“Technical Analysis of Stocks and Trends using Charts and

Analysis of Patterns.”

Submitted by

Antony Babu [1512006]

Harikrishna [1512011]

Mathew Subhash [1512014]

 CHAPTER 1 –

INTRODUCTION
1.1 Financial Markets

A financial market is a broad term describing any marketplace where buyers and sellers
participate in the trade of assets such as equities, bonds, currencies and derivatives. Investors
have access to to a large variety of financial products

1.1.1 Capital Markets

A capital market is one in which individuals and institutions trade financial securities.
Organizations and institutions in the public and private sectors also often sell securities on the
capital markets in order to raise funds. It is primarily different from money market due to the fact
that the latter comprises of financial instruments with high liquidity and very short maturities.

Stock Markets
Stock markets allow investors to buy and sell shares in publicly traded companies.
They are one of the most vital areas of a market economy as they provide companies
with access to capital and investors with a slice of ownership in the company and the
potential of gains based on the company's future performance. 

This market can be split into two main sections: the primary market and the
secondary market. The primary market is where new issues are first offered, with any
subsequent trading going on in the secondary market.

Our research is based on the price fluctuations of securities which pertain to the secondary
capital market.

1.2 Investment Analysis

Investors commonly perform investment analysis by making use of fundamental analysis and
technical analysis after which they decide where to invest based on the results and their intuition.
1.2.1 Technical Analysis vs Fundamental Analysis

Technical analysis and fundamental analysis are the two main schools of thought when it comes
to analyzing the financial markets.

Technical analysis looks at the price movement of a security and uses this data to predict future
price movements. Fundamental analysis instead looks at economic and financial factors that
influence a business.

Time Horizon: Fundamental analysis takes a long-term approach to investing compared

to the short-term approach taken by technical analysis.

Tools of the Trade: Technical analysts believe that there’s no reason to analyze a
company’s financial statements since the stock price already includes all relevant
information. Technical analysts typically begin their analysis with charts, while
fundamental analysts start with a company’s financial statements.

Objective: Technical analysts try to identify many short- to medium-term trades where
they can flip a stock, while fundamental analysts try to make long-term investments in a
stock’s underlying business.

Thus, our research shall follow the technical approach as it involves studying the price
movements and the trends and patterns which develop subsequently.

1.2.2 Technical Analysis – Trends, Charts and Patterns

Technical analysis is a method of evaluating securities that involves a statistical analysis of

market activity, such as price and volume. Technical analysts do not attempt to measure a
security’s intrinsic value, but rather, use charts and other tools to identify patterns that can be
used as a basis for investment decisions.
Technical analysis is based on three assumptions:

1. The market discounts everything - Efficient Market Hypothesis, which states that a
stock’s price already reflects everything that has or could affect a company – including
fundamental factors.
2. Price moves in trends - prices move in short-, medium-, and long-term trend
3. History tends to repeat itself - The repetitive nature of price movements is often
attributed to market psychology, which tends to be very predictable based on emotions
like fear or excitement.

Trends

The meaning in finance isn’t all that different from the general definition of the term – a trend is
really nothing more than the general direction in which a security or market is headed.

Trends aren’t always easy to spot because prices almost never move in straight lines. Rather,
prices tend to move in a series of highs and lows over time. In technical analysis, it is the overall
direction of these highs and lows that constitute a trend.

There are three types of trends:

1. Uptrend
2. Downtrend
3. Sideways / Horizontal Trends

An uptrend is classified as a series of higher highs and higher lows, while a downtrend consists
of lower lows and lower highs. Sideways or horizontal trends occur when there is little
movement up or down in the peaks and troughs of a trend.

Trends can be classified in terms of their length. Long-term trends occur over a timeframe of
longer than one year; intermediate-term trends occur over one to three months; and, short-term
trends occur over less than one month.
Trend lines

A trend line is a simple charting technique whereby a line is added to a chart to represent the
trend in a market or stock. Drawing a trend line is as simple as drawing a straight line that
connects lower lows or higher highs to show the general trend direction.

Importance of Trend

It is important to identify and understand trends so that you can trade with rather than against
them. Two important sayings in technical analysis are “the trend is your friend” and “don’t buck
the trend”, illustrating how important trend analysis is for technical traders.

