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Technical analysis report

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Technical analysis report

  1. 1. A PROJECT REPORT ON “TECHNICAL ANALYSIS OF PUBLIC SECTOR UNIT"Project report submitted for the partial fulfillment of the MASTER OF BUSINESS ADMINISTRATION (2012) Semester-3 Submitted by:- PRIYANKA SANCHETI 201104100710011 MUKESH YADAV 201104100710136 Submitted to:- Mr. MANISH PATHAK [11 Dec, 2012] SHRIMAD RAJCHANDRA INSTITUTE OF MANAGEMENT AND COMPUTER APPLICATION GOPAL VIDYANAGARSRIMCA Page 1
  2. 2. Declaration We hereby declare that the following project report titled―Technical Analysis‖ is an authentic work done by us. This is to declare that allthe work indulged in the completion of this work such as data collection,analysis is a profound and honest work of ours.Date:11/12/2012 Priyanka sanchetiPlace: Bardoli Mukesh yadavSRIMCA Page 2
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  4. 4. STOCK MARKET:The MeaningStock market is a place where the shares of different companies are bought and sold. TheOrganized Platform through which the buyers and sellers can trade in shares or other forms ofsecurities like bonds, derivatives is called STOCK EXCHANGE. The stock exchanges couldbe a corporation or a mutual organization. They primarily serve the purpose of listing andtrading the shares.In India, there are two stock exchanges apart from Regional stock exchanges:1) National Stock Exchange (NSE)2) Bombay Stock Exchange (BSE)Definition― The market in which shares are issued and traded either through exchanges or over-the-counter markets. Also known as the equity market, it is one of the most vital areas of amarket economy as it provides companies with access to capital and investors with a slice ofownership in the company and the potential of gains based on the companys futureperformance.‖  Role of Stock Exchange in an EconomyStock exchanges have multiple roles in the economy. This may include the following: 1) Raising capital for businessesThe Stock Exchange provides companies with the facility to raise capital for expansionthrough selling shares to the investing public. 2) Mobilizing savings for investmentWhen people draw their savings and invest in shares, it leads to a more rational allocation ofresources because funds, which could have been consumed, or kept in idle deposits withbanks, are mobilized and redirected to promote business activity resulting in strongereconomic growth and higher productivity levels of firms.SRIMCA Page 4
  5. 5. 3) Corporate governanceBy having a wide and varied scope of owners, companies generally tend to improvemanagement standards and efficiency to satisfy the demands of the stakeholders. 4) Creating investment opportunities for small investorsAs opposed to other businesses that require huge capital outlay, investing in shares is open toboth the large and small stock investors because a person buys the number of shares they canafford. 5) Government capital-raising for development projectsGovernments at various levels may decide to borrow money to finance infrastructure projectsby selling bonds. The issuance of such bonds can obviate the need, in the short term, todirectly tax citizens to finance development. 6) Barometer of the economyAt the stock exchange, share prices rise and fall depending, largely, on market forces.Therefore the movement of share prices and in general of the stock indexes can be anindicator of the general trend in the economy.  Central functions and responsibilities of a stock market:1) Making available cost-effective trading platforms2) Bundling of liquidity by concentrating supply and demand3) Guaranteeing the interchangeability, as well as the identical structuring of a particular category of security4) Ensuring the greatest possible transparency for investors5) Providing information on prices and volumeSRIMCA Page 5
