SUMMER INTERNSHIP PROJECT

FINAL DRAFT OF THE

PROJECT REPORT

EXECUTION PLAN:-
During the period of Internship the 5 projects are given by the industry mentor to work on
that projects. How to read stock charts if we are going to actively trade stocks as a stock
market investor. Spotting and correctly identifying patterns and understanding their
significance. Long and short positions in the trading of stocks. In trading either we can buy
the stocks or sell the stocks for which the intraday strategy has been taught to us. In this
project we will be learning about various intraday strategies like bulls 180, bears 180 and
apply these strategies on a daily basis in the stock market and keep a record of the trades for
analysing the probability of the strategy.

Understood Zerodha Portal

Spotting and correctly identifying patterns and understanding their significance. Long and
short positions in the trading of stocks. In trading either we can buy the stocks or sell the
stocks for which the intraday strategy has been taught to us. In this project we will be
learning about various intraday strategies like bulls 180, bears 180 and apply these strategies
on a daily basis in the stock market and keep a record of the trades for analysing the
probability of the strategy.
1. Put company in watch list
2. How to buy and sell
 To Buy see chart.
 It should be in Intraday.
 Quantity should be 1.
 Square off before 3:00pm.
 Stocks should be of Large Cap.
 Put immediate Stop loss after buying the shares.
 To see the Chart go to Tradingview.com
 Always Buy in Intraday (MIS)

Short Selling
Short selling is a fairly simple concept—an investor borrows a stock, sells the stock, and then
buys the stock back to return it to the lender. In short selling basically first we sell shares and
then buy. If the price drops you can buy back the shares at the lower price and make the profit
on difference. And if the price of the shares rises and then buyed, over there you loose
money.

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In this project we have learned about two intraday strategies like bulls 180, bears 180 and
apply these strategies on a daily basis in the stock market and keep a record of the trades for
analysing the probability of the strategy.
RANDOM
When we buy and sell the shares the randomly at any point of the shares.
 In case of random trades- Stop loss of 1% and target of 2% of the price of the stock.
Target Point

Buying Point

Stoploss

Intraday Strategies
Currently, we had been operating on intraday strategy project. We had been taught
approximately a way to buy and sell a stock, first of all on random strategy in order that we're
aware about the app (Zerodha), secondly, we traded in the stocks according to the strategy
that has been taught to us. As of now we had been taught BULLS180 & BEARS180.
1. BULLS180/ BULLISH ENGULFING

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 It is a downtrend strategy and when the green candle is equal to red candle in a
downtrend there we apply BULLS180 strategy. Bull Spread is a strategy that option
traders use when they try to make profit from an expected rise in the price of the
underlying asset. It can be created by using both puts and calls at different strike
prices. Usually, an option at a lower strike price is bought and one at a higher price
but with the same expiry date is sold in this strategy.
 After purchasing we need to put stop loss which should be equal to closing of
previous candle.
 Target price should be twice of stoploss.
 Candle duration should be of 5 minutes.

Target price is twice of stoploss

Buying Point

Stoploss

2. BEARS180/ DARK CLOUDING

It is an uptrend strategy and when the red candle is equal to green candle in a uptrend there
we apply BEARS180 strategy. In BEARS180 we do short selling means first we sell the
shares and when the price falls then we buy the shares. The main advantage of a bear call

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spread is that the net risk of the trade is reduced. Purchasing the call option with the higher
strike price helps offset the risk of selling the call option with the lower strike price.
Stoploss
Selling Point
Target Price is twice of
stoploss

 In case of BULLS180 & BEARS180 strategy- Target price of stock should be double
of Stop loss.

3. SPRING/SQUEEZE MOMENTUM
This is the third strategy. It is a day trading strategy. The momentum investing is a trading
strategy in which investors buy securities that are rising and sell them when they look to have
peaked. The goal is to work with vitality by finding buying opportunities in short-term
uptrends and then sell when shares start to lose momentum. Skilled traders understand when
to enter into a position, how long to hold it for and when to exit.
When to buy trade:-
 It should be a positive day.
 Indicates that the market is increasing or it is in upward trend which means if nifty
yesterday is 45000 then today it should be more than 45000 means the day is positive.

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  Only on top 10 gainers.
 For upward trend the candle should be green.
 Only consider the body of the candle not the wick of the candle.
 We should take trade nearly 12’0 clock because at that time the market mostly moves
in same range.

Purchasing point

Target-difference of the
gap*2
Stop loss

Technique:-
Purchase= Upper range
S/L= Lower range
Target= P- SL*2
When to sell the shares:-
 It should be a negative day.
 Indicate that the market is decreasing or it is downward trend which means if Nifty
yesterday is 45000 then today it will be less than 45000 means the day is negative.
 Only on top 10 losers.
 For downward trend the candle should be red.
 Only consider the body of the candle not the wick of the candle.
 We should take trade nearly 12’0 clock because at that time the market mostly moves
in same range.

Stop loss

Target- difference of the gap *2

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 Selling point

4. ORB45 (OPENING RANGE BREAK)

ORB45 is a fairly simple strategy where one’s take a trade when previous candle’s high or
low breaks. It is obtained by marking of high and low of a given candle on a 15- minute
chart. Once high and low of the candle is marked on a 15- minute chart, then we take a trade
when the high and low is breached. We initiate trade in the direction of the price move. ORB
is nothing but the opening range breakout trading strategy. So, I prefer to consider 2 hours
from the market opens as an opening range. I believe that the first one hour will be volatile
and then market consolidates in the next hour. If the stock open with a huge gap up or gap
down, then avoid trading for the day. If high of an opening range break with heavy buying
coming into the market, then the stock price will go up. Similarly, break below low of the
range with heavy selling gives you an opportunity to short it.
RULES:-
 Look first three candles (45 minutes).
 Mark the highest and lowest in 3 candles considering the wick.
 Consider the highest wick of candle.
 Limit frame 1 Day (15 minutes).
 9:15 – 10:00 get range.
 As soon as range breaks, we takes the trade.
 Take trade in any company of the large cap.
 It should be on market price.
 No limit order.
 Upper range break by fourth candle then buy.
 Lower range breaks short sell.
Possibility:-
 Profit 2%.

