PGDM Equivalent to MBA by AIU

Systematic review of Fundamental and Technical

Analysis of the stocks for client acquisition

Submitted by:
Niharika Hangloo
BM-020059

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OBJECTIVE OF THE STUDY
The following are the objective of the study:-

1. To gain the practical knowledge of technical analysis and fundamental analysis.

2. To understand the role of technical tools are used to predict the future behavior of the
stocks.
3. To understand the role of fundamental tools used for evaluation of fair value of the stock.
4. To have a knowledge about how an investors can use these technique so as to make
decent profit.
5. To understand the role of business development for the company.

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 LITERATURE REVIEW
 J Hema and V Ariram (2016), in their research paper titled, “ Fundamental analysis with special reference to
pharmaceutical companies listed in NSE” stated that an investor should analyze the market fundamentally
and technically before investing in shares. They also noticed growth in the pharmaceutical industry in India.

 Hemraj Verma and Prakash Tiwari (2009), in their study headed, “A Fundamental analysis of public sector
banks in India” detailed the growth of the Indian banking industry and current performance of the bank with
the help of various ratios.

 Venkatesh C K and Madhu Tyagi (2011), in their research paper titled, “ Fundamental analysis as a method of
share valuation in comparison with technical analysis” detailed about different movement of share prices in
comparison with fundamental and technical analysis. It also emphasized on the market capitalization and
organizational structure.

 Sanjay Sehgal and Meenakshi Gupta (2005), the survey covered institutional and individual technical traders
with a long and active trading record for the Indian market. In this study also it is observed that the sample
respondents tend to use Technical analysis along with Fundamental analysis for security selection.

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 Keerthi Gunuraj Kulkarni (2013), the paper had intended on developing a “stock selection criteria” based on
which stocks have been analysed. Whereas my study focuses on the application of Fundamental and
Technical analysis to assist investors to take simple buy or sell positions.

 Venkatesh. C. K and Madhu Tyagi (2011), basically analysed that while investing in all sectors and companies
brokers will use both technical and fundamental analysis but while evaluating companies from Banking,
Cement, Pharmacy and Steel industry they rely on fundamental analysis to forecast price. Technical Analysis
will be used to analyse stock from FMCG, Real Estate, Telecom and IT sector. Crux is that both methods are
equally important and can be used as a compliment to other investing strategies.

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RESEARCH METHODLOGY
1. Type of Study:
This is an analytical study based on the secondary data collected from various technical websites for two
different company from two different sector respectively.
 
2. Type of Data:
The type of Data that is collected is completely secondary data from websites.

3. Sampling size:
The samples selected are from the index of nifty of different industrial sectors. The sample of companies
selected are:-

1. Industrial sector: Fast moving consumer goods.

Company: Indian Tobacco Company Limited (ITC)

2. Industrial sector: Information technology

Company: Tata Consultancy Services (TCS)
 
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4. Analytical tool:
Fundamental analysis:
This data was been collected from:
(i) Ticker by Finology
(ii) Screener

Technical analysis:
This data was been collected from:
(i) Traderscockpit
 
5. Limitation of the study:
Analysis involves using of limited technical tools.
 The study is restricted only to two selected stocks of nifty.
 The study depends more on secondary data rather than on primary data.
 
6. Scope of the study:
The study is conducted based on the selected IT and Fast moving Consumer Goods Company listed in NSE. The
company is selected on the basis of the stock market performances from past 1 month.

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DATA ANALYSIS AND FINDINGS
The analysis for both the stock was done from 5th July 2021 till 5th August 2021

(A)FINANCIAL ANALYSIS

 FUNDAMENTAL ANALYSIS- Fundamental analysis is a method to evaluate the value of the asset and
then analyse those factors which could affect the price of the stock in the future. The basic requirement or
role of performing a fundamental analysis is to interpret the stocks are undervalued or overvalued
according to the market condition. This analysis even helps the investors to analyse the company’s
strength and even its ability to face the challenges from its competitors in the market.

