A PROJECT REORT

ON

“A STUDY ON TECHNICAL ANALYSIS OF STOCK MARKET WITH

REFERENCE TO IIFL”
Submitted in Partial Fulfilment for the award of the Degree

MASTERS OF MANAGEMENT STUDIES

FINANCE

Under University of Mumbai

SUBMITTED BY

SHUBHAM JAYWANT JADHAV

ROLL NO. MS1819026

Under the Guidance of

Prof. TEJASVI BHOSALE

Batch 2018-2020

INSTITUTE OF MANAGEMENT & COMPUTER STUDIES

THANE (W)
 CERTIFICATE

This is certify that SHUBHAM JADHAV of MMS (Master of Management Studies)

Semester III, Batch (2018-2020) has successfully completed the project on “A STUDY ON
DEMAT ACCOUNT PROCESS WITH SPEACIAL REFERENCE TO IIFL” under the
guidance of Prof. Tejasvi Bhosale.

Date:-
Place: - Thane

Director Project Guide/ External Examiner

 DECLARATION

I, SHUBHAM JADHAV the student of MMS Semester III, Batch (2018-2020) hereby declare
that, I have completed the project on “A STUDY ON TECHNINCAL ANALYSIS ON
STOCK MARKET WITH SPEACIAL REFERENCE TO IIFL” successfully. The
information submitted is true and original to the best of my knowledge.

Date:-
Place:-

SHUBHAM JADHAV
 ACKNOWLEDEMENT

I take this opportunity to express my gratitude and extend my thanks to all those who helped
and guided me to make this endeavour successful.
I would also like to thank our guide Prof. Tejasvi Bhosale who helped me in the completion
of project.
I cannot end this page without thanking my family and friends for their support and
encouragement while undertaking this project.
 INDEX
CHAPTER CHAPTER PAGE
NO. NO.
Chapter No .1 : Introduction of study
1.1 Introduction of Technical analysis of Stock market
1.2 Objectives of study
1.3 Review of literature
1 1.4 Research methodology
1.5 Scope of study
1.6 Importance of study
1.6 Limitations of study
Chapter No.2 : Company Profile
2.1 Company profile, history, overview

2.2 Product and services

2 2.3 Capital market and services

2.4 Company description

Chapter No.3 : The Conceptual Background

3.1 Introduction of technical analysis

3.2 Historical background of technical analysis

3.3 Tools and techniques of technical analysis

3.4 Importance of technical analysis

3.5 Assumption of technical analysis
3.6 Weaknesses of technical analysis

3 3.7 Important terms for new investor

3.8 Market watch
3.9 Chart types used in technical analysis
 3.10 How to read a single candlestick
3.11 Candle stick terminology & market emotion
3.12 Bullish candlestick patterns
3.13 Bearish reversed candlestick patterns
3.14 Trend
3.15Breakout strategy
3.16 Technical indicators
Chapter 4: Data Analysis & Interpretation
4.1 Trend analysis of different companies
4 4.2 Breakout strategies of different companies
4.3 Case of bullish patterns
4.4 Analysis of indicators
Chapter 5: Finding & Suggestions
5.1 Findings
5 5.2 Suggestions
5.3 Conclusion
6 Bibiliography
 LIST OF GRAPHS

GRAPH GRAPH PAGE NO.

NO.
3.8.1 Market watch
3.9.1 Line chart
3.9.2 Bar chart
3.9.3 Candle stick chart
3.14.1 Uptrend
3.14.2 Downtrend
3.14.3 Short-medium-long term trend
3.14.4 Resistance & support level
3.15.1 Breakout strategy
3.16.1 Bollinger bands
3.16.2 Relative strength index
3.16.3 MACD
3.16.4 Average directional index
4.1.1 Trend analysis – Maruti Suzuki
4.1.2 Trend analysis – TCS
4.1.3 Trend analysis – Induslnd
4.1.4 Trend analysis – Bajaj Auto ltd
4.2.1 Breakout strategy of Venky,s
4.2.2 Breakout strategy of Mangalam
4.3.1 Case of bullish pattern Philips Morris intl inc
4.3.2 Piercing line pattern (Karnataka bank)
4.4.1 Bollinger bands of indiabulls housing finance
4.4.2 Stochastic RSI (RSI)
CHAPTER 1
 1. INDTRODUCTION OF THE STUDY

1.1 INTRODUCTION

Technical analysis is a method of evaluating securities by analysing the 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.

1.2 OBJECTIVE OF THE STUDY

 To study the Technical Analysis & Fundamental Analysis and to analyse the factor that
affect the comanise performance.
 To examine the internal and external factors affecting the future price of company.
  To study the company’s future trend through method of technical analysis.

1.3 REVIEW OF LITE RATURE

1. Mark P. Taylor : Technical, or chartist, analysis of financial markets involves

providing forecasts or trading advice on the basis of largely visual inspection of past
prices, without regard to any underlying economic or ‘fundamental’ analysis. This
paper reports the results of a questionnaire survey, conducted on behalf of the Bank of
England, among chief foreign exchange dealers based in London in November 1988

2. Thomas Oberlechner : The importance of chartist/technical and fundamental analysis

among foreign exchange traders and financial journalists in Frankfurt, London, Vienna,
and Zurich. Results confirm that most traders use both forecasting approaches, and that
the shorter the forecasting horizon, the more important chartist/technical analysis is.
Financial journalists put more emphasis on fundamental analysis than do foreign
exchange traders.

3. Charles D. Kirkpatrick : Technical analysts study the action of the market itself rather
than the goods in which the market deals. The technical analyst believes that “the
market is always correct”. In other words, rather than trying to consider all the factors
that will influence the demand for Gadget International’s newest electronic gadget and
all the items that will influence the company’s cost and supply curve to determine an
outlook for the stock’s price, the technical analyst believes that all of these factors are
already factored into the demand and supply curves and, thus, the price of the
company’s stock

4. Anne sarders : Technical analysis is a process used to examine and predict the future
prices of securities by looking at things like price movement, charts, trends, trading
volume and other fac tors. Unlike fundamental analysis, technical analysis focuses on
trading signals to delineate good investments and trading opportunities by examining
an investment's trends through its trading data and other statistical elements
 5. Ahmed. S. wafi and abel Mabrouk : “Fundamental analysis models in financial market”
Presented in third economic and finance conference in Rome. This paper aims to find
the better stock valuation model using the fundamental analysis approach.

6. Patricia. M. Dechow : Stock with low fundamental-to-price ratios. Our findings also
then suggest that even sophisticated investors, such as short-sellers, do not seem to
understand the risk factors that have been so elusive academics. In this study, we
provide evidence that short-sellers position.

7. Venkatesh C K and Madhu Tyagi : “Fundamental analysis as a method of share

valuation in comparison with technical analysis” detailed about different movement of
share price in comparison with technical analysis” detailed about different movement
of share prices in comparison with fundamental and technical analysis. It also
emphasized on the market capitalization and organizational structure.

