UNIVERSITY REPORT NEW

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RESEARCH ON EQUITY MUTUAL FUNDS
AND
LEARNING ADVANCED TECHNICAL
ANALYSIS PATTERNS
SUBMITTED TO
CHITKARA BUSINESS SCHOOL
In partial fulfilment of the requirements for the award of degree of
Masters of Business Administration
2015-17
Submitted by: Supervised by:
RAGHAV AGGARWAL C. A. AMAN CHUGH
1520981014 MANAGING DIRECTOR
MARKETCONNECTED

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TO WHOMSOEVER IT MAY CONCERN
This is to certify that the project titled “RESEARCH ON EQUITY
MUTUAL FUNDS AND LEARNING ADVANCED TECHNICAL
ANALYSIS PATTERNS” studied out by Mr RAGHAV AGGARWAL,
S/o ANIL KUMAR AGGARWAL has been accomplished under my
guidance and supervision as a duly registered MBA student of Chitkara
University. This project is being submitted by her in the partial fulfilment
of the requirements for the award of the Masters of Business
Administration from Chitkara University.
Her dissertation represents her original work and is worthy of
consideration for the award of degree of Masters of Business
Administration.
CA AMAN CHUGH
MANAGING DIRECTOR
MARKETCONNECTED

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DECLARATION
I RAGHAV AGGARWAL, hereby declare that the work presented
herein is genuine work done originally by me and has not been published
or submitted elsewhere. Any literature, data or work done by others and
cited in the report has been given due acknowledgement and listed in the
reference section.
RAGHAV AGGARWAL
1520981014
Date:

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ACKNOWLEDGEMENT
I would like to express my gratitude to all those who gave me the possibility to
complete this project. I want to thank the department of Chitkara Business School for
giving me the opportunity to do such an interesting and wide topic, i.e., the study of
Mutual Funds and Technical Charts.
I would like to thank my supervisor for being a support throughout my project work.
C.A. Aman Chugh has always encouraged me to stay focused towards my project no
matter what the conditions were.
The goal of new idea and development can only be obtained by hard working it is
only key to success. For one to achieve success, the best way is suggestion and
guidance provided by one’s mentor.
I would also like to thank God for giving me the patience throughout my project and
my parents who supported me and helped me in any ways. Without all, I could not
have successfully completed my project properly in time with adequate data and
relevant substance in it.
RAGHAV AGGARWAL
1520981014
MBA (FMP)

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Executive Summary
This report is all about operations at MARKETCONNECTED. The main aim of this report
is to have an adequate knowledge of mutual funds and technical charting and research.
MarketConnected is a research based firm which deals in the investment strategies.
Problem Identification: There are so many investment avenues. So that investors do not
know which avenues provides best return. As per the financial rule of “Do not put all the eggs
in one basket” investor’s portfolio are most diversified. So that risk should be minimized. If
the person do not have knowledge of how to get maximum return with minimum risk or vice-
versa then they should invest in mutual fund but it is not important that he will earn more
returns from there. There are so many funds and schemes are available in mutual fund market.
Investors know that how much risk they can take and based on that they have to choose
schemes.
So we conducted a study which would lighten the path of investor in making appropriate
investing decision. As per our mentor’s guidance we started comparing the Mutual Fund
return with its top 10 holding returns. The primary objective of the study is to know about
whether mutual funds give higher performance within 3 years or whether we will get more
return if we directly invest in top 10 holdings of the same fund for the same period.
Methodology: For the purpose of this study, 4 open ended equity based growth mutual funds
were selected as the Sample. The data, which is the NAV’s of the funds and the closing prices
of the top 10 holdings, were collected for a period of 3 years starting 01/01/2013 To
31/12/2015. Different statistical tools were used on the data obtained to calculate the Average
returns, Standard deviation, Fund Beta, etc. We calculate monthly return of mutual fund for 3
years. Then this return is compared with weighted average return of top 10 holdings during
the same period.
In the second part of our project we learn Advance Technical Analysis Patterns to identify
meaningful Entry & Exit levels. This helps us to trade in stocks and predict its future price
movements. We conduced detail study of these patterns and analysed them on actual markets.
We identify the parameters for the pattern identification and then we examine the rules fi=or
trading the Technical Patterns.

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Conclusion: Usually the top 10 holdings of mutual fund give major returns because they
weight about 40-50% of corpus of the fund. Top 10 holdings generally don’t vary much
within a year for large cap funds but they may vary for mid cap and small cap funds. By
choosing to invest directly in mutual fund top 10 holdings, investor has to update his portfolio
on monthly basis. Other than 3-5% savings on AM fees and brokerage charges, investor earns
about 11-12% extra return by investing directly into top holdings in case of large cap funds
and for small and midcap it may go up to 40-50%.

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Table of Content
SL. NO. PARTICULARS PAGE NO.
I. Introduction to the company
 Business carried on by the company
 About founders
 Trend following turtle concept
 Significance of brand “MarketConnected”
 Organisation structure
 SWOT analysis of the company
8
13
16
21
22
II. Introduction to the project 23
III. Need of study 31
IV. Objectives of the study 32
V. Review of Literature 33
VI. Research methodology adopted 34
VII. Details of actual work undertaken 37
VIII. Interpretation and analysis 60
IX. Conclusion and suggestion 64
X. References 66

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INTRODUCTION
TO THE
COMPANY

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MARKETCONNECTED
Marketconnected Advisors LLP has been founded by CA Aman Chugh & CA Sheetu
Maheshwari.
BUSINESS CARRIED ON BY THE COMPANY
 To provide Foreign Exchange and Interest Rate Risk Management advisory to Corporate and
HNI clients including setting up of their Risk Management Policy & guiding them by
generating daily newsletter in such domain titled as “ Turtle Trend Broadcast: FX”
 To enable Corporate/HNIs/NRIs to make informed decisions while managing
Portfolios/Investing/Trading in markets (Equity / Foreign Exchange / Commodities) through
educating/training them (Through our Trainings & Workshops services) on our proprietary
Technical Analysis system titled as “CANDO” and “Turtle Trend Recognition System
(TTRS)”and managing Risk through “Turtle Advanced Risk Management System
(TARMS)”. We also handhold them further in their learning with us (Through our Technical
Advisory Services) & guide them by generating daily newsletter in such domain titled
as “Turtle Trend Broadcast: Macro” & “Turtle Trend Broadcast: Equity”.

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SERVICES OFFERED
 Risk Management Policy Advisory
a) Evaluation of Existing Risk Management framework and identifying weaknesses of the
system and helping to overcome them and providing report to Senior Management
b) Identification & Measurement of FX and Interest Rate Risk & Defining Maximum value at
Risk
c) Designing Hedge strategy within permitted instruments which is adaptable to any market
conditions
d) Developing Customized MIS for recording, monitoring transactions and management
reporting.
e) Risk management Audit & Compliance
 Remittances Advisory
a) We help the Corporate/SMEs in timing of their conversion of receivables and payables
b) We help the Corporate/SMEs to negotiate better rates with banks ensuring competitive and
lower spreads.
 Hedging Advisory
On Current Account Transactions
a) To decide on the amount of Hedge based on objective 10 Factor Model
(Uniquely designed by MarketConnected) rather than subjective method.
b) To design their portfolio of Hedges by taking judicious blend of Forwards, Options,
Strategies.
c) To time the forward cover rather than entering arbitrarily.
d) To formulate Options strategies which are better than pure forward.
e) To price/value forwards and option strategies and help in negotiating with the bank.
f) To get deal execution done at bare minimum margin/charges on exchanges.

