A PROJECT REPORT

ON

FUNDAMENTAL & TECHNICAL ANALYSIS,

LIVE TRADING, EQUITY RESEARCH &
DERIVATIVES

By:
VARUN KESHRI
18BSPHH01C1498

Aditya Birla Sun Life Insurance Pvt. Ltd

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 A PROJECT REPORT ON

FUNDAMENTAL AND TECHNICAL ANALYSIS, LIVE TRADING,

EQUITY RESEARCH & DERIVATIVES

By:
Varun Keshri
18BSPHH01C1498

Aditya Birla Sun life Insurance Pvt. Ltd

A report submitted in partial fulfillment of the

requirements of MBA Program of IBS
Hyderabad

SUBMITTED TO:
FACULTY GUIDE COMPANY GUIDE
Dr. Padmavathi. V Mr. Nikesh Ruparel

12th May, 2019

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 AUTHORISATION

This is to certify that this is a bonafide report submitted in partial fulfilment of the requirements of
MBA program (Class of 2018-20) of ICFAI Business School, Hyderabad.

This report document titled “A PROJECT REPORT ON FUNDAMENTAL AND TECHNICAL

ANALYSIS, LIVE TRADING AND EQUITY RESEARCH” is a submission of work done by
Varun Keshri as part of the completion of the Summer Internship Program at Aditya Birla Capital;
Birla Sun life Insurance Company under the guidance of Mr. Nikesh Ruparel, EAP (Executive
Associate Partner) of Aditya Birla Capital; Birla Sun life Insurance Company.

This report has been formally submitted to Dr. Padmavathi. V, IBS Hyderabad.

Varun Keshri
(18BSPHH01C1498)
Date: 12-05-2019
Place: New Delhi

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 ACKNOWLEDGEMENT

I would like to take this opportunity for extending my gratitude towards Aditya Birla Capital; Birla
Sun life Insurance Company for providing me the chance to undertake this internship study and
allowing me to explore the expertized area of Financial Analysis which was entirely new to me and
which will surely prove to be very beneficial to me in my future assignments, my studies and my
career ahead.
No job is a single man’s work as there are different factors, situations and people combine together
to form the background for the accomplishment of any task.

I sincerely extend my gratitude to my company guide, Mr. Nikesh Ruparel (Executive Associate
Partner), Aditya Birla Capital; Birla Sun life Insurance Company who played a pivotal role in the
learning and experience during my Internship. His constant monitoring, guidance and expert
knowledge in the operation and finance domain helped me in enhancing my knowledge and outlook
towards the corporate.

I would also like to mention the unconditional help put forth by the entire team member at Aditya
Birla Capital; Birla Sun life Insurance Company, New Delhi.

I am deeply grateful, to my faculty guide Dr. Padmavathi.V for her valuable suggestions, comments,
feedback and support throughout the internship.

My heartfelt thanks towards all those people who have helped me in the preparation of this project,
which has been a wonderful learning experience, without any of the above people, this project would
not have seen the light of the day.

VARUN KESHRI
(18BSPHH01C1498)

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 TABLE OF CONTENTS

1. Abstract……………………………………………………………………………4
2. Introduction……………………………………………………..…………………5
2.1 Overview…………………………………………………………………………6
2.1.1 About the Company………………………...………………………………….6
2.1.2 About Life Insurance…......................................................................................9
2.1.3 Products……………………………………………………………..…………10
3. Initial Public Offering…………………………………………………………….11
3.1 Steps in IPO Process ............................................................ …………………....12
4. Mutual Funds
4.1 Types of Mutual Funds…………………………………………………………..15
4.2 Steps to choose Mutual Fund…………………………………………………….16
4.3 Systematic Investment Plan (SIP)
4.3.1Types of SIP…………………………………………………………………….20
4.3.2 How does SIP works…………………………………………………………...20
5. Live Trading……………………………………………………………………….21
5.1 Index…….………………………………………………………………………..21
5.2 Steps to calculate index………………………………………………………..…22
5.3 Ways of making Profit……………………………………………………………23
6. Fundamental Analysis
6.1 Steps for analysis … .................................................................. …………………24
7. Technical Analysis
7.1 Different charts and analysis in long term………………………………………..26
7.2 Candlesticks………………………………………………………………………30
8. Derivatives
8.1 Products in Derivatives Market…………………………………………………..38
8.2 Option trading strategies………………………………………………………….40
8.3 Settlement mechanisms…………………………………………………………...43
8.4 Legal & Regulatory Environment………………………………………………...45
9. Project
9.1 Introduction ................................................................................... ………………46
9.2 Fundamental Analysis of Cement Sector…………………………………………49
9.3 Technical Analysis of Cement Sector…………………………………………….53
10. Bibliography…………...………………………………………………………….56

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 EXECUTIVE SUMMARY

The project Portfolio management and equity research explains various aspects related to portfolio
management such as selection of equity shares, making investments in different mutual funds, life
insurance, etc.
The project aims at making a portfolio which can deliver good results to the investors and for doing
this we were thought how to analyse different stocks and predict their future growth movement. To
predict the future of any stocks, the first step is to do its fundamental and technical analysis. Starting
with the training sessions we were thought about different investment options available for an investor
and how to help investor to choose the best alternative so that he can gain maximum from his
investments
We were given training how to analyse different sectors of the economy and what are the things a
portfolio manager should look at while selecting stocks for his portfolio. We were given hand on
training on online trading platform where we learnt how to trade stocks online and how to do analyse
the future performance of stocks using different technical analysis tools such as candle sticks pattern.
Then we learned financial ratios and how these ratios are important in determining the future of the
stock.
Then to get some personal management and convincing skills we were given a task to sell a life
insurance policy where different plans were explained to us and we need to sell those plans in open
market where company checked our time management and personal management skills where I gave
a business of 50,000 in 2 days.
We have been allocated a sector on which our project will be based on and currently I am working on
Cement sector. I have also created an index of the Cement Sector where my aim is to get more returns
than the index so, that we can say that our mutual fund is better than the index and our stock selection
procedure is right.

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 ABSTRACT

A mutual fund is an investment vehicle, which is made by pooling of money collected from
different investors for the purpose of investing in securities such as stocks, bonds, money market
instruments and other assets. Mutual funds are operated by professional fund managers, who
allocate the funds and attempt to produce capital gains and/or income for the investors who have
provided with the fund. A mutual fund portfolio is structured in a way to match the investment
objectives stated in its prospectus.

The aim of the training is to learn the various analysis so that the fund can be allocated in the
portfolio that we have made for a particular sector or the combination of different sectors large cap
stocks so that the probability of getting the profit and increasing the NAV should increase. The
technical and fundamental analysis has been used to make a better portfolio. Fundamental analysis
has been done to make the portfolio of the stocks of a sector and calculating the NAV and Technical
analysis is used for the trading. The motive is to learn the skills as a financial analyst to improve
the probability of getting the profit from the portfolio.

Learning about the company i.e. Aditya Birla Sun life Insurance has been done and also the
research on its products is completed. Learned about the mutual funds and its types that the
company offer. Also, the main business of the company i.e. insurance is being learned during the
training.

Project has been started, in which the allocation of the fund has to be done by making a portfolio
using fundamental analysis and calculating NAV on the daily basis. Till now the analysis has been
going on and the result will be shown at the end of the training.

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 ADITYA BIRLA SUNLIFE INSURANCE PVT. LTD

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 Overview:

About ABSIL

Formerly known as Birla Sun Life Insurance Company Ltd, Aditya Birla Sun Life Insurance
Company Limited (ABSLI) is a subsidiary of Aditya Birla Capital Ltd (ABCL). It is one of the
leading private sector life insurance companies with nation-wide presence. It offers large range of
products which includes children future plans, wealth protection plans, retirement and pension
solutions, traditional term plans and Unit Linked Insurance Plans (ULIPs). ABSLI has an active
customer base of over 16 lakhs policy holders and has over 10,000 employees.

History

Aditya Birla Sun Life Insurance Company Limited was founded on August 4th, 2000 and started its
operations on January 17th, 2001. The company is based in Mumbai, India. It is a joint venture
between Indian Aditya Birla Group and Canadian Sun Life Financial Inc., an International Financial
Services Organizations from Canada. Sun Life Financial increased their stake in Birla Sun Life
Insurance to 49% in April, 2016.
The Aditya Birla Group is an Indian multinational conglomerate, named after Aditya Vikram Birla
and headquartered in the Aditya Birla Center in worli, Mumbai, India. It works in 35 nations with in
excess of 120,000 employees around the world. The group was established by Seth Shiv Narayan
Birla in 1857. The group interests in diversified segment like viscose staple fiber, metals, cement
(largest in India), thick fiber yarn, branded clothing, carbon black, synthetic compounds, fertilizers,
insulators, financial services, telecom (third largest in India), BPO and IT administrations. The
organization offers asset management, life insurance, housing finance, lending, equity & commodity
broking, wealth management and distribution, online money management portal—Aditya Birla
Money My Universe, general insurance advisory and private equity and health insurance businesses,
for retail and corporate consumers. The group had a revenue of roughly US$44.3 billion in year 2018.

Sun Life Financial

Sun Life Financial, Inc. is a Canada-based financial services company known primarily essentially
as a life insurance organization. It is one of the biggest Life Insurance organizations in the world, and
furthermore one of the oldest, with the history traversing back to 1865. Sun Life Financial has a
revenue of CA$26.997 billion as of 2018. Sun Life has about CA$951.1 billion of Asset under
Management as of 2018.

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 Growth

ABSLI is the first Indian Insurance Company to introduce "Free Look Period", by which consumer
can return the policy to an insurance agency within this period after receiving the policy. "Free Look
Period" was later made compulsory by Insurance Regulatory and Development Authority of India for
all other life insurance organizations in 2013. Moreover, ABSLI spearheaded the launch of Unit
Linked Plan. ABSLI has a strategy of revealing their portfolio on a monthly basis. On 5 February
2015, ABSLI signed an IT outsourcing deal with International Business Machines Corporation (IBM)
with the end goal of utilizing mobility and cloud solutions created by IBM Research and the IBM
India Software Lab.