  6. 6. Investment strategies:One of the many things people always want to know about the stock market is, ―How do Imake money investing?" There are many different approaches; two basic methods areclassified as either fundamental analysis or technical analysis. Fundamental analysis refers toanalyzing companies by their financial statements found in SEC Filings, business trends,general economic conditions, etc.INTRODUCTION OF THE STUDY:The methods used to analyze securities and make investment decisions fall into two verybroad categories: fundamental analysis and technical analysis. Fundamental analysis involvesanalyzing the characteristics of a company in order to estimate its value. Technical analysistakes a completely different approach; it doesn‘t care one bit about the ‗value‖ of a companyor a commodity. Technicians (sometimes called chartists) are only interested in the pricemovements in the market.Despite all the fancy and exotic tools it employs, technical analysis really just studies supplyand demand in a market in an attempt to determine what direction, or trend, will continue inthe future. In other words, technical analysis attempts to understand the emotions in themarket by studying the market itself, as opposed to its components. If you understand thebenefits and limitations of technical analysis, it can give you a new set or skills that willenable you to be a better trader or investor.Just as there are many investment styles on the fundamental side, there are also manydifferent types of technical traders. Some rely on chart patterns, others use technicalindicators and oscillators, and most use some combination of the two. In any case, technicalanalysts exclusive use of historical price and volume data is what separates them from theirfundamental counterparts. Unlike fundamental analysis, technical analysts don‘t care whethera stock is undervalued – the only thing that matters is a security‘s past trading data and whatinformation this data can provide about where the society might move in the future.SRIMCA Page 6
  7. 7. Technical analysisIt is the polar opposite of fundamental analysis, which is the basis of every method exploredso far in this tutorial. Technical analysts, or technicians, select stocks by analyzing statisticsgenerated by past market activity, prices and volumes. Sometimes also known as chartists,technical analysts look at the past charts of prices and different indicators to make inferencesabout the future movement of a stocks price.Philosophy of Technical AnalysisIn his book, "Charting Made Easy", technical analysis guru John Murphy introduces readersto the study of technical analysis, explaining its basic premises and tools. Here he explainsthe underlying theories of technical analysis:Definition"Chart analysis (also called technical analysis) is the study of market action, using pricecharts, to forecast future price direction. The cornerstone of the technical philosophy is thebelief that all factors that influence market price - fundamental information, political events,natural disasters, and psychological factors - are quickly discounted in market activity. Inother words, the impact of these external factors will quickly show up in some form of pricemovement, either up or down."  The most important assumptions that all technical analysis techniques are based upon can be summarized as follows: 1) Prices already reflect, or discount, relevant information. In other words, markets are efficient. 2) Prices move in trends. 3) History repeats itself.General descriptionTechnical analysts also widely use market indicators of many sorts, some of which aremathematical transformations of price, often including up and down volume, advance/declinedata and other inputs. These indicators are used to help assess whether an asset is trending,and if it is, the probability of its direction and of continuation. Technicians also look forSRIMCA Page 7
  8. 8. relationships between price/volume indices and market indicators. Examples include therelative strength index, and MACD. Other avenues of study include correlations betweenchanges in Options (implied volatility) and put/call ratios with price. Also important aresentiment indicators such as Put/Call ratios, bull/bear ratios, short interest, Implied Volatility,etc.There are many techniques in technical analysis. Adherents of different techniques (forexample, candlestick charting, Dow Theory, and Elliott wave theory) may ignore the otherapproaches, yet many traders combine elements from more than one technique. Sometechnical analysts use subjective judgment to decide which pattern(s) a particular instrumentreflects at a given time and what the interpretation of that pattern should be. Others employ astrictly mechanical or systematic approach to pattern identification and interpretation.Technical analysis is frequently contrasted with fundamental analysis, the study of economicfactors that influence the way investor‘s price financial markets. Technical analysis holds thatprices already reflect all such trends before investors are aware of them. Uncovering thosetrends is what technical indicators are designed to do, imperfect as they may be. Fundamentalindicators are subject to the same limitations, naturally. Some traders use technical orfundamental analysis exclusively, while others use both types to make trading decisions.Benefits of Technical Analysis Technical analysis focuses on price movement. Trends are easily found. Patterns are easily identified. Charting is quick and inexpensive. Charts provide a wealth of information. Charting terms and indicatorsSRIMCA Page 8
