Professional Documents
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Technical and Fundamental Analysis of Selected Securities of Indian Stock Market
Technical and Fundamental Analysis of Selected Securities of Indian Stock Market
SUBMITTED BY
S.No.
TITLE
1.
CH 1 Introduction
1.1 Rationale
1.2 Objectives
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12
16
17
19
20
22
24
24
25
25
3.3.4 Ratios
27
28
4.
CH 4 Analysis
30
5.
CH 5 Limitations
71
2.
3.
Pg.No.
6.
CH 6 Conclusion
73
Glossary
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80
CHAPTER- 1
INTRODUCTION
Technical analysis
actually
Primary Objective:
a) To do technical and fundamental analysis of chosen securities
Sub-Objectives:
a) to study the various theories of technical analysis and fundamental analysis
c) understanding and analyzing the factors that affect the movement of stock
prices in the Indian Stock Markets
1.4 RESEARCH METHODOLOGY & DESIGN
TYPE OF STUDY
The research has been based on secondary data analysis. The study has been exploratory
as it aims at examining the secondary data for analyzing the previous researches that
have been done in the area of technical and fundamental analysis of stocks. The
knowledge thus gained from this preliminary study forms the basis for the further
detailed Descriptive research. In the exploratory study, the various technical indicators
that are important for analyzing stock were actually identified and important ones short
listed.
SAMPLE DESIGN
The sample of the stocks for the purpose of collecting secondary data has been selected
on the basis of Random Sampling. The stocks are chosen in an unbiased manner and
each stock is chosen independent of the other stocks chosen.
SAMPLE SIZE
The sample size for the number of stocks is taken as 10 for technical analysis and 4 for
fundamental analysis of stocks as fundamental analysis is very exhaustive and requires
detailed study.
CHAPTER- 2
TECHNICAL ANALYSIS
A CONCEPTUAL OVERVIEW
TECHNICAL ANALYSIS:
Technical analysis can be conditionally divided into some main parts such as:
Types of charts
Graphical methods
Analytical methods
Technical indicators
Technical analysis is concerned with predicting future price trends from historical price
and volume data. The underlying axiom of technical analysis is that all fundamentals
(including expectations) are factored into the market and are reflected in exchange rates.
A technical analysis is based on three axioms:
Resistance, on the other hand, is the point at which sellers (bears) take control of prices
and prevent them from rising higher. The price at which a trade takes place is the price
at which a bull and bear agree to do business. It represents the consensus of their
expectations.
Support levels indicate the price where the most of investors believe that prices will
move higher. Resistance levels indicate the price at which the most of investors feel
prices will move lower.
Role Reversal
When a resistance level is successfully broken through, that level becomes a support
level. Similarly, when a support level is successfully broken through, that level becomes
a resistance level.
The first is the daily variation due to local causes and the balance of buying and
selling at that particular time.
The secondary movement covers a period ranging from ten days to sixty days,
averaging probably between thirty and forty days.
The third move is the great swing covering from four to six years.
Bull markets are broad upward movements of the market that may last several
years, interrupted by secondary reactions. Bear markets are long declines
interrupted by secondary rallies. These movements are referred to as the primary
trend.
Secondary movements normally retrace from one third to two thirds of the
primary trend since the previous secondary movement.
Daily fluctuations are important for short-term trading, but are unimportant in
analysis of broad market movements.
Various cycles have subsequently been identified within these broad categories.
Primary Movements have Three Phases
The general conditions in the market:
Bull markets
11
Rampant speculation dominates the market and price advances are based on hopes and
expectations rather than actual results.
Bear markets
Bear markets start with abandonment of the hopes and expectations that
sustained inflated prices.
Distress selling follows as speculators attempt to close out their positions and
securities are sold without regard to their true value.
Ranging Markets
A secondary reaction may take the form of a line which may endure for several weeks.
Price fluctuates within a narrow range of about five per cent.
Breakouts
Advances above the upper limit of the line signal accumulation and higher prices;
Declines below the lower limit indicate distribution and lower prices;
Volume is
Trends
Bull Trends
A bull trend is identified by a series of rallies where each rally exceeds the highest point
of the previous rally. The decline, between rallies, ends above the lowest point of the
previous decline.
12
The start of an up trend is signaled when price makes a higher low (trough), followed by
a rally above the previous high (peak):
Start = higher Low + break above previous High.
The end is signaled by a lower high (peak), followed by a decline below the previous
low (trough):
End = lower High + break below previous Low.
