UNIVERSITY OF MUMBAI

PROJECT ON
TECHNICAL ANALYSIS OF CASTROL OIL

(INVESTMENT MANAGEMENT)
MASTER OF COMMERCE (BANKING AND FINANCE)
SEMESTER III
2013-14

In Partial Fulfillment of the Requirement under Semester Based Credit

and Grading System for Post Graduates (PG)
Programme under Faculty of Commerce

SUBMITTED BY
PRATIK JAIN
ROLL NO: 46

PROJECT GUIDE
Dr. (Ms.) TRUPTI KACHERIA

K.P.B HINDUJA COLLEGE OF COMMERCE

315, NEW CHARNI ROAD, MUMBAI-400 004
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M.Com (BANKING & FINANCE)

3rd SEMESTER

TECHNICAL ANALYSIS OF CASTROL OIL

SUBMITTED BY
PRATIK JAIN
ROLL NO: 46
2013-14

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CERTIFICATE

This is to certify that Mr. Pratik Jain of M.Com. Banking and Finance Semester3rd [2013-14] has successfully completed the Project on Technical Analysis On
Castrol Oil under the guidance of Dr (Ms.)Trupti Kacheria

Project Guide

________________

Course Coordinator

________________

Internal Examiner

________________

External Examiner

________________

Principal

________________

Date: 25/09/2013
Place: MUMBAI

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DECLARATION

I Mr. Pratik Jain student of M.Com (Banking and Finance), 3 rd semester

(2013-2014), hereby declare that I have completed the project on
Technical Analysis of Castrol Oil
The information submitted is true and original copy to the best of my knowledge.

Pratik Jain
(Signature)

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ACKNOWLEDGEMENTS

I feel the pleasure to have an opportunity to express my deep and sincere feelings
of gratitude towards all the personalities who have helped me to convert my
dreams into the reality.

Sincere thanks to my Project Mentor Dr. (Ms.) Trupti Kacheria for her guidance and
support at every step while completing this project and providing me the accurate and
detailed information to complete this report as part of my curriculum. Without her
continuous help and enthusiasm the project would not have been materialized in the
present form.

I also extent my sincere thanks to our Course Co-ordinator Dr. (Ms.) Rajeshwary
G. for her much required coordination and encouragement which helped me in
coming up with successful completion of this project.

I pay my sincere regards to my parents and friends who always encouraged and
helped me in the preparation of this project.

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CHAPTER 1
EQUITY ANALYSIS
Professional investor will make more money & less loss than, who let their heart
rule. Their head eliminate all emotions for decision making. Be ruthless &
calculating, you are out to make money. Decision should be based on actual
movement of share price measured both in money & percentage term & nothing
else. Greed must be avoided patience may be a virtue, but impatience can
frequently be profitable.
In Equity Analysis anticipated growth, calculations are based on considered
FACTS & not on HOPE. Equity analysis is basically a combination of two
independent analyses, namely FUNDAMENTAL ANALYSIS & TECHNICAL
ANALYSIS. The subject of Equity analysis, i.e. the attempt to determine future
share price movement & its reliability by references to historical data is a vast one,
covering many aspect from the calculating various FINANCIAL RATIOS,
plotting of CHARTS to extremely sophisticated indicators.
A general investor can apply the principles by using the simplest of tools: pocket
calculator, pencil, ruler, chart paper & your cautious mind, watchful attention. It
should be pointed out that, this equity analysis does not discuss how to buy & sell
shares, but does discuss a method which enables the investor to arrive at buying &
selling decision. The financial analysts always need yardsticks to evaluate the
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efficiency & performances of any business unit at the time of investment.

Fundamental analysis is useful in long term investment decision. In Fundamental
analysis a company s goodwill, its performances, liquidity, leverage, turnover,
profitability & financial health was checked & analysis with the help of ratio
analysis for the purpose of long term successful investment.Technical analysis
refers to the study of market generated data like prices & volume to determine the
future direction of prices movements. Technical analysis mainly seeks to predict
the short term price travels. The focus of technical analysis is mainly on the
internal market data, i.e. prices & volume data. It appeals mainly to short term
traders. It is the oldest approach to equity investment dating back to the late 19th
century.