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 Always put stop loss.
 Always Exit before 3 p.m.
 Short selling target.
 Stop loss up short selling.
 No trades.
 2 trades.
 After 1 trade immediately exit.

Purchasing point

Target the difference of gap*2

Stop loss

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 TECHNICAL OSCILLATOR
An oscillator is a technical analysis indicator that varies over time within a band (above and
below a center line, or between set levels). Oscillators are used to discover short-term
overbought or oversold conditions. Moving averages, relative strength index, and stochastic
oscillators are examples of technical indicators. Trading strategies, including entry, exit, and
trade management rules, often use one or more indicators to guide day-to-day decisions.
 Trend of each particular day.
 If any stock is overbought, then price will fall.
 If any stock is oversold, then price will go up.

1. FIBONACCI MOVING AVERAGES

Moving midpoints assist us with affirming and ride the pattern. They are the most known
specialized pointer and this is a direct result of their straightforwardness and their
demonstrated history of increasing the value of the examinations. We can utilize them to
discover backing and obstruction levels, stops and targets, and to comprehend the
fundamental pattern. It consider two kinds of candle 21 Candles and 55 Candles.
There are two types of Fibonacci moving average:-
1. Fibonacci Golden Cross Over: - The golden cross is a chart pattern that is a bullish
signal in which a relatively short-term moving average crosses above a long-term
moving average. As long-term indicators carry more weight, the golden
cross indicates a bull market on the horizon and is reinforced by high trading
volumes.
It’s shown two kind of candles 21 candle which stands for red and 55 candle which
stands for blue. This strategy says when 21 candle line cut the 55 candle line from
down to up then we get the symbol to buy.
RULES: -
 In this strategy we can’t put stoploss and target.
 As soon as you get the intersection and cross over is that is the point to purchase it.
 55 candle (Blue) line on upper side.
 21 candle (Red) line on lower side.
Upward Trend
Golden Cross Over
Purchasing point

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 2. Fibonacci Death Cross Over: - Conversely, a similar downside moving
average crossover constitutes the death cross and is understood to signal a decisive
downturn in a market. The death cross occurs when the short term average trends
down and crosses the long-term average, basically going in the opposite direction of
the golden cross. It is typically seen as a bearish technical pattern, with many chart
watchers seeing them as marking the spot a shorter-term selloff transitions to a
longer-term downtrend.
It’s shown two kind of candles 21 candle which stands for red and 55 candle which
stands for blue. This strategy says when 21 candle line cut the 55 candle line from up
to down then we get the symbol to sell.
RULES:-
 In this strategy we can’t put stoploss and target.
 As soon as you get the intersection and death cross over is that is the point to sell it.
 55 candle (Blue) line on lower side.
 21 candle (Red) line on upper side.
Upward Trend

Death Cross over

(Selling Point)

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 2. SUPERTREND:-

This analysis will itself say what to do. A 'Supertrend' indicator is one, which can give you
precise buy or sell signal in a trending market. As the name suggests, 'Supertrend' is a trend-
following indicator just like moving averages. This signal shows the symbol of short sell with
red arrow and the symbol of long run with green arrow. The indicator is easy to use and gives
an accurate reading about an ongoing trend. When plotted, the supertrend indicator appears
like an alternating blue and red continuous line.

RULES:-

 Target is 2% of the stock price.

 1% of the stock price will be the stop loss.
 Exit the trade as soon as the call itself has changed.

SHORT SELL


 SELLING POINT





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 Purchasing point

LONG RUN
3. RSI (Relative Strength Index):-

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and
change of price movements. Traditionally the RSI is considered overbought when above
70 and oversold when below 30. Generally, when the RSI surpasses the horizontal 30
reference level, it is a bullish sign and when it slides below the horizontal 70 reference
level, it is a bearish sign.

RULES:-
 Target is 2% of the stock price.
 Stoploss is 1% of the stock price.
 Exit when the call itself changes.
 If small scale point go outside the reference we will not consider it as a overbought or
oversold.

4. VWAP (Value Weighted Average Method):-

Strategies for intraday trading using the VWAP might be as simple as buying the first closing
price above VWAP as an entry, and selling at a predetermined point above it. They might go
long only when the price is below the VWAP and short when the price is above VWAP.
VWAP is an indicator, it indicates who is in control of the price (the buyers or the sellers).
When a stock is traded above the VWAP, it means that the buyers are in overall control of the

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price and there is a buying demand on the stock. When a stock price breaks and close below
the VWAP, it is safe to assume that the sellers are gaining control over the price.
 If you get cross over on red candle then the second candle should also be red on the
point of the closing of first candle.
 If you get cross over on green candle then the second candle should also be green on
the point of the closing of first candle.
RULES:-
 Target is 2% of the stock price.
 Stoploss is 1% of the stock price.
 We do not exit during the change of calls in this strategy.
 Do not take trade at adjustment time, when the price is stabilized then take trade.
 Do not take trade on first candle.

Short sell on this candle

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Short sell on this candle

Buy on this candle

No trade we need to wait for

One more candle

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 5. STOCHASTIC RSI:-
This is indicator of indicator. Its range is middle of 20% to 80%. The Stochastic RSI
indicator (Stochastic RSI) is essentially an indicator of an indicator. It is used in technical
analysis to provide a stochastic calculation to the RSI indicator. This means that it is a
measure of RSI relative to its own high/low range over a user defined period of time.

 A Stochastic RSI reading above 0.8 is considered overbought.

 A reading below 0.2 is considered oversold.
 On the zero to 100 scale, above 80 is overbought, and below 20 is oversold.

LONG:-
At the time of oversold we will buy. At the time of buying blue line should cross red line
from down to up. After cross over its not necessary to wait for the blue line to enter into
the range.
SHORT:-
At the time of overbought we will sell. At the time of short sell blue line should cross red
line from up to down. After cross over its not necessary to wait for the blue line to enter
into the range.
Overbought (Short Sell)

Oversold (Buy)

RULES:-
 Stoploss is 1% of stock price.
 Target is 2% of stock price.
 We will not exit while changing the call.

