RESEARCH PROJECT REPORT

Submitted in partial fulfillment of Master of Business Administration

Session- 2021-2022

“STATEMENT OF RESEARCH PROJECT REPORT TOPIC”

A Study of technical analysis of selected banking stock PROFITMART securities

Internal Guide Submitted By

“Name of the Guide” “Name of Student”

[Karan Upadhyay] Roll No- “2008480700077”

PSIT COLLEGE OF MANAGEMENT

Affiliated to Dr. APJAKTU

1
 DECLARATION

I hereby declare that this submission is my own work. It contains no material previously published

or written by another person, nor has this material to a substantial extent been accepted for the award

of any other degree or diploma of the university or other institute of higher learning.

“Name of student”
Roll No. “2008480700077”

2
 ACKNOWLEDGMENT

Research Project Report is the one of the important parts of MBA program, which has helped me to

gain a lot of experience, which will be beneficial in my succeeding career.

For this with an ineffable sense of gratitude I take this opportunity to express my deep sense of

indebtedness and gratitude to Director, PSIT College of Management and HOD, Department of

Business Administration, for their encouragement, support and guidance in carrying out the project.

I am very much thankful to, My Project Guide “Karan Upadhyay”, Assistant Professor for their

interest, constructive criticism, persistent encouragement and untiring Guidance throughout the

development of the project. It has been my great privilege to work under his/her inspiring guidance.

I am also thankful to my Parents and my friends for their indelible Co-operation for achieving the

Goal of this study.

3
 TABLE OF CONTENTS

Sr. No. PARTICULARS PAGE NO.

1 Title Page 1
2 Institute Certificate 2
3 Company Certificate 3
4 Declaration 4
5 Acknowledgment 5
6 Index 6
7 Executive Summery 7

CHAPTER 1
* Introduction of the study
8 8 to 14
* Company Profile
* Objective, Scope & Purpose of the study
9 CHAPTER 2: Review of Literature 15 to 16
10 CHAPTER 3: Research Methodology 17 to 53
11 CHAPTER 4: Data Analysis 54 to 59

12 CHAPTER 5: Finding, Recommendation and Suggestion 60 to 63

13 CHAPTER 6: Conclusion 64
14 Bibliography 65
15 Reference 66
16 Annexure
17 A- Questionnaire 67
18 B- Scope for future study 67
19 C- Photograph, Drawing

4
 EXECUTIVE SUMMARY

The share prices in the stock market fluctuate on a daily basis due to continuous buying
and selling. Stock prices move in trends and cycles and are never stable. An investor
in the stock market is interested to get a good return on his investment and hence
purchases securities at a low price and sells them at a high price. However, to gain
successfully return on investments in a volatile stock market is not an easy job to do.
An investor should adequate knowledge about the working of the stock and securities
market and the kind of risks involved in it. Well defined information about securities
being traded in the markets, its fluctuation in prices provides the investors with basic
understanding of the markets and helps them in their investments, i.e. investing in the
right type of securities at the right time. Hence, this is where technical analysis comes
into picture. Technical analysts consider a wide range of factors most importantly price
movements and volume to indicate the future trend of the market and the best buying
and selling opportunities of stocks.

The purpose of this study is to analyze five stocks belonging to various sectors
trading in the Bombay Stock Exchange (BSE) through technical analysis. The market
movements are analyzed using tools such as Exponential Moving Average (EMA),
Relative Strength Index (RSI), Moving Average Convergence/Divergence (MACD)
and Rate of Change (ROC).

The study aims at extracting the price movements of selected company stocks
over a period of one year. These prices are observed and analyzed using the above
mentioned indicators and on the basis of which conclusions are drawn on the trend of
price movements and whether to buy or sell the stock in the near future.
5
 CHAPTER 1
INTRODUCTION ABOUT THE INTERNSHIP
The study is carried 0ut at “PROFITMART SECURITIES”. They are trading
clearing member of MCX and NCDX commodity exchanges since 2010. Company
benefits their clients in number of ways as well as fast and accurate order
performance instant access to information regarding clients account personal
attention for large and small clients. Company has in house research team based on
fundamental and technical studies. This project is based on ‘technical analysis’ a
very important concept to study the market trading. In this project, the concept of
technical analysis used for classifying different scripts for trading. Secondary data is
collected for the study of this project report. The data is one of individual scrip from
bank nifty index. The individual scripts are Axis Bank, Bank of Baroda, Canara
Bank, Federal Bank, HDFC Bank, Indusind Bank, Kotak Bank, Maharashtra Bank,
and State Bank of India and Yes Bank which covers the Bank Nifty.