Total AUM of ABSLI remained at Rs. 389,548 million, as of 31st Dec 2018. In Q3 FY 2018-19,
ABSLI recorded a gross premium income of Rs. 18,599 million and a y-o-y development of 68% in
Individual First Year Premium and currently positioned 7th in Individual Business (Individual FYP
adjusted for 10% single premium).

Awards and recognitions:-

 Media Abby Awards at Goa Fest Advertising Agencies Association of India & Advertising Club
Bombay (2011)

 'Gold Trophy' for Financial Reporting by the Institute of Chartered Accountants of India (ICAI) in
2012.
 Grand Midas at the Midas Awards 2013 in Public Service Category for work titles as 'Death Track'.
 Gold Midas Awards 2013 in Direct Mail/Collateral competition for work titled as 'Karva Chauth'
 Awarded as Best Fund House Overall by Annual Morningstar India in 2018.

Key peoples of organization

Board of Directors:-

• Mr. Kumar Mangalam Birla (Chairman & Non- Executive Director)

• Mr. Sushil Agarwal (Non- Executive Director)
• Mr. Santrupt Misra (Non- Executive Director)
• Mr. Arun Adhikari (Independent Director)
• Mr. P.H. Ravikumar (Independent Director)

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• Mrs. Vijayalakshmi R Iyer (Independent Director)
• Mr. S.C. Bhargava – (Independent Director)

Investment Committee:-

• Mr. B. N. Puranmalka

• Mr. Eugene Lundrigan

• Mr. Ajay Srinivasan

• Mr. Vikram Mehmi

• Mr. Mayank Bathwal

• Mr. Fabien Jeudy

• Mr. Vikram Kotak

• Ms. Keerti Gupta

Competitors:-

• Max network life insurance

• MetLife insurance

• Aviva life insurance

• Bharathi Axa life insurance

• Bajaj Allianz life insurance

• Tata AIG life insurance1

• ICICI Prudential Life Insurance

• Reliance life insurance

• Kotak Mahindra life insurance

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Vision:
To be a world class provider of financial security to individuals and corporates and to be amongst the
top three private sector life insurance companies in India.

Mission:

To be the first preference of our customers by providing innovative, need based life insurance and
retirement solutions to individuals as well as corporates.

About Life Insurance

Life Insurance is an agreement among you and a life insurance company. You agree to pay for the
policy all the time, and the insurer consents to pay a total of cash to your beneficiaries if you die. Life
Insurance organizations make money by investing the premiums, planning to make more than they'll
have to pay in claims. They likewise benefit from clients who stop paying for their life insurance,
causing the policies to lapse and leaving the insurer with the cash that has already been paid.

You'll assign beneficiaries who will get the life insurance pay-out, called a death benefit. This can go
toward funeral costs, mortgage payments or anything else. It's essential to tell your beneficiaries that
your life insurance exists. They needn't bother with the policy in hand to make the claim later, yet
they do need to know which company holds the policy.

Need of Life Insurance Policy:-

The most common reason to buy a life insurance policy is to protect the financial interests of the
owner of the policy in case of the insured's demise. So, one must buy life insurance and be a step
ahead so that the financial goals set for his/her family can be accomplished even when he/she isn’t
around. Other reasons are:

 Financial Cushion- It provides financial support to insured’s family which is much-needed, by

compensating for the loss of income.
 Debt-Proof Future- In case of sudden demise of the sole earner of the family, it provides financial
support. With the help of life insurance, any outstanding debt, such as a motor loan, personal loan,
a home loan, etc. can be paid.
 Accomplishment of Retirement Goals- While life plan is a perfect option to accomplish long-
term goals, it helps accomplish retirement goals as well. Life insurance plans offer both diverse
investment opportunities as well as performance-based dividends.

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 Tax Benefits- A policyholder also gets tax-benefits regardless the type of life insurance he/she
purchases. As per section 80 C of the Income Tax Act, person is eligible for tax benefits up to
Rs.1.5 lac.
 Savings Tool- In case a person chooses a traditional/unit-linked plan, he/she pays an enhanced
insurance premium. This extra amount of money is invested in the insured’s preferred fund, either
equity or debt fund and consequently acts as a savings tool.
 Children’s Future Expenses- A life plan takes care of all the future expenses of a policyholder’s
children, like education and wedding expenses.
 Business Security- There are some insurance plans available in the market that offer support to
the insured’s business. It also enables a business partner to buy the share of his/her deceased
business partner.

Contribution of life insurance in development of economy

 Flow of Insurance Industry in India

 Structure of insurance industry: Snap Shot Industry

 Aggregation of long term savings

 Provide financial services in rural areas

 Provides Long term funds for infrastructure development of capital Markets/ Economic Growth

 Employment generation

 Growth Potential

Products
Insurance planning helps you to smooth out the uncertainties and adversities that life might send your
way, so that you can secure the future of your loved ones in the best possible way. ABSLI offers a
complete range of insurance products. Some of the well-known products are:

 Long Term Solutions

 Savings with Protection
 Child Plans
 Wealth Plan
 5.Retirement and Pension Solution Plans
 ULIP Solution Plans
 Rural Plan
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 Initial Public Offering

An IPO is stands for an Initial Public Offering. It is when a company offers its shares to the public
for the first time. It is also called "going public." An IPO is the first time when promoters of the
company give up part of their ownership to stockholders. IPOs are issued by smaller companies or
start-ups seeking capital to expand their business, as well as by large private companies looking to
expand & become publicly traded. In case of IPOs, when a company lists its securities on a public
exchange, the money paid by investors for the newly-issued shares goes directly to the company
(unlike, trading of shares later on the exchange where the money passes between investors). An IPO,
therefore, permits a company to tap a wide pool of investors to provide it with capital for future
development, repayment of debt or working capital. This ability to quickly raise large amount of
capital from the market is a key reason many companies seek to go public.

Benefits for being a public company are as follows:-

1. Diversifying the equity base.

2. Enabling cheaper access to capital.
3. Exposure, prestige and public image of the company.
4. Attracting and holding better management and employee’s retention through liquid equity
participation.
5. Encouraging acquisitions.
6. Making various financing opportunities: equity, convertible debt, cheaper bank loans, etc.

Procedure to apply for an IPO –

You can apply for an IPO through online as well as offline mode:
 Online Mode
To apply in IPO's online, an investor has to open a Demat account / trading account with financial
institution that provide this type of facility. Once a Demat & trading account is opened, one should
follow these steps to apply online:
1. First login in your trading a/c and select the IPO you wish to invest in.
2. Transfer funds from your bank account to your trading account.
3. Select the number of shares you want to apply for and the price you want to bid for (or use cut off
option) and then press submit button.

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 Offline Mode
You can also apply through your bank account. You just need to fill all the information such as your
Name, PAN number, Demat account number, bid quantity, bid price and other relevant details and
submit the ASBA application form to the banking branch which has been designated to provide
ASBA services. Once you submit the application, the bank will upload the details of the application
in the bidding platform.

ASBA (Application Supported by Blocked Amount)-

ASBA means “Application Supported by Blocked Amount”. ASBA is an application that has the
authority to block the money mentioned in the application in the bank account, for subscribing to an
issue. If an investor is applying through ASBA, his application money shall be debited from the bank
account only if shares are allotted to him/her, after the basis of allotment is finalized. It is a
supplementary process of applying in Initial Public Offers (IPO), right issues and Follow on Public
Offers (FPO) made through book-building process and exists together with the present procedure of
using cheque as a Mode of payment and submitting applications.

Steps in IPO Process-

The whole process is regulated by the 'Securities and Exchange Board of India’ (SEBI), to prevent
the fraudulent activities and safeguard the interest of the investor.

Selection of an Investment Banker-

The first thing that company management must do to go public is to find an investment banker that
will act as underwriters on behalf of the company. Underwriter buys the shares of the company and
resell them to the general public. Some companies also sell their shares directly through the stock
market, but most prefer going through the underwriters.

1. Preparation of Registration Statement - To begin an IPO process, the first step is to submit a
registration statement to the SEBI by the company, which includes a detailed report of its fiscal
health and business plans. SEBI critically examine this report and also does its own background
check of the company. It must also see that registration statement must fulfil all the mandatory
requirements and satisfy all rules and regulations.

2. Preparation of Prospectus- While awaiting the approval, the company, with assistance from the
underwriters, must create a preliminary 'Red Herring' prospectus. It includes detailed
information about the financial records, future plans or projects and the specification of expected
share price range. This prospectus is meant for forthcoming investors who would be interested in
buying the stock. It likewise has a lawful cautioning about the IPO pending SEBI approval.

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 Red Herring Prospectus- A red herring prospectus may refer to the first prospectus filed with
the SEC as well as a variety of subsequent drafts created prior to obtaining approval for public
release. A red herring is a preliminary prospectus filed by a company with the Securities and
Exchange Commission (SEC), usually in connection with the company's (IPO) and most
important it does not include key details of the security issue, such as its price and No. of shares.

3. SEBI Approval- Once SEBI is satisfied with the registration statement, it declares the statement
to be effective, giving a go ahead for the IPO to issue. Sometimes it asks for changes to be made
before giving its approval. The prospectus cannot be given to the public without the changes
suggested by SEBI.

4. Deciding the Price Band & No. of shares- After the SEBI approval, the company, with
assistance from the underwriters decide the number of shares and final price band of the shares.

There are two ways to decide the Price: Fixed Price and Book Building

Fixed Price – In Fixed price issue, company decides the price of the shares issued and also the
number of shares being sold. Ex: XYZ Ltd issues 20 lakh shares of face value 100/- each at a
premium of 10/- each to the public thereby generating 22 crores.
Book Building – A Book building is a process which helps the company to decide the price of
the issue. The company decides a price band for the issuance of the shares.
Ex: XYZ Ltd issue of 10 lakh shares of face value 10/- each at a price band of 60 to 70 is available
to the public thereby generating up to 7 crores.