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  Exit at 3’o clock.
 When the cross over is on the line or inside the line there we will not take trade.
6. MACD (MOVING AVERAGE CONVERGENCE DIVERGENCE):-
This line consists of histogram of red candle and blue candle which shows negative and
positive sign. Middle of that there is line called zero line. There are three types of line
MACD line, Zero line and Signal line. A nine-day EMA of the MACD called the "signal
line," is then plotted on top of the MACD line, which can function as a trigger for buy
and sell signals. Traders may buy the security when the MACD crosses above its signal
line and sell—or short—the security when the MACD crosses below the signal line. 

 MACD triggers technical signals when it crosses above (to buy) or below (to sell) its
signal line.
 The speed of crossovers is also taken as a signal of a market is overbought or
oversold.
 MACD helps investors understand whether the bullish or bearish movement in the
price is strengthening or weakening.

CONDITIONS (LONG):-

 Below the zero line.

 MACD line (Blue) is crossing signal line (yellow) from below to up.
 Wait for the MACD (blue) line to reach on zero line to purchase.
 Purchase on correspondence candle.

CONDITIONS (SHORT SELL):-

 Above the zero line.
 MACD line (Blue) is crossing signal line (yellow) from up to down.
 Wait for the MACD (blue) line to reach on zero line to sell.
 Sell on correspondence candle.
RULES:-
 Stoploss is 1% of stock price.
 Target is 2% of stock price. SHORT SELL

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 BUY

7. AROON:-
The Aroon Oscillator is a trend-following indicator that uses aspects of the Aroon
Indicator (Aroon Up and Aroon Down) to gauge the strength of a current trend. Above 50%
indicate that an uptrend is present, while readings below 50% indicate that a downtrend is
present.

 The Aroon Oscillator uses Aroon Up and Aroon Down to create the oscillator.
 The Aroon Oscillator crosses above the 50% line when Aroon Up moves above
Aroon Down. The oscillator drops below the 50% line when the Aroon Down moves
below the Aroon Up.
 Aroon Up (Blue line) and Aroon Down (Red line).

LONG:-

 When Aroon Up will cut Aroon Down from down to up.

 Aroon Up cross over must happen below 50%.
 When Aroon Up line reaches to 50% or above then purchase.
 If Aroon Up cross over is taking place above 50% there you will not take trade.

SHORT SELL:-

 When Aroon Up will cut Aroon Down from up to down.

 Aroon Up cross over must happen above 50%.
 When Aroon Up line reaches to 50% or above then short sell.
 If Aroon Up cross over is taking place below 50% there you will not take trade.

SHORT SELL

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 BUY

8. PIVOT POINT STANDARD:-

To enter a pivot point breakout trade, we should open a position using a stop limit order when
the price breaks through a pivot point level. These breakouts will mostly occur in the
morning. If the breakout is bearish, then you should initiate a short trade. If the breakout is
bullish, then the trade should be long.

 We will look into day opening candle.

 Need to see if it is above pivot line or below line.
 We can put Trailing loss which can be change according to market situation.
 If the candle is above pivot line and is BULLISH then it is positive and if first candle
is BEARISH and above pivot line then will wait for second candle to be formed and if
it’s BULLISH then over there we will buy the stock otherwise if below pivot line and
is BEARISH then short sell.

RULES:-

 If the purchase point is middle of pivot line and R1, then the stoploss will be S1.
 If Target is reached to R2 then we will shift trailing loss to R1.
 Need to watch candle volume.
 If it breaks S2 then surely its chances is to reach to S3.
 Don’t fix target before.

BUY

NO TRADE

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 9. BOLLINGER BANDS (BB):-

It includes three lines Upper, Middle and Lower Bollinger bands. It is to identify overbought
or oversold market conditions. When the price of the asset breaks below the lower band of
the Bollinger Bands®, prices have perhaps fallen too much and are due to bounce. On the
other hand, when price breaks above the upper band, the market is perhaps overbought and
due for a pullback.

 If red candle is crossing over upper Bollinger band then short sell.
 If green candle is crossing over lower Bollinger band then we can buy.
 Upper band – Middle band plus 2 standard deviation.
 Lower band – Middle band minus 2 standard deviation.
 Middle band – 20-period Moving Average.

RULES:-

 Stoploss is 1% of stock price.

 No need to fix the target while taking trade.
 Change the stoploss by changes in the market.
 Trade should be of 1Day 5Minutes.

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 10. CENTRAL PIVOT RANGE (CPR):-
Central Pivot Range is a versatile technical indicator usually comprising of 3 levels –
a central pivot point (pivot), top central level (TC), and bottom central level (BC). It is
beneficial for intraday trading. It is generally assumed that whenever you get a narrow
CPR in day trading it is a trending day for the particular stocks. While taking trade that three
lines should be of narrow range it should not be wide.
 If green candle is breaking upper range line then (LONG).
 If red candle is breaking lower range line then (SHORT SELL).
 Until and unless it doesn’t break range then (NO TRADE).
RULES:-
 Stoploss is 1% of stock price.
 Target is 2% of stock price.
 Candle duration should be of 1 Day 15 Minutes.
 Exit at or before 3’o clock.

SHORT SELL

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 BUY

BACKWARD TESTING
Backward testing is to determine the results to evaluate the accuracy of a trading strategy.
Back testing allows a trader to simulate a trading strategy using historical data to generate
results and analyse risk and profitability before risking any actual capital.
For backward testing we need to choose the company from our own sector. For example: -
Asian Paint, buy one shares of Asian paints when close crosses above at the supertrend (one
of the oscillator). We need to do backward testing in all the ten oscillators:-

Where 20 tables will be formed of ten oscillators of last 1 year:-
 Ten tables will be of long.
 Ten tables will be of shortsell.
Same rules will be market in the long and short sell backward testing.
 Quantity 1.
 Oscillator name.
 Stoploss 1%.
 Target 2%.
 Exit time 3p.m.
Probability of shortsell and buy of last one year will be:-

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  Winning probability = Total winning streaks / Total signals
 Losses probability = Total losses streaks / Total signals
Finally cumulative data will be formed by adding all the 10 different sectors of different
oscillators by which it can be verified each oscillators. And then according to the losses we
will rank them.