INDUSTRY PROFILE

Stock Market is the place for buyers and sellers of stocks, which indicates ownership
claims on business finished purchase of stock; these may be securities or stocks listed
on a stock exchange and which are traded over security. It is a place where listed
securities, stocks are bought and sold for the attention. This is planned marketplace,
where members of the organization or an exchange gather to trade stocks or other
securities to make profit out of it. Capital markets are the markets for equity, debt
instruments and other financial instruments. The future suppliers of capital transfer the
capital to the prospective borrowers of such capital. The suppliers like retail and
organized investors who wish to invest and earn return on such investments. The
borrowers may be the government, business and individuals. Since the capital is main
component for any business or trade, it is dynamic for the growth of an economy of
the country. The securities include shares, debentures and bonds. Capital market is
divided into primary and secondary markets.

COMPANY PROFILE
PROFITMART SECURITIES PRIVATE LIMITED (Formerly known as
M3Multiple Securities Brokers Pvt. Ltd.) started its operations in 2010. Profitmart is
an emerging Broking house in India offering diversified investment options like
Equities, Derivatives, Currency, Commodities, IPO, Mutual Funds and Real Estate.

6
At Profitmart, they focus on delivering efficient trading software, supported with
effective investing tools, which are helpful to maximize their profits.
The company has been hard at work creating an investment experience to achieve
their financial goals. It is their passion to offer the best product, Technology &
service. Investor confirms the trading experience at Profitmart to be one of its kinds,
with help of company knowledge.
Table 1.1 Company profile of Profitmart Securities Pvt Ltd.

Company Name PROFITMART SECURITIES PRIVATE LIMITED

CEO Mr. Nayan Bhandari.
Established year 2010
Type of the company Private company
Registered office Office No. 12, Neelkanth Market, M.G. Road, Ghatkopar –
address East Mumbai- 400077
NSE Membership No. 14556
SEBI Registration No. INZ000044432
SEBI Registration No. CASH- INZ000093633 F
& O- INZ000093633
CDS – INZ000093633
MCX Code No. 40885
Address 6/13288, Gala No.3, MahalaxmiSankul Opp. Vijaya
Bank, Behind Bhagyarekha Talkies, Ichalkaranji-416115
Branch Manager Mr. Sandeep Chopdar
Products Equities, Derivatives, Currency, Commodities, IPO, Mutual
Funds
Contact No. 0230-2439960, Mob. No. 09881094500
Web Site www.profitmart.in

Table 1.2 the promoters and board of directors of the company.

Name Designation
1. Nayan Bhandari CEO
2. Rakesh Sonawane Co-Founder, Director
3. Niranjan Mahajan Co-Founder, Director
4. Yesudasan R K Co-Founder, Director
5. HaroonKazi Director
6. Kailash Jain -

7
VISION, MISSION AND QUALITY POLICY
• Vision
“To become most trusted Savings and Investments partner for our clients.”

• Mission

“To build value for customers, employees and other stakeholders by creating new
industry benchmarks in financial product solutions and services in most advanced
and cost effective ways.”

• Privacy and Policy

“PROFITMART is strongly committed to every individual’s right to privacy and to

keeping private and financial information secure. As part of the effort to earn trust
and confidence in commitment. They are fully disclosing their privacy practices.
They therefore inspire me to read their privacy declaration to explain and understand
the types of personally identifiable information they collect and how they use this
information.”

“All the personal information which they will provide while registering for the
internet trading account, will be kept secret. Only those people or companies can
access the information who are authorized to do so. Information gathered is mainly
utilized to customize the content you see, attend your request promptly and inform
you about the updating on site.”