EQUITY ANALYSIS.

ENVIRONMENT & ECONOMICAL ANALYSIS.

FUNDAMENTAL
ANALYSIS

TECHNICAL
ANALYSIS

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CHAPTER 2
TECHNICAL ANALYSIS
2.1 INTRODUCTION
Technical analysis refers to the study of market generated data like prices &
volume to determine the future direction of prices movements.
Technical analysis mainly seeks to predict the short term price travels. It is
important criteria for selecting the company to invest. It also provides the base for
decision-making in investment. The one of the most frequently used yardstick to
check & analyze underlying price progress. For that matter a verity of tools was
consider.
This Technical analysis is helpful to general investor in many ways. It provides
important & vital information regarding the current price position of the company.
Technical analysis involves the use of various methods for charting, calculating &
interpreting graph & chart to assess the performances & status of the price. It is the
tool of financial analysis, which not only studies but also reflecting the numerical
& graphical relationship between the important financial factors.
The focus of technical analysis is mainly on the internal market data, i.e. prices &
volume data. It appeals mainly to short term traders. It is the oldest approach to
equity investment dating back to the late 19th century. It uses charts and computer

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programs to study the stocks trading volume and price movements in the hope of
identifying a trend.
In fact the decision made on the basis of technical analysis is done only after
inferring a trend and judging the future movement of the stock on the basis of the
trend. Technical Analysis assumes that the market is efficient and the price has
already taken into consideration the other factors related to the company and the
industry. It is because of this assumption that many think technical analysis is a
tool, which is effective for short-term investing.
2.2 PRINCIPLES OF TECHNICAL ANALYSIS
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 behavior -- hence technicians' focus on identifiable trends and conditions.
1. Market action discounts everything
On most of the sizable return days the information that the press cites as the cause
of the market move is not particularly important. Press reports on adjacent days
also fail to reveal any convincing accounts of why future profits or discount rates
might have changed. Our inability to identify the fundamental shocks that

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accounted for these significant market moves is difficult to reconcile with the view
that such shocks account for most of the variation in stock returns.
2. Prices move in trends
Technical analysts believe that prices trend. Technicians say that markets trend up,
down, or sideways (flat). An example of a security that had an apparent trend is
AOL from November 2001 through August 2002. A technical analyst or trend
follower recognizing this trend would look for opportunities to sell this security.
AOL consistently moves downward in price. Each time the stock rose, sellers
would enter the market and sell the stock; hence the "zig-zag" movement in the
price. In other words, each time the stock edged lower, it fell below its previous
relative low price.
3. History tends to repeat itself
Technical analysts believe that investors collectively repeat the behavior of the
investors that preceded them. Technical analysis is not limited to charting, yet is
always concerned with price trends. For example, many technicians monitor
surveys of investor sentiment.. Technicians use these surveys to help determine
whether a trend will continue or if a reversal could develop; they are most likely to
anticipate a change when the surveys report extreme investor sentiment.
2.3 TOOLS & INSTRUMENTS USED IN THE TECHNICAL ANALYSIS:
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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.
Open - This is the price of the first trade for the period (e.g., the first trade of the
day). When analyzing daily data, the Open is especially important as it is the
consensus price after all interested parties were able to "sleep on it."
High - This is the highest price that the security traded during the period. It is the
point at which there were more sellers than buyers (i.e., there are always sellers
willing to sell at higher prices, but the High represents the highest price buyers
were willing to pay).
Low - This is the lowest 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).
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.

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Volume - This is the number of shares (or contracts) that were traded during the
period. The relationship between prices and volume (e.g., increasing prices
accompanied with increasing volume) is important.
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.
Bid - This is the price a market maker is willing to pay for a security (i.e., the price
you will receive if you sell).
Ask - This is the price a market maker is willing to accept (i.e., the price you will
pay to buy the security).

2.4 PRICE STYLES

Price in a chart can be displayed in four styles:
1. Bar Charts:
The highs and lows of a foreign currency are plotted in a diagram and the points
are joined with vertical lines (bars). A small horizontal tick to the left denotes the
opening level while a small horizontal tick to the right represents the closing price
of each interval.