5. Available to public for purchase- On the dates mentioned in the prospectus, the shares are
available to public. Investors can fill out the IPO form and specify the price at which they wish
to make the purchase and submit the application.

6. Issue Price Determination& share allotment- Once the subscription period is over, members
of the underwriting banks, share issuing company etc. will meet and determine the price at which
shares are to be allotted to the prospective investors. The price would be directly determined by
the demand and the bid price quoted by investors. Once the price is finalized, shares are allotted
to investors based on the bid amounts and the shares available.
Note: In case of oversubscribed issues, shares are not allotted to all applicants.

7. Listing & unblocking Funds- The last step is the listing in the Stock Exchanges. Investors who
have applied through ASBA & to whom shares were allotted would get the shares credited to
their DEMAT accounts & their funds getting debited from their bank account or else for those
investors to whom the shares were not allotted, funds would get unblocked in their bank account.

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 MUTUAL FUND

A mutual fund is a venture vehicle comprised of a pool of money gathered from numerous investors
to invest in securities, such as stocks, bonds or shares. Both gains and rewards earned over the time
of investment and losses are shared equally in proportion of contribution to the corpus by all the
investors. Mutual funds are registered with SEBI.

Mutual fund units, or shares, can regularly be acquired or redeemed as needed at the fund's current
net asset value (NAV) per share, which is sometimes expressed as NAVPS. A fund's NAV is derived
by dividing total value of the securities in the portfolio by the total amount of outstanding shares.

Net Asset Value (NAV) - Net asset value tells the net value of an entity which is calculated by net
assets – net liabilities. It is most commonly used in the mutual funds and represents per share/unit
price of the funds registered with the US securities & exchange commission.
Formula for Mutual fund’s NAV calculation is-
Net assets- Net liabilities / Total number of shares.

How does Mutual Fund Companies Work?

Mutual fund are virtual organizations that purchase pools of stocks as well as securities as suggested by
a speculation advisor and fund manager. The fund manager is procured by a governing body and is
lawfully committed to work to the best interest of mutual fund shareholders. Most fund managers are
additionally owner of the fund however some are definitely not.

There are very few other employees in a mutual fund company. The speculation advisor or fund
manager may employ a few analysts to help pick investments or perform market surveying. A fund
accountant is kept on staff to calculate the fund's net asset value (NAV), or the daily value of the mutual
fund that determines if share prices go up or down.

Mutual funds need a consistence officer or two, and probably an attorney, to stay aware of government
guidelines.
Most mutual funds are part of a much larger investment company apparatus; the biggest have hundreds
of separate mutual funds. A portion of these fund companies are names well-known to the overall
population, for example, Fidelity Investments, the Vanguard Group, T. Rowe Price and Oppenheimer
Funds.

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 Types of Mutual Funds-

1. Equity Fund – Equity Funds are those funds which are invested in equity stocks of different
companies. These funds mainly aim to generate high returns by investing in the shares of companies
of different market capitalization. They provide higher returns than debt funds or fixed deposits.
These equity funds are further categorized as follows-
a. Large Cap Fund – Large Cap equity funds is a type of mutual fund that invests a larger proportion of
their corpus in companies with market capitalization of more than 20000 crore. Large-
cap companies are well-established players in the market with a good track record and have strong
corporate-governance practices. Ex – Aditya Birla SL Focused Equity fund.

b. Mid Cap Fund – Mid Cap Mutual Fund scheme invest in stock of mid-size companies or stocks with
market capitalization of 10000 crore to 20000 crore. Ex- L&T mid Cap Fund.
c. Small Cap Fund – Small Cap Mutual Fund scheme invest in stocks of small companies that have
good potential to grow. They have the market capitalization of less than 10000 crore. Ex- SBI Small
Cap Fund.
d. Multi Cap fund - Multi Cap funds are diversified equity funds which invest in varying proportions in
stocks of companies across market capitalizations to maximize their gains. It involves investment in
stocks of all large Cap, Mid Cap, and Small Cap companies. And they are less risky funds.

e. Sectorial Fund - A sectorial fund is a type of mutual fund that aims to completely invest in a few
specific sectors of the economy. This can be energy, information technology (IT), banking, FMCG,
and so on. The main aim of these funds is to benefit from sectors that are performing well based on
the investment objective of the scheme.
Aditya Birla Sun Life Banking and Financial Services Fund is an open-ended Banking & Financial
Services Sector Fund is an example of a sectorial fund.
f. Contrarian Fund- Contra funds are equity mutual funds that take a contrarian view on the market.
The portfolios of contra funds have defensive and underperforming stocks that have given negative
returns during bear markets. Ex- SBI India Contra Fund.
g. Index Fund- Index Fund are those funds whose movements depends upon the movements of index.
Charges of index fund are less.
h. Foreign Funds- Foreign fund invests in firms in countries other than the ones they reside. It is also
called overseas or International mutual funds. Investing in them means high risk exposure, but at the
same time there are chances of higher returns as well.
i. Fund of Funds- Fund of Fund is a mutual fund scheme that invests in other mutual fund schemes. In
this, the fund manager holds portfolio of other mutual funds instead of directly investing in equities
or bonds. The fund may choose to invest in scheme of the same or different fund house.

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2. Debt Fund- Debt funds are mutual funds which invest your money in a fixed interest earning
instruments like treasury bills and certificate of deposits. The main aim to invest in a debt fund is to
make more wealth by means of interest income. Types of Debt funds-
a. Short term Debt Fund- Short term debt fund is a mutual fund scheme with a shorter holding or
maturity period of less than 3 years. Investment is done in debt instruments like Certificate of
deposits, Treasury Bills etc.
b. Medium term Debt Fund- Medium term debt fund is a mutual fund scheme with a holding or maturity
period of 3 years to 5 years.
c. Long term Debt Fund - Long term debt fund is a mutual fund scheme with a holding or maturity
period of more than 5 years.

3. Balanced Fund- A balanced or hybrid provides a one-stop investment mix by investing in a mix
of debt and equity instruments. It aims to balance the risk-reward ratio and ensures a return.
In India, the Best Balanced Mutual Funds typically invest 50% to 70% of their portfolio in stocks and
the remainder of their resources in bonds and other debt instruments. So, they are usually equity-
oriented hybrid funds. As a low-risk investment, they serve as a suitable option for first-time
investors. They are for investors who do not want to take on risky options, but still want capital
appreciation.

STEP TO CHOOSE THE MUTUAL FUNDS-

Mutual fund companies provide various ways to investors to select the type of fund they want to invest
in by considering their risk appetite and hence providing them with different investment opportunities,
which help investors to diversify their portfolio and reduce the risk.
Following are the steps to choose any mutual fund-

I. Risk Profiling Questionnaire- The risk profiling questionnaire is used to measure the risk
tolerance as well as time horizon in investing. It is designed to show which type of investment
approach may suit you best. Each answer would be given a point. Based on your point, an investor
could be-
1. Very Cautious- 100% Debt
2. Cautious – 30% Equity and 70% Debt
3. Moderate or Balanced- 50% Debt and 50% Equity
4. Aggressive- 70% Equity and 30% Debt
5. Very Aggressive- 100% Equity
This questionnaire will help an investor to determine his investment attitude.

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 RISK PROFILING QUESTIONNAIRE

Name- ……………………………………………..

Gender- Male Female

Income Age
• Below 5 Lac per annum • 22-35 • 55 & above
• Above 10 Lac – Below 20 lac per annum • 36-45
• Above 20 Lac • 46-55

1. How much part of your total income would you invest in your overall investment?
• Less than 10%
• Between 10% and 25%
• Between 25% and 35%
• Between 35% and 50%

2. What is your primary objective of investment?

• Tax benefit
• Appreciation of capital
• Retirement benefit
• Education plans
• Other- specify

3. In case of emergency, would you withdraw funds from your investment made?
• I would withdraw funds as I have no other alternative.
• I would partially withdraw funds.
• I have savings, in case of emergency.

4. If you have investment portfolio of Rs.100000. If due to market conditions, your portfolio fell to
Rs.95000 would you:
• Sell all the investment and do not intend to take risk.
• Sell a portion of your portfolio
• Hold the investment and sell nothing
• Invest more funds to decrease investment price

5. If you have investment portfolio of Rs.100000, If due to market conditions, portfolio fell to Rs. 70000,
would you:
• Sell all the investment and do not take risk.
• Sell a portion of your portfolio.
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• Hold the investment and sell nothing.
• Invest more funds, to decrease investment price.

6. Assuming that higher risk gives higher returns, what are the chances of you investing in particular
company?
• 100%
• 80%
• 60%
• 40%
• 20%

7. If the expected returns did not match the actual returns, how would you feel?
• Not at all concerned
• Less concerned
• Somewhat concerned
• Concerned
• Highly concerned

8. If you win a lottery worth 10 Lacs, what it the most probable thing you will do out of it?
• Invest the whole amount i.e. 100% investment
• 70% investment and save 30% of it.
• Invest and save the equal amount
• 30% investment and save 70% of it
• Save the whole amount.

9. How long are you willing to invest your money?

• Less than 1 year
• 1-3 years
• 3-5 years
• 5-10 years
• More than 10 years

10. How long are you willing to wait for your investment to meet your expected rate of return?
• Less than 1 year
• 1-3 years
• 3-5 years
• 5-10 years • More than 10 years

(NOTE: This is a sample Risk Profiling Questionnaire prepared by the whole group during
Internship under the guidance of our mentor. By using this questionnaire, an investor can check
which Investment approach may suit him best.)

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 II. Based on the Risk profile, you will get different funds. Fund should be chosen based on their
returns. (Check 5-year return of the given funds.)
III. Charges or Expense Ratio should be checked while selecting the fund to invest in. Lower the
charges, better the fund is.