A bear trend starts at the end of a bull trend: when a rally ends with a lower peak and
then retreats below the previous low. The end of a bear trend is identical to the start of a
bull trend.
Large Corrections
A large correction occurs when price falls below the previous low (during a bull trend)
or where price rises above the previous high (in a bear trend).
13
A bull trend starts when price rallies above the previous high,
A bull trend ends when price declines below the previous low,
A bear trend starts at the end of a bull trend (and vice versa).
14
The moving average represents the consensus of investors expectations over the
indicated period of time.
TECHNICAL INDICATORS
15
SUPER BOWL: The Super Bowl indicator forecasts the direction of the
market based on whether the National Football Conference or the American Football
Conference wins. A win by the National Football Conference is bullish.
16
CHAPTER- 3
FUNDAMENTAL ANALYSIS
A CONCEPTUAL OVERVIEW
17
Fundamental analysis refers to the study of the core underlying elements that influence
the economy of a particular entity. It is a method of study that attempts to predict price
action and market trends by analyzing economic indicators, government policy and
societal factors (to name just a few elements) within a business cycle framework.
I. ECONOMIC ANALYSIS:
POLITICO-ECONOMIC ANALYSIS:
No industry or company can exist in isolation. It may have splendid managers and a
tremendous product. However, its sales and its costs are affected by factors, some of
which are beyond its control - the world economy, price inflation, taxes and a host of
others. It is important, therefore, to have an appreciation of the politico-economic
factors that affect an industry and a company.
The political equation
A stable political environment is necessary for steady, balanced growth. If a country is
ruled by a stable government which takes decisions for the long-term development of
the country, industry and companies will prosper.
Foreign Exchange Reserves
A country needs foreign exchange reserves to meet its commitments, pay for its imports
and service foreign debts.
Foreign Exchange Risk
This is a real risk and one must be cognizant of the effect of a revaluation or devaluation
of the currency either in the home country or in the country the company deals in.
Restrictive Practices
18
19
20
21
22
THE MANAGEMENT:
The single most important factor one should consider when investing in a company and
one often never considered is its management.
In India management can be broadly
divided in two types:
Family Management
Professional Management
THE COMPANY:
An aspect not necessarily examined during an analysis of fundamentals is the company.
A company may have made losses consecutively for two years or more and one may not
wish to touch its shares - yet it may be a good company and worth purchasing into.
There are several factors one should look at.
1. How a company is perceived by its competitors?
One of the key factors to ascertain is how a company is perceived by its competitors. It
is held in high regard. Its management may be known for its maturity, vision,
competence and aggressiveness. The investor must ascertain the reason and then
determine whether
the reason will continue into the foreseeable future.
2. Whether the company is the market leader in its products or in its segment
Another aspect that should be ascertained is whether the company is the market leader
in its products or in its segment. When you invest in market leaders, the risk is less. The
23
24
25
RATIOS:
Ratios express mathematically the relationship between performance figures and/or
assets/liabilities in a form that can be easily understood and interpreted.
No single ratio tells the complete story
Ratios can be broken down into four broad categories:
(A) Profit and Loss Ratios
These show the relationship between two items or groups of items in a profit and loss
account or income statement. The more common of these ratios are:
1. Sales to cost of goods sold.
2. Selling expenses to sales.
3. Net profit to sales and
4. Gross profit to sales.
(B) Balance Sheet Ratios
These deal with the relationship in the balance sheet such as :
1. Shareholders equity to borrowed funds.
2. Current assets to current liabilities.
3. Liabilities to net worth.
4. Debt to assets and
5. Liabilities to assets.
(C) Balance Sheet and Profit and Loss Account Ratios.
These relate an item on the balance sheet to another in the profit and loss account such
as:
1. Earnings to shareholder's funds.
2. Net income to assets employed.
3. Sales to stock.
4. Sales to debtors and
5. Cost of goods sold to creditors.
(D) Financial Statements and Market Ratios
These are normally known as market ratios and are arrived at by relative financial
figures to market prices:
26
CASH FLOW:
A statement of sources and uses begins with the profit for the year to which are added
the increases in liability accounts (sources) and from which are reduced the increases in
asset accounts (uses). The net result shows whether there has been an excess or deficit
of funds and how this was financed. Investors must examine a company's cash flow as it
reveals exactly where the money came from how it was utilized. Investors must be
concerned if a company is financing either its inventories or paying dividends from
borrowings without real growth as that shows deterioration.
