SECURITY ANALYSIS

AND PORTFOLIO
MANAGEMENT
CIA 1.1

FUNDAMENTAL AND TECHNICAL

ANALYSIS OF JK TYRES, APOLLO TYRES,
MRF TYRES

SUBMITTED BY
SHASHWAT VIJAYWARGIYA 1920626
AMISHA NAHAR 1920632
VANI AMBARDAR 1920654
 FUNDAMENTAL ANALYSIS
ECONOMIC ANALYSIS

Economic analysis is the study of economic systems. It may also be a study of a production
process or an industry. The analysis aims to determine how effectively the economy or
something within it is operating. For example, an economic analysis of a company focuses
mainly on how much profitit is making.

ECONOMIC ANALYSIS OF INDIA:

• India has emerged as the fastest growing major economy in the world and is expected
to be one of the top three economic powers in the world over the next 10-15 years,
backed by its robust democracy and strong partnerships.
• India‟s economic growth is expected to "strongly rebound" to 6-6.5 per cent in 2020-
21 from 5 per cent estimated in the current fiscal. One of the Survey said that there
are tentative signs of bottoming out of slowdown in manufacturing activity and global
trade, which will have a positive impact on growth in the next fiscal.
• India's gross domestic product (GDP) (at constant 2011-12 prices) was estimated to
be Rs 145.65 lakh crore (US$ 2.06 trillion) for 2019-20, growing 4.2 per cent over the
previous year.
• India retained its position as the third largest start-up base in the world with over
8,900-9,300 start- ups as 1,300 new start-ups got incorporated in 2019.
• India‟s labour force is expected to touch 160-170 million by 2020 based on the rate of
population growth, increased labour force participation and higher education
enrolment among other factors. India's GDP is expected to reach US$ 5 trillion by
FY25 and achieve upper-middle income status on the back of digitisation,
globalization, favourable demographics, and reforms.
• But due to coronavirus pandemic,The economy will suffer in FY 2020 due to
containment measures and weaker external demand. A major downside risk is a
significant prolongation of the national lockdown. More positively, fiscal stimulus
should support activity, as should looser monetary policy, although the fiscal deficit
will spike in tandem.
• It is projected that GDP will fall by 0.2% in FY 2020, which is down 1.6 percentage
points from April‟s forecast, and increase to 7.2% in FY 2021.Economic growth
slowed in the first quarter of calendar year 2020 (the fourth quarter of fiscal year

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 2019), with GDP expanding 3.1% (Q4: +4.1% year-on-year), which is the slowest
reading since at least 2012.

GROWTH RATE OF GROSS DOMESTIC PRODUCT (GDP)

An economy's overall economic activity is summarized by a measure of aggregate output. As
the production or output of goods and services generates income, any aggregate output
measure is closely associated with an aggregate income measure. The GDP is a measure of
all currently produced goods and services valued at market prices. The Indian economy
expanded 3.1 percent year-on-year in the first quarter of 2020, beating market forecasts of a
2.1 percent rise. Domestic credit provided by banking sector (% of GDP) in India was reported
at 72.06 % in 2018, according to the World Bank collection of development indicators,
compiled from officially recognized sources.

The Indian Tyre Industry is an integral part of the Auto Sector – It contributes to 3% of the
manufacturing GDP of India and 0.5% of the total GDP directly.
Indian tyre industry has almost doubled from Rs 30,000 crores in 2010-11 to Rs 59,500 crores
in 2017-18 of which 90-95% came from the domestic markets. The top three companies –
MRF, Apollo Tyres and JK Tyres have ~60% of the market share in terms of revenue. In
terms of segmentation tyres can be divided in two ways – based on end market and based on
product.

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Top 10 companies account for about 80 per cent of the market share. Top three companies
MRF, Apollo Tyres and JK Tyres -- have 55 per cent of the market share of the Indian tyre
industry and figure among the top 25 global companies in terms of revenue.

TOP INDIAN TYRE COMPANIES

Market Capital
Company Name %Percentage
(Rs. cr)

MRF 16,396.77 39.9

Apollo Tyres 7,622.65 18.55

Balkrishna Ind 6,254.29 15.22

Ceat 4,061.19 9.88

JK Tyre & Ind 2,401.95 5.84

TVS Srichakra 2,087.16 5.08

Goodyear 1,222.52 2.97

PTL Enterprises 661.89 1.61

Modi Rubber 152.37 0.37

Elgi Rubber 142.39 0.35

Govind Rubber 51.1 0.12

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India tyre market reached a consumption volume of 185 Million units in 2019. India
represents the fourth largest market for tyres in the world after China, Europe and the United
States. The market for tyres is quite concentrated in India with the top 10 manufacturers
accounting for around 80 per cent of the total market. MRF, Apollo Tyres and JK Tyres
currently represent the top players in this market.

