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Executive Summary
Executive Summary
The share prices in the stock market fluctuate on a daily basis due to continuous buying and
selling. Stock prices move in trends and cycles and are never stable. An investor in the stock
market is interested to get a good return on his investment and hence purchases securities at a
low price and sells them at a high price. However, to gain successfully return on investments
in a volatile stock market is not an easy job to do. An investor should adequate knowledge
about the working of the stock and securities market and the kind of risks involved in it. Well
defined information about securities being traded in the markets, its fluctuation in prices
provides the investors with basic understanding of the markets and helps them in their
investments, i.e. investing in the right type of securities at the right time. Hence, this is where
technical analysis comes into picture. Technical analysts consider a wide range of factors
most importantly price movements and volume to indicate the future trend of the market and
the best buying and selling opportunities of stocks.
The purpose of this study is to analyze five stocks belonging to various sectors trading
in the Bombay Stock Exchange (BSE) through technical analysis. The market movements are
analyzed using tools such as Exponential Moving Average (EMA), Relative Strength Index
(RSI), Moving Average Convergence/Divergence (MACD) and Rate of Change (ROC).
The study aims at extracting the price movements of selected company stocks over a
period of one year. These prices are observed and analyzed using the above mentioned
indicators and on the basis of which conclusions are drawn on the trend of price movements
and whether to buy or sell the stock in the near future.
CHAPTER - 1
INTRODUCTION
The bank interest rates have been increasing steadily but we cannot ignore that
Inflation rate has also been increasing. The impact of inflation is that the value of money is
decreasing and cost of living is increasing. For example at an inflation rate of 15% the
monthly expenses of Rs. 30000 would increase to Rs. 38288 after 5 years, Rs. 62,368 after 15
years and Rs. 79,599 after 20 years. In the similar way the value of Rs. 100000 at an inflation
rate of 15% would reduce to to Rs. 78,353 after 5 years, Rs. 48,102 after 15 years and Rs.
37,689 after 20 years. This throws light on the fact that just having made savings in banks is
not a financially prudent decision. So, the investors are now searching for proper investment
avenues which possess both safety of principal and give good return on investments.
In 2014, the Indian capital markets were one of the best performing markets globally.
The BSE Sensex rose a whopping 30% this year, its highest gain in five years. Mid- and
small-cap indices have performed much better, with 50% and 70% gains, respectively. Going
ahead, India is expected to continue the good show in 2015. Here comes the role fundamental
and technical analysis of stocks which facilitate investors make better decisions. This study
particularly concentrates on technical analysis of stocks and assists the readers in
understanding the use of charts and technical indicators in short term stock market trading.
The stock market indicators help the investor to identify price behaviour and major
market turning points. Any investor must definitely consider technical analysis as a tool
whether to buy or sell a stock at a particular point of time. The objective of the project is to
make a study on the technical analysis on selected stocks across various sectors and interpret
on whether to buy or sell them by using techniques.
METHODOLOGY ADOPTED
a. Candlestick Chart
Japanese candlestick charts form the basis of the oldest form of technical analysis.
Candlestick charts provide the information as namely open price. High price, low
price and Close price. However, Candlestick charting provide a visual indication of
market psychology, market sentiment and potential weakness making it a rather
valuable trading tool.
b. Exponential moving average
Exponential moving average (EMA) is calculated by using the following formula:
Where
Factor = 2/ (n+1)
The moving averages are plotted on the price charts. The curved line joining these
moving averages represent the trend line. When the price of the share intersects and
moves above or below this trendline, it may be taken as the first sign of trend reversal.
Where
RS = Average gain per day / Average loss per day
LITERATURE REVIEW
Ranjit Singh, Amit Kumar 2011 Authors Ranjit Singh and Amit Kumar from GGS
College of Modern Technology, Kharar, Mohali, Punjab, India. and College of Information
Science and Technology, Nanjing Forestry University, Nanjing, Jiangsu, China respectively
presented a research report on the topic Intelligent Stock Trading Technique using Technical
Analysis. The paper presents intelligent trading setup which can be used by any investor to
pick stock for buying at right time to get handsome profits. The study is conducted on
parameters such as charts, trend lines, moving averages and other technical indicators. The
authors introduce a setup which is a combination of price pattern and technical indicators
together, that gives the right conditions for predicting with reasonable confidence the future
direction of the stock’s price
For carrying out analysis limited parameters were considered. These parameters may
not be enough to predict the future price movements.