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2. Line Chart:
It gives the detailed information about every aspect.
The exchange rates for each time period are plotted in a diagram and the points are
joined. Prices on the y-axis, time on the x-axis.
The line chart chooses for example the closing price of consecutive time periods,
but can also work with daily, official fixings.

The relatively easy handling of line charts is a great advantage. Line charts do not
show price movements within a time period. This can be a problem because
important information for exchange rate analysis can be lost. This problem was

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remedied with the development of bar charts that represent a more sophisticated
form of line chart.
3. Candlestick Chart:
A candlestick is black if the closing price is lower than the opening price. A
candlestick is white if the closing price is higher than the opening price.

In the 1600s, the Japanese developed a method of technical analysis to analyze the
price of rice contracts. This technique is called candlestick charting. Steven Nison
is credited with popularizing candlestick charting and has become recognized as
the leading expert on their interpretation.
Candlestick charts display the open, high, low, and closing prices in a format
similar to a modern-day barchart, but in a manner that extenuates the relationship
between the opening and closing prices. Candlestick charts are simply a new way
of looking at prices, they don't involve any calculations.
The interpretation of candlestick charts is based primarily on patterns.
Bullish Patterns, Bearish Patterns, Reversal Patterns, Neutral Patterns
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Example

4. Point And Figure Charts

The point and figure chart is not well known or used by the average investor but it
has had a long history of use dating back to the first technical traders. This type of
chart reflects price movements and is not as concerned about time and volume in
the formulation of the points. The point and figure chart removes the noise, or
insignificant price movements, in the stock, which can distort traders' views of the
price trends. These types of charts also try to neutralize the skewing effect that
time has on chart analysis.

When first looking at a point and figure chart, you will notice a series of Xs and
Os. The Xs represent upward price trends and the Os represent downward price
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trends. There are also numbers and letters in the chart; these represent months, and
give investors an idea of the date. Each box on the chart represents the price scale,
which adjusts depending on the price of the stock: the higher the stock's price the
more each box represents.
2.5 SUMMARY OF CHARTS

CHAPTER 3
TRENDS IN TECHNICAL ANALYSIS
3.1 THE USE OF TRENDS
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One of the most important concepts in technical analysis is that of trend.

The meaning in finance isn't all that different from the general definition of
the term - a trend is really nothing more than the general direction in which
a security or market is headed.
3.2 A MORE FORMAL DEFINITION
Unfortunately, trends are not always easy to see. In other words, defining a
trend goes well beyond the obvious. In any given chart, you will probably
notice that prices do not tend to move in a straight line in any direction,
but rather in a series of highs and lows. In technical analysis, it is the
movement of the highs and lows that constitutes a trend. For example,
an uptrend is classified as a series of higher highs and higher lows, while a
downtrend is one of lower lows and lower highs. It is an example of an
uptrend. Point 2 in the chart is the first high, which is determined after the
price falls from this point. Point 3 is the low that is established as the price
falls from the high. For this to remain an uptrend each successive low must
not

fall

below

the

previous

lowest

point

or

the trend is deemed a reversal.

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3.3 TYPES OF TREND

As the names imply, when each successive peak and trough is higher, it's
referred to as an upward trend. If the peaks and troughs are getting lower, it's
a downtrend. When there is little movement up or down in the peaks and
troughs, it's a sideways or horizontal trend. If you want to get really
technical, you might even say that a sideways trend is actually not a trend on
its own, but a lack of a well-defined trend in either direction. In any case,
the market can really only trend in these three ways: up, down or nowhere.

3.4 TREND LENGTHS

Along with these three trend directions, there are three trend classifications.
A trend of any direction can be classified as a long-term trend, intermediate

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trend or a short-term trend. In terms of the stock market, a major trend is

generally categorized as one lasting longer than a year. An intermediate
trend is considered to last between one and three months and a near-term
trend is anything less than a month. A long-term trend is composed of
several intermediate trends, which often move against the direction of the
major trend. If the major trend is upward and there is a downward correction
in price movement followed by a continuation of the uptrend, the correction
is considered to be an intermediate trend. The short-term trends are
components of both major and intermediate trends. T

o get a sense of

how these three trend lengths might look.

