EXECUTIVE SUMMARY The share prices in the stock market fluctuate on a daily basis due to continuous buying and selling. Stock prices move in trends and cycles and are never stable. An investor in the stock market is interested to get a good return on his investment and hence purchases securities at a low price and sells them at a high price. However, to gain successfully return on investments in a volatile stock market is not an easy job to do. An investor should adequate knowledge about the working of the stock and securities market and the kind of risks involved in it. ell defined information about securities being traded in the markets, its fluctuation in prices provides the investors with basic understanding of the markets and helps them in their investments, i.e. investing in the right type of securities at the right time. Hence, this is where technical analysis comes into picture. Technical analysts consider a wide range of factors most importantly price movements and volume to indicate the future trend of the market and the best buying and selling opportunities of stocks. The purpose of this study is to analy!e anal y!e five stocks belonging to various sectors trading in the "ombay Stock #$change %"S#& through technical analysis. The market movements are analy!ed using tools such as #$ponential 'oving Average %#'A&, (elative Strength )nde$ %(S)&, 'oving Average Average *onvergence+ivergence %'A*& and (ate of *hange %(-*&. The study aims at e$tracting e$tracting the price movements movements of selected company company stocks over a period of one year. These prices are observed and analy!ed using the above mentioned indicators and on the basis of which conclusions are drawn on the trend of price movements and whether to buy or sell the stock in the near future.
CHAPTER - 1
INTRODUCTION The bank interest rates have been increasing steadily but we cannot ignore that )nflation rate has also been increasing. The impact of inflation is that the value of money is decreasing and cost of living is increasing. or e$ample at an inflation rate of /01 the monthly e$penses of (s. 23333 would increase to (s. 24544 after 0 years, (s. 65,264 after /0 years and (s. 78,088 after 53 years. )n the similar way the value of (s. /33333 at an inflation rate of /01 would reduce to to (s. 74,202 after 0 years, (s. 94,/35 after /0 years and (s. 27,648 after 53 years. This throws light on the fact that just having made savings in banks is not a financially prudent decision. So, the investors are now searching for proper investment avenues which possess both safety of principal and give good return on investments. )n 53/9, the )ndian capital markets were one of the best performing markets globally. The "S# Sense$ rose a whopping 231 this year, its highest gain in five years. 'id: and small:cap indices have performed much better, with 031 and 731 gains, respectively. ;oing ahead, )ndia is e$pected to continue the good show in 53/0. Here comes the role fundamental and technical analysis of stocks which facilitate investors make better decisions. This study particularly concentrates on technical analysis of stocks and assists the readers in understanding the use of charts and technical indicators in short term stock market trading. The stock market indicators help the investor to identify price behaviour and major market turning points. Any investor must definitely consider technical analysis as a tool whether to buy or sell a stock at a particular point of time. The objective of the project is to make a study on the technical analysis on selected stocks across various sectors and interpret on whether to buy or sell them by using techniques.
NEED FOR THE STUDY
To help comprehend the behaviour of share price movements in the past using charts. To understand the use of technical indicators in making buying or selling decisions of
stocks. To predict future prices of stocks in the near short term and be able to choose appropriate stop loss and target prices.
OBJECTIVES OF THE STUDY
To study the significance of technical analysis in )ndian capital market. To analy!e the performance of select companies using advanced interactive charts and to predict the future trends in the share prices. Technical analysis on selected stocks by means of certain technical indicators and interpret on whether to buy or sell. To assist the investors in making investment decisions regarding to buy or sell the selected stocks.
SCOPE OF THE STUDY This study mainly focuses on investment decisions by predicting futures stock price movements through the use of Technical analysis i.e. by means of advanced interactive charts and certain well known technical indicators. This study is based on five stocks belonging to various different sectors listed in "ombay Stock #$change.
METHODOLOGY ADOPTED The major Tools and Techniques used in this study are<
a. Candlestick Chart =apanese candlestick charts form the basis of the oldest form of technical analysis. *andlestick charts provide the information as namely open price. High price, low price and *lose price. However, *andlestick charting provide a visual indication of market psychology, market sentiment and potential weakness making it a rather valuable trading tool.
b. Exponential moving average #$ponential moving average %#'A& is calculated by using the following formula<
#'A > %*urrent closing price ? @revious #'A& actor B @revious #'A
here actor > 5+ %nB/&
and n > number of days from which the average is to be calculated.
