Summer Internship Project Report

Fundamental and Technical analysis of

Automobile Sector

Finoability Pvt Ltd

Submitted in Partial Fulfillment of MMS Program

Submitted by - Shubham Kunchanwar

Corporate Mentor -

Mr. Piyush Agarwal

Co-Founder & Director

1
 Declaration

I do hereby declare that this project entitled, “Fundamental & Technical

Analysis on Power sector” with Finoability Pvt Ltd. at Kolkata (Live/Online)
has been completed by me and it is an original work. This report is being
submitted for fulfilling the requirement of Summer Internship Project at
Jamnalal Bajaj Institute of Management Studies, Mumbai.

It has never been submitted nor been published elsewhere.

Name of the student: Shubham Kunchanwar

Date: 08/06/2021

Place: Nanded.

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 Acknowledgement

Summer Internship is an integral part of an MBA Program and I take this

opportunity to express my gratitude towards Finoability Pvt Ltd, Kolkata which
helped me to accomplish this project. I am highly grateful to my industry
mentor Mr. Piyush Agarwal, (Co-Founder & Director) for providing me the
opportunity to have such a good experience of the Internship program. It was
indeed very gracious of him to spare his valuable time and give an elaborate
insight into the functioning of the department.

I would like to thank my faculty mentor for their help and constant supervision
throughout the project. Their opinions and deep insight on the subject matter
and various parts of the SIP report helped in successful completion of this
project.

At last, I am also thankful to my friends, all known and unknown individuals

who have given me their constructive advice, encouragement, co-operation, and
motivation during this project and while preparing this report.

I thank my college Jamnalal Bajaj Institute of Management Studies, Mumbai

which gave me an opportunity to show my skills and work with such a big
organization.

Thank You,

Shubham Kunchanwar

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Research Methodology

Type of Study – Secondary Research

Sources – moneycontrol.com

Sampling Unit – Stock of Information Technology

ABOUT THE COMPANY

As an independent Finance company, we make all our recommendations based

solely on how it best serves your near and long-term goals. By teaching you
about the Financial Market and our principled approach, you can feel confident
in your ability to make sound decisions that will benefit you and your family in
the long run. That’s why our approach is fundamentally different. By combining
emotional and intelligence quotient – EQ and IQ – we can help you build a
more secure financial future.

4
 Contents
Title Pg. No.
1. Executive Summary 06

2. AutoMobile Sector

2.1 Introduction to AutoMobile Sector 07

2.2 Industry Scenario 07

2.3 Foreign Investment 07

2.4 Automotive Mission Plan 08

3. Fundamental Analysis

3.1 Introduction to Fundamental Analysis 08

3.2 Advantages of Fundamental Analysis 09

3.3 Disadvantages of Fundamental Analysis 10

4. Fundamental Analysis of AutoMobile Stocks

4.1. Valuation of stocks 11

4.2 Ranking of Selected Stocks 12

5. Technical Analysis

5.1. Long Term Technical Analysis 14

5.2. Long Term Technical Analysis AutoMobile Large Caps 22

5.3 Short Term Technical Analysis 23

6. Conclusion 26

7. References 26

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1. EXECUTIVE SUMMARY

This project report is about the “Fundamental Analysis in AutoMobile- Large Cap sector”.
Fundamental and Technical Analysis have been adopted as the methodologies to analyse the
sector.

Valuation is done as a part of Fundamental Analysis and certain stocks are chosen as the
“Value Picks” and certain stocks as “Growth Picks”.

The Value Picks have been chosen as those stocks which are undervalued and have shown a
growth in Earnings per Share (EPS) on a Year on Year (YOY) basis.

Some overvalued stocks have been chosen as Growth Picks which have the P/E Growth ratio
(PEG Ratio) as positive and less than or equal to 1.

Further, using some financial ratios which are important to the AutoMobile sector, the value
picks and growth picks have been ranked. According to the ranks, funds have been allocated
to these selected stocks.

Finally, a portfolio consisting of the selected AutoMobile Sector stocks is created and the Net
Asset Value (NAV) of the portfolio is calculated. Performance of the entire portfolio is
analysed with respect to the BSE index (which acts as a benchmark) on daily basis to see if
the portfolio of the AutoMobile sector stocks beats the benchmark of BSE index.

