A Research on Techinical Analysis in Share Market With Special Referance to Indiabulls Securities...

7/28/2019 A Research on Techinical Analysis in Share Market With Special Referance to Indiabulls Securities Ltd

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1.1 INTRODUCTION

The who think who know the market doesnt know the market the market really, who think he

doesnt know the market knows the market really

-Paul Tudor, Technical Analyst.

Though it regarded as the tussle between buying pressure and selling pressure. The Ultimate

game and soul of technical analysis lies in not only understanding the supply and demand but

also understanding naked truth as mentioned above.

The stock market history runs about 300 years and is aggressive in the last 100 years. In the

beginning technical analysis was considered as a pseudo-science. Now technical analysis is the

main branch in market analysis, which is regarded as an art and science. Interpreting chart

patterns are considered as an art i.e.it is the eyes of the beholder to justify the formation of the

pattern.

The re-emergence of technical analysis as a variable and efficient approach to individual stock

selection and market analysis has drawn a great deal of interest from practitioners and

academicians. Technical analysis uses past prices to predict future prices and has been popular

among investor and financial analysts despites criticism from some quarters .All stock broking

firms and major daily newspapers analyses and publish technical commentary on the

performance of the market as a whole and selected stock on a daily basis.

The key premise of technical analysis is that markets are dominated by the competing emotions

of fear and greed. These emotions are manifested in distinct chart patterns the fingerprints of

human psychology. Moreover, these patterns tend to repeat again and again because human

nature is immutable. Technical analysis uses this phenomenon to predict the future direction of

stock prices. Technical analysis provides the only mechanism to measure the irrational

(emotional) component in all market.

Technical analysis is derived from pragmatic theories of the founding fathers, which include

Charles Dow and R.N.Elliot. They proposed the Dow Theory and the Elliot wave theory. The

emergency of equity market provides greater opportunities for local and global investors. This

project studies the applications of technical analysis in stock market


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Importance of technical analyses:

The very definition of analysis states that it is the process of identifying trend and trend and

reversal at early stage. Thus, the foremost use of technical analysis would be to make an early in

the market, when it is likely to rise and an early exit from the market, when the market is likely

to reverse direction and move downward. This aspect can be referred to as timing ones entry new

about the bottom and make an exit near about the top in every market cycle.

The study reveals the movement of shares that is upward or downward, under different time

periods. One may note that, as indicated buying and selling near about bottom and the top

respectively and not the exact bottom and top. The reason for this is that buying or selling at the

exact bottom / top can be only a random or fluke occurrence. It is just not possible to buy and

sell consistently at the bottom and top.

Now, this timing can be useful to both short-term and long term investor. The short-term

trader can find out the short-term trend and ride that trend. The long-term trader can trade the

long term trade.

Further, with the help of technical analysis, is possible to identify periods where in one can

expect a quick fall in a short span of time. This single advantage can be of great help in

accelerating the return on investments.

At times it is possible to arrive at the probable price and time target so that one can have a

frame work within which one can trade or invest in the market. Also, it is possible to identify

securities that will rise or fall faster than the market or other securities.

Following the technical is important, even if the participants do not fully believe their use.

This is because, at times, the technical are the major reason for a market move. Since they are a

marketmoving factor, they should be watched.


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1.2INDUSTRYPROFILE

SECURITIESINDUSTRY:

The most for reaching structural change centers on the securities industry following the big

bang I in 1986. This represents an instructive case of the pressure inducing structural

change. Historically, this sector has been highly regulated through practices. Enforced by

the London stock exchange (LSE). Since 1908, stock exchange practices was based upon a

strict signal capacity rule, which meant that member

Firms were either brokers or jobbers in securities. But could not be both. Prior to the

the stock exchange considered of 4852 individual members in 209 members in firm. Mostof the firms (192) were brokers acting as agents for investors. Rationally members firms.

Member firm had been had to be partnerships. But changes to the rule in 1969 allowed

members firms to become limited companies and to take outside shareholders; through a

limit of 10% was place on shareholders in a member firm by single non member. This was

raised to 29.9% in 1989, but the fact that member firm could not the owned by a single

nonmember meant that firms could not be part of wider groupings.

Thus the historic distinction and separation between banking and securities tradingwas in the UK financial system the project of self-imposed arrangements. No change in the

laws was required to end this major feature of the British financial system

The rule book of the LSE was never applied to the very much larger Eurobond market in the

London were trading arrangements have always been different in four major respects banks

were not excluded as trade and market makers, there was no single capacity operation, no

fixed minimum commission charges were enforced, and trading has always been screen

biased rather than one the floor of an exchange in fact it was the set of rules and restrictive

practice enforced by the LSE that induce the Euro bond market to develop outside the ambit

of the stock exchange


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Evolution of stock exchange of India

The origin of the stock market relates back to the year 1494, when the Amsterdam stock

exchange was set up. In Indian it dates back to the 18th

century and year when the east India

company was a dominant institution In India.

The Bombay stock exchange (BSE) was founded in year 1875. The Ahmadabad shares

and stock association were formed by about 150 brokers on 15th

June 1908. In the year

1920. One stock exchange was established in northern India and one madras called the

madras stock exchange . The Hyderabad stock exchange LTD. was incorporated in the year

1944. Two stock exchange s which came into in Delhi by the name the Delhi stock share

exchange association lid in the year 1947. The national stock exchange of India LTD. was

incorporated in November 1947. The national stock exchange of India LTD. Was

Incorporated in 1992.

Today there are 23 stock exchanges in Indian including the 3 stock exchanges in

Mumbai Bombay stock exchange (BSE). National stocks exchange (NSE) and over the

counter exchange of India (OTCEI).

National stock exchange (NSE)

The national stock exchange of India limited has genesis in the report of the high

powered study group on established of new stock exchanges, which recommended

promotion of the a national stock exchange by financial institution (FIs) to provide access to

investors from all across the country on an equal footing. Based on the recommendations,

NSE was promoted by leading financial institutions at the behest of the government of India

and was incorporated in November 1992 as a tax paying company unlike other stock

exchanges in the country. On its recognition as a stock exchange under the securities

contracts (Regulation) act, 1956 in April 1993, NSE commenced operations in the wholesaledebt market (WDM) segment in June 1994. The capital market (Equities) segment

commenced operations in November 1994 and operations derivatives segments commenced

in June 2000.


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The logo of the NSE symbolizes a single nationwide securities trading facility ensuring

equal and fair access to investors, trading members and issuers all over the country. The

initial of the exchange viz., N, S and have been etched on logo and are distinctly visible.

Mission of NSE

NSEs mission is setting the agenda for change in the securities markets in India.

The NSE was set up with the main objectives of establishing a nation wide trading

facility for equities, debt instruments and hybrids, ensuring equal access to investors all the

country through an appropriate communication network, providing a fair, efficient and

transparent securities market to investors using electronic trading system , and meeting the

current international standards of securities markets.

Bombay stock exchange

Bombay stock exchange limited (the exchange) is the oldest stock exchange in Asia with

a rich heritage. Popularly known as BSE, was established as The native share &stockbrokers association in 1875. It is the first stock exchange in the countr y to obtain permanent

recognition in 1956 from the government of India under the securities contracts (regulation)

Act, 1956. The exchanges pivotal and pre-eminent rule in the development of the Indian

capital market is widely recognition and its index, SENSEX, is tracked worldwide.

Earlier an association of person(AOP), the exchange is now a demutualised and the

BSE (corporatization and demutualization) scheme,2005 notified by the securities and

exchange Board of India (SEBI) Bombay stock exchange limited received its certificate ofincorporation on August,2005. The Due Date for taking over the business and operations

of the BSE, By the exchange was fixed for 19th

August , 2005, under the scheme .the

exchange has succeeded the business and operations of BSE ongoing concern its recognition

as an changed has been contained by SEBI


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In terms of organization structure, the board formulates larger policy issues and exercises

over-all control. The committees constituted by the board are broad based. The management

team of professional. During the year designed to 2005, the trading volumes on the

exchange showed robust growth.

Bombay stock exchange limited is Asias oldest stock exchange. It carries with itself the

depth of knowledge of capital markets acquired since its inception in 1875. Located in

Mumbai, the financial capital of India, it has been backbone of the countrys capital

markets.