The moving averages are plotted on the price charts. The curved line joining these moving averages represent the trend line. hen the price of the share intersects and moves above or below this trendline, it may be taken as the first sign of trend reversal. c. Rate of Change Indicator (ROC) (-* helps to indentify overbought and oversold conditions and also the possibility of
trend reversals. )t measures the rate of change of the current price as compared to price a certain number of days or weeks back. (-* > %*urrent price + @rice CnD period ago& ? /
d. Relative strength index (RSI) This is a powerful indicator that signals buying and selling opportunities ahead of the market. (S) > /33 ? E/33 + %/B(S&F here (S > Average gain per day + Average loss per day
e. Moving verage Convergence and !ivergence (MC!) The 'A* Gine is the difference between /5:day #$ponential 'oving Average %#'A& and the 56:day #'A. *losing prices of the share are used for these moving averages. A 8:day #'A performs as the signal line and recogni!es turns in the trend. The 'A* Histogram represents the difference between 'A* and its 8:day #'A, the Signal line. hen the 'A* Gine is above the signal line, the histogram is positive and when the 'A* Gine is below the signal line, the histogram is negative.
LITERATURE REVIEW R Chitra "#$$ )n the study undertaken by 'rs. ( *hitra at ;(; School of
'anagement Studies, @eelamedu, *oimbatore conducted technical analysis on selected stocks of #nergy sector and interpreted whether to buy or sell those stocks. She carried out the analysis using "eta, (elative Strength )nde$ and Simple moving average. To find out the risk involved with the scrip on par with market "eta was used. To analy!e price movements
(elative Strength )nde$ was used. To understand trends and patterns in share price movements Simple 'oving Average was used. She concluded that technical analysis gives investor a better understanding of the stocks and also gives them right direction to go on further to buy or sell the stocks .Therefore, the small vvginvestors and traders should not blindly make an investment rather they should analy!e using the various tools to check if the scrip is technically strong. Ra!it Si"h# A$it %&$ar "#$$ Authors (anjit Singh and Amit umar from ;;S
*ollege of 'odern Technology, harar, 'ohali, @unjab, )ndia. and *ollege of )nformation Science and Technology, Ianjing orestry Jniversity, Ianjing, =iangsu, *hina respectively presented a research report on the topic )ntelligent Stock Trading Technique using Technical Analysis. The paper presents intelligent trading setup which can be used by any investor to pick stock for buying at right time to get handsome profits. The study is conducted on parameters such as charts, trend lines, moving averages and other technical indicators. The authors introduce a setup which is a combination of price pattern and technical indicators together, that gives the right conditions for predicting with reasonable confidence the future direction of the stockDs price A. Ja'a(&$ar# %. S&$athi "#$% This paper presents a significant technical analysis
of Jnion bank which helps to understand the price behaviour of the shares. )t also describes about the use of technical analysis for investors while buying and selling decisions with the technical analysis done for the stocks of Jnion "ank. )t helps investors to identify the current trend and risk. or the purpose of analysis weekly average are used for the analysis to know if the stock is technically strong or not.
LIMITATIONS OF THE STUDY The analysis is based on five selected company stocks. or carrying out analysis limited parameters were considered. These parameters may not be enough to predict the future price movements. Technical analysis only for three year is undertakenK from this data we cannot predict prices accurately. This study can be used only for short term decision making.
CHAPTER - 2
COMPANY PROFILE Itr)*&cti) Aa* Rathi# founded in the year /889, is one among the prime investment banks in
)ndia operating from 203 different locations. The firm has shown a notable presence in various other international locations including Hongkong, ubai and Gondon. Jnder the active leadership of 'r. Anand (athi and 'r. @radeep ;upta, the firm has grown to a strength of 5033 professional span over all the locations. The principal focus has been to provide financial services and wealth management solutions for HI)s, conglomerates and organi!ations. A client centric approach with an objective of providing long term value addition to the customers while retaining e$cellent professionalism and ethics has enabled the firm to
make a distinct remark in this field. The objectives and the virtues to attain them have been widely appreciated and acknowledged with The "est omestic @rivate "ank in )ndia by Asiamoney in their ifth Annual @rivate "anking @oll 5338. The company has come out as a winner across all key segments in AsiamoneyDs largest survey of high net worth individuals in )ndia.