The following is a list of some of the funds from which an investor can choose to invest by taking
into consideration the above-mentioned steps.

FUNDS RETURNS CHARGES AUM NAV

(5 Years) (EXPENSE (in Crores)
RATIO)
I. LARGE CAP MUTUAL FUND

i. Reliance Large Cap Fund (Dr) 17.9 1.20% 1371.15 34.71

ii. ICICI Pru Nifty Next 50 Index (Dr) 17.1 0.85% 106.23 24.2

II. MID CAP MUTUAL FUND

i. Axis Midcap Fund (Dr) 20.3 2.39% 1464.34 35.21

ii. Invesco India Midcap (Dr) 20.3 1% 211.43 47.45

III. SMALL CAP MUTUAL FUND

i. Kotak Small Cap Fund (Dr) 16.7 0.97% 82.7 74

ii. Franklin Small Cap Fund (Dr) 17.8 2.02% 5259 52.2

IV. MULTI CAP FUND

i. Invesco India (Dr) 19.9 0.69% 47.6 38.3

ii. Kotak Standard (Dr) 19.8 0.65% 5011.31 135.34

V. CONTRARIAN FUND
i. SBI Mutual Fund (Dr) 12.61 1.64% 1470 105.42

ii. TATA Mutual Fund (Dr) 19.93 0.93 5029 129.17

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 Systematic Investment Plan

Systematic Investment Plan (SIP) is a strategy to invest a certain amount of money at regular intervals
weekly, monthly or quarterly. SIP are smartest way of investing in mutual fund. A fixed amount of
money is auto- debited from your bank account and you are assigned a no. of units as per the present
NAV. Basically it is a planned approach towards investment. When money is invested on the basis
of average NAV so that it can cover both falling& rising price, so this plan is called SIP.

Types of SIP-

1. Top-Up SIP- This type of SIP allows you to increase your investment amount periodically. You can
increase your investment amount when your income increases.
2. Flexible SIP- This SIP allows you to increase as well as decrease your investment amount as per
cash flow you have. This way you can skip one or more payments when you face cash – crunch and
accordingly large investment can be made when you receive bonuses.
3. Perpetual SIP- SIP investments are generally for a fixed period of 1 yr. 3 yr. & 5 yrs. An SIP is
referred to as perpetual SIP if you do not mention the end date. This SIP allows you to redeem your
funds whenever required.
4. Trigger SIP- This SIP is ideal for investors with limited knowledge of financial market. You are
allowed to set NAV, index level etc.

How does SIP work

Investment in SIP is very simple. Steps are as follows-
 You apply for one or more SIP plans.
 Amount is automatically debited from your bank account.
 Based on NAV, you are allocated certain no. of units
 Every time you invest, you choose to invest in best SIP plans.
 Now additional units are added to your account based on current market rate.
 So, when prices are high, investor buy more units and vice-versa.

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 LIVE TRADING

Live trading is an act of participating in the financial markets, which seeks to outperform traditional
buy-and-hold investing. Instead of waiting to profit from long-term investments in the markets,
traders seek short-term price movement in order to earn profit during both rising and falling markets.
These platforms are normally provided by internet based brokers like Share khan and are accessible
to every single individual who wants to make money from the market.

Index -
Stock market indexes measure the value of a segment of a country’s stock market by the method of
weighted average of selected stocks. These indexes help investors and analysts describe the market
and compare different investments. Stocks in numerical terms. As the stocks within an index change
value, the index value also changes accordingly.
The stocks could be selected on the basis of the type of industry, market capitalisation or the size of
the company. The value of the stock market index is calculated using values of the underlying stocks.
Any change taking place in the prices of underlying stock impact the overall value of the index. If
the prices of most of the underlying stocks rise, then the index will rise and vice-versa.
In this way, a stock index reflects overall market sentiment and direction of price movements of
products in the financial, commodities or any other markets.

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Steps to calculate Stock Market Index (Cement Sector)

1. Note down the Daily closing price of the stocks (as per your sector).
2. Calculate the Market Capitalization by multiplying the closing price with No. of shares.
3. Next step in the process is to calculate the Weightage of all the stocks by dividing the individual
market cap with total market capitalization.
4. Percentage Change in price is calculated by - (Current Price- Base Price)/ Base Price*100
5. Change in weightage is calculated by multiplying Weightage with percent change in price.
6. Last step is to calculate the Final Value - (Change in weightage*1000/100) assuming base to be
1000.

Some of the notable indices in India are as follows:

1. Benchmark indices like NSE Nifty and BSE Sensex.

2. Broad-based indices like Nifty 50 and BSE 100.
3. Indices based on market capitalization like the BSE Small and Midcap.
4. Sectorial indices like Nifty FMCG Index and CNX IT.

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 Some of the notable World indices-

The trading in the internship is mostly in Nifty 50. And for sectorial fund analysis, sector wise indexes
have been taken. The trading is being done on TRADE TIGER by SHAREKHAN.

WAYS OF MAKING PROFIT IN STOCK MARKET:-

1. First way is a basic BUY-SELL situation in which we buy the stock at a lower pricing predicting that
its price will increase in future and sell it at a higher price to make profit.

2. In second case we do SHORT SELLING. Short selling is the sale of a security that is not owned by
the seller or that the seller has borrowed from the broker. Short selling is motivated by the belief that
a security's price will decrease in future, enabling it to be bought back at a lower price to make a
profit. In simple words we sell the share at a higher price predicting that it will decline in the future
and buy it at a lower price to make profit.

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 Fundamental Analysis

Fundamental analysis is the examination of the underlying forces that influence the prosperity
of the economy, business groups, and organizations. Similarly as with most analysis, the
objective is to derive a forecast and benefit from future price movements. At the organization
level, Fundamental analysis may include examination of financial information, the board,
business idea and competition.

At the business level, there may be an examination of supply and demand forces for the
products advertised. For the national economy, Fundamental analysis may concentrate on
monetary information to survey the present and future development of the economy. To
forecast future stock prices, Fundamental analysis consolidates financial, industry, and
company's analysis to infer a stock's present fair value and figure out future value. If fair value
isn't equivalent to the present stock value, Fundamental analysts believe that the stock is either
overvalued or undervalued and the market price will ultimately gravitate towards fair value.

Fundamentalists don't need the counsel of the random walkers and trust that markets are weak-
form efficient. By trusting that prices don't accurately reflect all accessible data, fundamental
analysts look to capitalize on perceived price discrepancies.

STEPS FOR DOING SECTORAL FUNDAMENTAL ANALYSIS:-

1. Select a sector for doing the analysis (for Ex- Cement, Automobile, telecom etc.)
2. As the investment in mutual funds is long term, therefore take large cap (<20000cr. Market
value) stocks from that sector and some mid cap (5000cr. – 20000 cr. Market value) stocks
also if there’s less stocks.
3. Check the last closing share price of every stock in the list and note it down.
4. Get the P/E value of every stock. It can be calculated or can be seen in the company details.
5. [P/E = Price / EPS (earnings per share)]
6. Calculate Industrial P/E by taking the average of the P/E’s of the stocks in the list.
7. Calculate EPS by multiplying P/E by Price of the stock.
8. Industrial P/E we can see if the stock is overvalued or undervalued.
9. If the value is above Industrial P/E then it’s overvalued and If below then Undervalued.
10. Overvalued stock shows that its value will decrease in future and undervalued shows that
its price will increase. So it’s obvious to buy the U.V. stock and sell O.V. stock.
11. We can calculate the future price i.e. LTPT (long term price target) by multiplying the
industrial P/E by EPS of that particular stock.

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 Finding the value pick stocks:

1. Next step is to take all the undervalued stocks and analyzing their revenue and profit. The
motive is to see weather both of them are increasing or decreasing.
2. Also we’ll see the topline factors on the company according to the sector in which it’s lying.
3. If both revenue and profit is increasing then we will definitely take that stock. If both have
decreased then it will be rejected.
4. If one is increasing and other is decreasing then it will be considered by seeing topline factors.
5. We will reject some stocks after this analysis and the left one will be value pick stocks.

Finding the growth pick stocks:

a. We will take all the Overvalued stocks and calculate their PEG value.
[PEG = P/E / EPS growth]
b. The EPS growth is percentage growth in EPS of the company compared to last financial year.
c. The value that we will put in the EPS growth should be the percentage value. For e.g. If the
EPS has increased by 20% then we will right the value 20, not 0.2.
d. If the EPS has decreased then the stock is removed. And we will take the stocks whose PEG
value is 1 or below that. 1.1 can be considered but not above that,
e. We will be having the list of growth pick stocks after this analysis.

RANKING:

Now when we have value pick and growth pick stocks list, we’ll see how much investment
should be done in which stock and for that we have to rank them. The highest ranked will get
the maximum allocation of the fund and the lowest ranked will have minimum.
The ranking is done by comparing the important financial ratios of the sector in which the
companies are lying. And we also see the factors of the companies. Ranking is given to all the
value pick stocks separately and the growth pick stocks separately. The highest ranked stock
will get the highest investment in value pick stocks and growth pick stocks. As a mutual fund
manager we will allocate the fund according to the ranking of the stocks.
After the allocation of the funds the daily NAV (net asset value) is calculated of the portfolio
according to the change in the price of the stocks.
NAV= AUM / NUMBER OF SHARES

AUM = Asset under management.

As of now this much analysis has been taught, the further analysis will be explained in the final
training report.

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 TECHNICAL ANALYSIS

Technical Analysis is the anticipating of future price movements dependent on an examination

of past price fluctuations. Like weather forecasting, technical analysis does not result in total
expectations about the future. Rather, technical analysis can enable investors to envision what
is "likely" to happen to price over time. Technical Analysis utilizes a wide range of charts that
show price over time.