8. J hema and V Ariram : “Fundamental analysis with special reference to

pharmaceutical companies listed in NSE” stated that an investor should analyze the
market fundamentally and technically before investing in shares. They also noticed
growth in the pharmaceutical industry in India.

9. Ken Little (17th may 2019) : Fundamental analysis is the process of looking at a
business at the most basic or fundamental financial level. This type of analysis
examines the key ratios of a business to determine its financial health. Fundamental
analysis can also give you an idea of the value of what a company's stock should be. It
takes several factors into account, including revenue, asset management, and the
production of a business as well as interest rate.

1.4 RESEARCH METHODOLOGY

1.4.1 Research Type

 a) Quantitative Analysis
Evaluation of the historical performance of a company or broad market is often done
through quantitative analysis. Investors perform quantitative analysis through simple financial
ratio calculations such as earnings per share (EPS) or more complex calculations such as the
discounted cash flow (DCF).

The results of quantitative analysis provide insight into the valuation or historic performance
of a specific security or market. But quantitative analysis is not often used as a standalone
method for evaluating long-term investments. Instead, quantitative analysis is used in
conjunction with fundamental and technical analysis to determine the potential advantages and
risks of investment decision.

1.4.2 Data collection

a. Primary data
 Primary data has been collected through observation.
b. Secondary data
 Various books related to stock market
 Books related to Financial Management

Web sites were used as the vital information source like investing.com, NSE india.com,
Moneycontrol.com

1.4.3 Instrument

 Charts
 Candlesticks
 Indicators

1.5 SCOPE OF STUDY

Technical analysis and Fundament analysis is widely used by forex, equity, and commodity
traders, to determine the short term as well as the long term trends of the market. The scope of
Technical analysis and Fundamental analysis is increasing every day, as more and more people
are trying to learn the skills of technical analysis to earn good returns.

1.6 IMPORTANCE OF STUDY

Technical analysis

1. If you’re going to actively traded stocks as a stock market investor, then you need to
know how to read stock charts. Even traders who primarily use fundamental analysis
to select stocks to invest in still often use technical analysis of stock price movement
to determine specific buy, or entry, and sell, or exit, points.

Stock charts are freely available on websites such as Google Finance and Yahoo
Finance, and stock brokerages always make stock charts available for their clients. In
short, you shouldn’t have any trouble finding stock charts to examine.

2. Candlestick charts are a tool for displaying market data. This charting is a great way
to display a stock’s price action history.
3. The indicators like Stochastic RSI, Bollinger band, Exponential Moving
Average will help in early signalling for entry and exit. Early signals can act
as an alert against a potential strength or weakness.

Technical analysis of stocks is method of analysis of stocks by using historical chart

pattern of stocks which are publicly available. This method of analysis is mainly
associated with equity but can be used for some different types of securities also.
In other words, Technical analysis means predicting the behaviour of the stock price
by looking at the previous trends of price and volumes by using their charts and other
technical indicators. It is generally used by short-term traders who want to make quick
money by observing patterns in stock prices.

1.6 LIMITATIONS OF STUDY

Apart from details about technical analysis of stock market it has some limitation due
to that all the details could not be published and displayed. It has been done on the basis of
secondary sources like website, newspapers.
Limitation of the study can be pointed out as follows
• Analysis done is limited to the availability of data.
• It is very difficult to evaluate the accuracy of the secondary data. Before using secondary
data.

CHAPTER 2

COMPANY PROFIE
 2. COMPANY PROFILE

2.1 Introduction

IIFL Holdings Limited (formerly India Infoline Limited) d/b/a IIFL and India Infoline, is an
Indian diversified financial services company headquartered in Mumbai. The organisation was
founded by Nirmala Jain. IIFL and its group companies are backed by Canadian investor Prem
Watsa, private equity firm General Atlantic and CDC Group, the UK Government's private
equity arm. IIFL is ranked among the top seven financial conglomerates in India and as the top
independent financial services firm in India in terms of market capitalisation. Nirmal Jain is
the Chairman of the group, while R Venkataraman is the Group Managing Director and Co-
Promoter.

IIFL Holdings Limited

Trade Name Indian infoline
 Formerly Indian infoline ltd
Type Public company
Traded as NSE : INFOLINE
BSE : 532636
Industry Financial Services
Area Served India
Canada
United Sates
United Kingdom
Switzerland
Singapore
Hong Kong
Mauritius
UAE
Key People Balaji Vasudevan ( Chairman)
R. Venkataraman ( Group Managing Director)
Number Of Empolyees 10,500
Website iifl.com

Product and services provided

Products

 Equities /Bonds /Mutual Fund/ Derivatives

 Managed Investment Services /PMS

 Commodities

 FX Trading

 Wealth Management

 Asset Management

 Investment Banking
  Insurance

 Fixed Deposit

 Loans

 Gold Bonds

 Offshore other small Investment

Services

 Creation of a customized financial strategy.

 Diversification of assets based on a formal process of asset allocation.

 Active tracking, monitoring, and review of portfolio

 Creation of private trusts

 Tax planning

 Estate planning

 Structuring of family wealth

Capital Market Services

Indiainfoline is a leading underwriter of public offering and private placements for a middle
markets company in India. We’re known for our innovative financing solutions that support
complex corporate strategies as well as our long - standing client relationship. Our a capital
market business seek to leverage our operational expertise and world class institutional and
retail distribution platforms to partner with the existing owners and management to maximize
value at the time of a public or secondary market offering. Over the course of their careers,
member of our senior team have to raise over $20 billion in equity and debt capital for company
around the world.

 Assessing the company's optimal capitalization and source of incremental capital.

 Developing the target investor group and effectively positioning the company’s story
to the investor community.
  Preparing all the investor material and managing all communication with potential
investors
 Managing due diligence process and all investors inquires.
 Assessing with necessary documentation to expeditiously execute a successful capital
raising.
 Assessing the most appropriate group of investors to assist the company in it's a long -
term plan.

Company Description

Indiainfoline Limited is a leading full service investment bank founded in 1996 offering a wide
range of financial services and wealth management solutions to institutions, corporations, high
- net worth individuals and families. The firm has rapidly expanded its footprint to over 2500
location across India with international presence in Singapore & Sri Lanka. Founded by IIFL
Limited. The firm's philosophy is entirely client centric, with a clear focus on providing long
term value addition to clients, while maintaining the highest standards of excellence, ethics and
professionalism. The entire firm activities are divided across distinct client groups, Private
clients, Corporate and Institutions. IIFL has been named The Best broking firm house in India.
The firm has emerged a winner across all key segments in Asia money's largest survey of high
net worth individuals in India.

