TREND ANALYSIS OF SELECTED SECURITIES IN BSE INDEX AT SHORTER TIME HORIZONS”

“TREND ANALYSIS OF SELECTED SECURITIES IN BSE INDEX AT SHORTER

TIME HORIZONS”

A PROJECT REPORT

SUBMITTED TO

UNIVERSITY OF CALICUT

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS

FOR THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

(2010-2012)

BY

DEEPAK.KD

(Register no: JLAKMBA 009)

Under the guidance of

Miss. NIMMI SOMRAJ, MBA

JAWAHARLAL COLLEGE OF ENGINEERING AND TECHNOLOGY,

MANGALAM, LAKIDI

1

SCHOOL OF MANAGEMENT

Jawaharlal College of Engineering and Technology

DECLARATION

I DEEPAK.K.D, hereby declare that the project report

entitled “TREND ANALYSIS OF SELECTED SECURITIES IN BSE INDEX

AT SHORTER TIME HORIZONS” submitted to the University of

Calicut in partial fulfillment of the requirements for the award of

the degree of the Master of Business Administration is a

record of original work done by me during 5th September 2011 to

3rd October 2007 under the guidance of Miss. Nimmi Somraj

Faculty of MBA in Jawaharlal College of Engineering and

Technology,

I also hereby declare that this project report has not been

submitted at any time to any other university or Institute for the

award of any degree/ diploma/fellowship or other titles.

Place:

Date: Signature

FORWARDED TO

2

DIRECTOR

PRINCIPAL

(Jawaharlal College of Engineering and

Technology)

SCHOOL OF MANAGEMENT STUDIES

JAWAHARLAL COLLEGE OF ENGINEERING AND

TECHNOLOGY

MANGALAM, LAKIDI

CERTIFICATE

This is to certify that this Dissertation submitted in partial

fulfillment of the requirement of the degree of Master of

Business Administration of the University of Calicut is a

record of bona fide project work conducted by Mr. DEEPAK.K.D

under my supervision and guidance and no part of this project

report has been submitted earlier for the award of any degree of

3

any University and this report has not been published in part or

full in any other magazine or journal

Date:

Faculty Guide

Acknowledgement

I take pleasant privilege in expressing my heart full gratitude to all those who were of precious

help in completing this project.

I also express my sincere gratitude and profound thanks to Mr. KPC Nair, Advisor of MBA

Department , for giving me the opportunity to do this project.

I am greatly indebted to Miss Nimmi Somraj, my guide for his valuable suggestions and

encouragement throughout the project work.

I also express my sincere gratitude to management and staffs who gave given me an opportunity

to do my project in their company.

I am happy to express my esteem thanks to Mr.Vinod, Manager of Share wealth Securities and

staffs for their help and cooperation.

4

I am expressing my sincere gratitude to my parents for their encouragement and blessing that

enabled me to successfully complete the project.

5

CONTENTS

Certificates Page number

Declaration

Acknowledgement

List of Tables & Graphs

Chapter I Introduction

1.1 Introduction to the topic

1.2 Introduction to capital market

1.3 Over view of Share wealth securities

1.4 Research problem

1.5 Objectives of the study

1.6 Scope of the study

1.7 Limitations of the study

1.8 Research methodology

Chapter II Review of Literature

Chapter III Industry and company profile

Chapter IV Data Analysis and interpretation

Chapter V Findings and Recommendations

Chapter VI Conclusion

Appendix (price data)

Bibliography

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Number Lists of charts Page number

1 Line chart of State Bank of India

2 Moving average chart of State Bank of India

3 RSI chart of State Bank of India

4 ROC chart of State Bank of India

5 MACD chart of State Bank of India

6 Line chart of ICICI Bank

7 Moving average chart of ICICI Bank

8 RSI chart of ICICI Bank

9 ROC chart of ICICI Bank

10 MACD chart of ICICI Bank

11 Line chart of HDFC Bank

12 Moving average chart of HDFC Bank

13 RSI chart of HDFC Bank

14 ROC chart of HDFC Bank

15 MACD chart of HDFC Bank

16 Line chart of Punjab National Bank

17 Moving average chart of Punjab National Bank

18 RSI chart of Punjab National Bank

19 ROC chart of Punjab National Bank

20 MACD chart of Punjab National Bank

21 Line chart of AXIS Bank

22 Moving average chart of AXIS Bank

23 RSI chart of AXIS Bank

24 ROC chart of AXIS Bank

25 MACD chart of AXIS Bank

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CHAPTER 1

INTRODUCTION AND RESEARCH PROBLEM

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1.1 INTRODUCTION

Investment means sacrifice of money value at present with the expectations to gain in the

future. Financial investments are like exchange of financial claims, like buying of shares,

debentures, purchasing insurance policy, investing money in bank or post office etc. Any rational

investor, before investing his or her investable wealth in the stock, analysis the risk associated

with the particular stock. The actual return he receives from a stock may vary from his excepted

return and the risk is expressed in terms of variability of return. The down side risk may be

caused by several factors, either common to all stocks or specific to a particular stock. Investor in

general would like to analysis the risk factors and a thorough knowledge of the risk, helps him to

plan his portfolio in such a manner so as to minimize the risk associated with the investment. To

a certain extent security analysis helps him or her to identify the risk. Securities analysis involves

fundamental analysis and technical analysis.

The study was conducted in the banking sector in which the securities are listed in BSE

index with reference to share wealth securities limited, Thrissur. The topic selected for study is

‘trend analysis of selected securities in BSE index at shorter time horizons’.

The study is done for the purpose of conducting technical analysis. In the stock market

share price of companies are determined by the demand and supply forces operating in the

market. These demand and supply forces in turn are influenced by a number of fundamental

factors as well as certain psychological or emotional factors. The combined impact of all these

factors is reflected in the share price movement. The price movements of securities follow

systematic and certain consistent patterns. Past movements in the prices of shares help to identify

trends and pattern. It is useful for the prediction of future price movements. The companies

selected from the banking sector for the study are State Bank of India, ICICI Bank, HDFC

Bank, Punjab National Bank & Axis Bank.

The efficiency of the companies conformed by analyzing technical aspects. The technical

analysis includes RSI (Relative Strength Index), ROC (rate of change), Simple Moving Average,

MACD, Line chart. It provides additional strength to the investor in choosing the option of buy,

hold or sell strategies.

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1.2 INTRODUCTION TO CAPITAL MARKET

The market where investment funds like bonds, equities and mortgages are traded is

known as the capital market. The primal role of the capital market is to channelize investments

from investors who have surplus funds to the ones who are running a deficit. The capital market

offers both long term and overnight funds. The financial instruments that have short or medium

term maturity periods are dealt in the money market whereas the financial instruments that have

long maturity periods are dealt in the capital market. The different types of financial instruments

that are traded in the capital markets are equity instruments, credit market instruments, insurance

instruments, foreign exchange instruments, hybrid instruments and derivative instruments.

A capital market is a market for securities (both debt and equity), where business enterprises

(companies) and governments can raise long-term funds. It is defined as a market in which

money is lent for periods longer than a year, as the raising of short-term funds takes place on

other markets (e.g., the money market). The capital market includes the stock market (equity

securities) and the bond market (debt).

Capital markets consist of

1 Primary market

2 Secondary markets

1. Primary market

The primary market is that part of the capital markets that deals with the issuance of new

securities. Companies, governments or public sector institutions can obtain funding through the

sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers.

The process of selling new issues to investors is called underwriting. In the case of a new stock

issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the

price of the security offering, though it can be found in the prospectus. The primary markets are

where new stock and bonds issues are sold (via underwriting) to investors.

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Features of primary markets are:

• This is the market for new long term equity capital. The primary market is the market

where the securities are sold for the first time. Therefore it is also called the new issue

market (NIM).

• In a primary issue, the securities are issued by the company directly to investors.

• The company receives the money and issues new security certificates to the investors.

• Primary issues are used by companies for the purpose of setting up new business or for

expanding or modernizing the existing business.

• The primary market performs the crucial function of facilitating capital formation in the

economy.

• The new issue market does not include certain other sources of new long term external

finance, such as loans from financial institutions. Borrowers in the new issue market may

be raising capital for converting private capital into public capital; this is known as

"going public."

• The financial assets sold can only be redeemed by the original holder.

Methods of issuing securities in the primary market are:

1. Initial public offering;

2. Rights issue (for existing companies);

An initial public stock offering (IPO) referred to simply as an "offering" or "flotation," is

when a company issues common stock or shares to the public for the first time. They are often

issued by smaller, younger companies seeking capital to expand, but can also be done by large

privately-owned companies looking to become publicly traded.

A rights issue is offered to all existing shareholders individually and may be rejected,

accepted in full or accepted in part. Rights are often transferable, allowing the holder to sell them

on the open market. A right to a share is generally issued on a ratio basis (e.g. one-for-three

rights issue). Because the company receives shareholders' money in exchange for shares, a rights

issue is a source of capital.

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2. Secondary market

The secondary market, also known as the aftermarket, is the financial market where

previously issued securities and financial instruments such as stock, bonds, options, and futures

are bought and sold. The term "secondary market" is also used to refer to the market for any used

goods or assets, or an alternative use for an existing product or asset where the customer base is

the second market (for example, corn has been traditionally used primarily for food production

and feedstock, but a second- or third- market has developed for use in ethanol production).

Under a secondary market offering or seasoned equity offering of shares to raise money,

a company can opt for a rights issue to raise capital. The rights issue is a special form of shelf

offering or shelf registration. With the issued rights, existing shareholders have the privilege to

buy a specified number of new shares from the firm at a specified price within a specified time.

A rights issue is in contrast to an initial public offering (primary market offering), where shares

are issued to the general public through market exchanges. With primary issuances of securities

or financial instruments, or the primary market, investors purchase these securities directly from

issuers such as corporations issuing shares in an IPO or private placement, or directly from the

federal government in the case of treasuries.

After the initial issuance, investors can purchase from other investors in the secondary

market.The secondary market for a variety of assets can vary from fragmented to centralized, and

from illiquid to very liquid. The major stock exchanges are the most visible example of liquid

secondary markets - in this case, for stocks of publicly traded companies. . Exchanges provide a

centralized, liquid secondary market for the investors who own stocks that trade on those

exchanges. Most bonds and structured products trade “over the counter,” or by phoning the bond

desk of one’s broker-dealer.