It will be helpful for investors who are looking for an investment in AutoMobile sector
companies.

As a part of Technical Analysis, two types of Technical Analysis namely Short-Term

Technical Analysis and Long-Term Technical Analysis have been performed on the selected
AutoMobile sector stocks (Growth Picks and Value Picks).

Various Patterns have been observed as a part of Long-Term Technical Analysis and points at
which the investors can buy and sell the stocks have been spotted. Also, the current trend of
the stocks has been found out.

Various Candlesticks have been used as a part of Short-Term Analysis and also various
Candlesticks positions have also been observed. The Candlesticks give us an idea regarding
trends and trend reversals for the selected AutoMobile sector stocks (Growth Picks and Value
Picks).

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2. AutoMobile Sector

2.1 Introduction to AutoMobile Sector

In 2020, India was the fifth-largest auto market, with ~3.49 million units combined sold in
the passenger and commercial vehicles categories. It was the seventh largest manufacturer of
commercial vehicles in 2019. The two wheelers segment dominate the market in terms of
volume owing to a growing middle class and a young population. Moreover, the growing
interest of the companies in exploring the rural markets further aided the growth of the sector.

India is also a prominent auto exporter and has strong export growth expectations for the near
future. In addition, several initiatives by the Government of India and major automobile
players in the Indian market is expected to make India a leader in the two-wheeler and four-
wheeler market in the world by 2020. The industry currently manufactures 26 mn vehicles
including Passenger Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers and
Quadricycles in April-March 2020, of which 4.7 mn are exported. India holds a strong
position in the international heavy vehicles arena as it is the largest tractor manufacturer,
second-largest bus manufacturer and third largest heavy trucks manufacturer in the world.

2.2 Industry Scenario

India's annual production has been 30.91 mn vehicles in 2019 as against 29.08 mn in 2018,
registering a healthy growth of 6.26%. India is expected to emerge as the world’s third-
largest passenger vehicle market by 2021. In FY 2018-19, sale of passenger vehicles has
increased by 2.70%, two-wheeler by 4.86% and three-wheeler by 10.27% as compared to FY
2017-18.

In April-March 2019, overall automobile exports grew by 14.50%. The overall

Commercial Vehicles segment registered a growth of 17.55% in April- March 2019.

2.3 Foreign Investment

India's annual production has been 30.91 mn vehicles in 2019 as against 29.08 mn in 2018,
registering a healthy growth of 6.26%.India is expected to emerge as the world’s third-largest
passenger vehicle market by 2021. In FY 2018-19, sale of passenger vehicles has increased
by 2.70%, two-wheeler by 4.86% and three-wheeler by 10.27% as compared to FY 2017-18.
In April-March 2019, overall automobile exports grew by 14.50%. The overall Commercial
Vehicles segment registered a growth of 17.55% in April- March 2019.
Siemens has signed a memorandum of understanding (MoU) with Switch Mobility
Automotive to jointly address the need of electric commercial vehicle customers and execute
E-Mobility Projects in India. Ashok Leyland through its subsidiary Switch Mobility, the UK-
based electric vehicle (EV) producer of buses and vans, announced its global expansion plans
into India and its plan to create two subsidiary companies. The State Bank of India (SBI) has
raised $1 billion from the Japan Bank for International Cooperation (JBIC) to extend loans to

7
supply a chain of Japanese automobile industry in India. US-based Triton Electric Vehicle
LLC has registered a subsidiary in India as part of setting up a business in the country.

2.4 Automotive Mission Plan

The Automotive Mission Plan 2016-26 (AMP 2026) outlines the trajectory of growth
of the automotive ecosystem in India, including the glide path of definite regulations
and policies that govern research, design, technology, testing, manufacturing, import/
export, sale, use, repair, and recycling of automotive vehicles, components and
services.
The Automobile industry is projected to be the third-largest in the world, contributing
12% to GDP.The industry has the potential to generate USD 300 Bn revenue and 65
mn additional jobs by 2026.The Automobile industry is one of the prime movers of the
manufacturing sector and the “Make in India” initiative. It aims to increase exports of
vehicles by five times. The growth of vehicles, particularly passenger vehicles, is
expected to triple to 9.4 mn units per annum by 2026.
The plan also foresees India to be the first in the world in the production/sale of small
cars, two-wheelers, three-wheelers, tractors and buses; and third in passenger vehicles
and heavy trucks.