“Profitmart will preserve all their private information and will be used as the
database for the personal use of Profitmart. This information will be provided to
those who are authorized to use the user database for Profitmart services. Profitmart
will provide the facility to edit your account information and preferences at any time.
Your account information is password protected for your security and privacy.
Please do maintain the secrecy and privacy of your user name and password to keep
it from any unauthorized access. The secrecy of your user name and password will
be wholly yours.”

PRODUCT AND SERVICES

• Equity

Trading in equities with Profitmart brings you the very best of the Technology,
Research, Access and Ease. It invest you to in equities by providing an anchor to
guide you as to when, where and how to invest. Best-in-class technology : Investing
8
on front-line technology Transparency and Compliance : Constant loyalty to the
standards Customer Service : Most dynamic and motivated team on the ground Reach
& delivery Model: both offline/online and upgrading service delivery channels.

• Commodity

Commodity derivative market has a new avenue for investors to build wealth.
Commodities have evolved as the next best option after stocks and bonds for
expanding the portfolio. Profitmart wants to connect and increase the the
Commodities market by providing the simple effective interface, research and
knowledge. Profitmart provide the online trading platform to user trade in various
commodity sectors like bullion, base metals, energy and Agriculture etc.

• Currency

The global increase in trade as well as foreign investments has led to inter- connection
of many national economies leading to greater need for a stronger foreign exchange
risk management mechanism. Currency market is now increasing in the market
because all countries are interconnect with each other. Foreign currency market helps
to change the currencies between two countries. The growth of FX futures market has
various with the participation of speculators, investors and arbitragers as a substitute
investment vehicle for Indian investors.

• Wealth Management

The financial success depends on the actual pieces of your life’s goals together.
Profitmart will helps to investor for all the pieces to create in one unique financial
picture. Company suggest the customers all about market. Their wealth management
approach proactively look for to understand their client’s wider conditions in order to
offer a superior level of advice. The strategies focus on growing and preserving
wealth while rigorously quantifying and monitoring risk. These approach, results in
customized solutions designed to help them achieve their unique goals.

• Depository
Our depository services offer you a secure, convenient, paperless and effective way
to keep track of your investment in share and other instruments over a period of time,
without the hassle of handling physical documents.

• Stock SIP

9
Stock SIP is an offered to help investor save regularly and it is a recurring deposit
with the bank where investor put in a small amount every month. It helps to small
investor for depositing in SIP. The difference here is that the amount is invested in
any investment is depends on the investors who interested in SIP. Savings a small
sum of money regularly at an early age makes money work with important impact on
wealth collecting and It helps in creating wealth over a longer time period & makes
investor controlled in their savings.

INFRASTRUCTURE FACILITIES
The Profit mart Security Pvt, Ltd. is located in Ichalkarnji. The branch open sharp on
9.00 am and it closed at 11.00 pm at night. All the employee of the company are
good in communication and they have good knowledge about share market. After
working hour experienced persons are teach to new employee about market.
Company giving information about NISM exam for clients or students. The company
has some basic facilities are following –
Tele-communication facilities travel Allowance, employee tour facility, medical
allowances, bonus and incentives etc.

SWOT ANALYSIS
STRENGTHS

• Excellent brand name.

• Experienced workforce
• High Goodwill
• Good Reputation
• It has multiple of products
WEAKNESS

• Less branches in Sub-urban and rural areas

• Low customer base
• High Brokerage charges related to its competitors
OPPORTUNITIES

• Technological progresses
• Increasing interest of people in Commodities
• Better range for increasing rural market

THREATS

10
 • Brokerage competition in the market
• Increasing competition because of new entrants
• Strict rules and regulations by the SEBI

FUTURE GROWTH
The Organization has a plan to develop software which helps their customers to
understand the market and trade easily. Company forecasting to reduce the brokerage
rate and to increase the reach of the company by expanding the company network.
Company is looking forward to conduct training session and seminars to create
awareness among the customers.

OBJECTIVES OF THE STUDY

 To study the significance of technical analysis in Indian capital market.
 To analyze the performance of select companies using advanced interactive charts and to
predict the future trends in the share prices.