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Functions of Secondary market

Secondary marketing is vital to an efficient and modern capital market . In the secondary

market, securities are sold by and transferred from one investor or speculator to another. It is

therefore important that the secondary market be highly liquid (originally, the only way to create

this liquidity was for investors and speculators to meet at a fixed place regularly; this is how

stock exchanges originated, see History of the Stock Exchange). As a general rule, the greater the

number of investors that participate in a given marketplace, and the greater the centralization of

that marketplace, the more liquid the market.

Fundamentally, secondary markets mesh the investor's preference for liquidity (i.e., the

investor's desire not to tie up his or her money for a long period of time, in case the investor

needs it to deal with unforeseen circumstances) with the capital user's preference to be able to

use the capital for an extended period of time.

Stock Exchanges

Stock exchanges are open markets that trade financial assets. Whether associated with a

company or acting as an individual, a stock exchange is the place where stocks are bought and

sold. There are a number of major stock exchanges around the world and each of these plays a

part in determining the overall financial and economic condition of any economy.

Stock exchanges deal with a number of financial instruments such as stocks, bonds and

equities. Both corporate and government bonds are traded in stock exchanges. Equities include

popular investment options, rights issues, bonus issues, and all other forms of shares and stocks.

The actual trading of stocks takes place through mediators such as financial advisors, brokerage

houses, and stockbrokers.

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Functions of Stock Exchanges:

The main function of a stock exchange is to facilitate the transactions associated with

both the buying and selling of securities. Buyers and sellers of shares and stocks can track the

price changes of securities from the stock markets in which they operate. The ups and downs of

stock indexes help the investors to speculate on the return on investment (ROI) of various

investment options.

Stock exchanges also serve as a source of capital formation for listed companies. Business

entities that are listed in a particular stock exchange can issue shares to thepublic and sell those

shares in that market.

To take part in these transactions, listed companies need to abide by the rules and

requirements of that market. The stock exchanges protect the interests of both buyers and sellers

by assuring a timely transfer of money. The participants of a stock market are required to operate

within the specified transaction limits fixed by the regulatory authority of that stock market.

Speed and transparency are vital for all stock market transactions. The companies listed

in a stock exchange need to provide proper guidance regarding business performance and

prospects, mergers and acquisitions, stock prices, dividends and other information at all times.

Investors make their investment decisions based on the information obtained from these

companies, and the comments of analysts who track those companies.

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1.3 OVER VIEW OF SHARE WEALTH SECURITIES

Share wealth Securities Ltd is the first corporate member of National Stock Exchange of

India Ltd, Bombay Stock Exchange Ltd and MCX Stock Exchange Ltd (MCX-SX) from

THRISSUR, the Cultural Capital of Kerala. Share wealth is also a Depository Participant with

CDSL (Central Depository Services (India) Ltd). Share wealth Securities Ltd has two group

companies, Share wealth Commodities Pvt Ltd (Member: MCX, NCDEX, NMCE, ICEX &

NSEL) and Share wealth Financial Services Ltd (AMFI Registered Mutual Fund Distributor).

Share wealth has a group (Overseas Joint Venture) company at Abu Dhabi, Share wealth

Financial Consultancy LLC. Registered & Corporate offices of Share wealth Group of

companies are at Thrissur.

Mission of the company

"To educate growing investing public in a simple & practical way to help them to protect their

hard earned money and to make more money from financial & commodity markets" , which

we mean by

"Wealth creation simplified"

Products and Services

Equities

Derivatives

Depository

Commodities

Mutual fund

Initial Public Offer (IPO)

Insurance

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1.4 RESEARCH PROBLEM

‘Trend analysis of selected securities in BSE index at shorter time horizons’.

Problem discussion

In the past, there were many situations in which stock prices fluctuated in an erratic

manner. There are various factors which affect the stock prices. They include human emotions

economic factors, government factors etc. The price of a security represents a consensus. It is the

price at which one person agrees to buy and another agrees to sell. The price at which an investor

is willing to buy or sell depends primarily on his expectations. If he expects the security's price

to rise, he will buy it; if the investor expects the price to fall, he will sell it. These simple

statements are the cause of a major challenge in forecasting security prices, because they refer to

human expectations. Humans are not easily quantifiable or predictable. This fact alone will keep

any mechanical trading system from working consistently.

Technical analysis is the study of price movement and trend in markets in order to

forecast future prices. Investment timing plays a crucial role for trading in stock market. The

investors face difficulty while identifying the opportunities. Prices of securities on the stock

market fluctuate daily on account of buying and selling. Stock prices move in trend and cycles

and are never stable .This study make a critical analysis of the stock price fluctuations and an

alternative approach to study the stock price behavior. The study mainly aims at minimizing this

risk existing in the market using technical analysis indicators and also shows whether these

technical analysis indicators able enough to act as a guide in making effective selling and buying

decisions.

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1.5 OBJECTIVES OF THE STUDY

To conduct technical analysis of leading banking companies securities in stock market.

To identify the nature of growth of the selected banking companies in share market.

To know how technical tools are used to predict the future behavior of the stock.

To know how an investor can take rational investment decision by the study of market

trends and movements.

To identify the effectiveness of Technical analysis in predicting the future stock prices

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1.6 SCOPE OF THE STUDY

The analysis is helpful for the common investors and researchers to find out the

trends in market.

The research is based upon the prices of five companies, State Bank of India (SBI),

ICICI Bank, HDFC Bank, Punjab National Bank, AXIS Bank.

The project tries to point out the best avenues that ensure maximum return and

minimum risk where in investment could be made. The performances of the Banking

companies are analyzed in terms of technical analysis. The results are supported by

various techniques in technical analysis. The technical analysis is to predict the future

stock behavior.

Mathematical indicators, oscillators’ tools are used for the analysis. These oscillators

are fine tools to predict future movements much before such movements takes place ,

and thus leave a sufficient time gap to take decision on the basis of

MACD (Moving Average Convergence and Divergence)

ROC (Rate of Change)

RSI (Relative Strength Index)

Moving average

Line chart

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

analysis helps the share holders to choose the best security to invest to make profit.

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

the transaction of shares. Since the customer gets added service, they will retain to the

company. It can be used as a method to increase their clients and there by profit. This

study reveals how the share brokers and their clients are helped by technical tools.

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1.7 LIMITATIONS OF THE STUDY

Analysis involves using of limited technical tools.

The study is restricted only to five selected stocks of BSE.

The study depends more on secondary data rather than on primary data.

This technical analysis can’t be applicable to newly listed companies script.

If the market is not stable, the findings may mislead us to wrong conclusions.

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1.8 RESEARCH METODOLOGY

The methodologies used for the study are the following

Research design

The research design used in the study is analytical research. In analytical research the researcher

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

of material. So the research has to analyze the closing price of shares, which is a historical data

and derive conclusions from it.

Universe

The segment identified for conducting the study is BSE index. Samples are selected from the

banking sectors which are listed in BSE index.

Sampling design

BSE index consist of 12 sectors. From the 12 sectors, banking sector are selected through

convenience sampling. The securities selected for the study are having high market capitalization

in the banking sector.

Samples

Five securities are selected, each from banking sectors. They are:

State Bank of India

ICICI Bank

HDFC Bank

Punjab National Bank

AXIS Bank

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CHAPTER II

REVIEW OF LITERATURE

21

TECHNICAL ANALYSIS

Technical analysis is a forecasting method of price movements using past prices, volume, and

open interest. Technical analysis includes a variety of forecasting techniques such as chart

analysis, pattern recognition analysis, seasonality and cycle analysis, and computerized technical

trading systems. However, academic research on technical analysis is generally limited to

techniques that can be expressed in mathematical forms, namely technical trading systems,

although some recent studies attempt to test visual chart patterns using pattern recognition

algorithms. A technical trading system consists of a set of trading rules that result from

parameterizations, and each trading rule generates trading signals (long, short, or out of market)

according to their parameter values. Several popular technical trading systems are moving

averages, channels, and momentum oscillators.

Definition

“The technical approach to investment is essentially a reflection of the idea that prices move in

trends that are determined by the changing attitudes of investors toward a variety of economic,

monetary, political, and psychological forces. 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.”

Charles H. Dow first introduced the Dow Theory in the late 1800s; technical analysis has been

extensively used among market participants such as brokers, dealers, fund managers, speculators,

and individual investors in the financial industry. Numerous surveys indicate that practitioners

attribute a significant role to technical analysis. Technical analysts may employ models and

trading rules based on price and volume transformations, such as the relative strength index,

moving averages, regressions, inter-market and intra-market price correlations, cycles or,

classically, through recognition of chart patterns. Technical analysis is frequently contrasted with

fundamental analysis, the study of economic factors that influence prices in financial markets.

Technical analysis holds that prices already reflect all such influences before investors are aware

of them, hence the study of price action alone. Some traders use technical or fundamental

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

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Premises of Technical Analysis

Prices follow a particular movement over the period.

Price movement is influenced by demand and supply.

Demand and supply are affected by certain rational and irrational factors.

Every kind of price sensitive information is discounted in to prices, which is the base of

predicting near future price movement.

Prices follow a particular path continuously, which gets repeated again and again, this

repetition provides a chance to take investment or disinvestment decision.

Price movement is supported by traded volume.

Tools for Technical analysis

Line chart

Rate of change indicator (ROC)

Relative strength index (RSI)

Moving average

Moving Average Convergence and Divergence (MACD)

Line chart

A line chart is a basic type of chart common in many fields. It is an extension of a scatter

graph, and is created by connecting a series of points that represent individual measurements

with line segments. A line chart is often used to visualize a trend in data over intervals of time,

thus the line is often drawn chronologically.

23

Rate of change indicator (ROC)

The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a

particular share (or other financial instrument) is moving. Rate of Change or ROC is a technical

indicator that measures the changes between the percentage compared to the most recent price

and the price "n" periods in the past. It is also said that it monitors the momentum of the market.