Aa* Rathi Vi+i), &o be a shining example as a leader in innovation' and the first choice for clients emploees.
S-ric- O//-ri"+ E*+it Research< Anand(athiDs e$ceptionally rated 50 member equity research team covers almost 533 companies across /0 sub:sectors. They possess a unique understanding of sectors and companies, ensuing in profitable investment opportunities.
Investment ,anking Anand(athiDs 23 member sector focused investments banking team works entirely with small and mid:si!ed companies, offering high quality advice on capital raising, 'LAs and restructuring.
E*+it trading and distrib+tion Anand(athiDs encompasses a rich /6 year history in equity trading and distribution making it e$clusively placed to offer the complete gamut of capital market services to small and mid: si!ed companies.
F&* 0a+-* actiiti-+,
Anand (athi ;lobal inance Gimited %A(;G& is a wholly owned subsidiary of Anand (athi inancial Services Gtd established on 2rd ebruary, /845. The firm is registered with (eserve "ank of )ndia %(")& as non:banking finance company %I"*& and classified as Goan company and grouped as MSystemically important non:deposit taking non:banking financial companyM%I"* : I ?S)&. The *ompany is affianced in the business of financial advisory, corporate consultancy and fund based activities. The firm handles various consultancy projects for reputed companies both in )ndia and abroad. A(;G has striving plans to e$pand its fund based activities to provide value added products + services to the large client base of the ;roup.
Pr)*&ct+ )//-r-* -oan against Shares This product offers you instant liquidity. )n case there is requirement of funds for personal need or need to increase holding+ investment in listed collaterals, there is no need to sell the securities. All that is to be done is e$ecute a loan agreement with A(;G. A Goan facility up to a value determined based on e$isting portfolio can be given. A sanction limit based on requirement just like overdraft facility from the bank is made available. There are nil minimum commitment charges, hidden cost and early payment charges other than interest on your actual utili!ation of limits and sanction limit is fle$ible based on movement of portfolio and its valuation.
-oan against demat This product caters to the financial needs of those involved in the commodities business. A credit of up to (s. /3 *rs is offered for agricultural functions with agricultural commodities as securities maintained in demat form.
IO /inance This product is a loan facility offered for applying in @rimary 'arket )ssues %)@-s and @-s&. ith the help of this product, investors can apply for )@-s. The investors can invest only a margin amount specified separately for each )@-.
ESO f+nding
This product is a loan facility presented against shares which have been approved + allotted to employees by their employer. This facility enables employees to e$ercise their #S-@ options by providing a loan against #S-@ ;rants.
C+stomi0ed /inancing This facility helps create customi!ed and secured financing products catering to your requirements. The *ollateral can be presented in the form of 'utual und units, #$change Traded unds %#T&, i$ed 'aturity @lans %'@s&, Saving "onds and other securities.
Aa* Rathi 1 At a G2ac•
Anand (athi offers institutional and retail brokerage of equities, commodities, currency, derivatives, online trading, investment banking, depository services, )@-Ds, mutual funds, fi$ed deposits, insurance broking, portfolio L wealth management,
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margin funding L research. Anand (athiDs retails footprint e$tends across over 3445 2)cati) acr)++ I*ia. e manage more than 6.3 2a(h c2i-t accounts across the country, with daily
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turnover in e$cess of )I( /0 billon. Anand (athi is a member of all the leading #quity, *ommodities, erivatives,
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*urrency •
L Spot *ommodity #$changes of )ndia Highly dedicated workforce of more than 6444 -$72)'--+ throughout )ndia and in )nternational -ffices.
J)&r-' )/ Aa* Rathi Gr)&7 899: Started activities in *onsulting L )nstitutional #quity Sales with /6 #mployees.
8993 Set up a (esearch esk empanelled with major institutional investors.
899; )ntroduced )nvestment "anking "usiness and (etail "rokerage Services.
