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Fluctuations of Equity Share Price of The Selected Banks in Oman
Fluctuations of Equity Share Price of The Selected Banks in Oman
ABSTRACT: Since Oman is experiencing a fall in the crude oil prices leading to the decline in share prices, there is a fear of an
economic slowdown. Oman being heavily dependent on oil to fund its national budget, it may experience a crisis due to this situation.
Capital Market Authority is the regulator or the governmental body which is responsible for governing the trading of securities in the
Sultanate. Muscat Securities Market is the exchange where all the listed securities are traded. The Central Bank of Oman is in charge
of keeping up the internal and external worth of the national money. It is also the single coordinated controller of Oman's finance
related services industry.
In this report we examine the equity shares price behaviour of six banks of Oman. These banks are listed in the MSM. A clear
comparison between these will help to forecast their future prices. This will benefit the shareholders in understanding and also to
make decisions regarding which bank to invest in to get maximum returns.
Keywords: Stock Market, Behaviour of Equity Share Prices, Conventional and Islamic Banks.
(James A.Bennet & Richard W. Sias, 2001) conducted a study on "can cash streams anticipate stock returs" and is characterized as the
distinction amongst upstick and downstick dollar exchanging volume. The study says that despite the little published research
(Shivaraju S, Mysore, & Rakesh H M, Assistant Professor, Dept of MBA, 2014) Depicted in his exploration "study of equity share
price of selected stocks from sectors" that securities exchanges assume a critical part in developing businesses and trade of a nation
that in the long run influence the economy. The study says the stock markets avail long-term capital to the listed firms by pooling
funds from diverse investors and permit them to expand in business and also offer investors elective speculation roads to put their
surplus funds in. The paper also evaluates the equity share prices of different companies of different sectors and says that investors
cautiously lookout the performance of stock markets by noticing the composite market index, before investing funds.
(R. Chitra, GRG School of Management Studies, Peelamedu, Coimbatore, TN, 2011) Examined in the paper "technical analysis on
selected stocks of energy sector" technical analysis is an investigation of securities exchange identifying with variables influencing the
free market activity of stocks furthermore helps in comprehension the inherent estimation of shares and to know whether the shares
are undervalued or overvalued. It shows the stock market indicators assist the investors to classify major market turning points. The
objective of the project was to study the technical analysis of selected stocks of energy sector and interpret on whether to buy or sell
them by using techniques which would help the investors to identify the current trends and risks involved.
(Singhal, Verma, & Khurana, 2014) did an research paper which contains the investigation of the quantity of stock prices which best
in class and declined on the New York stock Exchange on every trading day amid a four year time frame that value developments in a
securities exchange are of arbitrary nature. The study also shows that the prices of individual stock do not move independently and
there is strong tendency for prices to move in unison, up or down.
(Zoheir Ebrahim, Oliver R. Inderwildi, 2014) Did a study and said that dependency on oil-derived fuels on several sectors, most
notably in mobility, has left the global economy susceptible to numerous macroeconomic side effects. Numerous studies have
addressed the effect of price volatility on specific economic parameters. In the study, the analytical literature review and analysis of
the behavioral reactions of macroeconomic agents to OPV displays that such volatility has several destructive and threatening
macroeconomic impacts that will present a vital barrier to upcoming sustainable economic growth if left unchecked. To confirm
macroeconomic isolation from OPV, a mixture of supply and demand side strategies have been commended that can help to alleviate a
resilience to the economic uncertainty advanced by OPV.
(Tease, 1993) Did a research and reported the stock market has a significant role in sharing of resources, both directly and indirectly as
a source of funds and as a determinant of firm’s value and borrowing capacity. The project targets to inspect the connection between
equity prices and business environment, addressing the question of whether investment is influenced by ineffective pricing in equity
markets.
(A. A. Prakash, Shanmugha, & Valley, 2015) Analyzed the market price of the shares of a company tends to alter according to internal
as well as external factors. This study analyses the share price movement of bank industry as a rise in investment values throughout
India leading to revenue generation for banks. The tools used in this study are Simple moving Average, Relative strength Index,
Money flow Index, Linear Regression Findings.
(M. Prakash et al., 2015) conducted a research and their study shows a better understanding of stock market trend will permit
allocation of sources to the more lucrative investment prospect. The behavior of stock will assist investors to make suitable investment
decisions it measures the strength of the money involved in investing in the stocks. Simple moving average model is applied and
which would help investors in giving the sell or buy signal. In India, typically funds are raised through issue of shares.