It estimates the market’s rate of change comparative to the previous trading intervals. In the

highest level, the indicator might say a market is quite overbought. Valleys or troughs also points

out an oversold market situation. It can also stand alone as an essential indicator used by many

technicians interested in market momentum. It has a horizontal median called equilibrium. It is

this median that tells us everything we need to know about this type of rate. A few technicians in

the market often use a very simple approach for the Rate of Change learning

Buying signal

When ROC is more than one (ROC >1) and moving upward continuously, it indicates

that market is likely to move upward.

When ROC line is less than one (ROC < 1) and moving upward continuously, it indicates

that market has come out of the red and in the near future it is expected to have a upward

movement.

When ROC is moving downside but the pace of decline has decreased, it indicates that

market is likely to reach over sold level and after that it will start rising. An opportunist

who can take a risk can buy at this level.

Selling signal

When ROC line is increasing but the pace of increase has declined it indicates that

market is about to reach the overbought zone, after which it is likely to decline. One

should take precaution or a risk adverse investor can sell at this movement.

When ROC line has made a peak it is the identification of Over Bought market, and

market is likely to move towards downward direction, one should sell.

When ROC is more than one (ROC >1) but declining, it indicates that market will enter

in south zone, i.e declining zone, one should sell at this level.

24

Relative strength index (RSI)

The Relative Strength Index (RSI) is one of the powerful Oscillators which

indicate market movement much before such movement takes place. Under RSI gains and losses

of the prices over the immediate previous days’ price for a certain period is calculated. With the

help of the formulae RSI value is calculated and plotted on the graph to identify Over Bought

and Over Sold market. Market always moves southward after an overbought situation and it

moves northward after an oversold situation.

The RSI was developed by J. Welles Wilder and published in Commodities magazine (now

called Futures magazine) in June 1978 and in his New Concepts in Technical Trading Systems

the same year.

Relative strength also refers to the strength of a security in relation to its sector or

the overall market.

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

RS = Average of n periods price gains / Average of n periods price losses

RSI ranges from 0 to 100. An asset is deemed to be overbought once the RSI approaches the 70

level, meaning that it may be getting overvalued and is a good candidate for a pullback.

Likewise, if the RSI approaches 30, it is an indication that the asset may be getting oversold and

therefore likely to become undervalued.

Buying signal

When RSI is more than fifty and moving upward continuously, it indicates that market is

likely to move upward.

When RSI lines are less than fifty and moving upward continuously, it indicates that

market has come out of the red and in the near future it is expected to have a upward

movement.

When RSI is moving downside below the fifty marks but the pace of decline has

decreased, it indicates that market is likely to reach Over Sold level and after that it will

start rising, an opportunist who can buy at this level.

25

http://en.wikipedia.org/wiki/Futures_(magazine)

http://en.wikipedia.org/wiki/Commodities_(magazine)

http://en.wikipedia.org/w/index.php?title=J._Welles_Wilder&action=edit&redlink=1

Selling signal

When RSI line is increasing above fifty mark but the pace of increase has declined, it

indicates that market is about to reach the overbought zone, after which it is likely to

decline. One should take precaution or a risk adverse investor can sell at this movement.

When RSI line has made a peak at around 70 levels it is the identification of Over Bought

market, and market is likely to move downward direction, one should sell.

When RSI is more than 50 but declining, it indicates that market will enter in south zone,

i.e. declining zone, and one should sell at this level.

Moving average

In statistics, a moving average, also called rolling average, rolling mean or running average, is a

type of finite impulse response filter used to analyze a set of data points by creating a series of

averages of different subsets of the full data set. A moving average is not a single number, but it

is a set of numbers, each of which is the average of the corresponding subset of a larger set of

data points. it is used in technical analysis of financial data, like stock prices, returns or trading

volumes.

Moving averages is an indicator frequently used in technical analysis showing the average value

of a security's price over a set period Moving averages are used to emphasize the direction of a

trend and to smooth out price and volume fluctuations, or "noise", that can confuse

interpretation. Typically, upward momentum is confirmed when a short-term average (e.g.15-

day) crosses above a longer-term average (e.g. 50-day). Downward momentum is confirmed

when a short-term average crosses below a long-term average.

Moving Average Convergence & divergence (MACD)

MACD is used to predict movements in the market. An analyst is generally in a dilemma

whether to use long term moving average or short term moving average. The solution for such

dilemma is to use MACD; it is the difference between short term moving average and long term

moving average. This difference helps in identifying, whether prices in the recent past have

moved upward or downward as compared to longer period movement. With the help of MACD

line various signals can be generated.

26

http://en.wikipedia.org/wiki/Return_(finance)

http://en.wikipedia.org/wiki/Price

http://en.wikipedia.org/wiki/Technical_analysis

http://en.wikipedia.org/wiki/Average

http://en.wikipedia.org/wiki/Average

http://en.wikipedia.org/wiki/Finite_impulse_response_filter

http://en.wikipedia.org/wiki/Statistics

MACD = short period moving average – long period moving average

With the help of MACD buy and selling signal can be generated, when MACD is in a positive

zone it indicates buying as share prices are likely to move upward in the future. On the contrary,

when MACD is in negative zone it indicates downward movement of the market in the near

future and one should sell the shares.

Buying signal

Whenever MACD line is above the moving average line of MACD , it moves towards the

average line but fails to penetrate it, and instead starts rising upward, supported by an

upward movement of the average line, it is a buy signal.

When MACD line is below the moving average line of MACD, and it penetrates towards

the upside and continues to move upward, supported by an upward movement of the

average line, it is a buying signal.

When MACD line is above the moving average line of MACD and moving upward

continuously, supported by similar movement of the average line, it is also a buy signal.

Selling signal

When, MACD line is below the moving average line of MACD, it moves towards the

average line but fails to penetrate it, instead, starts declining, supported by a downward

movement of the average line, it is a sell signal.

When, MACD line is above the moving average line of MACD, and it penetrates

towards the downside and continues to move downward, supported by a downward

movement of the average line, it is a sell signal.

When MACD line is below the moving average line of MACD and moving downward

continuously, supported by similar movement of the average line, it is also a sell signal.

27

Aniruddha Naha Zaheer Abbas Zaidi

Examination of Yields and Spreads of Indian Debt Securities through Technical Analysis

Tools

The study aims at determining whether the tools and techniques of technical analysis are

applicable to the Indian Debt Market. Technical analysis has predominantly been a domain of the

equity market in India, but with the explosive growth in the debt market resulting in high

volumes of trades and continuous price formations, the concepts of technical analysis can be

extended to debt securities too. This study analyses yields of Government of India Securities to

check whether there is a scope of forecasting security yields and prices through technical

analysis tools. The analysis is done on the yields and the spread that exists between the yields of

Government of India Securities. Yields are taken in place of prices because of the existence of

different securities at different premium levels for the same maturity. The analysis on individual

securities is performed on the 5-Year and 10-Year security yields and the results are taken valid

for any other time period yields. Similarly the spread analysis is done for the 10-Year and 5-year

spreads and the result is taken valid for all other spreads.

Technical Analysis Tools Used

The analysis uses certain technical tools to help in analysing the Debt markets in India. The tools

used are

Moving Average Convergence Divergence

Bollinger Bands

Relative Strength Index

Exponential Moving Averages

Technical analysis is definitely successful when applied to yields. The analysis on the 5-Year

and 10-Year yields has shown that chart analysis is possible. Technical tools like RSI, EMA,

MACD and Bollinger Bands have given positive results. RSI has been very correct in predicting

the movement of yields about two to four periods prior to actual movement in the yields.

28

The technical tools work quite well with spreads. The RSI and Bollinger bands have given

exceptionally good results and can definitely be used in the analysis of spreads. The EMA can

also be used provided the changes in spreads are a little volatile. The EMA has worked well even

with stable spreads, but the changes in the EMA are minute and difficult to observe. The MACD

is even more difficult as changes in the MACD and crossovers of the MACD with the signal line

take place only in the ten thousandth part of a percent.

P. J. Detry CeReFiM, University of Namur, Belgium

Other evidences of the predictive power of technical analysis: the moving averages rules on

European indexes

Many authors discovered that simple forms of technical analysis possessed significant forecast

power on various market indexes. We show that these results can be replicated on formally

selected European indexes, which almost completely eliminates any influence from data-

snooping. Implications of these results in terms of market efficiency are also discussed.

Technical analysis uses past prices in order to predict future prices. It tries to detect some

predefined "patterns" in price series, and claims it is capable of exploiting the trends that it

discovers. the article of Brock, Lackonishok and Le Baron (BLL thereafter) (1992), showing that

simple forms of technical analysis can significantly predict daily price movements of the Dow-

Jones index, many academics have begun to realize that technical analysis might have some

value. Many other were skeptical, mainly because of the huge potential impact of data-snooping

when working with an index as much studied as the Dow-Jones. Indeed, when hundreds of

researchers try to find predictable patterns on the same sample, they are bound to find one, by

pure chance, even if the series follows a random walk.

29

This study tried to check whether BLL's results could be replicated on a series of formally

selected European indexes. The technical rules we chose to test are the VMA rules presented in

BLL, that seemed to perform particularly well on the Dow-Jones Industrial Average, on the

Footsie 30 and on a variety of Asian indexes. We find that in 13 cases out of 15, the VMA rules

possess some predictive ability in the sense that the returns following buy signals are higher than

returns following sell signals. Only for the indexes from France and Spain is this not the case. In

11 cases this predictive power is statistically significant, and in 10 cases this result is robust to

risk adjustment. As far as the volatility results are concerned, our study tends to confirm BLL's

results, although not as strongly: in 9 cases, technical rules can significantly select less risky

periods (column 6 in table 2). But in four cases, buy signals are followed by technical analysis

may still have some infra marginal value, by detecting some systematic over or underreaction to

information. Riskier periods than sell signals (although this result is statistically significant only

for the Dennish and Greek indexes). Interestingly, we find that break-even transaction costs, i.e.

the level of transaction costs that would just have eliminated all excess profit, are often of the

same magnitude as actual transaction costs encountered by professional traders: in 12 cases out

of 15, one way break even trading costs lie between 0.5 and 4 percent. If these figures are more

or less in accordance to the efficient market hypothesis of Fama (1970), we think they reflect the

infra-marginal contribution of technical analysis to market efficiency: In fact, all happens as if

chartists exploit predictability in stock prices up to the point where trading costs renders this

activity not profitable anymore. This could explain why, in stock prices, we find predictable, but

no profitable patterns. The question that remains is: what is the cause of this predictive ability, of

the tendency of stock prices to behave predictably? Two paths may be explored: the gradual

diffusion of information, or some irrational tendency from the market10 to under or overreact to

information in some systematic manner. In our study, testing technical rules on daily series, we

think the second explanation is the most likely, whereas the first explanation would be more

relevant in intra-day. This is why we believe that the cause of the predictive power of simple

forms of technical analysis has to be found in the area of behavioral finance, market psychology,

and all branches that do not assume the perfect rationality of markets.