 Technical analysis on selected stocks by means of certain technical indicators and interpret
on whether to buy or sell.

 To assist the investors in making investment decisions regarding to buy or sell the selected
stocks.

SCOPE OF THE STUDY

 This study mainly focuses on investment decisions by predicting futures stock price
movements through the use of Technical analysis i.e. by means of advanced interactive charts
and certain well known technical indicators. This study is based on five stocks belonging to
various different sectors listed in Bombay Stock Exchange.

NEED FOR THE STUDY

 To help comprehend the behaviour of share price movements in the past using charts.

11
 To understand the use of technical indicators in making buying or selling decisions of stocks.

 To predict future prices of stocks in the near short term and be able to choose appropriate
stop loss and target prices.

12
 CHAPTER 2
REVIEW OF LITERATURE
A Jaykumar (2014) observed that the stock market helps to know the intrinsic value
of the stock which talks about the technical analysis for traders when buying and
selling are done. Study resulted as it helps to know the current trend and risk of the
stock.
A Jaykumar, K. Sumathi (2013) founded that Indian banking sector various factors
effects the price because Indian banking sector is one of the wide sector in the
country. In this result, internal and external factors are effects in price of the banking
share.
Bhamini Garg (2014) found that the technical analysis helps to make a profitable
trade, right decision at right time and at right price. The unusual profits can be made
by applying technical analysis indicator to the past security data.

C. Boobalan (2014) found that the more accurate predictions of stock can be made
with the help of Fundamental analysis and Technical analysis. Technical analysis
does not predict the accurate trend but it’s helpful to investor or trader for buy and
sell signal.

Gabriel Dan I. Anghel (2015) concluded that in stock market 75 countries are
mostly using technical analysis indicator namely Moving Average Convergence
Divergence (MACD). Researcher said that there are many published papers in the
world but none looks at many countries as this one does. For this 1336 companies
are selected, with data staring January 1, 2001 to December 31, 2012.
Geoffrey Poitras, Dr. Charis Veld (2006) talks about the analysis of Bollinger
Band through an empirical analysis. Stock market Bollinger Band are most of the
time capture the price level, which can investor use for trading. For this study chose
20 days moving average for short term and 200 days for long term.
Hemal Pandya (2013) observed the perfect information about the price movement
using technical tools like EMA, MACD, RSI, ROC etc. and also observed the
different types of charts helps to invest with proper indicator.
Jumah Abbad, basher Fardousi and Muneer Abbad (2014) observed that the
technical tools forecast the price movement of the stock. Further observed that
forecast the stock returns very significantly.
Mary C. Martin, Jessette G. Canafranca and Mariam Irene E. Ortiz (2015)
concluded that the local stock market performance is one of the most active stock in
Philippine Stock Exchange. Technical analysis done when Fibonacci retracement,

13
candlestick pattern, stochastic analysis and golden ratio etc. are used. For this study
used unibank because this stock performance is better than other stocks in market
analysis.

Mitra (2002) studied ‘profiting from technical analysis in Indian stock market’.
Researcher tried to found out a trading strategy that was profitable even after
transaction cost.
Nithya, Dr. G. Thamizchelvan (2014) concluded that the CNX nifty assists in
decision making for investment using technical analysis. Study talk about forecasting
the stock price to find out the right stock for investment and candlestick charts and
indicators etc.
PoojaTalreja (2014) observed the behavior or share return and equity share
fluctuation in India. It also measures the money involved in investing the stock. This
paper gives to investor sell signal or buy signal applying Elliott Wave principle along
with Fibonacci sequence.
Sehgal and Garhyan (2002) found share recommendation based on technical
analysis which provides returns in the capital market. The study evaluating 21645
recommendations for 21 companies using 13 technical indicators.
Sehgal and Gupta (2007) evaluated technical tools for 69 large Indian companies
for the period of January 01, 1999 to December 31, 2004. The result consists that the
technical analysis provides statistically significant returns for all 9-technical
indicator on gross returns basis to the entire study period.
Sukanto Bhattacharya and Kuldeep Kumar (2006) found that the technical
analysis methodologies are based on the Fibonacci sequence. They also did that the
security price retracement may useful in constructing automated trading system.

