Technical analysis report

A

PROJECT REPORT

ON

“TECHNICAL ANALYSIS OF PUBLIC SECTOR UNIT"

Project report submitted for the partial fulfillment of the

MASTER OF BUSINESS ADMINISTRATION

(2012)

Semester-3

Submitted by:-

PRIYANKA SANCHETI 201104100710011

MUKESH YADAV 201104100710136

Submitted to:-

Mr. MANISH PATHAK

[11 Dec, 2012]

SHRIMAD RAJCHANDRA INSTITUTE OF MANAGEMENT AND

COMPUTER APPLICATION

GOPAL VIDYANAGAR

SRIMCA

Declaration

We hereby declare that the following project report titled

“Technical Analysis” is an authentic work done by us. This is to declare that all

the work indulged in the completion of this work such as data collection,

analysis is a profound and honest work of ours.

Date:11/12/2012

Place: Bardoli

SRIMCA

Priyanka sancheti

Mukesh yadav

SRIMCA

STOCK MARKET:

The Meaning

Stock market is a place where the shares of different companies are bought and sold. The

Organized Platform through which the buyers and sellers can trade in shares or other forms of

securities like bonds, derivatives is called STOCK EXCHANGE. The stock exchanges could

be a corporation or a mutual organization. They primarily serve the purpose of listing and

trading the shares.

In India, there are two stock exchanges apart from Regional stock exchanges:

1) National Stock Exchange (NSE)

2) Bombay Stock Exchange (BSE)

Definition

“ The market in which shares are issued and traded either through exchanges or over-the-

counter markets. Also known as the equity market, it is one of the most vital areas of a

market economy as it provides companies with access to capital and investors with a slice of

ownership in the company and the potential of gains based on the company's future

performance.”

Role of Stock Exchange in an Economy

Stock exchanges have multiple roles in the economy. This may include the following:

1) Raising capital for businesses

The Stock Exchange provides companies with the facility to raise capital for expansion

through selling shares to the investing public.

2) Mobilizing savings for investment

When people draw their savings and invest in shares, it leads to a more rational allocation of

resources because funds, which could have been consumed, or kept in idle deposits with

banks, are mobilized and redirected to promote business activity resulting in stronger

economic growth and higher productivity levels of firms.

SRIMCA

3) Corporate governance

By having a wide and varied scope of owners, companies generally tend to improve

management standards and efficiency to satisfy the demands of the stakeholders.

4) Creating investment opportunities for small investors

As opposed to other businesses that require huge capital outlay, investing in shares is open to

both the large and small stock investors because a person buys the number of shares they can

afford.

5) Government capital-raising for development projects

Governments at various levels may decide to borrow money to finance infrastructure projects

by selling bonds. The issuance of such bonds can obviate the need, in the short term, to

directly tax citizens to finance development.

6) Barometer of the economy

At the stock exchange, share prices rise and fall depending, largely, on market forces.

Therefore the movement of share prices and in general of the stock indexes can be an

indicator of the general trend in the economy.

Central functions and responsibilities of a stock market:

1) Making available cost-effective trading platforms

2) Bundling of liquidity by concentrating supply and demand

3) Guaranteeing the interchangeability, as well as the identical structuring of a particular

category of security

4) Ensuring the greatest possible transparency for investors

5) Providing information on prices and volume

SRIMCA

Investment strategies:

One of the many things people always want to know about the stock market is, “How do I

make money investing?" There are many different approaches; two basic methods are

classified as either fundamental analysis or technical analysis. Fundamental analysis refers to

analyzing companies by their financial statements found in SEC Filings, business trends,

general economic conditions, etc.

INTRODUCTION OF THE STUDY:

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 (sometimes called chartists) are only interested in the price

movements 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 attempts to understand the emotions in the

market by studying the market itself, as opposed to its components. If you understand the

benefits and limitations of technical analysis, it can give you a new set or skills that will

enable you to be a better trader or investor.

Just as there are many investment styles on the fundamental side, there are also many

different types of technical traders. Some rely on chart patterns, others use technical

indicators and oscillators, and most use some combination of the two. In any case, technical

analysts exclusive use of historical price and volume data is what separates them from their

fundamental counterparts. Unlike fundamental analysis, technical analysts don’t care whether

a stock is undervalued – the only thing that matters is a security’s past trading data and what

information this data can provide about where the society might move in the future.