Charts

Charts are simply graphical representations of a series of prices over time.

There are four primary types of charts used by investors and traders depending on the type of
information they’re seeking and their desired goals. These chart types include line charts, bar
charts, candlestick charts, and point and figure charts.

Line Charts

Line charts are the most basic type of chart because it represents only the closing prices
over a set period. The line is formed by connecting the closing prices for each period over
the timeframe. While this type of chart doesn’t provide much insight into intraday price
movements, many investors consider the closing price to be more important than the
open, high, or low price within a given period.

Bar Charts

Bar charts expand upon the line chart by adding the open, high, low, and close – or the
daily price range, in other words – to the mix. The chart is made up of a series of vertical
lines that represent the price range for a given period with a horizontal dash on each side
that represents the open and closing prices. The opening price is the horizontal dash on
 the left side of the horizontal line and the closing price is located on the right side of the
line.

Candlestick Charts

Candlestick charts originated in Japan over 300 years ago, but have since become
extremely popular among traders and investors. Like a bar chart, candlestick charts have
a thin vertical line showing the price range for a given period that’s shaded different
colors based on whether the stock ended higher or lower. The difference is a wider bar or
rectangle that represents the difference between the opening and closing prices.

Falling periods will typically have a red or black candlestick body, while rising periods
will have a white or clear candlestick body. Days where the open and closing prices are
the same will not have any wide body or rectangle at all.

Point and Figure Charts

Point and figure charts are not very well known or used by the average investor, but they
have a long history of use dating back to the first technical traders. The chart reflects
price movements without time or volume concerns, which helps remove noise – or
insignificant price movements – that can distort a trader’s view of the overall trend.

Charts are the most fundamental aspect of technical analysis. It’s important for traders to
understand what’s being shown on a chart and the information it provides.

Patterns

Chart patterns are geometric shapes found in the price data that can help a trader understand
the price action, as well make predictions about where the price is likely to go. 

The two most popular chart patterns are reversals and continuations. A reversal pattern signals
that a prior trend will reverse upon completion of the pattern, while a continuation pattern signals
that the trend will continue once the pattern is complete. These patterns can be found across any
timeframe.
Double Top

The Double Top Reversal is a bearish reversal pattern typically found on bar charts, line charts,
and candlestick charts. As its name implies, the pattern is made up of two consecutive peaks that
are roughly equal, with a moderate trough in-between.

Double Bottom
The Double Bottom Reversal is a bullish reversal pattern typically found on bar charts, line
charts and candlestick charts. As its name implies, the pattern is made up of two consecutive
troughs that are roughly equal, with a moderate peak in-between.

Triple Top

The Triple Top Reversal is a bearish reversal pattern typically found on bar charts, line charts
and candlestick charts. There are three equal highs followed by a break below support. As major
reversal patterns, these patterns usually form over a 3 to 6 month period.

Triple Bottom

The Triple Bottom Reversal is a bullish reversal pattern typically found on bar charts, line charts
and candlestick charts. There are three equal lows followed by a break above resistance. As
major reversal patterns, these patterns usually form over a 3- to 6-month period

Falling Wedge
The Falling Wedge is a bullish pattern that begins wide at the top and contracts as prices move
lower. This price action forms a cone that slopes down as the reaction highs and reaction lows
converge. In contrast to symmetrical triangles, which have no definitive slope and no bias,
falling wedges definitely slope down and have a bullish bias. However, this bullish bias cannot
be realized until a resistance breakout.

Rising Wedge
The Rising Wedge is a bearish pattern that begins wide at the bottom and contracts as prices
move higher and the trading range narrows. In contrast to symmetrical triangles, which have no
definitive slope and no bullish or bearish bias, rising wedges definitely slope up and have a
bearish bias.

Bump And Reversal Run [BARR]

The Bump and Run Reversal (BARR) is a reversal pattern that forms after excessive speculation
drives prices up too far, too fast.

Flags and Pennants

Flags and Pennants are short-term continuation patterns that mark a small consolidation before
the previous move resumes. These patterns are usually preceded by a sharp advance or decline
with heavy volume, and mark a mid-point of the move.