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 On Capital Account Transactions
(A) On Working Capital Loan- Currency Exposure in Buyers Credit, FCNR we help
Corporates / SMEs in:
a) Reducing the cost of hedge by entering into option strategy as against forward on Currency
exposure.
b) Pricing the deal with our pricing models to negotiate well with the banks
c) Arranging for alternate banks to quote if required.
(B) On Term Funding- INR- Cost Reduction in Loan (Working of Swap explained in
Annexure-1 below) we help Corporates / SMEs in:
a) Such Notional Derivative contract can be executed with any bank who is willing to
sanction the Derivative Limits (Bank or Exchange)
b) The timing of the hedge is made in a manner when we expect the INR to appreciate so that
the position can be considered to be squared in profits. As an example if INR appreciates by
1% which is 61.40 levels, and then Client earns Rs1 as profit.
c) Risks: In case the INR depreciates beyond the forward implied rate than client can have
loss on the deal. However in case C is an exporter, this structure acts as a natural hedge
(C) On Term Funding- Foreign Currency example Buyers Credit, ECB-Cost Reduction
in Loan we help corporate/SME’s in:
a) Pricing the deal with unique pricing models to negotiate well with the banks.
b) Designing option strategies to hedge exposure and reduce cost.
c) Getting the deal executed with alternate banks if required.
 Trading Advisory
Trading within Hedge Book
on Trading within Hedge we help Corporates / SMEs to:
a) Actively trade within the hedge book to earn that extra income while protecting the
budgeted rate.
b) Avoid any speculative and excess risk taking trades.
c) Execute the deal at bare minimum margin/charges on exchange.

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Pure Trading Book
on Pure Trading we help Corporates / SMEs in:
a) Active trading in cross currencies based on technical and fundamentals. For this we give
complementary views on the same for corporate to develop trust and faith on our views.
b) To execute the deals at bare minimum margin/charges on exchange.
 Arbitrage Advisory.
We help in designing and execution of Arbitrage profit generating trades.
 Other Services
a) In Setting up and running Treasury as Profit Centre.
b) Undertaking MTM Valuation of Derivatives.
c) Training on Derivatives.
d) Publication on Derivatives: Turtle Trend Broadcast: FX.
 Trend Following Turtle’s Training Services
1. Our Clients & Associations speak on such service four.
2. Foundation-Financial Derivatives & Risk Management.
3. Advanced-Financial Derivatives: The Currency & Rates Factor.
4. Advanced-Financial Derivatives: Turtle Trend Risk Management.
5. Foundation-Financial Derivatives & Technical Analysis.
6. Advanced-CANDO Technical Analysis & Turtle Trend Recognition System.
7. Advanced: Turtle Trend Advanced Risk Management on Technical Analysis.

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ABOUT THE FOUNDERS
CA Aman Chugh
CA Aman Chugh, whose name is a keyword on Google with over 1.2 million searches &
with over 10,000 Fan following over Social Media, stands as a reputed name in the World of
Financial Markets. Being one of the youngest Chartered Accountants of India & having
gained huge experience and expertise in complex fields including Investment Banking,
Corporate Banking, Derivatives (Including Equity & Currency) & Risk Management, he is
currently the most sought consultant in the Corporate & Financial World on such domains.
He has gained his experiences while having worked at Senior & Middle level Management
positions with reputed Brands including Price Water House, Ernst Young (Dubai), General
Electric (USA) and ICICI Bank. Having been exposed to International Financial Markets and
to almost all Financial Instruments for over a decade, he also holds varied positions such as
including Chairman, Chairperson, Advisor, Consultant and Trainer to various Fortune 500
Companies, Large Corporates, SMEs, & Bodies and Associations including Confederation of
Indian Industries, RBI & Other Government Organizations.
He has to his name the credit of being the First Author in the World to have written a Book
on Financial Derivatives which covers Currency and Interest Rates strategies & which has
been published by PEARSON and has reviews from reputed Senior Management people from
Ministry of Finance, RBI & Large Corporates including Reliance Industries, Indian Oil,
Larsen Toubro, TCS, Wipro and others. He also delivers sessions at reputed B-Schools and
Institutions such as ICAI, ICSI, IIT-Delhi, MDI, IIFT and SRCC.

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Below is a short description of his achievements and associations:
 Training Board Member of ICICI Group on Derivatives
 Chairman to the All India Committee on MSME Total Cost and Finance
Management of CII(Confederation of Indian Industries)
 Chairperson/Trainer/Advisor/Speaker of CII on important forums on Financial
markets, Derivatives & Innovative financing.
 Trainer and Advisor with Capital Markets Group of ICAI (The Institute of
Chartered Accountants of India).
 Member of Content Developing Committee wherein has contributed on certain
modules used in various MDPs & Other Programs run by ICAI for Senior Chartered
Accountants at decision making positions with reputed Corporates & in Private
practice.
 Author of first practical book titled as "Financial Derivatives – The Currency
and Rates Factor" published by Pearson. The book has been reviewed and praised
by various eminent personalities which include Joint Secretary-Ministry of
Finance, General Manager-RBI, & Treasury Heads of reputed Corporates such
as Reliance Industries, L&T, Wipro, TCS, Indian Oil, Dr Reddy’s Lab and many
more. It is a recommended book in IIT Delhi, SRCC-Delhi University, MDI, IIFT,
ICAI, ICSI, and NIFM-Ministry of Finance.
 Has gained a judicious blend of experience in auditing, corporate banking, investment
banking, trade services, Foreign exchange and Interest Rate Derivatives while
working with eminent Brands like PriceWaterHouse, Ernst Young (Dubai),
General Electric (US and India) and ICICI Bank.
 Conducts and provides consultancy / corporate trainings / seminars / Guest lectures in
varied Fortune 500 Corporates, Ministries of Govt and other Govt Bodies & premier
organizations/associations.
 Has been a part of Guest / Visiting faculty to reputed Institutes and Universities
which include ICAI, ICSI, IIT Delhi, IIFT, MDI, IMT, SRCC and others.
 His name has become a keyword on Google with over 1.2 million searches and
has over 8000 fan following on Facebook. His views have often been covered by
leading newspapers and magazines, including Hindustan Times, Indian Express,
Business Standard, The Financial World, and others.

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CA SheetuMaheshwari
Sheetu is a Chartered Accountant by qualification and has an extensive experience
in Technical Analysis of financial markets and Turtle Trading Risk Management System.
Below is the short description of her achievements and associations:
 She has developed her own proprietary models to identify trend, momentum and
volatility. This enhances the probability of forecasts and these models are used by
Marketconnected to provide output to its client.
 She has developed robust risk management and trading system which is the
backbone of trading in financial markets.
 In the past she has worked with KPMG, Infosys and Aditya Birla Group in
Corporate Finance & Taxation giving her strong background in understanding
financial health of companies.
 She trains and mentors people to advance their skills in Technical Analysis allowing
them to have consistent return from the financial markets.
 She conducts and provides consultancy/corporate/trainings/seminars/Guest lecturers
in varied organizations.