(Mrs.J.Nithya, Dr.G.Thamizhchelvan Department of Commerce and International Business, 2014)Studied how the technical analysis
can be of valuable use for the investors in marking their investment decisions. Tools of technical analysis can be used to forecast the
stock prices. He also studied the right stock for investment and how to offer the reason for the investment based on the candlestick
charts and indicators. Also to study the activities of stock prices of particular company stocks through technical analysis. He used
descriptive method to analyse the price trend of fifteen stocks using MACD and RSI charting technique of technical analysis.
(GOVINDARAJAN et al., 2014)Conducted a study on how stock market plays a vital rol in mobilizing the savings and diverting it
into industrial enterprises. According to him, investment in stocks is not well received by all investors. He said that investment may be
made from short term perspective and from long term point of view. He said that though a number of statistical tools are available 200
days daily moving average, relative strength index, rate of change and Bollinger point are considered as reliable tools to help the short
term investors. The research paper focused on the share price movement o new private sector banks and analyse their reliability of the
statistical tool in suggesting the suitable time for entry and exit from such investment.
(Sailendra, 2015)Conducted a study in which he said banking sector is attracting many invetstors of shares to have it as a primary
option in their investment portfolio. These investors ae in search of information about the right share to be purchased and the best
time to invest. He said through this study the investors would know what tools they can use to take decisions on shares trading.
(Jayakumar & K.Sumanthi, n.d.)Conducted a research on Indian Banking sector which is one of the wide sectors in the country and
the various factors which affect the share prices of banking companies. A detailed analysis of the trend in share price movement is
given in the result. He considered the internal ad external factors which affect the prices of the shares of bank. He used the spss model
and shoed through regression and correlation between the share prices.
(A.Jayakumar & K.Sumanthi, 2014)Conducted a study on the technical analysis is a study of stock market relating to factors affecting
the supply and demand of stocks. In his study he said technical analysis recommend that users fine tune these parameters according to
what they see suitable for their strategy. It will help in the understanding of intrinsic value of shares. The paper contains a significant
technical analysis of the Union Bank which helps to understand the price behavior of the shares. The paper describes the use of
technical analysis for investors while buying and selling decisions with the technical analysis done for the Union Bank. It would help
the investors to identify the trend and risk.
Research Methodology
Research methodology is a systematic way to resolve the research problem. Its main aim is to study how the research can be done and
also describes the methods of research and logic
Sample unit: For this research, six banks in Oman are selected. The banks which were selected are:
1. Bank Muscat
2. National Bank of Oman
3. Bank Dhofar
4. Bank Sohar
The first calculations for Average gain and average loss are for simple 14 period.
First Average Gain = Sum of gains over past 14 periods/14
First Average Loss = Sum of loss over past 14 periods/14
The next calculation are based on the previous average and current gain or loss
Average Gain = [(previous average gain) * 13 + current gain]/14
Average Loss = [(previous average loss) * 13 + current loss]/14
Now, if it is seen that the RSI crosses 70, the shares are overbought and is a signal to sell which leads to fall in share prices in the
future. If the RSI falls below 30, it means it’s a buy signal, since the shares are oversold and will lead to upward trend in future stock
prices.
1. Bank Muscat
Bank Muscat
1
Price
0
yearly moving 3 Bank Muscat
13Apr-
14Apr-
15Apr-
16Apr-
13Oct-
14Oct-
15Oct-
13Jul-
14Jul-
15Jul-
13Jan-
14Jan-
15Jan-
16Jan-
average as trend
14Apr-
15Apr-
16Apr-
13Oct-
14Oct-
15Oct-
13Jul-
14Jul-
15Jul-
13Jan-
14Jan-
15Jan-
16Jan-
Figure 2 Simple Moving Average
From the above graph, it is depicted that the SMA trend line of National Bank of Oman indicates a downward penetration with the
share price line. This creates a sell signal for the investor. Since there is a high possibility for fall in the future prices of the stock.
3. Bank Dhofar
Bank Dhofar
0.6
Bank Dhofar Share
0.4
Price
Price
0.2
0
yearly 3 Bank Dhofar
13May-
14May-
15May-
16May-
13Jan-
14Jan-
15Jan-
16Jan-
13Sep-
14Sep-
15Sep-
moving average as
trend
4. Bank Sohar
Bank Sohar
0.3
0.2 Bank Sohar Share
Price
Price
0.1
0 yearly 3 Bank Sohar
13May-
14May-
15May-
16May-
13Sep-
14Sep-
15Sep-
13Jan-
14Jan-
15Jan-
16Jan-
moving average as
trend
5. Bank Nizwa
Bank Nizwa
0.15
0.1
Price
14Apr-
15Apr-
16Apr-
13Oct-
14Oct-
15Oct-
13Jul-
14Jul-
15Jul-
13Jan-
14Jan-
15Jan-
16Jan-
Figure 5 Simple Moving Average
From the above graph, it is depicted that the SMA trend line of Bank Nizwa indicates an downward penetration with the share price
line. This creates a sell signal for the investor. Since there is a high possibility for fall in the future prices of the stock.
