TECHNICAL ANALYSIS A Study on Selected Banking Sector Stocks

By Supriya K B
IV Semester, MBA Reg.No.11MB0138

Guide
Prof.B. SHIVARAJ MBA,Ph.D Chairman BIMS

Project Report Submitted to the University of Mysore in partial fulfillment of the requirements of IV Semester MBA degree examinations -2013.

B.N. Bahadur Institute of Management Sciences,

University of Mysore, Manasagangotri, Mysore-570 006

UNIVERSITY OF MYSORE B.N.BAHADUR INSTITUTE OF MANAGEMENT SCIENCES MANASAGANGOTHRI MYSORE-570006

CERTIFICATE
This is to certify that Supriya K B, a student of IV semester MBA course, has been prepared this project report titled TECHNICAL ANALYSIS A Study on Selected Banking Sector Stocks, in partial fulfillment of the requirements of IV Semester MBA Degree Examinations 2013.

Date: 21-04-2013 Place: Mysore (Prof.B.SHIVARAJ) CHAIRMAN

UNIVERSITY OF MYSORE B.N.BAHADUR INSTITUTE OF MANAGEMENT SCIENCES MANASAGANGOTHRI MYSORE-570006

GUIDANCE CERTIFICATE
The project report titled TECHNICAL ANALYSIS A Study on Selected Banking Sector Stocks has been prepared by Supriya K B, under my guidance. This report is submitted to University of Mysore in partial fulfillment of the requirements of IV Semester MBA Degree Examinations 2013.

Date: 21-04-2013 Place: Mysore (Prof.B.SHIVARAJ) CHAIRMAN

DECLARATION

I hereby declare that, this project report titled TECHNICAL ANALYSIS A Study on Selected Banking Sector Stocks, has been prepared by me under the guidance Prof. B.SHIVARAJ, in partial fulfillment of the requirement of IV Semester MBA Degree Examination of 2013 I also declare that this project report is the result of my own efforts and that it has not been submitted in part or in full to any other university or institution for the award of any degree or diploma.

Date: 21-04-2013 Place: Mysore (Supriya K B) Reg.No.11MB0138

ACKNOWLEDGEMENT
I am grateful to my Guide and chairman Prof. B.SHIVARAJ, B.N. BAHADUR institute of management and science, MANASAGANGOTHRI Mysore for his valuable advice and guidance throughout, which has enabled me in the successful completion of this project and whose constant backing and support, made my project a knowledgably and insightful experience.

This Project report has been made possible through the direct and indirect cooperation of various people to whom I wish to express my deep sense of Gratitude.

Date: 21-04-2013 Place: Mysore

Supriya K B

TABLE OF CONTENTS chapters

Introduction Problem Statement Objective of the study Research Methodology Limitations of the study Chapter-1 Literature Review Overview of Technical analysis Basic Concept And Assumptions Of Technical Analysis Dow Theory Elliot Wave Theory Pattern Analysis Indicator Analysis Findings Chapter-2 Chapter-3 Chapter-4 Chapter-5 Chapter-6 Chapter-7 Bank of Baroda Bank of India Karnataka Bank Ltd State Bank of India Summary of Findings Conclusions and Suggestions Conclusions Suggestions Bibliography 95 96 98 43 61 69 77 86 12 15 25 35 7 8 2 3 3 5

CONTENTS

Page number

List of Figures
Sl. No. Figure 1.1 Figure 1.2 Figure 1.3 Figure 1.4 Figure 1.5 Figure 1.6 Figure 1.7 Figure 1.8 Figure 1.9 Figure 1.10 Figure 1.11 Figure 1.12 Figure 1.13 Figure 1.14 Figure 1.15 Figure 1.16 Figure 1.17 Figure 1.18 Figure 1.19 Figure 1.20 Figure 1.21 Figure 1.22 Primary Trends Elliot Wave Theory Elliot Wave Theory Smaller Cycles Line Charts Positive Bar Negative Bar Bar Chart Positive Candle Negative Candle Candlestick Chart Point And Figure Chart Head And Shoulder Top Head And Shoulder Bottom Head And Shoulder Double Tops And Bottoms Triangles Flags And Pennant Cup And Handle Support And Resistance Moving Average Convergence Divergences Rate Of Change Relative Strength Index Figures Page number 13 16 17 19 20 21 21 22 23 24 25 27 28 29 29 31 32 33 34 36 38 39

Figure 1.23

Money Flow Index

41

List of Tables Sl. No.

2.1 2.2 4.1 4.2 5.1 5.2 6.1 6.2 7.1 7.3 7.4 7.5 Bank Of Baroda Monthly Price Movements Of Bank Of Baroda Bank Of India Monthly Price Movements Of Bank Of India Karnataka Bank Monthly Price Movements Of Karnataka Bank Limited State Bank Of India Monthly Price Movements Of State Bank Of India Bank Of Baroda Bank Of India Karnataka Bank State Bank Of India

Tables

Page number
44 46 61 63 69 71 78 80 89 91 92 93

INTRODUCTION

The noun chartist and related verb charting are also used, sometimes referring to a subset of technical analysis. Also, technical analysts are often referred to as noise traders in the academic literature (noise being anything other than news).

Technical analysis is the study of financial market action. The technician looks at price changes that occur on a day-to-day or week-to-week basis or over any other constant time period displayed in graphic form, called charts. A chartist analyzes price charts only, while the technical analyst studies technical indicators derived from price changes in addition to the price charts. Technical analysts examine the price action of the financial markets instead of the fundamental factors that (seem to) effect market prices. Technicians believe that even if all relevant information of a particular market or stock was available, you still could not predict a precise market "response" to that information. There are so many factors interacting at any one time that it is easy for important ones to be ignored in favor of those that are considered as the "flavor of the day."

The technical analyst believes that all the relevant market information is reflected (or discounted) in the price with the exception of shocking news such as natural disasters or acts of God. These factors, however, are discounted very quickly. Watching financial markets, it becomes obvious that there are trends, momentum and patterns that repeat over time, not exactly the same way but similar. Charts are self-similar as they show the same fractal structure (a fractal is a tiny pattern; self-similar means the overall pattern is made up of smaller versions of the same pattern) whether in stocks, commodities, currencies, bonds.

A chart is a mirror of the mood of the crowd and not of the fundamental factors. Thus, technical analysis is theanalysis of human mass psychology. Therefore, it is also called behavioral finance.

I. PROBLEM STATEMENT
As an investor, Should I buy today? What will prices be tomorrow, next week, or next year?

Wouldn't investing be easy if we knew the answers to these seemingly simple questions?

Technical analysis has the answers to these questions.

The primary motive for buying a stock is to sell it subsequently at a higher price. In many cases, dividends will be expected also. Dividend and price changes are the principle ingredients that an investor regards as returns and yield. If the investor had complete and accurate information and insight about dividends and stock price over subsequent period, he would be well on his way to greet riches. However, the real world of investment is full of political, economic, social and other forces that investors do not understand enough and face difficulty in decision making.

The main objective of the technical analysis is forecasting of future financial price movement based on examination of past price. This will help the investors to take his decisions effectively whether to buy or sell the security. It is also used to know the holding period of the underlying stocks and to decide when to dispose it off. The investors face difficulty in identifying the opportunities that comes their way, so this analysis will direct towards the use of different tools of analyzing the securities.

II. OBJECTIVES OF THE STUDY

To make a study on Technical Analysis on selected stocksand interpret on whether to buy or sell them To analyze the relationship between price volume for the overall market and the individual stock by several indicators. To evaluate the various tools of technical analysis and its usage in forecasting the future price and opportunities. To study the role of selected stocks of companies and understanding their positions. To evaluate how the technical analysis helps the investor in predicting the future price.

III. RESEARCH METHODOLOGY

Descriptive research design is adopted to learn in detail the technical analysis to predict the short term price movements and establish long term patterns. Quantitative techniques are used to analyze the technical indicators.

Sample Size:
In this study, the Sample is the five Banking companies which are listed in BSE are selected for the study of technical analysis. The five Banking companies are: 1. Bank of Baroda 2. Bank of India 3. Karnataka Bank Ltd.,

4. State Bank of India

Sources of data
The study comprises of data collection from secondary sources.

Secondary data:
Magazines and journals Text books News papers websites

Technical tools used for this study are:

CHARTS: 1. Line chart
Line charts represents only the closing prices over a set period of time. The line is formed by connecting the closing prices over the time frame. Line charts do not provide visual information of the trading range for the individual points such as the high, low and opening prices. However, the closing price is often considered to be the most important price in stock data compared to the high and low for the day and this is why it is the only value used in line charts.

2. Bar chart
Bar chart is one of the most popular types of charts. This type of chart uses all the four data points they are: High - The top point of the vertical bar

Low - The bottom point of the vertical bar Opening Price - A small horizontal line to the left of the vertical bar Closing Price - A small horizontal line to the right of the vertical bar

3. Candlestick charts
Candlestick charts have been around for hundreds of years. They are often referred to as Japanese candles because the Japanese would use them to analyze the price of rice contracts. Similar to a bar chart, candlestick charts also display the open, close, daily high and daily low. The difference is the use of color to show if the stock went up or down over the day.

4. Point and figure charts

The point and figure chart record price changes that are defined by box size criteria. While Xs denote up moves (price increase) and Os and down moves (decrease in price) respectively, prices must reverse by the amount of the box size in order to be potted.

Technical Indicators used are:

1. Moving Average Convergence Divergence (MACD). 2. Relative Strength Index (RSI). 3. Rate of Change (ROC). 4. Money Flow Index (MFI).

IV. LIMITATIONS OF THE PROJECT STUDY

1. The study is only for academic purpose. 2. The conclusion drawn is based on my limited knowledge. 3. Technical analysis depicts the general trend, but may not continue the same trend in future.