30

Gunduz Caginalp, Ph.D. and Donald Balenovich, Ph.D.

Using a dynamical microeconomic model which generalizes the classical theory of

adjustment to include finite asset base and trend-based investment preference, we develop a

foundation for the technical analysis (or charting) of securities. The mathematically complete

system of (deterministic) ordinary differential equations that has provided a quantitative

explanation of the laboratory bubbles experiments generates a broad spectrum of patterns that are

used by practitioners of technical analysis. The origins of many of these patterns are classified as

(i) those that can be generated by the activities of a single group, and (ii) those that can be

generated by the presence of two or more groups with asymmetric information. Examples of (i)

include the head and shoulders, double tops, rising wedge while (ii) includes pennants and

symmetric triangles. The system of differential equations is easily generalized to stochastic

ODE’S. Application is also made to Japanese candlestick analysis

This approach provides a coherent explanation of not only the patterns of technical

analysis but also of the limitations involved in their application. One of the difficulties that afflict

technical analysis is that the rules and conclusions seem somewhat arbitrary and consequently

unscientific. From the perspective of the asset flow model the validity of technical analysis is

contingent upon only two factors: a finite asset base and the influence of trend based investing.

The vast majority of our conclusions would not be altered with a somewhat different approach

(e.g. discrete difference equations or a different form for the flow rate k) that nevertheless

preserves these properties. This (or any similar) methodology elevates technical analysis from a

set of arbitrary assumptions and conclusions to a set of implications that are implied by the

unique solution of the differential equations. Given a set of parameters (trend based coefficient,

etc.) that describe an investor population, one can obtain the implications of a particular

configuration of price development as the unique solution of the equations.

31

In view of the simplicity of assumptions and the limited strategy involved in the

model, it is somewhat surprising that these patterns emerge so naturally. In the symmetric

triangle pattern, for example, one can imagine a complex set of strategies evolving in time as

each local maximum or minimum is attained. The numerical results, however, seem to suggest

the information included in the price trend and the extent of under/over-valuation is a suitable

representation of the average of a wide spectrum of strategies. There are two additional research

problems that arise from this analysis. First, can patterns be detected in a market through

statistical and computer testing, and if so, do they have predictive value? One would need to

define the patterns in an algorithmic way that corresponds to human experts, as done in Kamijo

and Tanigawa (1993) for some patterns. The next step would be the precise identification of the

rules for deciding the trading action. Of course, a related issue is the possibility that these

patterns can be created in a laboratory, perhaps using experienced participants. A second issue is

the problem of deducing fundamental values, say Pa (1) and Pa (2), and assets of each group,

given P(t). This is an inverse problem similar to inverse scattering.

Yufeng Han, Ke Yang, and Guofu Zhou

A New Anomaly: The Cross-Sectional Profitability of Technical Analysis

In this paper, they document that an application of a moving average timing strategy

of technical analysis to portfolios sorted by volatility generates investment timing portfolios that

often outperform the buy-and-hold strategy substantially. For high volatility portfolios, the

abnormal returns, relative to the CAPM and the Fama-French three- factor models, are of great

economic significance, and are greater than those from the well known momentum strategy.

Although both the moving average timing and momentum strategies are trend-following

strategies, their performances are surprisingly uncorrelated and behave differently over the

business cycles. In addition, the abnormal returns cannot be explained by market timing ability,

investor sentiment, default and liquidity risks.

32

This paper provides the first study on the cross-sectional profitability of technical

analysis. Unlike existing studies that apply technical analysis to either market indices or

individual stocks

Technical analysis uses past prices and perhaps other past data to predict future

market movements. In practice, all major brokerage firms publish technical commentary on the

market and many of their advisory services are based on technical analysis. Many top traders and

investors use it partially or exclusively (see, e.g., Schwager, 1993, 1995; Covel, 2005; Lo and

Hasanhodzic, 2009). Whether technical analysis is profitable or not is an issue discussed in

empirical studies going as far back as Cowles (1933) who found inconclusive evidence. Recent

studies, such as Brock, Lakonishok, and LeBaron (1992) and Lo, Mamaysky, and Wang (2000),

however, find strong evidence of profitability when using technical analysis, primarily of using a

moving average scheme, to forecast the market. More recently, Neely, Rapach, Tu and Zhou

(2011) find that the stock market forecasting power of technical analysis is as good as using

economic fundamentals. From a theoretical point of view, Zhu and Zhou (2009) demonstrate that

technical analysis can be a valuable learning tool under uncertainty about market dynamics.

In this paper, we document that a standard moving average of technical analysis, when

applied to portfolios sorted by volatility, can generate investment timing portfolios that

outperform the buy-and-hold strategy greatly, with returns that have negative or little risk

exposures on the market factor and the Fama-French SMB and HML factors. Especially for the

high volatility portfolios, the abnormal returns, relative to the CAPM and the Fama and French

(1993) three-factor models, are high, and higher than those from the momentum strategy. While

the moving average strategy is a trend-following one similar to the momentum strategy, its

performance has little correlation with the momentum strategy, and behaves differently over

business cycles. Furthermore, the abnormal returns are not sensitive to changes in investor

sentiment, default and liquidity risks.

33

Our study provides new a research avenue in several areas. First, our study suggests

that it will be likely fruitful to examine the profitability of technical analysis in various markets

and asset classes by investigating the cross-sectional performance, especially focusing on the

role of volatility. Given the vast literature on technical analysis, potentially many open questions

may be explored and answered along this direction. Second, our study presents an exciting new

anomaly in the finance literature. Given the size of the abnormal returns and the wide use of

technical analysis, explaining the moving average anomaly with new asset pricing models will be

important and desirable. Thirdly, because of its trend-following nature, various investment issues

that have been investigated around the momentum strategy can also be investigated with the

moving average strategy. All of these are interesting topics for future research.

Ben R. Marshall, Sun Qian, Martin Young

Is technical analysis profitable on U.S stock with certain size, liquidity or industry

characteristics?

In this study they consider whether popular moving average and trading range breakout

technical trading rules are profitable on a subset of U.S. stocks with certain size, liquidity, and

industry characteristics. They find these rules are rarely profitable during the period 1990 to

2004, however there is some evidence they are more profitable for smaller, less liquid stocks.

There is no evidence of any industry bias in applying these rules and when a rule does produce

statistically significant profits on a stock, these profits tend to be greater for longer decision

period rules.

Technical analysis is widely used by practitioners even though most academic

research shows that technical trading rules do not produce excess profits after transactions costs

are accounted for. We contribute to the literature by considering the profitability of popular

trading rules on individual NYSE and NASDAQ stocks. This enables us to determine whether

technical analysis is profitable on a small subset of stocks with certain characteristics even

though it is not profitable across all stocks. The data for this study is obtained from the CRSP

database and includes all stocks listed on the NYSE and NASDAQ markets over the period 1990

to 2004.

34

This paper investigates whether the popularity of technical trading rules with

practitioners is due to their profitability on a small subset of stocks with certain size, liquidity,

and industry characteristics. It is possible that some stocks that are not included in market

indices, the focus of previous technical analysis studies, have characteristics that can be

profitability captured by technical trading rules. We consider this using popular moving average

and trading break-out rules on individual U.S. stocks over the 1990-2004 period. We find that

these rules are not profitable when applied to the vast majority of stocks. This result is robust to

different time periods and different markets 17 (NYSE and NASDAQ). There is some evidence

that these trading rules are more profitable on small, illiquid stocks, but this result is not strong.

We do not find any link between a firm’s industry and the profitability of technical analysis.

When a trading rule does produces statistically significant profits on a stock, these profits tend to

be greater for longer decision period rules. Also the profits tend to be considerably larger than

reasonable estimates of transaction costs. This may explain why practitioners continue to use

technical analysis despite it not generating profits on a consistent basis.

35

CHAPTER III

INDUSTRY AND COMPANY PROFILE

36

Industry Profile The trading on stock exchanges in India used to take place through open outcry

without use of information technology for immediate matching or recording of trades. This was

time consuming and inefficient. This imposed limits on trading volumes and efficiency. In order

to provide efficiency, liquidity and transparency, NSE introduced a nation-wide on-line fully-

automated screen based trading system (SBTS) where a member can punch into the computer

quantities of securities and the prices at which he likes to transact and the transaction is executed

as soon as it finds a matching sale or buy order from a counter party. SBTS electronically

matches orders on a strict price/time priority and hence cuts down on time, cost and risk of error,

as well as on fraud resulting in improved operational efficiency. It allows faster incorporation of

price sensitive information into prevailing prices, thus increasing the informational efficiency of

markets. It enables market participants, irrespective of their geographical locations, to trade with

one another simultaneously, improving the depth and liquidity of the market. It provides full

anonymity by accepting orders, big or small, from members without revealing their identity, thus

providing equal access to everybody. It also provides a perfect audit trail, which helps to resolve

disputes by logging in the trade execution process in entirety. This sucked liquidity from other

exchanges and in the very first year of its operation, NSE became the leading stock exchange in

the country, impacting the fortunes of other exchanges and forcing them to adopt SBTS also.

Today India can boast that almost 100% trading take place through electronic order

matching. Technology was used to carry the trading platform from the trading hall of stock

exchanges to the premises of brokers. NSE carried the trading platform further to the PCs at the

residence of investors through the Internet and to handheld devices through WAP for

convenience of mobile investors. This made a huge difference in terms of equal access to

investors in a geographically vast country like India. NSE has main computer which is connected

through Very Small Aperture Terminal (VSAT) installed at its office. The main computer runs

on a fault tolerant STRATUS mainframe computer at the Exchange. Brokers have terminals

(identified as the PCs in the Figure 1) installed at their premises which are connected through

VSATs/leased lines/modems. An investor informs a broker to place an order on his behalf. The

broker enters the order through his PC, which runs under Windows NT and sends signal to the

Satellite via VSAT/leased line/modem.