1.3 COMPANY PROFILE

INDIABULLS SEURIRTIES LIMITED

Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s Orbits

InfoTech Private Limited at New Delhi under the Companies Act, 1956 with Registration No. 55

- 103183. The name of Company was changed to M/s. Indiabulls Financial Services Private

Limited on March 16, 2001 due to change in the main objects of the Company from InfoTech

business to Investment & Financial Services business. It became a Public Limited Company on

February 27, 2004 and the name of Company was changed to M/s. Indiabulls Financial Services

Limited. The Company was promoted by three engineers from IIT Delhi, and has attracted morethan Rs.700 million as investments from venture capital, private equity and institutional investors

such as LNM India Internet Ventures LTD., Transatlantic Corporation LTD., Farallon Capital

Partners, L.P., R Capital Partners L.P., and Infinity Technology Trustee Pvt. LTD. and has

developed significant relationships with large commercial banks such as Citibank, HDFC Bank,

Union Bank, ICICI Bank, ABN Amor Bank, Standard Chartered Bank, Lord Krishna Bank and


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IL&FS. The Company and its subsidiaries have facilities from the above mentioned banks and

financial institutions aggregating to Rs. 1760 million. The Company headquarters are co-located

in Mumbai and Delhi, allowing it to access the two most important regions for Indian financial

markets, the Western region including Mumbai, rest of Maharashtra and Gujarat; and the

Northern region, including the National Capital Territory of Delhi, nearby cities, parts of

Haryana, Uttar Pradesh and Punjab; and access the highly skilled and educated workforce in

these cities. The Marketing and Sales efforts are headquartered out of Mumbai, with a regional

headquarter in Delhi; and its back office, risk management, internal finances etc. are

headquartered out of Delhi, allowing The Company to scale these processes efficiently for the

nationwide network, Indiabulls Financial Services LTD fixes an issue price of Rs 19 per share

for its initial public offering (IPO), which was oversubscribed 18.5 times. Indiabulls Financial

Services IPO closed on September 10, with an impressive response from all categories of

investors. The book was finally subscribed 18.5 times with over 1.3 lakh bids.

The institutional portion was subscribed more than 12 times, the retail portion 25 times and the

non-institutional portion 24 times. 2005-Indiabulls Financial Services LTD has informed that the

Company has incorporated a wholly owned subsidiary Indiabulls Investment Pvt LTD ("IIPL")

with a paid up share capital of Rs 5 lacks. 2011 -India bulls Financial Services is one of India's

leading non-banking finance companies providing Home Loans, Commercial Vehicle Loans and

Secured SME Loans. The company has a net worth of Rs 4,661 core with an asset book of Rs

20,788 Core. The company has disbursed loans over Rs 50,000 Core to over 3,00,000 customers

till date. Amongst its financial services and banking peers, Indiabulls Financial Services ranks

amongst the top few companies both in terms of net worth and capital adequacy. Indiabulls

Financial Services has been assigned `AA+' rating and has presence in over 87 cities and towns

with a total branch network of 170 branches.

Indiabulls group of companies

1. Indiabulls Financial service2. Indiabulls Real Estate3. Indiabulls Power


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1.4 PRODUCT PROFILE

DEPOSITORY SERVICES:

Enjoy the dual benefits of trading and depository services under one roof and experience

efficient, risk-free and prompt depository service.

Indiabulls is a depository participant with the National Securities Depository Limited and Central

Depository Services (India) Limited for trading and settlement of dematerialized shares.

Indiabulls performs Dearing services for all securities transitions through accounts. In JRG,

investors can open DEMAT account for holding securities, mutual funds and commodities.

Indiabulls offer depository services to create a seamless transactions platform execute trades

through the India bulls depository Services. Indiabulls Depository Services is part of our value

added services for our clients that create multiple interfaces with the client and provide for

solutions that takes care of all your needs.

They also offer various tariff plans to suite each and every category to investors via, Traders.

Investors, HNIs, Corporate, NRIs, etc.

Indiabulls:

Automated pay -in facility Access informationAnytime, Anywhere Quarterly Demat statements with valuation Statement on demand View and Demat A/C statement online Competitive transaction charges

Exclusive benefits for investors or customers:

Reduced paper work Speedy settlement process resulting in increased liquidity of your securities No risk of loss, wrong transfer, mutilation or theft of shares certificates


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Hassle free automated payin of your sell obligation with no need for physicalinstruction

Instant disbursement of non-cash benefits like Bonus and Rights Efficient pledge mechanism Wide branch & Franchisee coverage Personalized services of trained Help desk No charges for extra Transaction statement and Holding statement

1. EQUITY:

Trading in equities with Indiabulls brings you as to when, where and how to invest. They have

some key focus areas which we work on incessantly on order to bring you superior tradingexperience. These focus areas-based on our objectives of customer centricity include the

following.

Bestin-class technology: Investing in cutting-edge technology Powerful research & Analytics: Experienced and trustworthy experts Transparency and standards Compliance : Call & Trade: Call on a local number & trade on the telephone Customers Service: Most dynamic and motivated team on the ground Reach & Delivery Model: Both Offline/Online and upgrading service delivery

channels

They has on of the largest retail network on South India, with its presence in over 500 customer

touch-points through our Branch & Franchisee Network in more than & towns. This means, you

can walk into any of these branches and connect to our highly skilled and dedicated relationship

managers to get the best services.

2. COMMODITY:

GOLD BULLIONGold in a chemical with the symbol Au and an atomic number of 79. It has been a highly

sought-after precious metal for coinage, jewelry, and other arts since the beginning of records


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history. The metal occurs as nuggets or grains in rocks. In veins and in alluvial deposits. Gold is

dense, soft, shiny and the most malleable and ductile pure metal known. Pure gold has a

Bright yellow color and luster traditionally considered attractive, which it maintains without

oxidizing in air or water. Gold is one of the coinage metals and has served as a symbol of wealth

and a store of value throughout history. Gold standards have provides a basis for monetary

policies. It also has been linked to a variety of symbolisms and ideologies.

India is the worlds largest consumer of gold, as Indians buy about 25% of the worlds gold

purchasing approximately 800 tons of gold ever year. India is also the largest importer of the

yellow metal; in 2008, India imported around 400 tons of gold. Whereas, Since the 1880s, South

Africa, in 2007 China (with 276 tones) overtook South Africa as the worlds largest gold produce

the first time since 1905 that South Africa has not been the largest.

GLOBAL EXCHANGE:

OTC markets at London (LBMA), New York and Zurich. Gold derivative exchanges at New YorkCME (COMEX), Tokyo ( TOCOM),

and Mumbai (MCX)

Crude oil (Energy)

Petroleum, also called crude oil, is a thick and black liquid. It consists mainly of hydrocarbons

and is mainly found In the Middle East, North America, and Russia. It is the most important

world energy source. It supplies 38% of the worlds energy at present Petroleum can be

separated into fewer complexes but more useful mixtures by fractional distillation. The process is

called oil refining. Petroleum can be easily transported by pipeline. Treated petroleum can be

used as fuels; mainly gasoline (petrol) for cars, Diesel fuel for Diesel engines used in trucks,

trains and ships, kerosene fuel for jets and as lubricants


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2.1 REVIEW OF LITERATURE

According to Achilles "Technical analysis is the process of analyzing a securityshistorical prices in an effort to determine probable future prices."

According to Edwards, Magee and Bassett "It refers to the study of the action of themarket itself as opposed to the study of the goods in which the market deals. Technical

Analysis is the science of recording, usually in graphic form, the actual history of trading

(price changes, volume of transactions, etc.) in a certain stock or in the Averages and

then deducing from that pictured history the probable future trend.

According to Murphy "Technical analysis is the study of market action, primarily throughthe use of charts, for the purpose of forecasting future price t rends. The term market

action includes the three principal sources of information available to the technician

price, volume, and open interest."

According to Printing "The art of technical analysis, for it is an art, is to identify a trendreversal at a relatively early stage and ride on that trend until the weight of the evidence

shows or proves that the trend has reversed. Therefore, technical analysis is based on theassumption that people will continue to make the same mistakes they have made in the

past."

This paper examines the impact volume and variance on the profitability of theCombined Signal Approach (CSA) to technical analysis. The volume and variance tests

are conducted on the S&P 500 and NASDAQ from January 1990 to March 2008

(n=4,558).The results suggest that the profitability of the CSA is enhanced when

employing either volume or variance into the trading model. Jointly employing volume

and variance was notable to provide a significant improvement in profits over the

employment of volume or variance alone; this is partially the result of the correlation

between volume and variance.


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2.2 OPERATIONAL CONCEPT

TECHNICAL ANALYSIS:

There are two main approach used in analysis the movement of share price the fundamental

analysis and the technical analysis approach. Both the approaches have the same objectives of

buying at a lower price and selling at a higher price to get good returns on investment. Thus the

end goal in both the cases is the same. However there is a vast difference between the material

studies and the basis of analysis to reach this goal.

Definition :

The analysis is the study of the market or price actions, primarily through the use of charts,

For the purpose of forecasting future price trends.

Technical analysis can also be defined as the process of the indentifying trend and trend

reversal at an early stage and to ride the trend until the weight of evidence suggests that the trend

has reversed direction. Thus, the first task of the analysis is to ascertain the change in the

direction of the trend and then the next task is to monitor the trend on a continuous basis so thatone can ride or trade alone the new direction till the analysis leads one to conclude that the trend

has reversed direction.

To study the trend or direction of price movements, the technical analyst studies the historic

price and volume data with the help of chart. Thus, the two basis prices information needed by

the analyst are the price data and the volume data.


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DATA AND GRAPH:

Technical analysis studies the price and volume data with the help of chart to ascertain the

trend or direction of movement.

The security can does change hands at different price level on the same day. The price at

which it is traded is determined by the demand and supply relationship at that point of time. The

price represents the consideration that the buyer is willing to pay to acquire an asset and the

consideration that the seller willing to accept to part with the companys assets.

Of the various price at which the deals are struck, four are important the high, low, open

and close. This price represents the highest price lower price, opening price and closing price at

which the deals were negotiated or the rate at which the security changed hands. Most of the

indicators and tools used in technical analysis are based on these prices.