In order to satisfy the growing demand of India investors for trading offshore investment
products. Spread Co has designed and created a new financial product which incorporates the
benefits of traditional share trading and offering leverage. The new asset class is known as
Premium Securities Indiainfoline Limited Group has entered for an Introductory Broker
relationship with Spread Co to introduce clients for this financial product.
CHAPTER 3:- CONCEPTUAL BACKGROUND
 3. CONCEPTUAL BACKGROUND

3.1 Technical analysis

Technical analysis is the study of how past and present price action in a given financial market
may help determine its future direction. At the same time, however, technical analysis should
not be considered a crystal ball. Rather, the skills of a technical analyst are used primarily to
help determine the highest-probability reactions to past and current price movement, as well as
likely future price movement. Therefore, technical analysis is less about actually predicting the
future and more about finding high-probability potential opportunities to trade in the financial
markets.

Technical analysis is a broad collection of methods and strategies which attempt to forecast
future prices on the basis of past prices or other observable market statistics, such as volume
or open interest. Different analysts/ traders may choose to use different types of charts at
different times, whether it is a line chart, a bar chart, a candlestick chart, a point and-figure
chart, or any of a number of other chart types. Technical analysis involve putting stock
information like prices, volumes and open interest on a chart and applying various patterns and
indicators to it in order to assess the future price movements. The time frame in which technical
analysis is applied may range from intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-
minutes or hourly), daily, weekly or monthly price data to many years. Technical analysis really
just studies supply and demand in a market in an attempt to determine what direction, or trend,
will continue in the future. In other words, technical analysis attempts to understand the
emotions in the market by studying the market itself, as opposed to its components. If you
understand the benefits and limitations of technical analysis, it can give you a new set of tools
or skills that will enable you to be a better trader or investor.

Definition:-

Technical analysis is the study of investor behaviour and its effect on the
subsequent price action of financial instruments. The main data that we need to perform our
studies are the price histories of the instruments, together with time and volume information.
These enable us to form our views, based on objective fa

3.2 A HISTORICAL BACKGROUND OF TECHNICAL ANALYSIS

The principles of technical analysis are derived from hundreds of years of financial
market data. Some aspects of technical analysis began to appear in Amsterdam-based
merchant Joseph de la Vega's accounts of the Dutch financial markets in the 17th century. In
Asia, technical analysis is said to be a method developed by Homma Munehisa during the early
18th century which evolved into the use of candlestick techniques, and is today a technical
analysis charting tool. In the 1920s and 1930s, Richard W. Schabacker published several books
which continued the work of Charles Dow and William Peter Hamilton in their books Stock
Market Theory and Practice and Technical Market Analysis. In 1948, Robert D. Edwards and
John Magee published Technical Analysis of Stock Trends which is widely considered to be
one of the seminal works of the discipline. It is exclusively concerned with trend analysis and
chart patterns and remains in use to the present. Early technical analysis was almost exclusively
the analysis of charts because the processing power of computers was not available for the
modern degree of statistical analysis. Charles Dow reportedly originated a form of point and
figure chart analysis.

Dow Theory is based on the collected writings of Dow Jones co-founder and Editor Charles
Dow, and inspired the use and development of modern technical analysis at the end of the 19th
century. Other pioneers of analysis techniques include Ralph Nelson Elliott, William Delbert
Gann and Richard Wyckoff who developed their respective techniques in the early 20th
century. More technical tools and theories have been developed and enhanced in recent
decades, with an increasing emphasis on computer-assisted techniques using specially
designed computer software.

3.3 TOOLS AND TECHNIQUES OF TECHNICAL ANALYSIS

There are numerous tools and techniques for doing technical analysis. Basically this analysis
is done from the following four important points of view:-

1. Prices: Whenever there is change in prices of securities, it is reflected in the changes in

investor attitude and demand and supply of securities.

2. Time: The degree of movement in price is a function of time. The longer it takes for a
reversal in trend, greater will be the price change that follows.

3. Volume: The intensity of price changes is reflected in the volume of transactions that
accompany the change. If an increase in price is accompanied by a small change in transactions,
it implies that the change is not strong enough.

4. Width: The quality of price change is measured by determining whether a change in trend
spreads across most sectors and industries or is concentrated in few securities only. Study of
the width of the market indicates the extent to which price changes have taken place in the
market in accordance with a certain overall trends

3.4 IMPORTANCE OF TECHNICAL ANALYSIS

 Not Just for stocks

 Technical analysis has universal applicability. It can be applied to any financial
instrument - stocks, futures and commodities, fixed-income securities, forex, etc.
 Focus on price
Fundamental developments are followed by price movements. By focusing only on
price action, technicians focus on the future. The price pattern is considered as a leading
indicator and generally leads the economy by 6 to 9 months. To track the market, it
makes sense to look directly at the price movements. More often than not, change is a
subtle beast. Even though the market is prone to sudden unexpected reactions, hints
usually develop before significant movements. You should refer to periods of
accumulation as evidence of an impending advance and periods of distribution as
evidence of an impending decline.
 Supply, demand, and price action
 Technicians make use of high, low and closing prices to analyse the price action of a
stock. A good analysis can be made only when all the above information is present
separately, these will not be able to tell much. However, taken together, the open, high,
low and close reflect forces of supply and demand.
 Support and resistance
Charting is a technique used in analysis of support and resistance level. These are
trading range in which the prices move for an extended period of time, saying that forces
of demand and supply are deadlocked. When prices move out of the trading range, it
signals that either supply or demand has started to get the upper hand. If prices move
above the upper band of the trading range, then demand is winning. If prices move
below the lower band, then supply is winning.
 Pictorial price history
A price chart offers most valuable information that facilitates reading historical amount
of security’s price movement over period of time charts are much easier to read than
table of numbers. It is easy to identify following-
Past & present volatility
Historical volume or trading volume
Relative strength of stock Vs index
 Assist with entry point
It helps in tracking a proper entry point. Fundamental used to decide what to buy &
technical analysis is used to when to buy. Timing in this context plays a very important
 role in performance. It can help spot demand (support) & supply (resistance) levels as
well as breakout.

3.5 ASSUMPTIONS OF TECHNICAL ANALYSIS

 The market value of a security is solely determined by the interaction of demand and
supply factors operating in the market.
 The demand and supply factors of a security are surrounded by numerous factors; these
factors are both rational as well as irrational.
 The security prices move in trends or waves which can be both upward or downward
depending upon the sentiments, psychology and emotions of operators or traders.
 The present trends are influenced by the past trends and the projection of future trends
is possible by an analysis of past price trends.
 Except minor variations, stock prices tend to move in trends which continue to persist
for an appreciable length of time.
 Changes in trends in stock prices are caused whenever there is a shift in the demand
and supply factors.
 Shifts in demand and supply, no matter when and why they occur, can be detected
through charts prepared specially to show market action.
 Some chart trends tend to repeat themselves. Patterns which are projected by charts
record price movements and these patterns are used by technical analysis for making
forecasts about the future patterns.

3.6 WEAKNESSES OF TECHNICAL ANALYSIS

 Analyst bias

Technical analysis is not hard core science. It is subjective in nature and your personal biases
can be reflected in the analysis. It is important to be aware of these biases when analysing a
chart. If the analyst is a perpetual bull, then a bullish bias will overshadow the analysis. On
the other hand, if the analyst is a disgruntled eternal bear, then the analysis will probably have
a bearish tilt.

