A STUDY ON TECHNICAL

ANALYSIS

Done by:
Sukumar.R
MBA
INTRODUCTION

INDIA INFOLINE
India Infoline (IIFL) group,
is one of the leading players in the Indian
financial services space. IIFL offers advice
and an execution platform for a range of
financial services covering products ranging
from equities and derivatives, commodities,
wealth management, asset management,
insurance, fixed deposits, loans, investment
Banking, GoI bonds and other small savings
instruments.
INTRODUCTION
Technical analysis:
We can define Technical Analysis as a study
of the stock market considering factors related
to the supply and demand of stocks.
Technical analysis is a method of evaluating
securities by analyzing the statistics generated
by market activity, such as past prices and
volume.
ASSUMPTIONS:
1. The Market Discount Everything
2. Price Moves in Trends
3. History Tends to Repeat Itself
How is Technical Analysis done?

a) Moving Averages
b) Charts & Patterns
 RESEARCH METHODOLOGY.
RESEARCH OBJECTIVES:-
Primary Objective:
To find out appropriate time to buy and sell
securities based on selected indicator and
oscillator.
Secondary Objectives:
Understanding the technical analysis theories
and methods to analyze charts of the 2
companies using technical analysis.
RESEARCH DESIGN:
Descriptive Research Design.
DATA COLLECTION METHOD:
Secondary data (1 year)
SAMPLING TECHNIQUE:
  Sample of 2 companies has been selected on the
basis of market capitalization from NSE.
Reliance
BHEL
LIMITATIONS TO THIS STUDY
Costs
Time
Real investment information
Software rights
 TECHNIQUES USED
1)Moving Average Convergence Divergence – MACD

Formula:

MACD: (12-day EMA - 26-day EMA)

Signal Line: 9-day EMA of MACD MACD

Histogram: MACD - Signal Line

2)Relative Strength Index - RSI
  RSI= 100- 100
1+RS
RS=EMA[U]/EMA[D] EMA- exponential
moving average
U= Sig (close (today)-close
(yesterday))
D= Sig(close(yesterday)-close(today))
FINDINGS
 I found that 73 RSI signals and 32 MACD signals have been
generated in a year and total are 105 signals.
 Reliance has 37 RSI signals generated in a year which are highest.
 Both companies have high profit for MACD.
 Reliance has highest profit in RSI i.e. 44.45%
 Active trading strategy is more useful and gives more return
compare to passive trading strategy.
 
RECOMMENDATION
 It is recommended that one should use RSI because it is
more effective then MACD as it has more accuracy and
generate more signals then MACD and provide more
clear guidelines for entry and exit from the market.
 One should go for active trading strategy because it is
more profitable then passive trading strategy.