TYPES OF CHATRS:

There are three types of charts generally used in technical analysis.

1. The line chart or closing price chart2. The bar chart or high-low-close chart3. The Japanese candle stick chart.

(1) CLOSING PRICE CHART (line chart):

In the closing price posted by the security on a dayto-day basis are plotted on the X and

Y chart. Suppose one day one, the security close at rupees 20. Here, one has to move up to

rupees 20 on the Y-axis and then move horizontally to day one on the X -axis and mark the point

on the chart. In other words, if one has to draw two imaginary line one from rupees 20 on the

Y-axis (that moves horizontally over to right of the chart paper); the point of intersection of the

line would be given the first point on the chart. In the same manner, the points representing the

closing price of the same subsequent days are plotted on the chart. Finally, drawing a straight

line connects all these points.


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Chart on Line Chart:

(2) BAR CHARTS:

The bar chart the high - low close chart is the most popular chart used by technical

analyst. In this chart, the high, low and closing price of the day are plotted on a day to day

basis in the form of a bar chart. The top of the bar would represent the high of the day, the

bottom of the bar would represent the low of the day and a small horizontal hash on the right of

the bar would represent the close of the day. At this juncture it needs to be mentioned that there

are analyst who plot the opening prices as hash on the left hand side of the bar however, symbol

plotted for the opening price on the bar chart is not quite common and majority of traders, who

consider the opening price as important, prefer to use the Japanese candle stick chart instead of

the bar chart.


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Chart on bar chart:

Bar chart (daily) of NIFTY for the month of march-2013


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(3)JAPANESE CANDLE STICK CHART:

The Japanese candlestick chart represents the open, high, low and closing prices on a

day-to-day basis. Each candle stick has a two parts, the shadow of the candle and the body of the

candle. The shadow of the candle and the body of the candle. The shadow of the candle furtherdivided in to the upper shadow and the lower shadow. The upper and lower shadow is separated

from one another by body of the candle. The top of the upper shadow would represent the

highest price posted by the security on a particular time interval(daily, weekly, monthly etc ) and

the bottom of the lower shadow would represent the lowest price posted by the security during a

particular time interval (daily, weekly, monthly etc ). The body of the candle would represent the

open and close price.

White candle (closing price black candle (closing price are

Above opening price) than opening prices)


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Chart on Candle Stick:

DOW THEORY:

Charles Dow commonly referred to as the grand daddy of the technical analysis formulatedthe Dow Theory. He also formulated the Dow Jones index way back in 1884. Even today the

theory finds application in the stock market. In fact, this is one theory that has stood the test of

time rather remarkable. Charles Dows contribution to modern day technical analysis cannot be

understood. His focus on the basics of security price movement gives rise to a completely new

method of analysis the market.

The Dow Theory comprise of six assumptions:

1. The advantages discount everything.

2. The market is comprised of three trends:

Primary trend Secondary trend, and Minor trend.


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3. Primary trends have three phases.

4. The average must confirm other.

5. The volume the Dow Theory focuses primarily on price action.

6. A trend reminds intact until it gives a definite reversal signals.

The Elliot wave theory:

Ralph nelson Elliot (1871-1948) had been an accounted by profession. He retired in 1927

after contracting a serious illness and spent the next several years at is home in California. it was

during his long period of convalescence that he developed his theory of stock market behavior.

He apparently was mush influenced by the Dow theory. which has a lot in common with his

wave principle. Elliot and Dow both refer to the tide cycles of the sea and compared the rhythm

of the waves of the price fluctuation in the stop market. Two a Natures law-the secret of the

universe. Elliot was convinced that his theory was a part of much larger law governing all of

humans activity.

Interpretation:

There are three basic aspects of theory wave pattern, ratio and time (in the order of

importance). Elliot claims that the stock market follows a repetitive rhythm of a five wave

advance followed by a three wave decline, in a complete Elliot wave cycle; wave two and four

are corrective waves. After a five wave advance has been completed; a three wave corrections

begins, subdivide in A-B-C structure. After that, a new five wave advance can start. In the

given figure you can see the Elliot wave counts, there is the important consideration of degree.

Elliot categories nine different degrees of trend ranking from a grand super cycle spanning two

hundred years two a sub minuets degree covering only a few hours.

Since computers record every price change of a specific markets, the described five wave

sequence, can even be detected in intra-day moves lasting less than one hour.


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Trend concept:

In technical analysis literature we would have come across the word trend quite trend often.

When explaining the definition of technical analysis a reference was made on trend and trend

reversal

Trend is nothing but the direction of movement. Logically, the share price can either rise or

fall move narrowly (flat). Thus, there are three direction in which the price can move. These

three directions give rise to the three type of trend. When price are moving upward, The is said to

be rising. When price are moving downward, it is called falling trend. And when price are

moving in a narrow range, the trend can be said to said to be choppy or this trend itself has three

directions.

Price does not rise or fall in a straight line. the rise or fall is generally interpreter by

counter move. This counter move is known as a reaction. If the security is rising, the counter

moves would be against the rise. If the security is falling, the counter move would be against the

fall. Because of these counter moves, the security can be moving in a zigzag fashion, which

gives rise to tops and bottom. Thus, a top is nothing but a price level from where the security

reverses the down move and stars to rise. It is the position of the bottoms and the tops that

determines the trend at any given point of time.

TREND CONCEPT

RISING FALLING FLAT


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Thus, in a rising trend one would find price movement carrying the security upward. In

this rise, the security will exhibit the formation of higher bottom and higher tops. In a falling

trend the movement would carry the price down and hence the security would exhibit the

formation of a lower tops and bottoms.

In a sideways market or flat market, the movement would carry the price sideways and

the security would neither exhibit the formation of clear- cut higher bottom and higher tops nor

the formation of clear-cut lower tops lower bottoms.

At any given in time the trader or the investor has three options, to buy, to sell or stay

away from the market. If the trend is rising, he would do well to buy. If the trend is falling, he

should be selling, and if the trend is flat, it is the best to move away from the market. This is

because in a flat trend, the security would neither be rising nor falling nor falling, and hence the

trader or investor would lose out on the interest or the opportunity cost of funds .


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Chart patterns:

Identify chart patterns is simply a form of technical analysis. Hundreds of years of price

charts have show that price trend to move in trend. Well a trends is merely an indicator of an

imbalance of the supply and demand. These changes can usually be seen by market action

through changes in price. This price changes often from meaningful chart patterns that can act as

a signals in a trying to determine possible future trend developments.

Head and shoulder:

The head and shoulder pattern is generally regarded as a reversal pattern and it is

most often seen in up trends. It is also most reliable when found in an uptrend as well.

Eventually, markets begin to slow down and force of supply and demand is generally

considered in balance. Seller comes in at the high (left shoulder) and the down side

probed (beginning neckline). Buyers soon return to the market and ultimate push through

to new highs (head). However the new highs are quickly turned back and the down side is

tested again (continuing neckline).tentative buying re-emerges and the market rallies

once more, but fails to take out the previous high. (This last top is considered the right

shoulder). Buying dries up and head and the market test the down side yet again.

(Volume has a greater important in the head and shoulders pattern in comparison to other

pattern. Volume generally follows the price higher on the left shoulder)

However, the head is formed on diminished volume indicating the buyers arent as aggressive

as they once were. And on the last rallying attempt the left shoulders volume is even lighter

than on head, signaling that the buyers may have exhausted themselves). New selling comes in

and previous buyer gets out. The pattern is complete when the market breaks the neckline.

(Volume should increase on the breakout).


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The head and shoulder pattern can sometimes be inverted head and shoulders are typically

seen in down trends. The inverted left shoulder should be accomplished by an increase in

volume. The rally from the head lower, should show greater volume that the rally from left

should


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3.1 OBJECTIVES OF THE STUDY

Primary objectives

The objectives of technical analysis are to determine the right time to enter or exit from the

market. It is not a question of what to buy but when to buy / sell. It is believed that the market

movement is 90% psychological and 10% logical in nature.

Secondary objectives

To study the behavior of the price of the stock To find out the over brought and over sold conditions of the scrip. To predict the extent and direction of the price movements To compare the stock price movement with the index movement and determining

the trend

To studies the application of technical analysis in stock market. To buy at lower price and sell at higher price of share price to get a good return on

investment.

3.2 NEED OF THE STUDY

Technical analysis is a key factor that is taken into consideration for finding the

alternative approach to stock selection. This study has helped us in finding the position of

ranking on the basis of return to be as Infosys, Tcs and Hcl in the ranking order. Even though

there can be universal principals and rules that can be applied, it must be remembered that only

technical analysis more an art than a science. As a form of art it is subject to more of

interpretation. The need of the study reviews the moment of share that is upward or downward

under different time periods. This study may be needful to both short term and long term

investors. This study helps us to predict the future fall or rise of the share market.


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3.3 SCOPE OF THE STUDY

The capital gain of an investor depends on the performance of a particular companys

stock in the market. The strong in the companys share is, the more the profit the investor gets.

So it is necessary to ascertain, analyze and interpret the shares of various firms in order to know

it position in the market. Investors can make vise investment with the help of this analysis.