SAVINGS AND INVESTMENT

Growth of an economy requires proper amount of investments which in turn is dependent
upon amount of domestic savings. The amount of savings is favorably related to investment
in a country. The level of investment in the economy and the proportion of investment in
capital market is major area of concern for investment analysts. The demand for corporate
securities has an important bearing on stock prices movements. Greater the allocation of
equity in investment, favorable impact it has on stock prices. The household savings continues
to have a predominant share (more than 50% of the gross domestic savings) they have fallen
sharply over the years - from 34.6% of the GDP in FY12 to 30.5% in FY18 - pulling down
the overall savings.

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INDUSTRY GROWTH RATE
The stock market analysts focus on the overall growth of different industries contributing in
economic development. The higher the growth rate of the industrial sector, other things being
equal,the more favorable it is for the stock market. The growth of financial sector in India at
present is nearly 8.5% per year. The rise in the growth ratesuggests the growth of the economy.
Under personal segment, two and three wheelers constitute about 55 per cent sales while the
passenger cars made up for the balance sales.

PRICE LEVEL AND INFLATION

The inflation rate is defined as the rate of change in the price level. Most economies face
positive rates of inflation year after year. The price level, in turn, is measured by a price
index, which measures the level of prices of goods and services at given time. The numbers
of items included in aprice index vary depending on the objective of the index.

Year Inflation Rate (%) Annual Change

2018 4.86% 2.37%

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 2017 2.49% -2.45%

2016 4.94% -0.93%

A Rising inflation rate tends to Rising Interest Rates

As many players in the tyre industry have plans to further expand their capacities which will
be partly funded by debt. As RBI has been recently increasing interest rates due to macro
issues. The expected increase in rate could lead to increase in finance costs of the companies.

GOVERNMENT BUDGET AND DEFICIT

Government plays an important role in the growth of any economy. The government prepares
a central budget which provides complete information on revenue, expenditure and deficit of
the government for a given period.

For future industrial growth, the finance chief suggested the following measures to make the
tire sector more competitive:

• Levy of anti-dumping duty on import of TBR tyres from Thailand.

• Removal of anti-dumping duties on raw material imports for production for the tyre
sector.
• Removal of import duty on natural rubber.
• Ease of export obligations against natural rubber and pre-import condition on natural
rubbershould be removed
• Tax benefits for expenditure incurred on research and development of new products
wouldboost innovations

BUDGET

For year 2020-21: Nominal growth of GDP estimated at 10 per cent. Receipts: estimated at Rs
22.46 lakh crore (US$ 317.90 billion) Expenditure: at Rs 30.42 lakh crore (US$ 430.57 billion)

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THE TAX STRUCTURE

The business community eagerly awaits the government announcements regarding the tax
policy in March every year. The type of tax exemption has impact on the profitability of the
industries. Concession and incentives given to certain industry encourages investment in that
industry and have favourable impact on stock market.

Tax benefits for expenditure incurred on research and development of new products in the tyre
industry would boost innovations.

BALANCE OF PAYMENT, FOREX RESERVES AND EXCHANGE RATE

Balance of payment is the record of all the receipts and payment of a country with the rest of
the world. This difference in receipt and payment may be surplus or deficit. Balance of payment
is a measure of strength of rupee on external account.

India's Current Account Deficit (CAD) at US$ 6.3 billion (0.9 per cent of GDP) in Q2 of 2019-
20 narrowed from US$ 19.0 billion (2.9 per cent of GDP) in Q2 of 2018-19 and US$ 14.2
billion (2.0 per cent of GDP) in the preceding quarter.

India's total foreign exchange (Forex) reserves stand at around US$ 501.703 billion on 05th
June 2020, the highest ever, with foreign exchange assets (FCA) component at around
US$463.630 billion, gold reserves at around US$32.352billion, SDRs (Special Drawing Rights
with the IMF) of around US$1.442 billion and around US$4.278 billion reserve position, as
per Reserve Bank of India's (RBI) weekly statistical supplement published on 6 February 2020.

TECHNOLOGICAL ADVANCEMENTS

The future of automotive technology is one of the most hotly anticipated areas of technological
development. There’s a constant stream of articles and commentators remarking on industry
developments such as autonomous technology, yet surprisingly little is being said on the future
of tyres. This is surprising given they are so important to our experience as road users. Our
tyres affect everything from road safety to driving performance, and the development of new
tyre technology will help to redefine the way we drive. The history of tyres has shown us the
development of tyre pressure monitoring systems and other innovations that have helped to

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expand the usefulness of our tyres. Electricity is increasingly becoming bonded to modern tyre
manufacturing.

DEMOGRAPHIC FACTORS

The demographic data details about the population by age, occupation, literacy and geographic
location. These factors are studied to forecast the demand for the consumer goods. The data
related to population indicates the availability of work force. The cheap labor force in India has
encouraged many multinationals to start their ventures. Population, by providing labor and
demand for products, affects the industry and stock market.

The global tyre industry has been witnessing a shift in the tyre manufacturing activity, with
Asia carving a much larger piece of the pie with regard to the number of plants. Almost 60%
of the global tyre plants are located in Asia today

Globally, $22 billion worth of investment have been planned between 2016-2021. Asia account
for the majority share with 46% of the total investments. Overall Asian economies accounted
for 50% of the global sales and China is the world largest tyre market.