 Open to interpretation
Technical analysis is a combination of science and art and is always open to interpretation.
Even though there are standards, many times two technicians will look at the same chart and
paint two different scenarios or see different patterns. Both will be able to come up with logical
support and resistance levels as well as key breaks to justify their position. Is the cup half-
empty or half-full? It is in the eye of the beholder.

 Too late

You can criticize the technical analysis for being too late. By the time the trend is identified, a
substantial move has already taken place. After such a large move, the reward to risk ratio is
not great. Lateness is a particular criticism of Dow Theory.

 Always another level

Technical analysts always wait for another new level. Even after a new trend has been
identified, there is always another “important” level close at hand. Technicians have been
accused of sitting on the fence and never taking an unqualified stance. Even if they are bullish,
there is always some indicator or some level that will qualify their opinion.

 Trader’s remorse

An array of pattern and indicators arises while studying technical analysis. Not all the signals
work. For instance: A sell signal is given when the neckline of a head and shoulders pattern is
broken. Even though this is a rule, it is not steadfast and can be subject to other factors such as
volume and momentum. In that same vein, what works for one particular stock may not work
for another. A 50-day moving average may work great to identify support and resistance for
Infosys, but a 70-day moving average may work better for Reliance. Even though many
principles of technical analysis are universal, each security will have its own idiosyncrasies.

 TA is also useful in controlling risk

It is Technical Analysis only that can provide you the discipline to get out when you’re on the
wrong side of a trade. The easiest thing in the world to do is to get on the wrong side of a trade
and to get stubborn. That is also potentially the worst thing you can do. You think that if you
ride it out you’ll be okay. However, there will also be occasions when you won’t be okay. The
stock will move against you in ways and to an extent that you previously found virtually
unimaginable.

3.7 IMPORTANT TERM FOR NEW INVESTOR

i. Price Fields: Technical analysis is based almost entirely on the analysis of price and
volume. The fields which define a security’s price and volume are explained below.
ii. Open: This is the price of the first trade for the period (e.g., the first trade of the day).
When analysing daily data, the Open is especially important as it is the consensus price
after all interested parties were able to “sleep on it”
iii. High: This is the highest price that the security traded during the period. It is the point
at which there were more buyers than sellers (i.e., there are always buyers willing to
buy at lower prices, but the Low represents the lowest price sellers were willing to
accept).
iv. Low: This is the lowest price that the security traded during the period. Due to its
availability, the Close is the most often used price for analysis. The relationship
between the Open (the first price) and the close (the last price) are considered
significant by most technicians. This relationship is emphasized in candlestick charts.
v. Close: This is the last price that the security traded during the period. Due to its
availability, the Close is the most often used price for analysis. The relationship
between the Open (the first price) and the Close (the last price) are considered
significant by most technicians. This relationship is emphasized in candlestick charts.
vi. Volume: This is the number of shares (or contracts) that were traded during the period.
The relationship between prices and volume (e.g., increasing price accompanied with
increasing volume) is important.
vii. Open Interest: This is the total number of outstanding contracts (i.e., those that have
not been exercised, closed, or expired) of a future or option. Open interest is often used
as an indicator.
viii. Bid: This is the price market maker is willing to pay for a security (i.e., the price you
will receive if you sell)
ix. Ask: This is the price a market maker is willing to accept (i.e., the price you will pay
to buy the security).

3.8 MARKET WATCH: -

Market watch is very needed to predict the market. The stock holder, dealer as well as
analyst should give the regular market watch to the market, trading script. High, Low,
Open, Close are important terms which are shown, on market watch script or on trading
terminal.

Graph No.3.8.1

(Source of secondary data)

3.8.1 Order placing:-

It is important phase in technical analysis. There is asymmetry between zero & infinity.
What does it mean? Most of us have very finite capital but infinite opportunities because
of thousands of stocks. If we lose an opportunity, we will have thousands more tomorrow.
If we lose our capital, will we get thousands of opportunity? It is likely that we will not. It
is simply demand & supply management.

Buying order and selling order

There is a special script for buying Order and selling order, which include the name of
investment, product type, price, trig price, quantity, type of exchange, name of investor
etc.
3.9 CHART TYPES USED IN TECHNICAL ANALYSIS

The main chart types used by technical analysts are the line chart, bar chart, candlestick chart
etc. Charts can also be presented on an arithmetic or logarithmic scale. The types of charts and
the scale used depend upon what information the technical analyst considers to be most
important, and which charts and which scale ideally shows that information.

 Line Charts

Line charts are the most basic form of charts, they are composed of a single line from left to
right that links the closing prices. Generally, only the closing price is graphed, presented by a
single point. This is a popular type of chart used in presentations and reports to give a very
general view of the historical and current direction.

Graph No.3.9.1
(Source of secondary data)

It is clear as well as a simple way of getting a general idea of the price movement’s direction
in the market, which is preferred by some traders.

While this kind of chart doesn’t provide much insight into intraday price movements, many
traders consider the closing price to be more important than the open, high, or low price within
a given period.

 Bar Chart

One of the basic tools of technical analysis is the bar chart. Bar charts are also referred to as
open-high-low-close (OHLC) charts. They are comprised of a series of vertical lines that
indicate the price range during that Time Frame.

Graph No. 3.9.2

(Source of secondary data)

Bar charts enable traders to discover patterns more easily as they take into account all the
prices, open, high, low and close. The opening price is the horizontal dash on the left side of
the horizontal line and the closing price is located on the right side of the line. If the opening
price is lower than the closing price, the line is often colored black (or green) to represent a
rising period. The opposite is true for a falling period, which is represented by a red color.

 Candlestick Chart
Another kind of chart used in the technical analysis is the candlestick chart, so-called because
the main component of the chart which represents prices looks like a candlestick, with a thick
‘body’ and usually, a line extending above and below it, called the upper shadow and lower
shadow, respectively.

Graph No 3.9.3

(Source of secondary data)

The top of the upper shadow represents the high price, while the bottom of the lower shadow
shows the low price. Patterns are formed both by the real body and the shadows. Candlestick
patterns are most useful over short periods of time, and mostly have significance at the top of
an uptrend or the bottom of a downtrend, when the patterns most often indicate a reversal of
the trend. The wider part of the candlestick is shown between the opening and closing price. It
is usually colored in black/red when the security closes on a lower price and white/green the
other way around. The thinner parts of the candlestick are commonly referred to as the
upper/lower wicks or as shadows. These show us the highest and/or lowest prices during that
timeframe, compared to the closing as well as opening price. The relationship between the
bodies of candlesticks is important to candlestick patterns. Candlestick charts make it easy to
spot gaps between bodies.