  9. 9.  Widely-known technical analysis concepts include: Breakout - when a price passes through and stays above an area of support or resistance Commodity Channel Index - identifies cyclical trends Momentum - the rate of price change Moving average - lags behind the price action Relative Strength Index (RSI) - oscillator showing price strength Resistance - an area that brings on increased selling SRIMCA Page 9
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  11. 11. REVIEW OF LITERATUREAccording to Achelis "Technical analysis is the process of analyzing a security‘s historicalprices in an effort to determine probable future prices."According to Edwards, Magee and Bassetti "It refers to the study of the action of the marketitself as opposed to the study of the goods in which the market deals. Technical Analysis isthe science of recording, usually in graphic form, the actual history of trading (price changes,volume of transactions, etc.) in a certain stock or in ―the Averages‖ and then deducing fromthat pictured history the probable future trend."According to Murphy "Technical analysis is the study of market action, primarily through theuse of charts, for the purpose of forecasting future price trends. The term ―market action‖includes the three principal sources of information available to the technician—price,volume, and open interest."According to Pring "The art of technical analysis, for it is an art, is to identify a trend reversalat a relatively early stage and ride on that trend until the weight of the evidence shows orproves that the trend has reversed. [...] Therefore, technical analysis is based on theassumption that people will continue to make the same mistakes they have made in the past."According to Cory Janssen, Chad Langager and Casey Murphy ―Technical analysisis a method of evaluating securities by analyzing the statistics generated by market activity,such as past prices and volume. Technical analysts do not attempt to measure a securitysintrinsic value, but instead use charts and other tools to identify patterns that can suggestfuture actiSRIMCA Page 11
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  13. 13. Research Methodology  Introduction to topic:In this Project, we‘ll introduce you to the subject of technical analysis. It‘s a broad topic, sowe‘ll just cover the basics, providing you with the foundation you‘ll need to understand moreadvanced concepts down the road.Technical analysis is a method of evaluating securities by analyzing the statistics generalizedby market activity, such as past prices and volume. Technical analysis do not attempt tomeasure a security‘s intrinsic value, but instead use charts and other tools to identify patternsthat can suggest future activity.  ANALYTICAL RESEARCH:Research Design was based on analytical research, on the other hand, the researcher has touse facts or information already available, and analyze these to make these to make a criticalevaluation of the material.  OBJECTIVES OF THE STUDY:To analyze the price movements of shares of SBI and interpret the corrections and trends byusing Technical Analysis tools.1) To forecast the future trends and provide suitable suggestions to the investors.2) To identify the inherent technical strength and weakness of the equity shares.3) To represent the trend of the stock price through charts of the technical analysis.  SCOPE OF THE STUDY:1) The study covers for a period of one year from 1/10/ 2011 to 28/10/2012.2) The study helps to find out the future trends in the prices of PSU sectors companiesshares i.e. (ONGC, SBI, NTPC, COAL INDIA, BHEL) Valuable hints can be identified bythe investors for their future buying and selling.SRIMCA Page 13