WEALTH MANAGEMENT
MONEY PRINTING
The Reserve Bank of India (RBI) prints and oversees cash in India, while the Indian
government controls what groups to flow. The Indian government is exclusively liable for
stamping coins. The promising signs of money related recovery after the chief wave ran into
a serious second wave and another round of controls. In this manner, there have been a pile of
scales down being developed measures. Against this view, there have been calls from spaces
of India Inc for a gigantic monetary improvement, including printing cash, to support the
economy back to prosperity and help regions fixed by the disease.
Demonetization happens when the national bank purchases bonds straightforwardly from the
government. It is called 'cash printing' as new cash is made (not really banknotes) without a
comparing increase in nominal GDP.

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There is no rule of printing such unlimited note. By printing unlimited notes, hyperinflation
occurs. Hyperinflation causes an increase in the money supply and because of the demand –
pull inflation.
 The government borrows money by issuing bonds and then orders the central bank to
buy those bonds by creating (printing) money.
 Taxes.
 Bank Loan.
 Sell Shares.
 LIC.
 Privatisation.
 RBI shares bonds.
 Print notes.
 RBI makes monetary policy.
Problems by printing extra money:-
 Hyperinflation.
 Country bankrupt.
Don’t do unlimited expenses, don’t expect subsidy.
When the extra expenses in the country takes place, then the rules has been put called
Austerity measures. It refers.to economic policies implemented.by governments to reduce
government spending in order to reduce public debt. This policy can bring into action by
reducing government spending and by increasing taxes.
Country can be bankrupt by reasons:-
1. Fiscal Deficit.
2. Current account deficit:-
 Export is low, import is high.
 If country don’t have a dollar it will be bankrupt.
 We should do import less and export high.
EXAMPLE:-
India is also doing export low but import high so why we are not bankrupt. It is because of
NRI (Dollar comes and changes into money) and that is how we sustain.
DOLLARS
1970s, dollar coverted into gold is suspended.
Petro dollar started.
Exporting from the country getting dollar and importing from the country giving dollar.
How America has unlimited dollar?
America put paper in machine and creates dollar. The reason is America is superpower in
dollar because they print the dollars by themselves unlimited and basically they give papers

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to China and South Arabia and purchase oil and products, etc. And the China and South
Arabia and many other countries thinks that the dollars the America is giving is real and
basically it’s the piece of paper on which dollars are printed. America has unlimited
purchasing power.
When China realised that America is makinf fool to China so they thougt if they stop
exporting from America then China economy will go down which they can,t do. So they
decided to take out solution named OBOR (One Belt One Road)initiative.
 After making One Belt One Road, China will export the thing to Europe by half road
and half sea root.
 China dollar converted into Real Estate.
 String of pearls china.
 China is exporting much and importing less and has left out with dollars through
which the China made the use of the dollars by giving loans to several countries for
making roads, etc. This all happens because of the tradeplus.
America thought to bring China down so they camee up with the solution:-
 Increase custom duty so that China products become costly and dollar will not be left
with China.
 How much America is paying that much China also needs to pay so they will not be
left with dollars.
 America thouht to counter China, Ameriac needs to bring the india above.
 India is very important part to western powers.

FUNDAMENTAL TECHNICAL ANALYSIS

INDEX
Top Companies NIFTY 50
Index funds are. funds that invest in. an index. Their main objective. is to replicate a stock
market index in terms of the portfolio. An index fund has the.same stocks and in the same
weightage. as the stocks.listed on the chosen index.
For Example:- 1000 crore

100 crore 900 crore

Listed Parted Promoters Holding

(Free Float Market Cap)

Total Market Cap = Free Float Market Cap + Promoters Holdings (Other’s Holdings)

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FREE FLOAT MARKET CAP:-
First price fluctuate then market will change.
 Large Cap- More than 20,000 crore
 Mid Cap- 7,50,000 to 20,000 crore
 Small Cap- less than 7,50,000
Future option has only Large Cap companies.
Micro Company is listed in SME exchange.
The compnay of index is decided by the index itself.
LOGIC:-
 Index should represent all the industries.
 Its should be large cap.
 It is flexible.
 Weightage is decided by market cap as same weightage according to capital.
Index Funds nowadays are a supply of funding for traders searching at an extended term,
much less unstable shape of funding. The achievement of index budget relies upon on their
low volatility and consequently the selection of the index. NSE Indices are utilized by some
of famous mutual budget in India for selling Index Funds.
FORMULA:-
 Weightage (Market Share) = Market Cap/ Listed Price*100.
 Percentage Price Change = (Closing price- Listed price)/Listed price*100.
 Percentage Change in Index = Percentage Price Change*Market Share
Weightage/100.
 Change in Index = Percentage Change in Index/100*Closing Index.
 No. of Shares = Market Cap/Listed Price.
 New Market Cap = Closing Price*No. of shares.
 Market Share = Market Cap/Total Market Cap.

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 MUTUAL FUND
The project involved circulating a questionnaire to analyse the risk profile of various
demographics and provide them with a fund recommendation that suits them the best. And
then:

 Help the customers in analysing their risk profiles.

 Decide funds to invest into based on the risk profile of the customer.

RISK PROFILING QUESTIONNAIRE

Every individual investor is unique. Not only with regards to investment objectives but even
in approach and view of risk. This is what makes Risk Profiling absolutely crucial before
investing.

A Risk Profiler is essentially a questionnaire that seeks an investor’s answers to questions

about both “ability” and “willingness”.

It is highly recommended that investors contact their Mutual Fund distributor or an

investment advisor to complete. It is highly recommended that investors contact their mutual
fund distributor or an investment advisor to complete this task and get to know their risk
profile. The risk profiling questionnaire is intended to measure the risk tolerance and time
horizon of your investments. The questionnaire is designed to show which kind of investment
strategy suits you best. Each answer would be given a point. The total score suggests the
appropriate risk profile for you.