A slight drawback of the candlestick chart is that candlesticks take up more space than OHLC
bars. In most charting platforms, the most you can display with a candlestick chart is less than
what you can with a bar chart
3.10 HOW TO READ A SINGLE CANDLESTICK

Each candlestick represents one day’s worth of price data about a stock through four pieces of
information: the opening price the closing price, the high price, and the low price. The color of
the central rectangle (called the real body) tells investors whether the opening price or the
closing price was higher. A black or filled candlestick means the closing price for the period
was less than the opening price; hence, it is bearish and indicates selling pressure. Meanwhile,
a white or hollow candlestick means that the closing price was greater than the opening price.
This is bullish and shows buying pressure. The lines at both ends of a candlestick are
called shadows, and they show the entire range of price action for the day, from low to high.
The upper shadow shows the stock’s highest price for the day, and the lower shadow shows
the lowest price for the day.

3.11 CANDLE STICK TERMINOLOGY AND MARKET EMOTION

Technical are the only way to measure the emotional component of the market. The names of
the Japanese candlestick charts make this fact evident. These names are a colourful mechanism
used to describe the emotional health of the market at the time these patterns are formed. After
hearing the expressions "hanging man" or "dark-cloud cover," would you think the market is
in an emotionally healthy state of course not! These are both bearish patterns and their names
clearly convey the unhealthy state of the market.

While the emotional condition of the market may not be healthy at the time these patterns form,
it does not preclude the possibility that the market will become healthy again. The point is that
at the appearance of, say, a dark-cloud cover, longs should take defensive measures or,
depending on the general trend and other factors, new short sales could be initiated.

There are many new patterns and ideas in this book, but the descriptive names employed by
the Japanese not only make candlestick charting fun, but easier to remember if the patterns are
bullish or bearish. For example, you will learn about the "evening star" and the “morning star."
Without knowing what these patterns look like or what they imply for the market, just by
hearing their names which do you think is bullish and which is bearish? Of course, the evening
star which comes out before darkness sets in, sounds like the bearish signal and so it is! The
morning star, then, is bullish since the morning star appears just before sunrise.

The other pivotal price point is the close. Margin calls in the futures markets are based on the
close. We can thus expect heavy emotional involvement into how the market closes. The close
is also a pivotal price point for many technicians. They may wait for a close to confirm a break-
out from a significant chart point. Many computer trading systems (for example, moving
average systems) are based on closes. If a large buy or sell order is pushed into the market at,
or near, the close, with the intention of affecting the close, the Japanese call this action a night
attack.

3.12 BULLISH CANDLESTICK PATTERNS

Over time, groups of daily candlesticks fall into recognizable patterns with descriptive names
like three white soldiers, dark cloud cover, hammer, morning star, and abandoned baby, to
name just a few. Patterns form over a period of one to four weeks and are a source of valuable
insight into a stock’s future price action. Before we delve into individual bullish candlestick
patterns, note the following two principles:

1. Bullish reversal patterns should form within a downtrend. Otherwise, it’s not a bullish
pattern, but a continuation pattern.
2. Most bullish reversal patterns require bullish confirmation. In other words, they must
be followed by an upside price move which can come as a long hollow candlestick or
 a gap up and be accompanied by high trading volume. This confirmation should be
observed within three days of the pattern.

The bullish reversal patterns can further be confirmed through other means of traditional
technical analysis like trend lines, momentum, oscillators, or volume indicators to reaffirm
buying pressure. There are a great many candlestick patterns that indicate an opportunity to
buy. We will focus on five bullish candlestick patterns that give the strongest reversal signal.

 The Hammer or the Inverted Hammer

The Hammer is a bullish reversal pattern, which signals that a stock is nearing bottom in a
downtrend. The body of the candle is short with a longer lower shadow which is a sign of
sellers driving prices lower during the trading session, only to be followed by strong buying
pressure to end the session on a higher close. Before we jump in on the bullish reversal
action, however, we must confirm the upward trend by watching it closely for the next few
days. The reversal must also be validated through the rise in the trading volume.

The Inverted Hammer also forms in a downtrend and represents a likely trend reversal or
support. It’s identical to the Hammer except for the longer upper shadow, which indicates
buying pressure after the opening price, followed by considerable selling pressure, which
however wasn’t enough to bring the price down below its opening value. Again, bullish
confirmation is required, and it can come in the form of a long hollow candlestick or a gap
up, accompanied by a heavy trading volume.
 The Bullish Engulfing

The Bullish Engulfing pattern is a two-candle reversal pattern. The second candle
completely ‘engulfs’ the real body of the first one, without regard to the length of the
tail shadows. The Bullish Engulfing pattern appears in a downtrend and is a
combination of one dark candle followed by a larger hollow candle. On the second day
of the pattern, price opens lower than the previous low, yet buying pressure pushes the
price up to a higher level than the previous high, culminating in an obvious win for the
buyers. It is advisable to enter a long position when the price moves higher than the
high of the second engulfing candle—in other words when the downtrend reversal is
confirmed.
 The Piercing Line

Similar to the engulfing pattern, the Piercing Line is a two-candle bullish reversal
pattern, also occurring in downtrends. The first long black candle is followed by a white
candle that opens lower than the previous close. Soon thereafter, the buying pressure
pushes the price up halfway or more (preferably two-thirds of the way) into the real
body of the black candle.

 The Morning Star

As the name indicates, the Morning Star is a sign of hope and a new beginning in a
gloomy downtrend. The pattern consists of three candles: one short-bodied candle
(called a doji or a spinning top) between a preceding long black candle and a succeeding
long white one. The colour of the real body of the short candle can be either white or
black, and there is no overlap between its body and that of the black candle before. It
shows that the selling pressure that was there the day before is now subsiding. The third
white candle overlaps with the body of the black candle and shows a renewed buyer
pressure and a start of a bullish reversal, especially if confirmed by the higher volume.
 The Three White Soldiers
This pattern is usually observed after a period of downtrend or in price consolidation.
It consists of three long white candles that close progressively higher on each
subsequent trading day. Each candle opens higher than the previous open and closes
near the high of the day, showing a steady advance of buying pressure. Investors should
exercise caution when white candles appear to be too long as that may attract short
sellers and push the price of the stock further down.
3.13 BEARISH REVERSAL CANDLESTICK PATTERNS

1. Doji bearish reversal candlestick patterns

A doji pattern looks like a cross, it is formed when the opening and the closing price are same
or almost same, and it doesn’t matters much whether the doji is red or green. There are two
type of doji , the dragonfly doji and and the gravestone doji . A grave stone doji is more bearish
than dragonfly doji

2. Hanging man
A hanging man is a type of bearish reversal pattern, made up of just one candle, found in an
uptrend of price charts of financial assets. It has a long lower wick and a short body at the top
of the candlestick with little or no upper wick. In order for a candle to be a valid hanging man
most traders say the lower wick must be two times greater than the size of the body portion of
the candle, and the body of the candle must be at the upper end of the trading range.
3. Shooting Star

The Shooting formation is created when the open, low, and close are roughly the same price.
Also, there is a long upper shadow, generally defined as at least twice the length of the real
body. When the low and the close are the same, a bearish Shooting Star candlestick is formed
and it is considered a stronger formation because the bears were able to reject the bulls
completely plus the bears were able to push prices even more by closing below the opening
price. The Shooting Star formation is considered less bearish, but nevertheless bearish when
the open and low are roughly the same. The bears were able to counteract the bulls, but were
not able to bring the price back to the price at the open. The long upper shadow of the Shooting
Star implies that the market tested to find where resistance and supply was located. When the
market found the area of resistance, the highs of the day, bears began to push prices lower,
ending the day near the opening price. Thus, the bullish advance upward was rejected by the
bears.