Technical Analysis is appropriate to stocks, lists, commodities, futures or any tradable

instrument where the price is affected by the market forces i.e. demand and supply of product.
Price here means any mix of the open, high, low, or close for a given security over a particular
time period. The time allotment can be founded on intraday (1-minute, 5-minutes, 10-minutes,
15-minutes, 30-minutes or hourly), every day, week by week or month to month value
information and last a couple of hours or numerous years. Also, some technical analysts
incorporate volume or open interest figures with their analysis of price movement.

Different charts and their analysis in long term

Technical Analysis helps in identifying long term trend by analyzing the change in price over
a period of time. There are different shapes and curves that are formed while doing this analysis
and these curves help us to predict bid and ask point.
Money can be easily made using this indicators as per the market situations. There are 3 types
of trends known as uptrend, downtrend and sideways. And we need to figure out the trend
reversal point in order to choose our buying and selling position.
Different types of chart patterns & graphs are used for analysing the trends. Most frequently
used chart patterns are mentioned below-

a) Rounding bottom
b) Cup with handle
c) Bump and Run reversal
d) Head & Shoulder (Top and Bottom)
e) Double Top
f) Double Bottom

a) Rounding bottom: Rounding bottom is a long-term reversal pattern that is mostly used for
weekly charts. It is also known to as a saucer bottom, and depicts a long consolidation period
that change from a bearish bias to a bullish bias. A rounding bottom could be thought of as a
head and shoulders bottom without readily identifiable shoulders. The head shows the low and
is fairly central to the pattern. The patterns of volume are same and confirmation comes with a
resistance breakout. While symmetry is preferable on the rounding bottom, the left and right
side do not have to be equal in time or slope.

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b) Cup with Handle: A Cup and Handle chart represents a bullish continuation pattern in
which the upward trend has paused but will follow an upward direction once the pattern is
confirmed. Pattern of the price shows 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. After the price movement pushes above the resistance lines
formed in the handle, the upward trend can continue. There is a long time frame for this type
of pattern, with the span ranging from several months to more than a year.

c) Bump and Run Reversal: The Bump and Run Reversal (BARR) is a type of reversal pattern
that takes shape, after excessive speculation drives prices up too far, too fast. There are three
main stages to the pattern: lead-in, bump and run.
Lead-in Stage: The first part of the pattern is a lead-in phase that can last 1 month or longer
and forms the basis from which to draw the trendline. During this phase, prices advance in an
orderly manner and there is no excess speculation. The trendline should be moderately steep.
If it is too steep then the ensuing bump is unlikely to be significant enough.

Bump Stage: The bump forms with a sharp advance, and prices move further away from the
lead-in trendline. Ideally, the angle of the trendline from the bump's advance should be about
50% greater than the angle of the trendline extending up from the lead-in phase.
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Run Stage: The run phase begins when the pattern breaks support from the lead-in trendline.
Prices will sometimes hesitate or bounce off the trendline before breaking through. Once the
break occurs, the run phase takes over and the decline continues.

d) Head and Shoulder (Top & Bottom): One of the most popular and reliable chart
patterns in technical analysis is head and shoulder. Head and shoulders is a reversal chart
pattern that when formed, shows that the stock is likely to move opposite as compared to
the previous trend. There are two sub types of the head and shoulders chart pattern. Head
and shoulders top is a chart pattern that is formed at the high of an upward movement and
shows that the upward trend is about to end. Head and shoulders bottom, also referred as
inverse head and shoulders is the lesser known of the two, but is used to show a reversal in
a downtrend.
Two of these head and shoulders patterns are similar as there are four main parts: two
shoulders, a head and a neckline. The reaction lows of each peaks & troughs can be
connected to form support, or a neckline. Also, each individual head and shoulder is
comprised of a high and a low. Take into consideration that an upward trend is a time of
successive rising highs and rising lows. The head and shoulders chart pattern, therefore,
shows a weakening in a trend by showing the deterioration in the successive movements of
the highs and lows.

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 e) Double Top: Double top is a major reversal pattern that are formed after an extended
uptrend. As the name suggests, the pattern is drawn up of two consecutive peaks that are
roughly equal, with a moderate trough in between. Although there can be variations, the
classic double top marks at least an intermediate change, if not long-term change, in trend
from bullish to bearish. Different double tops can form along the way up, but until key
support is broken, a reversal cannot be confirmed.

f) Double Bottom: Double bottom is a type of reversal pattern that forms after an extended
downtrend. As the name implies, this pattern is made up of two consecutive troughs that are
roughly equal, with a moderate peak in between. Although there can be variations, the classic
double bottom usually marks an intermediate or long-term change in trend. Many potential
double bottoms can form along the way down, but until key resistance is broken, a reversal
cannot be confirmed.

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 CANDLE STICKS

Candlesticks are formed using the open, high, low and close. Without opening prices,
candlestick charts are not possible to draw. If the close is above the open, then a hollow or
white candlestick is formed. If the close is below the open, then a filled or black candlestick is
formed. The hollow or filled portion of the candlestick is referred to as body. The long thin
lines above and below the body represent the high/low range and are referred to as shadows.
The high is represented by the top of the upper shadow and the low by the bottom of the lower
shadow.
Long white candlesticks show strong buying pressure. If the close is above the open with a
large gap then body of white candlestick would be longer. This indicates that prices gained
significantly from open to close and buyers are aggressive and buying pressure is high. While
long white candlesticks are generally bullish but much depends on their position in the
technical chart.
Long black candlesticks show sellers are aggressive and selling pressure is high. If the close is
below the open with a large gap then body of black candlestick would be longer. This shows
that prices declined significantly from the open and sellers were aggressive.

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 DOJI

Doji is formed when a security's open and close price are virtually equal. The length of the
upper and lower shadows can vary and the resulting candlestick looks like an inverted cross or
plus sign. Alone, doji are neutral patterns. Any bullish or bearish bias is based on preceding
price action and future confirmation. Doji convey a sense of indecision between buyers and
sellers. Prices move above and below the opening level during the session,
but close at or near the opening price level. The result is neutral. Neither bulls nor bears are
able to gain control and a turning point could be developing.

After a long white candlestick, a doji signals that buying pressure may be declining and the
uptrend would be ending soon. Continued buying pressure is required to sustain an uptrend,
otherwise security will decline from a lack of buyers. Therefore, a doji may be more significant
after an uptrend or long white candlestick. Even after the doji forms, further downside is
required for bearish confirmation. After a long white candlestick and doji, traders should be
ready for a potential evening doji star.

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After a decline or long black candlestick, a doji indicates that selling pressure may be declining
and the downtrend would be ending soon. Even though the bears are starting to lose control of
the decline, further strength is required to confirm any reversal. Bullish confirmation could
come from a gap up or a long white candlestick above the long black candlestick's open. After
a long black candlestick and doji, traders should be ready for a potential morning doji star.

Star position:

It tells us how candlesticks are positioned with respect to one another. Depending on the
previous candlestick, the star position candlestick gaps up or down. It appears isolated from
previous price change. The two candlesticks could be any combination of white and black.

Harami Position:

A candlestick which is formed within the body of the previous candlestick is in Harami
position. The first candlestick usually has a large real body and the second candlestick has a
smaller real body than the first. Doji can form in the Harami position as well as doji has small
real bodies.
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Hammer and Hanging man:
The Hammer and hanging man, are candlesticks with small bodies and long lower shadows.

The hammer is a bullish reversal pattern that forms after a decline. With a potential trend
reversal, hammers can also mark bottoms or support levels. After a decline, hammers signal a
bullish pattern. The low of the long lower shadow indicates that selling pressure is high during
the trading session but buyers are able to regained their footing at the end of the session on a
strong note. Hammers require further bullish confirmation which could come up from a gap up
or long white candlestick.
The hanging man is a bearish reversal pattern that can also mark a top or resistance level.
Hanging man signals that selling pressure is starting to increase as it forms after an advance.
The low of the long lower shadow confirms that sellers pushed prices lower during the session.
A hanging man also requires bearish confirmation before action which could come as a gap
down or long black candlestick on heavy volume.

Inverted Hammer and Shooting Star:

Inverted Hammer and Shooting Star have small real bodies (black or white), long upper
shadows and small or non-existent lower shadows.

The shooting star is a bearish reversal pattern that forms after an advance and in the star
position, hence its name. It can indicate a potential trend reversal or resistance level. The
candlestick forms when prices gap higher on the open, advance during the session and close
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well off their highs. The resulting candlestick has a long upper shadow and small black or white
body. After the upper shadow, the selling pressure or bears forces prices down to raise the
yellow flag. The upper shadow should be relatively long and at least 2 times the length of the
body to show substantial reversal. Bearish confirmation is required after the shooting star and
can take the form of a gap down or long black candlestick on heavy volume.

The inverted hammer is a bullish reversal pattern and forms after a decline. After a decline, the
long upper shadow indicates buying pressure during the session. However, the bulls were not
able to sustain this buying pressure and prices closed well off of their highs to create the long
upper shadow. Bullish confirmation is required which is followed by a gap up or long white
candlestick, which could act as a bullish confirmation.

Blending Candlesticks:

Candlestick patterns are made up of one or more candlesticks and these can be blended together
to form one candlestick. This blended candlestick define the essence of the pattern and can be
formed using the following:
 The open of first candlestick
 The close of the last candlestick
 The high and low of the pattern

By using the open of the first candlestick, close of the second candlestick and high/low of the
pattern, a bullish engulfing pattern blends and forms a hammer. The long lower shadow of the
hammer indicates a potential bullish reversal. The bullish engulfing requires bullish
confirmation with the hammer.
Blending the candlesticks of a bearish engulfing pattern forms a shooting star. The long upper
shadow of the shooting star signals a potential bearish reversal. Bearish engulfing pattern
requires bearish confirmation with the shooting star.