T Deva Prasad, Chaitanya, Thulasi Kumar (2013) Studied the volatility ofshare
using technical analysis. The technical analysis predicts the turning point of stock
when to buy or sell the stock. Study observe that the Canara bank and Vijaya bank
share are gives the highest yield compare to another bank.

14
 CHAPTER 3
RESEARCH METHODOLOGY

The major Tools and Techniques used in this study are:

a. Candlestick Chart
Japanese candlestick charts form the basis of the oldest form of technical analysis.
Candlestick charts provide the information as namely open price. High price, low price and
Close price. However, Candlestick charting provide a visual indication of market psychology,
market sentiment and potential weakness making it a rather valuable trading tool.

b. Exponential moving average

Exponential moving average (EMA) is calculated by using the following formula:

EMA = (Current closing price – Previous EMA) * Factor + Previous EMA

Where
Factor = 2/ (n+1)

And n = number of days from which the average is to be calculated.

The moving averages are plotted on the price charts. The curved line joining these moving
averages represent the trend line. When the price of the share intersects and moves above or
below this trend line, it may be taken as the first sign of trend reversal.

15
c. Rate of Change Indicator (ROC)
ROC helps to indentify overbought and oversold conditions and also the possibility of trend
reversals. It measures the rate of change of the current price as compared to price a certain
number of days or weeks back.

ROC = (Current price / Price ‘n’ period ago) – 1

d. Relative strength index (RSI)

This is a powerful indicator that signals buying and selling opportunities ahead of the market.

RSI = 100 – [100 / (1+RS)]

Where
RS = Average gain per day / Average loss per day

e. Moving Average Convergence and Divergence (MACD)

The MACD Line is the difference between 12-day Exponential Moving Average (EMA) and
the 26-day EMA. Closing prices of the share are used for these moving averages. A 9day
EMA performs as the signal line and recognizes turns in the trend. The MACD Histogram
represents the difference between MACD and its 9-day EMA, the Signal line. When the
MACD Line is above the signal line, the histogram is positive and when the MACD Line is
below the signal line, the histogram is negative.

16
 ASSUMPTIONS OF TECHNICAL ANALYSIS

1. The Market Discounts Everything

A major criticism of technical analysis is that it only considers price movement,
ignoring the fundamental factors of the company. However, technical analysis
assumes that, at any given a time, a stock’s price reflects everything that has or could
affect the company including

Fundamental Factors. Technical analysts believe that the company’s fundamentals,

along with broader economic factors and market\ psychology, are all priced into the
stock, removing the need to actually consider these factors separately. This only
leaves the analysis of price movement, which technical theory views as a Product of
supply and demand for a particular stock in the market.

2. Price Moves In Trends

In technical analysis, price movements are believed to follow trends. This means that
after a trend has been established, the future price movement is more likely to be in
the same direction as the trend that to be against it. Most technical trading strategies
are based on this assumption.

3. History Tends To Repeat Itself

Another important idea in technical analysis is that history tends to repeat itself,
mainly in terms of price movement. The repetitive nature of price movement is
attributed to Market psychology; in other words, market participants tend to provide
a consistent reaction to similar market stimuli over time. Technical analysis uses
chats patterns to analyze market movements and understand trends. Although many
of\these charts have been use for more than 100 years they are still believed to be
relevant because they illustrate patterns in price movements that often repeat
themselves.

Importance of Technical Analysis

1. Not Just for stocks

Technical analysis has universal applicability. It can be applied to any financial
Instrument - stocks, futures and commodities, fixed-income securities, forex, etc

2. Focus on price
Fundamental developments are followed by price movements. By focusing only on
price action, technicians focus on the future. The price pattern is considered as a
leading indicator and generally leads the economy by 6 to 9 months. To track the
17
market, it makes sense to look directly at the price movements. More often than not,
change is a subtle beast. Even though the market is prone to sudden unexpected
reactions, hints usually develop before significant movements. You should refer to
periods of accumulation as evidence of an impending advance and periods of
distribution as evidence of an impending decline.