4. The analysis is done only for the selected stocks. 5. The study is confined only for oneyear and hence the studycannot be used for a period before and after. 6. The study is for a limited period; hence the behavior pattern may serve limited purpose.

CHAPTER-I

REVIEW OF

LITERATURE

1.1 OVERVIEW OF TECHNICAL ANALYSIS

Technical analysis of the market is based on some basic tenets, namely that all fundamental factors are discounted by the market and are reflected in prices. Secondly, these prices move in trends or waves which can be either upward or downward depending on the sentiment, psychology and emotions of operators or traders. Thirdly, the present trends are influenced by the past trends and the projection of future trends is possible by an analysis of past price trends. Analysis of historical trends confirmed the above principles and the Random Walk Theory explaining the randomness of price changes has been found to be not applicable by the technical analyst in practice. Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. A technical analyst believes that share prices are determined by the demand and supply forces operating in the market. These demand and supply forces in turn are

influenced by a number of fundamental factors. Many of these factors cannot be quantified. The combined impact of all these factors is reflected in the share price movement. Over a period of time Indian stock market has gone through lots of ups and down. Even though our Indian stock market is in the bull hug at present, the retail investors who have invested in the stock markets do spend sleepless nights because of the sudden trend reversal which have occurred many times in the past. Prices of shares are influenced by many exogenous factors. The volatility in share price takes place based on speculation and over sensitiveness and reactions among the investors. A technical analyst therefore concentrates on the movement of share prices. He claims that by examining past share price movements future share prices can be accurately predicted. Technical analysis is the name given to forecasting techniques that utilize historical share price data.

1.2Basic Concept and assumptions of Technical Analysis

Technical analysis is based on certain assumptions such as:

 Market price of a security is related to and determined by the interactions of demand and supply forces operating in the stock market.

Stock prices tend to move in trend for a long period, nevertheless, there may be minor fluctuations in between in the market. This implies that the movement in prices is continuous in a particular for some time.

Reversal of shift in trend in prices may occur because of change in demand and supply factors.

The change in demand and supply factors can be detected earlier with the help of charts and graphs.

Price patterns projected by price movements in the market tend to repeat themselves and can be used to forecast future price behavior

1.3 Principles:
Technicians say that a market's price reflects all relevant information, so their analysis looks more at "internals" than at "externals" such as news events. Price action also tends to repeat itself because investors collectively tend toward patterned behaviour hence technicians' focus on identifiable trends and conditions.

1.4 Difference between Technical and Fundamental Analysis

With a view to make a broad comparison between these two analyses as follows: 1.4.1 Regarding fundamentalist, his perspective is long-term in nature. He is conservative in his approach and he acts on what should be. Whereastechnical analyst outlook is short-term oriented? He is aggressive and he acts on what is.

1.4.2

The focus of fundamental analysis is on fundamental factors relating to the economy, the industry and the firm. The focus of technical analysis is mainly on internal market data, particularly price and volume data.

1.4.3

Fundamental analyst considers total gain from equity investment that consists of current yield by way of dividends and long-term gains by way of capital appreciation. And on the other hand technician doesnt distinguish between current income and capital gains. He is interested in short- term profits. Fundamentalist adopts a buy-and hold policy. He doesnt usually expect any significant increase in the value of his investments in less than a year. And as per technical, he believes in making quick buck. He snuffles his investments quite often recognising and foresees changes in stock prices.

1.4.4

1.4.5

Fundamental analyst forecast on the basis of economic, industry and company statistics. The principal decision variables take the form of earnings and dividends. He makes a judgement of the stocks value with a risk-return. Where, technician forecast securities prices by studying patterns of supply and demand for securities. Technical analysis is the study of stock exchange information.

1.4.6

Fundamentalist uses tools of financial analysis and statistical forecasting techniques. And regarding technical analyst, he uses mainly charges of financial variables beside the quantitative tools.

1.5 Superiority of Technical Analysis

Technical analyses differ in their views about fundamental analysis. Those who depend exclusively on technical analysis, criticize fundamental analysis as follows:

1.5.1

Fundamental analysis is hard and time consuming work. Technical analysis on the other hand requires less schooling and is easier to use.

1.5.2

Fundamental analysis is based on inadequate income statements and highly subjective nature of earnings multipliers.

1.5.3

Fundamental analysis is right in its assertion that security prices fluctuate around their intrinsic values. But even if fundamental analyst does find an under-priced

security, he must wait and hope that the rest of the market recognizes the securitys true value and bids its price up.

1.6 Advantages of Technical Analysis

There are many advantage associated with technical analysis of securities. They are 1.6.1 Technical analysis helps in investors buy/sell decision-making. 1.6.2 Technical analysis provides a quick view on the movement to a new equilibrium value for whatever the reason and helps in making necessary trading activity to get benefit. 1.6.3 The technical analysis is not based on the analysis of financial statement which is very often Associated with major problems such as
(a) Lack of good deal of information related to sales, earning & capital utilized. (b) Differential accounting practice of the firms, leads lack of proper comparisons. (c) It doesnt consider psychological factors and non-quantifiable variables.

1.6.4 Technicians relay on security prices, volume of trading and other trading information is derived from the stock market itself. 1.6.5 Technical analysis does not attempt to measure a security intrinsic value; instead they look for patterns and indicators on stock chart that will determine a stock future performance.

1.7 Weaknesses of Technical Analysis

Technical analysis of stocks is no panacea - it has its strengths and its weaknesses. Some weaknesses are:

1.7.1 Disillusionment

Not all strategies work all the time. It may be that any strategy or technique runs into a bad streak. It can happen that an investor is unaware of this inevitable situation and simply stops trading. There is a balance as to when you discover a strategy is a bad strategy and to be abandoned, or it is a good strategy and isn't working at the time.

1.7.2 Failure to Predict

It is generally understood at a technical analysis indicator may predict a price rise and that rise may fail to occur. This is a failure of prediction. What is less understood that there may be a price rise that the indicator failed to predict? This is a failure to predict.

1.7.3 Paralysis
traders can spend way too much time looking for trends, trend retracements, changes in values, changes in relationships between values, and so on, but traders really only have from close of market to the next market opening to make a decision. Adding to this is the reality that there will always be another resistance level to overcome or from which to retreat. Or, another support level to stop a downward slide or break through it on a downward trend.

1.7.4 Delay
It may be that by the time a series of particular events has produced the detected price pattern the risks taken to produce those events have already been rewarded by a price rise. If true, then an investment after the pattern is established may not be rewarded by a similar price rise.

1.7.5 Subjective Bias

To a carpenter all tools look like hammers. To a surgeon all problems can be solved by surgery. No insult to either profession. Our opinions are all shaped by our education and experience. If you are a market bull you'll see a pattern indicative of a market rise. Conversely if you are bearish the same pattern may have a negative implication. Looking at the same chart different people can honestly see differing implications for market direction and risk.

So what can be done?

Overcome disillusionment by paper trading until you develop the confidence to overcome a streak of poor performance. Paper trade through a good time and bad time. Don't risk real money on untested strategies.

Reduce negative impact of failures to predict

By using multiple indicators in the generation of selections, Remember that the market is not reality; it is the reflection of the perception of reality. The events of the cosmos continue to unfold outside of market hours. The analysis of price movement and volume cannot truly anticipate the unknown. Overcome paralysis by making a checklist of what you consider to be due diligence in the examination of every single investment. Make sure that list can be completed within the time allowed. Consider risk-delay penalties in the overall context of your risk tolerance. Yes, the majority of risk may have already been rewarded. Does that mean there is no reward remaining? Maybe, maybe NOT! Don't guess. Set your parameters, do your diligence, paper trade your strategy and see for yourself.

1.8 MARKET INDICATORS

The use of technical indicator to measure the direction of the overall market should precede any technical analysis of individual stocks because of the systematic influence of the general market on stock prices. In addition, some technicians feel that forecasting aggregates is more reliable because individual errors can be filtered out. First, we will examine the seminal theory from which much of the substance of technical analysis has been developed like DOW THEORY after which the other key indicators of the market activity is ELLIOT WAVE THEORY.

1.8.1 Dow Theory

It is considered as the oldest and best known theory of technical analysis, originally developed in the late 1800s by the editor of The Wall Street Journal Charles H. Dow formulated who many regarded as the father of the technical analysis. Although Dow developed the theory to describe past price movements, William Hamilton followed up by using it to predict the movements in the market. Dow Theory was very popular in the years 1920s and 1930s. It is hypothesis that the stock market doesnt perform on a random basis but is influenced by three distinct cyclical trends that guide its general direction. By following these trends, he said the general market direction can be predicted.

Figure 1.1

1.8.1.1 Some of the assumptions of the Dow Theory:

1.8.1.1.1 Dow classified these cycles as primary, secondary and minor trends

(a) Primary trend: It is a long range cycle that carries the entire market up and down. The term bull and bear originated with the direction of the Dow Theory Trend. Bull is occurs when prices rises as the market responds to improved earnings. And bear occurs when prices declines in response to disappointing earnings. (b) Secondary trend: It acts as a restraining force on the primary trend tending to correct deviations from its general boundaries. This trend usually last from several weeks to several months in length. (c) Minor trend: It can be called as daily fluctuations or day to day fluctuation in the stock price in the market. These have little analytical value because of their short duration and variations in amplitude.

1.8.1.1.2 The Averages Discount Everything.

An individual stock's price reflects everything that is known about the security. As new information arrives, market participants quickly disseminate the information and the price adjusts accordingly. Likewise, the market averages discount and reflect everything known by all stock market participants.