Technical analysis only for three year is undertaken; from this data we cannot predict
prices accurately.
This study can be used only for short term decision making.
CHAPTER - 2
COMPANY PROFILE
Introduction
Anand Rathi, founded in the year 1994, is one among the prime investment banks in
India operating from 350 different locations. The firm has shown a notable presence in
various other international locations including Hongkong, Dubai and London. Under the
active leadership of Mr. Anand Rathi and Mr. Pradeep Gupta, the firm has grown to a
strength of 2500 professional span over all the locations. The principal focus has been to
provide financial services and wealth management solutions for HNIs, conglomerates and
organizations.
A client centric approach with an objective of providing long term value addition to
the customers while retaining excellent professionalism and ethics has enabled the firm to
make a distinct remark in this field. The objectives and the virtues to attain them have been
widely appreciated and acknowledged with The Best Domestic Private Bank in India by
Asiamoney in their Fifth Annual Private Banking Poll 2009. The company has come out as a
winner across all key segments in Asiamoney’s largest survey of high net worth individuals
in India.
Service Offerings
Equity Research:
AnandRathi’s exceptionally rated 25 member equity research team covers almost 200
companies across 15 sub-sectors. They possess a unique understanding of sectors and
companies, ensuing in profitable investment opportunities.
Investment Banking
AnandRathi’s 30 member sector focused investments banking team works entirely with small
and mid-sized companies, offering high quality advice on capital raising, M&As and
restructuring.
AnandRathi’s encompasses a rich 16 year history in equity trading and distribution making it
exclusively placed to offer the complete gamut of capital market services to small and mid-
sized companies.
Products offered
This product offers you instant liquidity. In case there is requirement of funds for
personal need or need to increase holding/ investment in listed collaterals, there is no need to
sell the securities. All that is to be done is execute a loan agreement with ARGFL. A Loan
facility up to a value determined based on existing portfolio can be given. A sanction limit
based on requirement just like overdraft facility from the bank is made available. There are
nil minimum commitment charges, hidden cost and early payment charges other than interest
on your actual utilization of limits and sanction limit is flexible based on movement of
portfolio and its valuation.
IPO Finance
This product is a loan facility offered for applying in Primary Market Issues (IPOs
and FPOs). With the help of this product, investors can apply for IPOs. The investors can
invest only a margin amount specified separately for each IPO.
ESOP funding
This product is a loan facility presented against shares which have been approved /
allotted to employees by their employer. This facility enables employees to exercise their
ESOP options by providing a loan against ESOP Grants.
Customized Financing
This facility helps create customized and secured financing products catering to your
requirements. The Collateral can be presented in the form of Mutual Fund units, Exchange
Traded Funds (ETF), Fixed Maturity Plans (FMPs), Saving Bonds and other securities.
1994
1995
1997
2001
2002
2003
2004
2005
2007
2009-2011:
Ranked as No. 1 amongst South Asia's wealth managers for the ultra-rich
by Asia Money Poll.
ARG Asset Under Management is 5500Crs.
Has strengthened its manpower with 6500+ Employees.
Top Management
Mr. Rathi, a gold medallist chartered accountant, has a vast experience spanning over 40
years. Mr. Rathi has presided ICAI and BSE as a valuable member, eventually rising to the
position of president of BSE in 1999. He pioneered the expansion of the online trading
system BOLT. He also set up the Trade Guarantee Fund and played a vital role in setting up
the Central Depository Services Ltd (CDSL).
Mr. Amit Rathi is a Chartered Accountant and holds an MBA graduate degree from the New
York University - Leonard N. Stern School of Business. He has played a key role in setting
up the Private Wealth Management (PWM) and Investment Banking (IB) businesses of the
Anand Rathi group, and instituting them in the global markets. By the virtue of his leadership
skills and inspiration the group has been able to flag consistent growth in this field.
Corporate structure
The fundamental research team covers ~100 stocks and tracks a further 150.
Ms. Priti Gupta got “Women Leader of the year Award" in 2010 in Financial
Category by NDTV Profit.
Mr. Anand Rathi awarded by Zee Business for his contribution towards India’s
Capital market in January, 2010.
Private Wealth Team was awarded for generating the ‘Highest AUM growth in 2010’
for Kotak (by Mr. Uday Kotak himself)
Mr. Kishore Narne won the Zee Business’s as “Best Technical Analyst-
Commodities”