FUND TO INVEST

INSURANCE:-

Bank

Broker

AMC

 All bank keeps all mutual fund.

 Through Net Value Asset (NAV) we understand that our money has reached to what
level. The money that is invested in mutual fund.

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  But all bank don’t keep all insurance they keeps only 1 or 2 that is why they also open
there own branch. There are also three channels:-

Direct Marketing (DM)

Agency & APC

TPD (Third Party Distribution)- Broker

NAV= AUM (Asset under Manager)/No. of Unit

TYPES OF FUND:-

Equity Fund

Balance Fund

Debt

Equity Fund:-
A value reserve is a common asset that puts essentially in stocks. It tends to be effectively or
inactively (file store) oversaw. Value reserves are otherwise called stock assets. Stock
common assets are chiefly classified by organization size, the speculation style of the
property in the portfolio.
Types of Equity fund:-
 Large Cap.
 Sector Fund.
 Arbitrage Fund.
 Mid Cap.
 Contra Fund.
 Small Cap.
 Fund of Fund.
 Index fund.
 Multi Cap.
 Foreign Fund.
EXPALNATION:-
 Large Cap means only to invest in large cap.

26
  Mid Cap means only to invest in mid cap.
 If no risk then Debt Fund.
 Multi Cap means a diversified fund.
 Small Cap is for high risk.
 Sector Fund means to invest in specific fund.
 Contra Fund means contrarian. Basically it means to work opposite means the sector
which are going down today in pandemic that sector will rise in future after 5-6 years,
so invest in that sectors.
 Index Fund means to copy index. It is automate. To justify to fund manager we need
to give more good result than index is showing, basically we need to bit index.
 Foreign Fund is the fund where we invest, we fill FIRs.
 A Fund of Funds is an investment vehicle that invests in mutual funds, exchange-
traded funds (ETFs) or even hedge funds.
Insurance company also has mutual fund called Ulip (Unit Linked Insurance Plan), which
is a multi- faceted Life Insurance product. A ULIP plan is a combination of life insurance and
investment.
There is one fund which has locking that is ELISS (Equity Link Saving Scheme)
 It get tax benefit under saving scheme.
 3 years locking.

TAX EVASION
Tax evasion is an illegal activity in which someone or entity deliberately avoids paying a true
tax liability. Those stuck evading taxes are usually difficulty to crook prices and great
consequences.
Who pay taxes:-
 Individuals- Change Citizenship
 Corporations – Trademark, Patent
 FI/FDIs – Morachetious Double Tax Treaty
Example:-
Apple says he will not pay tax. He wants to show profit also but he don’t want to show tax
 So for this Patent is a logic.
 He will pay all the profit to Apple Netherland there will be 0.00% tax.
 Then from Apple Netherland the profit will go to US.
 And it’s illegal.
In SEJ there are no tax for 20-25 years.

27
 Capital Gain Fund

Short Term (15% to pay) Long Term (10% to pay)

CONCEPT OF INSURANCE
Where there is a collective risk- their insurance comes.
Village Panchayat decides to make VRF (Village Relief Fund).
Life Insurance – Level Premium.
Car Insurance into two comprehensive insurance:-
 Own damage.
 Third Party Association (TPA) – It is mandatory we need to take.
In zero debt whatever bill come they gives.

The idea of insurance includes a switch of threat from one birthday party, which includes a person or
company buying an insurance policy, to some other, together with an insurance business enterprise.
For example, if you buy a house owners coverage policy, you are moving the danger that you may be
faced with a luxurious loss because of hearth or some other hazard to the insurance agency.

COCEPT OF RE- INSURANCE

Insurance company do their Insurance also.
In India Re- Insurance Company named as GIC (General Insurance Corporation).
Re- insurance company is increasing health Premium.
26% - Indians
74% - Foreign
Four Insurance:-
 Oriental Insurance.
 New India Insurance.
 National Insurance.
 United India Insurance.
How products designed evolve:-
1. Term Plan- (Pure Insurance)
Cover should be at least 20times.

28
 2. Premium Black Term Plan
3. Traditional Plans- (With Interest)
Whole life plan- 1200000 (100000 premium)

Lump sum Whole Life

Customer pay whole life plan

4. Money Back Plan- Focused on Tax Saving

5. ULIP (Unit Link Insurance Plan) - Attached mutual fund to insurance and one
product.

DERIVATIVES
OPSTRA OPTIONS ANALYTICS
1. Short Straddle :- Possibilities

32000 33000 34000 35000 36000 37000

20% 20% 20% 20% 20%

80% (If goes towards 36000)

2. IOCONDOV :- 33000- PE (PUT) - BUY

37000- CE (CUT) - BUY

GOLD PRICING
Gold is calculated in CARAT.
Gold is 24% pure.
Gold jewellery is made up of 22% CARAT.
Gold Price is 48000- It is in 10 gram.
1 gram = 4800- This is 24 CARAT Gold.
 24 CARAT- Pure.
 22 CARAT- Gold Jewellery.
 18 CARAT- Diamond Jewellery.

NUMERICAL:
 22/24= 91.16% (GOLD)
 18/24= 75% (DIAMOND)

29
  Price/43.26= per gram rate
 4396+500=4896 (Marking)
 4800= 1 gram, 4800*91.6%= 4396.8 per gram (For 22 CARAT)

DIAMOND PRICING

It has 4C’s:-
1. CARAT:- In this CARAT is purity
1 CARAT = 100cent
CARAT is nothing but weight
2. CUT:- How much cut is good that much is purity
o H&A (Heart shape & Aeronaut cut)
o Excellent
o Very Good
o Good
3. CLARITY: - When we see diamond there is impurity by seeing this we assume how
much clarity is there.
Clarity:-
 IT
 VVS (Very Very Slight)
 VVS2 (Very Very Slightly Inclusion)
 SI 1 (Slightly Included)
 SI 2
4. COLOUR:- D- Very Colourless
k- Very Dim Colour
Pink and Blue Colour is rare.
Fixed: - 1 CARAT at excellent
Vary: - Price is same, same CARAT
But due to colour clarity the price varies.
GIA and IGI- Take this diamond.