  14. 14.  LIMITATIONS OF THE STUDY:1) One of the most important limitations for most technical analysis methods is the factthat there are so many people using the basic technical analysis methods already, and thenumber is increasing every day, making it harder for a single trader to make money on themarket with the methods.2) Because of these methods are so widely spread and there is so much money riding onthe methods, some also claim that technical analysis has become self-fulfilling prophecy, aspeople trend to enter the market and put their stops on the same places, increasing thevolatility towards the technical analysis method being correct.3) Technical analysis systems usually do not take into account correlation betweendifferent markets. If you are analyzing several markets and they all give similar signals, theymay have close correlations, meaning that the risk profile for each is very similar, and that theprices of the assets move in close steps with each other.  SOURCES OF DATA:The main sources of data are collected through website, various publication books,magazines, newspaper and reports prepared by research scholars etc.METHODS OF DATA COLLECTION:SECONDARY DATA:The study is purely based on secondary data. The secondary data are those which havealready been collected by someone else and which have already been passed through thestatistical process. The methods of collecting secondary data are published data orunpublished data. It takes short time and relatively low cost.  SAMPLING METHOD - Systematic Rndom Sampling method used in this project by us , as we have selected sectors nd companies on the basis of market capitalization.SRIMCA Page 14
  15. 15.  SAMPLE SIZE - 5 companies are selected by us 1) ONGC 2) NTPC 3) SBI 4) BHEL 5) COAL INDIA  DURATION OF STUDY - Here we hawe taken data for 1 year i.e. from 1-oct-2011 to 26-oct-2012 of all five compnies .STATISTICAL TOOLS APPLIED: The analysis of data is carried out for secondary data by the following method. Relative Strength Index(RSI) Rate of Change (ROC)  ROC ( Rate of Change)ROC stands for Rate of Change, and is one of the most well-known and popular of stock andshare technical indicators. The ROC indicator is an momentum or velocity oscillator, with itsmovement oscillating around a central zero-point level. As with many technical indicators, aset period is used to compare with todays price. This period can be as small as 1 day or aslarge as 200 days or more, but the most typical periods used are 10, 12 or 25 days.Calculation of the ROC IndicatorThe ROC is calculated by looking at todays price and comparing this with the price at so-many days ago, depending on the period used. It can be expressed as a simple price-difference figure, or as a percentage-change figure. Whichever was is used, the Rate ofChange indicator will be positive, negative or zero.Calculation of the ROC as a simple price-difference figure as very easy - just look at todaysclosing price, deduct the closing price so-many days ago (depending on period used), andvoila, you have the ROC figure.SRIMCA Page 15
  16. 16. To obtain the Rate of Change indicator as a percentage, the following calculation is used:ROC= ((todays closing price - closing price at [period number of days ago]) ÷ closing priceat [period number of days ago]) x 100ROC =Interpretation of the Rate of Change Technical IndicatorThe Rate of Change Indicator can give a good idea of a stock, share or markets cyclicalpattern of movement upwards and downwards, and the graphical display of ROC can be away to identify these cycles better than just looking at the share price graph alone. When itcomes to interpretation for buying or selling decisions, analysts consider that a ROC indicatorwhich is at a high peak and starting to move down is an indication of a sell signal, whereas anROC at a low peak, but staring to move upwards, is a buy signal. This is due to the theorythat the higher the ROC, the more overbought the stock or share is, and the lower the ROC,the more oversold it is likely to be. It is also based on the idea that movement toward the zeroline indicates that the existing trend is losing momentum. The best overbought or oversoldlevels are likely to vary depending on the stock or share under study, so it is a good idea tolook at past patterns to assist in making a decision regarding a particular stock. In very strongupwardly trending bull markets it may be advantageous to use higher and lower peaks than intimes of a weaker market.Although more difficult to identify, divergences between the ROC trend and the stock pricecan be helpful in interpretation, with the movement of ROC and price in opposite directionsconsidered to be a sign of a possible reversal of the stock price trend.Some analysts also use the zero level as a basis of buy or sell decisions - buying when thestock moves from below the zero line to above, and selling when the stock moves from aboveto below the zero mark. However, other market technicians may consider this to be a slightover-simplification of ROC interpretation.SRIMCA Page 16