3. Fundamental Analysis

3.1. Introduction to Fundamental Analysis

It is a method used to evaluate a security on the basis of its intrinsic value by examining
related economic, financial and other qualitative and quantitative factors.
Fundamental analysis is about using real data to evaluate a security's value. Although most
analysts use fundamental analysis to value stocks, this method of valuation can be used for
just about any type of security. It assumes that over the long term, a stock price will reflect
the company's intrinsic value.

A Fundamental analyst attempts to study everything that can affect the security's value,
including macroeconomic factors (like the overall economy and industry conditions) and
company-specific factors (like financial condition and management).

An investor, for instance can perform fundamental analysis on a bond's value by looking at
economic factors, such as interest rates and the overall state of the economy, and information
about the bond issuer, such as potential changes in credit ratings. For assessing stocks, this
method uses revenues, earnings, future growth, return on equity, profit margins and other
data to determine a company's underlying value and potential for future growth.

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It is critical for an investor to separate the daily short-term noise in the stock prices and
concentrate on the underlying business performance. Over the long term, the stock prices of a
fundamentally strong company tend to appreciate, thereby creating wealth for its investors.

The end goal of performing fundamental analysis is to produce a value that an investor can
compare with the security's current price, with the aim of figuring out what sort of position to
take with that security (Undervalued = buy, Overvalued = sell).

Growth is also considered as an important factor in the fundamental analysis because if the
security does not grow or if there is a negative growth (loss making company) then
irrespective of whether it is an overvalued or undervalued security, there is no point in
analysing it further for fundamental analysis.

In case of stocks, Undervalued stocks can be considered for further analysis only if they grow
Year on Year. The undervalued securities with positive Year on Year growth are considered
as ‘Value Picks’. Overvalued stocks can be considered for further analysis only if their PEG
ratio (also known as Price to EPS growth ratio) lies between 0 and 1 including those having
PEG ratio near or equal to 1. Such overvalued stocks are known as ‘Growth Picks’.

Fundamental analysts focus on the underlying business of the company being evaluated and
specifically look at quantitative measures such as:

• Revenues
• Earnings
• Assets
• Debts
These financial measures are often combined to produce fundamental or financial ratios that
analysts can use to compare the company they are analysing to:

• Other companies in the same industry

• The overall market
• Previous periods result for the same company
Analysts use a variety of ratios to compare the two companies or the stocks of the two
companies like Net Income margin, ROE, Debt to Equity ratio, etc. The ratios used for
comparison vary from sector to sector

3.2 Advantages of Fundamental Analysis

• It uses sound mathematical and statistical principles to produce ratios so that there is no
room for personal bias.

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• The markets are usually driven by fundamental factors over the long term. Fundamental
analysis can look at long-term economic, demographic, technologic or consumer trends.

• By determining an intrinsic value, fundamental analysts can determine appropriate buy

prices that represent 'good value'.

• Research into fundamentals provides the investor with a better understanding of the
company and its business.

3.3 Disadvantages of Fundamental Analysis

• Fundamental analysis can be hard work and be overly complicated. Given the time and
difficulty constraints, it may be difficult to get an edge

• In the short term, markets will not always move in the same direction as fundamental value
meaning that often short-term momentum will override the fundamentals

• Six monthly issuing of financial information may mean a company's fundamentals have
significantly changed and means a time lag for investment decisions. This applies especially
to a lack of opportunity to react quickly to exit stocks
• Fundamental analysis for future estimated value can only be based on assumptions so a
best- and worst-case valuation model may need to be considered.

• No valuation model can take into account any unexpected negative economic, political or
legislative changes.

• Another important point to consider is that most information considered in fundamental

analysis comes from the company itself and assumptions have to be made that the company is
providing accurate and true information.

4. Fundamental Analysis of AutoMobile Stocks

For conducting fundamental analysis for the stocks in AutoMobile Sector, we have taken into
consideration only large cap stocks i.e. stocks with market capitalization greater than 5000 crore
rupees. Table below shows the stocks of the companies having market capitalization greater
th
than 5000 crore rupees and listed under the Nifty 500 Index (as on 8 June, 2021).