TOOL USED: Ticker and Screener

 TECHNICAL ANALYSIS- Technical analysis is basically done to evaluate the investment criteria and
identifying the investment opportunities in the market on the bases of the price trends and technical
indicators. This analysis basically guides the investors in understanding the trend in the market so as to
make investment decision and even understand the demand and supply levels.

TOOL USED: Traderscockpit

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FUNDAMENTAL ANALYSIS

(i) P/E Ratio: It is the ratio is defined as a ratio for valuing a company that measures its current
share price relative to its per-share earnings. PE chart is used to depict that whether the
stock of the company are overvalued or undervalued.

(ii) P/B Ratio: It is a financial ratio used to compare a company's current market value to its
book value.

(iii) ROCE%: Return on Capital Employed (ROCE) is a financial ratio that measures a
company's profitability and the efficiency with which its capital is employed.

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Fundamental analysis of TCS and ITC Ltd. (5TH JULY 2021-5TH
AUGUST 2021)
COMPANY TCS ITC

P/E RATIO OVER-VALUED SLIGHTLY OVER-VALUED

P/B RATIO OVER-VALUED SLIGHTLY OVER-VALUED

ROCE% HIGH LOW

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TECHNICAL ANALYSIS

(i) Crossover:
BEARISH CROSSOVER/DEATH CROSSOVER: This crossover depicts that the seller are gaining
the control and a weakness is observed in the stock’s price. Basically bearish crossover occurs when
50 DMA (50 day moving average) line crosses the 200 DMA (200 day moving average) line from
above then the bearish crossover occurs. The major indication that is given by a bearish crossover is
to SELL STOCK at the particular crossover.

BULLISH CROSSOVER/GOLDEN CROSSOVER: This crossover depicts that the buyer are
gaining the control. In this crossover 50 DMA line crosses 200 DMA line from below then the bullish
or golden crossover occurs. The major indication that is given by a bearish crossover is to BUY
STOCK at the particular crossover.

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(ii) Indicator:
 pSAR: The pSAR trend helps investor to analyse the trend in the market and whether to buy, sell or hold stock.
Even help the investor in recognizing the trend of the stock.
 ADX indicator: The ADX indicator attempts to measure the strength of the price movement be it positive or
negative.
 RSI indicator: RSI indicator is used to evaluate that whether the stock is over bought or over-sold.
 MACD indicator: It help in analysing the relationship between two moving averages. Red line (MACD line)
crosses below the blue line (Signal line) which indicated a buying of the stock.
 MFI Oscillator: The Money Flow Index (MFI) is a technical oscillator that uses price and volume data for
identifying overbought or oversold. If the value of MFI is above 80 then is considered to be over bought and
should be sold immediately but if the value of the MFI is below 20 then it is over-sold and the stock should be
bought by the investors.
 CCI Oscillator: The CCI Oscillator help to identify whether there is an uptrend or downtrend in the stock of the
company and also whether to buy or sell the stock. As per the indicator +100 reflect strong price that signal’s the
start of uptrend (buy) and is the value moves towards -100 then it reflects the start of downtrend (sell).
 William %R indicator: This indicator is used to understand the stock conditions in the market whether the
stock is over-bought or over-sold not only this, it also indicates the momentum of the stock. This oscillator
oscillates between 0 to -100. If the value of the indicator is between 0 to -20 then the stock is considered to be
over-bought and if the value ranges between -80 to -100 then the stock is considered to be over-sold.

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 Technical analysis of TCS and ITC ltd. (5TH JULY 2021-5TH AUGUST 2021)
COMPANY TCS ITC
CROSSOVER No crossover No crossover
PSAR Downward trend/Buy signal 29Th July to 6th august- Downward
trend
July 14 – July 28th: Upward trend
th

Buy signal
ADX Downward trend/Buy signal No solid trend built.
RSI Neither over-bought nor over-sold Neither over-bought nor over-sold

MACD Buy signal Positive trend formed.

MFI Neither over-bought nor over-sold Neither over-bought nor over-sold

CCI 6th July-2nd August: Downward trend 1st July-13th July- Strong sell
3rd August-5th August: Upward trend 14th July-5th August- Strong buy
(Strong buy)
William %R 2nd August-6th August: over-bought 5th and 6th of August the stocks were
over-bought. 8th to 13th July the stocks
were over-sold.
 