SRIMCA

Technical analysis

It is the polar opposite of fundamental analysis, which is the basis of every method explored

so far in this tutorial. Technical analysts, or technicians, select stocks by analyzing statistics

generated by past market activity, prices and volumes. Sometimes also known as chartists,

technical analysts look at the past charts of prices and different indicators to make inferences

about the future movement of a stock's price.

Philosophy of Technical Analysis

In his book, "Charting Made Easy", technical analysis guru John Murphy introduces readers

to the study of technical analysis, explaining its basic premises and tools. Here he explains

the underlying theories of technical analysis:

Definition

"Chart analysis (also called technical analysis) is the study of market action, using price

charts, to forecast future price direction. The cornerstone of the technical philosophy is the

belief that all factors that influence market price - fundamental information, political events,

natural disasters, and psychological factors - are quickly discounted in market activity. In

other words, the impact of these external factors will quickly show up in some form of price

movement, either up or down."

The most important assumptions that all technical analysis techniques are based

upon can be summarized as follows:

1) Prices already reflect, or discount, relevant information. In other words, markets

are efficient.

2) Prices move in trends.

3) History repeats itself.

General description

Technical analysts also widely use market indicators of many sorts, some of which are

mathematical transformations of price, often including up and down volume, advance/decline

data and other inputs. These indicators are used to help assess whether an asset is trending,

and if it is, the probability of its direction and of continuation. Technicians also look for

SRIMCA

relationships between price/volume indices and market indicators. Examples include the

relative strength index, and MACD. Other avenues of study include correlations between

changes in Options (implied volatility) and put/call ratios with price. Also important are

sentiment indicators such as Put/Call ratios, bull/bear ratios, short interest, Implied Volatility,

etc.

There are many techniques in technical analysis. Adherents of different techniques (for

example, candlestick charting, Dow Theory, and Elliott wave theory) may ignore the other

approaches, yet many traders combine elements from more than one technique. Some

technical analysts use subjective judgment to decide which pattern(s) a particular instrument

reflects at a given time and what the interpretation of that pattern should be. Others employ a

strictly mechanical or systematic approach to pattern identification and interpretation.

Technical analysis is frequently contrasted with fundamental analysis, the study of economic

factors that influence the way investor’s price financial markets. Technical analysis holds that

prices already reflect all such trends before investors are aware of them. Uncovering those

trends is what technical indicators are designed to do, imperfect as they may be. Fundamental

indicators are subject to the same limitations, naturally. Some traders use technical or

fundamental analysis exclusively, while others use both types to make trading decisions.

Benefits of Technical Analysis

Technical analysis focuses on price movement.

Trends are easily found.

Patterns are easily identified.

Charting is quick and inexpensive.

Charts provide a wealth of information.

Charting terms and indicators

SRIMCA

Widely-known technical analysis concepts include:

Breakout - when a price passes through and stays above an area of support or

resistance

Commodity Channel Index - identifies cyclical trends

Momentum - the rate of price change

Moving average - lags behind the price action

Relative Strength Index (RSI) - oscillator showing price strength

Resistance - an area that brings on increased selling

SRIMCA

REVIEW OF LITERATURE

SRIMCA

According to Achelis "Technical analysis is the process of analyzing a security’s historical prices in an effort to determine probable future prices."

According to Edwards, Magee and Bassetti "It refers to the study of the action of the market 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 through the use of charts, for the purpose of forecasting future price trends. The term “market action” includes the three principal sources of information available to the technician—price, volume, and open interest."

According to Pring "The art 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 that the trend has reversed. [...] Therefore, technical analysis is based on the assumption that people will continue to make the same mistakes they have made in the past."

According to Cory Janssen, Chad Langager and Casey Murphy “Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future acti

SRIMCA

Research Methodology

SRIMCA

Introduction to topic:

In this Project, we’ll introduce you to the subject of technical analysis. It’s a broad topic, so

we’ll just cover the basics, providing you with the foundation you’ll need to understand more

advanced concepts down the road.

Technical analysis is a method of evaluating securities by analyzing the statistics generalized

by market activity, such as past prices and volume. Technical analysis do not attempt to

measure a security’s intrinsic value, but instead use charts and other tools to identify patterns

that can suggest future activity.