EMPLOYMENT

The Annual Survey of Industry (ASI), MOSPI data reveals that the tyre industry provides direct
employment to more than 0.15 million people, which is about 0.12 million in the organised
sector. It also provides livelihood to over 1 million people such as traders, dealers and repairers
directly. Further, employment generated by the industry in services such as tyre repairing, air
filling, etc is also very significant.

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GLOBAL ANALYSIS

India tyre market reached a consumption volume of 185 Million units in 2019. India represents
the fourth largest market for tyres in the world after China, Europe and the United States. In
India, the market is currently being driven by increasing radicalisation of tyres especially in
buses and trucks. Moreover, the tyre industry consists of a vast consumer base, they are used
in all type of vehicles which include passenger cars, buses, military vehicles, motorcycles,
trucks, etc.

The demand of tyres is primarily catalysed from two end-user segments - OEMs and the
replacement segment. The Replacement market currently dominates the tire market accounting
for most of the total sales. Demand by the OEM segment is driven by new automobile sales
trend, whereas, the replacement market is linked to the usage patterns and replacement cycles.
The market for tyres is quite concentrated in India with the top 10 manufacturers accounting
for around 80 per cent of the total market. MRF, Apollo Tyres and JK Tyres currently represent
the top players in this market. Looking forward, we expect the market to reach a volume of 245
Million Units by 2025 growing at a CAGR of 4.8% during 2020-2025.

STOCK ANALYSIS

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 INDUSTRY ANALYSIS

The Indian Tyre Industry:

• The origin of the Indian Tyre Industry dates back to 1926 when Dunlop Rubber
Limited set up the first tyre company in West Bengal MRF followed suit in 1946.
Since then, the Indian tyre industry has grown rapidly. Indian Tyre Industry now
provides direct and indirect employment to nearly million persons, including dealers,
retailers, growers of Natural Rubber, employment raw material sector etc.
• The Indian tyre industry has become one of the most competitive markets in the world
and with the help of new technology ultra-modern production facilities and availability
of raw materials beer rate, the sector is set to grow further. At present, India has forty
large and medium tyre manufacturing tyre production companies, of which the top 10
account for over 90 percent of the country's total
• The Indian Auto Sector is an integral part of the Indian economy contributing to about
7.5 percent to the GDP The Indian Tyre Industry which provide services to the Auto
Sector in India also contributes to around 3% of the manufacturing GDP of India and
0.5% of the total GDP directly.
• Indian tyre industry has almost doubled from Rs 30,000 crores in 2010-11 to Rs
59,500 crores in 2017-18 of which 90-95% came from the domestic markets. The top
three companies – MRF, Apollo Tyres and JK Tyres have 60% of the market share in
terms of revenue.

Nature of the Industry:

Tyre Industry is highly raw material intensive. Raw material cost accounts for approx. 63%
of tyre industry turnover and 72% of production cost. The industry is a major consumer of the
domestic rubber market. Natural rubber constitutes 80% while synthetic rubber constitutes
only 20% of the material content in Indian tyres, 62% of total Natural Rubber consumption is
by the Tyre Sector, balance by rubber based non-tyre industry. Interestingly, world-wide, the
proportion of natural to synthetic rubber in tyres is 30:70.

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Demand Drivers of the Industry
1) Industrial and freight activity
The truck and bus tyre segment accounted for 19% of tyres produced in India. Every truck/bus
manufactured generates a demand for seven tyres. In addition, the price of a truck tyre is
significantly higher than that of a passenger car tyre (roughly 10 times).

2) Personal purchasing power

As the economy booms and disposable incomes in the hands the sale of passenger cars has
been witnessing an upward swing over the past decade. Since tyre sales are directly linked to
car sales, both through OEMs and the replacement market, the tyre industry has witnessed a
corresponding increase in its sales figures

3) Automobile sales
The demand from the OEM segment a derived one directly correlated to the level of
automotive production. The recent Slowdown in automotive industry and global economies
general negatively impacted the Indian Tyre industry.

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Competition
Indian tyre industry is facing intense competition from China and other South East Asian
countries . Though the quality of Indian Tyres is better and has wider acceptance, due to
cheaper pricing higher volumes aided by Government support and subsidies Chinese tyres
are cutting into the share of Indian tyre exports There is a need to promote India Brand for
tyres as one which spells quality and higher standards.

Present Situation of the Tyre Industry and Future Growth

• Due to the Corona Virus Situation around the tyre industry around the world is going to
show a decline as the demand for the Tyres by the global automakers is going to decline as
there is shutdown in most of the countries and manufacturing by the auto-makers have
reduced.
• The credit profile of the Indian tyre industry is likely going to be affected by the ongoing
slowdown in domestic automotive industry, rising raw material (RM) prices and higher
spend towards debt-funded capacity expansion. Nevertheless, the long-term outlook on
industry credit profile is stable.
• As our Prime Minister Narendra Modi‟s call to be „atma nirbhar‟ (self-reliant) amidst the
coronavirus pandemic and call to boycott foreign goods, it is a good opportunity for many
local and rural tyre manufactures to take advantage of this situation and this move is
expected to grow the tyre industry in India.