When analyzing trends, it is important that the chart is constructed to best

reflect the type of trend being analyzed. To help identify long-term trends,
weekly charts or daily charts spanning a five-year period are used by
chartists to get a better idea of the long-term trend. Daily data charts are best
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used when analyzing both intermediate and short-term trends. It is also

important to remember that the longer the trend, the more important it is; for
example, a one-month trend is not as significant as a five-year trend.
3.5 TREND LINES
A trend line is a simple charting technique that adds a line to a chart to
represent the trend in the market or a stock. Drawing a trend line is as
simple as drawing a straight line that follows a general trend. These lines are
used to clearly show the trend and are also used in the identification/ of
trend reversals. An upward trend line is drawn at the lows of an upward
trend. This line represents the support the stock has every time it moves
from a high to a low. Notice how the price is propped up by this support.
This type of trend line helps traders to anticipate the point at which a stock's
price will begin moving upwards again. Similarly, a downward trend line is
drawn at the highs of the downward trend. This line represents the resistance
level that a stock faces every time the price moves from a low to a high.

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3.6CHANNELS
A channel, or channel lines, is the addition of two parallel trend lines that act as
strong areas of support and resistance. The upper trend line connects a series of
highs, while the lower trend line connects a series of lows. A channel can slope
upward, downward or sideways but, regardless of the direction, the interpretation
remains the same. Traders will expect a given security to trade between the two
levels of support and resistance until it breaks beyond one of the levels, in which
case traders can expect a sharp move in the direction of the break. Along with
clearly displaying the trend, channels are mainly used to illustrate important areas
of support and resistance.

A descending channel on a stock chart; the upper trend line has been placed
on the highs and the lower trend line is on the lows. The price has bounced
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off of these lines several times, and has remained range-bound for several
months. As long as the price does not fall below the lower line or move
beyond the upper resistance, the range-bound downtrend is expected to
continue.
3.7 THE IMPORTANCE OF TREND
It is important to be able to understand and identify trends so that you can trade
with rather than against them. Two important sayings in technical analysis are "the
trend is your friend" and "don't buck the trend," illustrating how important trend
analysis is for technical traders
3.8 IMPORTANCE OF VOLUME
i.

Volume

Volume is simply the number of shares or contracts that trade over a given
period of time, usually a day. The higher the volume, the more active the
security. To determine the movement of the volume (up or down), chartists
look at the volume bars that can usually be found at the bottom of any chart.
Volume bars illustrate how many shares have traded per period and show
trends in the same way that prices do.

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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. 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

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the up trading days are marked with lower volume, it is a sign that the trend
is starting to lose its legs and may soon end. When volume tells a different
story, it is a case of divergence, which refers to a contradiction between two
different indicators. The simplest example of divergence is a clear upward
trend on declining volume.

ii.

Volume and Chart Patterns

The other use of volume is to confirm chart patterns. Patterns such as head
and shoulders, triangles, flags and other price patterns can be confirmed
with volume, a process which we'll describe in more detail later in this
tutorial. In most chart patterns, there are several pivotal points that are vital
to what the chart is able to convey to chartists. Basically, if the volume is not
there to confirm the pivotal moments of a chart pattern, the quality of the
signal formed by the pattern is weakened.
iii.

Volume Precedes Price

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Another important idea in technical analysis is that price is preceded by volume.

Volume is closely monitored by technicians and chartists to form ideas on
upcoming trend reversals. If volume is starting to decrease in an uptrend, it is
usually a sign that the upward run is about to end. Now that we have a better
understanding of some of the important factors of technical analysis, we can move
on to charts, which help to identify trading opportunities in prices movements .