Relative sensitive index and moving average are tools used for the analysis. These tools help

us to analyze when to buy, hold or sell the shares. That means at which price we must buy or sell

the securities. It also helps as to analyze till when we must hold the securities.

This study is much useful for both the clients and the share broking firms. Technical analysis

helps the share holders to choose the best securities to invest to make profit. It also guides them

to when to sell or how much time to hold the security and the like. Ti is also helps the share

brokers. The share brokers can use these tools to give a good guidance to its clients regarding the

transaction of shares. Since the customers get added service, they will retain to the company. It

can be used as a method to increase their clients and their by profit. This study reveals how the

share brokers and its clients are helped by technical tools.

This project is intended to increase or to offer customer service with the help of simple

financial tools. The companies can implant the tools and analysis mentioned in this project for

the above purpose. If the company implements this projects, they will have increase in profit.


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4.1 RESEARCH METHODOLOGY

RESEARCH DESIGN

Research design is the blueprint for fulfilling research objectives and answering

questions. Research design is define as the specification of methods and procedures employed

for acquiring the information needed. It is a plan or framework for doing the study and collecting

the data.

Types of research design:

1. Exploratory research design.2. Experimental research design.3. Descriptive research design.

Out of the research design above said the research design undertaken for the purpose of the study

was Descriptive research design.

Descriptive Research:

This study is based on the descriptive research design. Descriptive study is a fact findinginvestigation with Interpretation. The main objective of descriptive study is to describe the state

of affairs as it exists at present. The descriptive research is concerned with specific predictions

with narrations of facts and characteristics concerning individual. Hence, the researcher chooses

to apply Descriptive design for the current study. Descriptive Design Generally describes the

characteristics of a particular individual.


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4.2 METHOD OF DATA COLLECTION

Data Collection:

There are two ways to collect data

1. Primary data.2. Secondary data

Primary Data

Primary data are those which are collected afresh and for the first time. It can be obtained

through observation or through direct communication. Primary data were collected through

Questionnaire.

Secondary Data

Secondary data are those data which results the study done by others and for different

purposes than the one for which the data are being reviewed.

4.3 STATISTICAL TOOLS USED

The analysis of data is carried out for secondary data by the following method..

Exponential Moving Average. Moving average convergence and divergence Relative Strength Index. Rate of change


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4.4LIMITATIONSOFTHESTUDY

Volatility of stock is crucial effective technical analysisThe duration Of study was limitedSince the share market has unpredictable risk, there actual result may change from the

forecasted.

The market price of share may change in higher rate than we calculated. So there is a Nonoccurrence of the findings will be there

If the market is not stable the findings may mislead us wrong conclusions.The sample size is restricted to 3 months, which reduces accuracy of the result.Since the stock brokers have lot of other task to perform, they may not choose these tools.

It will consume their time and extra personnel are to be appointed for the service

Uncertainty is relevant I predicting the value of the shares.Only five securities are taken for the analysis. There may be many other securities that

can give us more capital gains.


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5.1 TOOLS FOR ANALYSIS

A) Exponential Moving Average:

a) Moving averages:

Moving averages are one of the most popular technical indicators used to identify the

directions of stock market. The market does not rise or fall in a straight line. The up-moves and

down-moves are interrupted by counter moves. Quite often, these counter moves are quite

volatile making it difficult for the analyst to gauge the underlying trend of the market.

Mathematically moving averages filter out the random noise in market data by smoothing out

fluctuation and short-term volatility in price movement. Graphically super imposing a moving

average on a price chart makes it easy to visualize the underlying trend within the data.

Moving averages are precisely calculated according to specific mathematical formulae. This

makes moving averages an objective way to determine the current trend direction of a market,

and anticipate its most likely future directions. This is in sharp contrast to subjective approaches

to trend identification based on visual chart analysis of reoccurring pattern such as head-and-

shoulders formation, flags, and pennants etc.

In calculating the various types of moving averages, one must first the prices on which the

moving average would be based. There are four basic types of prices maintained by the analyst,

the open, high, low, closing prices. Of these, the closing prices are generally used to calculate the

various types of moving averages. This does not mean that one cannot calculate the moving

averages on either the high, low or the averages of these prices or for that matter any other

combination of these prices.

There are three types of moving averages that are commonly used by the analyst, simple,

weighted, and Exponential Moving Averages.

b) Exponential Moving Average:

An exponential moving average improves the weighted moving average by weighting past

history less and less, without ever removing the data completely so it eliminates the impact when

a data point is dropped from the moving average. It still appropriately gives the highest


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weighting to most recent data. However, this moving average is harder to understand than the

simple moving average..

For calculating the exponential moving average the following formula is used

(Current closing price-previous exponential Average) x Factor

Exponential Average = __________________________________________________

Previous exponential average

Where factor = 2/n+1. Here n=number of days for which the average is to be calculated.

Calculation of five day Exponential Moving Average

Date Closing price Exponential

Average

02-Jan-2013 2,808.95

03-Jan-2013 2,864.30

04-Jan-2013 2,854.40

05-Jan-2013 2,840.1506-Jan-2013 2,832.15

07-Jan-2013 2,835.20

Take the closing price of the first day as the average for that day.

The actual five day exponential moving average can be had from the sixth day onwards and so

on.

Here factor =2/n+1

Where, n=5

Factor=2/5+1=0.33


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Average on 02/01/12 will be,

Average = (66.70-64.65)*0.33/64.65=0.010

For starting the calculation, on the first day one does not have the exponential average for the

first day. Hence in place of the exponential average of the first day, one can use the closing price

on the first day as the exponential average on day one and proceeds with the calculations. If one

is calculating exponential average for five days, the correct five day exponential average will be

available from the sixth day on wards and so on.

Another method of calculating the exponential moving average of five days to take the simple

moving average of five days as the starting point or the exponential average on the fifth day and

then calculating the exponential average for the sixth day with the help of the formula for

exponential moving average.

Average period:A moving average represents the underlying trend in the security. For calculating the moving

average the number of days to averages s the most important criterion. This number of days is

also known as the average. The period of the average determines the period of the trend that is

being identified. In other words, a five day period will represent the longer term trend (of 200

days) in security.

Interpretation:The interpretation of moving average is quiet simple. The moving average line is superimposed

on the price line and both the lines are studied together to locate buy and sell signals in the price

chart.

The analyst also study the relationship between two or more moving averages i.e. the

relationship between long-term and short term moving averages. Some of the important

indicators from using moving averages lines are:-

o Bullish signal-when the price line is above the moving average line.


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o Bearish signal-when the price line is below the moving average line.o Buy signal-when the price line moves above the moving average line.o Sell signal-when the price line crosses below the moving average line.

B). Moving Averages Convergence Divergence (MACD)

MACD is one of the most accepted and widely used oscillators. MACD, as the name

itself suggests the difference between two moves average. It is constructed by taking the

difference between two moving average of different length and plotting that difference.

For calculating MACD, we generally use Exponential Moving Average (EMA) to get faster

signal from the chart. An EMA gives more weight to recent prices and decreasing weight to

older data. It is the most sophisticated moving average which answers the criticism fixed by the

simple moving average.

To constructor the MACD, two EMA s are used, the short-term EMA and the long-term EMA

the MACD is the difference between the short term EMA and long term EMA.

Interpretation:

The simple moving average line which is superimposed on the MACD line gives us the buy and

sell signal.

o Buy signal-if the MACD line moves above the simple moving average line.o Sell signal-if the MACD line moves below the simple moving average line.

C). Relative strength index (RSI):

Relative strength index (RSI) is a momentum indicator; it measures the market

momentum (if constructed for the indices) or security momentum (if constructed for individual

security). RSI is developed by wells wilder. It is an indicator used to identify the inherent

technical strength or weakness in particular security. This indicator should not be confused with


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RSC indicator. The RSC or the Relative strength comparative is the ratio of two prices of

different securities.

RSI will show from one extreme to the other across a central reference point or the equilibrium

point. RSI is used along with the price chart and never in isolation. This is because the RSI

would indicate the possibility of trend reversal or the likelihood of the security rising of falling at

a fast price. The RSI is calculated for the particular security by using the following formula.

RSI=100-(100/1+RS)

Where: RS=Average gain per day/Average loss per day.

Calculation of 9-days RSI:

Date Closing price Gain Loss

02-Jan-2013 2,808.95 0 0

03-Jan-2013 2,864.30 55.35 0

04-Jan-2013 2,854.40 0 9.9

05-Jan-2013 2,840.15 0 14.25

06-Jan-2013 2,832.15 0 8

07-Jan-2013 2,835.20 3.05 009-Jan-2013 2,836.55 1.35 0

10-Jan-2013 2,863.60 27.05 0

11-Jan-2013 2,826.60 0 37

G = total gain L = total loss

RS = G/L

RSI = 100 - (100/(1+RS))

G= 86.8/9 =9.64

L= 69.15/9 = 7.68

RS =9.64 /7.68 = 1.25RSI = 100-(100/(1+1.25)) = 55.55

The average gain or loss per day is, in turn, arrived at by adding up the gain or losses, per

day, calculated by comparing the closing price on a day with that of the proceeding day, (gain


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and losses have to be added separately and not merged) and then dividing the total of gains or

losses by the period for which RSI is calculated.