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Challenges Faced by the Indian Tyres Industry
• Economic (Volatility, Uncertainty, Complexity & Ambiguity)
• Sustainability
• Digitization
• Technology and R&D
• Threat from China
• Govt. Policy & Reforms
• Economy of scale
• Operational Excellence (Quality, Productivity, Cost, Delivery)

Reason to Invest in Tyres Industry

• Government initiatives for making India self-independent
• Innovation in the tyre industry
• Business Fundamentals
• Increased demand from around the world
• Government Support

S.W.O.T. Analysis

Strengths Weakness
• Highly Capital Intensive
• Revival in economic activity
• Fluctuation in Exchange Rate
• Limited competition
• Pricing Pressures
• R&D initiative by Top players

Opportunity
• Improvement in Auto-Mobile Industry
• Access to global sources for raw
material
• Exploration of new markets
Threats
• Introduction of other transport facilities
• Cheaper Import of tyres
• Expectation of rise in natural rubber
price

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VOLATILITY, UNCERTAINTY, COMPLEXITY & AMBIGUITY (VUCA Analysis)
Volatility
The nature & dynamics of change
The nature & speed of change forces
Change catalysts
Complexity
The multiplex of forces
The confounding of issues
The chaos & confusion that surround
an organization.
Uncertainty
The lack of predictability,
The prospects for surprise
The sense of awareness &the
understanding of issues and events
Ambiguity
The haziness of reality
The potential for misreads
The mixed meanings of conditions
Cause-and-effect confusion
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Government Initiatives
• Under Free Trade Agreements Government has reduced customs duty in tyres with no
corresponding reduction in basic rate of customs duty on Natural Rubber.
• Reduction in customs duty on EPDM rubber would reduce the input costs for the auto
industry, tyres, rubber profile manufacturers.
• Government of India can increase the customs duty on tyres from existing rate of 10%
(to a higher rate of duty) without any corresponding action/explanation to the WTO.
• All categories of tyres can be exported freely.
• All categories of new tyres can be imported freely. No WTO Bound Rates for tyres and
tubes.
• Imports of Second hand/Rethreaded tyres (major categories) are restricted under EXIM
Policy and can be done against an import licence.
• Tyres imports under Regional Trade Agreements (Asia Pacific Trade Agreement, Indo-
Sri Lanka, SAFTA, India-Singapore, ASEAN, India-Malaysia etc.) allowed at
preferential rates of import duty.
• All tyre industry related raw-materials can be imported freely (under OGL).
• Natural Rubber (NR) principal raw material of Tyre Industry, is in the ‘Negative List`
(i.e., not eligible for any concession in Custom duty) under various Trade Agreements.

Future for the Tyre Industry in India

The Indian tyre industry may log 7-9 per cent growth over the next five year backed by
favourable outlook for the domestic automotive industry. Besides, the domestic tyre industry
margins, which declined by 120 bps year-on-year in the September 2018 quarter, are expected
to improve due to the falling crude prices and stable prices of the natural rubber. Tyre demand
is estimated to grow by 7-9 per cent over the next five years (FY2019-23) supported by
favourable outlook for the domestic automotive industry. According to an industry report, the
domestic automobile industry, which is currently the fourth largest in the world, is expected to
become the third largest by 2021. The industry (including component manufacturing) is
expected to grow at a compounded annual growth rate of 5.9 per cent and reach USD 251.4-
282.8 billion by 2026, thereby becoming the fastest growing industry in the country, as per the
report. Due to the Covid-19 situation around the world there is a decrease in the demand of the
tyres from around the world but it is surely going to increase when the situation are going to

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normal, the demand for the tyres are also going to be increased domestically since the PM has
called for the self- dependent India and most of the companies are now demanding the goods
from the local market instead of importing it from the others nations.

Suggestions

• Since there is an increased competition from China the tyre industry players have to
maintain the quality of their products and try to provide the best of the products to the
automobile industries around the world.

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 • The gap between production and consumption of natural rubber widened by 45 per cent
between April 2018 and January 2019 thus there is a need to fill this gap and make tyre
industry fully efficient.
• With the emergence of new technology, ultra-modern production facilities and
availability of raw material, and with the growing insistence to lower emission levels
and enhance fuel efficiency in vehicles, Indian tyre industry has a great opportunity to
get a bright spot in the global trade and contribute to sustainable growth and
development of the country as Indian tyres are exported to more than 100 countries
across the world.
• Tyre manufacturing companies can also take an advantage of India’s population, with
increasing per capita income, infrastructure development and growing urbanisation in
India, the demand for automobiles and heavy vehicles have increased a lot. Therefore,
the tyre manufacturing companies can capitalise on these opportunities and grow as an
industry.