1.8.1.1.3. Primary Trends Have Three Phases.

The Dow Theory says that the First phase is made up of aggressive buying by informed investors in anticipation of economic recovery and long-term growth. The informed investors, realizing that a turnaround is inevitable, aggressively buy from these distressed sellers. The Second phase is characterized by increasing corporate earnings and improved economic conditions. Investors will begin to accumulate stock as conditions improve. The Third phase is characterized by record corporate earnings and peak economic conditions. The general public (having had enough time to forget about their last "scathing") now feels comfortable participating in the stock market--fully convinced that the stock market is headed for the moon. They now buy even more stock, creating a buying frenzy. It is during this phase that those few investors who did the aggressive buying during the First phase begin to liquidate their holdings in anticipation of a downturn.

1.8.1.1.4. The Averages Must Confirm Each Other.

The Industrials and Transports must confirm each other in order for a valid change of trend to occur. Both averages must extend beyond their previous secondary peak (or trough) in order for a change of trend to be confirmed.

1.8.1.1.5. Trends are confirmed by volume

Dow believed that volume confirmed price trends. When prices move on low volume, there could be many different explanations why. An overly aggressive seller could be present for example. But when price movements are accompanied by high volume, Dow believed this represented the "true" market view. If many participants are active in a particular security, and the price moves significantly in one direction, Dow maintained that this was the direction in which the market anticipated continued movement. To him, it was a signal that a trend is developing.

1.8.1.1.6. Trends exist until definitive signals prove that they have ended
Dow believed that trends existed despite "market noise". An up-trend is defined by a series of higher-highs and higher-lows. In order for an up-trend to reverse, prices must have at least one lower high and one lower low (the reverse is true of a downtrend). The trend should be given the benefit of the doubt during these reversals. Determining whether a reversal is the start of a new trend or a temporary movement in the current trend is not easy. Dow Theorists often disagree in this determination. Technical analysis tools attempt to clarify this but they can be interpreted differently by different investors.

1.8.2 Elliot Wave Theory

There is an another theory that attempts to develop a rationale for a long-term pattern in the stock price movements is the theory which we called it as a Elliot Wave theory, defined by Ralph Nelson Elliott in the 1930s.

Inspired by the Dow Theory and by observations found throughout nature, Elliott concluded that the movement of the stock market could be predicted by the major moves that take place in different successive steps resembling tidal waves. A wave is a movement of the market price from one change in the direction to the next change in the same direction. In fact, Elliott believed that all of man's activities, not just the stock market, were influenced by these identifiable series of waves. The waves are the result of buying and selling impulses emerging from the demand and supply pressures on the market. The basic pattern is made up of eight waves which are labeled 1, 2, 3, 4, 5, a, b, and c on the following chart. The market is unfolded through the basic rhythm of pattern of 5 waves up and 3 waves down to form a complete cycle of 8 waves. One complete cycle consists of waves made up of two distinct phases- bullish and bearish. Thus, the first wave moves upward, second wave corrects the first wave. Similarly, third wave and fifth wave are those with an upward impulse but are corrected by fourth wave and sixth wave respectively. An entire sequence of 1 to 5 waves are corrected by the sequence of bearish waves, namely a, b and c. thus in a complete cycle, there are 5 bullish phases as shown in the below figure. From the below figure, Waves 1, 3, and 5 are called impulse waves. Waves 2 and 4 are called corrective waves. Waves a, b, and c correct the main trend made by waves 1 through 5. The main trend is established by waves 1 through 5 and can be either up or down. Waves a, b, and c always move in the opposite direction of waves 1 through 5.

Figure 1.2 Elliott Wave Theory holds that each wave within a wave count contains a complete 5-3 wave count of a smaller cycle. The longest wave count is called the Grand Super cycle. Grand Super cycle waves are comprised of Super cycles, and Super cycles are comprised of Cycles. This process continues into Primary, Intermediate, Minute, Minuette, and Sub-minuette waves.

The following chart shows how 5-3 waves are comprised of smaller cycles.

Figure 1.3

1.8.3 Volume of trading

Volume is an important aspect of technical analysis because it is used to confirm trends and chart patterns. Any price movement up or down with relatively high volume is seen as a stronger, more relevant move than a similar move with weak volume. Therefore, if you are looking at a large price movement, you should also examine the volume to see whether it tells the same story.

Say, for example, that a stock jumps 5% in one trading day after being in a long downtrend. Is this a sign of a trend reversal? This is where volume helps traders. If volume is high during the day relative to the average daily volume, it is a sign that the reversal is probably for real. On the other hand, if the volume is below average, there may not be enough conviction to support a true trend reversal.

Volume should move with the trend. If prices are moving in an upward trend, volume should increase (and vice versa). If the previous relationship between volume and price movements

starts to deteriorate, it is usually a sign of weakness in the trend. For example, if the stock is in an uptrend but the up trading days are marked with lower volume, it is a sign that the trend is starting to lose its legs and ends.

1.9 Charting: The Basic Tool of Technical Analysis

Charting is the key activity in the technical analysis. It is already noted that in technical analysis, the basic motive is to identify the price trend on the basis of historical data. The trend is then used to forecast the future behavior. The price and volume of data on securities are the basic raw material used by a technical analyst and the charts and graphs are used as the basic tools to identify trends in prices. It may be noted that the technical analysis can be used either for a specific share or the market in general. In case of a specific share, the past data of that security are used to show charts while in case of market, the aggregate data on price and volumes are used to prepare charts. In technical analysis, both the price data and the volume data are studied simultaneously. This is true for specific shares as well as for the market. We refer people who study charts as technical analyst or chartists. Just as we find identifiable forms in the clouds or in constellations of stars, our brains are creative enough to find patterns in a sequence of stock prices. Technical analysts learn what they consider important patterns through folklore or their own experience.

1.9.1 Price and Price Charts:

In the charting activity, it is the price of securities that plotted and shown in the graphs and charts. A security is traded at different prices on particular day. Out of these different price quotations, four prices are relevant important. These are: (a) Opening Price: this is the rate at which the first transaction takes placed for the day. This price may be less, more or equal to the closing price for the previous trading day.

(b) Highest Price: this the highest rate for the day at which a transaction has taken place. It may be noted that simply a bid/offer rate is not relevant, rather a transaction have been entered into. (c) Lowest Price: This is the lowest price for the day at which the transaction has taken place. Different between the highest and lowest traded price may be taken as the price range for the day. (d) Closing Price: It is the rate at which a transaction for the day is traded. Out of the four prices, the closing price is the most relevant for two reasonsi. The stock indices for the day are calculated on the basis of closing prices of the constituent securities and ii. Closing price for a particular day can be compared with the opening price for that day or closing price for the previous day to identify a trend in prices.

1.9.2 TYPE OF CHARTS 1.9.2.1Line charts:

The line chart is a simplest presentation of movement in any variable. On the horizontal axis, time is taken and the variable is taken on the vertical axis. The value of the variable for different dates is platted on the graph. All the points are then joined by a line. This line is known as the variable line. The variable for the line chart can be price of a security, volume of a security, index number, total volume at the exchange, etc. Line chart can be prepared even for intra-day fluctuations in the particular variable Line Chart.

Figure 1.4

1.9.2.2 Bar Charts

The opening price on a bar chart is illustrated by the dash that is located on the left side of the vertical bar. Conversely, the close is represented by the dash on the right. Generally, if the left dash (open) is lower than the right dash (close) then the bar will be shaded black, representing an up period for the stock, which means it has gained value. A bar that is coloured red signals that the stock has gone down in value over that period. When this is the case, the dash on the right (close) is lower than the dash on the left (open).

POSITIVE BAR

Figure 1.5

NEGATIVE BAR

Figure 1.6 The bar chart expands on the line chart by adding several more key pieces of information to each data point. The chart is made up of a series of vertical lines that represent each data point. This vertical line represents the high and low for the trading period, along with the closing price. The

close and open are represented on the vertical line by a horizontal dash.

Figure 1.7

1.9.2.3 Candlestick Charts

A major problem with the candlestick colour configuration, however, is that different sites use different standards; therefore, it is important to understand the candlestick configuration used at the chart site you are working with. There are two colour constructs for days up and one for days that the price falls. When the price of the stock is up and closes above the opening trade, the candlestick will usually be white or green. If the stock has traded down for the period, then the candlestick will usually be black or red, depending on the site. If the stock's price has closed above the previous days close but below the day's open, the candlestick will be black or filled with the colour that is used to indicate an up day.

Positive Candle

Figure 1.8

Negative Candle

Figure 1.9 The candlestick chart is similar to a bar chart, but it differs in the way that it is visually constructed. Similar to the bar chart, the candlestick also has a thin vertical line showing the period's trading range. The difference comes in the formation of a wide bar on the vertical line, which illustrates the difference between the open and close. And, like bar charts, candlesticks also rely heavily on the use of colours to explain what has happened during the trading period.

Figure 1.10

1.9.2.4 Point and figure charts

The technical analyst attempts to identify the future price behavior in terms of the past data for prices, timing and the volume. However, there are some analysts who consider only the past prices and ignore the timing and the volume. This is based on the proposition that future price behavior can be predicted on the basis of past prices only. The time dimension and the volume are not useful. Rather, significant price changes and reversals should be noted to predict future price behavior. As the time dimension is ignored, the preparation of point and figure chart is a bit different from the bar chart. In order to prepare the Point and Figure Chart, the analyst has to decide as to what is a significant price change or price reversal. For example, for a share whose price is running around Rs.100, a change of Rs.5 may be considered significant but for a share whose price is running around Rs.500, a change of Rs.20 may be considered as significant. The significant price changes are

shown in the vertical axis and though time dimension is ignored, the horizontal axis impliedly shows time. The Point and Figure Chart allows for a visually clear sense of support and resistance levels. Breakouts from a particular level can give indication if where the trend in prices is headed in the future. The longer a price plot moves in a consolidation or sideways movement, the stronger the reaction can be a breakout.