  17. 17.  RSI Technical IndicatorWhen applied to stocks, shares and securities, RSI stands for Relative Strength Index. It wasoriginally developed by J. Welles Wilder, Jr, who first introduced the concept of RSI to theworld in his 1978 book, New Concepts in Technical Trading Systems.Unfortunately there are two different types (and meanings) of Relative Strength when itcomes to stock market trading, and this fact can lead to possible confusion. One of the typesof Relative Strength is the type used to compare the performance of a particular stock withanother stock or sector of the market, or with the whole market itself, or even to comparewhole markets worldwide (for example to compare the relative performance of the UK StockMarket in comparison to the USA stock market). This type is not what will be discussed onthis page, but instead the Relative Strength Index developed by J. Welles Wilder Jr. is amomentum oscillator which is based purely on the price changes of a single particular stock,share or security, and does not compare that individual stock to others or to a sector or themarket as a whole.Calculation of the RSI IndicatorWilders RSI looks at the positive and negative price changes over a period of days prior to"today" and, from these changes, calculates a RSI figure for "today" which can oscillatebetween 0 and 100. Wilde preferred to use 14 days as a period for calculation, and thisappears to continue to be a popular choice, but some analysts and charts may use periods aslow as 8 or as high as 25 days.If we call the period of days prior to "today" the period, then to start out in the calculation ofthe RSI, we need to add together all of the positive price changes over the period.Calculation:RSI = 100 – 100 / (1+RS)Average gain = (Total gains / n)Average loss = (Total loss / n)Relative Strength = Average gain / Average lossRelative Strength Index = 100 – 100 / (1+ RS)N = number of RSI periods.SRIMCA Page 17
  18. 18. To simplify the formula, the, the Average Loss, the First RS, and the subsequent SmoothedRS‘s For a 20 period RSI, the Average Gain equals the sum total all gains divided by 20.Evenif there are only 5 gains (losses), the total of those 5 gains (losses) is divided by the totalnumber of RSI periods in the calculation (7 in this case). The Average Loss is computed in asimilar manner. Calculation of the First RS value is straightforward: divide the Average Gainby the Average Loss. All subsequent RS calculations use the previous periods Average Gainand Average Loss for smoothing purposes.RSI interpretationThe RSI is a momentum oscillator, which measures the speed of directional price movement.According to Wilder, a divergence between the RSI and price action on the chart is a verystrong indication that a market turning point is imminent. A divergence between the RSI andstock price action is where the stock is making new highs and the RSI is making new lows (orvice-versa).RSI can also be used to identify when a stock or share is overbought or oversold. With a 14day period RSI, many analysts consider that if the RSI drops to below 30 mark, it indicatesthat the stock is oversold, so is a possible buy signal. Conversely, if the RSI rises to above 70,the stock may be overbought and it is worth considering selling. If a shorter period (forexample 8 days) is used, you may wish to use a lower level (for example 20 to 25) as anoversold level, and a higher level (eg 75 to 80) as an overbought indicator. The lower numberof days used for the period, the more volatile the RSI will be.Overall, RSI is one of the most popular technical indicators, and analysts consider it to beamong the most reliable. However, it works best with volatile shares, and may not provide asmuch success if used with shares whose price does not change much over time. Also, bewareof large surges and drops in stock or share values - such sudden movements may produce afalse buy or sell signal. It is best to use RSI as a compliment to your investing tools andinformation, rather than simply on itsSRIMCA Page 18