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 CANDLESTICKS AND SUPPORT

Candlestick patterns and single candlesticks can be used to confirm or mark support levels.
This support levels could be new after an extended decline or confirm a previous support level
within a trading range. Candlesticks helps to choose entry points for buying near support in a
trading range.
Bullish reversal candlesticks and patterns depicts that early selling pressure is declining and
buying pressure is rising for a strong finish.

Doji Marks Support/Resistance:

Electronic Data Systems (EDS) traded in a range of 58 and 75 for about 4 months at the start
of 2000. Support at 58 was first established in early January and resistance at 75 in late January.
The stock fell down to its previous support level in early March, forming a long legged doji
and later a spinning top (black circle).

Hammer Marks Support:

Medtronic (MDT) established support around 46 in late February with a spinning top (first
arrow) and early March with a Harami. The stock declined sharply in April and formed a
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hammer to confirm support at 46 (second arrow). After a reaction rally to resistance around 57,
the stock again declined sharply and again found support around 46 (third arrow). The black
candlestick with the long lower shadow marked support, but the body was too big to qualify as
a hammer.

CANDLESTICKS AND RESISTANCE

Single candlesticks and candlestick patterns can be used to confirm or mark resistance levels.
Such a resistance level could be new after an extended advance, or an existing resistance level
confirmed within a trading range. Candlesticks can help identify entry points to sell near
resistance in a trading range.
Bearish reversal candlesticks and patterns suggest that buying pressure is increasing and selling
pressure prevailed.

Doji Marks Resistance:

In late May, Veritas (VRTS) increased from 90 to 140 in about two weeks. The final jump
came with a gap up and two doji. These doji marked a sudden stalemate between buyers and
sellers, and a resistance level subsequently formed. After a resistance test in mid-june, another
doji formed to indicate that buyer pressure is decreasing. This led to a decline and subsequent
reaction rally in early July. The advance carried the stock from 105 to 140, where another doji
formed to confirm resistance set in early June.

MORNING STAR

The morning star consists of three candlesticks:

1. A long black candlestick.
2. A small white or black candlestick that gaps below the close of the previous candlestick. If
the candlestick is doji, in that case the pattern would be a morning doji star.
3. A long white candlestick.

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The black candlestick confirms that the decline remains in force and selling dominates. When
the second candlestick gaps down, it provides further evidence of selling pressure. However,
the decline slows down significantly after the gap and a small candlestick form. The small
candlestick tells indecision and a possible reversal of trend. The chances of a reversal increase
in case of doji. The third long white candlestick provides bullish confirmation of the reversal.
The following image shows the formation of Morning Doji Star-

EVENING STAR
The evening star consists of three candlesticks:
1. A long white candlestick.
2. A small white or black candlestick that gaps above the close (body) of the previous
candlestick. If candlestick is a doji, then pattern would be an evening doji star.
3. A long black candlestick.
The long white candlestick confirms that buying pressure remains strong and the trend is up.
When the second candlestick gaps up, it provides further evidence of residual buying pressure.
However, the advance ceases or slows down significantly after the gap and a small candlestick
forms, indicating indecision and a possible reversal of trend. If the small candlestick is a doji,
the chances of a reversal increase. The third long black candlestick provides bearish
confirmation of the reversal.
The following image shows the formation of Evening Star-

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 DERIVATIVES

Derivative is an instrument or a product whose value is derived from the value of underlying
asset. Derivatives depend on wide range of underlying asset. These include:
 Metals, for example, Gold, Silver, Aluminum, Copper, Zinc, Nickel, Tin, Lead etc.
 Energy resources, for example, Oil (unrefined petroleum, items, breaks), Coal,
Electricity, petroleum gas etc.
 Agri-commodities, for example, wheat, Sugar, Coffee, Cotton, Pulses and so on and
 Financial assets, for example, Shares, Bonds and Foreign Exchange.

Importance of Derivatives
Like different portions of Financial Market, Derivatives Market serves following functions-
 Improvement in price discovery dependent on actual valuations and desires is done with
the help of derivatives market.
 Derivatives market helps in transfer of different risk from those who are exposed to risk
but have generally low risk appetite to members with high risk appetite. For instance
hedgers need to give away the risk whereas merchants are eager to take risk.
 Shifting of speculative trades from unorganized market to organized market is also done
through derivatives. Risk management mechanism of various participants in organized
market provide stability to the financial system.

Products in Derivatives Market

Forwards
 It is a legally binding contract between two parties to buy/sell an underlying asset at a
specific future date, at a specific cost that is pre‐decided on the date of agreement.
 Both the contracting parties are committed and are obliged to execute the transaction
regardless of price of the underlying asset at the time of execution of the contract.

Futures
A futures contract is like a forward, except that the agreement is made through an organized
and managed exchange instead of being negotiated directly between the parties. So, futures are
exchange traded forward contracts.
Options
An Option is an agreement that gives the right, yet not an obligation, to buy or sell the
underlying on or before a stated date and at a stated price. While buyer of option pays the
premium and purchases the right, seller of options gets the premium with obligation to sell/buy
the underlying asset, if the buyer exercises his right.
Swaps
A swap is an agreement made between two parties to exchange cash flows on as per a
prearranged formula. Swaps are, comprehensively, arrangement of forward contracts. Swaps
help market participants manage risk related with unpredictable or volatile interest rates,
currency exchange rates and commodity prices.

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FUTURES CONTRACT
Futures markets were came to beat the limitations of forwards. A future contract is an
agreement made through an organized exchange to buy or sell a fixed amount of a commodity
or a financial asset on a future date at a pre-decided cost. The clearinghouse related with the
exchange ensures settlement of these trades. A trader, who buys futures contract, takes a long
position and the one, who sells futures, takes a short position. The words purchase and sell are
metaphorical simply because there is no physical exchange of cash or underlying asset between
buyer and seller.

Features of futures contract

In futures market, exchange decides all the agreement terms of the contract other than price.
Futures contracts have following highlights:
 Contract between two parties through Exchange
 Centralized exchanging platform i.e. exchange
 Price discovery through free interaction of buyers and sellers
 Margins are payable by both the parties
 Quality decided today (standardized)
 Quantity chose today (standardized)

OPTIONS CONTRACT
An Option is an agreement that gives the right, however not an obligation, to purchase or sell
the underlying asset on or before a fixed date/day, at a stated price, for a price. The party taking
a long position i.e. purchasing the option is called buyer/holder of the option and the party
taking a short position for example selling the option is known as the seller/writer of the option.
The option buyer has the right however no obligation with respect to buying or selling the
underlying asset, while the option seller has the obligation in the contract. Therefore, option
buyer/ holder will exercise his option only when the situation seems favorable to him, but,
when he decides to exercise, option writer would be legally bound to honor the contract.
Options may be categorized into two main types: ‐
 Call Options
 Put Options

Options, which gives buyer a right to purchase the underlying asset, is called call option and
the option which gives buyer a privilege to sell the underlying asset, is called put option.

Different participants in derivatives markets-

Hedgers
Organizations, Investing Institutions, Banks and Governments all use derivatives in order to
reduce their risk exposure to market factors, for example, interest rates, share values, bond
price, exchange rates and commodity prices.
Example- A farmer who sells futures contracts to fix the price for delivering a crop on a future
date. The buyer may be a food‐processing organization, which wishes to fix a price for taking
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 delivery of the crop later on. Another case is of a company that has to receive a payment in
foreign currency on a future date. In both the examples, buyer and seller are reducing their risk
by entering into a derivative contract.
Speculators/Traders
Derivatives are very appropriate to trade on the prices of commodities and financial assets and
on key market factors, for example, interest rates, stock market indices and currency exchange
rates. It is significantly less costly to create a speculative position using derivatives than
actually buying in the equity markets and as a result, potential returns are also much greater.
Example- A trader who believes that increasing demand or decreasing production is likely to
increase the price of a commodity. He has two options ‐ first option is to buy and store the
physical commodity whereas other option is to go long futures contract. Trader chooses the
second option to go long futures contract on the underlying asset. If commodity price increases,
the value of the contract will also increase and he can reverse back position to book his profit.

Arbitrageurs
An arbitrage is a deal that produces risk free profits by exploiting the mis-pricing in the market.
It happens when a buyer purchases an asset at a lower price in one exchange/market and sell it
at a higher price at another exchange/market. But these opportunities do not persist for too long
and therefore, arbitrageurs do not keep the asset for too long as it will reduce the chances of
making large profits.
There are three players in the derivative market – Hedgers, Speculators, and Arbitrageurs.
Hedgers are there to hedge their risk, traders take the risk which hedgers intend to offload from
their exposure and arbitragers make profits by exploiting mis-pricing prevailing in markets.

OPTION TRADING STRATEGIES

Following option trading strategies are:

1. Option spreads
2. Straddle
3. Strangle
4. Covered call
5. Protective Put
6. Collar
7. Butterfly Spread

OPTION SPREADS
It involves combining options on the same underlying and of same type (call/ put) but with
different strikes and maturities. These are limited profit and limited loss
positions. They are mainly categorized into three sections as:

 Vertical Spreads
 Horizontal Spreads
 Diagonal Spreads
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 Vertical Spreads
These spreads are formed by using options having same expiry but different strike prices. These
can be created by the combination of either calls or puts. These can be further classified as:

1. Bullish Vertical Spread

a. Using Calls
b. Using Puts
2. Bearish Vertical Spread
a. Using Calls
b. Using Puts

Horizontal Spread
Horizontal spread is formed using options having same strike, same type but different expiry
options. This is also known as time spread or calendar spread. Here, it is not possible to draw
the payoff chart as the expiry of the underlying the spread are different. This is essentially a
play on premium difference between two
options prices squeezing or widening.

Diagonal spread
Diagonal spread is formed using combination of options having same underlying but different
expiries as well as different strikes. Again, as the maturities are different, it is not possible to
draw pay offs here as well. These are much more complicated in nature and in execution. These
strategies are more usually for the OTC market rather than the exchange traded markets.

STRADDLE
A Straddle is a volatility strategy and is used when the stock price/index is expected to show
longer movements. It involves two options of same strike prices and same maturity at ATM
i.e. at the money.