ANALYTICAL RESEARCH:

Research Design was based on analytical research, on the other hand, the researcher has to

use facts or information already available, and analyze these to make these to make a critical

evaluation of the material.

OBJECTIVES OF THE STUDY:

To analyze the price movements of shares of SBI and interpret the corrections and trends by

using Technical Analysis tools.

1) To forecast the future trends and provide suitable suggestions to the investors.

2) To identify the inherent technical strength and weakness of the equity shares.

3) To represent the trend of the stock price through charts of the technical analysis.

SCOPE OF THE STUDY:

1) The study covers for a period of one year from 1/10/ 2011 to 28/10/2012.

2) The study helps to find out the future trends in the prices of PSU sectors companies

shares i.e. (ONGC, SBI, NTPC, COAL INDIA, BHEL) Valuable hints can be identified by

the investors for their future buying and selling.

LIMITATIONS OF THE STUDY:

SRIMCA

1) One of the most important limitations for most technical analysis methods is the fact

that there are so many people using the basic technical analysis methods already, and the

number is increasing every day, making it harder for a single trader to make money on the

market with the methods.

2) Because of these methods are so widely spread and there is so much money riding on

the methods, some also claim that technical analysis has become self-fulfilling prophecy, as

people trend to enter the market and put their stops on the same places, increasing the

volatility towards the technical analysis method being correct.

3) Technical analysis systems usually do not take into account correlation between

different markets. If you are analyzing several markets and they all give similar signals, they

may have close correlations, meaning that the risk profile for each is very similar, and that the

prices of the assets move in close steps with each other.

SOURCES OF DATA:

The main sources of data are collected through website, various publication books,

magazines, newspaper and reports prepared by research scholars etc.

METHODS OF DATA COLLECTION:

SECONDARY DATA:

The study is purely based on secondary data. The secondary data are those which have

already been collected by someone else and which have already been passed through the

statistical process. The methods of collecting secondary data are published data or

unpublished data. It takes short time and relatively low cost.

SAMPLING METHOD

- Systematic Rndom Sampling method used in this project by us , as we have

selected sectors nd companies on the basis of market capitalization.

SAMPLE SIZE

SRIMCA

- 5 companies are selected by us

1) ONGC

2) NTPC

3) SBI

4) BHEL

5) COAL INDIA

DURATION OF STUDY

- Here we hawe taken data for 1 year i.e. from 1-oct-2011 to 26-oct-2012 of all

five compnies .

STATISTICAL TOOLS APPLIED:

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

Relative Strength Index(RSI)

Rate of Change (ROC)

ROC ( Rate of Change)

ROC stands for Rate of Change, and is one of the most well-known and popular of stock and

share technical indicators. The ROC indicator is an momentum or velocity oscillator, with its

movement oscillating around a central zero-point level. As with many technical indicators, a

set period is used to compare with today's price. This period can be as small as 1 day or as

large as 200 days or more, but the most typical periods used are 10, 12 or 25 days.

Calculation of the ROC Indicator

The ROC is calculated by looking at today's price and comparing this with the price at so-

many days ago, depending on the period used. It can be expressed as a simple price-

difference figure, or as a percentage-change figure. Whichever was is used, the Rate of

Change indicator will be positive, negative or zero.

Calculation of the ROC as a simple price-difference figure as very easy - just look at today's

closing price, deduct the closing price so-many days ago (depending on period used), and

voila, you have the ROC figure.

To obtain the Rate of Change indicator as a percentage, the following calculation is used:

SRIMCA

ROC= ((today's closing price - closing price at [period number of days ago]) ÷ closing price

at [period number of days ago]) x 100

ROC = toda y' sclosing−previous da y ' sclosingpreviousda y ' sclosing price

×100

Interpretation of the Rate of Change Technical Indicator

The Rate of Change Indicator can give a good idea of a stock, share or market's cyclical

pattern of movement upwards and downwards, and the graphical display of ROC can be a

way to identify these cycles better than just looking at the share price graph alone. When it

comes to interpretation for buying or selling decisions, analysts consider that a ROC indicator

which is at a high peak and starting to move down is an indication of a sell signal, whereas an

ROC at a low peak, but staring to move upwards, is a buy signal. This is due to the theory

that the higher the ROC, the more overbought the stock or share is, and the lower the ROC,

the more oversold it is likely to be. It is also based on the idea that movement toward the zero

line indicates that the existing trend is losing momentum. The best overbought or oversold

levels are likely to vary depending on the stock or share under study, so it is a good idea to

look at past patterns to assist in making a decision regarding a particular stock. In very strong

upwardly trending bull markets it may be advantageous to use higher and lower peaks than in

times of a weaker market.