The RSI can be calculated for any number of days depending on the strategy of the

technical analyst and the time frame of trading. The most commonly used time period is the 14-

days RSI. However, some analyst uses 5-days RSI, 7-days RSI or even 9-days RSI for quick

trading. In general, it can be stated that the greater the period, the lower would be the Volume of

whipsaw (incorrect signals). RSI can be calculated on daily basis or weekly or monthly basis.

For calculating the daily RSI, the weekly closing price is used, for monthly RSI, one has to use

the monthly closing price.

Interpretation:

Whenever the RSI goes above seventy, one had better prepared for a down turn. Similarly,

when RSI goes below thirty, it is time to pick the security. These, of course Are board rules yet

there could always be exceptions. What adds to this forecasting merit is the fact that the RSI

generally moves above the seventy ranges or below the thirty ranges much before the security

makes the top or the bottom i.e. it gives an early warning of the top or bottom that would be in

the making. Once this top or bottom is formed, one can expect a significant reaction in the

security or the very trend may changes.

4. Rate of Chan (ROC)

Rate of change measures the rate at which prices rises or fall. The concept of ROC can be

explained with the help of a simple example. A ball thrown up into the air shoots up with speed

but subsequently slows down considerably before it turns to come down again. The loss of

upward momentum that occurs before the ball change course can be seen in the currency market

also.

Before peaking out, currency prices register a notable decrease in momentum. To measure the

ROC, the ratio of the most recent closing price to the price for certain number of days in the past

in worked out.


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To calculate a 13-day ROC, the latest closing price is divided by the closing price before

13 days. If the latest price is higher than that of the historical price to the 13 previous days, the

ROC value will be above the line 1 and vice-versa.

Interpretation:If the ROC line is above 1, the current day price is higher than that of 13 days ago. If the ROC is

above 1 and rising, the difference between the current day price and 1days back grows at an

increasing rate, then it gives a bullish signal. Similarly, if the ROC line is above 1, but declining

the price rises at a lower rate than the earlier growth rate, then it gives a bearish signal.

If the ROC line is below 1, the current days price is lower than the price 13 days ago. If the

ROC line is below 1 and falling, the current price and the 13 days back price grows at a faster

rate, then it gives a bearish signal. Similarly, if the ROC line below 1, but rising, the rate of

decline slows down, it gives a Bullish signal.


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OPINION REGARDING THE SELLING OR BUYING OF SCRIPS OF

INFOSYS TECHNOLOGIES LTD DURING JANAPR 2013

Date Open High Low LTP Close Volume Turnover

02-Jan-2013 2,759.20 2,816.65 2,742.00 2808.00 2,808.95 7,28,272 20,258.04

03-Jan-2013 2,824.10 2,886.95 2,820.00 2865.20 2,864.30 11,12,876 31,860.66

04-Jan-2013 2,845.00 2,875.00 2,841.05 2845.00 2,854.40 9,17,678 26,206.27

05-Jan-2013 2,839.20 2,876.00 2,831.45 2840.00 2,840.15 8,90,659 25,418.18

06-Jan-2013 2,838.00 2,867.60 2,811.10 2829.10 2,832.15 8,85,954 25,119.10

07-Jan-2013 2,838.90 2,851.50 2,828.05 2834.95 2,835.20 95,521 2,711.87

09-Jan-2013 2,847.50 2,866.30 2,817.20 2827.80 2,836.55 10,33,223 29,354.63

10-Jan-2013 2,870.00 2,875.40 2,850.20 2864.15 2,863.60 13,97,397 39,985.09

11-Jan-2013 2,868.00 2,894.90 2,813.00 2819.00 2,826.60 17,24,475 49,097.36

12-Jan-2013 2,750.00 2,750.00 2,578.05 2590.25 2,588.25 61,21,325 1,60,837.113-Jan-2013 2,618.00 2,619.00 2,552.25 2582.00 2,584.20 26,12,368 67,416.47

16-Jan-2013 2,581.25 2,644.00 2,579.10 2640.00 2,640.15 16,48,592 43,300.87

17-Jan-2013 2,650.00 2,672.80 2,633.85 2648.75 2,662.05 10,92,553 29,050.17

18-Jan-2013 2,644.00 2,644.00 2,585.00 2607.00 2,612.05 12,12,553 31,633.44

19-Jan-2013 2,616.00 2,622.80 2,576.60 2590.00 2,594.70 12,06,542 31,289.54

20-Jan-2013 2,596.00 2,609.70 2,576.30 2580.00 2,588.80 14,54,464 37,677.72

23-Jan-2013 2,590.00 2,615.50 2,589.00 2602.00 2,600.30 6,45,108 16,799.28

24-Jan-2013 2,618.00 2,639.60 2,595.00 2613.00 2,620.80 7,06,651 18,504.46

25-Jan-2013 2,635.00 2,675.00 2,625.00 2668.90 2,665.80 13,18,170 35,011.69

27-Jan-2013 2,702.00 2,735.00 2,686.20 2721.00 2,725.00 15,27,359 41,452.79

30-Jan-2013 2,698.90 2,725.20 2,690.00 2699.00 2,712.30 11,98,557 32,393.0131-Jan-2013 2,712.00 2,754.65 2,706.00 2740.00 2,746.00 10,82,362 29,664.03

01-Feb-2013 2,739.70 2,748.00 2,695.65 2746.00 2,742.70 7,83,667 21,322.98

02-Feb-2013 2,740.10 2,783.00 2,730.00 2752.95 2,757.00 14,42,282 39,782.00

03-Feb-2013 2,740.05 2,792.00 2,740.05 2778.10 2,783.25 14,54,650 40,426.06

06-Feb-2013 2,805.10 2,807.90 2,752.10 2760.00 2,777.10 9,92,210 27,615.36

07-Feb-2013 2,805.00 2,805.00 2,713.65 2731.35 2,727.50 9,02,705 24,901.87

08-Feb-2013 2,748.00 2,782.00 2,741.35 2765.95 2,769.15 8,33,937 23,045.93

09-Feb-2013 2,749.00 2,822.10 2,731.85 2806.20 2,809.90 12,69,605 35,290.63

10-Feb-2013 2,799.00 2,802.00 2,751.15 2775.05 2,790.40 6,47,202 17,985.75

13-Feb-2013 2,775.25 2,800.50 2,757.10 2780.00 2,788.40 7,16,751 19,919.69

14-Feb-2013 2,776.00 2,809.90 2,764.00 2809.00 2,801.05 6,84,721 19,100.37

15-Feb-2013 2,815.00 2,875.00 2,815.00 2858.40 2,864.10 8,97,291 25,572.49

16-Feb-2013 2,864.00 2,917.70 2,860.55 2912.85 2,908.95 10,32,069 29,810.25

17-Feb-2013 2,916.25 2,978.00 2,900.15 2958.90 2,947.80 14,32,160 42,144.85

21-Feb-2013 2,930.00 2,959.90 2,911.25 2926.00 2,938.25 7,56,153 22,238.33

22-Feb-2013 2,905.20 2,994.00 2,905.20 2945.15 2,952.25 13,01,640 38,560.99

23-Feb-2013 2,939.00 2,982.60 2,916.20 2929.10 2,933.15 13,09,370 38,658.00


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27-Feb-2013 2,965.00 2,965.00 2,872.00 2874.95 2,883.35 8,63,821 25,153.23

28-Feb-2013 2,886.00 2,910.00 2,854.95 2880.00 2,872.40 9,93,775 28,555.38

29-Feb-2013 2,894.00 2,908.10 2,864.20 2871.10 2,883.45 11,08,551 31,987.58

01-Mar2013 2,851.55 2,875.00 2,805.00 2845.35 2,856.65 12,25,829 34,830.20

02-Mar2013 2,865.00 2,865.00 2,813.10 2858.00 2,845.70 7,59,707 21,533.2403-Mar2013 2,846.85 2,869.35 2,846.85 2854.00 2,858.10 21,694 21,6995.23

05-Mar2013 2,858.10 2,863.85 2,796.70 2805.15 2,809.85 7,22,557 20,368.01

06-Mar2013 2,805.1 2,880.00 2,801.10 2835.00 2,852.45 12,93,711 36,876.31

09-Mar-2013 2,894.00 2,903.00 2,848.00 2856.50 2,855.30 8,30,601 23,887.02

13-Mar-2013 2,843.95 2,869.85 2,842.00 2860.05 2,859.80 9,63,803 27,539.76

14-Mar-2013 2,890.00 2,915.00 2,853.95 2879.90 2,878.85 13,25,261 38,203.16

15-Mar-2013 2,895.00 2,905.15 2,870.50 2872.00 2,881.90 7,81,420 22,546.73

16-Mar-2013 2,905.00 2,913.00 2,847.15 2860.00 2,864.95 11,28,876 32,536.11

19-Mar-2013 2,895.00 2,900.00 2,811.30 2835.05 2,837.50 7,57,691 21,553.10

20-Mar-2013 2,826.00 2,853.20 2,803.00 2830.00 2,831.35 11,53,173 32,598.17

20-Mar-2013 2,826.00 2,853.20 2,803.00 2830.00 2,831.35 11,53,173 32,598.1722-Mar-2013 2,874.00 2,874.55 2,814.30 2817.45 2,828.30 7,08,080 20,126.35