ABOUT PRODUCT
TRADITIONAL PLANS :- (Returns are guaranteed)
(Return on bond)
Basic Terms:-
 Premium.
 Payterm – (For a no. of years customer supposed to pay the premium)

30
  Proposer & Life Insured: - Took plan for himself. Now person think about his child
to take plans where person will be proposer and son will be life insured.
The one who is taking plan is proposer and for whom is taking is LIFE Insured.
 Policy term – That duration or tenure for which the no. of years the life is insured the
policy term.

1. PRODUCT NAME (GUARANTEED INCOME GOAL): -

 Pay term: - 12 years
 Policy term: - 12 years
 Premium: - 1 Lakh
How Product Works:-
 First 12 years person will pay 1- 1 Lakh and after the 12 years he will start get annual
income.
 Life Insurance is not objective of person.
 Objective is investment.
WOP (Waver of Premium):-
 Plan will work like that only, if the person who is proposer and after 1 year if
something has happened to that person and the child is minor so the premium will be
wave of means the whole premium will be given by company and like that only the
annual will be paid.
 If you have paid only 6 years and after that you have left to pay, then all the annual
income will be 50%.
 While taking plan if the child is minor, then in the knowledge of company the child
will be minor only. Whether child is going to become of 18 next year’s then also in
the knowledge of company, the child will be minor.
 Minimum 3 years you have to pay after that in rare scenario if you need to leave you
can at least you will get some proportionate of premium.
 Maximum a person can hold of 2 years only if there is due to financial problem.
 You will get the interest from 13 years only whether you stop paying from 6 years or
7 years.
How to compare with FD:-
 In this product we get return 6.5% as compared to FD, Bajaj it’s giving .5% extra.
 Insurance company can’t give loan to anyone except of Government of India.
 Insurance is safer than FD.
 In Insurance default chances is very low.
 80C benefit.
 10-10D benefit (Tax free money will come in traditional product, In FD tax also cuts).

2. PRODUCT NAME (POS GOAL SURAKSHA):-

 Payterm- 12-15 years.

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  Policy term- 12-20 combination
 Life insurance is 12 & 20 both
1st Combination:-
Example: - 12 years fill 1-1 Lakh and 15th years you will get lump sum 2070000.

2nd Combination: -
Example: - 12 years fill 1-1 lakh and on 20th years you get lump sum 28 lakh back.
Customer say I want at the end of 12 years then return will become comparatively less in that
case the customer will get 16.5 lakh return back.
Payer and nominee can change but life insured will not change.

3. PRODUCT NAME (FLEXY INCOME BULL):-

 Payterm – 12 years.
 Policy – 50 years.
 Premium – 1 lakh.
From 1st year company will return: - 30000
Tax saving 15% = 15000 (So total he will get back 45000)
Next 38 years company will gives 70000 and at the last company will also give the
maturity 1830000.
1st to 12th years company is returning 50-60% (Because of tax benefit).

TECHNICAL ANALYSIS
PAINT SECTOR

The area of chart explains the technical analysis. Technical analysis is the examination of
past price moments to forecast future price movements. This chart analysis contains articles
and what charts are, common pattern that appears.
In long term there are three kinds of trends:-

 Uptrend
 Downtrend
 Sideways

LONG TERM

32
TREND REVERSAL PATTERN:-

1. Rounding Bottom (sideways to up pattern):-

The rounding bottom is a long-term reversal pattern that is best suited for weekly
charts. It is also referred to as a saucer bottom, and represents a long consolidation
period that turns from a bearish bias to a bullish bias.
Example:-

Example of Asian Paint:-

2. Cup With Handle (sideways to up):-

33
 The Cup with Handle is a bullish continuation pattern that marks a consolidation period
followed by a breakout. There are two parts to the pattern: the cup and the handle. The
cup forms after an advance and looks like a bowl or rounding bottom. As the cup is
completed, a trading range develops on the right hand side and the handle is formed. A
subsequent breakout from the handle's trading range signals a continuation of the prior
advance.
Example:-

Example of Asian Paint:-

3. BUMP & RUN REVERSAL (Up to sideways & up to down):-
As the name implies, the Bump and Run Reversal (BARR) is a reversal pattern that
forms after excessive speculation drives prices up too far, too fast. The pattern was
originally named the Bump and Run Formation, or BARF. Bulkowski decided that
Wall Street was not ready for such an acronym and changed the name to Bump and
Run Reversal. Bulkowski identified three main phases to the pattern: lead-in, bump
and run.
In this pattern we short sell the shares.

34
Example:-

Example of Asian Paint:-

4. Head and Shoulder pattern (sideways to down & sideways to up):-

Head and Shoulder top- A head and shoulders reversal pattern forms after an
uptrend, and its completion marks a trend reversal. The pattern contains three
successive peaks with the middle peak (head) being the highest and the two outside
peaks (shoulders) being low and roughly equal. The reaction lows of each peak can be
connected to form support, or a neckline.

Examples:-

35
Examples of Asian Paint:-

Head and Shoulder bottom- The head and shoulders bottom forms after a downtrend, and
its completion marks a change in trend. The pattern contains three successive troughs with
the middle trough (head) being the deepest and the two outside troughs (shoulders) being
shallower. Ideally, the two shoulders would be equal in height and width. The reaction highs
in the middle of the pattern can be connected to form resistance, or a neckline.

Examples:-

36
Example of Asian Paint:-

5. Double Top (sideways to down):- The double top is a major reversal pattern that
forms after an extended uptrend. As its name implies, the pattern is made up of two
consecutive peaks that are roughly equal, with a moderate trough in between. In
double top we need to short sell.
Example:-

37
 Example of Asian Paint

5. Double Bottom (sideways to up):- The double bottom is a major reversal pattern that
forms after an extended downtrend. As its name implies, the pattern is made up of two
consecutive troughs that are roughly equal, with a moderate peak in between.