Although more difficult to identify, divergences between the ROC trend and the stock price

can be helpful in interpretation, with the movement of ROC and price in opposite directions

considered to be a sign of a possible reversal of the stock price trend.

Some analysts also use the zero level as a basis of buy or sell decisions - buying when the

stock moves from below the zero line to above, and selling when the stock moves from above

to below the zero mark. However, other market technicians may consider this to be a slight

over-simplification of ROC interpretation.

RSI Technical Indicator

SRIMCA

When applied to stocks, shares and securities, RSI stands for Relative Strength Index. It was

originally developed by J. Welles Wilder, Jr, who first introduced the concept of RSI to the

world in his 1978 book, New Concepts in Technical Trading Systems.

Unfortunately there are two different types (and meanings) of Relative Strength when it

comes to stock market trading, and this fact can lead to possible confusion. One of the types

of Relative Strength is the type used to compare the performance of a particular stock with

another stock or sector of the market, or with the whole market itself, or even to compare

whole markets worldwide (for example to compare the relative performance of the UK Stock

Market in comparison to the USA stock market). This type is not what will be discussed on

this page, but instead the Relative Strength Index developed by J. Welles Wilder Jr. is a

momentum oscillator which is based purely on the price changes of a single particular stock,

share or security, and does not compare that individual stock to others or to a sector or the

market as a whole.

Calculation of the RSI Indicator

Wilder's RSI looks at the positive and negative price changes over a period of days prior to

"today" and, from these changes, calculates a RSI figure for "today" which can oscillate

between 0 and 100. Wilde preferred to use 14 days as a period for calculation, and this

appears to continue to be a popular choice, but some analysts and charts may use periods as

low as 8 or as high as 25 days.

If we call the period of days prior to "today" the period, then to start out in the calculation of

the RSI, we need to add together all of the positive price changes over the period.

Calculation:

RSI = 100 – 100 / (1+RS)

Average gain = (Total gains / n)

Average loss = (Total loss / n)

Relative Strength = Average gain / Average loss

Relative Strength Index = 100 – 100 / (1+ RS)

N = number of RSI periods.

SRIMCA

To simplify the formula, the, the Average Loss, the First RS, and the subsequent Smoothed

RS’s For a 20 period RSI, the Average Gain equals the sum total all gains divided by 20.Even

if there are only 5 gains (losses), the total of those 5 gains (losses) is divided by the total

number of RSI periods in the calculation (7 in this case). The Average Loss is computed in a

similar manner. Calculation of the First RS value is straightforward: divide the Average Gain

by the Average Loss. All subsequent RS calculations use the previous period's Average Gain

and Average Loss for smoothing purposes.

RSI interpretation

The RSI is a momentum oscillator, which measures the speed of directional price movement.

According to Wilder, a divergence between the RSI and price action on the chart is a very

strong indication that a market turning point is imminent. A divergence between the RSI and

stock price action is where the stock is making new highs and the RSI is making new lows (or

vice-versa).

RSI can also be used to identify when a stock or share is overbought or oversold. With a 14

day period RSI, many analysts consider that if the RSI drops to below 30 mark, it indicates

that the stock is oversold, so is a possible buy signal. Conversely, if the RSI rises to above 70,

the stock may be overbought and it is worth considering selling. If a shorter period (for

example 8 days) is used, you may wish to use a lower level (for example 20 to 25) as an

oversold level, and a higher level (eg 75 to 80) as an overbought indicator. The lower number

of days used for the period, the more volatile the RSI will be.

Overall, RSI is one of the most popular technical indicators, and analysts consider it to be

among the most reliable. However, it works best with volatile shares, and may not provide as

much success if used with shares whose price does not change much over time. Also, beware

of large surges and drops in stock or share values - such sudden movements may produce a

false buy or sell signal. It is best to use RSI as a compliment to your investing tools and

information, rather than simply on its

SRIMCA

DATA ANALYSIS & INTERPRETATION

SRIMCA

STEP - 1

Index Capitalization rate of all the sectors of BSE was identified on 28-oct- 2012. Out of

these sector 1 sectors namely: (1) PSU (Public sector unit) has shown very high capitalization

as compare to others.