Market price comparison of past 5 years of:

MRF

APOLLO TYRES

JK TYRES

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 COMPANY ANALYSIS

MRF TYRES

COMPANY ANALYSIS

MRF is India's largest tyre manufacturer and ranked amongst the Top 20 Global Manufacturers
with 9 state-of-the-art factories across India. It is also India's largest Original Equipment
Manufacturer (OEM) tyre supplier with an expansive tyre range from two-wheelers to fighter
aircrafts. The MRF story is a truly remarkable one. What started as a rubber balloon factory
with a funding of Rs.14, 000 way back in the 40‟s is now a multibillion legacy that produces
quality tyres used all around India & internationally along with a presence in paints & coats,
toys, motorsports and cricket training. MRF is recognized for its drive towards continuous
quality improvement and customer satisfaction. It has won the JD Power award not once but
12 times till date. It has also won the TNS and CAPEXIL awards for being voted as the most
trusted tyre company in India. MRF‟s passion for motorsports is seen through its involvement
in racing, karting, rallying and various other motorsport events. Its rallying team has won the
prestigious FIA Asia Pacific Rally Championship twice and even in international
championships, MRF karting tyres homologated by FIA, is the preferred choice.

Serial No. Valuation Metrices Fundamentals

1. Earnings per share (EPS) 2,404.1

2. Price-to-earnings (P/E) ratio 26.64

3. Return on equity -

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 4. Debt-to-Equity Ratio 0.14

5. Price-to-book (P/B) ratio 2.40

EARNINGS PER SHARE

MRF‟s EPS is consistently falling for the past 5 years. This is a red flag for an investor who
is looking to earn regular dividend as EPS is indicative of earning power of each share
invested in the company.

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APOLLO TYRES

Company Summary

Apollo Tyres Ltd is the leading tyre manufacturing company in India. They are engaged in
manufacturing automobile tyres and tubes. They are the first Indian tyre company to launch
exclusive branded outlets for truck tyres and also the first Indian company to introduce radial
tyres for the farm category. Apollo Tyres currently has four manufacturing facilities in India -
- two (including a leased facility) in the rubber-producing state of Kerala and one each in
Gujarat and Tamil Nadu. Outside India the company has a manufacturing facility each in The
Netherlands and Hungary. The company markets its products under our two global brands:
Apollo and Vredestein. These products are available in countries across the globe through a
vast network of branded, exclusive and multi-product outlets. Apollo Tyres has multiple
manufacturing units in India, the Netherlands and Hungary.

With its corporate headquarters in Gurgaon, India, we cater to over 100 countries across the
globe. At the end of the financial year 2019, the company clocked a turnover of US$ 2.48
billion, backed by a global workforce of approximately 17,200 employees.

As of March 31, 2019, the company traded in India on the Bombay Stock Exchange and
National Stock Exchange, with 59.10% of shares held by the public, government entities, banks
and financial institutions.

Serial No. Valuation Metrices Fundamentals

1. Earnings per share (EPS) 8.89

2. Price-to-earnings (P/E) ratio 13.53

3. Return on equity 4.82

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4. Debt-to-Equity Ratio 0.56

5. Price-to-book (P/B) ratio 0.65

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JK TYRES

Company Summary
The J. K. Organisation is an Indian industrial conglomerate, with headquarters in Delhi,
Kanpur andMumbai. It is run by the Singhania family, which rose to prominence in Kanpur,
India, under Lala Kamlapat Singhania. JK Tyre is the pioneer of Radial Technology in India.
It was the first companyto launch radials in the passenger car segment way back in 1977. With
a vast experience and understanding of operating conditions in India, JK Tyre brings one of
the best technology for all the cars & SUVs. JK Tyre & Industries Ltd is one of India‟s
foremost tyre manufacturers and is also amongst the top 25 manufacturers in the world.It is
the only Indian tyre manufacturer to be included in the list of Super-brands India in 2019 for
the seventh consecutive year. JK Tyre recently was awarded the most coveted Safety award
in the world -the Sword of Honour for Safety across its plants by the British Safety Council,
UK. JK Tyre launched India‟s first ever „Smart Tyre‟ technology-and introduced Tyre
Pressure Monitoring Systems (TPMS) by offering TREEL Sensors, which monitors the tyre‟s
vital statistics,including pressure and temperature.

Serial No. Valuation Metrices Fundamentals

1. Earnings per share (EPS) 7.16

2. Price-to-earnings (P/E) ratio 10.49

3. Return on equity 6.28

4. Debt-to-Equity Ratio 2.52

5. Price-to-book (P/B) ratio 0.68

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The above graphs show P/E Ratio of JK Tyres for last 5 years, which helps us to make
conclusion that company had an overall increasing P/E Ratio except for 2019. In the near
future it is expectedto low and lower it is, more viable investing option it becomes.

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The above graph shows Debt- Equity Ratio of JK Tyres for last 5 years. Which helps us to
make conclusion that company had fluctuations in terms of long term-interest bearing debt
that it had over last years and a remained stable from 2.9 in 2018 to 2.5 in 2019 which is bad
for the firm’s performance and show’s firm’s ability that it cannot finance on its own and it
relies on debt capital to meet fund requirements.