Figure 1.11

1.10 ANALYSIS OF PRICE VOLUME CHARTS:

Various price-volume charts represented in the foregoing paragraphs have a high degree of visual communication to the investors. The past and present price-volume information provided by these charts can be used by the investors to make reasonable and logical predictions which can be used to take wiser decisions. There are two ways in which these charts can be studied and analyzed. These are:

(a) Pattern Analysis (b) Indicator Analysis

1.10.1 PATTERN ANALYSIS

In technical analysis, the distinctive formation created by the movement of security prices on a chart. It is identified by a line connecting common price points (closing prices, highs, lows) over a period of time. Chartists try to identify patterns to try to anticipate the future price direction,Also known as "trading pattern".

Patterns in security prices occur daily. However, although the various kinds of price patterns may in hindsight be easy to understand and see on paper, it is much harder to spot, and trade these formations in real time. There are many different kinds of patterns in technical analysis: the cup and handle, ascending/descending channels and, among others, the head-and-shoulders pattern. The price-volume charts can be used to analyze the patterns of price behavior. Dow and Elliot Theory concentrated on the analysis of price patterns. Identification of primary trend, secondary trend and minor fluctuation (as in Dow Theory) was in fact the identification of price pattern over a time period. The pattern analysis emphasizes the tendency of the price movements in a particular direction or repeats the same formation over and over again. These patterns can be categorized to reflect a bullish or bearish trend over years. In order to assess and forecast the share price movements, technical analysts believe that prices move in pattern which can be identified and standardized. Based on a particular formation of price movement or price pattern, the likely behavior of prices in future can be predicted. In general, the share prices do not overnight change from being in the bullish phase to the bearish phase or vice versa. There is usually a transitional phase in between. The price pattern can give an advance idea of likely change in direction of prices. These price patterns can be used to forecast. (a) End of bull/bear phase (b) Reversal of trend in prices

(c) Direction of the new change (d) Confirmation of the new trend Some of the common price patterns are as follows:

Trend:
Trend is a long- term price pattern. Over a period of one year to three years, the basic tendency of the prices can be identified as increasing and decreasing trend.

1.10.1.1 Head and shoulders:

At the end of a long trend, a reversal may turn up. This reversal can be signaled by a head and shoulders formation. This is one of the most popular and reliable chart patterns in technical analysis. Head and shoulders is a reversal chart pattern that when formed, signals that the security is likely to move against the previous trend. There are two versions of the head and shoulders chart pattern. Head and shoulders top and Head and Shoulder at bottom. At the end of an increasing trend, a set of 3 humps (middle on being higher than the two others) may appear. A neck-line may be drawn to identify the base of the formation. When the prices fall below the neck-line, a downward trend is expected to occur. And when the prices breach the neckline, it indicates the start of a rising trend.

1.10.1.2 Head and Shoulder Top

Figure 1.12

1.10.1.3 Head and Shoulder Bottom

Figure 1.13

Both of these head and shoulders patterns are similar in that there are four main parts: two shoulders, a head and a neckline. Also, each individual head and shoulder is comprised of a high and a low. For example, in the head and shoulders top image shown on the left side in Figure 1, the left shoulder is made up of a high followed by a low. In this pattern, the neckline is a level of support or resistance. Remember that an upward trend is a period of successive rising highs and rising lows. The head and shoulders chart pattern, therefore, illustrates a weakening in a trend by showing the deterioration in the successive movements of the highs and lows. Figure 1: Head and shoulders top is shown on the left. Head and shoulders bottom, or inverse head and shoulders, is on the right.

Figure 1.14

1.10.1.4 Double Tops and Bottoms:

A double top appears when a share hits a high, comes lower, again pulls back but fails to hit the earlier high. So, price rise fails to breach the immediately prior high and comes down. When the price comes below the lower level created by earlier move, a downward trend starts.

Figure 1.15

On the other hand, a double bottom appears at the end of bearish trend and indicates the stat of a bull phase. It is quite possible that there may be small rally in price after first peak in double top or after first troughs in double bottom. Similar to double tops and bottoms, there may be triple tops and triple bottoms also.

1.10.1.5 Triangles:
Out of the different continuation patterns, triangles are more popular. A triangle is formed when each succeeding peak is lower than the proceeding peak and each succeeding bottom is higher than the proceeding bottom. The series of peaks and bottoms are joined by a line which converges and form a shape of a triangle. When the prices break out if the sides of the triangle, there may be a sharp reversal of prices. The triangle formation may appear either during a bull phase or a bear phase. Triangle may take different forms and may be known as ascending, descending, symmetrical or expanding. In any case, the upper line of the triangle is known as the resistance line, as the price does not go beyond it and the lower line is known as the support line as the price does not go below it. Usually, there are six points (3 upper and 3 lower) to form a

triangle. There is a limit for the end of the triangle pattern and that is at a point when the two lines meet. Before the end of the triangle or immediately after the end, the price should break out of the triangle in the direction of the earliest trend. The break out from a triangle is usually accompanied by increasing volumes.

Figure 1.16 The symmetrical triangle in the above figure is a pattern in which two trend lines converge toward each other. This pattern is neutral in that a breakout to the upside or downside is a confirmation of a trend in that direction. In an ascending triangle, the upper trend line is flat, while the bottom trend line is upward sloping. This is generally thought of as a bullish pattern in

which chartists look for an upside breakout. In a descending triangle, the lower trend line is flat and the upper trend line is descending. This is generally seen as a bearish pattern where chartists look for a downside breakout.

1.10.1.6 Flags and Pennant:

These two short-term chart patterns are continuation patterns that are formed when there is a sharp price movement followed by a generally sideways price movement. This pattern is then completed upon another sharp price movement in the same direction as the move that started the trend. The patterns are generally thought to last from one to three weeks. As you can see in Figure below, there is little difference between a pennant and a flag. The main difference between these price movements can be seen in the middle section of the chart pattern. In a pennant, the middle section is characterized by converging trend lines, much like what is seen in a symmetrical triangle. The middle section on the flag pattern, on the other hand, shows a channel pattern, with no convergence between the trend lines. In both cases, the trend is expected to continue when the price moves above the upper trend line.

Figure 1.17

1.10.1.7 Cup and Handle:

A cup and handle chart is a bullish continuation pattern in which the upward trend has paused but will continue in an upward direction once the pattern is confirmed.

Figure 1.18 As you can see in above Figure, this price pattern forms what looks like a cup, which is preceded by an upward trend. The handle follows the cup formation and is formed by a generally downward/sideways movement in the security's price. Once the price movement pushes above the resistance lines formed in the handle, the upward trend can continue. There is a wide ranging time frame for this type of pattern, with the span ranging from several months to more than a year.

1.10.1.8 Support and Resistance

Support and resistance are price levels at which movement should stop and reverse direction. Think of support/resistance (S/R) as levels that act as a floor or a ceiling to future price movements. Support - A price level below the current market price, at which buying interest should be able to overcome selling pressure and thus keep the price from going any lower.

Resistance - A price level above the current market price, at which selling pressure should be strong enough to overcome buying pressure and thus keep the price from going any higher. One of two things can happen when a stock price approaches a support/resistance level. On the one hand, it can act as a reversal point: in other words, when a stock price drops to a support level, it will go back up. On the other hand, S/R levels may reverse roles once they are penetrated. For example - When the market price falls below a support level, that former support level will then become a resistance level when the market later trades back up to that level.

Figure 1.19 Support and resistance

This chart shows an excellent example of support and resistance levels for General Electric (GE). Notice that once the stock price penetrated below the support level in December, it became the resistance level. You also need to understand that S/R levels vary in strength, leading to certain price levels being designated as major or minor S/R levels. For example -- A five-year high on a bar chart would be a much more significant and useful resistance level than a one-month resistance level.

1.10.2 INDICATOR ANALYSIS

Indicator analysis is a new form of interpretation of price-volume charts. It is a graphical presentation with mathematical calculations. The objective of indicator analysis is to predict where and in which direction the price may move in near future. The indicator analysis attempts to establish a mathematical relationship of current price to past prices. Technical analysts use various indicators. These indicators can be classified as Moving Averages or Oscillators.

1.10.2.1 Moving Average Convergence Divergence (MACD)

Common, the MACD is a trend following, momentum indicator that shows the relationship between two moving averages of prices. To Calculate the MACD subtract the 26-day EMA from a 12-day EMA. A 9-day dotted EMA of the MACD called the signal line is then plotted on top of the MACD. There are 3 common methods to interpret the MACD: Crossover When the MACD falls below the signal line it is a signal to sell. Vice versa when the MACD rises above the signal line. Divergence When the security diverges from the MACD it signals the end of the current trend. Overbought/Oversold When the MACD rises dramatically (shorter moving average pulling away from longer term moving average) it is a signal the security is overbought and will soon return to normal levels. Other less common moving averages include triangular, variable, and weighted moving average. All of them being slight deviations from the++ ones above and are used to detect different characteristics such as volatility, and weighting different time spans. One of the easiest indicators to understand, the moving average, shows the average value of a securitys price over a period of time. To find the 50-day moving average, you would add up the closing prices (but not always explain later) from the past 50 days and divide them by 50. Because prices are constantly changing, the moving average will move as well. It should also be

noted that moving averages are most as well. It should also be noted that moving averages are most often used then compared or used in conjunction with other indicators such as moving average convergence divergence (MACD) and exponential moving (E M A). The most commonly used moving averages are 20,30,50,100 and 200 days. Each moving average provides a different interpretation on what the stock will do-there is not one right time frame. The longer the time spans, the less sensitive the moving average will be to daily price changes. Moving averages are used to emphasize the direction of a trend and smooth out price and volume fluctuations that can confuse interpretation.

Here is a visual example using stock price

Figure1.20 Moving Average Convergence Divergences (MACD) Notice that back, in September the stock price dropped well below its 50-day average (the green line) there has been a steady downward trend since then and no really strong divergence until the end of December when it rose above its 50-days average and continued to rise for several weeks.