27th-OCT-2012

SECTOR INDEX CAPT. (%)

AUTO 2.81

BANKEX 6.73

CD 0.34

CG 2.35

FMCG 4.39

HC 2.25

IT 3.79

METAL 2.03

OIL&GAS 4.11

POWER 2.01

PSU 24.73REALITY 0.40

TECH 4.91

Source: www.bseindia.com

STEP-2

SRIMCA

As per the market capitalization we have selected five companies from the PSU sector. The

five companies are as follows.

As on 28/10/2012

Company name Market capitalization (%)

1) ONGC 15.38

2) SBI (State bank of India) 15.28

3) NTPC (NTPC Ltd ) 7.3

4) COAL INDIA 5.87

5) BHEL(Bharat Heavy Electricals Ltd) 5.44

Source: www.bseindia.com

STEP 3 - RSI CALCULATION

SRIMCA

Date Close

Price

change Gai

n

Loss

3-Oct-11 268.55

4-Oct-11 264.4 -4.15 0 4.15

5-Oct-11 264.2 -0.2 0 0.2

]7-Oct-11 264.45 0.25 0.25 0

10-Oct-11 273.5 9.05 9.05 0

11-Oct-11 268.35 -5.15 0 5.15

12-Oct-11 270.5 2.15 2.15 0

13-Oct-11 265 -5.5 0 5.5

14-Oct-11 266.65 1.65 1.65 0

17-Oct-11 269.5 2.85 2.85 0

18-Oct-11 263.6 -5.9 0 5.9

19-Oct-11 268.35 4.75 4.75 0

20-Oct-11 266.8 -1.55 0 1.55

21-Oct-11 265.4 -1.4 0 1.4

Calculation

FORMULA FOR CALCULATING RSI:

RSI = 100 – (100/ 1+ Rs)

Average gain = Total Gains / n = (20.7/14) = 1.47857143

Average loss = Total Loss / n = (22.45/14) = 1.60357149

RS¿ AverageGAINAverage Loss

= 0.922049

= 100 – (100 / 1+0.922049)

RSI = 47.97

CHART OF RSI METHOD FOR ALL FIVE SELECTED COMPANY

SRIMCA

RSI = 100 – (100 / 1+ RS)

1) ONGC

INTERPRETATION

The Relative Strength Index (RSI) is a financial technical analysis showing price

strength by comparing upward and downward close-to-close movements.

In the above Chart, blue color line indicates closing price of ONGC scrip.

In the above Chart the sell point of 3-January and 3-Feb and 3- july indicate that there

may be downturn & it is the right time to sell the scrip.

Similarly the Buy point 3-Dec. and 3-Jan and 18-may indicating that it is time to pick

up the scrip and the price of share is upward.

In this chart the double Top, formations are generated.

In 3- Nov the resistance level is generated.

In the Dec., January and Jun month is over sold region, the investor can buy the scrip

In the month of January and July over bought region, the investor can sell the scrip.

2) SBI BANK

SRIMCA

INTERPRETATION



In the above Chart, blue color line indicates closing price of SBI Bank scrip.

In the above Chart the sell point of 25-Oct. and 27-Jan. and 24-Oct indicate that there


Similarly the Buy point 25-Jan. and 3-May and 3-Aug. indicating that it is time to

pick up the scrip and the price of share is upward.

In this chart the double Top, formations are generated.

In the Oct., January and Oct. month is over sold region, the investor can buy the scrip

In the month of January and May and Aug. over bought region, the investor can sell the scrip.

3) Coal India

SRIMCA

INTERPRETATION



In the above Chart, blue color line indicates closing price of Coal India scrip.

In the above Chart the sell point of 8-Dec., 19-January and 2-Sep. indicate that there


Similarly the Buy point 3-Nov. and 12-Oct indicating that it is time to pick up the

scrip and the price of share is upward.

In this chart the double Bottom formations are generated.

In 25- Dec the support level is generated.

The Head & Shoulder top and bottom are generated.

4) NTPC

SRIMCA

INTERPRETATION



In the above Chart, blue color line indicates closing price of NTPC scrip.

In the above Chart the sell point of 20-Feb and 18- July indicate that there may be

downturn & it is the right time to sell the scrip.