Alizz Islamic Bank
14Apr-
15Apr-
16Apr-
13Oct-
14Oct-
15Oct-
13Jul-
14Jul-
15Jul-
13Jan-
14Jan-
15Jan-
16Jan-
BANK MUSCAT
100
80
60
40
RSI
20
0
… MAY
… MAY
… OCT
… OCT
… MAY
…DEC
…DEC
…SEP
… JAN
… JAN
… JAN
… JUL
…AUG
… JUL
…AUG
…FEB
…NOV
…FEB
…NOV
…FEB
…MAR
…JUN
…MAR
…JUN
…APR
…APR
…APR
RSI
RSI
Bank Sohar
Bank Dhofar
RSI
| Volume 1 | Issue 7 |
100
0
20
40
60
80
100
120
0
20
40
60
80
10
20
30
40
50
60
80
90
70
0
2013, 01JAN
13Jan--01
National Bank of Oman
Bank Sohar
2014, 22SEP
Bank Dhofar
2014, 10SEP
2014, 11NOV 2014, 08JUL
www.ijrtem.com
… OCT
2014, 10SEP
| 18 |
In the above graph, the RSI line of National Bank of Oman falls between 70 and 30. This indicates the investor can hold the script for
Fluctuations of Equity Share Price of the Selected Banks in Oman
From the above graph, it is depicted that the RSI trend line of Bank Dhofar is moving downwards. It may cross below 30 thus making
Fluctuations of Equity Share Price of the Selected Banks in Oman
From the above graph, it is depicted that the trend line of Bank Sohar is moving downwards. It touches 50 thus making the stocks
neither oversold nor overbought. This creates a buy signal. There might be a upward penetration in future stock price.
BANK NIZWA
100
50
RSI
0
…DEC
…DEC
…DEC
…NOV
…FEB
… JUN
… JUN
…APR
…FEB
…APR
…FEB
…APR
… MAR
… MAR
… MAR
…MAY
…OCT
…OCT
…MAY
…JAN
…JAN
…JAN
…SEP
…SEP
…SEP
…AUG
…JUL
…JUL
…JUL
Figure 5 Relative Strength Index
In the above graph, the RSI line of Bank Nizwa falls between 70 and 30. This indicates the investor can hold the script for some more
time. The script is neither oversold nor overbought. The investor can sell the scripts later to make comfortable profits.
RSI
100
80
60
40
20
0
RSI
2014, 04SEP
2015, 28SEP
2013, 18JUN
…NOV
2013, 30DEC
…NOV
…NOV
…MAR
2013, 11APR
…MAR
…MAR
2015, 09DEC
…MAR
…MAY
…MAY
…MAY
2015, 28JUL
2013, 21JUL
2014, 10JUL
2013, 05FEB
2014, 10FEB
2016, 24FEB
2016, 28APR
2015, 11JAN
…AUG
2013, 02OCT
2013, 02JAN
Conclusions
The data was collected from seven banks which are listed in the Muscat Securities Market. All the data taken was from secondary
sources like Muscat Securities Market website, report, etc. Using the Simple Moving Average and Relative Strength Index, a study
was done on the behavior of the share prices of the companies.
With the help of the simple moving average and the relative index strength trend lines, the investor can be comfortable to find to
decide on whether to buy or hold or to sell the shares at a particular time period and make good profits.
The shares market has a possibility to become stable in the future. Therefore, the seller can hold the shares till the market gains
stability or the crude oil achieves better price, i.e it follows a fixed bearish or bullish trend. Once the crude oil prices become stable,
the sellers can sell and buyers can buy the shares of the oil and gas companies.
With the help of the trend lines it is found out that the shares of the banking sector have a potential to rise in the future. So, the
investor can take a decision to capitalize or hold the shares for some time.
The RSI trend line of the banks also demonstrates an opportunity for the investor to get income though there is a decrease in stock
value at present.
There is great in volatility seen by the market observers as a sign of shareholder tension which in the counter-initiative world is quite
strong. The investors can invest in the companies which are improving. Also the shareholders are recommended to hold the shares
until the shares follow a fixed bearish or bullish trend.
References
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of Advance Research in Computer Science and Management Studies, 2(1), 356–360.
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Online Source
http://www.investopedia.com
https://www.msm.gov.om/
https://www.cma.gov.om/
http://mctgases.com/CompanyProfile.aspx
http://www.almaha.com.om/products-services/