3. Supply, demand, and price action

Technicians make use of high, low and closing prices to analyze the price action of
a stock. A good analysis can be made only when all the above information is
present separately, these will not be able to tell much. However, taken together, the
open, high, low and close reflect forces of supply and demand.

4. Support and resistance

Charting is a technique used in analysis of support and resistance level. These are
trading range in which the prices move for an extended period of time, saying that
forces of demand and supply are deadlocked. When prices move out of the trading
range, it signals that either supply or demand has started to get the upper hand. If
prices move above the upper band of the trading range, then demand is winning. If
prices move below the lower band, then supply is winning.

5. Pictorial price history:-

A price chart offers most valuable information that facilitates reading historical
amount of security’s price movement over period of time charts are much easier to
read than table of numbers. It is easy to identify following-
- Past & present volatility
- Historical volume or trading volume
- Relative strength of stock Vs index

6. Assist with entry point:-

It helps in tracking a proper entry point. Fundamental used to decide what to buy &
Technical analysis is used to when to buy. Timing in this context plays a very
important role in performance. It can help spot demand (support) & supply
(resistance) levels as well as breakout.

TOOLS AND TECHNIQUES OF TECHNICAL ANALYSIS

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

1. Prices:
Whenever there is change in prices of securities, it is reflected in the changes in
Investor attitude and demand and supply of securities.

18
 2. Time
The degree of movement in price is a function of time. The longer it takes for a
reversal in trend, greater will be the price change that follows.

3. Volume:
The intensity of price changes is reflected in the volume of transactions that
accompany the change. If an increase in price is accompanied by a small change in
transactions, it implies that the change is not strong enough. Volume is simply the
number of shares or contracts that trade over a given period of time, usually a day.
The higher the volume, the more active the security. To determine the movement of
the volume (up or down).

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

5. The Market Discounts Everything:

A major criticism of technical analysis is that it only considers price movement,
ignoring the fundamental factors of the company. However, technical analysis
assumes that, at any given time, a stock's price reflects everything that has or could
affect the company -including fundamental factors. Technical analysts believe that
the company's fundamentals, along with broader economic factors and market
psychology, are all priced into the stock, removing the need to actually consider
these factors separately. This only leaves the analysis of price movement, which
technical theory views as a product of the supply and demand for a particular stock
in the market

6. History Tends To Repeat Itself :

Another important idea in technical analysis is that history tends to repeat itself,
Mainly in terms of price movement. The repetitive nature of price movements is
attributed to market psychology; in other words, market participants tend to provide
a consistent reaction to similar market stimuli over time. Technical analysis uses
chart patterns to analyse market movements and understand trends.

• Analyst bias
Technical analysis is not hard core science. It is subjective in nature and your
personal biases can be reflected in the analysis. It is important to be aware of these
biases when analyzing a chart. If the analyst is a perpetual bull, then a bullish bias
will overshadow the analysis. On the other hand, if the analyst is a disgruntled
eternal bear, then the analysis will probably have a bearish tilt.
19
 • Open to interpretation
Technical analysis is a combination of science and art and is always open to
Interpretation. Even though there are standards, many times two technicians will
look at the same chart and paint two different scenarios or see different patterns.
Both will be able to come up with logical support and resistance levels as well as key
breaks to justify their position. Is the cup half-empty or half-full? It is in the eye of
the beholder.

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

• Always another level

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

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

• TA is also useful in controlling risk

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

20
 TREND

Trend represent a constituent change in prices ( i-e a change in investor

expectations). Trends differs from support or resistance levels in that represent
change, where as support or resistance levels represent barriers to change.
Dow Theory provides us with a clear definition of trend. Dow described how
prices did not rise or fall in a straight line but moved in a series of zigzags which
resembled waves and it was the relative positioning of the peaks and troughs in
these waves that defined the trend.

1) Uptrend:-

A rising trend is defined by successively higher low-prices. A rising trend

can be thought of as rising support level the bulls in control & are pushing prices
higher. Uptrend is classified as series of higher highs & higher lows.