27
28
CHAPTER-4
ANALYSIS
29
1) TATA MOTORS
I Market/ Economy Analysis
It covers the macro economy analysis and the various macro economic factors on the
national level like GDP, Monetary policies of India, Fiscal Policies and Inflation and
money supply etc.
GDP
Real GDP growth accelerated from 7.5 per cent during 2004-05 to 8.4 per cent during
2005-06 on the back of buoyant manufacturing and services activity supported by a
recovery in the agricultural sector. Real GDP growth has, thus, averaged over eight per
cent during the last three years and over seven per cent in the first four years (2002-03
to 2005-06) of the Tenth Five Year Plan.
Strengths of India today are:
A well diversified industrial base which profits from self-reliance in all core
industries .A large & sophisticated financial architecture - The robust capital Markets
today have over 9000 listed companies and boast of a massive Market capitalization.
A healthy GDP composition with agriculture contributing 22%, Industry 22% and
services, which have gone strength to strength, accounting. For 56% of the GDP an
acknowledged strength in knowledge driven industries like Information technology,
biotechnology, entertainment Software etc
India has Over 3 million scientific & technical manpower, Over 0.6 million S&T post
graduates, Over 0.7 million graduate engineers, Over 3500 doctorates in sciences every
year.
Assuming trend growth in agriculture under normal monsoon conditions and barring
domestic or external shocks, the Reserve Bank in its Annual Policy Statement for 200708 (April 2007) placed real GDP growth, for policy purposes, in the range of 7.5-8.0 per
cent during 2007-08. Growth prospects are, however, subject to a number of downside
30
Inflation
Inflation was contained to 6.3 per cent by end-March 2007 within the indicative
trajectory of 5.0-5.5 per cent during 2007-08. The actual inflation was considerably
lower than the indicative trajectory and this could be mainly attributed to the deferred
pass-through of even the cognisable permanent component of international crude oil
prices.
Money Supply
Monetary and liquidity conditions remained largely comfortable during 200607reflecting proactive liquidity management operations by the Reserve Bank under the
liquidity adjustment facility, flexible management of issuances under the market
stabilisation scheme, and some private placement of Government securities
In short, the Indian economy is exhibiting strong fundamentals and displaying
considerable resilience. At the same time, there are continuing signs of demand
pressures, especially high credit growth, that could exert upward pressure on prices
when associated with supply shocks such as from oil. These pressures have the potential
for impacting stability and inflation expectations. While domestic developments
continue to dominate the economy, global factors tend to gain more attention now than
before. The global outlook for growth is positive but downside risks in regard to
inflation also RBI is applying new repo and reverse repo for the balance of inflation and
monetary policies.
31
II INDUSTRY ANALYSIS
Since, 1991 opening of the economy has changed the face of auto industry. Today, it is
amongst the main drivers of growth of Indian economy with an output multiplier of
2.24(for every Re.1 invested, auto sector gives back Rs.2.24 to the economy). In recent
years we have seen increasing number of global players entering Indian market by way
of Joint ventures, collaborations or wholly owned subsidiary
The automobile industry is torn between trying to reduce costs on the one hand and, on
the other, dealing with the high price of performance-enhancing technology and
environmental compliance. Key drivers in the automotive industry are:
Reduction of weight
Recyclability
Safety
Aesthetics
32
33
1
Day
Price
Market
Chang Cap
e%
Description
P/E
ROE
%
Net
LongPrice
Profit
Term
Price
to
Div.
Free
Debt
to
Book Margi
Yield
Equit Value n % Flow
%
(mrq)
to
Cash
(mrq)
0.11
10.76 7.06
408.42
0.61
331.0B
30.00 7.50
1.71 1.81
1.55
1.60
-4.40
Daimlerchrysler AG (DCX)
Ford Motor Co. (F)
0.21
1.21
53.9B
15.7B
4.69
-0.60
-3.54
-82.05
-0.24
16.5B
3.40 3.90
1.42
-6.21
0.14
0.83
-0.38
0.73
62.2B
7.1B
175.6B
10.72 11.19
NA
-9.51
NA
62.85
11.52 16.54
18.64 NA
13.94 15.05
1.00 0.83
1.50 NA
1.20 1.03
1.73
5.35
1.97
5.52
5.64
6.59
207.48
Companies
34
NA
NA
35
36
Product Mix
Tata Motors is India's only fully integrated automobile manufacturer with a portfolio
that covers trucks, buses, utility vehicles and passenger cars. It would be no
exaggeration to say that Tata Motors provides the wheels for India's growth.