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  20. 20. DATA ANALYSIS & INTERPRETATIONSTEP - 1Index Capitalization rate of all the sectors of BSE was identified on 28-oct- 2012. Out ofthese sector 1 sectors namely: (1) PSU (Public sector unit) has shown very high capitalizationas compare to others. 27th-OCT-2012SECTOR INDEX CAPT. (%)AUTO 2.81BANKEX 6.73CD 0.34CG 2.35FMCG 4.39HC 2.25IT 3.79METAL 2.03OIL&GAS 4.11POWER 2.01PSU 24.73REALITY 0.40TECH 4.91Source: www.bseindia.comSRIMCA Page 20
  21. 21. STEP-2As per the market capitalization we have selected five companies from the PSU sector. Thefive companies are as follows. As on 28/10/2012Company name Market capitalization (%)1) ONGC 15.382) SBI (State bank of India) 15.283) NTPC (NTPC Ltd ) 7.34) COAL INDIA 5.875) BHEL(Bharat Heavy Electricals Ltd) 5.44Source: www.bseindia.comSRIMCA Page 21
  22. 22. STEP 3 - RSI CALCULATIONDate Close change Gain Loss Price 3-Oct-11 268.55 4-Oct-11 264.4 -4.15 0 4.15 5-Oct-11 264.2 -0.2 0 0.2 ]7-Oct-11 264.45 0.25 0.25 010-Oct-11 273.5 9.05 9.05 011-Oct-11 268.35 -5.15 0 5.1512-Oct-11 270.5 2.15 2.15 013-Oct-11 265 -5.5 0 5.514-Oct-11 266.65 1.65 1.65 017-Oct-11 269.5 2.85 2.85 018-Oct-11 263.6 -5.9 0 5.919-Oct-11 268.35 4.75 4.75 020-Oct-11 266.8 -1.55 0 1.5521-Oct-11 265.4 -1.4 0 1.4CalculationFORMULA FOR CALCULATING RSI:RSI = 100 – (100/ 1+ Rs)Average gain = Total Gains / n = (20.7/14) = 1.47857143Average loss = Total Loss / n = (22.45/14) = 1.60357149RS = 0.922049 RSI = 100 – (100 / 1+ RS) = 100 – (100 / 1+0.922049)RSI = 47.97SRIMCA Page 22
  23. 23. CHART OF RSI METHOD FOR ALL FIVE SELECTED COMPANY 1) ONGCINTERPRETATION The Relative Strength Index (RSI) is a financial technical analysis showing price strength by comparing upward and downward close-to-close movements. In the above Chart, blue color line indicates closing price of ONGC scrip. In the above Chart the sell point of 3-January and 3-Feb and 3- july indicate that there may be downturn & it is the right time to sell the scrip. Similarly the Buy point 3-Dec. and 3-Jan and 18-may indicating that it is time to pick up the scrip and the price of share is upward. In this chart the double Top, formations are generated. In 3- Nov the resistance level is generated. In the Dec., January and Jun month is over sold region, the investor can buy the scrip In the month of January and July over bought region, the investor can sell the scrip.SRIMCA Page 23
  24. 24. 2) SBI BANKINTERPRETATION The Relative Strength Index (RSI) is a financial technical analysis showing price strength by comparing upward and downward close-to-close movements. In the above Chart, blue color line indicates closing price of SBI Bank scrip. In the above Chart the sell point of 25-Oct. and 27-Jan. and 24-Oct indicate that there may be downturn & it is the right time to sell the scrip. Similarly the Buy point 25-Jan. and 3-May and 3-Aug. indicating that it is time to pick up the scrip and the price of share is upward. In this chart the double Top, formations are generated. In the Oct., January and Oct. month is over sold region, the investor can buy the scrip In the month of January and May and Aug. over bought region, the investor can sell the scrip.SRIMCA Page 24
  25. 25. 3) Coal IndiaINTERPRETATION The Relative Strength Index (RSI) is a financial technical analysis showing price strength by comparing upward and downward close-to-close movements. In the above Chart, blue color line indicates closing price of Coal India scrip. In the above Chart the sell point of 8-Dec., 19-January and 2-Sep. indicate that there may be downturn & it is the right time to sell the scrip. Similarly the Buy point 3-Nov. and 12-Oct indicating that it is time to pick up the scrip and the price of share is upward. In this chart the double Bottom formations are generated. In 25- Dec the support level is generated. The Head & Shoulder top and bottom are generated.SRIMCA Page 25
  26. 26. 4) NTPCINTERPRETATION The Relative Strength Index (RSI) is a financial technical analysis showing price strength by comparing upward and downward close-to-close movements. In the above Chart, blue color line indicates closing price of NTPC scrip. In the above Chart the sell point of 20-Feb and 18- July indicate that there may be downturn & it is the right time to sell the scrip. Similarly the Buy point 26-Nov. and 18-May and 24-July indicating that it is time to pick up the scrip and the price of share is upward. In this chart the double Top and double bottom formations are generated.SRIMCA Page 26