Rectangle

A Rectangle is a continuation pattern that forms as a trading range during a pause in the trend.
The pattern is easily identifiable by two comparable highs and two comparable lows. The highs
and lows can be connected to form two parallel lines that make up the top and bottom of a
rectangle. Rectangles are sometimes referred to as trading ranges, consolidation zones or
congestion areas.
 CHAPTER 2 –

LITERATURE REVIEW
2.1

Author: Raghunandan H.J

Title: A Speculation from the Financial Strategy of Dead Cat Bounce in the
Indian Equity Stock

This paper talks about occurrence of Dead Cat Bounce which is a temporary recovery of prices
from a prolonged decline or bearish markets and the recovery is nominal. Using such patterns,
current trends of Security Price Fluctuation can be understood and forecasting of Prices can be
made. It focuses on the identification of such a pattern in the stocks of the selected Indian Public
listed companies. This paper analyses the reasons for the occurrence of such price patterns.
Mostly what these studies try to predict the future price of the stock at the onset of a trend,
however the same has not been given weightage in the given paper as it focuses more on the
reasons for such price pattern observed in the selected securities.

(Raghunanadan, 2017)

2.2

Author: C. Boobalan

Title: Technical Analysis in select stocks of Indian Companies

This paper talks about use of Technical Analysis in the selected securities of the selected Indian
Public listed companies. Technical analysis is the forecasting of future price movements based
on an examination of past price movements. The paper examines the price movements of the
selected companies. This paper analyses the technical indicators which flash such buy or sell
signals. Technical Analysis help chart a visual indication of the market psychology, market
sentiment and potential weakness. However this paper does not foray into forecasting the future
price movements but focuses on identifying such indicators which could serve the investors
while selecting the securities.

(Boobalan, 2014)
2.3

Author: Charles D. Kirkpatrick, Julie R Dahlquist

Title: Technical Analysis -The complete resource for Financial Market

Technicians

The book provides an end to end overview of Technical Analysis, the principles of Technical
Analysis, various market trends, Temporal patterns and cycles, Breakouts, stops and
retracements, Moving Averages, Chart Pattern Analysis, Point and Figure Chart Patterns, Short
Term Patterns, Trend Confirmations, Selection of Markets and Issues, Trading and Investing ,
Money and Risk Management. The intent is to provide the reader with a basic reference to
support a lifelong study of technical analysis which ensures effectiveness and efficiency in
investing into securities and can downsize the risk of losses on the course of investing.

(D. Kirkpatrick & Dahlquist, 2006)

2.4

Author: Hemal Pandya

Title: Technical Analysis for Selected Companies of Indian Information

Technology Sector

This paper focuses on the performance of various companies in the Information Technology
sector and aims to predict the future trends in the prices through tools of Technical Analysis. The
objective of the paper is to assist the investors in making decisions in Indian Information
Technology Sector. This sector is crucial as the export revenue of 99 billion USD and contributes
7.5% of the Gross Domestic Product. Many of the major Information Technology companies are
listed at National Stock Exchange as well as the Bombay Stock Exchange providing a lot of
opportunities for investors to invest in the securities of such companies. The paper focuses on
forecasting the future price movements by using the tools such as stock charts, Exponential
moving average. The weightage is given on the price movements and less on the reasons
surrounding such patterns observed. (Pandya, 2013)
2.5

Author: Sudheer V

Title: Trading through technical analysis: an empirical study from Indian

stock market

The paper endeavors to apply the tools and techniques of technical analysis to assist investment
decisions in Indian Equity markets. Technical analysis examines the four dimensions, namely
price, volume, time and breadth. Changes in price reflect changes in investor attitude, while
volume reflects the intensity of changes in investor attitude. Time reflects length of cycles in
investor psychology. Breadth, measures the extent of emotion of the investors. The paper seeks
to find the relevance of technical analysis in the Indian context and advise investors in making
investment decisions.