37

Indian stock market marks to be one of the oldest stock market in Asia. It dates back to

the close of 18th century when the East India Company used to transact loan securities. In the

1830s, trading on corporate stocks and shares in Bank and Cotton presses took place in Bombay.

Though the trading was broad but the brokers were hardly half dozen during 1840and 1850.In

1860, the exchange flourished with 60 brokers. In fact the 'Share Mania' in India began with the

American Civil War broke and the cotton supply from the US to Europe stopped.

Further, the brokers increased to 250. At the end of the war in 1874, the market found a

place in a street (now called Dalal Street). In 1887, "Native Share and Stock Brokers'

Association" was established. In 1895, the exchange acquired a premise in the street, which was

inaugurated in 1899.

National Stock Exchange (NSE)

The National Stock Exchange of India (NSE) was incorporated in November 1992 as a tax-

paying company. It is recognized under Securities Contracts (Regulation) Act, 1956 in 1993 as a

stock exchange. In June 1994, it commenced operations in the Wholesale Debt Market (WDM).

In November, the same year, the Capital Market (Equities) segment commenced operations and

the Derivatives segment in June 2000.

Bombay Stock Exchange (BSE)

A very common name for all traders in the stock market, BSE, stands for Bombay Stock

Exchange. The oldest market not only in the country, but also in Asia. The early days of BSE was

known as "The Native Share & Stock Brokers Association." It was established in the year 1875

and became the first stock exchange in the country to be recognized by the government. In 1956,

BSE obtained a permanent recognition from the Government of India under the Securities

Contracts (Regulation) Act, 1956.

38

THE MAIN PLAYERS IN THE INDUSTRY

The financials and investment industry is a highly competitive in nature with almost well

established firms diversifying and entering into this industry. As of today there are Over 2000

brokers, 10000 sub brokers and 1 crore investors. It is highly competitive with entry of new

aggressive players. Retail broking is highly fragmented industry with falling brokerages Value

added services and Online trading, the new fad.

INDIABULLS FINANCIAL SERVICES LTD.

Indiabulls is India’s leading Financial Services and Real Estate Company having presence

over 414 locations in more than 124 cities. Indiabulls serves the financial needs of more than

3,00,000 customers with its wide range of financial services and products from securities,

derivatives trading, depositary services, research & advisory services, insurance, consumer

secured & unsecured credit, loan against shares and mortgage & housing finance. The market

capitalization of Indiabulls is around USD 800 million, and the consolidated net worth of the

company is around USD 500 million.

KARVY SECURITIES LTD

KARVY, is a premier integrated financial services provider, and ranked among the top

five in the country in all its business segments, services over 16 million individual investors in

various capacities, and provides investor services to over 300 corporates, comprising the who is

who of Corporate India. The birth of Karvy was on a modest scale in 1981. Karvy Consultants

Limited. Thus over the last 20 years Karvy has traveled the success route, towards building a

reputation as an integrated financial services provider, offering a wide spectrum of services.

INDIAINFOLINE

IndiaInfoline was founded by a group of professionals in 1995, a seemingly distant past

in the Internet age. Their meticulous research was published and distributed in printed form to a

client base comprising the who's who of Indian business including leading MNCs, investment

banks and consulting firms. The quality of research was highly acclaimed and soon became the

industry benchmark. Over the last few years, their research coverage has grown to cover

39

http://202.87.40.145/aboutus/abouthp.asp?lmn=0#%23


practically all companies, sectors, economy and financial markets. The breadth and depth of their

content is unmatched - stock markets, mutual funds, personal finance, taxation and economy.

SHARE KHAN

Share khan is a pioneer in equity market. Share khan is among the top 3 branded retail service

providers. Largest network of branded broking outlets in the country servicing 100,000 clients.

Sharekhan not only has a strong offline presence but also provides automated online

trading services. To sum up, Sharekhan brings to you a user- friendly online trading facility,

coupled with a wealth of content that will help you stalk the right shares. In fact Sharekhan runs

India's largest chain of share shops with around 250 outlets in 113 cities!

40



COMPANY PROFILE

Promoters of the company

Share wealth is promoted by a group of Financial Market Professionals having more

than 20 years of experience in Financial Markets. Mr.T.B.Ramakrishnan (Ramki)- CEO &

Managing Director is leading the core team of Share wealth, which has a highly competent

diversified Board of Directors. Mr.Ramki is a Stock Market Analyst, Ex. Treasurer & Governing

Council Member of Cochin Stock Exchange Ltd (1998-2000) and former Kerala Regional Head of

Share khan who has got more than 20 years of experience in Financial Markets. Mr.Joseph P

Antony, Mr.T.V.N Girish Kumar, Mr.N.C.Peethambaran (Group Company Director) and Mr.Mani

Paul (Group Company Director) are Working Directors of the company.

Mr.N.C.Chummar,Anchery Ramanathan, Dr.Saifu Kokkat, N.Nandakumar, A.A.Mathew,

Advocate A.Y.Khalid, Mr.A.Unnikrishnan(Group Company Director), Mr.T.S.Rajan(Group

Company Director) ,Mr.Vincent Paliakkara(Group Company Director) are other directors.

Dr.Anil Menon is the Chairman and Mr.C.G.Surendran is the Vice-Chairman of the company.

Products and Services

Equities

The Equities section provides with an insight into the equities segment of NSE & BSE and also

provides real-time quotes and statistics of the equities market. In-depth information regarding

listing of securities, trading systems & processes, clearing and settlement, risk management,

trading statistics etc are available. Share wealth is the registered member of NSE, giving

equities at the most importance.

Derivatives

The term "Derivative" indicates that it has no independent value, i.e. its value is entirely

"derived" from the value of the underlying asset. The underlying asset can be securities,

commodities, bullion, currency, live stock or anything else. In other words, Derivative means a

forward, future, option or any other hybrid contract of pre determined fixed duration, linked

for the purpose of contract fulfillment to the value of a specified real or financial asset or to an

41

http://www.sharewealthindia.com/service_details.aspx?id=1

index of securities. With Securities Laws (Second Amendment) Act,1999, Derivatives has been

included in the definition of Securities. The term Derivative has been defined in Securities

Contracts (Regulations) Act, as:- A Derivative includes:-

1.a security derived from a debt instrument, share, loan, whether secured or unsecured, risk

instrument or contract for differences or any other form of security;

2. a contract which derives its value from the prices, or index of prices, of underlying securities;

Depository

A depository can be compared to a bank. A depository holds securities like shares,

debentures, bonds, Government Securities, units etc. of investors in electronic form. Besides

holding securities, a depository also provides services related to transactions in securities. At

present two Depositories viz. National Securities Depository Limited (NSDL) and Central

Depository Services (I) Limited (CDSL) are registered with SEBI.

A depository interfaces with the investors through its agents called Depository Participants

(DPs). If an investor wants to avail the services offered by the depository, the investor has to

open an account with a DP. This is similar to opening an account with any branch of a bank in

order to utilize the bank's services. The Depository facilities include, Dematerialization,

Rematerialization, repurchase/redemption of units of mutual funds, electronic settlement of

trades in stock exchanges, receipt of non-cash corporate benefits such as bonus, in electronic

form, transmission of securities, and other facilities like holding debt instruments in the same

account, availing stock lending/borrowing facility, etc. Share wealth provides you all Depository

services.

Commodities

Any product that can be used for commerce or an article of commerce which is traded

on an authorized commodity exchange is known as commodity. The article should be movable

of value, something which is bought or sold and which is produced or used as the subject or

42



barter or sale. In short commodity includes all kinds of goods. Forward Contracts (Regulation)

Act (FCRA), 1952 defines goods as every kind of movable property other than actionable claims,

money and securities.

In current situation, all goods and products of agricultural (including plantation),

mineral and fossil origin are allowed for commodity trading recognized under the FCRA. The

national commodity exchanges, recognized by the Central Government, permits commodities

which include precious (gold and silver) and non-ferrous metals; cereals and pulses; ginned and

un-ginned cotton; oilseeds, oils and oilcakes; raw jute and jute goods; sugar and gur; potatoes

and onions; coffee and tea; rubber and spices.etc.Share wealth is the registered member of

MCX.

Mutual Fund

Mutual fund is a mechanism for pooling the resources by issuing units to the investors

and investing funds in securities in accordance with objectives as disclosed in offer document.

Investments in securities are spread across a wide cross-section of industries and sectors and

thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the

same direction in the same proportion at the same time. Mutual fund issues units to the

investors in accordance with quantum of money invested by them. Investors of mutual funds

are known as unit holders. The profits or losses are shared by the investors in proportion to

their investments. The mutual funds normally come out with a number of schemes with

different investment objectives which are launched from time to time. A mutual fund is

required to be registered with Securities and Exchange Board of India (SEBI) which regulates

securities markets before it can collect funds from the public Share wealth has the AMFI

registration and guides in all types of Mutual Fund.

Initial Public Offer

43



An Initial Public Offer (IPO) is the selling of securities to the public in the primary market.

It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its

existing securities or both for the first time to the public. This paves way for listing and trading

of the issuers securities. The sale of securities can be either through book building or through

normal public issue. IPOs can be a risky investment. For the individual investor, it is tough to

predict what the stock will do on its initial day of trading and in the near future since there is

often little historical data with which to analyze the company. Also, most IPOs are of companies

going through a transitory growth period, and they are therefore subject to additional

uncertainty regarding their future value

Insurance

Life insurance is a contract that pledges payment of an amount to the person assured (or

his nominee) on the happening of the event insured against. The contract is valid for payment

of the insured amount during:

1) The date of maturity, or

2) Specified dates at periodic intervals, or

3) Unfortunate death, if it occurs earlier.