  27. 27. 5) BHELINTERPRETATION The Relative Strength Index (RSI) is a financial technical analysis showing price strength by comparing upward and downward close-to-close movements. In the above Chart, blue color line indicates closing price of BHEl scrip. In the above Chart the sell point of 1-May indicate that there may be downturn & it is the right time to sell the scrip. Similarly the Buy point 21-Nov. and 16-Dec. indicating that it is time to pick up the scrip and the price of share is upward. In this chart the double Top formations are generated. On 11- Oct. the resistance level is generated. On 27-May and 14-Sep. the support level is generated. In the Nov. and Dec. month is over sold region, the investor can buy the scrip In the month of May over bought region, the investor can sell the scrip.SRIMCA Page 27
  28. 28. STEP 4- CALCULATION OF ROCDate Close Price ROC -1 Method ROC -2 Method (%) (%) 3-Oct-11 1862.75 4-Oct-11 1786.7 5-Oct-11 1715.3 7-Oct-11 1751.85 10-Oct-11 1754.55 11-Oct-11 1765.1 12-Oct-11 1872.25 13-Oct-11 1886.95 14-Oct-11 1882.5 17-Oct-11 1891.8 101.5595222 1.559522212 18-Oct-11 1863.4 104.2928304 4.292830358 19-Oct-11 1919.1 111.8813036 11.88130356Formula for calculation of ROCROC= ((todays closing price - closing price at [period number of days ago]) ÷ closing priceat [period number of days ago]) x 100ROC =ROC = {(1891.8-1862.75)/1862.75} * 100 = 1.559522212SRIMCA Page 28
  29. 29. CHART OF ROC METHOD FOR ALL FIVE SELECTED COMPANY 1) ONGC 25 Double Top 20 Over Bought Raising Trend 15 Raising Trend 10 5 0 Series1 -5 -10 Double -15 Bottom -20 Over Sold -25INTERPRETATION  ROC measures the rate of change between the current price & the price ‗n‘ number of days in past. ROC helps to find out the overbought & oversold positions in scrip.  In the above chart, scrip‘s ROC reaches the historic high value in the month of Jun, the scrip is in overbought region & a fall in the value can be anticipated. In 27-sep- 2012, the investor can sell the scrip.  Similarly, scrip‘s ROC reaches the historic low value in the month of January and May, the scrip is in oversold region & a rise in the scrip‘s price can be anticipated. In January, the investor can buy the scrip.  The Double top & double bottom trend generated in January & February month.  Raising trend found from the month of August to September.  Falling trend found in 17 December 2012.SRIMCA Page 29
  30. 30. 2) SBI BANK 25 Failing Trend Over Bought Double Top 20 Raising Trend 15 Raising 10 5 0 -5 -10 Double Bottom -15 -20 Over Sold -25INTERPRETATION  Here in chart in the month of December we found falling trend.  In the month of May & September Raising trend found.  In January month Double top & in February Double Bottom trend found.  In month of September i.e. on 26 SEP 2012 overbought situation arise.  In month of December i.e. on 20 DEC 2011oversold situation arise.SRIMCA Page 30
  31. 31. 3) COAL INDIA 15 Over bought Raising Failing Trend 10 Head & Shoulder Trend 5 0 -5 -10 Over Sold -15INTERPRETATION  In December month Raising trend found & from 2 Dec 2011 trend starts to fall downward side.  Here top head & shoulder I found in month of February  Between month of May & June bottom head & shoulder is found  In all chart pattern we found all price movement is within the limit.  Only two point are in the situation off over bought & over sold situation.  At 2-Dec 2011 value is overbought area.  At 14 Dec 2012 the oversold situation arise .SRIMCA Page 31
  32. 32. 4) NTPC Head & shoulder Trend 15 Failing Trend Raising Trend Raising Trend 10 5 0 Series1 -5 -10 Head & shoulder Trend Over Sold -15 INTERPRETATION  In December month downward trend found & from 20 Dec 2011 trend starts to rise upward side.  Here bottom head & shoulder is found in the month of march  At the end of December trends starts falling i.e history is repeating  In all chart pattern we found all price movement is within the limit.  Top head & shoulder is also observed  Trend is following repeated patternSRIMCA Page 32
  33. 33. 5) BHEL 40 Head & Shoulder Trend 30 Over Bought Over Bought 20 10 0 -10 Head & shoulder Trend -20 Over Sold -30 INTERPRETATION  In month of February & March Over bought situation seen  While in the month of December oversold is there.  Bottom Head & shoulder pattern we can see in month of August.  As in month of September & October top head & shoulder pattern is seen.SRIMCA Page 33
  34. 34. SRIMCA Page 34