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(B) BUSSINESS DEVELOPMENT

TASK: To develop the business for the company by generating leads and selling the company’s
software/courses.

METHODOLOGY:
The steps that I followed for the completion of the marketing task were:
1. All the interns were provided with one webinar so as to understand the key points related to the
product/service before pitching it to the clients.
2. I first tried and understood the market/customer I need to target.
3. Then by analysing that, I went on for the next time that is marketing the product/service through online
platforms like LinkedIn, Instagram and Whatsapp.
4. Creating a strong online network is very important for selling and generating leads.
5. I even understood that generating leads can be easier if product/service knowledge is up to mark. Because
before selling a product, knowledge about the product plays an important role.
6. After generating leads, I made the customer understand about the value of the product and when they agreed
on purchasing the product, I myself made sure that all the help that could be provided to them in any case was
given so as to build a strong customer base between the company and client.

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ACHIEVEMENT:
Throughout this internship programme we has three phases and all phases had one business development
task. After completing that the financial analysis and business development task then only the intern could
move to next phase. In my internship time frame, I sold:

1) PIM+PSTS- Course + software, worth 5000 rupees.

2) PSTS- Software, worth 2500 rupees.
3) PSTS- Software, worth 2500 rupees.

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CONCLUSION

By the means of this SIP project, an overview of fundamental and technical analysis and importance of
using these analysis before investing is been showcased on two different sector that is IT and FMCG.

Various fundamental and technical analysis tools have been used like P/E ratio, ROCE%, various
indicators and crossovers. Fundamental analysis requires both qualitative and quantitative information in
order to identify the performance of the company in the market. The practical usage of both fundamental
and technical analytical tools is been showcased in this study. Though technical and fundamental
analysis are applied on past event but it can for sure guarantee great financial results in future.

And the business development can only be done if one knows how and when the tools can be used so as
to get better results. And to pitch courses/software anything nowadays strong network is required to be
built. And not just for creating strong network but learning more skills as well.

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LEARNING OUTCOME
1. Through the means of this internship I learned more about the stock market and basic of stock market.

2. I understood the importance of prior analysis before investing.

3. I gained more knowledge about the fundamental and technical tools that are being used by the investors to
analyse the performance of the company in the market before investing.

4. Use of technical tools like RSI, PSAR, MACD, CCI, ADX, Bullish and bearish crossover in analyse the trend of
the stock and for fundamental analysis ratio like ROCE%, ROE%, P/E ratio, P/B ratio and EPS to know whether
the stock is over bought or over-sold.

5. By the means of business development, learning how to widen our network, how to generate leads, how to
manage the client.

6. The importance of financial literacy and skill of developing a business in today’s time.

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REFERNCES
1. Silpa, K.S. & Mol, J. & Ambily, A.S. (2017). A study on fundamental analysis of selected IT companies listed at
NSE. Journal of Advanced Research in Dynamical and Control Systems. 9. 1-10.
Bhatia, A. M. A. N. (2021, February 2). TECHNICAL ANALYSIS AND ITS USE IN THE STOCK MARKETS.
 
Cohen, Gil. (2011). Stock Market Analysis in Practice: Is It Technical or Fundamental. Journal of Applied Finance
and Banking.
 
 Thomas Asha E. (2014). A Study on Technical Analysis and its Usefulness in IndianStock Market. Mirror 3, (2),
159-165. ISSN: 2249-8117
 
A, V., & P, K. (2016). A Study on the Technical Analysis of NSE Towards it Stocks with Reference to Indian Stock
Market. A Study on the Technical Analysis of NSE towards It Stocks with Reference to Indian Stock Market, 5(04 :
( 2016)).
 
Bentes, Sónia & Navas, Raúl. (2013). the Fundamental Analysis: An Overview.
 
A, V., & P, K. (2016). A Study on the Technical Analysis of NSE Towards it Stocks with Reference to Indian Stock
Market. A Study on the Technical Analysis of NSE towards It Stocks with Reference to Indian Stock Market, 5(04 :
( 2016)).
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THANK YOU

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