(Sudheer, 2015)

2.6

Author: Mrs. J. Nithya, Dr. G. Thamizhchelvan

Title: Effectiveness of Technical Analysis in Banking Sector of Equity Market

The paper aims to find the right stock for investment and to provide justification for the
investment based on the candlestick chart and indicators. The paper endeavors to meet the
financial goal of investors and to ensure effective utilization of analysis done on the price
movements of the securities of the selected Banking companies. This study tries to predict the
future price of the stock at the onset of a trend and does not focus much on the reasons of the
formation of price patterns.

(Thamizhchelvan & Nithya, 2014)

2.7

Author: Selene Yue Xu

Title: Stock Price Forecasting Using Information from Yahoo Finance and
Google Trend

This paper aims to combine the information from Google trend website and the Yahoo finance
website and the conventional time series analysis technique to predict weekly changes in stock
price. Various news/events related to stock over a five year span are recorded and its effect on
the stock prices are shown. The result of this experiment shows significant correlation between
the changes in weekly stock prices and the values of important news/events computed from the
Google trend website

(Xu, 2012)

2.8

Author: Ravi Patel

Title: Guide to Technical Analysis & Candlesticks

This book explains the basics of stock markets, stock market analysis and various case studies in
technical analysis. The book proves to be a guide for a new investor as it explains the basics of
investing and identifying stock patterns to maximise returns on the money invested in the stock
market

(Patel, 2010)
2.9

Author: Sumit Kaur

Title: Financial market development and Integration: A look at the Indian

story.

The papers studies the importance of the Indian Financial market and its development right from
Independence to the present day. A presence of a strong central bank ensured India did not fall
into financial instability which is common among developing countries. The paper outlines the
importance of forex markets, the resilience of Indian financial institutions during the 2008
financial crisis and integration of financial markets and its benefits for the citizens of the country.
The relationship between macro-economic fundamentals and financial market variables is
evaluated in this paper.

The paper confirms that a better financial market integration leads to higher efficiency of
financial markets and thereby leads to higher availability of better risk-return combinations to
investors. This paper provides a broad outlook of the financial markets in our country.

(Kaur, 2014)

2.10

Author: Dr. Gurinder Singh and Ms. Navleen Kaur

Title: Investigation of the Determinants to Augment Investment in the Indian

Stock Market

The papers endeavors to find the reasons why in a population of 1.3 billion only 3% invest in the
stock market. It seeks to find ways by which the general public can be drawn towards the equity
markets which can unlock liquidity and flow of funds in an economy. The study compares
investment in Indian Stock Market with United States, London and Japanese Stock Market. This
report analyzed the responses of investors and non-investors towards Indian Stock Market. Age
old taboos regarding financial dealings, especially in rural India leads to their non-participation
in equity markets. (Singh & Kaur, 2015)
2.11

Author: Prasanna Chandra

Title: Investment Analysis and Portfolio Management

This book is written with the objective of providing junior level equity researchers, investment
counselors, students and portfolio managers a lucid introduction to the world of investing in
securities and creating portfolios. It decrypts the complexities of the of the investment world by
addressing basic concepts and modeling methods and then going on to modern portfolio theory,
fixed income, equity shares and derivatives. The book encompasses the various techniques used
by professionals in for analyzing and valuing investment alternatives which is in relation to our
research objective.

(Chandra, 10 March 2017)

2.12

Author: Bharati. V. Pathak

Title: The Indian Financial System This book engages with important aspects of the
financial system and aims to help the readers decrypt the Indian Financial System – a complex
amalgamation of various institutions, markets, regulations and laws, analysts, transactions,
claims and liabilities.

(Pathak, 2014)

2.13
Author: Jeremy Whaley

Title: The Secret to Predicting Stock Market Prices with Chart Patterns

This is a very concise and well-structured article that provides the entire framework and ideology
behind the use of chart patterns. Jeremy Whaley gives a brief history of the origin of chart
pattern and its ability to have stood the test of time. He displays confidence in his beliefs
regarding the credibility of chart patterns and knowing of which would expand the risk
foreseeing capacity of an investor by leaps and bounds. He stresses on the core tenant of
technical analysis which is the undeniable fact that people are very predictable and that through
learning chart pattern the investor is effectively reading human behavior in motion.