4. Bearish Harami :

Bearish Harami Pattern is formed near a resistance or at the end of an uptrend. This pattern is
a trend reversal type and its reliability is low if watched alone. However if considered with
other technical indicator may a strong signal for the investors.
First Day: A Long bullish candle is formed, shown in green in the fig below.
Second Day: A small bearish candle is formed shown in green in the fig below.

The pattern got its name because in Japanese: Harami means pregnant or body within. In this
pattern a small bearish (red) candlestick is formed on day 2 which lies within the body of the
bullish (green) candle formed on day 1.

5. Evening Star

An Evening Star is a stock-price chart pattern used by technical analysts to detect when a trend
is about to reverse. It is a bearish candlestick pattern consisting of three candles: a large white
candlestick, a small-bodied candle, and a red candle.

Evening Star patterns are associated with the top of a price uptrend, signifying that the uptrend
is nearing its end. The opposite of the Evening Star is the Morning Star pattern, which is viewed
as a bullish indicator.
3.14 TREND
Trend represent a constituent change in prices (i-e a change in investor expectations). Trends
differs from support or resistance levels in that represent change, whereas support or resistance
levels represent barriers to change.

Dow Theory provides us with a clear definition of trend. Dow described how prices did not
rise or fall in a straight line but moved in a series of zigzags which resembled waves and it was
the relative positioning of the peaks and troughs in these waves that defined the trend.

1. Uptrend:-

A rising trend is defined by successively higher low-prices. A rising trend can be thought of
as rising support level the bulls in control & are pushing prices higher. Uptrend is classified as
series of higher highs & higher lows.

Graph No 3.14.1

(Source of secondary data)

Notice how each successive peak and trough is located above the previous ones. For example,
the peak at trend is higher than the peak at uptrend. The uptrend will be deemed broken if the
next low on the chart falls below trend.
2. Downtrend:-

A falling trend is defined by successively lower high-prices. A falling trend can be thought of
as falling resistance level- the bears are in control & are pushing price lower. A downtrend line
has a negative slope & is formed by connecting two or more high points. The second high must
be lower than first for line to have a negative slope.

Graph No 3.14.2

(Source of secondary data)

A) Short term trend

A short-term investment is between one hour and one week. We are not talking about
investment but trading. Below one hour, we talk about very short term trading which includes
scalping and also some day trading positions. If you use technical analysis you will view charts
ranging from 15 minutes to 4 hours.

Short-term advantage

Ability to get performance quickly

Short term disadvantages

Time consuming: short term trading requires regular trade monitoring (stop loss
modification, trend reversal, etc.)
Significant transaction costs: A short-term trader places a large number of orders and pays
the spread and/or commissions for each round trip. This has a negative impact on
performance.
More stress: Watching the price charts creates stress.

B) Medium term trend

A medium term placement is between one week and several months. We can then call it an
investment. You can then integrate the notion of fundamental analysis as a complement to
technical analysis. If you use technical analysis, you will view daily charts.

Medium-term advantages

- Suitable for a wider range of individuals

- Performance determined by the trend of assets in the portfolio
- Reduced stress

Medium term disadvantages

- Requires more analysis than short term for asset selection.

- Impact of macroeconomics/microeconomics

C) Long term trend

A long-term investment is between one year and several years. In this case, the rules of
portfolio management apply. If you use technical analysis, you will view weekly or monthly
charts.

Long-term advantages
- No stress
- Requires very little time: No need to regularly monitor changes in positions
- Very low transaction costs: There is no frequent round trip and you only pay the spread
and/or commissions once.
- High earning potential: the longer the investment horizon, the greater the earning potential.
- Ability to invest large amounts with reduced risk (with good diversification)
- Suitable for all investor profiles
- Possibility of having your portfolio managed (UCITS)

Long term disadvantages

- Necessity of not needing your savings for the duration of the investment
- Requires in-depth analysis: technical analysis is insufficient, fundamental analysis is also
required
- Can have a significant negative impact on your assets in the event of poor investment
timing.

Graph No 3.14.3

(Source of secondary data)

4) Support Level and Resistance Level

Support, or support level, refers to the price level that an asset does not fall below for period
of time. An asset's support level is created by buyers entering the market whenever the asset
dips to a lower price. In technical analysis, the simple support level can be charted by drawing
a line along the lowest lows for the time period being considered. The support line can be flat
or slanted up or down with the overall price trend. Other technical indicators and charting
techniques can be used to identify more advanced versions of support.

Graph No 3.14.4

(Source of secondary data)

A resistance level, is the price point at which the rise in the price of an asset is halted by the
emergence of a growing number of sellers who wish to sell at that price. Resistance levels can
be short-lived if new information comes to light that changes the overall market’s attitude
toward the asset, or they can be long-lasting. In terms of technical analysis, the simple
resistance level can be charted by drawing a line along the highest highs for the time period
being considered. Depending on price action, this line can be flat or slanted. There are,
however, more advanced ways to identify resistance incorporating bands, trend
lines and moving averages.
3.15 BREAKOUT STRATEGY

A breakout is a price movement of a stock outside a defined level of support or resistance,

which is accompanied by increased volume and high level of volatility.

Position taken by Breakout traders

 Long position when the price breaks a prior resistance

 Short position when the stock breaks the support level.

 Special Feature of breakout

 It is seen that the stock takes a sharp upward move post breakout.

 The reason breakout is a good trading strategy since it is accompanied with major price
swings and starting point of a major trend.

 There can number of ways of breakout like triangle breakout, flag breakout, megaphone
breakout etc taking place in various timeframe but this blog will mainly focus on long
term monthly breakout.

 Breakout Strategy

 Let us understand the breakout strategy here:

 Criteria 1: Time period

 Look for stocks which are probable breakout candidates of about 5, 7, 10 years or even
higher period in the monthly chart. Along with the breakout, the Relative Strength
Index (RSI) of the stock should also enter or already trading in the overbought area.

 Criteria 2: Volume

Volume is another important parameter to look for which should be gradually increasing as the
stock approaches breakout. The confirmation is further validated if the stock breaks the
previous long term resistance with a gap up which suggests increased demand from the bulls.
3.16 TECHNICAL INDICATORS

1) Bollinger Bands

Bollinger bands are a volatility indicator. They consist of a simple moving average, and 2 lines
plotted at 2 standard deviations on either side of the central moving average line. The outer lines
make up the band.