Segmental Overview
Commercial Vehicle Segment
The Company registered 69.6% volume growth in the domestic CV segment during
4QFY06, from 37,228 units in Q3FY05 to 63,082 units in Q3FY06. The market share in
this segment was 65.8% in Q4FY06, as compared to 55.2% in Q1FY06. The M/HCV
goods-carrier segment registered a 54.4% growth YoY, with sale of 33,515 units and a
market share of 64.5%, up by around 410 bps, driven by infrastructure development and
increase in international trade.
Passenger Vehicle Segment
The Company reported a growth of 21.2% YoY, to 49,907 vehicles, in the domestic
passenger vehicle segment and a market share of 16.2% in the quarter. The passenger
vehicle industry registered a volume growth of 20.4% during Q4FY06
Plants
Tata Motors owes its leading position in the Indian automobile industry to its strong
focus on indigenisation. Their manufacturing plants are situated at Jamshedpur in the
East, Pune in the West and Lucknow in the North.
37
38
10%
17%
34%
promotors
MF Banks, Fis
FIIs
Others
Public
25%
14%
Financial highlights
39
40
RATIO ANALYSIS
Ratios
2006
2005
2004
Debt/equity
0.56
0.49
0.44
Current ratio
1.08
0.87
0.76
12.11
11.51
12.38
10.87
10.43
11.04
ROCE %
31.25
32.76
33.77
3.15
3.53
3.43
ROE %
27.61
30.09
22.57
Dividend-equity
497.94
453.73
282.11
Retention Ratio
67.43
63.32
65.19
DPS (Rs.)
13.01
12.5
7.99
EPS (Rs.)
25
34
41
0.39
0.42
0.37
CAGR of EPS
0.177
-0.017
Average ROE
25.74
41
average retention
63.54
16.36
Market return
14.54%
2) HPCL
42
(i) early phase (1947 to 1969)- when the government consolidated its control
over the industry with Soviet assistance;
(ii) development phase (1970 to 1989)- in this period the US companies played
dominant role replacing the Soviets and
PORTERS MODEL
SWOT ANALYSIS
STRENGHS
43
Entry on petrochemicals and gas sector will reduce dependence on R&M sector.
WEAKNESSES
OPPORTUNITIES
THREATS
COMPANY ANALYSIS
The Annual Report is broken down into the following specific parts:
A) The Director's Report,
B) The Auditor's Report,
C) The Financial Statements, and
44
1. THE MANAGEMENT
HPCL is a public sector undertaking. Thus it is a professionally managed company.
There are some parameters of management on which a company is analysed :
a. integrity of management
b. past record of management
c. how highly is the management rated by its peers in the same industry
d. how the management fares in adversity
e. the depth of the knowledge of management
f. open and innovative management
on all these parameters HPCL scores good.
2. COMPANY
Many times a company has made losses in the previous years but that does not mean
that the company is bad to invest. Thus many factors are studied while studying a
company.
a) perception of competitors
45
46
Ratio Analysis
Evaluation of Intrinsic Value of the Security
stdev mkt
stdev sec
0.011934
0.03831
correlation
Beta
Risk
Free
Rate
Mkt Rate
0.485958
1.56765
18.26%
Average
Retention
Ratio
ROE
g
0.60504
0.19842
0.120052
6.50%
14%
Hence we see that here our g is less than k .Thus we see that as per Dividend
Discount Model our Intrinsic value is div=22(1+.012)=24/.0626= 387
Price= Projected EPS + Weighted P/E ratio
Using CAGR EPS = 43.468
Weighted P/E Ratio = 7.5+665/2=336.25
Price = 43.468+336.25 = 381
3) HDFC BANK
47
48
49
2. Economic factors-:
Basell II norms for the risk management in banking sector - The new Basel
Accord has its foundation on three mutually reinforcing pillars. The first pillar is
compatible with the credit risk, market risk and operational risk. The second
pillar gives the bank responsibility to exercise the best ways to manage the risk
specific to that bank.
Concurrently, it also casts responsibility on the supervisors to review and
validate banks risk measurement models. .
Consolidation and merger and acquisitions in the banking sector-. HDFC
bank also acquired TIMES BANK in 2001 which increased its customer base by
3 lakh customers.
Universal Banking has been introduced. ICICI Bank ,HDFCs closest
competitor is already into Universal Banking so HDFC is also getting into it as
now it is providing retail banking and also depository facilities in the form of
demat account.