(Whaley, 2016)

2.14

Author: Steve Nison

Title: Beyond Candlesticks: New Japanese Charting Techniques Revealed

Considered the “Father of Candlesticks” in the world of securities market, Steve Nison is the
phenomenal financial analyst who has been credited with introducing the concept of Japanese
candlesticks, one of the most powerful tools of technical analysis of stocks and securities to the
west. As a follow up to his primary most priceless contribution in 1990 (introduction to
candlesticks), Beyond Candlesticks opened the world of stocks and its players to a new
collection of exotic candlestick techniques. In this book Nison has revealed dominantly four new
exquisite patterns- Kagi, Renko, Three Line Break charts and the disparity index. Unlike the first
publication which focused mainly on future markets, in this book Nison elaborates the
application of techniques on stocks, foreign exchange and bonds. This book has been considered
by financial analysts and fervent market traders across the globe as a must have for trading in
securities the intelligent way.

(Nison, 1994)

2.15

Author: Rahul Oberoi

Title: Making Hot Money Through Cup and Handle Techniques

Cup and Handle is one of the most well-known stock chart patterns among technical analysts. It
is one of the easiest ones to identify among stocks. In this article, Rahul Oberoi elucidates the
simplicity of this pattern and how an investor in India can rely on it confidently in comparison to
other pattern given the risk factor of the investor may be less. The article outlines the opinions of
several senior technical analysts on the Cup and Handle pattern, most of which signifies the
importance of the distance existing between the resistance and support levels (the cup’s bottom
and the neckline level). He has then listed 10 stocks that have shown the pattern in the past 6 to
12 months. This includes Mahindra and Mahindra, Apollo Tyres, Bata India, Nestle India, HCL
Technologies etc.... The market outlook provided by him shows positive expectations following
3 to 4 months.

(Oberoi, 2017)

2.16

Author: Jim Cramer

Title: The Key Chart Pattern All Investors Should Keep In Mind

Jim Cramer is a financial analyst television representative for CNBC network in the US. His
approach to understanding and exploiting the tool of stock charts in stock market prediction is
one of the most simplified and organized. There is a lot of passion that is reflected in his method
of financial advisory. Cramer stresses that the most efficient results arises from focusing
thoroughly on the fundamental and technical aspects of a stock. He believes in using the simple
average price movement of a stock more than the graphing of daily price movement but the latter
does always require due importance. Cramer suggests the use of RSI to understand whether the
stock is in an overbought/sold position and additionally asks the investor to compare the RSI
value with the RSI of a related factor to get price trends. He cites examples of his own
experiences with different stock patterns that has benefited him as well as shook him. (Cramer,
2017)

2.17
Author: Dan Zanger and Randy Zanger

Title: The Zanger Report

Dan and Zandy Ranger are one of the most dedicated tutors of the art of analyzing stocks
through use of stock chart patterns. Their work is considered ideal for an individual who plans to
enter the stock market as a fresher and does not wish to waste unnecessary time on other areas. It
is a book that people have praised immensely for dispensing extensive crucial information and
improving overall trading activity reasonably for its readers.

(Zanger, 2017)

2.18

Author: Thomas N. Bulkowski

Title: Getting Started in Chart Patterns - 2nd Edition

One of the very best in the business, Thomas N. Bulkowski has, through his books, given to the
point professional insights and logical advices for players in the stock market. In this 2 nd edition,
the approach is directed towards both fresh and established traders. One of its core discussion
involves the relationship between trading behavior and determination of the support levels. The
book is also considered a testimony of the nearly 25 year experience that Bulkowski had as a
professional trader. The book clearly illustrates the ways in which the power of chart patterns can
be leveraged for making investment decisions. In addition, this book also explores the avenues of
ETFs and Mutual Funds. It also provides actual trading data examples from the past that have
shown remarkable occurrences of patterns.