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 Company Market Capitalization (in Rs. Cr)

Maruti Suzuki India Ltd. 2,08,791

Mahindra & Mahindra Ltd. 1,00,853

Bajaj Auto Ltd. 1,20,089

Hero MotoCorp Ltd. 58,529

Eicher Motors Ltd. 71,753

Motherson Sumi Systems Ltd. 75,948

MRF Ltd. 34,854

Ashok Leyland Ltd. 37,090

Bharat Forge Ltd. 30,644

4.1. Valuation of stocks

The P/E ratio of each stock is then compared with the sectorial P/E ratio to determine whether
the stock is Undervalued or Overvalued. For instance, if P/E ratio of a stock is lesser than the
sectorial P/E ratio then that stock is considered as an Undervalued stock on the other hand if
the P/E ratio of a stock is greater than the sectorial P/E ratio then that stock is considered as
an Overvalued stock. (As shown in Table below). The Long-Term Price Target (LTPT) is
then determined by multiplying the average sector P/E with the stock EPS. All the
Undervalued stocks are considered as ‘Value Picks’.

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 Overvalued Stock

Company EPS (2021) EPS (2020) PEG Ratio

Eicher Motors Ltd. 49.28 66.91 -2.35

Motherson Sumi Systems Ltd. 3.29 3.71 -8.92

MRF Ltd. 3011 3354 -2.15

Ashok Leyland Ltd. -1.7 1.15 -0.43

Undervalued Stock

Company Sales PAT Select/Reject

Maruti Suzuki India Ltd. Increasing Increasing Select

Mahindra & Mahindra Ltd. Increasing Decreasing Reject

Bajaj Auto Ltd. Increasing Increasing Select

Hero MotoCorp Ltd. Increasing Increasing Select

MRF Ltd. Increasing Increasing Select

4.2 Ranking of Selected Stocks

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5. Technical Analysis

Technical analysis is the examination of past price movements to forecast future price
movements where the price is influenced by the forces of supply and demand.

The objective of analysis is to forecast the direction of the future price. By focusing on price
and only price, technical analysis represents a direct approach while Fundamentalists are
concerned with why the price is what it is.

Based on the duration of analysis, technical analysis can be categorized into two types:

1. Long term technical analysis (2-5 years)

2. Short term technical analysis (<1 year)

There are various patterns to analysis whether the movement of a particular stock is in
upward trend or downward trend.

Upward trend signifies when demand is greater than supply resulting in increase in prices.
An uptrend line has a positive slope and is formed by connecting two of more low points. The
second low must be higher than the first for the line to have a positive slope.

Downward trend signifies when supply exceeds the demand resulting in decrease in prices.
A down trend line has a negative slope and is formed by connecting two or more high points.
The second high must be lower than the first for the line to have a negative slope.

Support is the price level at which demand is thought to be strong enough to prevent the
price from declining further. The logic dictates that as the price declines towards support and
gets cheaper, buyers become more inclined to buy and sellers become less inclined to sell. By
the time the price reaches the support level, it is believed that demand will overcome supply
and prevent the price from falling below support. A decline below support indicates a new
willingness to sell and/or a lack of incentive to buy.

Resistance is the price level at which selling is thought to be strong enough to prevent the
price from rising further. The logic dictates that as the price advances towards resistance,
sellers become more inclined to sell and buyers become less inclined to buy. By the time the
price reaches the resistance level, it is believed that supply will overcome demand and
prevent the price from rising above resistance.

5.1. Long Term Technical Analysis

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a) Rounding Bottom

i. 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.

b) Cup with Handle

a. The Cup with Handle is a bullish continuation pattern that marks a consolidation
period followed by a breakout. It was developed by William O'Neil and introduced in
his 1988 book, How to Make Money in Stocks.
b. b. As its name implies, 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.

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c) Bump & Run Reversal

a. A Rising trendline is drawn which connects at least 3 lows of a price series (troughs)
of 3 different periods respectively as shown in the below Figure 5.3. Then a Bump is
seen which can be observed as a bullish pattern and finally the point where the
trendline is broken, the pattern enters into a Run phase. This point is called as a sell
point i.e. Investor is supposed to sell the stock at this point.

d) Double Top

a. 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 as shown in Figure 5.4. At least an intermediate
change, if not long-term change, in trend from bullish to bearish as soon as the
support is broken. Many potential double tops can form along the way up, but until
key support is broken, a reversal cannot be confirmed.