3. Social factorsBig and growing middle class in India -: This has been a major factor in the
growth of the retail loans like consumer loans in the form of home loans, car loans,
education loans, auto loans etc. Retail loans have grown from 19% in FY99 to
51% FY06.Consumer credit accounts for a meager 28.6 per cent of the country's
GDP and the buoyancy in the economy offers sufficient scope for it to grow.
Geographical and Cultural diversity- This is leading to a greater demand for
financial products and customization by the customers.
4. Technical factorsThe Indian Financial Network (INFINET) was inaugurated in June 1999. It is
based on satellite communication using VSAT technology and would enable faster
connectivity within the financial sector.
Banks (All): No of players = 40
Sector statistics:
We see the sector aggregates and make a financial comparison for the major banks
50
Top Players
FY2006
Based on Total Income
Total
Income
(Rs Mn)
63161.9
ICICI BANK
Based on OPBDT
Change
(%)
54.50
PUNJAB
NATIONAL B
29218
14.91
27709.5
23.78
OPBDT
(Rs Mn)
76352.8
Change
(%)
-1.29
37174
19.36
22205.2
39.36
23317
25.43
16882.5
CAN BANK
18550.8
60.24
14324
H D F C BANK
H D F C BANK
% change - indicates the change between current and corresponding quarter.
19.53
27.48
CAN BANK
BANK OF INDIA
SBI
ICICI BANK
PUNJAB
NATIONAL B
51
52
Interest Income
Interest Expense
Net Interest Income
Other Income
Net Revenues
Operating costs
Operating Result
Provisions and Contingencies
Profit before tax
Provision for taxation
Profit after tax
Funds :
Deposits
Subordinated debt - Stockholders Equity
Working Funds
Loans
Investments
Key Ratios :
Earnings per share (Rs)
Return on Average Networth
Tier 1 Capital Ratio
Total Capital Ratio
Dividend per share (Rs) Dividend payout ratio Book value per share as at March 31 (Rs)
Market price per share as at March 31 (Rs)
Price to Earnings Ratio
2002-03
2,013,61
1,191,96
821,65
465,55
1,287,20
577,05
710,15
139,30
570,85
18325
38760
2003-04
2,548,93
1,211,05
1,337,88
480,03
1,817,91
810,00
1,007,91
288,95
718,96
20946
50950
2004-05
3,093,49
1,315,56
1,777,93
651,34
2,429,27
1,085,40
1,343,87
364,93
978,94
31338
66556
2237607
20000
224483
3042408
1175486
1338808
3040886
60000
269188
4230699
1774451
1925679
3635425
50000
451985
5142900
2556630
1934981
13.75
18.10%
9.49%
11.12%
3
24.72%
79.6
234.55
17.06
17.95
20.14%
8.03%
11.66%
3.5
22.15%
94.52
378.75
21.1
22.92
20.44%
9.60%
12.16%
4.5
24.00%
145.86
573.64
25.03
53
54
4) JET AIRWAYS
MARKET
Currently the market scenario is as shown :
1) ACC LIMITED
55
AIRLINE
Jet Airways
Air Deccan
Kingfisher
Spice Jet
GoAir
CURRENT ACQUISITION
FLEET
PLANS
53
30 by 2012
29
79 by 2010
11
100 by 2012
6
38 by 2010
4
33 by 2008
INVESTMENTS
US $Bn
2
2.7
4.5
1.9
2.4
High growth potential due to economic boom and highly under penetration in the
market
0.02 trips per capita per annum
Long-term GDP growth at 8% annually
It is forecasted that India would be the second fastest growing travel and tourism
economy in the world
ATF (Aviation Turbine Fuel) prices and airport charges in India are among the
highest in the world
MACRO ENVIRONMENT
Refers to the factors which influence an industry but are beyond its control.Main
factors are:
P OLITICAL
E CONOMIC
S OCIO-CULTURAL
T ECHNOLOGICAL
Other Factors
DEMOGRAPHIC
NATURAL ENVIRONMENT
56
POLITICAL
OPEN SKY POLICY
DEREGULATIONS IN DIFFERENT SPHERES
LESS ENTRY BARRIERS
REDUCTION IN FDI LIMIT: 49% for airlines
100% for airport
SOCIO-CULTURAL
57
3.2 million foreign tourists visited India last year ; tourism industry grew 8.8 per
cent over 2003, the highest growth rate in the world.