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TREND FOLLOWING TURTLE CONCEPT
INTRODUCTION
Investors / Traders have preference for either going long or Short i.e. Bulls / Bears. Bulls
suffer when market goes down and Bears suffer when market goes up. However, we follow
the trend and ride the trend in Turtle style. All our services integrate “The Trend Following
Turtle” style.
 As you would know 99 % of people lose money in Financial Markets, & only 1% make
money. The ones who make money normally follow models which are based on VAR (Value
at Risk). Normally such similar models are developed & followed by the following players:
o Large Hedge Funds
o Investment Banks
 Corporates/Retail Players/HNIs/NRIs/Brokers/Sub Brokers segment of the market do not
have access/time/expertise/experience in implementing such advanced models based on VAR
(Value at Risk)
BACKGROUND
The original Turtle model was applied primarily in US markets on Commodities and
Currencies in 1980’s. Some of the Famous Trend Followers have been:
 Jesse Livermore: “Great Bear of Wall Street “- An American stock trader. He was famed for
making and losing several multi-million dollar fortunes and short selling during the stock
market crashes of in 1907 & 1929.
 George Soros: “The Man broke the Bank of England”- He brought Bank of England to its
knees when he demolished the monetary system of Great Britain with an elegantly
constructed bet against its currency.
 Richard Donchian: “Creator of the managed futures industry: MarketConnected has modified
the model for its application in India designed/innovated/back tested/implemented
substantially advanced techniques to identify trends.

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UNIQUE CONTRIBUTION BY MARKETCONNECTED
The original Turtle model was applied primarily in US markets on Commodities and
Currencies in 1980’s. MarketConnected has modified the model for its application in India
and has designed/innovated/backtested/implemented substantially advanced techniques to
identify trends. We have named this model as “Trend Following Turtle” Model.
UNIQUE FEATURES OF MARKET “THE TREND FOLLOWING TURTLE”
STYLE
The Key Features of Trend Following Turtle Style are:
 Diversification-
Trend Following Turtle Style has been blended with multiple underlings, which gives a
perfect diversification in any mood of markets.
 Pyramiding –
Trend Following Turtle Style helps in accumulating at different levels (i.e. Averaging when
price goes in direction of trend) by doing 4 hits in one underlying.
 Maximum Drawdown risk –
Trend Following Turtle Style has a very robust risk management system which defines the
Value at Risk (VAR). VAR refers to a risk assessment measure that is used to establish the
relationship between a possible declines in the market value of a portfolio over a specific
period of time.
(a) Portfolio Level VAR-
 Max Draw Down Risk ->30%
 Normal VAR -> i.e. Overnight VAR
I.e. one day VAR -> 5%

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(b) Individual underlying Level VAR-
Based on the volatility prevailing of each underlying and the co-relation between each
underlying the model determines individual underlying level.
KNOW MORE
 Our Model neither uses fundamental nor complex technical to trade. That’s why the model is
named as Trend Following Turtle.
 Our Model does not try to forecast / predict market.
 Our Model lets the trend determine direction of market and the trade.
 Our Model is never eager to book profits and lets the profitable positions run and loss making
positions exit.
 Our Model decides Entry and Exit based on the volatility of the markets.
 Our Model restricts the Position Size to prevent over leverage in the market.
 Our Model believes in unique diversification& helps the model to have participation in all
segments decided.
 Our Model does not keep profit targets and exits the position through trailing stop
loss method.
 Our Model divides the trades into 4 parts and each trade is done sequentially as the trend
becomes stronger.
 Our Model has an inbuilt capacity to allocate more funds to trending underlying and less or
nothing to non-trending underlying. In case a particular underlying becomes non-trending,
the model has inbuilt method to exit that position and allocate funds to the trending
underlying.
IMP NOTE: In case all the underlying / asset classes do not have any trending move and
are only in consolidation phase, then such model would not be able to generate the desired
returns.

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SIGNIFICANCE OF BRAND “MARKETCONNECTED”
1. Markets are connected in today’s globalised world, the independence and correction
between various markets have increased significantly. Thus, decision making on one
underlying/asset class cannot be done in isolation and models to identify market
trends have to be robust. Market connected through its experience of more than a
decade has developed its unique models which help our clients to stay ahead in the
competitive world.
2. Connect with the markets irrespective of one’s stream of profession, in today’s world
one cannot afford to be ignorant of financial markets. However considering the
amount of random and unstructured information available in the market, people tend
to ignore market on account of its complexities. Marketconnected educates and trains
people to interpret the market in a simple manner with goal of making people more
informed and educated for financially successful life.
SIGNIFICANCE OF TAG LINE “TREND FOLLOWING TURTLE”
We describe the significance of our tag line “Trend Following Turtle” style with the unique
features of turtle:
 FIT TO SURVIVE
Turtles have been for more than 200 million years and are able to survive through stable
periods and times of extreme environmental changes.
Similarly, the “Trend Following Turtle” style of decision making can survive the stable as
well as crisis phase of financial markets.
 SHOCK SIGHTEDNESS
Turtles are able to predict the upcoming risks/shocks/surprises which may harm them and
they react their necks into their protective shells.
Similarly, the “Trend Following Turtle” style through its quick Turtle Trend Recognition
System (TTRS) and knowledge of advanced instruments, like Exotic Options & Advanced
Option Strategies, is able to devise defensive strategies in the times of crisis.
 TOUGH LOOKS, SOFT FEEL
The prospective skeletal structure of a turtle is armoured enclosure to protect the soft vital
internal organs.

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Similarly, “Trend Following Turtle“ style not only protects from the adverse impact of
financial markets through the use of defensive strategies but also assist to generate stable and
consistent returns during such adverse markets.
 MAKE IT LARGE
The large body cavity enables the turtles to produce and hold a large volume of eggs.
In a similar manner, “Trend Following Turtle” style is also able to hold large amount of
information and decipher the same through the Turtle Trend Recognition System (TTRS).
 VOLATILITY- WE SMILE
Turtles can remain under water for a long period of time through for their efficient oxygen
retention system.
Similarly, “Trend Following Turtle” style helps to survive through volatile times through its
Turtle Advance Risk Management System (TARMS).

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ORGANIZATION STRUCTURE
Marketconnected has a simple organizational structure. In simple organizational structure, top
manager controls the work of employees. This is most widely practiced in smaller businesses,
in which the coordination of work can be effectively structured around a different set of
activities.
Top
Manager
CA Aman Chugh
Employee 1
Pankaj Chabra
Employee 2
Abhishek Sharma

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SWOT ANALYSIS
STRENGTH
 Efficient and Skill Manpower
 Specific Knowledge and
Capabilities
 Hedging against Global Risk
 Customer Orientation
 Different services offered
 Investment Advice
 Transparent Functioning
WEAKNESS
 Lack of awareness due to low
publicity
 Lack of investor Knowledge
 Stiff Competition
 Less penetration in rural areas
OPPORTUNITY
 Tapping the growing rural market
 Earning urban+ youth looking for
investment option
 Awareness
 Education level
 Increasing market in investment
field
THREAT
 Technology based business
 Dynamic Environment
 Price war
 New competitors
 Macroeconomic factors

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INTRODUCTION
TO THE
PROJECT

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MUTUAL FUNDS
Definition
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.
Meaning
A mutual fund is a trust/company that pools money from several investors who share a
common financial goal. The money thus collected is then invested in stocks, bonds, short–
term money-market instruments, other securities or assets, or some combinations of these
investments. For the money invested by investors, investors will receive units in mutual
funds. Investors can sell their units when they want. The income earned through these
investments and the capital appreciation realized is shared by its unit holders in proportion to
the number of units owned by them.

