TECHNICAL INDICATORS: IDENTIFYING BUY AND SELL SIGNALS

Presenter s:

Ankur Jain Ghulam Khan Saurabh Manoj Kumar

FUNDAMENTAL ANALYSIS: DEFINED
Fundamental analysis is a stock valuation method that uses financial and economic analysis to predict the movement of stock prices. The fundamental information that is analyzed can include a company's financial reports, and non-financial information such as estimates of the growth of demand for products sold by the company, industry comparisons, and economy-wide changes, changes in government policies etc.

FUNDAMENTAL ANALYSIS: KEY FINANCIAL RATIOS
 Earning

Per Share  P/E Ratio  PEG Ratio  Dividend Yield Ratio  Price to Book Ratio  Debt-Equity Ratio

KEY FINANCIAL RATIOS: INFOSYS TECH
31-03-2005 31-03-2006 31-03-2007 31-03-2008 31-03-2009 DEBT-EQUITY RATIO EPS GROWTH IN EPS NA NIL NIL 70.38 NIL 87.86 NIL 66.23 NIL 78.15 17.997886 101.58 29.980806 24.8366013 -24.618712

BOOK VALUE DIVIDEND/SHARE CLOSING PRICE/SHARE P/E RATIO PEG RATIO

193.73 11.5 1128.6 16.035806 NA

250.29 45 1490.7 16.9667653

195.41 11.5 2018.65 30.47939

235.84 33.25 1439.9 18.424824 1.0237216

310.9 23.5 1323.9 13.033077 0.434714

0.68313555 -1.2380579

DIVIDEND YIELD RATIO PRICE/BOOK RATIO

1.0189615 5.8256336

3.01871604 5.95589117

0.5696877 10.330331

2.3091881 6.1054104

1.7750585 4.2582824

SOURCE: WWW.MONEYCONTROL.COM

FUNDAMENTAL VS TECHNICAL ANALYSIS
Fundamental analysis is the analysis of a stock on the basis of core financial and economic analysis to predict the movement of stocks price. On the other hand, technical analysis is the study of prices and volume, for forecasting of future stock price or financial price movements.

TECHNICAL ANALYSIS: DEFINED
Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is "likely" to happen to prices over time.

TECHNICAL ANALYSIS: STRENGHTS
 Focus

on price  Supply, demand and price action  Support/resistance  Pictorial price history  Assist with entry point

TECHNICAL ANALYSIS: WEAKNESS
 Analyst

bias  Open to interpretation  Too late  Always another level  Trader’s remorse

TECHNICAL ANALYSIS: INDICATORS
 Bollinger

Bands  Moving Average Convergence Divergence  Volumes  Relative Strength Index

CHARTS
A price chart is a sequence of prices plotted over a specific time frame. In statistical terms, charts are referred to as time series plots. On the chart, the y-axis (vertical axis) represents the price scale and the x-axis (horizontal axis) represents the time scale. Technicians, technical analysts and chartists use charts to analyze a wide array of securities and forecast future price movements.

CHARTS: INFOSYS TECH (BSE)
2 1 3 4

SOURCE: WWW.ICHARTS.IN

CHARTS: INFOSYS TECH (BSE)
SIGNAL -1 (BUY), 19-05-2005 C.P = Rs. 2098.5 * 100 SHARES = Rs. 209850/SIGNAL -2 (SELL), 11-07-2005 C.P = Rs. 2315.45 * 100 SHARES = Rs. 231545/% RETURN = (231545-209850)/209850 = 10.33% ANNUALIZED RETURNS = (10.33/53DAYS)*360DAYS = 70.16%

CHARTS: INFOSYS TECH (BSE)
SIGNAL -3 (BUY), 29-07-2005 C.P = Rs. 2269.2 * 100 SHARES = Rs. 226920/SIGNAL -4 (SELL), 19-10-2005 C.P = Rs. 2499.95 * 100 SHARES = Rs. 249995/% RETURN = (249995-226920)/226920 = 10.16% ANNUALIZED RETURNS = (10.16/82DAYS)*360DAYS = 44.6%