Similarly the Buy point 26-Nov. and 18-May and 24-July indicating that it is time to

pick up the scrip and the price of share is upward.

In this chart the double Top and double bottom formations are generated.

5) BHEL

SRIMCA

INTERPRETATION



In the above Chart, blue color line indicates closing price of BHEl scrip.

In the above Chart the sell point of 1-May indicate that there may be downturn & it is

the right time to sell the scrip.

Similarly the Buy point 21-Nov. and 16-Dec. indicating that it is time to pick up the

scrip and the price of share is upward.

In this chart the double Top formations are generated.

On 11- Oct. the resistance level is generated.

On 27-May and 14-Sep. the support level is generated.

In the Nov. and Dec. month is over sold region, the investor can buy the scrip

In the month of May over bought region, the investor can sell the scrip.

STEP 4- CALCULATION OF ROC

SRIMCA

Date Close Price ROC -1 Method (%)

ROC -2 Method (%)

3-Oct-11 1862.75

4-Oct-11 1786.7

5-Oct-11 1715.3

7-Oct-11 1751.85

10-Oct-11 1754.55

11-Oct-11 1765.1

12-Oct-11 1872.25

13-Oct-11 1886.95

14-Oct-11 1882.5

17-Oct-11 1891.8 101.5595222 1.559522212

18-Oct-11 1863.4 104.2928304 4.292830358

19-Oct-11 1919.1 111.8813036 11.88130356

Formula for calculation of ROC

ROC= ((today's closing price - closing price at [period number of days ago]) ÷ closing price

at [period number of days ago]) x 100

ROC = toda y' sclosing−previous da y ' sclosingpreviousda y ' sclosing price

×100

ROC = {(1891.8-1862.75)/1862.75} * 100

= 1.559522212

CHART OF ROC METHOD FOR ALL FIVE SELECTED COMPANY

SRIMCA

1) ONGC

17/Oct/

11

29/Oct/

11

10/Nov/1

1

22/Nov/1

1

04/Dec/

11

16/Dec/

11

28/Dec/

11

09/Jan/1

2

21/Jan/1

2

02/Feb/1

2

14/Feb/1

2

26/Feb/1

2

09/Mar/

12

21/Mar/

12

02/Apr/1

2

14/Apr/1

2

26/Apr/1

2

08/May

/12

20/May

/12

01/Jun/1

2

13/Jun/1

2

25/Jun/1

2

07/Jul/1

2

19/Jul/1

2

31/Jul/1

2

12/Aug/1

2

24/Aug/1

2

05/Sep/1

2

17/Sep/1

2

29/Sep/1

2

11/Oct/

12

23/Oct/

12

-25

-20

-15

-10

-5

0

5

10

15

20

25

Series1

Falling Trend

Raising Trend

Over Sold

Raising TrendOver Bought

Double Top

Double Bot-tom

INTERPRETATION

ROC measures the rate of change between the current price & the price ‘n’ number of

days in past. ROC helps to find out the overbought & oversold positions in scrip.

In the above chart, scrip’s ROC reaches the historic high value in the month of Jun,

the scrip is in overbought region & a fall in the value can be anticipated. In 27-sep-

2012, the investor can sell the scrip.

Similarly, scrip’s ROC reaches the historic low value in the month of January and

May, the scrip is in oversold region & a rise in the scrip’s price can be anticipated. In

January, the investor can buy the scrip.

The Double top & double bottom trend generated in January & February month.

Raising trend found from the month of August to September.

Falling trend found in 17 December 2012.

2) SBI BANK

SRIMCA

17/Oct/

11

30/Oct/

11

12/Nov/1

1

25/Nov/1

1

08/Dec/

11

21/Dec/

11

03/Jan/1

2

16/Jan/1

2

29/Jan/1

2

11/Feb/1

2

24/Feb/1

2

08/Mar/

12

21/Mar/

12

03/Apr/1

2

16/Apr/1

2

29/Apr/1

2

12/May

/12

25/May

/12

07/Jun/1

2

20/Jun/1

2

03/Jul/1

2

16/Jul/1

2

29/Jul/1

2

11/Aug/1

2

24/Aug/1

2

06/Sep/1

2

19/Sep/1

2

02/Oct/

12

15/Oct/

12

-25

-20

-15

-10

-5

0

5

10

15

20

25Failing Trend

Raising Trend

Over Bought

Raising Trend

Double Top

Double Bottom

Over Sold

INTERPRETATION

Here in chart in the month of December we found falling trend.