Notice how each successive peak and trough is located above the previous ones. For
example, the peak at trend is higher than the peak at uptrend. The uptrend will be
deemed broken if the next low on the chart falls below trend.
level indicates more willingness to sell and a lack of willingness to buy. A break in
the levels of support indicates that the expectations of sellers are reducing and they
are ready to sell at even lower prices.

21
 Logically as the price declines towards support and gets cheaper, buyers
become more inclined to buy and sellers become less inclined to sell. By the time
the price reaches the support level, it is believed that demand will overcome supply
and prevent the price from falling below support.

2) Resistance
It is horizontal ceiling where pressure to sell is greater than the pressure to buy.
Thus resistance level is price at which sufficient supply exist to, at least
temporarily, at upward movement, logically as price advance towards resistance,
seller become more inclined to sell &
buyer become less incline to buy. By the time the price reaches resistance level, it is
believed that supply will overcome demand & prevent the price from rising above
resistance.
A resistance line refers to that line beyond which a stock’s price will not
increase. It indicates that price level at which a sufficient supply of stock is
available to stop and possibly, for a time, head off an uptrend in prices. Logically as

the price advances towards resistance, sellers become more inclined to sell and
buyers become less inclined to buy.

3) Support and resistance zones:-

22
 A stock’s price is determined by supply and demand. Bulls buy when the
stock’s is prices are too low and bears sell when the price reaches its maximum.
Bulls increase the prices by increasing the demand and bears decrease it by
increasing the supply. The market reaches a balance when bulls and bears agree on
a price.
When prices are increasing upward, there exists a point at which the
bears become more aggressive the bulls begin to pull back - the market balances
along the resistance line. When prices are going downwards, the market balances
along the support line. As prices starts to decline toward the support line, buyers
become more inclined to buy and sellers start holding on to their stocks.
4) Breakout theory:-
Just as prices penetrate support & resistance levels when expectation change,
price can penetrate rising & falling trendline. It shows penetration of Merk’s falling
trendline as investors no longer expected lower price.

Break out is also called as ‘confirmation’. This is indicated by drawing a line,

which is a period of consolidation, when the share prices move sideways within a
range of about 5% of the share price. Eventually a break out will occur and it is
often suggested that the longer the period of consolidation, the greater will be the
extent of ultimate rise or fall.

Volume increased when trendline was penetrate . this is an important

confirmation that previous trend is no longer intact.

Breakout is a signal for the investors who wish to buy or sell their stocks

23
 1) Trader’s remorse:-
Volume is the key to determining the significance of penetration of trend.
Volume increased when the trend was penetrated, and was weak as the bulls tried to
move prices back above the trend line

2) DOW Theory:-
The Dow Theory is one involving when to buy and when to sell. The two
most important terms in this theory are support, and resistance. When the market
reaches a peak and starts to fall, the peak where its high was reached is now known
as a resistance point. When the market starts to rise back to the resistance point, the
lowest point of the valley just created is known as the support. As the market nears
the resistance point the “test” will occur determining whether to sell or not. If the
market rises past the resistance area the market will probably continue to rise, but if
the market falls beyond the support area the market will most likely continue to fall
and the stock should be sold

Pattern of charts:-

There are three main types of charts that are used by investors and traders
depending on the information that they are seeking and their individual skill levels.
The chart types are: the line chart, the bar chart, the candlestick chart.
A chart gives us a complete picture of a stock’s price history over a period of an
hour, day, week, month or many years. It has an x-axis (horizontal) and a y-axis
(vertical). Typically, the x-axis represents time; the y-axis represents price

24
Line chart:-
“Line charts” are formed by connecting the closing prices of a specifi c stock or
market over a given period of time. Line chart is particularly useful for providing a
clear visual illustration of the trend of a stock’s price or a market’s movement. It is
an extremely valuable analytical tool which has been used by traders for past many
years.
Line charts, especially for Elliott wave analysis. A line chart is the simplest of
all methods. It is constructed by joining together the closing price of each period,
for example daily closings for the daily line chart, weekly closings for the weekly
chart or monthly closings for the monthly line chart.