Typically, when a stock price moves below its moving average it is a bad sign because the stock is moving on a negative trend. The opposite is true for stock that exceed their moving average-in this case, hold on for the ride.

1.10.2.2 Rate of change indicators (ROC)

It is a very popular oscillator which measures the rate of change of the current price as compared to the price a certain number of days or weeks back. The ROC has to be used along with price chart. The buying and selling signals indicated by the ROC should also be confirmed by the price chart.

Figure 1.21 Rate of change

1.10.2.3 Relative strength index (RSI)

There are a few different tools that can be used to interpret the strength of a stock. One of these is the Relative Strength Index (RSI), which is a comparison between the days that a stock finishes up and the days it finishes down. This indicator is a big tool in momentum trading. The RSI is a reasonably simple model that anyone can use. It is calculated using the following formula. RSI = 100 - [100/ (1 + RS)]

RS = (Avg. of n-day up closes)/ (Avg. of n-day down closes) n = days (most analysts use 9 - 15 day RSI)

The RSI ranges from 0 to 100. At around the 70 levels, a stock is considered overbought and you should consider selling. In a bull market some believe that 80 is a better level to indicate an overbought stock since stocks often trade at higher valuations during bull markets. Likewise, if the RSI approaches 30, a stock is considered oversold and you should consider buying. Again, make the adjustment to 20 in a bear market. The smaller the number of days used, the more volatile the RSI is and the more often it will hit extremes. A longer term RSI is more rolling, fluctuating a lot less. Different sectors and industries have varying threshold levels when it comes to the RSI. Stocks in some industries will go as high as 75-80 before dropping back, while others have a tough time breaking past 70. A good rule is to watch the RSI over the long term (one year or more) to determine at what level the historical RSI has traded and how the stock reacted when it reached those levels. The RSI is a great indicator that can help you make some serious money. Be aware that big surges and drops in stocks will dramatically affect the RSI, resulting in false buy or sell signals. Most investors agree that the RSI is most effective in "backing up" or increasing confidence before making an investment decision - don't invest simply based on the RSI numbers.

Figure 1.22Relative Strength Index (RSI) Above, we have an RSI chart for AT&T. The RSI is the green line, and its scale is the numbers on the right hand side that go from 0 to 100. Notice the RSI was approaching the 60-70 level in December and January, and then the stock (blue line) sold off. Also, notice that when the RSI dropped to 25 around October the stock climbed up nearly 30% in just a couple of weeks. Using the moving averages, trend lines divergence, support and resistance lines along with the RSI chart can be very useful. Rising bottoms on the RSI chart can produce the same positive trend results as they would on the stock chart. Should the general trend of the stock price tangent from the RSI, it might spark a warning that the stock is either over- or under bought.

1.10.2.4 The Money Flow Index

Now that we've taken a look at the Relative Strength Index (RSI), let's take a look ata more stringent momentum indicator. The Money Flow Index measures the strengthof money flowing into and out of a stock. The difference between the RSI and MoneyFlow is that where RSI only looks at prices, the Money Flow Index also takes volumeinto account.

Calculating Money Flow is a bit more difficult than the RSI: First we need the average price for the day: Day High + Day Low + Close Average Price = ----------------------------------------3

Now we need the Money Flow: Money Flow = Average Price x Day's Volume Now, to calculate the money flow ratio you need to separate the money flows for a period into positive and negative. If the price was up in a particular day, this is considered to be "Positive Money Flow". If the price closed down it is considered to be "Negative Money Flow". Positive Money Flow Money Flow Ratio = ----------------------------Negative Money Flow It is the Money Flow Ratio that is used to calculate the Money Flow The Money Flow ranges from 0 to 100. Just like the RSI, a stock is considered overbought in the 70- 80 range and oversold in the 20-30 range. The shorter number of days you use, the more volatile the Money Flow is. For the example below we will use a 14-day average.

Figure 1.23 The chart above is for Home Depot (HD); the green line identifies the Money Flowindex. Notice that each time the Money Flow dropped below 30, the stock began torally. Furthermore, each time the money flow rose above 70, the stock started to selloff. Like any indicator, this is not correct 100% of the time. Back in early October whenthe stock price dropped from around $55 down to $37 the Money Flow didn't detect athing. Just remember that money flow is useful to detect momentum, but it can'tpredict unsystematic risk.

FINDINGS

CHAPTER-II
BANK OF BARODA
Bank of Baroda (BoB) is an Indian state-ownedbanking and financial services company headquartered in Vadodara. It offers a range of banking products and financial services to corporate and retail customers through its branches and through its specialised subsidiaries and affiliates in the areas of retail banking, investment banking, credit cards and asset management. Its total global business was Rs. 7,003 billion as of 30 Sep 2012.In addition to its headquarters in its home state of Gujarat it has a corporate headquarter in the Bandra Kurla Complex in Mumbai. Based on 2012 data it is ranked 715 on Forbes Global 2000 list. BoB has total assets in excess of Rs. 3.58 trillion (short scale), or Rs. 3,583 billion, a network of 4261 branches (out of which 4168 branches are in India) and offices, and over 2000 ATMs. The bank was founded by the Maharaja of Baroda, H. H. Sir Sayajirao Gaekwad III on 20 July 1908 in the Princely State of Baroda, in Gujarat. The bank, along with 13 other major commercial banks of India, was nationalised on 19 July 1969, by the Government of India and has been designated as a profit-making public sector undertaking (PSU).

Bank of Baroda

Type Traded as Industry Founded Founder(s) Headquarters Area served Key people

Public company BSE: 532134 Banking, Financial services 1908 Maharaja Sayajirao Gaekwad Vadodara, India Worldwide S S Mundra (Chairman &MD)

Products

Credit cards, consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans, private banking, private equity, wealth management

Revenue Net income Total assets Website

345.88 billion (US$6.4 billion) (2012) 52.48 billion (US$970 million) (2012) 4.574 trillion (US$84 billion) (2012) www.bankofbaroda.com Table 2.1

Subsidiaries
BOB Capital Markets is a SEBI-registered investment banking company based in Mumbai, Maharashtra. It is a wholly owned subsidiary of Bank of Baroda. Its financial services portfolio includes Initial Public Offerings, private placement of debts, corporate restructuring, business valuation, mergers and acquisition, project appraisal, loan syndication, institutional equity research, and brokerage.

International presence
In its international expansion, the Bank of Baroda followed the Indian diaspora, especially that of Gujaratis. The Bank has 100 branches/offices in 24 countries including 61 branches/offices of the bank, 38 branches of its 8 subsidiaries and 2 representative offices in Thailand and Australia. The Bank of Baroda has a joint venture in Zambia with 16 branches. Among the Bank of Barodas overseas branches are ones in the worlds major financial centers (e.g., New York, London, Dubai, Hong Kong, Brussels and Singapore), as well as a number in other countries. The bank is engaged in retail banking via the branches of subsidiaries in Botswana, Guyana, Kenya, Tanzania, and Uganda. The bank plans to upgrade its representative office in Australia to a branch and set up a joint venture commercial bank in Malaysia. It has a large presence in Mauritius with about nine branches spread out in the country. The Bank of Baroda has received permission or in-principle approval from host country regulators to open new offices in Trinidad and Tobago and Ghana, where it seeks to establish joint ventures or subsidiaries. The bank has received Reserve Bank of India approval to open offices in the Maldives, and New Zealand. It is seeking approval for operations in Bahrain, South Africa, Kuwait, Mozambique, and Qatar, and is establishing offices in Canada, New Zealand, Sri

Lanka, Bahrain, Saudi Arabia, and Russia. It also has plans to extend its existing operations in the United Kingdom, the United Arab Emirates, and Botswana. The tagline of Bank of Baroda is "India's International Bank".

Affiliates
IndiaFirst Life Insurance Company is a joint venture between two of Indias public sector banks Bank of Baroda (44%) and Andhra Bank (30%), and UKs financial and investment company Legal &General (26%). It was incorporated in November 2009 and has its headquarters in Mumbai. The company started strongly, achieving a turnover in excess of Rs. 2 billion in its first four and half months, and being recommended for ISO certification within 7 months.

Monthly Price Movements of Bank of Baroda

Table 2.2

2.1Line Chart
The following chart depicts the Line Chart indicator ofBank of Baroda,for the period of 1 april 2012 to 31 march 2013.

The line chart is got by plotting the closing price of stock on Y axis and period on X axis. When a line chart is drawn to the data of Bank of Baroda shares, it is found that the price of the stock is low in the middle of the month of May and June 2012 and crash in the month of September 2012, after the price scaled up and reached around Rs. 800 in the month of October 2012 the price scaled up to Rs. 880 in the month of January and after bearish trend started, in March 2013 the price down to around Rs. 700.

2.2 Moving Average Convergence Divergence

The following chart depicts the MACD indicator of Bank of Baroda, for the period 1st april 2012 to 31st march 2013.

MACD is one of the oscillators (Lagging Indicator) which is used to identify the change in the trend. If the MACD line crosses the zero line from above, the trend can be considered to have bearish, signaling a sell opportunity. On the other hand if MACD line moves above the zero line from below, the trend turned bullish and indicates a buying opportunity. From the above chart we can observe that, The MACD rises above the signal line i.e.:- On September 2012, December-2012, indicating a bullish signal, which indicates that it may be time to buy. The MACD falls below the signal line i.e.:- May 2012, July 2012 and February 2013 indicating a bearish signal, this indicates that it may be time to sell.

The MACD indicator is flat or stays close to the zero line in the month of April 2012, July 2012 and November 2012, it is better to hold the security.

2.3 Relative Strength Index

The following chart depicts the RSI indicator of Bank of Baroda, for the period 1st april 2012 to 31st march 2013.