CHAPTER 4
CHART PATTERNS
A chart pattern is a distinct formation on a stock chart that creates a trading signal,
or a sign of future price movements. Chartists use these patterns to identify current
trends and trend reversals and to trigger buy and sell signals. In the first section of
this tutorial, we talked about the three assumptions of technical analysis, the third
of which was that in technical analysis, history repeats itself. The theory behind
chart patterns is based on this assumption. The idea is that certain patterns are seen
many times, and that these patterns signal a certain high probability move in a
stock. Based on the historic trend of a chart pattern setting up a certain price
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movement, chartists look for these Patterns to identify trading opportunities. While
there are general ideas and components to every chart pattern, there is no chart
pattern that will tell you with 100% certainty where a security is headed. This
creates some leeway and debate as to what a good pattern looks like, and is a
major reason why charting is often seen as more of an art than a science. There are
two types of patterns within this area of technical analysis, reversal and
continuation. A reversal pattern signals that a prior trend will reverse upon
completion of the pattern. A continuation pattern, on the other hand, signals that a
trend will continue once the pattern is complete. These patterns can be found over
charts of any timeframe. In this section, we will review some of the more Popular
chart patterns.
1. HEAD AND SHOULDERS
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 (shown on the left) is a
chart pattern that is formed at the high of an upward movement and signals that the
upward trend is about to end. Head and shoulders bottom, also known as inverse

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head and shoulders (shown on the right) is the lesser known of the two, but is used
to signal a reversal in a downtrend.

Head and shoulders Top.

Head and shoulders

Bottom/Inverse

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, 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.

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2. 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.

The 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.
3. DOUBLE TOPS AND BOTTOMS
This chart pattern is another well-known pattern that signals a trend
reversal - it is considered to be one of the most reliable and is
commonly used. These patterns are formed after a sustained trend and
signal to chartists that the trend is about to reverse. The pattern is
created when a price movement tests support or resistance levels twice
and is unable to break through. This pattern is often used to signal
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intermediate and long-term trend reversals.

Double Top pattern

Double Bottom Pattern

In the case of the double top pattern, the price movement has twice tried to move
above a certain price level. After two unsuccessful attempts at pushing the price
higher, the trend reverses and the price heads lower. In the case of a double bottom
(shown on the right), the price movement has tried to go lower twice, but has
found support each time. After the second bounce off of the support, the security
enters a new trend And heads upward.
4. TRIANGLES
Triangles are some of the most well-known chart patterns used in technical
analysis. The three types of triangles, which vary in construct and implication, are
the symmetrical triangle, ascending and descending triangle.

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The symmetrical 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.
5. FLAG AND PENNANTS
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.

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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
6. WEDGE
The wedge chart pattern can be either a continuation or reversal pattern. It is
similar to a symmetrical triangle except that the wedge pattern slants in an
upward or downward direction, while the symmetrical triangle generally
shows a sideways movement. The other difference is that wedges tend to
form over longer periods, usually between three and six months.

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The fact that wedges are classified as both continuation and reversal patterns can
make reading signals confusing. However, at the most basic level, a falling wedge
is bullish and a rising wedge is bearish. We have a falling wedge in which two
trend lines are converging in a downward direction. If the price was to rise above
the upper trend line, it would form a continuation pattern, while a move below the
lower trend line would signal a reversal pattern
7. Triple Tops And Bottoms
Triple tops and triple bottoms are another type of reversal chart pattern in chart
analysis. These are not as prevalent in charts as head and shoulders and double
tops and bottoms, but they act in a similar fashion. These two chart patterns are
formed when the price movement tests a level of support or resistance three times
and is unable to break through; this signals a reversal of the prior trend.

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Confusion can form with triple tops and bottoms during the formation of the
pattern because they can look similar to other chart patterns. After the first two
support/resistance tests are formed in the price movement.

CHAPTER 6
SUPPORT, RESISTANCE AND MOVING AVERAGES
Once you understand the concept of a trend, the next major concept is that of
support and resistance. You'll often hear technical analysts talk about the ongoing
battle between the bulls and the bears, or the struggle between buyers (demand)
and sellers (supply). This is revealed by the prices a security seldom moves above
(resistance) or below (support).