Simply, when the band is narrow the market is quiet. When the band is wide the market is loud.

You can use Bollinger Bands to trade in both ranging and trending markets.

In a ranging market, look out for the Bollinger Bounce. The price tends to bounce from one side
of the band to the other, always returning to the moving average. You can think of this like
regression to the mean. The price naturally returns to the average as time passes.

In this situation, the bands act as dynamic support and resistance levels. If the price hits the top
of the band, then place a sell order with a stop loss just above the band to protect against a break
out. The price should revert back down towards the average, and maybe even to the bottom
band, where you could take profits.
Graph No 3.16.1

(Source of secondary data)

2) Relative Strength Index (RSI)

Next up, the Relative Strength Index (RSI). This is a momentum indicator plotted on a separate
scale. There’s a single line scaled from 0 to 100 that identifies overbought and oversold
conditions in the market. Readings over 70 indicate an overbought market, and readings below
30 indicate an oversold market. Got it? Alright, let’s see how you can make money from this
guy.

The whole idea behind RSI is to pick the tops and bottoms, to get into a market as the trend is
reversing. This can help you to take advantage of the whole move.
Graph No 3.16.2

(Source of secondary data)

3) Moving Average Convergence Divergence (MACD)

Next on the roster we have Moving Average Convergence Divergence (AKA MACD). This is
a trend indicator and it consists of a fast line, slow line, and a histogram. Have you had a coffee
yet? This is going to be a little confusing, so pay attention!

The inputs for this indicator are a faster-moving average (MA-fast), a slower-moving average
(MA-slow), and a number defining the period for yet another moving average (MA-period).

The MACD fast line is a moving of the moving average of the difference between MA-fast and
MA-slow. Let that sink in.

The MACD slow line is a moving average of the MACD fast line. The number of periods is
defined by MA-period.

Finally, the histogram shows the difference between the MACD fast and slow lines.
Don’t worry if you don’t get it first time, we’ll go through an example.

Say you have MACD “12, 26, 9” (a common default setting). This means that the fast line is the
moving average of the difference between the 12-period and 26-period moving averages. The
slow line is a 9-period moving average of the MACD fast line. And the histogram is the
difference between the MACD lines.

You might have to re-read that a few times to get it. And make sure you do get it because MACD
is a very useful indicator.

Graph No 3.16.3

(Source of secondary data)

4) Stochastic

Next in line, the stochastic indicator. This is a momentum indicator, and can be used to find
where a trend might be ending. In a similar fashion to RSI, it’s used to determine when an asset
is overbought or oversold.
It’s made up of 2 lines plotted on a separate chart.

As you might’ve already guessed, stochastic can help you to pick an entry point and get into a
trend at the very beginning. When the stochastic lines are above 80, the market is overbought,
and a DOWNTREND is likely to follow.

Graph No 3.16.4

(Source of secondary data)

5) ADX (AVERAGE DIRECTONAL INDEX)

The average directional index (ADX) is a technical analysis indicator used by some
traders to determine the strength of a trend. The trend can be either up or down, and this
is shown by two accompanying indicators, the Negative Directional Indicator (-DI) and
the Positive Directional Indicator (+DI). Therefore, ADX commonly includes three
separate lines. These are used to help assess whether a trade should be taken long or
short, or if a trade should be taken at all.
Graph No 3.16.5
(Source of secondary data)

CHAPTER No : 4
DATA ANALYSIS AND INTERPRETATION
 4: - DATA ANALYSIS AND INTERPRETATION

4.1 TREND ANALYSIS OF DIFFFERENT COMPANIES

1. Maruti Suzuki
This five-year chart of Maruti tells any investor why the market loves the stock so much. The
stock had witnessed one major fall during the early 2016 due to global market crash on the
back of a big slump in crude oil prices. But the most surprising event were that the stock came
back with a vengeance to conquer the Rs 10,000 level by the end of 2017, in just 24 months.
From its 2016 low of Rs 3,000, the stock has gained 230 per cent. A good stock can never stay
low for long.

Graph No: 4.1.1

(Source of secondary data)

Interpretation:

Buy and hold’ is the most simple yet most difficult-to-follow approach in the stock market.

Maruti’s price charts are on an extremely strong uptrend. That’s the case not just in a five-
year period chart, but since its inception. This stock truly epitomises the India Growth Story
in its own way.

Every dip, irrespective of news flow, had s een a lot of demand. In last five years as well,
there has been just one big correction in the stock, which happened at the end of 2015.
However, that correction proved to be “one step back, and three steps forward,” as the stock
multiplied three times from those lows in early 2016.
2. TCS:
IT as a sector could do no wrong. It was seen as a blind compounding story. Post the global
financial crisis, the US slowdown and the advent of new technology platforms, Indian IT has
been struggling since late 2014. One look at the five-year chart of TCS tells you that the upside
is not clear. The chart is mirroring fundamentals. The cloudy business environment is
influencing technical trends of the stock.

Graph No: 4.1.2

(Source of secondary data)

Interpretation:

TCS falls into ‘3S’ trending model.

Trends are Stable, Slow and, hence, Sturdy.

In case of a strong uptrend, the stock doesn’t break its previous monthly low, and continues
to rise higher.

This invariably acts as a ‘Trailing Stop Loss mechanism’ style of investing.

Using this TSL method, an investor could have managed to ride the trend when the stock rose
from Rs 1,000 to Rs 2,700 (blue shaded region).
3. IndusInd Bank:

When it comes to private banks, HDFC Bank is seen as the leader. The star of 2017 was,
however, IndusInd Bank NSE -2.38 %. Analysts draw parallels between the two. People were
looking at IndusInd as the next HDFC.

When I study the five-year chart, it gives me a better picture on how IndusInd tends to make
higher highs and higher lows, always bouncing back. The quarterly financial results of the
bank have pleased the market.
Graph No: 4.1.4

(Source of secondary data)

Interpretation:

Price charts of IndusInd Bank depict a ‘Range behaviour’ pattern.

Here, the stock rises to a certain extent and then goes into a prolonged pause. This pause is
more of a ‘time correction’ rather than price correction.

It’s a process of ‘Mean Reversion’, wherein extreme price moves are countered by prolonged
consolidation, when the stock remains range bound. In this duration, the prices come
back/revert to their long-term key moving averages. It’s basically a pause mode in stock price
trends.

In fact, even if we look at the chart, the magnitude of the correction has not been more than
1520 per cent even in these phases of price/time consolidation.

Timing your entry, or averaging the stock using these consolidation zones effectively, can be
a smart strategy even for long-term investors in this stock.

4. Bajaj Auto:
The two-wheeler market has underperformed the four-wheeler market for a couple of years
now. But returns that Bajaj Auto NSE 1.07 % has generated despite the trials & tribulations
would take you by surprise: the stock price doubled in 5 years. However, the chart is a clear
test of patience.
Graph No: 4.1.5

(Source of secondary data)

Interpretation
It’s a curious case of a structured uptrend.