Long Straddle
In long straddle, a person buys both call and put option at same strike price and same expiry at
ATM. If a person buys both a call and a put, then his maximum loss will be
equal to the sum of these two premiums paid i.e. limited loss. And, price movement from here
in either direction would first result in that person recovering his premium and then making
profit. This strategy is used when investor’s view is that price/index will experience volatility
in near term.

Short Straddle
It is exact opposite of long straddle. Here, according to trader’s view, the price of underlying
would not move much or remain stable. So, the investor sells a call and a put so that he can
profit from the premiums. As position of short straddle is just opposite of long straddle, the pay
off chart would be just inverted, so what was loss for long straddle would become profit for
short straddle.
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STRANGLE
It is similar to straddle in outlook but different execution, aggression and cost.

Long Strangle
It involves simultaneous buying of OTM put and OTM call. As both the options are at OTM,
so premium paid is very low. In case of a strangle, the strikes are different. If a trader goes on
long for these options then his maximum cost will be equal to the sum of the premium paid.
However, strangle would make money when there is greater movement on the upside or
downside of the stock price.

Short strangle
This is exactly opposite to the long strangle with simultaneous selling of two out‐of‐the‐money
options (call and put). In this, risk is unlimited but return is limited to the premium received.
Pay offs for this position would be opposite to that of a long strangle.

COVERED CALL
It is used when market is neutral to moderately bullish. This strategy is mainly used to generate
extra income from existing holdings of the investor in the cash market. If an investor has bought
shares and wants to hold them for some time, then he would like to earn some income on that
asset, without selling it, thereby reducing his cost of acquisition.
In this, investor sells an OTM call option. Call option would not get exercised unless stock
price would increase above the strike price, till then his premium becomes his income.
For Example: Suppose an investor buys a stock in the cash market at Rs. 1490 and also sells a
call option with a strike price of 1500, thereby earning Rs. 10 as premium. If the stock price
moves up from 1490 level, he makes profit in the cash market but starts losing in the option
trade. For example, if Stock goes to 1540,
Long Cash: Profit of 1540 – 1490 = 50
Short Call: – 1540 + 1500 + 10 = ‐30
Net Position: 50 – 30 = 20

PROTECTIVE PUT
If an investor takes long in the cash market, he always runs the risk of a fall in prices and
thereby reduction of portfolio value and MTM losses. A mutual fund manager, who is
predicting a fall, can either sell his entire portfolio or short futures to hedge his
portfolio. The fund manager is effectively taking a bearish view on the market by buying put
options and if his view turns right, he will make profits on long put, which is then used to
nullify the MTM losses in the cash market portfolio.
Let us say an investor buys a stock in the cash market at 1500 and at the same time buys a put
option with strike of 1500 by paying a premium of Rs. 20.
Now, if prices fall to 1430 from here:
Long Cash: Loss of 1500 – 1430 = ‐ 70
Long Put: Profit of – 20 – 1430 + 1500 = 50
Net Position: ‐20
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 COLLAR
It is used when the investor is conservatively bullish. The collar is used if the investor is writing
covered calls to earn premiums but wishes to protect himself from an unexpected sharp drop
in the price of the underlying security. To decrease his loss downside, he long a put option,
which essentially negates the downside of the short underlying/futures (or the synthetic short
put). In this, risk is unlimited and reward is limited.
For example- Assume that a trader longs a stock at 1490 and shorts a call
option with a strike price of 1500 and receives Rs. 10 as premium. In this case, the BEP was
1480. If price fell below 1480, loss could be unlimited whereas if price rose above 1500, the
profit was capped at Rs. 20.

BUTTERFLY SPREAD

Butterfly spread is an extension of short straddle. In short straddle, downside is unlimited if

market moves significantly in either direction. So, to put a limit to this downside, along with
short straddle, trader buys OTM call and one OTM put.
Long Call Butterfly is used when the investor is neutral on market direction and bearish on
volatility. This strategy will limit the loss. In this, investor will buy 1 ITM Call, 1 OTM Call
and sell 2 ATM Calls.
Short Call Butterfly is used when the investor is neutral on market direction and bullish on
volatility. So, he will sell 1 ITM and 1 OTM and buy 2 ATM.

Settlement Mechanism

In India, settlement mechanism is decided by the SEBI-

 Cash settlement (settlement by payment of differences) for both stock options and futures; or
 Physical settlement (settlement by making physical delivery of underlying stock) for both stock
options and stock futures; or
 Cash settlement for stock options and physical settlement for stock futures; or
 Physical settlement for stock options and cash settlement for stock futures.

A Stock Exchange may introduce physical settlement in a proper manner. Physical settlement
for all stock options and/or all stock futures, as per the case, must be completed within six
months. The settlement mechanism is to be decided by the Stock Exchanges in consultation
with the Depositories.
On expiry / exercise of physically settled stock derivatives, the risk management framework
(i.e. margins and default) of the cash segment shall be applicable. There should be separate
settlements of cash and equity derivative segments.
The Stock Exchanges interested to introduce physical settlement should:

 Organize proper systems and procedures for smooth implementation of physical settlement.
 Necessary amendments should be introduced to the relevant bye‐laws, rules and regulations
for implementation of physical settlement.
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 Bring the provisions of this circular to the notice of all categories of market participants,
including the general public, and also to disseminate the same on their websites.

The Stock Exchanges interested to offer physical settlement should submit to SEBI for
approval, a detailed framework for implementation of physical settlement of stock derivatives.
After opting for a particular mode of settlement for stock derivatives, a Stock Exchange may
change to another mode of settlement after seeking prior approval of SEBI.

Settlement Schedule
The settlement of trades is on the basis of T+1 working day. Members with a funds pay‐in
obligation are required to have clear funds in their primary clearing account on or before 10.30
a.m. on the settlement day. The pay-out of funds is credited to the primary clearing account of
the members thereafter.

Settlement of Futures Contracts on Index or Individual Securities

Both the parties to the contract have to deposit margin money in future contract, which is called
as initial margin. There are two types of settlements in future contract, MTM settlement which
happens on a continuous basis at the end of each day, and the final settlement which happens
on the last trading day of the futures contract.

Mark to Market (MTM) Settlement

Mark to Mark settlement is a process by which margins as well as profits & losses are adjusted
on daily basis. The profits/ losses are calculated as the difference between:
 The trade price and the day's settlement price for contracts executed during the day but not
squared up.
 The previous day's settlement price and the current day's settlement price for brought forward
contracts.
 The buy price and the sell price for contracts executed during the day and squared up.

The clearing member who suffers a loss is required to pay the MTM loss amount in cash which
is in turn passed on to the clearing member who has made a MTM profit. The pay‐in and pay‐
out of the mark‐to‐market settlement are affected on the day following the trade day (T+1)
where trading member is responsible to collect/ pay funds from/ to clients by the next day.
Clearing Members are responsible to collect and settle the daily MTM profits/losses incurred
by the TMs and their clients clearing and settling through them.

Final Settlement
At the expiry of the futures contracts, when trading hour is closed, all positions of a clearing
member is marked by the clearing corporations to the final settlement price and the resulting
profit/ loss is settled in cash. Final settlement loss/profit amount is debited / credited to the
respective clearing member’s clearing bank account on next day following expiry day of the
contract. All long positions are automatically linked with short positions in option contracts
with the same series, on a random basis.
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 Legal and Regulatory Environment

Securities and Exchange Board of India Act, 1992

SEBI Act, 1992 provides for establishment of Securities and Exchange Board of India
(SEBI) with statutory powers for the purpose of (a) protecting the interests of investors in
securities (b) promoting the development of the securities market and (c) regulation of the
securities market. Its regulatory jurisdiction extends over corporate in the issuance of capital
and transfer of securities, in addition to all intermediaries and persons associated with securities
market. SEBI has been obligated to perform the aforesaid functions by such measures as it
thinks fit. In particular, it has powers for:

 Business in stock exchanges and any other securities markets are regulated by the SEBI.
 Working of stock brokers, sub–brokers etc. is also regulated by the SEBI.
 Promotion and regulation of self‐regulatory organizations is also in the hand of SEBI.
 Prohibiting fraudulent and unfair trade practices.
 Inspection, enquiries and audit of the stock exchanges and other person related to stock
exchanges is regulated by the SEBI.
 Performing such functions and exercising according to Securities Contracts
(Regulation) Act, 1956, as may be delegated to it by the Central Government.

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 PROJECT (Sector Research)

Objective of the study:

To observe the rate of stock fluctuation of selected companies.
To make your own Mutual funds and beat the benchmark.
To do the Fundamental and Technical Analysis of the stocks of the chosen sector.

Methodology:
Primary Research - Primary research is new research which is carried out to answer specific
Questions. This type of research is mainly done through questionnaires, surveys or interviews
with individuals or small groups. There was no primary research conducted for doing equity
research.

Secondary Research: Secondary research (also known as desk research) involves the study
or analysis of existing research rather than primary research and data is collected from research
papers or experiments. To understand the stock behavior which includes data from various
sources such as News channels, Business magazines, Government websites, and Company’s
official websites, we collected secondary data from websites such as
https://www.moneycontrol.com/, https://in.finance.yahoo.com/ and then analyzing the market
from that given data and performed all the calculations.

Introduction-

The project that I have started working on is the fund management of the different stocks by
doing Fundamental analysis of a particular sector in which the company’s shares lies. I have
chosen the CEMENT SECTOR as I have done some previous research on this during the
second semester. The project was given 2 weeks ago my company mentor and I have started
the research that is as follows:
• The Indian Cement industry is the second biggest market after China. It had an overall
production limit of around 455 million tons (MT) as of November 2018. Cement is a cyclical
product with a high relationship with Gross domestic product.
• The housing and real estate sector is the greatest demand driver of cement, representing about
65% of total consumption in India. The other major consumers of cement include public
infrastructure at 20% and industrial development at 15%.
• Cement demand is expected to touch 550-600 Million Tons every year by 2025 bolstered by
get in the housing fragment and higher infrastructure spending. The business is as of now
creating 280 MT for gatherings its residential interest and 5 MT for exports necessity.

