A STUDY ON TECHNICAL ANALYSIS

Done by: Sukumar.R MBA

INTRODUCTION
INDIA INFOLINE
India Infoline (IIFL) group, is one of the leading players in the Indian financial services space. IIFL offers advice and an execution platform for a range of financial services covering products ranging from equities and derivatives, commodities, wealth management, asset management, insurance, fixed deposits, loans, investment Banking, GoI bonds and other small savings instruments.

INTRODUCTION
Technical analysis: We can define Technical Analysis as a study of the stock market considering factors related to the supply and demand of stocks. Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume.

ASSUMPTIONS:
1. The Market Discount Everything 2. Price Moves in Trends 3. History Tends to Repeat Itself

How is Technical Analysis done?

a) Moving Averages b) Charts & Patterns

RESEARCH METHODOLOGY.
RESEARCH OBJECTIVES:Primary Objective: To find out appropriate time to buy and sell securities based on selected indicator and oscillator. Secondary Objectives: Understanding the technical analysis theories and methods to analyze charts of the 2 companies using technical analysis.

RESEARCH DESIGN:
Descriptive Research Design.

DATA COLLECTION METHOD:

Secondary data (1 year)

SAMPLING TECHNIQUE:
Sample of 2 companies has been selected on the basis of market capitalization from NSE. Reliance BHEL

LIMITATIONS TO THIS STUDY

Costs Time Real investment information Software rights

TECHNIQUES USED
1)Moving Average Convergence Divergence MACD
Formula: MACD: (12-day EMA - 26-day EMA) Signal Line: 9-day EMA of MACD MACD Histogram: MACD - Signal Line

2)Relative Strength Index - RSI RSI= 100- 100 1+RS RS=EMA[U]/EMA[D] EMA- exponential moving average U= Sig (close (today)-close (yesterday)) D= Sig(close(yesterday)-close(today))

FINDINGS

I found that 73 RSI signals and 32 MACD signals have been generated in a year and total are 105 signals.

Reliance has 37 RSI signals generated in a year which are highest. Both companies have high profit for MACD.

Reliance has highest profit in RSI i.e. 44.45%

Active trading strategy is more useful and gives more return compare to passive trading strategy.

RECOMMENDATION

It is recommended that one should use RSI because it is

more effective then MACD as it has more accuracy and

generate more signals then MACD and provide more clear guidelines for entry and exit from the market.

One should go for active trading strategy because it is more profitable then passive trading strategy.