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Support is the price level through which a stock or market seldom falls (illustrated
by the blue arrows). Resistance, on the other hand, is the price level that a stock or
market seldom surpasses (illustrated by the Red Arrows).
These support and resistance levels are seen as important in terms of market
psychology and supply and demand. Support and resistance levels are the
levels at which a lot of traders are willing to buy the stock (in the case of a
support) or sell it (in the case of resistance). When these trend lines are
broken, the supply and demand and the psychology behind the stock's
movements is thought to have shifted, in which case new levels of support
and resistance likely be established. In almost every case, a stock will have
both a level of support and a level of resistance and will trade in this range
as it bounces between these levels.

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The Importance of Support and Resistance

Support and resistance analysis is an important part of trends because it can be
used to make trading decisions and identify when a trend is reversing.
Support and resistance levels both test and confirm trends and need to be
monitored by anyone who uses technical analysis. As long as the price of the share
remains between these levels of support and resistance, the trend is likely to
continue. It is important to note, however, that a break beyond a level of support or
resistance does not always have to be a reversal.
For example, if prices moved above the resistance levels of an upward trending
channel, the trend have accelerated, not reversed. This means that the price

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appreciation is expected to be faster than it was in the channel.

Being aware of these important support and resistance points should affect the way
that you trade a stock. Traders should avoid placing orders at these major points, as
the area around them is usually marked by a lot of volatility. If you feel confident
about making a trade near a support or resistance level, it is important that you
follow this simple rule: do not place orders directly at the support or resistance
level. This is because in many cases, the price never actually reaches the whole
number, but flirts with it instead. So if you're bullish on a stock that is moving
toward an important support level, do not place the trade at the support level.
Instead, place it above the support level, but within a few points. On the other
hand, if you are placing stops or short selling, set up your trade price at or below
the level of support.

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MOVING AVERAGES
Most chart patterns show a lot of variation in price movement. This can
make it difficult for traders to get an idea of a security's overall trend. One
simple method traders use to combat this is to apply moving averages. A
moving average is the average price of a security over a set amount of time.
The calculations only differ in regards to the weighting that they place on
the price data, shifting from equal weighting of each price point to more
weight being placed on recent data. The three most common types of
moving averages are simple, linear and exponential.

If the periods used in the calculation are relatively short, for example 15 and 50,
this could signal a short-term trend reversal. On the other hand, when two averages
with relatively long time frames cross over, this is used to suggest a long-term shift
in trend.

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Moving averages are a powerful tool for analyzing the trend in a security. They
provide useful support and resistance points and are very easy to use. The most
common time frames that are used when creating moving averages are the 200day, 100-day, 50-day, 20-day and 10-day. The 200-day average is thought to be a
good measure of a trading year, a 100-day average of a half a year, a 50-day
average of a quarter of a year, a 20-day average of a month And 10 day average
of two weeks.

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CHAPTER 7
ABOUT CASTROL

Castrol India, also known as Castrol India Limited, is an automotive and

industrial lubricant manufacturing company which has been operating in India
since 1910.
Castrol India is a public limited company and its parent company, Castrol Limited
(UK) holds 70.92% equity of Castrol India Limited. Castrol India manufactures
and markets both, automotive and industrial lubricants. Castrol India is the 2nd
largest manufacturer of automotive and industrial lubricants in the Indian lubricant
market and owns around 22% market share in the overall Indian lubricant market.
Castrol India is a part of the BP Group and operates in about 56 countries.
Castrol markets its automotive lubricants under two brands - Castrol and BP.
Castrol India enjoys market leadership in passenger car engine oils, premium 2stroke and 4-stroke oils, and multi-grade diesel engine oils. Castrol India Ltd. has 5
manufacturing plants that are meticulously networked with 270 distributors,
serving over 70,000 retail outlets. Further, it is also equipped with a state-of-the-art
plant in Silvassa.

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As the leading lubricant-manufacturing company, Castrol is the proud owner of the

largest manufacturing facilities and marketing network amongst the lubricant
companies operating in India. Castrol India registered net sales of ` 442.1 crore for
the quarter ended March 31st March, 2006. The company's net profit stands at Rs
41.5 crore for the same period. The company is headed by Mr. Naveen Kshatriya,
who is the managing director of the company, who also indicated that the company
is looking to adapt its processes to ensure a sustainable future.