  35. 35. FINDINGS 1) ONGC  Resistance level is provided thus the price started declining in November.  Twice buy & sell point occurs within 1 month duration.  Support level is provided in September as result price started rising.  With respect to ROC, falling trend has been observed & because of oversold it continuous.  Overbought along with double top trend has been seen In JAN end. 2) SBI  During November share price is at minimum point thus it gives the buy signal to the investors.  Double top trend has been repeated twice, one is within limit & another is crossing the resistance level in the month of Jan & Feb.  In the month of April bottom Head & Shoulder is noticed  Raising trend has been found in the end of May & August. 3) COAL INDIA  Support level is provided in the beginning of Jan 12 as result price rises.  Bottom Head & Shoulder has been found in May 12.  Buy call is twice & 3 sell call has been observed.  Double bottom is seen in November & april.  Top Bottom Head & Shoulder has been found in February & may respectively.  Raising trend is observed in the month of December as it is overbought. 4) NTPC  Continuous fluctuation of prices has been found in scrip of NTPC.  2 Double bottom & 2 Top bottom has been found thus high variation in price & trend is followed.  Raising trend is seen in December & again price reaches its historic value in January.  Top Bottom head & shoulder are seen in March & August respectively.SRIMCA Page 35
  36. 36. 5) BHEL  Twice support level has been provided in the month of may & September.  Double top trend is observed in the month of July.  Two Bottom head & shoulder and one top head & shoulder are seen in the charts.  One symmetric triangle is found in March.SRIMCA Page 36
  37. 37. SRIMCA Page 37
  38. 38. SUGGESTIONS  The investors should be trained to use the technical analysis tools. Since it will help them in their day to day investments to get more returns.  Fundamental analysis can also be suggested to the investors together corporate, growth of earnings and profitability.  The company should orient the investors to mainly watch the business, economic, social and political factors that affect the supply and demand for securities.  The investors can also use more number of charts which will depict a true picture on the movement of the securities.  The investors should analyze market data in real time; plan your own market timing strategy to make money, regardless of upwards and downwards trending markets.  Minute – by – Minute trading volume shows the reversal points of the market, and therefore when to buy and sell can be identified.  ―The trend is your Friend‖ is the motto of technical analysis. So the investor has to monitor the trend of stocks before investment.SRIMCA Page 38
  39. 39. SRIMCA Page 39
  40. 40. CONCLUSION Buying and selling of stock is not an easy task if you want to make money doing it.Millions of investors have lost the money in past trying guessing stock price movements. Inorder to consistently make money in the stock market, investors have to be right over 70% ofthe time.In today‘s world, if you rely on fundamental analysis, broker‘s advice newspaper, articles orbusiness channels for your investing or trading decisions, you are asking for a painfulexperience in the markets. So, this study on technical analysis will help the investors inanalyzing the scripts based on the technical tools and oscillators to earn fruitful investment.Technical analysis is the art and science of chart patterns in order to better analyze andpredict prices of a given security. It is also becoming popular with the younger generation.But further research has to be conducted to know whether the technical analysis alone willguarantee profits to the investors. Knowledge of the stock markets is the key to the successand emphasis should be on managing trading risk while technical analysis can help you tocontrol them.SRIMCA Page 40
  41. 41. SRIMCA Page 41
  42. 42. BIBLIOGRAPHYBOOKS REFERRED: 1) Security Analysis and Portfolio Management by Dr. Punithavathi Pandian in the year 2008 – Publication: Vikas Publishing House Pvt Ltd.WEBSITES: - www.nseindia.com - www.bseindia.com - www.technicaltrends.com - www.stockcharts.com - www.investopedia.com - www.sharetermpapers.com - www.indiabulls.com - http://www.investopedia.com/terms/s/stockmarket.asp#ixzz2Ac12urX7 - http://www.boerse- frankfurt.de/en/basics+overview/role+of+the+stock+exchange/the+stock+exchange - http://www.investopedia.com/university/stockpicking/stockpicking9.asp#ixzz2AcBof otn - http://www.pandacash.com/technical-analysis/roc.htmSRIMCA Page 42

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