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Diagrammatic representation of Mutual Funds
Frequently Used Terms
 Asset Allocation
Asset allocation is the implementation of an investment strategy that attempts to
balance risk versus reward by adjusting the percentage of each asset in an
investment portfolio according to the investor's risk tolerance, goals and investment
time frame.
 Asset Management Company (AMC)
A firm that invests the pooled funds of investors in securities, in line with the stated
investment objectives. For a fee, the investment company provides diversification,
liquidity, and professional management service.
 Assets Under Management
Assets under Management is commonly referred to as AUM, is the total money
managed by the Mutual Fund.
 Entry load
Entry load is the amount or fee charged from an investor while entering a scheme or
joining the company as an investor.

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 Exit Load
A fee charged by some funds when units are sold. The amount sometimes depends on
how long the investment was held, so the longer the time period, the smaller the
charge.
 Front-end load
A one - time charge that investors pay at the time when they buy fund units.
 Fund of Funds (FOF)
A fund that invests in other mutual funds, unlike a normal fund which invests in
equity and fixed income securities.
 Load fund
A mutual fund that charges a sales fee. There are 2 types of loads: front-end (charged
at the time of purchase) and back- end (charged at the time of redemption).
 Lock-in period
A period of time during which the investor is restricted from selling a particular
investment.
 Market risk
The potential loss that is possible as a result of short-term volatility of the stock
market. Owning mutual funds may shield an investor from some market risk that a
stockholder may be vulnerable to, if their portfolio is not well diversified.
 Net Asset Value
The NAV is the market value of mutual fund shares. It is calculated each business day
based on the value of the assets of the fund minus its liabilities, divided by the number
of shares outstanding.
 No-load fund
A general term applied to mutual funds that sell shares at net asset value, either
directly to the public or through an affiliated distributor, without the addition of a
sales charge.
 Open-end fund
A mutual fund that does not have a fixed number of shares (as does a closed-end
fund.) The mutual fund will offer as many shares as investors are willing to buy. Most
mutual funds are open-ended unless otherwise noted.

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 Public Offering Price (POP)
The price at which mutual fund shares are offered for sale to the public. Also known
as offering price. The public offering price represents the net asset value plus any
applicable initial sales charges. The price at which mutual fund shares are offered for
sale to the public. Also known as offering price. The public offering price represents
the net asset value plus any applicable initial sales charges.
 Redemption load
A fee charged by some funds for redeeming or buying back fund shares. These
charges often decline or are eliminated after a certain number of years.
 Redemption price
The price at which a mutual fund’s units are redeemed or bought back by a fund. The
redemption price is usually equal to the current net asset value per unit minus the exit
load if any.
 Sales charge
A charge added on to the price of a mutual fund when investor buy it.
 Systematic Investment Plan (SIP)
A Systematic Investment Plan allows an investor to automatically buy shares or units
according to a schedule that the investor creates. It allows the investor to use the rupee
cost averaging investment strategy.
 Systematic Withdrawal Plan (SWP)
A Systematic Withdrawal Plan permits the investor to receive regular payments of a
fixed amount from his investment in a mutual fund scheme on a periodic basis.
Retirees in need of a regular income often opt for this.
Examples of Mutual Funds
 SBI Small & Midcap Fund – Growth
 Franklin India Low duration Fund
 IDFC Infrastructure Fund
 Reliance Diversified Power Sector Fund
 UTI Banking Sector Fund

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Why
Mutual
Funds?
Professional
Management
Diversification
Affordability
&
Investment
size
Tax Benefits
Liquidity
Transparency
Regulated
Others
Advantages of Investing in Mutual Funds
Since creation, Mutual funds have been a popular investment vehicle for investors. Their
simplicity along with other attributes provide great benefit to investors with limited
knowledge, time or money. To help investor decide whether Mutual funds are suitable for
investor and his situation, let’s look at some reasons why one might want to consider
investing in them.
 Professional-Management
When one invest in a mutual fund, his money is managed by finance professionals.
Investors who don’t have time or skill to manage their own portfolio can invest in mutual
funds. By investing in mutual funds, one can gain the services of professional fund
managers, which would otherwise be costly for an individual investor.
 Diversification
Mutual funds provide the benefits of diversification across different sectors and
companies. Different investors having varied interests and size of investments pool in
their money under different schemes of mutual funds. Because of large pool size of
money, mutual funds widen investments across various industries and asset classes.
Thus, by investing in a mutual fund, one can gain from the benefits of diversification and
asset allocation, even if investor’s individual portfolio/investment size is small.
 Affordability & Investment size
If investor have been postponing to start his investing program because of certain
challenges like lack of knowledge, expertise, time, information etc, (and investor can't

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afford his own personal investment consultant!), mutual funds will get anyone on way at
a bare minimum cost.
Also, investing in a mutual fund usually doesn’t require a large sum of money. Although
most fund organizations have minimum amounts needed to open an account, yet such
minimum benchmark of investments is quite small. Even an investor with small
investment size can get started on mutual funds because of the small size of minimal
investment requirements investor can invest with a minimum of Rs.500 in a Systematic
Investment Plan (SIP) on a regular basis.
 Tax benefits
 Section 80C: Amount invested in tax-saving funds (ELSS) would be eligible for
deduction under Section 80C, however the aggregate amount deductible under the
said section cannot exceed Rs 150,000.
 Tax on Dividends: Dividends declared by debt-oriented mutual funds (i.e. mutual
funds with less than 50% of assets in equities), are tax-free in the hands of the
investor. Similarly, Dividends declared by equity-oriented funds (i.e. mutual funds
with more than 50% of assets in equities) are tax-free in the hands of investor.
 A dividend distribution tax of 12.5% (including surcharge) is to be paid by the
mutual fund on the dividends declared by the fund.
 Liquidity
Mutual funds are usually very liquid investments. Unless they have a pre-specified lock-
in period, investor’s money is available to him anytime. However, in case of an early
withdrawal, one may be subject to exit load. Normally funds take a couple of days in
returning investor’s money. Since they are well integrated with the banking system, most
funds can transfer the money directly to one’s bank account.
 Transparency
Mutual funds provide investors with updated information pertaining to the markets and
schemes through factsheets, offer documents, annual reports etc.
 Well-regulated
Mutual funds in India are regulated and monitored by the Securities and Exchange Board
of India (SEBI), which endeavours to protect the interests of investors. All funds are
registered with SEBI and complete transparency is enforced. Mutual funds are required
to provide investors with standard information about their investments, in addition to
other disclosures like specific investments made by the scheme and the quantity of
investment in each asset class.