SOCIAL
TECHNOLOGICAL
MODERNISATION OF AIRPORTS
ILS-INSTRUMENT LANDING SYSTEMS
DEMOGRAPHIC
CHANGING STRUCTURE OF CONSUMERS
HIGHEST % PEOPLE IN 20-50 AGE GROUP
58
The cost of aviation turbine fuel ATF in india for domestic airlines is almost
double for international market.
Govt. increased prices by 7.5%. From 32.56 to 35/litre.
ATF price in feb soared by 3.5% to the price in jan 06.
POWER OF BUYERS
Large number of buyers: Business travelers sector intensified by GDP
growth, leisure customer market too a huge growth opportunity
Alternative source- large number of options available
Cost of switching- Minimal
No differentiation among the players in the same segment
POWER OF SUPPLIERS
ATF AIRCRAFT MFG PILOT
Switching costs- options of switching is very limited
Brand value- high
Forward integration- no history in past but possible
Shortage of pilots
High fuel costs
AVAILABILITY OF SUBSTITUTE
Product for product substitution- consumers can choose between the
various options such as road and rail.
59
Substitution for need- with technology the need to travel has reduced but
it is not possible to totally do away with it. It is marginally possible.
COMPETITIVE RIVALRY
Increased competitive pressures due to new entrants
Growth rates- high projected to be 22%
High fixed costs
Extra capacity
Acquisition of weaker companies
High exit barriers
Differentiation
Key Attractions:
Low entry barrier.
Attraction of foreign shores.
Foreign equity allowed.
Rising income levels and demographic profile.
Key Problems:
Crippling Oil Shock .
Absence to Institutionalized Funding.
Acute shortage of trained Pilots, severely limiting growth prospects.
Unplanned location of Airports.
4) JET AIRWAYS
Market Share: 35%
#Strengths
60
#Weaknesses
Required 1000 pilots in next two years.
Concentrates only most profitable routes.
Failed attempts at Merger.
#Opportunities
Hugh untapped international sectors
Increase in domestic flight density
Expanding operations into Air Freight business
Integrate more long haul aircrafts
#Threats
Stiff competition in the Economy class from Low Cost Carriers.
Competition in the Business Class form newcomers like KingFisher
Hugh investments locked in future fleet expansion plans
Single source of revenue
Growth Forecast
World Passenger traffic grew to 52.12 million in the last fiscal, from 43.47
million in 2004-05, to register a growth of 19.9 percent.
In the last fiscal, the Indian aviation industry logged a robust growth of 24
percent and experts say the sector will expand by at least 16 percent annually for
the next five years, riding on the overall economic growth of eight percent.
61
Premier Airways
Star Air
East West Airlines
Indigo
Jagson
LIMITED
62
ANALYSIS: Trend: The stock after correcting to 50% of the long bull run [Bottom 676 Top 1197]
prices
reversed back and are now in intermediary upward trend.
Moving Averages :The stock is currently trading above all the important trading moving averages. The
moving average rossover of 13 days & 40 days is observed on 22nd Dec. 2006
triggering price trend reversal and buyat current levels.
13 days: = 1037.70 40 days: = 1060.84
30 days: = 1078.65 100 days: = 991.62
Moving Average Channels: The stock on giving a close above 1070 levels has given a breakout above the moving
averagechannel signaling buy at current levels.
Relative Strength Index (RSI): RSI on falling to 34 levels in the profit booking mode bounced back to bull zone at
53.46 showing synchronization with price movement.
Pitchfork: The stock have broken the upper arms and moved out (at 1072) of the corrective trend
pitchfork signaling positive trend & buy at current levels.
The stock is now moving towards the median of the major pitchfork which is around
1160 levels.
Oscillators:-
63
Close
2351.25
Trend
Up
Support
2340
Resistance 2380
Stop loss
2317
The Trend refers to the daily trend of the stock and not intraday but one may trade
intraday based on it. If you are a slightly longer term investor, you may go on holding
the stock in long if trend is up or you may go on holding the stock in short position if
trend is down. If you are a short term trader you may use the below paragraph
information and play for small moves.
How to trade according to the data mentioned above
If an entry is made in front of support and the close is above the support, it means
that ne can buy the stock intraday during market hours at support and put an
appropriate stop loss mentioned below. Once you have bought the stock
intraday, put the Stop Loss accordingly mentioned and sell it before the market
closes.
If an entry is made in front of resistance and the close is less then resistance, it
means that one can short the stock intraday during market hours at resistance and
put an appropriate stop loss mentioned below. At close one should cover if one
is an intraday trader.