CHARTS: INFOSYS TECH (BSE)
5 6

SOURCE: WWW.ICHARTS.IN

CHARTS: INFOSYS TECH (BSE)
SIGNAL -5 (BUY), 7-11-2005 C.P = Rs. 2637.1 * 100 SHARES = Rs. 263710/SIGNAL -6 (SELL), 12-01-2006 C.P = Rs. 2835 * 100 SHARES = Rs. 283500/% RETURN = (283500-263710)/263710 = 7.5% ANNUALIZED 40.9% RETURNS = (7.5/66DAYS)*360DAYS =

CHARTS: INFOSYS TECH (BSE)
AVERAGE ANNUALIZED RETURNS = ( 70.16+ 44.6+ 40.9)/3 = 51.8% VS BUY, 1-04-2005 Rs. 2243.6 * 100 SHARES = Rs. 224360/SELL, 27-03-2006 Rs. 2881.65 * 100 SHARES = Rs. 288165/ANNUALIZED RETURN = (288165-224360)/224360 = 28.43%

CHARTS: INFOSYS TECH (BSE)
1 2 3

SOURCE: WWW.ICHARTS.IN

CHARTS: RIL (BSE)
SIGNAL -1 (BUY), 13-07-2007 C.P = Rs. 1768.5 * 100 SHARES = Rs. 176850/SIGNAL -2 (SELL), 31-07-2007 C.P = Rs. 1892.3 * 100 SHARES = Rs. 189230/% RETURN = (189230-176850)/176850 = 7% ANNUALIZED 148.23% RETURNS = (7/17DAYS)*360DAYS =

CHARTS: RIL (BSE)
4

SOURCE: WWW.ICHARTS.IN

CHARTS: RIL (BSE)
SIGNAL -3 (BUY), 29-08-2007 C.P = Rs. 1889.8* 100 SHARES = Rs. 188980/SIGNAL -4 (SELL), 18-01-2008 C.P = Rs. 2799.5 * 100 SHARES = Rs. 279950/% RETURN = (279950-188980)/188980 = 48.13% ANNUALIZED RETURNS = (48.13/142DAYS)*360DAYS = 122.01%

CHARTS: INFOSYS TECH (BSE)
AVERAGE ANNUALIZED RETURNS = ( 148.23+ 122.01)/2 = 135.12% VS BUY, 2-04-2005 Rs. 1313.5 * 100 SHARES = Rs. 131350/SELL, 27-03-2006 Rs. 2264.5 * 100 SHARES = Rs. 226450/ANNUALIZED RETURN = (226450-131350)/131350 = 72.4%

CHARTS: ICICI (BSE)
1 2 3

SOURCE: WWW.ICHARTS.IN

CHARTS: ICICI (BSE)
SIGNAL -1 (BUY), 17-05-2007 C.P = Rs. 935.75* 100 SHARES = Rs. 93575/SIGNAL -2 (SELL), 26-07-2007 C.P = Rs. 945.1 * 100 SHARES = Rs. 94510/% RETURN = (94510-93575)/93575 = 0.99% ANNUALIZED RETURNS = (0.99/70DAYS)*360DAYS = 5.09%

CHARTS: ICICI (BSE)
4

SOURCE: WWW.ICHARTS.IN

CHARTS: ICICI (BSE)
SIGNAL -3 (BUY), 3-09-2007 C.P = Rs. 907.3* 100 SHARES = Rs. 90730/SIGNAL -4 (SELL), 18-01-2008 C.P = Rs. 1245.45 * 100 SHARES = Rs. 124545/% RETURN = (124545-90730)/90730 = 37.2% ANNUALIZED RETURNS = (37.2/137DAYS)*360DAYS = 97.75%

CHARTS: ICICI (BSE)
AVERAGE ANNUALIZED RETURNS = (5.09+97.75)/2 = 51.42% VS BUY, 2-04-2007 Rs. 804.5 * 100 SHARES = Rs. 80450/SELL, 31-03-2008 Rs. 770.1 * 100 SHARES = Rs. 77010/ANNUALIZED RETURN = (77010-80450)/80450 = (4.2)%

THANK YOU

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