Bajaj Auto remains in a structured multi-year uptrend. However, it’s a very slow-paced
uptrend.

Prices are moving in a higher uptrend. However despite volatility in prices, it continues to
remain in a ‘Rising Channel’ pattern.
If you look closely, extremes above (point 1) and below (point 2) the trends result into a
sharp reaction for bringing the stock back into the channel. This happens due to the fact that
the stock by nature is oriented more towards slow trends slow trend due to its low-beta
nature.
In last five years, the stock has gradually risen from Rs 1,500 to Rs 3,300 in a slow paced
uptrend

4.2 BREAKOUT STATERGIES OF DIFFERENT COMPAINES

1) VENKYS
Venkys India Ltd. too witnessed a sharp movement post breakout after 6.5 years and
generated more than 6x return in a span of mere 15 months.
Graph No: 4.2.1

(Source of secondary data)

Interpretation

The two parameters which are very important in breakout strategy is time period and volume. In case
if venkys India ltd. it is observed that from 2011 to 2017 for a period of 6 years it is lining between
below the support line and after 7th year it brakes the support line after which is was touching its high

Venkys India Ltd. Was not touching the

3. Mangalam Organics

Mangalam Organics is another stellar performer which turned out to be a ten bagger in almost
2 years’ time post breakout in February 2017 after 6.5 years.

Graph No: 4.2.2

(Source of secondary data)

The two parameters which are very important in breakout strategy is time period and volume.
In case if Mangalam Organics Ltd. it is observed that from 2010 to 2017 for a period of 7 years
it is lining between below the support line and after 8th year it brakes the support line after
which is was touching its high.
4.3 CASE OF BULLISH PATTERNS:

1. Philip morris intl inc.

Philip Morris (NYSE: PM) stock. The company' shares were a great long in 2011 and
remained in an uptrend. In 2012, though, the stock was retreating. On January 13,
2012 a bullish engulfing pattern occurred; the price jumped from an open of $76.22 to

close out the day at $77.32.

Graph No: 4.3.1

(Source of secondary data)

Interpretation:

This bullish day dwarfed the prior day's intraday range where the stock finished down
marginally. The move showed that the bulls were still alive and another wave in the uptrend
could occur. It can be analyse from that it be beneficial to enter a long position when the price
moves higher than the high of the second engulfing candle.
2. Piercing line candlestick pattern

The Karnataka bank shares were a facing downtrend long in December and remained in an
uptrend for 3days though, after 9th December a Piercing line candlestick pattern occurred; the
price jumped from an open of 142.5 to close out the day at 150

Graph No: 4.3.2

(Source of secondary data)

Interpretation:

An investor should invest their funds after a piercing line candlestick pattern basically piercing
pattern means where in candlestick covers 50% of the bearish candlestick
4.4 ANALYSIS OF INDICATOR

1. BOLLINGER BANDS

Indiabulls Housing Finance Ltd. touches with upper and lower band along with the daily
movements of the stock’s price.

Indiabulls housing finance ltd

Graph No: 4.4.1

(Source of secondary data)

INTERPRETATION:

It can be analyse that Indiabulls Housing finance ltd. It touches its support line after which the
share prices fall with daily movements when in touches its resistance line then the share prices
are rising in this period an investor can invest.
2. STOCHASTIC RSI

State Bank Of India price closes at 314.30 and open at 316 on 4th November 2019

Graph No: 4.1.2

(Source of secondary data)

Interpretation: stochastic RSI indicator is used to an index of whether a share is overbought or

oversold. As in case of state bank of India we can predict that in Aug 2019 it was overbought
which means that it is trading at lower price by looking at this overbought and oversold
situation an investor can analyse that at what time funds infusion should be done.
 CHAPTER 5:

FINDING AND SUGGESTION

 5. FINDINGS AND SUGGESTIONS

5.1 Findings
An investors can earn profit with the help of technical analysis patterns and chart which help
in finding out the current situation of any firm.
Technical analysis basically help an investor regarding where an investor should take a short
position or long position.
Future predication can be made with the help of various technical analysis indicators and
charts.
Factors creating volatility can be identify with technical analysis.
Knowledge of the stock market is the key to the success and emphasis should be on managing
trading risk while technical analysis can help you to control them.

5.2 Suggestions
There are some unforeseen factors which make shares market more volatile, so an investor
should even consider such factors before investing in any shares
The investor should analyse market data in real time, plan their market timing strategy to
make money regardless of upwards and downward trends in the market.
“The trend is your friend” is the motto of technical analysis. So the investor has to monitor
the trend of stocks before investment

5.3 Conclusion

Technical analysis is the study of behaviour of buyer & seller. It is very useful tool to capture
gain with the help of technical analysis. It is very important analysis is the study of investor
behaviour and its effect on the subsequent price action of financial instruments. The main data
that we need to perform our studies are the price histories of the instruments, together with time
and volume information.
Technical analysts examine the price action of financial markets instead of fundamental factors
that to effect to market prices. It is important to understand to enter in the transaction &
understand the trade management once you understand this psychology then it is easier to
predict future & earn profit.

While it is time to rejoice at the booming Indian economy and the historical journey of the
Sensex, the foremost question in the minds of all investors is whether it is the right time to buy
or sell stocks now. The main rules are

1. Don't be greedy: Invest smartly, with some professional help and some study on your own.

2. Avoid 'hot tips': Use your own judgement.

3. Avoid trading/timing the market: 'timing' leads to huge monetary losses and mental tension. 4. Avoid
actions based on sentiments: Don't be emotionally attached to stocks

Don't panic if the market drops: Be patient and hold on to the scrip until some semblance of
sanity prevails in the market. Consult a professional and then act accordingly.

Stay invested, possibly continue to invest more: It is natural to book profits with the markets
at higher levels. This should be done, but we suggest people should also stay invested in the
equity markets. Indian stocks do not appear over stretched at present, considering that
average price/earnings ratios -- a common measure of value – were around 15-16 times.

Diversify: diversify a bit, looking at stocks, mutual funds, commodities and gold (for a
longer-term). If equities pick up some of these stocks again.

Sell when value is realized: Some stocks may rise sooner than you may have anticipated. In
a frenzied bull run, investors may see their target prices being met in a matter of days. Here
time should not be of any consequence.

These rules are frequently used in technical analysis. The rules are clear and consistent but they
are difficult to use in practise. Much experience is needed to use them. The investor always kept
in the mind we have limited capital but the unlimited opportunity. Once you lose the capital you
cannot opportunity. But if you lose opportunity then hundreds of other opportunity waiting for
us.
 Bibliography

 www.nseindia.com

 www.bseindia.com

 www.moneycontrol.com

 www.investopedia.com

 www.profitindicators.com

 www.stocata.com

 www.en.bookfi.org

 www.thepatternsite.com

 www.fineprint.com

 www.forexinvestment.com

 www.wikipedia.com