(Bulkowski, 2014)

2.19
Author: Cody Hind

Title: The 7 Best Price Action Patterns Ranked by Reliability

Samurai Trading Academy is a platform created by Cody Hind for teaching new traders the art of
technical analysis. As part of his curriculum he has listed out 7 stock chart patterns that he
considers are the best based on the data acquired and analysed over and 10 years and through
more than 200,000 patterns. He has included these particular patterns on the condition that these
have shown a proper execution of a break from support or resistance or trend line. The patterns
include Flag pattern (Bull and Bear), Triangle patter (Ascending and Descending), Channel
pattern (Ascending and Descending), Double Top and Double Bottom, Triple Top and Bottom,
Rectangle (Bullish and Bearish) and Head and Shoulders. Additionally he has expressed his
specific disregard for the Pennant pattern on account of its poor performance reflected by an
average 55% success rate compared to the well above 70% rate for the former seven. (Hind,
2013)

2.20

Author: Peter Leeds

Title: How to Trade Penny Stock using Trading Charts

A technical analyst who addresses himself as a fundamentalist by heart, Peter Leeds has a very
unique way of approaching the technical analysis of a stock. He and his team initially engage in
identifying very high quality penny stocks. They use of the Leeds Analysis Process, a creation of
their own that gives 80% weight-age to fundamental aspects and 10% to technical. The balance
10 % is associated with something they term as 3 rd level analysis which looks into traits of
business such as marketing, brand power etc. He outlines the irrelevance that technical analysis
(TA) has on penny stocks as the volume of activity is relatively thin as compared to high priced
stocks for which the TA methods are more applicable. The pattern he suggests for penny stocks
include Price Dips, Share Consolidation, Bottoming out, Topping out, Candlestick patterns and
Gapping stocks.

(Leeds, 2011)
2.21

Author: Trent Hamm

Title: How to Read a Stock Chart in 5 Seconds

Trent Hamm is a technical analyst author who understands the difficulty of the common man in
being able to understand the movements of a stock from a bunch of raw data thrown at them. His
strong belief is that instead of approaching expert analysts and seeking their opinion in most
situations (which may not reveal the entire picture) one can figure out the tricks of TA of stocks
by themselves. Hamm discusses in detail the evolution of technical analysis over the years and
its well debated accuracy rate. He elaborately explains the working of a stock that breaks through
the resistance level and shows how human behavior and predictability go hand in hand. In his
theory the stock reading process can broken down into 5 simple steps; Identify the trend in the
last 6 months, Look for recent spikes, Changes within the organization and comparison with
charts of competitors. (Hamm, 2014)

2.22

Author: Peter Tryfos

Title: Are Stock Prices Predictable?

Perhaps the most debated question in the history of technical analysis is whether the use of the
history of a stock for predicting its future behavior is important. A topic that has faced a lot of
controversy among academics and professionals. Tryfos argues that the past prices of a stock
does not effectively help in prediction and the investor should rather rely on possible new
information. However he also raises the issue of random walk theory wherein information
regarding an event, a decision or a change that helps determining the stock price would render
the past information of a stock useless. For this he takes the help of a hypothetical situation
involving price determination using a roulette wheel. In conclusion he affirms that as long as
new information affecting the future profits of a firm becomes available, traders who are able to
evaluate this information accurately are able to make greater profits, the benefit being the
possession of new information.

(Tryfos, 2001)

2.23

Author: Sowmya Kamath

Title: Graphic Gains - Technical Analysis Tools Useful in India

Intra trading in stocks is the key area discussed by Sowmya in her article on effective tools for
technical analysis in India. She enlists the prime factors that an investor in India would need to
consider to conduct technical analysis. Her first step is to select a stock with high volume and
volatility. The subsequent step is to determine a stop-loss level. The next major step is to identify
a stock trend. For this purpose she recommends the 200 day moving average, Relative Strength
Index (RSI), Moving Average Convergence Divergence (MACD), Fibonacci Retracement and
the basic Support Resistance level knowledge.

(Kamath, 2012)

2.24

Author: Robert D. Edwards, John Magee, W.H.C. Bassetti

Title: Technical Analysis of Stock Trends

This book speaks about the Dow Theory and conversion of manual charting into modern
computer software methods. It describes a trend- following procedure that aims to replace the
Dow Theory called the Basing Points Procedure.

(Robert D Edwards, 2012)

2.25

Author: Raghu Palat

Title: Fundamental Analysis for Investors

This book helps a beginner investor sharpen his skill set by focusing on essential analytical tools
of fundamental analysis. These tools correspond to economic, industry and company analysis
which helps an investor make an investment decisions and calculate the intrinsic value of a share
which has been used by goliaths like Warren Buffet to amass fortunes.