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Disadvantages of Investing in Mutual Funds
 Costs despite Negative Returns
Investors must pay sales charges, annual fees, and other expenses despite of how the
fund performs.
 Lack of Control
Investors typically cannot ascertain the exact make-up of a fund’s portfolio at any
given time, nor can they directly influence which securities the fund manager buys
and sells or the timing of those trades.
 Price Uncertainty
With an individual stock, one can obtain real-time (or close to real-time) pricing
information with relative ease by checking financial websites or by calling his broker.
Investor can also monitor how a stock’s price changes from hour to hour—or even
second to second. However, with a mutual fund, the price at which investor purchase
or redeem shares will typically depend on the fund’s NAV, which the fund might not
calculate until many hours after investor have placed his order. In general, mutual
funds normally calculate their NAV at least once every business day.
Disadvantages
Of Mutual
Funds
Costs
Despite
Negative
Returns
Lack of
Control
Price
Uncertainity

- 31 -
NEED OF STUDY
Mutual funds have gained popularity among the investing public especially in the last two
decades. The Mutual Funds in India are handled by Fund Managers, also called Portfolio
managers. The Securities Exchange Board of India (SEBI) regulates the Mutual Funds in
India.
Purpose of doing this project was to know about mutual funds, its functioning and also about
the miss-selling of mutual fund products in the markets. Detailed analysis of mutual fund
industry help us in gaining in depth knowledge about mutual funds right from its inception
stage, growth and future prospects.
There are various questions before us which arises the need for this study. Some of the vital
issues are:
1. How one should approach towards the mutual fund investments?
2. Where are the good opportunities in Mutual fund investments?
3. How to identify the miss-selling done by various Asset management companies?
4. How one can overrule the mutual funds and earn better by investing in its holdings?

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OBJECTIVE OF STUDY
 The objective of the research is to study and analyse the awareness level of investors
of mutual funds.
 Evaluating and comparatively analysing the Equity based Mutual Funds on various
parameters which includes Returns, Standard deviation, Sharpe ratio and Treynor’s
ratio.
 To analyse the stock selection ability of the Mutual Fund Managers.
 Comparing returns of mutual funds with its top holdings return.
 To study Advance technical analysis patterns and there implications on live markets.
 Designing Derivative Strategies on Equity Underlying based on Market Positioning,
Trends, Volatilities and Macro Factors.

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REVIEW OF LITERATURE
William F. Sharpe –
An American economist who won the 1990 Nobel Prize in Economics, along with Harry
Markowitz and Merton Miller, for developing models to assist with investment decision
making. Sharpe's capital asset pricing model (CAPM) calculates expected returns based on
varied levels of risk and states that taking on more risk is necessary to earn a higher return.
Corporations, institutions and pension fund managers have all used CAPM theory to manage
risk.
Sharpe was born in Boston in 1934. He earned his PhD from the University of California at
Los Angeles and has taught at the University of Washington, the University of California at
Irvine and Stanford University. He has been a consultant to numerous major corporations and
founded the consulting firm William F. Sharpe Associates. Sharpe also developed the Sharpe
ratio, another tool for analysing investment performance.
Jack Treynor -
Developed by Jack Treynor, the Treynor ratio (also known as the "reward-to-volatility
ratio") attempts to measure how well an investment has compensated its investors given its
level of risk. The Treynor ratio relies on beta, which measures an investment's sensitivity to
market movements, to gauge risk. The premise underlying the Treynor ratio is that systematic
risk--the kind of risk that is inherent to the entire market (represented by beta)--should be
penalized because it cannot be diversified away.
Jack Lawrence Treynor (February 21, 1930 – May 11, 2016) was an American economist
who served as the President of Treynor Capital Management in Palos Verdes Estatates,
California. He was a Senior Editor and Advisory Board member of the Journal of Investment
Management, and was a Senior Fellow of the Institute for Quantitative Research in Finance.
He served for many years as the editor of the CFA Institute's Financial Analysts Journal.

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RESEARCH METHODOLOGY ADOPTED
Research Methodology has many dimensions, it include not only research methods but
also considers the logic behind the methods used in the context of the study and explains
why only a particular method of technique has been used so that research leads to proper
evaluations. Thus in a way it is a written game plan for concluding research therefore in
order to solve research problem it is necessary to design a research methodology for the
problem as the same differ from problem to problem.
Research Design:
The research design is a pattern or an outline of a research project. It is a statement only the
essential of a study that provides the basic guidelines for the details of the project.
The present study being conducted follows a Descriptive Research and the Exploratory
Research. It is a cross section of the situation design of the descriptive studies including the
nature and the analytical method.
Data Collection:
After the research problem has been defined and the research design has been chalked out, the
task of date collection begins. The data collection technique would be Secondary Data
Collection. Secondary data would be collected from the internet and different websites and
newspaper articles. And other research paper would be taken into consideration to find out
the better result from the research paper.
Research Tools and Techniques:
Tools and techniques are used for the stock selection and to manage the risk and return on the
portfolio. Major things to be considered are the sector preference for the selection of the
stock because diversification should be into different sectors so as to maximize the return
and taking advantage of whole economy related environment and news. Stock selection
will be based on the Fundamental analysis and Beta for the stock selection.
Details of tools and techniques:
Standard Deviation: Standard Deviation is absolute measure of volatility. It suggests the
deviation of returns from its mean.
Beta: It is the measure of the volatility of a security or a portfolio as compared to the market
as a whole. Beta signifies the risk or volatility relative to the Benchmark Indices. By
definition, benchmark index holds Beta of 1. For example – If a fund's Beta is 1.2, it simply
means that the fund is 1.2 times more volatile than the benchmark index.

- 36 -
Sharpe Ratio: The Sharpe ratio, also known as Reward to Risk Ratio, measures the risk-
adjusted performance. It indicates the excess return per unit of risk associated with the excess
return. To calculate Sharpe ratio, risk free rate is subtracted from portfolio returns and
dividing the result by the standard deviation of the portfolio returns. The higher the Sharpe
Ratio, the better the performance. A negative Sharpe indicates that a rational investor would
choose risk-less asset over the risky investment under analysis.
Treynor’s Ratio: The Treynor’s ratio, also known as the Reward to Volatility ratio,
measures returns earned in excess of that which could have been earned on a risk-less
investment per each unit of market risk. To calculate Treynor’s ratio, risk free rate is
subtracted from portfolio returns and dividing the result by the Beta of the portfolio returns.
Treynor’s ratio is a risk-adjusted measure of return based on systematic risk. It is similar to
the Sharpe ratio, but the Treynor’s ratio uses beta as the measurement of volatility whereas
Sharpe ratio uses Standard Deviation. The higher Treynor’s Ratio score means better the
fund.
Alpha: The excess return of the fund relative to the return of the benchmark index is a fund's
alpha. Alpha is the actual return in excess to what was predicted using the CAPM model.
Alpha is often considered to represent the value that a portfolio manager adds to or subtracts
from a fund's return. The higher Alpha score means better the fund.
Diversification – A risk management technique that mixes a wide variety of investments
within a portfolio. The rationale behind this technique contends that a portfolio of different
kinds of investments will, on average, yield higher returns and pose a lower risk than any
individual investment found within the portfolio. Diversification strives to smooth out
unsystematic risk events in a portfolio so that the positive performance of some investments
will neutralize the negative performance of others. Therefore, the benefits of diversification
will hold only if the securities in the portfolio are not perfectly correlated (ideally perfectly
negatively correlated).
Risk Adjusted Returns – We should know that how much risk is involved in producing an
investment's return. The return generated in excess of risk is known as Risk Adjusted Return
and is generally expressed as a number or rating. Risk-adjusted returns are applied to
individual securities and investment funds and portfolios. There are five principal risk
measures: Alpha, Beta, R-squared, Standard Deviation and the Sharpe ratio. Each risk
measure is unique in how it measures risk