23-Mar-2013 2,833.00 2,882.75 2,830.40 2875.10 2,872.70 6,87,217 19,663.69

26-Mar-2013 2,869.00 2,869.00 2,821.10 2821.10 2,830.75 6,15,333 17,457.82

27-Mar2013 480.00 484.90 468.15 472.70 470.80 9,53,606 4,525.04

28-Mar2013 471.05 477.80 465.65 470.10 470.60 6,30,267 2,964.38

29-Mar2013 465.00 484.40 440.60 469.65 472.15 11,74,114 5,536.70

30-Mar2013 472.20 486.45 472.20 482.45 483.25 6,09,050 2,912.61

02-Apr2013 483.90 504.80 477.50 501.90 501.25 7,57,634 3,731.56

03-Apr2013 506.00 506.35 497.90 505.15 505.40 4,32,535 2,175.43

04-Apr2013 504.00 512.40 500.00 508.95 509.05 5,01,525 2,548.81

09-Apr2013 507.00 511.45 495.05 497.05 498.30 6,15,175 3,112.83

10-Apr2013 496.65 502.05 487.40 491.50 491.00 4,59,288 2,258.62

11-Apr2013 489.00 494.40 484.15 493.95 490.00 8,52,411 4,172.26

12-Apr2013 491.30 503.45 490.35 493.00 494.40 10,35,323 5,160.34

13-Apr2013 479.80 490.00 475.00 475.45 478.95 13,95,377 6,724.23

16-Apr2013 474.00 488.10 471.00 485.95 484.80 8,36,927 4,018.73

17-Apr2013 487.95 497.70 479.30 481.00 480.85 12,55,051 6,104.63

18-Apr2013 502.00 511.35 492.45 494.30 494.30 54,82,304 27,549.58

19-Apr2013 496.60 504.75 494.30 502.75 503.45 11,88,656 5,954.48

20-Apr2013 499.35 508.60 498.05 505.00 505.35 9,80,338 4,957.10

23-Apr2013 507.00 507.05 493.10 497.20 495.55 5,71,571 2,848.2524-Apr2013 498.80 519.50 498.25 510.75 510.20 18,87,917 9,691.92

25-Apr2013 509.80 513.10 504.05 509.00 507.60 10,37,383 5,270.65

26-Apr2013 507.80 510.00 496.25 501.00 500.95 14,54,247 7,282.80

27-Apr2013 502.00 513.50 501.00 509.55 510.95 10,90,908 5,557.20

28-Apr2013 513.95 513.95 507.25 510.00 509.45 14,102 71.88

30-Apr2013 509.10 514.50 506.00 512.00 512.05 7,21,521 3,683.58


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FORECASTING FUTURE PRICE TRENDS OF STOCKS USING

EXPONENTIAL MOVING AVERAGE (EMA)

INTERPRETATION:

In figure the red line represents faster and blue line represents slower moving averages. From

figure it is obtained that the faster EMA (red line), three times crosses above and two times

crosses below the slower EMA (blue line). That means three times a buy signal generated (when

red line crosses above the blue line) and two times a sell signal generated (when red line crosses

above the blue line) and two times a sell signal generated (when red line crosses below the blue

line)


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MOVING AVERAGE CONVERGENCE AND DIVERENCE (MACD)

INTERPRETATION:

From the diagram it is obtained that the MACD line (red line), three times crosses above and two

times crosses below the zero line. That means, three times a buy signal generated (when the red

above the zero line) and two times a sell signal generated (when the red line is below the zero

line). The blue line represents the MACD signal line. Here the MACD line (red line) crosses

above and below the MACD signal line (blue line) at two times. These are the apt point to buy

and sell the shares respectively.


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RELATIVE STRENTH INDEX (RSI)

INTERPRETATION:

The figure shows that there is a right time to pick up the shares, since RSI touches the oversold

line (30) at two times. But there is no right to sell the shares, because it doesnt touch the

overbought line (70).


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RATE OF CHANGE (ROC)

INTERPRETATION:

From figure it is obtained that, the ROC curve, three times crosses above and below the

zero line. The region above the zero line shows the overbought area and the region below the

zero Line shows the oversold area.


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OPINION REGARDING THE SELLING OF BUYING OF SCRIPS OF

HCL TECHNOLOGIES LTD DURING JAN APR 2013


02-Jan-2013 389.00 395.00 386.00 394.00 393.60 5,24,788 2,061.95

03-Jan-2013 397.00 405.70 396.00 403.00 403.20 25,35,805 10,204.55

04-Jan-2013 406.45 428.00 406.00 418.95 418.40 23,68,787 9,924.45

05-Jan-2013 418.40 424.90 412.25 412.90 414.75 8,07,992 3,386.25

06-Jan-2013 414.00 420.00 410.00 418.15 417.55 8,18,065 3,416.55

07-Jan-2013 419.90 419.90 414.25 415.00 415.05 42,128 175.28

09-Jan-2013 417.00 418.80 413.05 416.00 414.95 5,39,153 2,244.60

10-Jan-2013 419.00 420.65 416.80 419.95 419.90 15,74,329 6,607.98

11-Jan-2013 423.80 424.90 412.80 415.85 415.30 7,41,919 3,110.74

12-Jan-2013 415.00 415.20 402.05 406.00 405.75 11,11,377 4,520.68

13-Jan-2013 406.50 408.10 396.00 398.50 397.75 13,74,576 5,499.87

16-Jan-2013 397.00 408.40 395.05 407.65 405.95 8,28,158 3,343.8717-Jan-2013 422.00 432.50 414.70 425.15 425.40 47,90,096 20,365.44

18-Jan-2013 426.45 426.70 413.35 415.00 417.45 13,80,201 5,824.71

19-Jan-2013 421.00 422.55 415.40 417.75 418.95 7,56,692 3,172.87

20-Jan-2013 422.25 422.25 409.80 416.45 417.65 7,60,332 3,166.54

23-Jan-2013 70.75 73.00 70.75 72.25 72.00 27,89,513 2,010.77

24-Jan-2013 71.75 73.40 71.10 72.60 72.60 31,69,547 2,290.58

25-Jan-2013 73.10 73.50 72.00 72.25 72.30 29,46,294 2,136.04

27-Jan-2013 72.75 77.15 58.00 76.50 76.15 1,09,74,107 8,096.65

30-Jan-2013 74.15 76.45 72.45 73.00 73.00 44,81,253 3,311.57

31-Jan-2013 73.65 74.55 72.45 73.30 73.45 36,15,003 2,651.03

01-Feb2013 73.50 76.95 73.30 75.70 76.15 81,22,814 6,136.1302-Feb2013 78.10 80.40 73.60 74.20 74.10 1,24,63,099 9,572.41

03-Feb2013 463.00 463.45 449.30 450.50 454.00 7,09,288 3,227.69

06-Feb2013 455.45 467.95 455.45 461.15 462.75 13,05,922 6,045.62

07-Feb2013 463.00 468.50 457.00 460.00 460.60 7,16,147 3,324.16

13-Feb2013 470.00 475.00 466.05 467.50 468.30 3,49,981 1,647.42

14-Feb2013 470.00 470.35 462.30 468.60 468.25 3,01,195 1,407.99

15-Feb2013 470.00 471.25 466.25 469.25 469.70 4,17,528 1,960.50

16-Feb2013 470.30 477.10 469.40 476.00 476.05 7,89,511 3,747.08

17-Feb2013 478.00 502.90 478.00 491.70 492.55 18,72,413 9,154.15

21-Feb2013 489.80 494.95 486.30 491.50 493.75 8,30,256 4,083.94

22-Feb2013 495.00 498.00 484.50 493.50 492.10 10,79,738 5,332.56

23-Feb2013 492.00 498.00 490.45 496.15 495.40 12,75,407 6,307.14

24-Feb2013 491.00 499.85 482.40 493.30 492.85 7,32,279 3,616.45

27-Feb2013 494.00 498.00 480.25 486.10 484.60 12,14,560 5,964.14

28-Feb2013 486.35 487.20 472.45 483.40 482.30 8,74,637 4,194.44

29-Feb2013 484.00 486.10 481.95 484.95 484.95 6,72,895 3,257.24

01-Mar2013 481.00 485.00 474.55 481.90 482.00 4,20,986 2,023.37


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02-Mar-2013 487.00 487.00 476.00 483.15 481.65 2,97,784 1,433.36

03-Mar-2013 480.00 484.85 480.00 480.40 481.85 15,943 76.84

05-Mar-2013 477.20 483.95 469.55 480.65 480.85 2,93,870 1,395.39

06-Mar-2013 482.00 491.50 475.00 480.50 481.40 5,70,789 2,767.87

07-Mar-2013 479.50 496.80 474.50 495.00 494.90 7,25,582 3,548.2809-Mar-2013 497.20 513.20 497.20 504.00 506.90 16,75,244 8,475.14