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COMPANY STOCK RECOMMENDATION

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 TOOLS FOR TECHNICAL ANALYSIS

TOOL 1: MOVING AVERAGE METHOD

A moving average (MA) is a widely used technical indicator that smooths out price trends by
filtering out the “noise” from random short-term price fluctuations. Moving averages can be
constructed in several different ways, and employ different numbers of days for the averaging
interval. The most common applications of moving averages are to identify trend direction and
to determine support and resistance levels. When asset prices cross over their moving averages,
it may generate a trading signal for technical traders. While moving averages are useful enough
on their own, they also form the basis for other technical indicators such as the moving average
convergence divergence (MACD).

TOOL 2: RSI (RELATIVE STRENGTH INDEX)

The relative strength index (RSI) is a momentum indicator used in technical analysis that
measures the magnitude of recent price changes to evaluate overbought or oversold conditions
in the price of a stock or other asset. The RSI is displayed as an oscillator (a line graph that
moves between two extremes) and can have a reading from 0 to 100. Time period generally
considered is 14 days. RSI reading below 25 is interpreted as oversold. RSI between 25 & 45
is interpreted as a bearish condition. RSI between 45 & 55 is interpreted as a neutral condition.
RSI between 55 & 75 is interpreted as a bullish condition. RSI reading greater than 75 is
interpreted as an overbought.

Interpretation of RSI and RSI Ranges - 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. Put another way, one can interpret that RSI values of 70 or above indicate
a security is becoming overbought or overvalued and may be primed for a trend reversal or
corrective price pullback. An RSI reading of 30 or below indicates an oversold or undervalued
condition.

During trends, the RSI readings may fall into a band or range. During an uptrend, the RSI tends
to stay above 30 and should frequently hit 70. During a downtrend, it is rare to see the RSI
exceed 70, and the indicator frequently hits 30 or below.

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TOOL 3: JAPANESE CANDLE STICKS

A current financial candlestick is a form of price and technical chart analysis used by traders
that displays the high, low, open, and closing prices of a security or instrument over a specific
period. Sometimes colloquially known as Japanese candlesticks.

● Typically coloured or filled in, these types of charts’ goal is to tell investors whether
the closing price of an asset was higher or lower than its opening price. This relationship
determines the candlestick’s shape and colour.
● Green candlesticks indicate there is strong buying or bullish price pressure. Red
candlesticks suggest there is significant selling or bearish pressure. They adequately
comprise a multitude of information regarding the market’s impact on security prices.
● Additionally, candlesticks are used to analyze any trading periods, including minute-
long, daily, or hourly cycles.
● They determine when to enter and exit trades of many liquid financial assets, such as
but not limited to stocks, foreign exchange, and futures

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 MOVING AVERAGE METHOD ANALYSIS

APOLLO:

Apollo Tyres Opened at 219.00 and Closed at: 211.55, which is -4.11% of previous session's
close. It moved within a range of 210.00 and 219.00
The session was a Bearish session with an average volume of 3941166, which is 42.74% of
previous session's volumes.

• The stock has fallen, and its short term trend is also negative and in a downtrend.
• The stock has fallen, and its mid term trend is also negative and in a downtrend.
• Even though the stock has fallen, but its long term trend is positive and in an uptrend.
• Support for tomorrow is 206.28 and resistance for tomorrow is 215.28
These support and resistance points are valid for the first 5-15 minutes charts
• Support for tomorrow's hourly charts is 208.03, 204.52 resistance for tomorrow's hourly
charts is 217.03, 222.52
• 10 Day SMA for Apollo Tyres (APOLLOTYRE) is 220.47 and stock is trading below
these levels. This is not a good sign for its short term trend
• 20 Day SMA for Apollo Tyres (APOLLOTYRE) is 222.11 and the stock is trading
below these levels. This is not a good sign for its mid term trend

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 • 50 Day SMA for Apollo Tyres (APOLLOTYRE) is 226.46 and the stock is trading
below these levels. This is not a good sign for its mid to long term trend
• 100 Day SMA is 222.37 and the stock is trading below these levels. This is not a good
sign for its long term trend
• 200 Day SMA Apollo Tyres is 211.51 and stock is trading above these levels. This is a
good sign for its long term trend.

JK TYRES:

Jk Tyre Opened at 154.00 and Closed at: 148.70, which is -6.29% of previous session's close.
It moved within a range of 146.05 and 157.00 The session was a Bearish session with an
average volume of 1751058, which is 32.35% of previous session's volumes.

Even though the stock has fallen, but its short term trend is positive and in an uptrend. Even
though the stock has fallen, but its midterm trend is positive and in an uptrend.

Even though the stock has fallen, but its long term trend is positive and in an uptrend. Support
for tomorrow is 141.9 and resistance for tomorrow is 152.85

These support and resistance points are valid for the first 5-15 minutes charts.