The

Latest Financial Figures

(Figures in Rs. Crores)

ET 500 Rank(2011)

228

Industry

Lubricants

Turnover

2950.6

Profit after Tax(PAT)

501.9

MCAP (Market Capitalization)

11697.84

Assets

553.5

product

lines

of

Castrol

India

include

the

following

Industrial - The full range of Castrol metalworking fluids, cleaners,

corrosion preventives and lubricants.
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 Marine - Cylinder oils-crosshead, crancase oils-crosshead, truck piston

engine oils, hydraulic oils, gear oils, compressor oils, turbine oils,
refrigeration oils, emulsifiable oils, multi-grades, heat transfer oils, greases,
and fishing.
Castrol India is also involved with motor sports both, at the international and
national level. At the international level, Castrol partners BMW Williams F1 team
as well as other BMW Motorsports and it also hosts the famous Dakar Rally.
Further, the company also provides technical assistance on the race track and in
test events. Furthermore, it is a worldwide 'strategic lubricants partner' for
automobile giants like Jaguar Cars Ltd., Land Rover, Volvo Car Corporation, and
Aston Martin. In India, Castrol has a major presence due to an extensive network
of dealers. Apart from this, the company has also entered into strategic tie-ups with
companies like Tata Cummins, Godrej, ITC, and Reliance who act as original
equipment

manufacturers

(OEM)

for

Castrol.

Castrol India is responsible for several social campaigns such as its Social
Investment Program, Castrol Drive for Safety, and the Castrol Tsunami Project.
The company also played a significant role after the Mumbai floods in 2005.

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Chapter 8
Analysis of Castrol
Short Term Basis

Tools used Projector Line

Analysis

According to projector lines the trend is downturn which means the stock is in bearish

mode for short period of time.

The stock has tested the support of INR 306 which means it will fall till INR 306 in short

period of time.
The formation of cup and handle did not tested by the stock which means the preasure of

seller is very high

MACD is also in selling mode
RSI is also in selling mode

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Tools Used Fibonacci Retracement

Analysis

According to Fibonacci retracement the stock has breached the support of INR

320 in September and formed a new resistance of INR 320.

Three black crows formation is formed in short term which means stock will
shed its tear more in near future.

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Tool Used Bollinger Band

Analysis
According to Bollinger Band the stock can move in the band of INR 308 to INR

332.
It is been seen that stock has the support of its current price but if it breaches then
buyer will tend to start buying the stock in the market because it will make its 4
months low.

Medium Term Analysis

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Tool Used Projector Lines

Analysis

It can be seen from the stock upper triangle formation has been formed which means that

stock may rise in near future.

MACD is again in sell mode
RSI is not in buy mode

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Tool used Fibonacci Retracement

Analysis

It can be seen that in medium term the stock has breached the level of its support

which is the new low of the stock

If the condition pertains same the stock will go down to its 52 week low
New low will be INR 294

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Tools Used Bollinger Band

Analysis

The Stock will prove its support as the final stop of the fall
While showing the downturn of stock one may enter as buyer

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LONG TERM

Tool Used Fibonacci Retracement

Analysis

Long term FR shows that stock has still not reached the Support level shown in

the chart
If the price of 308 is breached the stock will see it face on INR 287.

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Tool Use Bollinger Band

Analysis

Its entry time for investors who can hold their position for long
One may can enter in the stock with the stop loss of INR 307 and a resistance of
INR 318

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TIME HORIZON

POSITION

PRICE

Short Term

Sell

Expected Price INR

300

Medium Term

Sell

Expected Price INR

294

Long Term

Buy

Expected Price INR

320

Recommendations

Conclusion
One may use the technical charts as a tool and indicator of future
prices
One should not rely only on technical Charts
It has proven the best possible prices in the market and sometimes
it has shown the opposite moves.

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 It is always advisable to hold the position long and use

TECHNOFUNDA analysis

BIBLIOGRAPHY
News papers
o Economic Times
Websites
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o
o
o
o
o
o

etportfolio.economictimes.indiatimes.com/
www.bseindia.com
www.ndtv.com
www.nseindia.com
www.moneycontrol.com
Chart nexus

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