(Palat, 2016)
 CHAPTER 3 –

RESEARCH DESIGN
3.1 Title

“Technical Analysis of Stocks and Trends using Charts and Analysis of Patterns.”

3.2 Statement of problem

The cost benefit analysis tools used by investors are advantageous for deriving returns on a long
term scale. It fails to cover the motives of speculative trading and the activity of aggressive
buying and selling of securities for gaining immediate profits.

Pattern analysis of stock enables the investor to achieve this very purpose by clearly highlighting
the exact points in a stock movement data given(in graphical form/charts) where there exists a
possibility of trend reversal or continuation.

This research study will be undertaken to identify various stock patterns in the selected
industries.

3.3 Objectives

This study has the following objectives:-

1. To examine the stock movement of companies through stock charts and technical analysis.

2. To identify the presence of stock patterns in the data collected.

3. To determine the nature of the stock pattern, i.e. Trend reversals or continuation (bullish
/bearish).

4. To evaluate results and conclude on an Investment decision

5. To understand reasons behind such patterns

3.4 Scope

The industries selected for the purpose of research are Information Technology, Automobile,
Pharmaceuticals and Banking.
Information Technology

Since the reforms of 1991, the information technology sector has been growing at the rate of
10%.The information technology sector contributes 7.5% to the Gross Domestic Product with
multiple listed companies. Tata consultancy services is the market leader with 10.1% market
share. It is extremely competitive with the top five companies garnering 25% market share. The
industry continues to be a net employment generator — expected to add 230,000 jobs in fiscal
year 2012, thus directly employing about 2.8 million people and indirectly employing 8.9
million, making it a dominant player in the global outsourcing sector. However, it continues to
face challenges of competitiveness in the globalized and modern world, particularly from
countries like China and Philippines.

Automobile Sector

The automotive industry in India has grown leaps and bounds since independence. It is among
the largest in the world with a yearly production of 23.96 million vehicles. This sector has nearly
20 players with Maruti Suzuki holding its place as the market leader. The industry contributes
5% of the Gross Domestic Product. India's automobile exports have grown consistently and
reached $4.5 billion in 2009, with the United Kingdom being India's largest export market,
followed by Italy, Germany, Netherlands, and South Africa

Pharmaceutical Industry

The pharmaceutical industry is worth $27.57 billion and is projected to be the sixth largest
market globally in absolute size. US is the biggest market of generic drug makers. India accounts
for the highest FDA approved plants outside the United States of America.
India accounts for 20% of global exports in generics. Pharma exports in India grew at 9.44% in
2016 and are expected to register double digit growth in 2017. The implementation of the Goods
and Services Tax (GST) is expected to be a game-changer for the Indian Pharmaceuticals
industry. It will lead to tax-neutral inter-state transactions between two dealers, thereby reducing
the dependency on multiple states and increasing the focus on regional hubs . The Indian
pharmaceutical market size is expected to grow to US$ 100 billion by 2025, driven by increasing
consumer spending, rapid urbanization, and raising healthcare insurance among others.
Banking Sector

The Indian banking system consists of 27 public sector banks, 21 private sector banks, 45 foreign
banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural cooperative
banks, in addition to cooperative credit institutions. Over the past couple of years, the deposits in
the banking system have surged to 1.5 trillion US dollars. Rising incomes are expected to
enhance the need for banking services in rural areas and therefore drive the growth of the sector;
programs like MNREGA have helped in increasing rural income aided by the recent Jan Dhan
Yojana. The recent bank capitalization has increased the outlook of the banking sector multifold.

3.5 Methodology

The stock prices have been extracted from the website of the Bombay Stock Exchange. This was
plotted onto a line graph by using the tools in Microsoft Excel.

Stock prices from January 2017 to November 2017 of the selected companies were taken and
plotted on a line chart. Using these charts, various patterns are identified and the reasons for the
same are analyzed by inspecting the audited reports, company news and other information
relating to the company for which such patterns are identified.

3.6 Sources of Data

Investopedia- www.investopedia.com

Wikipedia- www.wikipedia.org

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