- 37 -
DETAILS OF
ACTUAL WORK
UNDERTAKEN

- 39 -
MUTUAL FUNDS
Mutual Fund: A Portfolio Perspective
 A Portfolio Approach
The major characteristic of any portfolio is the diversification benefit provided by the
portfolio. A portfolio can be considered a risk reducing or a risk mitigating strategy
whereby an investor tries to maximize the returns or minimize the risk by investing in
diversified financial instruments. A mutual fund also has the similar characteristics.
Instead of investing in a single security, it helps in diversifying by investing in different
securities including stocks, bonds, etc, depending upon the structure and investment
objective of the fund.
Let’s assume an investor who doesn’t have the expertise to invest in financial markets
but wants to take exposure in the large cap equities can do so by purchasing the units in a
large cap fund such as Birla sun Life top 100. Similarly, for an investor who is seeking
an exposure in both equity and bonds can invest in a balanced fund like ICICI pru
balanced fund. So, investor has the liberty to choose from variety of funds depending on
his views, risk taking ability and investment objective.
 Myths about investing in Mutual funds and SIP
It is a common misconception that mutual funds always generate positive returns. Mutual
funds don’t guarantee return on one’s investments. A fund manager follows and invests
according to the stated objective of the fund. However, he is not liable for any losses
incurred by the fund. Although funds do earn positive returns for the investors, but a part
of the returns get eroded due to various kind of fees paid by the investor to the Mutual
funds.
 Long term returns on mutual funds are always positive and better than other
investment alternatives.
Assume an investor, who had invested in a Mutual fund in 2007 with an objective to
remain invested for 5 years and earn at least his opportunity cost. However, Global
markets went into recession in 2008 and bounced back to their 2007 levels in 2012.
The investor might have earned some positive returns. However, these returns were
not sufficient to cover the opportunity cost of the investor.
 If investor would have invested in a 5 year government security, investor’s
return would be much higher compared to mutual funds.

- 40 -
 If investor would have invested in gold or Property, his returns would be
much higher
 Investments in SIP are safe and investor will get positive returns because of Cost
Averaging.
 Scenario A: When investor started investing in a SIP, NAV of mutual fund
was 10 and when investor exited form SIP, NAV was 15. During 12 months
NAV reached its peak of 20. For 12 months investor’s average NAV cost
was 18. This implies that market peaked during these 12 months and investor
purchased at a higher rate (average is higher than the net value). So, investor
has incurred a loss. As investor has invested more during upward phase thus
investor’s average cost is higher than today’s NAV.
 Scenario B: when investor started investing, NAV of mutual fund was 10 and
when investor exited NAV of his fund was 13. During 12 months NAV took
a nosedive at 7 for few months and averaged around 11. This implies that
investor have purchased at a lower rate because of which his average NAV is
low at 11. However, at the exit of SIP, NAV is 13. Therefore, investment is
profitable.
Meaning and Calculation of NAV
The net asset value of a fund is the market value of the assets minus the liabilities on the day
of valuation. In other words, it is the amount which the shareholders will collectively get if
the fund is dissolved or liquidated. The NAV of a unit is the net asset value of fund divided
by the number of outstanding units.
𝑁𝐴𝑉 =
𝐶𝑂𝑅𝑃𝑈𝑆
𝑁𝑈𝑀𝐵𝐸𝑅 𝑂𝐹 𝑈𝑁𝐼𝑇𝑆
CORPUS = MARKET VALUE OF ALL INVESTMENTS + ACCRUED INCOME +
PREPAID EXPENSES + OTHER RECIEVABLES (Short Term) – OUTSTANDING
EXPENSES – PRE RECIEVED INCOME – OTHER PAYABLES (Short Term)

- 41 -
FORMULAES USED IN STUDY
 Holding Period Return
The total return received from holding an asset or portfolio of assets over a period of
time, generally expressed as a percentage. Thus, HPR is the change in value of an
investment, asset or portfolio over a particular period.
𝑯𝑷𝑹 =
( 𝑭𝒊𝒏𝒂𝒍 𝑽𝒂𝒍𝒖𝒆 − 𝑰𝒏𝒊𝒕𝒊𝒂𝒍 𝑽𝒂𝒍𝒖𝒆)
𝑰𝒏𝒊𝒕𝒊𝒂𝒍 𝑽𝒂𝒍𝒖𝒆
∗ 𝟏𝟎𝟎
 Annualized Holding Period Return
To annualize a holding period return means to find the equivalent rate of return per year.
 Standard Deviation: Standard Deviation is absolute measure of volatility. It suggests
the deviation of returns from its mean.
 Beta: It is the measure of the volatility of a security or a portfolio as compared to the
market as a whole. Beta signifies the risk or volatility relative to the Benchmark Indices.
 Sharpe Ratio: The Sharpe ratio, also known as Reward to Risk Ratio, measures the risk-
adjusted performance. It indicates the excess return per unit of risk associated with the
excess return.

- 42 -
 Treynor’s Ratio: The Treynor’s ratio, also known as the Reward to Volatility ratio,
measures returns earned in excess of that which could have been earned on a risk-less
investment per each unit of market risk.
 Alpha: The excess return of the fund relative to the return of the benchmark index is a
fund's alpha. Alpha is the actual return in excess to what was predicted using the CAPM
model.

- 43 -
The objective of the study is to compare Mutual Fund Return with its Top 10 Holding’s
Return. Calculation of return is done in the following manner.
Step1. Firstly we calculate the mutual fund return for the period of three years. By comparing
the NAV given on the official website of AMC, monthly return is calculated in three year
period starting from Jan 2013 to Dec 2015. Snip showing the detail calculation done on the
spread sheet is given as follows:

- 44 -
Cumulative total of monthly return comes around 42.01% and annualised return is 12.40%.
Step2. In this step we start calculating the returns of Top 10 holdings. Firstly we segregate
those top holdings of mutual funds which comprise at least 50% of the mutual fund’s total
holdings. This exercise is done on monthly basis, since mutual fund companies can change
their holding patterns.
First column shows the name of the holding and second column shows the weight of it in
particular month. We calculate the monthly weights of the mutual fund holdings for the
period starting from Jan 2013 to Dec 2015. Then this 50% holding is squared up as 100% to
make comparison of investing in these top holdings of fund with investing in Mutual fund
itself.

- 45 -
Step3. Final calculation is done for calculating the weighted return of the selected top
holdings as per step two. It is also calculated for the period of three years starting from Jan
2013 to Dec 2015. Snip showing weighted return of one of the holding is as follows:
Firstly monthly return is calculated and it was then multiplied with their weights of a given
month. Weighted return was calculated in the same way for each stock.

