and Surplus.
Number of out standing equity shares. Quite normally the book value of an equity share tends to increase as the ratio of reserves and surplus to the paid-up equity capital increases. The market value of an equity share is the price at which it is traded in the market. The price can be easily established for a company that is listed on the stock market and actively traded. For a company that is not listed on the stock market, one can merely conjecture as to what its market price would be if it were traded.                 Investors are interested primarily in eventually selling a security for more than they paid for it.       Including the receipt of interest or dividends during the time the security is held, the investor hopes to achieve a higher reward than would have been possible by simply placing the same amount of money in a savings account.  This reward, or return, must be measured and estimated for each security being considered, with appropriate adjustments for decision-making costs.        But in seeking rewards that exceed those available on savings accounts, every Investor, consciously or not, faces the very real risk that his hoped-for return will fall short of his expectations.  Risk means the uncertainty in the probability distribution of returns.  This aspect of investing in securities must also be measurable and estimated for each security being considered. The entire process of estimating return and risk for individual securities is known as security analysis.        .  Traditionally, analysis have attempted to identify undervalued securities to...
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