44


CHAPTER IV

DATA ANALYSIS AND INTERPRETATION

45

1-Jul-1

0

16-Jul-1

0

31-Jul-1

0

15-Aug-1

0

30-Aug-1

0

14-Sep-10

29-Sep-10

14-Oct-

10

29-Oct-

10

13-Nov-1

0

28-Nov-1

0

13-Dec-

10

28-Dec-

10

12-Jan-11

27-Jan-11

11-Feb-11

26-Feb-11

13-Mar-

11

28-Mar-

11

12-Apr-1

1

27-Apr-1

1

12-May

-11

27-May

-11

11-Jun-11

26-Jun-11

0

500

1000

1500

2000

2500

3000

3500

4000Line chart of SBI

closing price

INTERPRETATION

Line chart is prepared by connecting the closing price of State Bank of India. The closing price

of SBI is 2261.8 on 1st July 2010, after that the price increased up to 3489.55 on 5th November

2010. The lowest price is 2141.05 on 22nd June 2011.

Moving average of SBI

1-Jul-1

0

17-Jul-1

0

2-Aug-1

0

18-Aug-1

0

3-Sep-1

0

19-Sep-1

0

5-Oct-

10

21-Oct-

10

6-Nov-1

0

22-Nov-1

0

8-Dec

-10

24-Dec

-10

9-Jan-1

1

25-Jan-1

1

10-Feb-1

1

26-Feb-1

1

14-Mar

-11

30-Mar

-11

15-Apr-1

1

1-May

-11

17-May

-11

2-Jun-1

1

18-Jun-1

10

500

1000

1500

2000

2500

3000

3500

4000

Close Price

10 days moving average

46

INTERPRETATION

From the moving average chart closing price and 10 days moving average are plotted. A short

term moving average is used to predict near future movement and take decision for short time

period.

During the following period price line is above the moving average line, it indicates the

buying signal for the scrip.

16th August 2010 15th September 2010 4th November 2010

1st December 2010 15th February 2011 30th March 2011

21st April 2011

During the following period price line is below the moving average line, it indicates the

selling signal for the scrip.

9th August 2010 24th November 2010 10th & 24th February 2011

1-Jul-1

0

15-Jul-1

0

29-Jul-1

0

12-Aug-

10

26-Aug-

10

9-Sep

-10

23-Sep

-10

7-Oct

-10

21-Oct

-10

4-Nov-

10

18-Nov-

10

2-Dec

-10

16-Dec

-10

30-Dec

-10

13-Jan-1

1

27-Jan-1

1

10-Feb

-11

24-Feb

-11

10-Mar

-11

24-Mar

-11

7-Apr-

11

21-Apr-

11

5-May

-11

19-May

-11

2-Jun-1

1

16-Jun-1

1

30-Jun-1

10

20

40

60

80

100

120

RSI chart of SBI

RSI

INTERPRETATION

In most of the cases RSI remained below the 60 mark line which indicates a bearish

market for the scrip. By analysing RSI chart of SBI it is understood that the peak level shows

the period for buying the security. When RSI line crosses the 30 mark line it shows the selling

signal.

47

Over bought market for the scrip

On 18 nov-10, 14 dec-10, 7 jan-11, 9 feb-11, 9 may-11, 24may-11, 14june-11, the RSI

line crossed the 70 mark line from down wards, it indicates an over bought market for the scrip.

It signifies that soon peak wold be genarated and then market will fall.

Over sold market for the scrip

On 6 aug-10, 9 sep-10, 30 sep-10, 3 nov-10, 28 march-11, 7 june-11, RSI line crossed 30

mark line from upwards indicating oversold market, it indicates very soon market will rise in

future and become bullish.

During the following periods RSI line moved upward in the 30-70 zone and gave clear sell

signal

5 nov-10 to 11nov-10 2 feb-11 to 7 feb-11 15 feb-11 to 3 march-11

30 mar-11 to 13 april-11 21 april-11 to 4 may-11 8 june-11 to 13 june-11

During the following periods RSI line moved downwards in the 70-30 zone and give clear

buy signals:

26 oct-10 to 1nov-10 17 jan-11 to 21 jan-11 8 feb-11 to 15 feb-11

13 apr-11 to 25 apr-11 30 may-11 to 3 jun-11

48

1-Jul-1

0

16-Jul-1

0

31-Jul-1

0

15-Aug-

10

30-Aug-

10

14-Sep

-10

29-Sep

-10

14-Oct-

10

29-Oct-

10

13-Nov-

10

28-Nov-

10

13-Dec

-10

28-Dec

-10

12-Jan-1

1

27-Jan-1

1

11-Feb

-11

26-Feb

-11

13-Mar

-11

28-Mar

-11

12-Apr-1

1

27-Apr-1

1

12-May

-11

27-May

-11

11-Jun-1

1

26-Jun-1

10

0.2

0.4

0.6

0.8

1

1.2

ROC chart of SBI

ROC

INTERPRETATION

The ROC line moves between .8134 and 1.1380 marks, which is the indication of some upward

and downward fluctuation in the prices of the scrip.it can also seen from the chart that the price

line starts from 2261.8 on 1st july 2010 which reaches a peak 3489.55 on 5th november 2010.

ROC is greater than 1 for the long period of 15th july-10 to 25th aug-10 and 8th sep-10 to 14th oct-

10. Also ROC is less than 1 during the month of may 2011.

On the following instances ROC touched its extreme during whole of the year( peak

formation)

13 aug -10 13 sep-10 5th nov -10 3rd dec-10

24th dec-10 24th jan-1 16th feb-11 29th mar-11

25th apr-11 8th june 29th jun-11

During the following intervals ROC line declined from its extreme towards one mark line,

which signifies a bearish trend in the market for the scrip:

13-aug-10 to 23 aug-10 13 oct-10 to 20 oct-10 5 nov-10 to 23 nov-10

3 dec-10 to 15 dec-10 16 feb-11 to 7 mar-11 18 mar-11 to 25 may-11

49

During the following intervals ROC line increased from one mark line towards its peak,

which signifies the bullish trend in the market for the scrip:

27 oct-10 to 5th nov -10 14 jan-11 to 24 jan-11 10th feb-11 to 16th

15 aprl-11 to 27 aprl-11.

1-Ju

l-10

22-Jul

-10

12-A

ug-1

0

2-Sep

-10

23-S

ep-1

0

14-O

ct-1

0

4-N

ov-1

0

25-N

ov-1

0

16-D

ec-1

0

6-Ja

n-11

27-Jan

-11

17-F

eb-1

1

10-M

ar-1

1

31-M

ar-1

1

21-A

pr-1

1

12-M

ay-1

1

2-Ju

n-11

23-Jun

-11

-100

-50

0

50

100

150

MACD of SBI

MACD

INTERPRETATION

MACD line refers to the two moving average differences. Whenever MACD line is above the

Zero mark line, it indicates the signal of bullish market and whenever it is below the zero mark

line it shows the signal for bearish market. From the above chart indicates the difference between

5 days and 10 days moving averages. MACD line lies between -85.595 to 112.31.

During the following periods the MACD line forms a peak giving a signal of trend

reversal, i.e. is conversion of a bullish market into a bearish market:

16th August 2010 14th September 2010 12th October 2010

25th October 2010 5th November 2010 18th November 2010

50

2nd December 2010 3rd January 2011 17th February 2011

26th April 2011 12th May 2011

During the following periods the MACD line formed a through, trend reversal takes place

and bearish market starts converting in to bullish market.

6th September 2010 1st November 2010 25th November 2010

18th January 2011 10th February 2011 3rd & 25th May 2011

1-Jul-1

0

16-Jul-1

0

31-Jul-1

0

15-Aug-

10

30-Aug-

10

14-Sep

-10

29-Sep

-10

14-Oct-

10

29-Oct-

10

13-Nov-

10

28-Nov-

10

13-Dec

-10

28-Dec

-10

12-Jan-1

1

27-Jan-1

1

11-Feb

-11

26-Feb

-11

13-Mar

-11

28-Mar

-11

12-Apr-1

1

27-Apr-1

1

12-May

-11

27-May

-11

11-Jun-1

1

26-Jun-1

10

200

400

600

800

1000

1200

1400

Line hart of ICICI

__ closing price

INTERPRETATION

Line chart of ICICI bank is drawn by connecting the closing price. On 1st July the share price of

ICICI bank was 841.4, on 5th November 2010 it shows that the share price increased to the

maximum of 1269.7 and the lowest value of the share is 840.1 on 2nd July 2010.

51

MOVING AVERAGE OF ICICI

1-Jul-1

0

21-Jul-1

0

10-Aug-

10

30-Aug-

10

19-Sep

-10

9-Oct-

10

29-Oct-

10

18-Nov-

10

8-Dec

-10

28-Dec

-10

17-Jan-1

1

6-Feb

-11

26-Feb

-11

18-Mar

-11

7-Apr-1

1

27-Apr-1

1

17-May

-11

6-Jun-1

1

26-Jun-1

10

200

400

600

800

1000

1200

1400

Close Price10 days moving average

INTERPERTATION

From the moving average chart closing price and 10 days moving average of ICICI bank are

plotted. A short term moving average is used to predict near future movement and take decision

for short time period.



4th October 2010 2nd & 27th December 2010 24th January 2011

14th February 2011 31st May 2011



27th October 2010 9th December 2010 24th February 2011

18th March 2011 4th & 19th May 2011

52

1-Jul-1

0

16-Jul-1

0

31-Jul-1

0

15-Aug-

10

30-Aug-

10

14-Sep

-10

29-Sep

-10

14-Oct-

10

29-Oct-

10

13-Nov-

10

28-Nov-

10

13-Dec

-10

28-Dec

-10

12-Jan-1

1

27-Jan-1

1

11-Feb

-11

26-Feb

-11

13-Mar

-11

28-Mar

-11

12-Apr-1

1

27-Apr-1

1

12-May

-11

27-May

-11

11-Jun-1

1

26-Jun-1

10

102030405060708090

RSI chart of ICICI

RSI

INTERPRETATION

During the period RSI line is above 30 mark line most of the time, by analyzing RSI chart the

peak level shows period for buying the security. When RSI line crosses the 30 mark line it shows

the selling signal.