The above chart depicts the RSI or Relative Strength Index for different months starting from April 2012 to March 2013. When the RSI has crossed the 30 line from below to above and is rising, a buying opportunity is indicated.in the above chart, we can see that it crossed 30 line in the month of may 2012 and march 2013 so it is indicating there is a buying opportunity. When it has crossed the 70 line from above to below and falling , a sell signal is indicated. In the above chart we can see that the RSI for sell signal is indicated September 2012 , December 2012 to January 2013 , the shares were over bought in this period.

2.4 Rate of Change

The following chart depicts the ROC indicator of Bank of Baroda, for the period 1st april 2012 to 31st march 2013.

When the ROC line is above the zero line, the price is rising and when it is below the zero line, the price is falling. There are a lot of fluctuations in the ROC implying the market is volatile. Upside crossing (from below to above the zero line) indicates a buying opportunity, while down side crossing indicates a selling opportunity.

In the month of September 2012 the trend line is above the zero level it indicates bullish trend, which indicates selling signal to investor. In the month of May 2012 the trend line is below the zero level it indicates bearish trend, which indicates buying signal to investor.

2.5 Money Flow Index

The following chart depicts the MFI indicator of Bank of Baroda, for the period 1st april 2012 to 31st march 2013.

A stock is considered "overbought" if the MFI indicator reaches 80 and above. On the other end of the spectrum, a bullish reading of 20 and below suggests a stock is "oversold".

We can observe from the above graph, that MFI line has crossed below 20 in the month of May 2012 and February 2013, it indicates BUY signal. The period September and in the month of December 2012 the MFI line has crossed the above 80 which indicates its bearish trend. It indicates to SELL the security.

CHAPTER-IV
Bank of India
Bank of India (BoI) is an Indian state-owned commercial bank with headquarters in Mumbai, Maharashtra. Government-owned since nationalisation in 1969, it is India's 9th largest PSU bank, after State Bank of India, Punjab National Bank and Bank of Baroda. It has 4187 branches as on 21 April 2012, including 52 branches outside India, and about 1679 ATMs. BoI is a founder member of SWIFT (Society for Worldwide Inter Bank Financial Telecommunications), which facilitates provision of cost-effective financial processing and communication services. The Bank completed its first one hundred years of operations on 7 September 2006.

Bank of India

Type Industry Founded Headquarters

Public company (BSE: BOI) Financial services 7 September 1906 Mumbai, Maharashtra, India

Key people Products

Vijayalakshmi R Iyer (CMD) Commercial Banking Retail Banking Private Banking Asset Management Mortgages Credit Cards

Revenue Operating income Net income Website

243935.0 million (US$4.5 billion) 53842.3 million (US$990 million) 24887.1 million (US$460 million) www.bankofindia.com

Table 4.1

History
Previous banks that used the name Bank of India At least three banks having the name Bank of India had preceded the setting up of the present Bank of India.
a. A person named Ramakishen Dutt set up the first Bank of India in Calcutta (now Kolkata) in 1828, but nothing more is known about this bank. b. The second Bank of India was incorporated in London in the year 1836 as an Anglo-Indian bank. c. The third bank named Bank of India was registered in Bombay (now Mumbai) in the year 1864.

The current bank

Bank of India, Mumbai Main Branch

The earlier holders of the Bank of India name had failed and were no longer in existence by the time a diverse group of Hindus, Muslims, Parsees, and Jews helped establish the present Bank of India in 1906. It was the first in India promoted by Indian interests to serve all the communities of India. At the time, banks in India were either owned by Europeans and served mainly the interests of the European merchant houses or by different communities and served the banking needs of their own community. The promoters incorporated the Bank of India on 7 September 1906 under Act VI of 1882, with an authorised capital of Rs. 10 million divided into 100,000 shares each of Rs. 100. The promoters placed 55,000 shares privately, and issued 45,000 to the public by way of IPO on 3 October 1906; the bank commenced operations on 1 November 1906. The lead promoter of the Bank of India was Sir Sassoon J. David (18491926). He was a member of the Sassoons, who in turn were part of a Bombay community of Baghdadi Jews, which was notable for its history of social service. Sir David was a prudent banker and remained the chief executive of the bank from its founding in 1906 until his death in 1926.

Monthly Price Movements of Bank of India

Table 4.2

4.1 Line Chart

The following chart depicts the Line Chart indicator ofBank of India, for the period of 1 april 2012 to 31 march 2013.

When a line chart is drawn to the data of Bank of India shares, it is found that the price of the stock iscrash in the month of September 2012 and low in the middle of the month of November and December 2012, after bullish trend started, the price scaled up to Rs.392, in the month of January and after bearish trend started, in March 2013 the price down to around Rs.318.

4.2 Moving Average Convergence Divergence

The following chart depicts the MACD indicator of Bank of India, for the period 1st april 2012 to 31st march 2013.

From the above chart it is found that The MACD rises above the signal line i.e.:- On, June 2012,September 2012 and December 2012 indicating a bullish signal, which indicates that it may be time to buy. The MACD falls below the signal line i.e.:- onApril 2012,July 2012, February 2013, indicating a bearish signal, this indicates that it may be time to sell.

4.3 Relative Strength Index

The following chart depicts the RSI indicator of Bank of India, for the period 1st april 2012 to 31st march 2013.

The above chart depicts the RSI or Relative Strength Index for different months starting from April 2012 to March 2013. When the RSI has crossed the 30 line from below to above and is rising, a buying opportunity is is indicated.in the above chart, we can see that it crossed 30 line in the July end and August2012 so it is indicating there is a buying opportunity.

When it has crossed the 70 line from above to below and falling , a sell signal is indicated. In the above chart we can see that the RSI for sell signal is indicated in the middle of month of December 2012 and January 2013, the shares were over bought in this period.

4.4 Rate of Change

The following chart depicts the ROC indicator of Bank of India, for the period 1st april 2012 to 31st march 2013.

In the month of June, September, December 2012 the trend line is above the zero level it indicates bullish trend, which indicates selling signal to investor.

In the end of the month May, August 2012 and the end of the month January 2013 the trend line is below the zero level it indicates bearish trend, which indicates buying signal to investor

4.5 Money Flow Index

The following chart depicts the MFI indicator of Bank of India, for the period 1st april 2012 to 31st march 2013.

We can observe from the above graph that, MFI line has crossed below 20 in the month end of July 2012, it indicates BUY signal. In the month of June, December 2012 and January 2013 the MFI line has crossed the above 80 which indicates its bearish trend. It indicates to SELL the security.

CHAPTER-V

Karnataka Bank Ltd.

Karnataka Bank Limited is a private sector banking institution based in the town of Mangalore in Karnataka, India. The Reserve Bank of India has designated Karnataka Bank as an A1+-class scheduled commercial bank. The bank now has a national presence with a network of some 503 branches across 20 states and 2 Union territories. It has over 5844 employees and 4.84 million customers, including farmers and artisans in villages and small towns throughout the country. Its shares are entirely privately owned by some 86,868 shareholders.

The Karnataka Bank Limited

Type

Private BSE&NSE:Karnataka Bank,

Industry Founded Headquarters

Banking 1924 (as The Karnataka Bank Limited) Karnataka Bank Ltd., Mahaveera Circle, Kankanady, Mangalore, India

Products Revenue Total assets Website

Loans, Credit Cards, Savings, Investment vehicles USD Rs.31,693.01 crore www.karnatakabank.com

Table 5.1

History
The Karnataka Bank was incorporated on February 18, 1924, as the Karnataka Bank Limited and commenced business on May 23, 1924. Its founders established it at Mangalore, a coastal town

in the Dakshina Kannada district of Madras Presidency. Among the founders, who created the bank to serve the South Kanara region was B. R. Vysaray Achar. Another important personality associated with the bank was K. S. N. Adiga, who served as Chairman from 1958 to 1979.

1960: Karnataka Bank acquired the Sringeri Sharada Bank, which was established in 1942 which had four branches.

1964: Karnataka Bank took over the assets and liabilities of the Chitradurga Bank (also known as Chitladurg Bank), which was established in 1868 in Mysore State and was the oldest bank in Mysore.

1966: Karnataka Bank took over the assets and liabilities of the Bank of Karnataka, in Hubli. Bank of Karnataka was established in 1946 and had opened one branch in Belgaum in 1947. At the time of the acquisition, Bank of Karnataka had 13 branches.

In 2000, Karnataka Bank signed a memorandum of understanding with Infosys Technologies to develop a core-banking solution called FINACLE. Over 221 branches were networked up to March 31, 2004. The main motto of this programme is "Anytime/Anywhere banking".In 2002, the bank concluded a pact with Corporation Bank for sharing its ATMs. A year later, the bank introduced the Moneyplant card that allows customers to withdraw money from any of their Karnataka bank accounts. In September 2003, the bank shifted its head office from Kodialbail to Kankanady.

Current position
For the fiscal year ending 31 March 2011, the total interest earned was 2370.84 crores. The total income for the bank was 2662.60 crores and the expenditure, 2307.31 crores, thereby yielding a profit of 204.61 crores. The Karnataka Bank has been striving to keep pace with advances in banking technology by adopting core banking and Internet banking, and establishing its "MoneyPlant" automated teller machine system. The bank has the Best Bank Award for "Managing IT Risk" under small bank category for the year 2010-11, instituted by Institute for Development and Research in Banking Technology (IDRBT). Shri Anand Sinha, deputy governor, Reserve Bank of India and chairman, IDRBT

presented the award to Shri P. Jayarama Bhat, managing director at a function held in Hyderabad on 4 August 2011 in the presence of Shri B. Sambamurthy, director, IDRBT. In August 2008, Karnataka Bank received the Sun and NDTV Green IT Award. Sun Microsystems and NDTV gave the award to in recognition of the bank's "green policies" and use of earth-friendly technology such as solar power.