- 46 -
Step4. Then weighted return of all top holdings is comprised into one sheet. From this we
came to know the return on investing in top 10 holdings month wise for three years.
The sum total return on investing in Top 10 holdings of the mutual fund for the three years
comes around 53.47%.

- 47 -
(b)ADVANCED
TECHNICAL
ANALYSIS PATTERN

- 48 -
MEANING OF TECHNICAL ANALYSIS
Technical analysis is the study of market action, primarily through the use of charts for the
purpose of forecasting future price trends. We got an opportunity to work and learn Advance
Technical Chart Patterns during our internship period. We analyse the identification rules as
well as trading rules for different chart patterns. Some of the best chart patterns are copied
here.
1. BROADENING FORMATIONS, RIGHT –ANGLED AND DESCENDING
MEANING
This is a bullish reversal pattern. The pattern is formed by two diverging lines, the resistance
being a horizontal line and the support a bearish slant. So it is an inverted ascending triangle.
The oscillations between the two levels of the triangle are therefore becoming more and more
important. Each line must be touched at least twice for validation.

- 49 -
IDENTIFICATION GUIDELINES TRADING TACTICS
 Megaphone, tilted down, with the top
of the formation horizontal and
bounded on the bottom by a down-
slopping trend line.
 Horizontal line of resistance joins the
tops as a trend line. Must have least
two distinct (minor highs) touches
before drawing a trend line.
 The expanding price series is bounded
on the bottom by a down – slopping
trend line. Must have at least two
distinct minor lows to create a trend
line.
 For an established formation, when
prices climb toward the trend line or
decline toward the lower one but fail
to touch it, prices often reverse
direction and break out of the
formation.
 Follows the two trend lines into the
future but is sporadic.
 Compute the formation height by taking
the difference between the horizontal
top and lowest low in the formation.
For upward breakouts, add the result to
the value of the horizontal trend line.
For downward breakouts, subtract the
value from lowest low. Result is target
price.
 It is unclear which way prices will
break out, so it is best to wait for prices
to close outside the trend lines. Once
they do, expect prices to continue
moving in the direction of the breakout.
 Once a breakout occurs, consider the
opposite side of the formation as the
stop-loss point. However, in many
cases you will want something closer to
our purchase price, so look for nearer
support or resistance zones. Once the
stock moves substantially, advance the
stop to the break-even point or higher.
IMPORTANT NOTES
 Select patterns that follow the trend: upward breakouts in a bull market, downward
breakouts in a bear market.
 If you can determine when the trend changes, buy after the stock bottoms and hang on as
price rises an average of 55%.
 Failure rates are lowest for patterns with small moves in a bear market with downward
breakouts. Patterns in a bull market with upward breakouts do better for price runs longer
than 15%.
 In a bull market, select patterns with breakouts in the middle of the yearly price range. In
the bear market select those with breakouts near the yearly low.
 Patterns with a u-shaped volume pattern do well after an upward breakout. Select
patterns with dome-shaped volume and downward breakouts.

- 50 -
2. BROADENING FORMATIONS, RIGHT –ANGLED AND ASCENDING
MEANING
This is a bearish reversal pattern. The pattern is formed by two diverging lines, the support
being a horizontal line and the resistance a bullish slant. So it is an inverted descending
triangle. The oscillations between the two levels of the triangle are therefore becoming more
and more important. Each line must be touched at least twice for validation.

- 51 -
 Megaphone with one side horizontal.
Bottom of formation follows a
horizontal trend line, while an up-
slopping trend line bounds the top
side.
 Top trend line touches at least two
minor highs and minor lows as prices
descend to trend line
 Prices sometimes move horizontally
for months before moving outside the
formation high or low.
 Prices drop below the horizontal trend
line usually accompanied by surge in
volume.
 Compute the formation of height from
highest high to the horizontal trend line.
For upward breakout, add height to
highest high in pattern and for down
subtract height from value of horizontal
trend line. It gives us target price. More
accurate target use a formation height
divided by 2.
 Use a partial rise or decline as an entry
signal. Use Fibonacci retracements.
 If you own stock and prices close below
the lower trend line, sell. As many
times the breakout will be downward.
 For tall patterns, buy near the lower
trend line and sell near the top as prices
curl down.
IMPORTANT NOTES
 Trade with the market trend: in bull market, buy upward breakouts; in bear market
short at downward breakouts.
 Trade busted patterns or after price reaches the ultimate high or low.
 Patterns in bull markets with upward breakout have the lowest failure rates for moves
above 15%.
 In bull market, select patterns with the upward breakout near the yearly high.
Downward breakouts should be near the yearly low, regardless of market type.
 Throwbacks and pullbacks hurt performance. Look for nearby support or resistance to
a price move.
 In a bull market let your profits ride as it takes time for prices to rise. In bear market,
decline is likely to be steep and short.so use target profit to get out.
 Select tall patterns and wide patterns perform better when breakout direction follows
the general market trend.
 Choose patterns with heavy breakout volume except for those patterns with
downward breakouts in a bear market.

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3. CUP WITH HANDLE
MEANING
As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms
after an advance and looks like a bowl or rounding bottom As the cup is completed, a trading
range develops on the right hand side and the handle is formed. A subsequent breakout from
the handle's trading range signals a continuation of the prior advance.

- 53 -
 A rounded turn that looks like a cup with a
handle on the right.
 Upward leading to the pattern. Price
should rise by at least 30% leading to the
cup.
 The cup should be U-shaped, not V-
shaped. Consider handle length as the
distance from the right cup lip to the
breakout. Cup must have handle on right.
 Cups to be sure prices in the handle
drifted no lower than halfway down the
cup. Remove those drifting lower.
 From 7 to 65 weeks.
 Cup gently rounds over and climbs just
beyond old high then pauses. Price drift
down in handle, along with down trending
volume before breakout. Then volume
surges and price move smartly upward.
 Compute the formation height by
subtracting the lowest low reached in
the cup from the high at the right cup
lip. Add the difference to the high at the
right cup lip and the result is the target
price to which prices will climb, at a
minimum. Only 50% of the formations
rise that far in a bull market; 27% hit
the target in a bear market. Use half the
cup height to get a more realistic price
target.
 If you discover a cup within a cup, buy
on the breakout of the inner cup. Be
prepared to sell at the price of the old
high.
 Place stop-loss order 0.15 below the
handle to limit losses. Raise the stop to
breakeven or just below the nearest
support zone when prices rise.
IMPORTANT NOTES
 Select cups in a bull market and avoid those in a bear market
 Cups in a bull market have a lower failure rate.
 Select cups with breakouts near the yearly low.
 After the breakouts, prices take longer to reach the ultimate high in a bull market, giving
them a better chance of a larger gain.
 Pick tall cups.
 Choose cups with short handles and higher left cup lips.
 Cups with U-shaped volume perform best.

- 54 -
4. HEAD AND SHOULDERS BOTTOMS
MEANING
As a major reversal pattern, the Head and Shoulders Bottom forms after a downtrend, and its
completion marks a change in trend. The pattern contains three successive troughs with the
middle trough (head) being the deepest and the two outside troughs (shoulders) being
shallower. Ideally, the two shoulders would be equal in height and width. The reaction highs
in the middle of the pattern can be connected to form resistance, or a neckline.
The Head and Shoulders Bottom, sometimes referred to as an Inverse Head and Shoulders,
is a pattern that shares many common characteristics with its comparable partner, but relies
more heavily on volume patterns for confirmation.