RSI line crossed 70 mark line from downwards On 26th October 2010, 18th November 2010, 4th

January 2011, 4th February 2011, 4th May, 20th May 2011 , 14th June 2011. It indicates an

overbought market for the scrip. It signifies soon peak would be generated and then market will

fall, ie.. it will became bearish.

Oversold market for the scrip

On 29th October 2011 RSI line crossed 30 mark lines from upward and reached 18.5029 on 9th

November, it indicating oversold market for the scrip, it indicates soon the market will rise in

future and became bullish. But the market price increased after that effect and reaches peak on

18th November. Likewise on 29th December RSI line again crossed the 30 mark line after that it

reached the highest RSI vale of 81.969 on 7th January 2011.

53

During the following period RSI line moved downwards in the 70-30 zone and gave

clear sell signals:

15th Oct to 22nd Oct 2010 29th Nov to 2nd Dec 2010 14th Dec 23rd Dec 2010

8th Jan to 21 Jan 2011 9th Feb to 14th Feb 2011 15th April to 25th April

23rd May to 31 May 2011 21st June to 24th June 2011

During the following periods the RSI line moved upwards in the 30-70 zone and gave

clear Buy signals:

12th Aug to 16th Aug 2010 30th Dec to 3rd Jan 2010 21st Jan to 3rd Feb 2011

22nd Feb to 25th Feb 2011 10th march to 2st March2011 11th Apr to 15th Apr 2011

31st may to 9th June 2011

1-Jul-1

0

16-Jul-1

0

31-Jul-1

0

15-Aug-1

0

30-Aug-1

0

14-Sep-10

29-Sep-10

14-Oct-

10

29-Oct-

10

13-Nov-1

0

28-Nov-1

0

13-Dec-

10

28-Dec-

10

12-Jan-11

27-Jan-11

11-Feb-11

26-Feb-11

13-Mar-

11

28-Mar-

11

12-Apr-1

1

27-Apr-1

1

12-May

-11

27-May

-11

11-Jun-11

26-Jun-11

0

0.2

0.4

0.6

0.8

1

1.2

1.4

ROC chart of ICICI

ROC

INTERPRETATION



line starts from 841.4 on 1st july 2010 which reaches a peak 1269.7 on 5th november 2010.

54


formation)

13 September-10 10th november -10 24th december-10

24th jan-11 22nd february -11 4th April -11

1st June-11 6th June -11



19-aug-10 to 27 aug-10 9 nov-10 to 19 nov-10 22 feb-11 to 7

march-11

4th April to 11 April-11



2nd Sept to 13 Sep-10 27 oct-10 to 5th nov -10 15 Dec-10 to 24 Dec-10

8th Feb to 15th Feb-11

55

1-Jul-

10

20-Jul-

10

8-Aug-1

0

27-Aug-1

0

15-Sep

-10

4-Oct

-10

23-Oct

-10

11-Nov-1

0

30-Nov-1

0

19-Dec

-10

7-Jan

-11

26-Jan

-11

14-Feb

-11

5-Mar

-11

24-Mar

-11

12-Apr-

11

1-May

-11

20-May

-11

8-Jun-1

1

27-Jun-1

1

-40

-30

-20

-10

0

10

20

30

40

MACD Chart of ICICI

MACD

INTERPRETATION



line it shows the signal for bearish market. From the MACD chart of ICICI indicates the

difference between 5 days and 10 days moving averages. MACD line lies between -32.845 to

28.085.



23rd august 2010 3rd November 2010 2nd December 2010

31st December 2010 21st January 2011 17th February 2011

28th April 2011 31st May 2011



27th October 2010 26th November 2010 17th January 2011

9th February 2011 22nd March 2011 24th May 2011

56

1-Jul-1

0

18-Jul-1

0

4-Aug-

10

21-Aug-

10

7-Sep

-10

24-Sep

-10

11-Oct

-10

28-Oct

-10

14-Nov-

10

1-Dec

-10

18-Dec

-10

4-Jan-1

1

21-Jan-1

1

7-Feb

-11

24-Feb

-11

13-Mar

-11

30-Mar

-11

16-Apr-

11

3-May

-11

20-May

-11

6-Jun-1

1

23-Jun-1

10

500

1000

1500

2000

2500

3000

Line chart of HDFC Bank

Close Price

INTERPRETATION

Line chart is prepared by connecting the closing price of HDFC Bank. The closing price of

HDFC Bank is 1907.15 on 1st July 2010, after that the price increased up to 2502.6 on 30th June

2011, which is the last date of the period of the study. The lowest price is 1907.15 on 1st July

2010, which is the first date of the study.

MOVING AVERAGE OF HDFC BANK

1-Jul-1

0

21-Jul-1

0

10-Aug-

10

30-Aug-

10

19-Sep

-10

9-Oct-

10

29-Oct-

10

18-Nov-

10

8-Dec

-10

28-Dec

-10

17-Jan-1

1

6-Feb

-11

26-Feb

-11

18-Mar

-11

7-Apr-1

1

27-Apr-1

1

17-May

-11

6-Jun-1

1

26-Jun-1

10

500

1000

1500

2000

2500

3000

Close Price10 Days moving average

57

INTERPERTATION

From the moving average chart closing price and 10 days moving average of HDFC bank are





1st December 2010 3rd January 2011 17th February 2011



25th October 2010 13th January 2011 24th February 2011

11th April 2011

1-Jul-1

0

16-Jul-1

0

31-Jul-1

0

15-Aug-

10

30-Aug-

10

14-Sep

-10

29-Sep

-10

14-Oct-

10

29-Oct-

10

13-Nov-

10

28-Nov-

10

13-Dec

-10

28-Dec

-10

12-Jan-1

1

27-Jan-1

1

11-Feb

-11

26-Feb

-11

13-Mar

-11

28-Mar

-11

12-Apr-1

1

27-Apr-1

1

12-May

-11

27-May

-11

11-Jun-1

1

26-Jun-1

10

10

20

30

40

50

60

70

80

90

RSI chart of HDFC Bank

RSI

INTERPRETATION


market for the scrip. By analysing RSI chart of HDFC Bank it is understood that the peak level

shows the period for buying the security. When RSI line crosses the 30 mark line it shows the

selling signal.

58


On 13 aug -10, 14 th, 19th &26th Oct -10, 15th Dec -10, 14th Jan -11, 7th Feb-11, 21st

March-11, 4th May-11, and 17th june-2011 the RSI line crossed the 70 mark line from down

wards, it indicates an over bought market for the scrip. It signifies that soon peak wold be

genarated and then market will fall.


On 29th July-10, 18th Aug-10, 9th Sep-10, 9th Nov-10, 29th Dec-10, 17th Feb-11, 11 Mar-11,

28th March-11, 31st May-11 and 28th June 2011 RSI line crossed 30 mark line from upwards

indicating oversold market, it indicates very soon market will rise in future and become bullish.

During the following periods RSI line moved upward in the 30-70 zone and gave clear sell

signal

1st Sep to 8th Sep-10 29th Nov to 2nd De-10 22nd Dec to 28th Dec-10

8th Feb to 16th Feb-11 22nd Mar to 24th Mar-11 3rd May to 18th May-11

20th June to24th June -11


buy signals:

6th Aug to 12th Aug-10 26 th Aug to 1st Sep-10 2 nd Dec to 8th Dec-

10

3rd Jan to 12th Jan-10 10th March to 17th March-11 9th June to 14th June-

11

59

1-Jul-1

0

15-Jul-1

0

29-Jul-1

0

12-Aug-1

0

26-Aug-1

0

9-Sep-1

0

23-Sep-1

0

7-Oct-

10

21-Oct-

10

4-Nov-1

0

18-Nov-1

0

2-Dec

-10

16-Dec

-10

30-Dec

-10

13-Jan-1

1

27-Jan-1

1

10-Feb-1

1

24-Feb-1

1

10-Mar

-11

24-Mar

-11

7-Apr-1

1

21-Apr-1

1

5-May

-11

19-May

-11

2-Jun-1

1

16-Jun-1

1

30-Jun-1

10

0.2

0.4

0.6

0.8

1

1.2

ROC chart of HDFC Bank

ROC

INTERPRETATION


and downward fluctuation in the prices of the scrip.it can also seen from the table that the price

line starts from 1907.15 on 1st july 2010 which reaches a peak 2502.6 on 30th June 2011.


formation)

20th Auguest 2010, 22nd September 2010 10th November 2010

3rd January 2011 21st February 2011 4th April 2011



21st Sept-to 8th Oct-2010 3rd Jan to 14th Jan 2011 18th Feb to 28th feb 2011

14th march to 18th march 2011 4th April to 18th April 2011.

60



1st Sep to 22nd Sep 2010 28th Oct to 10th Nov 2010 16th Dec-10 to 3rd Jan-11

8th Feb to 21st feb 2011 21st March to $th April 2011

1-Jul-1

0

17-Jul-1

0

2-Aug-

10

18-Aug-

10

3-Sep

-10

19-Sep

-10

5-Oct-

10

21-Oct-

10

6-Nov-

10

22-Nov-

10

8-Dec

-10

24-Dec

-10

9-Jan-1

1

25-Jan-1

1

10-Feb

-11

26-Feb

-11

14-Mar

-11

30-Mar

-11

15-Apr-1

1

1-May

-11

17-May

-11

2-Jun-1

1

18-Jun-1

1

-60

-40

-20

0

20

40

60

80

MACD Chart of HDFC Bank

MACD



line it shows the signal for bearish market. From the MACD chart of HDFC Bank indicates the


56.425.



20th August 2010 4th October 2010 3rd December 2010

4th January 2011 21st February 2011 26th April 2011

61



13th August 2010 8th September 2010 27th October 2010

26th November 2010 24th December 2010 25th February 2011

22nd March 2011 25th May 2011

31-Dec-99 3-Jul-13 3-Jan-27 3-Jul-40 3-Jan-54 3-Jul-67 3-Jan-81 3-Jul-94 3-Jan-080

200

400

600

800

1000

1200

1400

1600

Line chart of PNB

Close Price

INTERPRETATION

Line chart is prepared by connecting the closing price of Punjab National Bank. The closing

price of PNB was 1019.95 on 1st July 2010, after that the price increased up to 1384.35 on 9th

November 2010. The lowest price is 986.55 on 10th Feb 2011.