Services
In August 2008, the Karnataka Bank introduced Quick Remit, a facility to make money transfer easy for Non-Resident Indians living in Canada, USA and the UK. The bank also runs a 24-hour Internet banking service called Moneyclick. Karnataka Bank offers multi-branch banking, deposit schemes as Abhyudaya cash certificate, fixed deposits, ready money deposit, Soulabhya deposit, cumulative deposit, Platinum lakhpathi, insurance linked savings bank deposit, K-Flexi deposit, resident foreign currency (domestic) account, NRI services, Senior Citizens Deposit Scheme and loan schemes as Vidyanidhi education loans, Apna ghar home loans, car finance scheme, Varthak loans, Easy ride, Scheme for salaried persons, Udyog mithra, Niveshan loans, Krishi card, K-Power, Lease n Encash, Suvarna Nidhi, InstaCash and VahanaMitra

Monthly Price Movements of Karnataka Bank Limited

Table 5.2

5.1 Line Chart

The following chart depicts the Line Chart indicator ofKarnataka Bank for the period of 1 april 2012 to 31 march 2013.

The above figure depicts the line chart indicator of Karnataka bank Ltd for the period between April 2012 and March 2013. The price of the stocks from the beginning of the year is decreasedwhen there is increase in volume along with prices rise then it is bullish. When volume increases and prices decrease then it signals for having a bearish. Though the trend has been moving on in a bearish side in January 2013, the highest price occurred is in the month of December 2012. It almost reached aroundRs.188.

5.2 Moving Average Convergence Divergence

The following chart depicts the MACD indicator of Karnataka bank limited, for the period 1st april 2012 to 31st march 2013.

From the above chart it is found that The MACD rises above the signal line i.e.:- OnJune2012,September 2012, indicating a bullish signal, which indicates that it may be time to buy. The MACD falls below the signal line i.e.:- on May 2012, August 2012 and February 2013, indicating a bearish signal, this indicates that it may be time to sell. The MACD indicator is flat or stays close to the zero line in the month of April 2012, it is better to hold the security.

5.3 Relative Strength Index

The following chart depicts the RSI indicator of Karnataka bank limited, for the period 1st april 2012 to 31st march 2013.

The above chart depicts the RSI or Relative Strength Index for different months starting from April 2012 to March 2013. When the RSI has crossed the 30 line from below to above and is rising, a buying opportunity is indicated.in the above chart, we can see that it crossed 30 line in the month of may 2012 so it is indicating there is a buying opportunity.

When it has crossed the 70 line from above to below and falling , a sell signal is indicated. In the above chart we can see that the RSI for sell signal is indicated July, October, November, December 2012, the shares were over bought in this period.

5.4 Rate of Change

The following chart depicts the ROC indicator of Karnataka bank limited, for the period 1st april 2012 to 31st march 2013.

In the end of the month of September 2012 and December 2012 the trend line is above the zero level it indicates bullish trend, which indicates selling signal to investor.

In the end of the month May 2012 and March 2013 the trend line is below the zero level it indicates bearish trend, this indicates buying signal to investor

5.5 Money Flow Index

The following chart depicts the MFI indicator of Karnataka bank limited, for the period 1st april 2012 to 31st march 2013.

We can observe from the above graph that, MFI line has crossed below 20 only in the month of May 2012, it indicates BUY signal. In the month of June, July, September end, October and November end 2012, the MFI line has crossed the above 80 which indicates its bearish trend. It indicates to SELL the security.

CHAPTER-VI

State Bank of India

State Bank of India (SBI) is a multinational banking and financial services company based in India. It is a government-owned corporation with its headquarters in Mumbai, Maharashtra. As at December 2012, it had assets of US$501 billion and 15,003 branches, including 157 foreign offices making it the largest banking and financial services company in India. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidencies banksBank of Calcutta and Bank of Bombayto form the Imperial Bank of India, which in turn became the State Bank of India. The Government of India nationalised the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. SBI has been ranked 285th in the Fortune Global 500 rankings of the world's biggest corporations for the year 2012. SBI provides a range of banking products through its network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). SBI has 14 regional hubs and 57 Zonal Offices that are located at important cities throughout the country. SBI is a regional banking behemoth and has 20% market share in deposits and loans among Indian commercial banks. The State Bank of India was named the 29th most reputed company in the world according to Forbes 2009 rankings and was the only bank featured in the "top 10 brands of India" list in an annual survey conducted by Brand Finance and The Economic Times in 2010.

State Bank of India

Type Traded as

Public NSE: SBIN BSE: 500112 LSE: SBID BSE SENSEX Constituent

Industry Founded

Banking, Financial services 1 July 1955

Headquarters Mumbai, Maharashtra, India Area served Key people Worldwide Pratip Chaudhuri (Chairman) Products Credit cards, Consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans, private banking, wealth management Revenue Profit Total assets Total equity Owner(s) Employees Website US$ 36.950 billion (2012) US$ 3.202 billion (2012) US$ 359.237 billion (2012) US$ 20.854 billion (2012) Government of India 292,215 (2012) www.sbi.co.in

Table 6.1 As of 31 March 2012, the bank had 173 overseas offices spread over 34 countries. It has branches of the parent in Moscow, Colombo, Dhaka, Frankfurt, Hong Kong, Tehran,

Johannesburg, London, Los Angeles, Male in the Maldives, Muscat, Dubai, New York, Osaka, Sydney, and Tokyo. It has offshore banking units in the Bahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape Town. It also has an ADB in Boston, USA. SBI operates several foreign subsidiaries or affiliates. In 1990, it established an offshore bank: State Bank of India (Mauritius).

Associate banks

Main Branch of SBI in Mumbai

SBI has five associate banks; all use the State Bank of India logo, which is a blue circle, and all use the "State Bank of" name, followed by the regional headquarters' name:

State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore

Non-banking subsidiaries
Apart from its five associate banks, SBI also has the following non-banking subsidiaries:

SBI Capital Markets Ltd. SBI Funds Management Pvt. Ltd. SBI Factors & Commercial Services Pvt. Ltd. SBI Cards& Payments Services Pvt. Ltd. (SBICPSL) SBI DFHI Ltd. SBI Life Insurance Company Limited.

SBI General Insurance.

In March 2001, SBI (with 74% of the total capital), joined with BNP Paribas (with 26% of the remaining capital), to form a joint venture life insurance company named SBI Life Insurance company Ltd. In 2004, SBI DFHI (Discount and Finance House of India) was founded with its headquarters in Mumbai.

Other SBI service points

SBI has 27,000+ ATMs (25,000th ATM was inaugurated by the then Chairman of State Bank Shri O.P. Bhatt on 31 March 2011, the day of his retirement); and SBI group (including associate banks) has about 45,000 ATMs. SBI has become the first bank to install an ATM at Drass in the Jammu & Kashmir Kargil region. This was the Bank's 27,032nd ATM on 27 July 2012.

Monthly Price Movements of State Bank of India

Table 6.2

6.1 Line Chart

The following chart depicts the Line Chart indicator of for the period ofState Bank of India, for the period 1 april 2012 to 31 march 2013.

When a line chart is drawn to the data of stateBank of India shares, it is found that the price of the stock is low in the middle of the month of May 2012 and in the month of September

2012, after, the price scaled up and reached around Rs.2700 in the month of January 2013. Then bearish trend started, in March 2013 the price down to around Rs.2100.

6.2 Moving Average Convergence Divergence

The following chart depicts the MACD indicator of State Bank of India, for the period 1st april 2012 to 31st march 2013.

The MACD rises above the signal line i.e.:- On April 2012, June 2012, September 2012, December 2012 indicating a bullish signal, which indicates that it may be time to buy. The MACD falls below the signal line i.e.:- on May 2012, July 2012 and February 2013, indicating a bearish signal, this indicates that it may be time to sell. The MACD indicator is flat or stays close to the zero line in the month of November 2012, it is better to hold the security.

6.3 Relative Strength Index

The following chart depicts the RSI indicator of State Bank of India, for the period 1st april 2012 to 31st march 2013.

The above chart depicts the RSI or Relative Strength Index for different months starting from April 2012 to March 2013. When the RSI has crossed the 30 line from below to above and is rising, a buying opportunity is indicated.in the above chart, we can see that it crossed 30 line in the month of may 2012, August 2012 and march 2013 so it is indicating there is a buying opportunity. When it has crossed the 70 line from above to below and falling , a sell signal is indicated. In the above chart we can see that the RSI for sell signal is indicated middle of the September 2012 and January 2013, the shares were over bought in this period.

6.4 Rate of Change

The following chart depicts the ROC indicator of State Bank of India, for the period 1st april 2012 to 31st march 2013.

In the end of the month of May end and September 2012 the trend line is above the zero level it indicates bullish trend, which indicates selling signal to investor. In the starting of 1st and 2nd week of May, August 2012 and February 2013the trend line is below the zero level it indicates bearish trend, which indicates buying signal to investor.

6.5 Money Flow Index

The following chart depicts the MFI indicator of State Bank of India, for the period 1st april 2012 to 31st march 2013.

We can observe from the above graph that, MFI line has crossed below 20 in the month of May 2012 and February 2013, it indicates BUY signal. Only in the month of September 2012 the MFI line has crossed the above 80 which indicates its bearish trend. It indicates to SELL the security.

CHAPTER-VII

SUMMARY OF FINDINGS

SUMMARY OF FINDINGS
Technical Analysis is not based on strong conceptual framework, but depends fully on the use of historical trends to predict future prices. Though technical analysis and fundamental analysis provides diagonally opposite approaches to valuation, in practice a judicious blend of two approaches used to arrive at better results. The data collected is for a period from april-12 to march-13.Technical Analysis is done for 4 important measures namely, Price, Time, Volume and Breadth. The five Banking companies which are listed in BSE are selected for the study of technical analysis. The five Banking companies are: 1. Bank of Baroda 2. Canara Bank 3. Bank of India 4. Karnataka Bank Ltd., 5. State Bank of India The tools are used for this analysis are

 Relative strength index, Moving average convergence/divergence, Rate of change, Money flow index.