<448
)nitiated ealth 'anagement Services:'S.
<44< (etail "usiness recommences with -wnership 'odel.
<446 •
Started )nsurance "roking.
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ealth 'anagement Assets crossed /033*rsL 'S services were launched at ubai.
<44: *ommodities "rokerage L (eal estate Services were introduced.
<443 (etail "ranch Ietwork #$pands across 533 Gocations.
<44= •
A(; acquires membership of ubai ;old L *ommodity #$change:;*N. (anked amongst South AsiaMs top 0 wealth managers for the ultra:rich by Asia
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'oney. (anked 6th in O5336 for All India Broker Performance in equity distribution
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in the HI) *ategory.
<44; *itigroup Penture *apital )nternational picks up /8.81 equity stake.
<4491<488< •
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(anked as Io. / amongst South AsiaMs wealth managers for the ultra:rich by Asia 'oney @oll. A(; Asset Jnder 'anagement is 3344Cr+. Has strengthened its manpower with =3445 E$72)'--+.
T)7 Maa"-$-t
Aa* Rathi# ounder L *hairman 'r. (athi, a gold medallist chartered accountant, has a vast e$perience spanning over 93 years. 'r. (athi has presided )*A) and "S# as a valuable member, eventually rising to the position of president of "S# in /888. He pioneered the e$pansion of the online trading system "-GT. He also set up the Trade ;uarantee und and played a vital role in setting up the *entral epository Services Gtd %*SG&.
Pra*--7 G&7ta# *o:founder L Pice chairman 'r. ;upta has a vast industrial e$perience in managing and operating enterprises with different business interests. He has an e$perience of over two decades in the field of financial markets and has pioneered the )nstitutional "roking and )nvestment Services arm of the group. He has been the source of motivation behind the companyDs dynamic growth. ith his business acumen, the Anand(athi ;roup has setup franchisee business and branch network across )ndia.
A$it Rathi# 'anaging irector 'r. Amit (athi is a *hartered Accountant and holds an '"A graduate degree from the Iew Oork Jniversity : Geonard I. Stern School of "usiness. He has played a key role in setting up the @rivate ealth 'anagement %@'& and )nvestment "anking %)"& businesses of the Anand (athi group, and instituting them in the global markets. "y the virtue of his leadership skills and inspiration the group has been able to flag consistent growth in this field.
C)r7)rat- +tr&ct&r-
Ui>&- F-at&r-+ )/ Aa* Rathi Gr)&7
)s a -ne Stop inancial Shop for its *lients giving a wide (ange of inancial Services under / roof
/7 Oears of #$perience in such a Polatile 'arket
Having one of the oldest (esearch esk
A 50:member research team, comprising /0 analysts %including sector specialists, macro economist, strategist& and /3 associates.
The fundamental research team covers Q/33 stocks and tracks a further /03.
-ur Pision of being the first *hoice for our clients
Total AJ' has grown up to 0033crs
-ur networking across the country making ourselves easily accessible to our *lients
Availability of a proper inancial @lanning without any additional cost
Achi--$-t+ )/ Aa* Rathi Gr)&7
Ra(-* N).8 D)$-+tic Ba(-r <449 ? <484 %ealth 'anagement *ompany& by
Asia 'oney @oll.
M+. Priti G&7ta got RW)$- L-a*-r )/ th- '-ar A@ar* in 53/3 in inancial
*ategory by ITP @rofit.
Mr. D. D. Shar$a awarded as B-+t Aa2'+t <484 by ee "usiness.
RB-+t C)tri0&ti) i I-+t)r E*&cati) a* Cat-")r' Ehac-$-t )/ thY-ar in "loomberg JTP inancial Geadership Awards.
Mr. Aa* Rathi awarded by ee "usiness for his contribution towards )ndiaDs
*apital market in =anuary, 53/3.
@rivate ealth Team was awarded for generating the CHighest AJ' growth in 53/3D for otak (by Mr. Uday Kotak himself)
Mr. %i+h)r- Nar- won the ee "usinessDs as RB-+t T-chica2 Aa2'+t1 C)$$)*iti-+