64
Close
248.35
Trend
Not Clear
Support
220
Resistance 260
Stop loss
205
65
331.85
Trend
Down
Support
355
Resistance
390
Stop loss
347
If an entry is made in front of support and the close is above the support, it
means that one can buy the stock intraday during market hours at support and
put an appropriate stop loss mentioned below. Once you have bought the stock
intraday, put the Stop Loss accordingly mentioned and sell it before the market
closes.
If an entry is made in front of resistance and the close is less then resistance, it
means that one can short the stock intraday during market hours at resistance and
put an appropriate stop loss mentioned below. At close one should cover if one
is an intraday trader.
If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.
Close
409.15
Trend
Not Clear
Support
360
Resistance
420
Stop loss
350
If an entry is made in front of support and the close is above the support, it
means that one can buy the stock intraday during market hours at support and
put an appropriate stop loss mentioned below. Once you have bought the stock
intraday, put the Stop Loss accordingly mentioned and sell it before the market
closes.
If an entry is made in front of resistance and the close is less then resistance, it
means that one can short the stock intraday during market hours at resistance and
66
put an appropriate stop loss mentioned below. At close one should cover if one
is an intraday trader.
If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.
Close
875.05
Trend
Down
Support
810
Resistance 895
Stop loss
795
If an entry is made in front of support and the close is above the support, it
means that one can buy the stock intraday during market hours at support and
put an appropriate stop loss mentioned below. Once you have bought the stock
intraday, put the Stop Loss accordingly mentioned and sell it before the market
closes.
If an entry is made in front of resistance and the close is less then resistance, it
means that one can short the stock intraday during market hours at resistance and
put an appropriate stop loss mentioned below. At close one should cover if one
is an intraday trader.
If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.
RELIANCE
Date
Close
1358.85
Trend
Not Clear
Support
1290
Resistance 1370
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1280
If an entry is made in front of support and the close is above the support, it
means that one can buy the stock intraday during market hours at support and
put an appropriate stop loss mentioned below. Once you have bought the stock
intraday, put the Stop Loss accordingly mentioned and sell it before the market
closes.
If an entry is made in front of resistance and the close is less then resistance, it
means that one can short the stock intraday during market hours at resistance and
put an appropriate stop loss mentioned below. At close one should cover if one
is an intraday trader.
If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.
Close
880.80
Trend
Down
Support
930
Resistance 980
Stop loss
918
If an entry is made in front of support and the close is above the support, it
means that one can buy the stock intraday during market hours at support and
put an appropriate stop loss mentioned below. Once you have bought the stock
intraday, put the Stop Loss accordingly mentioned and sell it before the market
closes.
If an entry is made in front of resistance and the close is less then resistance, it
means that one can short the stock intraday during market hours at resistance and
put an appropriate stop loss mentioned below. At close one should cover if one
is an intraday trader.
If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.
68
Close
1183.70
Trend
Not Clear
Support
1120
Resistance 1170
Stop loss
1105
If an entry is made in front of support and the close is above the support, it
means that one can buy the stock intraday during market hours at support and
put an appropriate stop loss mentioned below. Once you have bought the stock
intraday, put the Stop Loss accordingly mentioned and sell it before the market
closes.
If an entry is made in front of resistance and the close is less then resistance, it
means that one can short the stock intraday during market hours at resistance and
put an appropriate stop loss mentioned below. At close one should cover if one
is an intraday trader.
If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.
Close
912
Trend
Down
Support
950
Resistance
990
Stop loss
940
If an entry is made in front of support and the close is above the support, it
means that one can buy the stock intraday during market hours at support and
put an appropriate stop loss mentioned below. Once you have bought the stock
69
intraday, put the Stop Loss accordingly mentioned and sell it before the market
closes.
If an entry is made in front of resistance and the close is less then resistance, it
means that one can short the stock intraday during market hours at resistance and
put an appropriate stop loss mentioned below. At close one should cover if one
is an intraday trader.
If we do not find the stock giving clear signal for intraday trading, than we will
leave the support or resistance field empty.
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CHAPTER-5
LIMITATIONS
LIMITATIONS
Like all studies based on samples, this study also suffers from some limitations.
1. As the study depends on human perceptions so there are chances of study getting
biased.
2 Error due to some oversight or misinterpretation.
3 The scope of study was limited due to some constraints.
4. Any other error which could have crept in the course of the Project.
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72
CHAPTER-6
CONCLUSION
CONCLUSION
RECOMMENDATIONS:
1) ACC- At current price it is not advisable to buy the stock. Reasons for not
buying the stock:
The stock is currently trading above all the important trading moving averages.