Using MACD
MACDis a trending indicator which tells whether a stock is in an uptrend or a downtrend. The direction of long term of market is first assessed. If it is trending up it triggers a BUY signal and if it is trending down is suggests a SELL signal.

Using RSI
What the RSI does is , it compares the magnitude of a stock's recent gains to the ,magnitude of its recent losses. From there a number is derived between 0 100 to distinguish that comparison. Simple interpretation is Overbought A stock is overbought if the RSI shows a level above 70. Oversold A stock is oversold if the RSI shows a level below 30.

The centerline for RSI is 50. If the stock is showing an RSI less than 50 we can say that the average losses are greater than the average gains, and with RSI above 50 we can say that the average gains are greater than the average losses.

Using Rate of Change

The Rate of Change (ROC) indicator is a very simple yet effective momentum oscillator that measures the percent change in price from one period to the next. The ROC calculation compares the current price with the price n periods ago. The plot forms an oscillator that fluctuates above

and below the zero line as the Rate of Change moves from positive to negative. The oscillator can be used as any other momentum oscillator by looking for higher lows, lower highs, positive and negative divergences, and crosses above and below zero for signals.

Usingthe Money Flow Index

The Money Flow Index measures the strengthof money flowing into and out of a stock. The difference between the RSI and MoneyFlow is that where RSI only looks at prices, the Money Flow Index also takes volumeinto account. The Money Flow ranges from 0 to 100. Just like the RSI, a stock is considered overbought in the 70- 80 range and oversold in the 20-30 range.

7.1 Bank of Baroda

TECHNICAL INDICATORS
MACD

BUY SIGNAL
September, December May, march

SELL SIGNAL
May, July, February September, December, January

RSI

May ROC May, February MFI

September September, December

Table 7.1

According to calculation of MACD the best months to buy the stocks are September and December 2012. The appropriate months to sell the stock are May, July 2012 and February 2013.According to calculationRSI of the best months to buy the stocks are May2012 and March 2013.The appropriate months to sell the stock are September, December 2012 and January 2013.According to calculation of ROC the best months to buy the stocks areMay 2012. The appropriate months to sell the stock are September 2012. According to calculation of MFI the best months to buy the stocks are May 2012 and February 2013. The appropriate months to sell the stock are September and December 2012.

7.3 Bank of India

TECHNICAL INDICATORS
MACD

BUY SIGNAL
June, September, December July end and August

SELL SIGNAL
April, July and February December, January

RSI

May, August, January ROC

June, September, December

July MFI

June, December, January

Table 7.3 According to calculation of MACD the best months to buy the stocks areJune, September and December 2012. The appropriate months to sell the stock are April, July 2012 and February 2013.According to calculationRSI of the best months to buy the stocks are July end and August 2012. The appropriate months to sell the stock are December 2012 and January 2013. According to calculation of ROC the best months to buy the stocks are May,August, 2012 January 2013. The appropriate months to sell the stock are June, September and December2012. According to calculation of MFI the best months to buy the stocks are July 2012. The appropriate months to sell the stock are June, December 2012and January 2013.

7.4 Karnataka Bank Ltd.,

TECHNICAL INDICATORS
MACD

BUY SIGNAL
June, September

SELL SIGNAL
May, August, February

May RSI

July, October, November, December

May end, march ROC

September, December

May MFI

June,July, September, October, November

Table 7.4 According to calculation of MACD the best months to buy the stocks are June and September 2012. The appropriate months to sell the stock are May, August2012 and February 2013.According to calculationRSI of the best months to buy the stocks are May2012. The appropriate months to sell the stock are July, October, November and December 2012. According to calculation of ROC the best months to buy the stocks are Mayend 2012 and March 2013. The appropriate months to sell the stock are September and December 2012. According to calculation of MFI the best months to buy the stocks are May 2012.The appropriate months to sell the stock are June,July, September, October, and November2012.

7.5 State Bank of India

TECHNICAL INDICATORS
MACD

BUY SIGNAL
April, June, September, December

SELL SIGNAL
May, July, February

May, August, march RSI 1st and 2nd week of May, ROC August, February May, February MFI

September, January

May end and September

September

Table 7.5 According to calculation of MACD the best months to buy the stocks areApril, June, September and December 2012. The appropriate months to sell the stock are May, July 2012 and February 2013.According to calculationRSI of the best months to buy the stocks are May, August2012 and March 2013. The appropriate months to sell the stock are September 2012 and January 2013. According to calculation of ROC the best months to buy the stocks are 1st and 2nd week of May, August 2012 and February 2013. The appropriate months to sell the stock areMay end and September 2012. According to calculation of MFI the best months to buy the stocks are May 2012 and February 2013. The appropriate months to sell the stock are September 2012.

CHAPTER-VIII

CONCLUSIONS AND RECOMMENDATION

8.1 Conclusion
In light of our study on five companies, we have seen how technical analysis can be used to predict the possible swings of stock prices. After analyzing the five companies stocks the following conclusion was drawn. The technical indicatorscan play a useful role in the timing of stock market entry and exits. Byapplying technical indicators, brokers or investors may enjoy substantialprofits.

Whereas most investors concentrate on the fundamentals of a company (turnover, profits, growth etc.), technical analysts are concerned with the share price itself.

They believe that prices are driven by the psychology of investors rather than fundamentals. By understanding investor psychology, they can predict which way prices will move.

The tool they use for making predictions is the chart. They plot price and volume data on a chart, and look for patterns and trends.

There are numerous theories within technical analysis. They all depend on market psychology being predictable, and on chart patterns repeating themselves.

By its nature, technical analysis tends to be useful for short-term trading rather than long-term investing.

A technical indicator is a series of data points that are derived by applying a formula to the price data of a security.

Some indicators may use only the closing prices, while others incorporate volume and open interest into their formulas.

Technical indicators look to predict the future price levels, or simply the general price direction, of a security by looking at past patterns. One cannot tell which the best indicator is as all indicators have different methods of calculations and each method will provide its own unique interpretation.

Technical analysis assumes that current prices should represent all known information about the markets. Prices not only reflect intrinsic facts, they also represent human emotion and pervasive mass psychology and mood of the moment. Prices are, in the end, a function of supply and

demand however, on a moment to moment basis, human emotions.Fear, Greed, Panic, Hysteria etcalso dramatically affect prices. Markets may move based upon peoples expectations, not necessarily facts.

8.2 Suggestions
Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. Even though many different charting techniques are available, one method is not necessarily better than the other. The data may be the same, but each method will provide its own unique interpretation, with its own benefits and drawbacks.

Learn the basics of chart analysis, apply your knowledge on a regular basis, and continue your development We should buy the stocks which demonstrate the potential for explosive gains, while maintaining highly disciplined trading rules and strategies to manage risk. The choice of which charting method to use will depend on personal preferences It is better to keep the applications of technical analysis as simple as possible for using some of the indicators. As there is lot of volatility in the market, the prediction of price by using technical analysis may go wrong in some cases. Need to have a proven consistent strategy that will allow finding winning stock in any market environment. For active trading in the short run this should be the better rather than a long term investors. Investors should have knowledge regarding the market trends so that they can take maximum return.

 An investor should be very careful; in identifying the primary trend. Investor should identify the primary trend any pull back in the rally is an opportunity for a re-entry provided the primary trend is intact. Investor should take the help of indicators while taking the investment decisions. An investor is supposed to identify the breakout in the RSI and MACD to its moving average and use this at an early entry level. Investors must follow the principles laid down with portal clarity and in good faith which will help in reducing the psychological strain and pressure. Investor should get away from market rumors and wrong information in order to take protection from market manipulation. The investor should not hesitate in increasing his position on identifying the strength and hold on to his position until the trend gives a reverse signal. Limit the number of charts, indicators and methods.

What one does is more of a matter of personal preference and style. It is critical to use the tools that you are most comfortable with and that of which will match well your trading philosophy. Never forget Technical Analysis is just a forecasting tool. As with any other forecasts, it should be continually monitored, assessed and updated when new conditions appear. Never depend solely on a single tool to provide you with the trading signals as some will work better than others in different situations. Analysis can offer great insight but if used improperly, they can also produce false signals. While trend lines have become a very popular aspect of technical analysis, they are merely one tool for establishing, analyzing, and confirming a trend. Trend lines should not be the final arbiter, but should serve merely as a warning that a change in trend may be very useful. In some situation, this principle is violated. Technical analysis does not provide 100% accuracy to the investors.

Finally, the investors are advised not to depend only on Technical Analysis for investing on a stock. Before investing, the investors should look into performance and growth of the company in the market. Technical analysis is enough to make decisions, but it is better to use both fundamental analyses along with technical analysis to predict the prices in the market.

BIBLIOGRAPHY

TEXT BOOKS:

Investment Analysis and portfolio management Prasanna Chandra. Security Analysis and porfolio Management by Donald E. Fischer and Ronald J. Jordan,6th edition, 2011.

JOURNALS, MAGAZINE AND NEWSPAPERS: International Journal of Management & Business Studies, page number 42 to 46, IJMBS Vol. 1, Issue 1, March 2011. Research report on Technical Analysis Explained pdf (online link:

https://research.credit-suisse.com/riskdisclosure). Technical Analysis pdf dated April 2007 (revised August 2008) by Martin Sewell. Technical Analysis from A to Z pdf dated 5th November 2001 By Steven B. Achelis(online link:http://www.equis.com/free/taaz/inttrends.html).

Websites: www.moneycontrol.com www.icharts.in www.icicidirect.com www.wikepedia.com www.in.yahoo.finance.com http://www.investopedia.com/university/technical/ www.tradesignum.com