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 Besides, the per capita utilization of cement in India still remains generously low at under 200
kg when compared with the world average which remains at around 500 kg. In the event of
China, it is more than 1,000 kg per head.
• Cement, being a mass product, is a freight intensive industry and transporting it over long
distance can end up being uneconomical. This Industry is mostly separated into five principle
regions viz. north, south, west, east and the central region. The Southern region of India has
the most installed capacity, representing around 33% of the country's absolute installed cement
production capacity.

PORTER Five forces model to research for the sector (Cement Sector)

1. Demand & Supply - The demand supply situation is highly skewed with the last being
fundamentally higher. Housing sector goes about as the important development driver for
cement. However, industrial and infrastructure parts have likewise risen as demand drivers.
2. Barriers to entry - High capital expenses and long incubation periods. Access to limestone
reserves (key information) acts as huge entry barrier.
3. Bargaining power of suppliers - Licensing of coal and limestone reserves, supply of power
from the state grid, and so forth are altogether constrained by a single entity, which is the
government. However, numerous producers are depending more on captive power.
4. Bargaining power of customers - Cement is a commodity business and sales volumes
generally rely on the distribution reach of the organization. Cement is sold in two sections –
exchange and non-exchange. Exchange concrete is the one sold to the sellers. Non-exchange
cement is sold straightforwardly to the buyers, mostly institutional purchasers. Exchange
bond offers higher contrasted with non-exchange. As such, organizations that have a solid
circulation system and retail presence will in general have better cement realizations.
5. Competition - Intense competition with players extending reach and accomplishing Pan-
India presence. The industry is much more merged than two or three decades back with a
couple of large players controlling substantial market share.

Financial Year’18

• Production in the year 2018 was 305 million tons against the capacity of more than 455 million
tons bringing about a normal capacity utilization of around 67%. According to Department of
Industrial policy and promotion (DIPP) reports, the industry had shown a development of 6%
just in the first of the year in cement production however recovered in the second half with a
double digit growth in production ending the year with a five-year high development of 6.3%.
This growth compares against the contraction of 1.2% in cement output in the previous year.

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• The growth in the second half was primarily on the account of the support driven by
government framework undertakings and housing activities and adaptable interstate movement
of cement because of usage of GST. Business in cement industry needed to confront and
conquer different obstacles in the year as inactive impact of demonetization, early stage
struggles emerging out of GST take off, Land (Guideline and Improvement) Act, 2016 (RERA)
enactment sway, and confinements/prohibition on sand mining in a few states.

• The industry troubles duplicated with a prohibition on the savvy fuel pet coke by the Supreme
Court of India which was hence pulled back. The industry likewise needed to confront generous
climb in the costs of oil based commodities, imported fuel and pet coke. On the cost front, there
was an enormous increment in information cost brought about by the expansion in costs of the
fuel imported coal and pet coke. The normal pet coke value which was around US$60 conveyed
in the last quarter of the earlier year went up to a dimension of US$100 during the last quarter
of the present year. This was compounded by the expansion in Trade Obligation on pet coke to
11% from around 3% prior.

Prospects

• Cement demand is firmly connected to the overall economic growth, especially the housing
and infrastructure sector. If the rate of development of consumption stays low at 5-6%, the
existing capacity would be adequate to fulfill the cement demand for the following couple of
years.
• Higher government spending on real estate and housing facilities, and rising per capita income
will be key growth drivers for the cement industry. There have likewise been certain proceeds
onward the policy front, in zones identified with simplicity of working together, advancing
new businesses, legitimizing the expense structure and organization, and opening up more
regions for remote venture through the programmed course.

• The administration is generously venturing up framework spending. From a long term

perspective, overall pick up observed in the infrastructure spending by the government and
downward trend in the interest’s rate is relied upon to restore the demand across sectors.

• The seventh Pay Commission is required to help in housing demand. Government push on
reasonable housing for understanding its vision of "Housing for All" by 2022 and Smart City
program ought to likewise help in demand growth of cement. The rate of new capacity increases
has additionally backed off extensively.

• In this manner, the standpoint for the cement sector looks better. On the back of arrangement
of changes attempted over the previous year different organizations including IMF have
anticipated a financial development of around 7.3% to 7.5% amid the current monetary superior
to the patterns of the earlier years.

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• The government has given a push through the financial plan for development of cement
concrete roads, highways through its unique Bharatmala project, construction of rural roads
under the Pradhan Mantri Gram Sadak yozana, housing for all by 2022, and bullet train
arrangement in a few urban communities, and so forth which forecast well for the industry in
the medium term.

Progress on Project till now-

1. Started the fundamental analysis in Cement Sector. As I have to manage and allocate the fund,
I have given 5cr. (not real) for the investment.
2. Firstly, I chose the large cap and mid cap stocks in the sector. One can find it from number of
sources, I used money control for this.
3. Then P/E Analysis has been done to find the Overvalued and Undervalued stocks.
4. The U.V. stocks were further analyzed by seeing Top-line (Revenue) and Bottom-line (Sales)
and value picks stocks were selected.
5. The O.V. stocks were further analyzed by finding the PEG value and growth pick stocks were
selected.
6. The ranking was done according the values of the important financial ratios of the sector of the
stocks.
7. The fund allocation was done according to the ranking of the stocks.
8. Daily NAV was calculated of the portfolio according to the price change of the stocks.

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 Overvalued / Undervalued Stocks

1. Ambuja, RAMCO, JK Cements are undervalued stocks as their actual P/E is less than the
average P/E.
2. Ultratech, Shree, ACC Cements are overvalued stocks as their actual P/E are greater than
average P/E.

Calculation of Profit-Earning Growth Ratio

 PEG Ratio = P/E / EPS Growth Rate.

 When PEG Ratio is below 1 or 1 than its good even if the stock is overvalued.
 So PEG Ratio of ACC Cement is less than 1 so it is considered as Growth pick.

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 Important Ratios for Analysis

Ranking

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 Allocation of Amount (5crore)

 Allocation of amount is done on the basis of ranking of the stocks.

 Lower the rank more is the fund allocation
 Cash in hand 50000000 – 49998129 = 1871/-

This figure shows the NAV calculation of the portfolio started from 2nd April, 2019. It was
continued further to see the growth in NAV. As the price of the stock changes, the AUM changes
by which the NAV changes.

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 TECHNICAL ANALYSIS OF CEMENT SECTOR

Technical Analysis is the prediction of future financial price movements based on an examination of
past price movements. Technical analysis uses a wide variety of charts that show price over time.
Technical Analysis helps in identifying long term trend by analyzing the price movements over a
certain duration. There are different shapes that are formed while doing this analysis and these trends
help us to predict buy and sell point.

Steps in Technical Analysis-

1. Study the past movement in share price and identify the trends and establish patterns.
2. Look at the current movement in the share price and identify the trends and establish patterns.

With this the future price movement is predicted. The rationale behind the technical analysis is that
share price moves in trend which may be upside or downside. It is believed that the present trends
are influenced by the past trends. The technical analyst, therefore analyses the price and volume
movement of individual securities as well as the market index. Thus, technical analysis is really a
study of past or historical price volume so as to predict the future stock.

The basic principle behind Technical Analysis-

1. The market value of a share is related to the demand and supply factors prevailing in the market.
2. There are both rational factors which surrounds the supply and demand factors of security.
3. Security prices behaves in a manner that their movements are continuous in particular direction
for some length of time.
4. Trends in stock prices have been seen to change when there is shift in demand and supply.
5. The shift in demand and supply factors can be detected through charts prepared specifically to
show market action.

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INTERPRETAION- In Jan 2017, trend reversal was seen with the formation of Cup with
Handle, after which upward trend was there till August 2017. The stock was bearish from Jan
2018 to July 2018, after which again trend reversal was seen with the formation of Rounding
bottom and buying pressure increased. Current trend is unclear but could be Cup with handle.

INTERPRETATION- Resistance and Support are shown with brown line. There was a
continuous uptrend from Jan 2017 to July 2017, which infer that stock was bullish at that time
showing Bump and Run Reversal. But after that downfall was observed till July 2018 and
current trend remains unclear.

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INTERPRETATION- Trend reversal was seen first in July 2016 with the formation of Cup
with Handle and after that in Jan 2017 with the formation of Rounding Bottom, after which
stock was bullish and buying pressure increased. But after Jan 2018, downfall was observed
and after which stock stabilized.

INTERPRETATION- Price remained constant till July 2015, after which upward trend was
seen. There was a formation of rounding bottom which indicates an uptrend trend. But after
Jan 2017, sideways trend was observed and there was a downfall also i.e. neither buying
pressure nor selling pressure dominated in this time frame. Current trend is upward.

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 Bibliography

 https://www.equitymaster.com/research-it/sector-info/cement/Cement-Sector-Analysis-Report.asp
 https://www.ibef.org/industry/indian-cement-industry-analysis-presentation
 https://www.ibef.org/archives/industry/cement-reports/indian-cement-industry-analysis-april-2018
 https://www.investopedia.com/articles/stocks/07/cement_stocks.asp
 https://www.moneycontrol.com/stocks/marketinfo/marketcap/bse/cement-major.html
 https://www.policybazaar.com/life-insurance/
 https://www.chittorgarh.com/ipo/ipo_list.asp
 https://economictimes.indiatimes.com/mutual-funds
 www.nism.ac.in
 http://www.investopedia.com/university/technicalanalysis/
 https://issuu.com/sanjaykumarguptaa/docs/fundamental-and-technical-analysis-of-five-major-c
 https://lifeinsurance.adityabirlacapital.com/about-us.aspx
 http://www.moneycontrol.com/mutualfundindia/

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