The moving average crossover of 13 days & 40 days is observed on 22nd Dec.
2006 triggering price trend reversal and buy at current levels.
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4) HPCL:
Strengths:
Favourable production sale mix
Entry on petrochemicals and gas sector will reduce dependence on R&M sector
Second largest refining capacity and pipeline infrastructure in the industry
Good presence in high demand regions of west and north India
Growth potential:
Per capita energy consumption low in country
74
5) HDFC BANK: Growing stock and its advisable to invest in this stock for long term.
HDFC bank acquired TIMES BANK in 2001 which increased its customer base by 3
lakh customers.
Growth in net revenues of 42.2%. Net profit up by 32%. Total customer asset increased
by 44.9%
6) JET AIRWAYS: We should not invest in the stock because of the following
reasons:
ATF (Aviation Turbine Fuel) prices and airport charges in India are among the highest
in the world
Regulatory and infrastructure bottlenecks have prevented accelerated growth in the
industry
6) RELIANCE INDUSTRIES: Good stock for any Portfolio.
Very high GRM thus it will continue to produce Positive Cash Flow.
Charts show good volume with positive uptrend.
8) STATE BANK OF INDIA: Should be Sold.
Due to tight monetary policies it will remain under pressure.
Very low volumes plus twenty day moving average both indicate that it should not be
held.
10)MARUTI UDYOG: Can be held.
Being market leader it has best chances but high input costs are putting pressure on
margins plus rising interest costs are going against the stock.
It has taken a sharp run in the last rally and now there is a dip in the volumes in the past.
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76
CHAPTER-7
GLOSSARY
GLOSSARY
77
SECURITY ANALYSIS: stands for the proposition that a well-disciplined investor can
determine a rough value for a company from all of its financial statements, make
purchases when the market inevitably under-prices some of them, earn a satisfactory
return, and never be in real danger of permanent loss.
FUNDAMENTAL ANALYSIS: is the analysis of a stock on the basis of core financial and
economic analysis to predict the movement of stocks price.
TECHNICAL ANALYSIS: is the study of prices and volume, for forecasting of future
stock price or financial price movements.
DOW JONES THEORY: The Dow theory is a method of interpreting and signaling
changes in the stock market direction based on the monitoring of the Dow Jones
Industrial and Transportation Averages.
ELLIOT WAVES BASICS: Breaking through support or resistance levels results in a
change of traders expectations
SUPPORT: Support is a level at which bulls (i.e., buyers) take control over the prices
and prevent them from falling lower.
RESISTANCE: is the point at which sellers (bears) take control of prices and prevent
them from rising higher
ROLE REVERSAL: When a resistance level is successfully broken through, that level
becomes a support level. Similarly, when a support level is successfully broken
through, that level becomes a resistance level.
BULL TREND: The start of an up trend is signaled when price makes a higher low
(trough), followed by a rally above the previous high (peak)
BEAR TREND: when a rally ends with a lower peak and then retreats below the
previous low. The end of a bear trend is identical to the start of a bull trend.
LARGE CORRECTION: A large correction occurs when price falls below the previous
low (during a bull trend) or where price rises above the previous high (in a bear trend).
MOVING AVERAGE: A moving average is the average price of a financial instrument
over a given time.
RELATIVE STRENGTH INDEX: The Relative Strength Index Technical Indicator
(RSI) is a price-following oscillator that ranges between 0 and 100
ADVANCE/DECLINE LINE: The advance/decline line shows, for some period, the
cumulative difference between advancing and declining issues.
CLOSING TICK: Closing tick is the difference between the number of shares that
closed on an uptick and those that closed on a downtick.
CLOSING ARMS: Closing arms or trin (trading index) is the ratio of average
trading volume in declining issues to average trading volume in advancing issues.
Z-BLOCK TRADES: zBlock trades are trades in excess of 10,000 shares.
HI-LO-CLOSE CHART: A hi-lo-close chart is a bar chart showing, for each day, the
high price, low price, and closing price.
CANDESTICK CHART: A candlestick chart is an extended version of the hi-lo-close
chart. It plots the high, low, open, and closing prices, and also shows whether the
closing price was above or below the opening price
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79
CHAPTER-8
BIBLIOGRAPHY
BIBLIOGRAPHY
80
WEBSITES:
www.tradingday.com
www.marketscreen.com
www.icicidirect.com
www.nseindia.com
www.investopedia.com
www.indiainfoline.com
www.economictimes.com
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