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Support for tomorrow's hourly charts is 144.17, 139.63 resistance for tomorrow's hourly charts
is 155.12, 161.53

• 10 Day SMA for Jk Tyre (JKTYRE) is 154.84 and stock is trading below these levels.
This is not a good sign for its short-term trend
• 20 Day SMA for Jk Tyre (JKTYRE) is 151.32 and the stock is trading below these
levels. This is not a good sign for its midterm trend
• 50 Day SMA for Jk Tyre (JKTYRE) is 146.89 and the stock is trading above these
levels. This is a good sign for its mid to long term trend
• 100 Day SMA is 133.12 and the stock is trading above these levels. This is a good sign
for its long-term trend
• 200 Day SMA Jk Tyre is 115.59 and stock is trading above these levels. This is a good
sign for its long-term trend

MRF TYRES

Mrf Opened at 79399.00 and Closed at: 78076.95, which is -1.63% of previous session's close.
It moved within a range of 77805.00 and 79399.00 The session was a Bearish session with an
average volume of 8520, which is 17.71% of previous session's volumes.

• The stock has fallen, and its short term trend is also negative and in a downtrend.
• The stock has fallen, and its mid-term trend is also negative and in a downtrend.

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 • Even though the stock has fallen, but its long term trend is positive and in an
uptrend.
• A Dead cross was found 7 days back on long term averages

Support for tomorrow is 77143.98 and resistance for tomorrow is 78737.98 These support
and resistance points are valid for the first 5-15 minutes charts

• Support for tomorrow's hourly charts is 77454.97, 76832.98 resistance for tomorrow's
hourly charts is 79048.97, 80020.98
• 10 Day SMA for Mrf (MRF) is 78756.99 and stock is trading below these levels. This
is not a good sign for its short term trend
• 20 Day SMA for Mrf (MRF) is 79543.45 and the stock is trading below these levels.
This is not a good sign for its mid term trend
• 50 Day SMA for Mrf (MRF) is 80726.83 and the stock is trading below these levels.
This is not a good sign for its mid to long term trend
• 100 Day SMA is 80724.79 and the stock is trading below these levels. This is not a
good sign for its long term trend
• 200 Day SMA Mrf is 81281.1 and stock is trading below these levels. This is not a
good sign for its long term trend

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RSI

APOLLO TYRES –

RSI is 37.9. According to RSI analysis, APOLLO TYRE is technically weak. RSI is generating
a SELL signal and the sell signal is getting stronger, this is not a good position to be in by the
company as they have heavy competiton from stocks in the Tyre Industry who are performing
better. This might have been resulted in the sharp price decline in April 2020 due to the
pandemic as many reasons such as cars not being sold resulted in an affect on the tyre industry.
Since this is more like a netral category, it is upto the investors discreation whether they want
to keep the stock or not.

MRF –

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RSI is 39.8. According to RSI analysis, MRF is technically weak. But it is still in the mid-
range, i.e., between 30 and 70 and thus cannot be called either Oversold or Overbought.
According to RSI indicator, Selling is dominating the stock of MRF Limited. Another thing
can be that investors wait for proper trends to emerge before taking any further decisions
regarding the stock.

JK TYRES –

RSI is 48.1. According to RSI analysis, JK TYRE is at it's support.JK Tyer’s RSI is better than
both of Apollo and MRF as they have kept themselves in the mid category which doesn’t give
a sell signal. RSI is generating a BUY signal but the buy signal is losing strength. Investors
looking for investing in this particular industry should take a look at JK Tyre as well.

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JAPANESE CANDLESTICKS ANALYSIS

Candlestick Chart of JK Tires for 5 years

2017

In 2017, it is seen that the stock price is initially bullish at the beginning of the year but soon
for 3 consecutive months, it goes down and the prices are bearish. It is observed very carefully
in this case that an economic downturn reversal is seen. This is also termed as three black crows
confirming a bearish reversal. A sudden bullish stock price is then seen but at a very low price
for the next three consecutive months. A bullish price is then seen at a much higher price than
in the previous months for the next two months. This is termed as the Doji Star Bearish
condition. For the next few months, there is a bearish trend seen in the stock market which
finally ends at a bull run hike in the final month of the year.

2018

The year begins at a bullish run with a higher stock price than the previous year promising an
upgoing trend. It suddenly becomes bearish for the next month for a while. And this pattern
goes on for consecutive months. By the mid of the year we see a downward trend in the stock
prices.

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2019

The downward trend continues for a long time but in this year 2019, the stock market looks
bearish more than it is bullish however the shares are valued at a lower price thus making up
for the losses. By the end of the year however, the prices go a little bullish in an upward
direction.

2020

The prices are then bearish in the beginning of 2020. Till the first two months we can see the
stock market being extremely bearish which then turns a little bearish towards the month of
April where for three consecutive months it is seen to be deliberation bearish indicating the
exhaustion of the ascending trend. The Evening Star pattern is a three-candle, bearish reversal
candlestick pattern that appears at the top of an uptrend. It signals the slowing down of upward
momentum before a bearish move lays the foundation for a new downtrend.