15
 Key Points Regarding Double Bottom Chart Pattern:

 Resistance break: Even after trading down to support, the double top and trend reversal
are still not complete. Breaking support from the lowest point between the peaks
completes the double top.
 Resistance turned support: Broken support becomes potential resistance and there is
sometimes a test of this newfound resistance level with a reaction rally. Such a test can
offer a second chance to exit a position or initiate a short.
 Price Target: The distance from support break to peak can be subtracted from the support
break for a price target. This would infer that the bigger the formation is, the larger the
potential decline.

e) Double Bottom

a. 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.
a. Although there can be variations, the classic double bottom usually marks an
intermediate or long-term change in trend when the resistance is broken. Many
potential double bottoms can form along the way down, but until key resistance is
broken, a reversal cannot be confirmed.

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 Key Points Regarding Double Bottom Chart Pattern:

 Resistance break: Even after trading up to resistance, the double top and trend reversal
are still not complete. Breaking resistance from the highest point between the troughs
completes the double bottom. This too should occur with an increase in volume and/or an
accelerated ascent.
 Resistance turned support: Broken resistance becomes potential support and there is
sometimes a test of this newfound support level with the first correction. Such a test can
offer a second chance to close a short position or initiate a long.
 Price Target: The distance from the resistance breakout to trough lows can be added on
top of the resistance break to estimate a target. This would imply that the bigger the
formation is, the larger the potential advance.

f) Head & Shoulders Top

a. 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.

17
 b. As its name implies, the head and shoulders reversal pattern are made up of a left
shoulder, head, right shoulder and neckline. Other parts playing a role in the pattern
are volume, the breakout, price target and support turned resistance.

 Key Points Regarding Double Bottom Chart Pattern:

 Neckline: The neckline forms by connecting low points 1 and 2. Low point 1 marks the
end of the left shoulder and the beginning of the head. Low point 2 marks the end of the
head and the beginning of the right shoulder. Depending on the relationship between the
two low points, the neckline can slope up, slope down or be horizontal. The slope of the
neckline will affect the pattern's degree of bearishness: a downward slope is more bearish
than an upward slope. Sometimes more than one low point can be used to form the
neckline.
 Neckline Break: The head and shoulders pattern are not complete and uptrend is not
reversed until neckline support is broken.
 Support turned resistance: Once support is broken; it is common for this same support
level to turn into resistance. Sometimes, but certainly not always, the price will return to
the support break and offer a second chance to sell.

 Price Target: After breaking neckline support, the projected price decline is found by
measuring the distance from the neckline to the top of the head. This distance is then
subtracted from the neckline to reach a price target.

g) Head & Shoulders Bottom

a. The head and shoulders bottom is sometimes referred to as an inverse head and
shoulders. The pattern shares many common characteristics with its comparable
partner, but relies more on volume patterns for confirmation.
b. As a major reversal pattern, 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.
c. The price action forming both head and shoulders top and head and shoulders bottom
patterns remains roughly the same, but reversed.

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 Key Points Regarding Double Bottom Chart Pattern:

 Neckline: The neckline forms by connecting reaction highs 1 and 2. Reaction high 1
marks the end of the left shoulder and the beginning of the head. Reaction high 2
marks the end of the head and the beginning of the right shoulder.
Depending on the relationship between the two reaction highs, the neckline
can slope up, slope down or be horizontal. The slope of the neckline will affect the
pattern's degree of bullishness: an upward slope is more bullish than downward slope.
 Neckline Break: The head and shoulders pattern is not complete and the downtrend is
not reversed until neckline resistance is broken.
 Resistance turned support: Once resistance is broken; it is common for this same
resistance level to turn into support. Often, the price will return to the resistance break
and offer a second chance to buy.
 Price Target: After breaking neckline resistance, the projected advance is found by
measuring the distance from the neckline to the bottom of the head. This distance is
then added to the neckline to reach a price target.

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h) Triple Top

a. The triple top is a reversal pattern made up of three equal highs followed by a break below
support. In contrast to the triple bottom, triple tops usually form over a shorter time frame and
typically range from 3 to 6 months. Generally speaking, bottoms take longer to form than
tops.