In the month of May & September Raising trend found.

In January month Double top & in February Double Bottom trend found.

In month of September i.e. on 26 SEP 2012 overbought situation arise.

In month of December i.e. on 20 DEC 2011oversold situation arise.

SRIMCA

3) COAL INDIA

17/Oct/

11

31/Oct/

11

14/Nov/1

1

28/Nov/1

1

12/Dec/

11

26/Dec/

11

09/Jan/1

2

23/Jan/1

2

06/Feb/1

2

20/Feb/1

2

05/Mar/

12

19/Mar/

12

02/Apr/1

2

16/Apr/1

2

30/Apr/1

2

14/May

/12

28/May

/12

11/Jun/1

2

25/Jun/1

2

09/Jul/1

2

23/Jul/1

2

06/Aug/1

2

20/Aug/1

2

03/Sep/1

2

17/Sep/1

2

01/Oct/

12

15/Oct/

12

-15

-10

-5

0

5

10

15

Over Sold

Head & Shoulder Trend

Failing TrendRais-ing Trend

Over bought

INTERPRETATION

In December month Raising trend found & from 2 Dec 2011 trend starts to fall

downward side.

Here top head & shoulder I found in month of February

Between month of May & June bottom head & shoulder is found

In all chart pattern we found all price movement is within the limit.

Only two point are in the situation off over bought & over sold situation.

At 2-Dec 2011 value is overbought area.

At 14 Dec 2012 the oversold situation arise .

4) NTPC

SRIMCA

17/Oct/

11

30/Oct/

11

12/Nov/1

1

25/Nov/1

1

08/Dec/

11

21/Dec/

11

03/Jan/1

2

16/Jan/1

2

29/Jan/1

2

11/Feb/1

2

24/Feb/1

2

08/Mar/

12

21/Mar/

12

03/Apr/1

2

16/Apr/1

2

29/Apr/1

2

12/May

/12

25/May

/12

07/Jun/1

2

20/Jun/1

2

03/Jul/1

2

16/Jul/1

2

29/Jul/1

2

11/Aug/1

2

24/Aug/1

2

06/Sep/1

2

19/Sep/1

2

02/Oct/

12

15/Oct/

12

-15

-10

-5

0

5

10

15

Series1

Head & shoulder Trend


Failing Trend

Raising TrendRaising Trend

Over Sold

INTERPRETATION

In December month downward trend found & from 20 Dec 2011 trend starts to rise

upward side.

Here bottom head & shoulder is found in the month of march

At the end of December trends starts falling i.e history is repeating

In all chart pattern we found all price movement is within the limit.

Top head & shoulder is also observed

Trend is following repeated pattern

5) BHEL

SRIMCA

17/Oct/

11

30/Oct/

11

12/Nov/1

1

25/Nov/1

1

08/Dec/

11

21/Dec/

11

03/Jan/1

2

16/Jan/1

2

29/Jan/1

2

11/Feb/1

2

24/Feb/1

2

08/Mar/

12

21/Mar/

12

03/Apr/1

2

16/Apr/1

2

29/Apr/1

2

12/May

/12

25/May

/12

07/Jun/1

2

20/Jun/1

2

03/Jul/1

2

16/Jul/1

2

29/Jul/1

2

11/Aug/1

2

24/Aug/1

2

06/Sep/1

2

19/Sep/1

2

02/Oct/

12

15/Oct/

12

-30

-20

-10

0

10

20

30

40

Over Bought


Head & Shoulder Trend

Over Sold

Over Bought

INTERPRETATION

In month of February & March Over bought situation seen

While in the month of December oversold is there.

Bottom Head & shoulder pattern we can see in month of August.

As in month of September & October top head & shoulder pattern is seen.

SRIMCA

FINDINGS

SRIMCA

1) ONGC Resistance level is provided thus the price started declining in

November. Twice buy & sell point occurs within 1 month duration. Support level is provided in September as result price started rising. With respect to ROC, falling trend has been observed & because of

oversold it continuous. Overbought along with double top trend has been seen In JAN end.

2) SBI During November share price is at minimum point thus it gives the buy

signal to the investors. Double top trend has been repeated twice, one is within limit &

another is crossing the resistance level in the month of Jan & Feb. In the month of April bottom Head & Shoulder is noticed Raising trend has been found in the end of May & August.