2021

The stock market for JK Tyres seems to be on an upward trend and has been bullish till this
month. The upward trend is a good indication of rising prices and hence higher profitability in
investing in these stocks at these times of the year.

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Candlestick Chart of Apollo Tires for 5 years

2017

In the beginning of the year to the end of 2016 to be specific, a bullish trend is seen. For the
consecutive three months, a bearish trend is seen and we see a similar three black crows bearish
trend in this case too. There is a bullish trend for the next three months and by April we see a
bull run at the highest level which further grows and forms a deliberation bearish reversal
indicating a declining trend. Till November it is seen that there is a bearish stock market for
apollo which then suddenly takes a little bull run but again at a lower price for around 140
rupees.

2018

The beginning of the year is marked by a highly bullish stock market, with a very high price,
which makes it profitable to invest in these shares. The next month again marks a bearish run
at the same price. A series of bullish and bearish runs in alternative years is seen but the prices
go on an upward trend which makes it more profitable in case of a bull run which happens
mostly.

2019

The year goes on to be bullish for most of the year and the trend keeps on going down however
a falling three methods are seen. By the end of the year, a bullish trend is seen. The market
doesn’t perform that well this year.

2020

The beginning is marked by a bearish trend moving on to a bullish trend by March, which again
continues till July marking a deliberate bearish reversal which has been seen frequently. In the
middle a bearish star doji is seen and the trend goes higher with a bull run marking a profitable
investment.

2021

There is an extremely bullish run seen at the beginning of the year yet at a higher price per
share which is followed by bearish runs for 2 consecutive months. It then leads to a high trend
and the stock market is sufficiently bullish till the current month.

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Candlestick Chart of MRF Tyres for 5 years

2017

The end of 2016 is marked by a bullish run followed by an alternate bearish and bullish runs
till the beginning of 2017 and a Doji star Bearish Reversal is seen marked by bullish runs till
April. This is an upward trend and a bearish trend is seen for the next month. For the next two
months a bearish run is seen but it is a downward trend.

2018

2018 begins with a bearish run but an upward trend in stock prices is marked till the mid of the
year. Falling three methods trend is seen by the end of the year but a falling trend is seen in the
beginning of 2019.

2019

It is seen that there is a downward trend all through the year with more bullish runs than a
bearish run. The year isn't that profitable for investment.

2020

The year 2020 has fluctuated a lot with equal bearish and bullish runs. At the end of the year a
higher trend is seen and by the end of the year it ends at a bullish run with a very high stock
price.

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2021

This year a higher trend is seen all through the years doji star bearish, abandoned baby bearish,
three outside down bearish and then at the end an engulfing bullish trend is seen. Till this month
a high stock price is maintained but in a bullish trend.

REFERENCES:

[1] Apollo Tyres Ltd. Share Price: Live BSE/NSE. (n.d.). Retrieved June 25, 2020, from
https:// www.valueresearchonline.com/stocks/241/apollo-tyres-ltd?utm_source=direct-click

[2] Ceat Ltd. Share Price: Live BSE/NSE. (n.d.). Retrieved June 25, 2020, from https://
www.valueresearchonline.com/stocks/670/ceat-ltd

[3] ETMarkets.com. (2019, June 06). Buy MRF, target Rs 60,000: Kunal Bothra. Retrieved
June 25, 2020, from https://economictimes.indiatimes.com/markets/stocks/recos/buy-mrf-
target-rs-60000- kunal-bothra/articleshow/69670546.cms?from=mdr

[4] JK Tyre & Industries Ltd. Share Price: Live BSE/NSE. (n.d.). Retrieved June 24, 2020,
from https://www.valueresearchonline.com/stocks/1834/jk-tyre-and-industries-ltd

[5] MRF Ltd. Share Price: Live BSE/NSE. (n.d.). Retrieved June 25, 2020, from https://
www.valueresearchonline.com/stocks/2261/mrf-ltd

[6] Satija, A. (2020, February 20). The Indian Tyre Industry, Key Players & The Road
Ahead. Retrieved June 23, 2020, from https://www.alphainvesco.com/blog/understanding-
the-indian-tyre- industry/

[7] Top Companies in India by Market Capitalization - BSE. (n.d.). Retrieved June 23, 2020,
from https://www.moneycontrol.com/stocks/marketinfo/marketcap/bse/tyres.html

[8] TVS Srichakra Ltd. Share Price: Live BSE/NSE. (n.d.). Retrieved June 25, 2020, from
https:// www.valueresearchonline.com/stocks/4010/tvs-srichakra-ltd

[9] Vijayraghavan, L. (2019, August 06). Credit profile of Indian tyre industry is likely to
weaken in FY2020: ICRA. Retrieved June 22, 2020, from
https://m.economictimes.com/credit-profile-of- indian-tyre-industry-is-likely-to-weaken-
in-fy2020-icra/articleshow/70556944.cms

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