12-Mar-2013 507.00 512.00 500.20 508.00 506.95 12,86,670 6,544.69

13-Mar-2013 508.00 509.90 496.20 506.60 505.10 11,09,657 5,589.72

14-Mar-2013 510.00 519.20 502.15 503.50 504.80 9,13,924 4,638.45

15-Mar-2013 502.40 505.75 493.35 496.00 496.20 5,11,564 2,549.64

16-Mar-2013 499.00 506.00 490.60 498.00 497.15 6,97,277 3,486.41

19-Mar-2013 494.05 502.45 488.00 499.00 498.95 29,07,052 14,392.19

20-Mar-2013 499.00 500.95 485.70 489.00 492.00 5,02,713 2,492.80

21-Mar-2013 489.50 497.00 487.95 492.00 491.85 6,55,722 3,228.24

22-Mar-2013 492.00 495.85 469.50 477.00 477.00 12,90,270 6,207.92

23-Mar-2013 480.80 488.90 475.50 484.55 484.95 26,96,410 13,063.2326-Mar-2013 487.90 504.50 471.50 476.50 477.35 28,37,564 13,566.30

27-Mar-2013 480.00 484.90 468.15 472.70 470.80 9,53,606 4,525.04

28-Mar-2013 471.05 477.80 465.65 470.10 470.60 6,30,267 2,964.38

29-Mar-2013 465.00 484.40 440.60 469.65 472.15 11,74,114 5,536.70

30-Mar-2013 472.20 486.45 472.20 482.45 483.25 6,09,050 2,912.61

02-Apr-2013 483.90 504.80 477.50 501.90 501.25 7,57,634 3,731.56

03-Apr-2013 506.00 506.35 497.90 505.15 505.40 4,32,535 2,175.43

04-Apr-2013 504.00 512.40 500.00 508.95 509.05 5,01,525 2,548.81

09-Apr-2013 507.00 511.45 495.05 497.05 498.30 6,15,175 3,112.83

10-Apr-2013 496.65 502.05 487.40 491.50 491.00 4,59,288 2,258.62

11-Apr-2013 489.00 494.40 484.15 493.95 490.00 8,52,411 4,172.26

12-Apr-2013 491.30 503.45 490.35 493.00 494.40 10,35,323 5,160.34

13-Apr-2013 479.80 490.00 475.00 475.45 478.95 13,95,377 6,724.23

16-Apr-2013 474 488.1 471 485.95 484.8 836927 4018.73

17-Apr-2013 487.95 497.7 479.3 481 480.85 1255051 6104.63

18-Apr-2013 502 511.35 492.45 494.3 494.3 5482304 27549.58

19-Apr-2013 496.6 504.75 494.3 502.75 503.45 1188656 5954.48

20-Apr-2013 499.35 508.6 498.05 505 505.35 980338 4957.1

23-Apr-2013 507 507.05 493.1 497.2 495.55 571571 2848.25

24-Apr-2013 498.8 519.5 498.25 510.75 510.2 1887917 9691.92

25-Apr-2013 509.8 513.1 504.05 509 507.6 1037383 5270.6527-Apr-2013 502 513.5 501 509.55 510.95 1090908 5557.2

28-Apr-2013 513.95 513.95 507.25 510 509.45 14102 71.88

30-Apr-2013 509.1 514.5 506 512 512.05 721521 3683.58


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INTERPRETATION:

In figure red line represents faster and blue line represents slower moving average. From

figure it is obtained that the faster (EMA)(red line), four times crosses above and three times

crosses below the slower EMA (blue line). That means four times a buy signal generated (when

red line crosses above the blue line) and three times a sell signal generated (when red line crosses

below the blue line)


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MOVING AVERAGE CONVERGENCE AND DIVERGENCE (MACD)

INTERPRETATION:

From the diagram it is obtained that red line, three times crosses above and two time

crosses below the zero line. That means, three times a buy signals is generated(when the red

crosses above the zero line) and two times a sell signals is generated(when the red line crosses

below the zero line). The blue line represents the MACD signal line. Here the MACD(red line),

four times crosses below the MACD signal line(blue line). There are the apt point to buy and sell

the shares respectively.


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INTERPRETATION:

From figure it is obtained that, the ROC curve, five times crosses above and four times

crosses below the zero line. The region above the zero line shows the overbought area and the

region below the zero line shows the oversold area.


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OPINION REGARDING THE SELLING OR BUYING OF SCRIPS OF

TATA CONSULTANCY SERVICES LTD DURING JAN APR 2013


02-Jan-2013 1,161.00 1,185.95 1,153.00 1177.90 1,178.60 11,24,271 13,188.77

03-Jan-2013 1,183.25 1,209.90 1,180.00 1197.00 1,197.60 13,54,442 16,245.78

04-Jan-2013 1,204.90 1,205.00 1,169.30 1170.75 1,173.00 11,93,385 14,141.60

05-Jan-2013 1,172.80 1,185.00 1,167.35 1171.20 1,172.00 12,73,656 14,972.25

06-Jan-2013 1,166.00 1,188.35 1,156.80 1170.95 1,169.40 10,59,864 12,390.10

07-Jan-2013 1,170.00 1,178.75 1,170.00 1172.00 1,172.50 67,051 787.01

09-Jan-2013 1,171.00 1,179.70 1,165.25 1172.30 1,171.35 7,54,514 8,849.60

10-Jan-2013 1,175.00 1,185.50 1,158.50 1168.00 1,165.40 17,95,895 20,972.40

11-Jan-2013 1,171.40 1,175.00 1,133.15 1135.55 1,137.00 28,37,690 32,575.63

12-Jan-2013 1,101.00 1,115.00 1,068.65 1096.35 1,089.50 47,64,342 51,833.99

13-Jan-2013 1,097.15 1,103.35 1,073.00 1085.45 1,085.75 20,09,914 21,799.63

16-Jan-2013 1,084.00 1,114.00 1,078.90 1108.80 1,109.40 15,23,601 16,828.6317-Jan-2013 1,119.90 1,124.70 1,094.00 1105.25 1,103.95 18,52,109 20,479.94

18-Jan-2013 1,080.00 1,096.30 1,045.30 1073.00 1,076.15 58,32,766 62,633.68

19-Jan-2013 1,087.00 1,088.90 1,065.40 1075.00 1,075.55 20,81,646 22,337.85

20-Jan-2013 1,079.95 1,090.95 1,073.00 1076.55 1,079.50 12,86,347 13,919.40

23-Jan-2013 1,086.00 1,091.45 1,074.15 1076.25 1,077.70 10,65,248 11,533.55

24-Jan-2013 1,088.00 1,095.00 1,078.00 1085.55 1,088.70 13,20,655 14,358.29

25-Jan-2013 1,094.90 1,109.95 1,091.05 1095.20 1,098.00 29,22,619 32,218.80

27-Jan-2013 1,105.00 1,120.55 1,100.10 1108.70 1,108.75 26,04,859 28,946.61

30-Jan-2013 1,102.50 1,118.95 1,100.75 1112.25 1,111.75 12,97,779 14,443.84

31-Jan-2013 1,113.00 1,135.90 1,113.00 1131.00 1,132.40 17,69,060 19,953.68

01-Feb-2013 1,129.40 1,135.00 1,108.25 1131.00 1,128.70 11,44,402 12,820.9902-Feb-2013 1,136.00 1,152.65 1,130.30 1150.00 1,148.00 16,93,070 19,358.88

03-Feb-2013 1,145.00 1,176.00 1,141.00 1169.70 1,171.55 13,88,779 16,103.16

06-Feb-2013 1,183.70 1,200.05 1,173.35 1197.60 1,193.85 17,13,598 20,375.97

08-Feb-2013 1,216.40 1,226.85 1,211.00 1220.00 1,219.65 18,13,592 22,141.91

09-Feb-2013 1,211.10 1,232.00 1,188.00 1229.95 1,228.60 15,19,031 18,441.43

10-Feb-2013 1,228.00 1,238.00 1,212.00 1228.00 1,233.40 11,62,151 14,245.30

13-Feb-2013 1,222.20 1,237.95 1,214.00 1228.00 1,225.70 8,15,885 9,979.76

14-Feb-2013 1,225.00 1,229.55 1,215.00 1221.00 1,220.00 9,13,323 11,154.75

15-Feb-2013 1,227.15 1,248.80 1,219.50 1238.20 1,241.60 10,83,583 13,424.25

16-Feb-2013 1,238.00 1,242.00 1,218.00 1222.30 1,225.35 9,43,330 11,589.98

17-Feb-2013 1,234.85 1,254.00 1,221.00 1225.35 1,228.75 20,48,284 25,323.57

21-Feb-2013 1,223.55 1,240.00 1,204.75 1235.95 1,237.05 12,44,752 15,231.84

22-Feb-2013 1,235.00 1,266.85 1,229.00 1246.20 1,252.35 15,70,913 19,689.01

23-Feb-2013 1,249.05 1,274.90 1,244.00 1254.30 1,259.80 20,43,440 25,717.30

24-Feb-2013 1,259.00 1,280.85 1,257.25 1268.00 1,270.00 11,73,200 14,926.98

27-Feb-2013 1,279.00 1,279.95 1,245.60 1250.00 1,252.05 9,30,685 11,771.40

28-Feb-2013 1,255.25 1,260.40 1,219.10 1227.60 1,226.55 19,86,745 24,420.97


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29-Feb-2013 1,240.00 1,240.00 1,212.25 1220.90 1,221.95 15,30,108 18,750.53