Example:-

38
Example of Asian Paint

MEDIUM TERM
1. Ascending Triangle (sideways to up):-
The ascending triangle is a bullish formation that usually forms during an uptrend as a
continuation pattern. There are instances when ascending triangles form as reversal
patterns at the end of a downtrend, but they are typically continuation patterns.
Regardless of where they form, ascending triangles are bullish patterns that indicate
accumulation.
When the candle breaks the upper line then buy. The chart is of 1 year.
RULES:-
 Stop loss should be bottom line.
 Target should be 2% of the difference between the buying point and stop loss.

Example:-

39
Example of Reliance:-

2. Descending triangle (sideways to down):-

The descending triangle is a bearish formation that usually forms during a downtrend
as a continuation pattern. There are instances when descending triangles form as
reversal patterns at the end of an uptrend, but they are typically continuation patterns.
Regardless of where they form, descending triangles are bearish patterns that indicate
distribution.

40
 When the candle breaks the lower line then short sell.
RULES:-
 Stop loss should be top line.
 Target should be 2% of the difference between the buying point and stop loss.

Example:-

Example of Reliance:-

3. SYMMETRICAL TRIANGLE (sideways to up/ sideways to down):-

The symmetrical triangle, which can also be referred to as a coil, usually forms during
a trend as a continuation pattern. The pattern contains at least two lower highs and
two higher lows. While there are instances when symmetrical triangles mark
important trend reversals they more often mark a continuation of the current trend.

41
 Regardless of the nature of the pattern, continuation or reversal, the direction of the
next major move can only be determined after a valid breakout.
When the breakout is done on the top line then we will buy and when the breakout is
done on bottom line then we will sell.
RULES:-
 Buying time
 Stop loss should be on bottom line.
 Target should be 2% of the difference between the buying point and stop loss.

RULES:-
 Selling time
 Stop loss should be on top line.
 Target should be 2% of the difference between the buying point and stop loss.

Example:-

4. 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

42
of a rectangle. Rectangles are sometimes referred to as trading ranges, consolidation zones or
congestion areas.
When the candles break the bottom line we will short sell and when the candles break the top
line we will buy.
RULES:-
BUYING-
 Stop loss should be on bottom line.
 Target should be 2% of the difference between the buying point and stop loss.

SELLING-
 Stop loss should be on top line.
 Target should be 2% of the difference between the buying point and stop loss.
Example of buying:-

Example of selling:-

SHORT TERM
BAR CHART:-

43
Perhaps the most popular charting method is the bar chart. The high, low and close are
required to form the price plot for each period of a bar chart. The high and low are
represented by the top and bottom of the vertical bar and the close is the short horizontal line
crossing the vertical bar. On a daily chart, each bar represents the high, low and close for a
particular day. Weekly charts would have a bar for each week based on Friday's close and the
high and low for that week.

CANDLE STICK CHART:-

Many traders and investors believe that candlestick charts are easy to read, especially the
relationship between the open and the close. White (clear) candlesticks form when the close
is higher than the open and black (solid) candlesticks form when the close is lower than the
open. The white and black portion formed from the open and close is called the body (white
body or black body). The lines above and below are called shadows and represent the high

and low.

In short run the trend analysis go either up or down there is no sideways.

44
All 5 candles are neutral.
1. Doji:-
Doji are important candlesticks that provide information on their own. Doji form
when a security's open and close are virtually equal. The length of the upper and
lower shadows can vary and the resulting candlestick looks like a cross, inverted cross
or plus sign. Alone, doji are neutral patterns.
Neither it will go up or go down it moves in same direction.

2. Hammer Hanging man:-

The hammer and hanging man look exactly alike. Both have small bodies red or
green. Lower candle sticks are long and upper candle sticks are short. These
candlesticks mark potential trend reversals, but require confirmation before action.
Hammer:-
The hammer is a bullish reversal pattern that forms after a decline.
Hanging:-
The hammer is a bearish reversal pattern that forms after an increased.

45
 3. Inverted hammer and shooting star:-
The inverted hammer and shooting star look exactly alike. Both have small bodies red
or green. Lower candle sticks are short and upper candle sticks are long. These
candlesticks mark potential trend reversals, but require confirmation before action.
Inverted hammer:-
The inverted hammer forms after a decline or downtrend. The inverted hammer is a
bullish reversal pattern that forms after a decline.
Shooting star:-
The shooting star forms after an increase or uptrend. The shooting star is a bearish
reversal pattern that forms after an increase.

4. Blending Candles:-
Candlestick patterns are made up of one or more candlesticks and these can be
blended together to form one candlestick. This blended candlestick captures the
essence of the pattern and can be formed using the following:
 The open of first candlestick
 The close of the last candlestick
 The high and low of the pattern

Bullish Engulfing or Pearsing Pattern:-

It blends into a hammer. The long lower shadow of the hammer signals a potential bullish
reversal.
Bearish Engulfing or Dark Cloud:-
It creates a shooting star. The long upper shadow of the shooting star indicates a potential
bearish reversal.

SECTORS
46
 FUNDAMENTAL ANALYSIS
ECONOMIC FACTOR:-
 Revenue
 Profit
POSSIBILITIES:-
REVENUE PROFIT
BUY

HOLD

SELL

COMMON FACTORS THAT AFFECT ALL THE SECTORS:-

 Budget.
 Dollar.
 Interest rate.
 Inflation.
 Taxes.
 Labour.
 Raw material.
 Rain.
INDIA (Second Largest Cement Market)

PRODUCTION CONSUMPTION

98% Private Sector 2% Public sector 65% Real Estate

47
COMPANY FACTORS:-
CEMENT SECTOR

PROFIT REVENUE
Interest rate Budget
Raw material (limestone/coal) Rain
Per Bag Realisation (Rs.) Dispatch no. (MP)

INFRASTRUCTURE SECTOR

PROFIT REVENUE
Interest rate Budget
Raw material (Cement/steel)

Cost Escalation government follows PPBOT (Private Partnership Built Operate Transfer).
FSI (Floor Space Index) - Needs to follow FSI to control population density. This rule is
applicable where the big towers are allowed for example: - Mumbai.
TDR (Transfer Develop Right).