- 55 -
 A three-trough formation with the centre
trough below the other two. It looks like a
head and shoulders bust flipped upside
down. The three troughs and two minor
rises should appear well defined.
 The left and right shoulders should be
opposite one another about the head, there
are wide variations, but the formation is
noticeably symmetrical about the head.
 A line that connects the rise between the
two shoulders. A neckline pierce signals
an upward breakout. For up-slopping
neckline, use the highest high in the
pattern as the breakout price.
 Highest on the left shoulder or head and
diminished on the right shoulder.
 The breakout is upward, usually on high
volume that powers price upward. A low
volume breakout is not an indicator of an
impending failure.
 Compute the formation height by
subtracting the value of the lowest low
reached in the head from the neckline,
measured vertically. Add the difference
to the point where prices pierce the
neckline. The result is the target price to
which prices will rise, at a minimum.
For up-sloping necklines, substitute the
rise between the head and right
shoulder for the neckline breakout
price.
 Place a stop-loss order below the lower
of the two shoulders. Often, prices drop
to the shoulders lows before meeting
support. Raise the stop as price climb.
 Wait for the price to close above the
neckline or highest high. Make sure
head and shoulder bottom pattern is
present.
IMPORTANT NOTES
 Trade this pattern in a bull market for the highest average rise and to select pattern.
 Patterns in a bull market show the lowest failure rates.
 In a bull market buy HSBs near the yearly high. In bear market patterns near the
yearly low do best.
 Throwbacks hurt performance in a bull market.
 Select patterns with breakout day gaps.
 Expect the price trend to weaken a month after the breakout in a bear market, 6 to 8
weeks in a bull market.
 Tall or narrow patterns perform better than short or wide ones. Patterns that are both
tall and narrow do best.
 Select HSBs with a falling volume trend.
 Select patterns with light breakout volume in a bull market and heavy breakout
volume in a bear market.
 Patterns with higher left shoulder lows tend to outperform.

- 56 -
5. HORN BOTTOMS
MEANING
Find horns on the weekly charts and flip to the daily or intraday charts for trading. The twin
downward spikes should be longer than most spikes over the prior year. The longer the spikes
(the taller the pattern) the better the post-breakout performance, on average. Look for clear
visibility surrounding the spikes, meaning that the bottom should look like a price reversal
not part of a congestion area. The spikes should be well below the surround price landscape.
Horn bottoms often appear near the end of declines but sometimes show at the bottom of
retraces in uptrends. The pattern confirms as a valid one when price closes above the highest
high in the 3-bar pattern.

- 57 -
 Two downward price spikes separated by
a week on the weekly chart.
 Use the weekly chart and locate two
downward price spikes separated by a
week. The two spikes should be longer
than similar spikes over the prior year and
be well below the low of the centre week.
The formation should look like an
inverted horn. Abnormally long spikes
result in better performance.
 In a downtrend, the horn lows should be
well below the surrounding lows,
especially to the left of the formation for
several weeks (or months). Usually, horns
appear near the end of declines but also
happen on retraces in uptrends (where
visibility is less clear to the left).
 The pattern becomes a valid horn bottom
when price closes above the highest high
in the 3-week pattern.
 Subtract the highest high from the
lowest low and add it to the highest
high. We get target price.
 Price should climb smartly and weekly
low should not be near the horn low.
The week after the right horn is key.
 Horns may appear near the end of
uptrend also. Watch for trend to change.
 Horns will form near the end of
downtrend. Price might continue to drift
down and head upward.
 Place a stop $1 below the lowest horn
to reduce the chance that a retest of the
low will stop you out.
IMPORTANT NOTES
 To be sure you have the pattern correct.
 Horns have above average rises with bear markets showing steeper, shorter climb.
 For small gains, horns in bear market have a lower failure rate. For larger gains over
10% and bull markets outperform.
 Throwbacks hurt performance.
 Expect price weakness a month after the breakout in a bear market.
 Choose patterns with heavy breakout volume.
 Horns with a large price difference or a lower left spike do well.
 Inside week horns perform best.

- 58 -
6. ROUNDING BOTTOMS
MEANING
A chart pattern used in technical analysis, which is identified by a series of price movements
that, when graphed, form the shape of a "U". Rounding bottoms are found at the end of
extended downward trends and signify a reversal in long-term price movements.

- 59 -
 A saucer like concave price turn. Use
weekly scale to identify these and it works
well with daily scale as well.
 Price trend curves gently usually after an
upward price trend. Connect the weekly
low prices to visually construct a saucer or
bowl shape in your mind.
 Volume trend sometimes moves like price
trend appearing as a bowl but more often
dome shaped.
 Subtract the lowest low from the right
saucer lip. Add the difference to the
value of the right saucer lip to get the
target price. The measure rule only
works about half of the time, so be
conservative and lower your target.
 Wait for prices to rise (close) above the
left or right saucer lip before buying,
whichever is at lower price.
 Many times price will reach the level of
left saucer lip then dip to form a handle.
Buy when prices rise above the right
saucer lip.
IMPORTANT NOTES
 Trade rounding bottoms in a bull market.
 Continuations in bull market perform substantially better than reversals.
 Patterns in a bull market have lower failure rates.
 Select patterns with breakouts near the yearly high.
 Expect to take profits 4 to 5 weeks into the trade.
 Select tall patterns or wide patterns.
 Choose patterns with a rising volume trend and u-shape.
 Trade patterns with heavy breakout volume in a bull market.
 Pick rounding bottoms with the left rim higher than the right in a bull market.

- 60 -
INTERPRETATION
AND
ANALYSIS

- 64 -
CONCLUSION
AND
SUGGESTIONS

- 65 -
CONCLUSION
 Usually the top 10 holdings of mutual fund give major returns because they weight about 40-
50% of corpus of the fund.
 Top 10 holdings generally don’t vary much within a year for large cap funds but they may
vary for mid cap and small cap funds.
 By choosing to invest directly in mutual fund top 10 holdings, investor has to update his
portfolio on monthly basis.
 Other than 3-5% savings on AM fees and brokerage charges, investor earns about 11-12%
extra return by investing directly into top holdings in case of large cap funds and for small and
midcap it may go up to 40-50%.
 Sectorial analysis is done for top holdings sectors which tell about current and future
outlook of a particular sector.

- 67 -
www.amanchughca.com/
http://www.marketconnected.com/ca-shitu-maheshwari/
www.marketconnected.com/significance-of-brand-marketconnected/
www.marketconnected.com/services/
www.brownconsultancy.com/mffaq-schemetypes.aspx
https://en.m.wikipedia.org/wiki/Sharpe_ratio
https://en.m.wikipedia.org/wiki/Treynor_ratio
www.investopedia.com/ask/answers/10/mutual-funds-advantages-
disadvantages.asp
https://www.axismf.com/Downloads.aspx?Value=factsheet#SchemeInformationDoc
s
http://www.itsallaboutmoney.com/equities/mutual-funds/types-of-mutual-fund-
schemes/

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