 Key Points Regarding Triple Top Chart Pattern:

 Support break: As with many other reversal patterns, the triple top is not complete until
a support break. The lowest point of the formation, which would be the lowest of the
intermittent lows, marks this key support level.

 Support turns resistance: Broken support becomes potential resistance, and there is
sometimes a test of this newfound resistance level with a subsequent reaction rally.

 Price Target: The distance from the support break to highs can be measured and
subtracted from the support break for a price target.

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i) Triple Bottom

a. The triple bottom is a reversal pattern made up of three equal lows followed by a breakout
above resistance. While this pattern can form over just a few months, it is usually a long-
term pattern that covers many months.

 Key Points Regarding Triple Bottom Chart Pattern:

 Resistance break: As with many other reversal patterns, the triple bottom is not complete
until a resistance breakout. The highest point of the formation, which would be the
highest of the intermittent highs, marks resistance.

 Resistance turns support: Broken resistance becomes potential support, and there is
sometimes a test of this newfound support level with the first correction. Because the
triple bottom is a long-term pattern, the test of newfound support may occur many months
later.

 Price Target: The distance from the resistance breakout to lows can be measured and
added to the resistance break for a price target.

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5.2. Long Term Technical Analysis AutoMobile Large Caps
a) Maruti Suzuki Ltd

b) Bajaj Auto Ltd

22
d) Hero Motocorp Ltd

5.3 Short Term Technical Analysis

Candlestick Chart: Originating in Japan over 300 years ago, candlestick chart
requires all the open, high, low and close prices. A daily candlestick is based on the
open price, the intraday high and low, and the close. A weekly candlestick is based on
Monday's open, the weekly high-low range and Friday's close.

Candlestick Patterns for Reversal of trend:

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1. Doji: The relevance of a Doji depends on the preceding trend or preceding
candlesticks. Doji indicate that the forces of supply and demand are becoming more
evenly matched and a change in trend may be near.

2. Hammer: The hammer is a bullish reversal pattern that forms after a decline. After a
decline, hammers signal a bullish revival. The low of the long lower shadow implies
that sellers drove prices lower during the session.

3. Hanging Man: The hanging man is a bearish reversal pattern that can also mark a top
or resistance level. Forming after an advance, a hanging man signals that selling
pressure is starting to increase. The low of the long lower shadow confirms that
sellers pushed prices lower during the session.

4. Shooting Star: The shooting star is a bearish reversal pattern that forms after an
advance and in the star position, hence its name. A shooting star can mark a potential
trend reversal or resistance level.

5. Inverted Hammer: The inverted hammer looks exactly like a shooting star, but
forms after a decline or downtrend. Inverted hammers represent a potential trend
reversal or support levels. After a decline, the long upper shadow indicates buying
pressure during the session.

Candlestick’s position: -

1. Star Position:

A candlestick that gaps away from the previous candlestick is said to be in star position.
The first candlestick usually has a large real body, but not always, and the second
candlestick in star position has a small real body. Depending on the previous candlestick,
the star position candlestick gaps up or down and appears isolated from previous price
action. The two candlesticks can be any combination of white and black. Doji, hammers,

24
shooting stars and spinning tops have small real bodies and can form in the star position.
Later we will examine 2- and 3-candlestick patterns that utilize the star position.

2. Harami Position:

A candlestick that forms within the real body of the previous candlestick is in
Harami position. Harami means pregnant in Japanese and the second candlestick is
nestled inside the first. The first candlestick usually has a large real body and the second
a smaller real body than the first. The shadows (high/low) of the second candlestick do
not have to be contained within the first, though it's preferable if they are. Doji and
spinning tops have small real bodies and can form in the harami position as well. Later
we will examine candlestick patterns that utilize the harami position.

25
 Conclusion
Equity research plays a very crucial role in order to make wise investment decisions. After having
accessed your risk capacity and tolerance followed by time horizon and intention of investment, the
individual portfolio can fetch your systematic returns.

Relative valuation model is one such method for value analysis. One can use long term and short-
term technical analysis along with fundamental analysis to determine a confirm trade signal. By
calculating long term target price investor one can achieve maximum profit and also get an idea for
how much period they should hold the stock.

References

1. www.equitymaster.com

2. www.investopedia.com

3. www.ibef.org

4. www.stockcharts.com

5. www.wikipedia.com

6. www.makeinindia.com

7. www.investindia.gov.in

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