BANKING SECTOR

PROFIT REVENUE
NIM (Net Interest Margin) NIT (Net Interest Income)

Net Interest Income: -

48
  1 lakh crore- Loan book
 Come from FDI
 Interest 10000 crore (10%)
 Left with bank – 5000 crore (NIM)
 1500 crore (Real Estate)
 3500
 NIM= 3.5%
 NIM is the percentage of loan amount.

Sub Prime Crisis:-

Salary Expenses (70,000)

35000 (EMI) 35000

15000 (Tax) 20000

Bond (LTP Mortgage)- Collateralize Debt Obligation(CDO)

CASA Ratio:-
CASA RATIO

Current Account Saving Account

1 Lakh Crore

60 crore 40 crore
(CASA BALANCE)
Higher the CASA better it is.
If they keep in current account- 0% to give.
If they keep in saving account- 3.5% to give.
If they keep in FD- 5% to give.
PHARMA SECTOR

49
CRAMS (Contract Research and Manufacturing)

By this, Indian companies get foreign contract.

EQUITY RESEARCH-RATIOS

Sector

Below (Under) Above (Over)

Revenue (20/21) Profit (19/20)

Select (value pick)

Reject

For Undervalued Stocks:-

PEG Ratio: - PE/EPS Growth
If the growth comes in the mid of 0-1 then it is called select or growth pick.
Undervalue: - If P/E ratio is less than Average price then it is under value.
Overvalue: - If P/E ratio is more than Average price then it is overvalue.
Select (Undervalue):- If current year profit is more than last year profit and current year
revenue is more/less than last year revenue it is called select /value pick.
Reject (Undervalue): - If current year profit is less than last year profit and current year
revenue is more/less than last year revenue is called reject.
Select (Overvalue): - If PEG ratio is between it is called select or growth pick.
Reject (Overvalue): - If PEG ratio is less than 0 then reject.

50
 +++++++++++

RATIO ANALYSIS
ANALYSIS OF FINANCIAL STATEMENTS:
The financial statement of a company can be used to evaluate the financial
position of the company. Financial ratios are most extensively used for this purpose. Ratio
analysis helps an investor to determine the strengths and weakness of the company. It also
helps him to analyse whether the financial performance and financial strengths are
improving or deteriorating. Ratios can be used for comparative analysis either with other
firms in the industry through across sectional analysis or with past data through a time series
analysis.
1. CEPS (Cash Earning Per Share): -
Benefits of Using Cash EPS

 CEPS is less prone to accounting manipulation, which offers a clearer picture of cash
flow and real earnings. Added transparency is a sign of good corporate governance.
 CEPS shows investors on a per share basis how much profit each share generates.
This helps identify incremental value.
 CEPS is not subject to the same short-term market focus seen with EPS.

51
 Cash EPS= Operating cash flow/ Diluted shares outstanding

2. ROE (Return On Equity): -

Sometimes an extremely high ROE is a good thing if net income is extremely large compared
to equity because a company’s performance is so strong. However, an extremely high ROE is
often due to a small equity account compared to net income, which indicates risk.
There are two versions of DuPont analysis, the first involving three steps:

ROE=NPM ×Asset Turnover× Equity Multiplier

Where: NPM=Net profit margin, the measure of operating efficiency

Asset Turnover=Measure of asset use efficiency

Equity Multiplier=Measure of financial leverage

Alternatively, the five-step version is as follows:

ROE=SEBT×AS×EA× (1−TR)
Where: EBT=Earnings before tax
S=Sales
A=Assets
TR=Tax rate

E=Equity
3. DuPont: -
DuPont analysis is a useful technique used to decompose the different drivers of return on
equity (ROE). The decomposition of ROE allows investors to focus on the key metrics of
financial performance individually to identify strengths and weaknesses.
Formula and Calculation of DuPont Analysis
The DuPont analysis is an expanded return on equity formula, calculated by multiplying the
net profit margin by the asset turnover by the equity multiplier.

DuPont Analysis=Net Profit Margin ×AT×EM
Where: Net Profit Margin=Net Income/ Revenue
AT (Asset Turnover) =sales/ Average Total Assets
EM (Equity Multiplier) =Average total assets/average shareholders equity

4. Debt to Equity Ratio:-

This ratio indicates the relationship between the outsider funds & the shareholders’ funds.
52
Ideal ratio: 2:1
It means for every 2 shares there is 1 debt. If the debt is less than 2 times the equity, it means
the creditors are relatively less and the financial structure is sound. If the debt is more than 2
times the equity, the state of long term creditors are more and indicate weak financial
structure. This ratio also indicates standard should be applied having regard to size and type
and nature of business and the degree of risk involved.
The formula for the personal D/E ratio is represented as:

Debt/Equity= Total Liabilities/ Total Shareholders equity

5. ROCE:-
Return on Capital Employed (ROCE), a profitability ratio, measures how efficiently a
company is using its capital. ... They show how well a company utilizes its assets to produce
profit and is commonly used by investors to determine whether a company is suitable to
invest in or not. High ROCE (Return on Capital Employed) with low PE implies that
company is doing well and the price of shares will rise in future. ROCE should always be
higher than the rate at which the company borrows; otherwise any increase in borrowing will
reduce shareholders' earnings. 
Return on Capital Employed = Earnings before Interest and Tax (EBIT) ÷ (Total Assets -
Current Liabilities)
6. Interest Coverage ratio:-

The interest coverage ratio measures a company's ability to handle its outstanding debt. ... A
good interest coverage ratio is considered important by both market analysts and investors,
since a company cannot grow—and may not even be able to survive—unless it can pay
the interest on its existing obligations to creditors. The interest coverage ratio is used to
measure how well a firm can pay the interest due on outstanding debt.

The Formula for the Interest Coverage Ratio

Interest Coverage Ratio= EBIT/Interest Expense
Where: EBIT=Earnings before interest and taxes

After selecting ratios learned to find out all the ratios values and after that ranked the ratios
according to the best to worst and then have done total of all ranked ratios of particular sector
as well as allocated the weightage to each sectors according to the rank.

53
And after this learned to find out the NAV of particular sector.

NAV= AUM/No. of Units

54