3) COAL INDIA Support level is provided in the beginning of Jan 12 as result price rises. Bottom Head & Shoulder has been found in May 12. Buy call is twice & 3 sell call has been observed. Double bottom is seen in November & april. Top Bottom Head & Shoulder has been found in February & may respectively. Raising trend is observed in the month of December as it is overbought.

4) NTPC Continuous fluctuation of prices has been found in scrip of NTPC. 2 Double bottom & 2 Top bottom has been found thus high variation in

price & trend is followed. Raising trend is seen in December & again price reaches its historic

value in January. Top Bottom head & shoulder are seen in March & August respectively.

5) BHEL

SRIMCA

Twice support level has been provided in the month of may & September.

Double top trend is observed in the month of July. Two Bottom head & shoulder and one top head & shoulder are seen in

the charts. One symmetric triangle is found in March.

SRIMCA

SUGGESTIONS

SRIMCA

The investors should be trained to use the technical analysis tools. Since it will help

them in their day to day investments to get more returns.

Fundamental analysis can also be suggested to the investors together corporate,

growth of earnings and profitability.

The company should orient the investors to mainly watch the business, economic,

social and political factors that affect the supply and demand for securities.

The investors can also use more number of charts which will depict a true picture on

the movement of the securities.

The investors should analyze market data in real time; plan your own market timing

strategy to make money, regardless of upwards and downwards trending markets.

Minute – by – Minute trading volume shows the reversal points of the market, and

therefore when to buy and sell can be identified.

“The trend is your Friend” is the motto of technical analysis. So the investor has to

monitor the trend of stocks before investment.

SRIMCA

CONCLUSION

SRIMCA

Buying and selling of stock is not an easy task if you want to make money doing it.

Millions of investors have lost the money in past trying guessing stock price movements. In

order to consistently make money in the stock market, investors have to be right over 70% of

the time.

In today’s world, if you rely on fundamental analysis, broker’s advice newspaper, articles or

business channels for your investing or trading decisions, you are asking for a painful

experience in the markets. So, this study on technical analysis will help the investors in

analyzing the scripts based on the technical tools and oscillators to earn fruitful investment.

Technical analysis is the art and science of chart patterns in order to better analyze and

predict prices of a given security. It is also becoming popular with the younger generation.

But further research has to be conducted to know whether the technical analysis alone will

guarantee profits to the investors. Knowledge of the stock markets is the key to the success

and emphasis should be on managing trading risk while technical analysis can help you to

control them.

SRIMCA

BIBLIOGRAPHY

BOOKS REFERRED:

SRIMCA

1) Security Analysis and Portfolio Management by Dr. Punithavathi Pandian in the year

2008 – Publication: Vikas Publishing House Pvt Ltd.

WEBSITES:

- www.nseindia.com

- www.bseindia.com

- www.technicaltrends.com

- www.stockcharts.com

- www.investopedia.com

- www.sharetermpapers.com

- www.indiabulls.com

- http://www.investopedia.com/terms/s/stockmarket.asp#ixzz2Ac12urX7- http://www.boerse-frankfurt.de/en/basics+overview/role+of+the+stock+exchange/

the+stock+exchange- http://www.investopedia.com/university/stockpicking/

stockpicking9.asp#ixzz2AcBofotn- http://www.pandacash.com/technical-analysis/roc.htm

SRIMCA

http://www.pandacash.com/technical-analysis/roc.htm

http://www.investopedia.com/university/stockpicking/stockpicking9.asp#ixzz2AcBofotn

http://www.investopedia.com/university/stockpicking/stockpicking9.asp#ixzz2AcBofotn

http://www.boerse-frankfurt.de/en/basics+overview/role+of+the+stock+exchange/the+stock+exchange

http://www.boerse-frankfurt.de/en/basics+overview/role+of+the+stock+exchange/the+stock+exchange

http://www.investopedia.com/terms/s/stockmarket.asp#ixzz2Ac12urX7

http://www.indiabulls.com/

http://www.sharetermpapers.com/

http://www.investopedia.com/

http://www.stockcharts.com/

http://www.technicaltrends.com/

http://www.bseindia.com/

http://www.nseindia.com/

Technical analysis report

Documents

Transcript of Technical analysis report