62

MOVING AVERAGE OF PNB

31-Dec-99 3-Jul-16 3-Jan-33 3-Jul-49 3-Jan-66 3-Jul-82 3-Jan-990

200

400

600

800

1000

1200

1400

1600

Close Price10 Days moving average

INTERPERTATION

From the moving average chart closing price and 10 days moving average of Punjab National

Bank are plotted. A short term moving average is used to predict near future movement and take

decision for short time period.



13th October 2010 5th November 2010 2nd December 2010

15th February 2011 30 March 2011 25th April 2011



28th October 2010 26th November 2010 8th December 2010

9th February 2011 19th May 2011

63

31-Dec-99 3-Jul-10 3-Jan-21 3-Jul-31 3-Jan-42 3-Jul-52 3-Jan-63 3-Jul-73 3-Jan-84 3-Jul-94 3-Jan-050

10

20

30

40

50

60

70

80

90

100

RSI Chart of PNB

INTERPRETATION


market for the scrip. By analysing RSI chart of PNB it is understood that the peak level shows

the period for buying the security. When RSI line crosses the 30 mark line it shows the selling

signal.


On 18th November 2010, 6th January 2011, 1st February 2011, 2nd may 2011 15th June

2011, the RSI line crossed the 70 mark line from down wards, it indicates an over bought market

for the scrip. It signifies that soon peak wold be genarated and then market will fall.


On 30th July 2010, 9th September 2010, 4th October 2010, 12th October 2010, 23rd March

2011, 1st June 2011, 29th June 2011, RSI line crossed 30 mark line from upwards indicating

oversold market, also it indicates very soon market will rise in future and become bullish.

64

During the following periods RSI line moved upward in the 30-70 zone and gave clear

sell signal

13th Oct to 16th Nov-10 23rd Dec-10 to 5th Jan-11 21st feb to 3rd march

7 April to 13th April-11 27th April to 2nd may-11 8th June 15th June-11


buy signals.

19th Oct to 25th Oct 2010 27th Oct to 3rd Nov 2010 29th nov to 2nd dec 2010

16th dec to 23rd Dec 2010 10th Feb to 21st Feb 2011 15th April to 25th April 2011

23rd may to 30 may 2011

31-Dec-99 3-Jul-10 3-Jan-21 3-Jul-31 3-Jan-42 3-Jul-52 3-Jan-63 3-Jul-73 3-Jan-84 3-Jul-94 3-Jan-050

0.2

0.4

0.6

0.8

1

1.2

ROC Chart of PNB

INTERPRETATION



line starts from 1019.95 on 1st july 2010, which reaches a peak 1384.35 on 9th november 2010.

65


formation)

25th Augest 2010 15th September 2010 13th October 2010

10th December 2010 23rd February 2011 30th March 2011

2nd June 2011



25th Aug to 31st Aug 2010 13th Oct to 20 th Oct 2010 13th Dec to 20th Dec 2010

3rd Jan to 10 th Jan 2011 8th June to 16th June 2011



26th nov to 3rd Dec 2010 14th Jan to 24th jan 2011 8th Feb to 23rd Feb 2011

22nd Mar to 31st Mar 2011

31-Dec-993-Jan-12 3-Jan-24 3-Jan-36 3-Jan-48 3-Jan-60 3-Jan-72 3-Jan-84 3-Jan-96 3-Jan-08

-50

-40

-30

-20

-10

0

10

20

30

40

50

MACD Chart of PNB

MACD

66



line it shows the signal for bearish market. From the MACD chart of Punjab National Bank

indicates the difference between 5 days and 10 days moving averages. MACD line lies between -

41.435 to 36.32.



4th August 2010 13th October 2010 25th October 2010

22nd November 2010 2nd December 2010 2nd February 2011

16th February 2011 28April 2011



19th October 2010 1st November 2010 26th November 2010

8th December 2010 9th February 2011 22nd March 2011

23rd May 2011

67

1-Jul-1

0

18-Jul-1

0

4-Aug-

10

21-Aug-

10

7-Sep

-10

24-Sep

-10

11-Oct-

10

28-Oct-

10

14-Nov-

10

1-Dec

-10

18-Dec

-10

4-Jan-1

1

21-Jan-1

1

7-Feb

-11

24-Feb

-11

13-Mar

-11

30-Mar

-11

16-Apr-1

1

3-May

-11

20-May

-11

6-Jun-1

1

23-Jun-1

10

200

400

600

800

1000

1200

1400

1600

1800

Line chart of AXIS bank

Close Price

Line chart of AXIS bank is drawn by connecting the closing price for a particular period of time.

On 1st July the share price of AXIS bank was 1229.55, on 13th October 2010 it shows that the

share price increased to the maximum of 1588.7 and the lowest value of the share is 1159.45 on

9th Feb 2011.

MOVING AVERAGE OF AXIS BANK

1-Jul-1

0

16-Jul-1

0

31-Jul-1

0

15-Aug-

10

30-Aug-

10

14-Sep

-10

29-Sep

-10

14-Oct

-10

29-Oct

-10

13-Nov-

10

28-Nov-

10

13-Dec

-10

28-Dec

-10

12-Jan

-11

27-Jan

-11

11-Feb

-11

26-Feb

-11

13-Mar

-11

28-Mar

-11

12-Apr-

11

27-Apr-

11

12-May

-11

27-May

-11

11-Jun-1

1

26-Jun-1

10

200

400

600

800

1000

1200

1400

1600

1800

Close Price

10 Days mov-ing average

INTERPERTATION

From the moving average chart closing price and 10 days moving average of AXIS Bank are



68




3rd January 2011 17th February 2011 20th April 2011

31st May 2011



1st September 2010 26th November 2010 8th December 2010

14th January 2011 9th & 24th February 2011 23rd may 2011

15th June 2011

1-Jul-1

0

16-Jul-1

0

31-Jul-1

0

15-Aug-

10

30-Aug-

10

14-Sep

-10

29-Sep

-10

14-Oct-

10

29-Oct-

10

13-Nov-

10

28-Nov-

10

13-Dec

-10

28-Dec

-10

12-Jan-1

1

27-Jan-1

1

11-Feb

-11

26-Feb

-11

13-Mar

-11

28-Mar

-11

12-Apr-1

1

27-Apr-1

1

12-May

-11

27-May

-11

11-Jun-1

1

26-Jun-1

10

20

40

60

80

100

120

RSI chart of AXIS Bank

RSI

INTERPRETATION

During the period RSI line is above 30 mark line most of the time, by analyzing RSI chart the

peak level shows period for buying the security. When RSI line crosses the 30 mark line it shows

the selling signal.

69


RSI line crossed 70 mark line from downwards On 5th August 2010, 15th October 2010, 16th

November 2010, 15th December 2010, 13th January 2011,7th February 2011, and 28th April 2011.

It indicates an overbought market for the scrip. It signifies soon peak would be generated and

then market will fall, i.e. it will became bearish.

Oversold market for the scrip

On 19th August 2010 , 9th September 2010, 2nd November 2010, 31st December 2010, 24th March

2011, 24th June 2011 , the RSI line crossed 30 mark lines from upward. It indicates that oversold

market for the scrip, it indicates soon the market will rise in future and became bullish. The

highest value of RSI is 98.4375 and the lowest value is 8.7080.

During the following period RSI line moved downwards in the 70-30 zone and gave

clear sell signals:

11th Aug to 18th Aug 2010 28th Oct to 3rd Nov 2010 14th Dec to 23rd Dec 2010

10th Feb to 22nd Feb 2011 17th Mar to 23rd Mar 2011 14th June to 23rd June 2011

During the following periods the RSI line moved upwards in the 30-70 zone and gave

clear Buy signals:

27th July to 4th Aug 2010 11th Nov to 15th Nov 2010 3rd Jan to 7th Jan 2011

28th Jan to 4th Feb 2011 20th April to 25th April 2011 28th Jan to 3rd Feb 2011

3rd June to 14th June 2011

70

1-Jul-1

0

16-Jul-1

0

31-Jul-1

0

15-Aug-

10

30-Aug-

10

14-Sep

-10

29-Sep

-10

14-Oct

-10

29-Oct

-10

13-Nov-

10

28-Nov-

10

13-Dec

-10

28-Dec

-10

12-Jan-1

1

27-Jan-1

1

11-Feb

-11

26-Feb

-11

13-Mar

-11

28-Mar

-11

12-Apr-

11

27-Apr-

11

12-May

-11

27-May

-11

11-Jun-1

1

26-Jun-1

10

0.2

0.4

0.6

0.8

1

1.2

ROC Chart of AXIS Bank

ROC

INTERPRETATION



line starts from 1229.55 on 1st july 2010 which reaches a peak 1588.7 on 13th October 2010.


formation)

20th September 2010 10th November 2010 24th December 2010

3rd January 2011 23rd February 2011 4th April 2011

2nd June 2011



8th Nov to 19th Nov 2010 8th June to 16th June 2011



16th Dec to 24th dec 2010 9th Feb to 16th feb 2011 22nd march to 29th march 2011

71

1-Jul-1

0

17-Jul-1

0

2-Aug-

10

18-Aug-

10

3-Sep

-10

19-Sep

-10

5-Oct

-10

21-Oct

-10

6-Nov-

10

22-Nov-

10

8-Dec

-10

24-Dec

-10

9-Jan

-11

25-Jan

-11

10-Feb

-11

26-Feb

-11

14-Mar

-11

30-Mar

-11

15-Apr-

11

1-May

-11

17-May

-11

2-Jun-1

1

18-Jun-1

1

-60

-40

-20

0

20

40

60

80

MACD Chart of AXIS bank

MACD



line it shows the signal for bearish market. From the MACD chart of AXIS Bank indicates the


55.545.



9th August 2010 13th September 2010 27th September 2010

27th October 2010 26th November 2010 17th January 2011

9th February 2011 24th February 2011 22nd march 2011

25th May 2011




3rd January 2011 25th April 2011

72

TREND ANALYSIS OF SELECTED SECURITIES IN BSE INDEX AT SHORTER TIME HORIZONS”

Economy & Finance

Transcript of TREND ANALYSIS OF SELECTED SECURITIES IN BSE INDEX AT SHORTER TIME HORIZONS”