01-Mar-2013 1,223.00 1,226.95 1,210.05 1219.00 1,219.60 7,84,297 9,553.93

02-Mar-2013 1,226.00 1,227.00 1,207.00 1219.00 1,217.25 11,54,616 14,034.94

03-Mar-2013 1,219.00 1,223.85 1,213.00 1213.00 1,218.40 32,711 398.95

05Mar2013 1,214.00 1,222.45 1,201.00 1208.10 1,207.30 7,70,439 9,326.6606-Mar-2013 1,203.00 1,221.30 1,189.00 1190.00 1,202.00 8,58,861 10,351.91

07-Mar-2013 1,195.00 1,206.00 1,186.55 1195.90 1,192.85 9,72,833 11,624.71

09-Mar-2013 1,227.00 1,227.00 1,202.95 1207.10 1,208.55 11,12,879 13,482.30

12-Mar-2013 1,215.90 1,218.85 1,183.20 1185.60 1,189.05 11,20,139 13,377.13

13-Mar-2013 1,190.00 1,214.95 1,190.00 1198.80 1,197.00 12,46,232 14,979.33

14-Mar-2013 1,210.10 1,214.00 1,151.00 1152.00 1,154.55 40,32,657 47,233.51

15-Mar-2013 1,159.00 1,170.95 1,145.00 1164.80 1,163.70 21,42,118 24,829.34

16-Mar-2013 1,169.95 1,180.00 1,158.00 1163.60 1,169.55 10,27,362 12,036.51

19-Mar-2013 1,169.55 1,169.55 1,111.80 1124.75 1,122.00 25,66,432 28,875.34

20-Mar-2013 1,129.00 1,145.00 1,120.00 1133.70 1,134.85 18,41,602 20,937.09

21-Mar-2013 1,136.95 1,179.80 1,136.55 1173.95 1,175.75 22,76,621 26,591.5722-Mar-2013 1,174.70 1,189.70 1,160.00 1167.20 1,167.75 17,10,847 20,112.55

23-Mar-2013 1,175.00 1,191.90 1,164.80 1185.00 1,184.65 15,79,218 18,702.99

26-Mar-2013 1,177.00 1,185.00 1,154.00 1158.00 1,161.60 15,26,692 17,738.89

27-Mar-2013 1,173.00 1,179.65 1,151.95 1176.00 1,174.75 7,94,123 9,261.20

29-Mar-2013 1,151.00 1,164.00 1,132.40 1148.95 1,141.20 13,40,607 15,339.01

30-Mar-2013 1,145.50 1,175.75 1,145.50 1165.00 1,168.80 12,71,671 14,793.56

02-Apr-2013 1,170.00 1,199.00 1,170.00 1198.00 1,194.25 11,63,494 13,807.29

03-Apr-2013 1,200.20 1,207.35 1,175.30 1175.75 1,178.00 11,34,577 13,427.22

04-Apr-2013 1,169.00 1,189.80 1,167.00 1179.75 1,178.45 10,82,527 12,777.43

09-Apr-2013 1,170.00 1,188.00 1,158.25 1165.35 1,164.10 7,88,314 9,269.33

10-Apr-2013 1,166.30 1,175.65 1,152.25 1155.95 1,156.20 7,66,496 8,879.20

11-Apr-2013 1,149.70 1,155.00 1,135.20 1139.70 1,138.10 8,90,793 10,190.09

12Apr-2013 1,140.25 1,148.00 1,129.10 1132.50 1,131.65 10,57,343 12,019.74

13-Apr-2013 1,091.35 1,104.70 1,061.25 1065.00 1,068.35 44,97,340 48,575.10

16-Apr-2013 1065.25 1074.3 1053.3 1070 1069.75 2508055 26734.56

17-Apr-2013 1085 1094.95 1073.8 1094.4 1090.85 1236832 13412.1

18-Apr-2013 1100 1114.7 1093.85 1095 1097.55 1441132 15876.97

19-Apr-2013 1100.9 1106.8 1091.1 1103.05 1102.95 883708 9717.17

20-Apr-2013 1093.25 1107.95 1077.4 1093.55 1088.45 1225012 13399.71

23-Apr-2013 1093.95 1102.4 1047.65 1065.9 1064.25 1421934 15349.46

24-Apr-2013 1122 1205 1117.3 1198.95 1194.2 9056891 106098.625-Apr-2013 1189 1190 1167.5 1170.05 1171.05 2708949 31909.93

26-Apr-2013 1170 1201.9 1164.5 1198.3 1194.65 2738146 32518.09

27-Apr-2013 1190 1212 1190 1200.1 1204 1855573 22317.36

28-Apr-2013 1200 1205 1196.1 1203 1201.85 51873 622.35

30-Apr-2013 1204 1250 1204 1250 1246.6 2302411 28481.85


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INTERPRETATION:

In figure the red line represents faster and blue line represents slower moving averages.

From figure it is obtained that the faster EMA (red line), two times crosses above and one time

crosses below the slower EMA (blue line). That means two times a buy signal generated (when

red line crosses above the blue line) and one time a sell signal generated (when red line crosses

below the blue line).


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RELATIVE STRENGTH INDEX (RSI)

INTERPRETATION:

The figure shows that there is a right time to pick up the shares, since RSI crosses the oversold

line (30). But there is no right time to sell the shares, because it doesnt touch the overbought line

(70).


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INTERPRETATION:

From figure it is obtained that, the ROC curve, four times crosses above five times

crosses below the zero line. The regain above the zero line shows the overbought area and the

region below the zero line the zero line shows the oversold area.


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6.1 FINDINGS

Findings relating to the companies selected for the technical analysis:-

From the four technical analysis tools I have used, it is identified that the sell and buy

signals were obtaining alternatively. So the shares of INFOSYS, HCL, and TCS are

appropriate shares for speculators.

According to RSI it is identified that the shares of HCL are more are ideal securities tohold. So it is more appropriate securities to moderate risk seekers and long term

investors.

According to most of the tools, I have used, it is identified that, the securities ofINFOSYS, & TCS suitable securities to high risk seekers and long term investors.

Findings related to technical analysis tools:-

The technical analysis tools are more helpful for speculators than investors. The exponential moving average is more powerful tool than simple moving average

because EMA is quicker to respond to price fluctuations than a simple moving average.

The disadvantage of EMA over simple moving average is that EMA is more prone towhipsaws (i.e. false signals).

It is found that the MACD is not only good for buy and sell signals, the MACD can beused for warnings of potential change in the direction of stocks, futures, and currency

pairs.

Apart from showing overbought and oversold conditions the ROC can be used to confirmprice moves or detect divergences.


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6.2 SUGGESTIONS

Technical analysis will improve the investment decision.

Technical analysis is simple and more reliable then fundamental analysis because the

information required for technical analysis is free available as compared to fundamental

analysis.

Even though technical analysis is enough for making decision in stock market.Simultaneous usage of both fundamental and technical analysis will reduce errors in

forecasting future prices.

Before going to invest, an investor should have clear knowledge of capital market so it isthe part of the company to educate the investor with relate to all the types of investment

alternatives available.

Investor should have knowledge regarding the market terms so that they can takemaximum return from maximum investment.

As the long term investment is more favour to the company as it can enjoy the benefit oflong term cash reserve the marketer should try to push and pull more and longer term

investment from the investors.

Also it is necessary to keep in mind that only maintaining more and more fund reserveonly should not be the sole objective of the company, it should predict the future changes

in the value of money, by changing its mind set the company should also play the role of

fund creator.

Investors perceive that the stock market activities are risky and they hesitate to comeforward to invest in stock market, so the company has to execute such programs that train


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and educate the investors about the benefits part of stock market investment and the

return they get from it.

As in case of stock market half knowledge is very dangerous. So it is the responsibility ofthe company to train the employees and technical analysts to make them experts in

subject of stock market, so that they become experts to solve all the queries of the

investors without any wrong information or hesitation and solve the confusions of the

investors to increase the investment.

Suggestions for Indiabulls securities ltd:

Add new customer service to service profile-technical analysis. It may result in high

profits for the company. The customer can be charged for the service offered. It will also add

goodwill to the company.

Suggestion relating companies selected for the technical analysis:

The risk is common for all securities. The scrip that is having low may also be subject to

high risk. The main reason is that market is unpredictable. So the investor must invest carefully.

Since risk is involved in every scrip, greater emphasized is given to return in each investment.

On the basis of study, suggested ranking of scrip is as follows. The rank is given on the basis of

return.

Rank Company

1 INFOSYS

2 TCS

3 HCL


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Suggestions to technical analysts:

In the world of technical analysis, there are hundreds of tools available to predict the

nature of the securities. Most of the technical analysts are using n no: of tools at a time and they

dont like to say that one tool is far better than another. That means each and every tool having

their own important. So my suggestion is like for analyzing the scrips better to use all possible

tools and reach the interpretation by analyzing all the angles of the scrips


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6.3 CONCLUSION

Technical analysis is an alternative approach to stock selection. Today the world of

technical analysis is huge and it is used by large number of institutional and individual traders.

Technical analysts consider the market to be 80% psychological and 20% logical. Psychological

or logical may be open for database, but there is no questioning the current price of a

A Research on Techinical Analysis in Share Market With Special Referance to Indiabulls Securities...

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