The line is formed by connecting the closing prices over the time frame. Line
charts do not provide visual information of the trading range for the individual
points such as the high, low and opening prices. A line chart's strength comes from
its simplicity. It provides an uncluttered, easy to understand view of a security's
price. Line charts are typically displayed using a security's closing prices.

Bar chart:-
A bar chart displays a security's open (if available), high, low, and closing
prices. Bar charts are the most popular type of security chart. The bar chart expands
on the line chart by adding several more key pieces of information to each data
point. The chart is made up of a series of vertical lines that represent each data
point. This vertical line represents the high and low for the trading period, along
with the closing price. The close and open are represented on the
Vertical line by a horizontal dash. The opening price on a bar chart is illustrated by
the dash that is located on the left side of the vertical bar. Conversely, the close is
represented by the dash on the right.
Bar chart is the most popular method traders use to see price action in a
stock over a given period of time. Such visual representation of price activity helps
in spotting trends and patterns.

25
Candle chart:-
A candlestick chart can be created using the data of high, low, open and
closing prices for each time period that you want to display. The hollow or fi lled
portion of the candlestick is called “the body” (also referred to as “the real body”).
The long thin lines above and below the body represent the high/low range and are
called “shadows” (also referred to as “wicks” and “tails”). The high is marked by
the top of the upper shadow and the low by the bottom of the lower shadow. If the
stock closes higher than its opening price, a hollow candlestick is drawn with the
bottom of the body represents the opening price and the top of the body
representing the closing price. If the stock closes lower than its opening price, a
filled candlestick is drawn with the top of the body representing the opening price
and the bottom of the body representing the closing price.

26
Bull-

The Bulls A bull market is when everything in the economy is great, people are
finding jobs, gross domestic product (GDP) is growing, and stocks are rising.
Picking stocks during a bull market is easier because everything is going up. Bull
markets cannot last forever though, and sometimes they can lead to dangerous
situations if stocks become overvalued. If a person is optimistic and believes that
stocks will go up, he or she is called a "bull" and is said to have a "bullish
outlook".

The Bears –

A bear market is when the economy is bad, recession is looming and stock
prices are falling. Bear markets make it tough for investors to pick profitable
stocks. One solution to this is to make money when stocks are falling using a
technique called short selling. Another strategy is to wait on the side lines until you
feel that the bear market is nearing its end, only starting to buy in anticipation of a
bull market. If a person is pessimistic, believing that stocks are going to drop, he or
she is called a "bear" and said to have a bearish outlook.

27
 1) Reversal pattern

Candlesticks primarily focus on trend reversals. Reversal patterns are indicators

that the previous trend is about to:
 Reverse,

 flatten out and continue,

 or flatten out and reverse

As you can see, reversal patterns can signal several different outcomes. This is
why we need to have a firm grip on reversal patterns before we proceed any
further. Successful traders have the ability to know what the trend is doing and is
going to do. They do this by mastering the ability to recognize reversal patterns
and then implementing the knowledge gained to improve their trading positions.
The main use of reversal patterns is to signal when to exit a trade. They
should not be used to signal when to enter a trade. The reason is because a reversal
pattern can signal that the trend is reversing, flattening and resuming or flattening
and reversing. We must wait until we get more information after the reversal
pattern to make our move.
The reversal patterns that we will discuss are divided into two sections. Single
candle reversal indicators and multi-candle reversal indicators are:

A. Single Candle Reversal Indicators

 Hammer and Hanging Man

 Towers

1) Hammer:-

A bullish reversal pattern that forms during a downtrend. It is named

because the market is hammering out a bottom. A long lower shadow about
two or three times the length of the real body. Little or no upper shadow. The
28
 real body is at the upper end of the trading range. The color of the real body
is not important, however, a green body is more bullish than a red body.

Hammer candlesticks form when a security moves significantly lower after

the open, but rallies to close well above the intraday low. The resulting candlestick
looks like a square lollipop with a long stick. If this candlestick forms during a
decline, then it is called a Hammer. It indicates a reversal or a bottom is near in a
downtrend and when they appear at the top of an uptrend the name transforms to a
Hanging man and it indicates that a top is near. You need to know that there are
three main characteristics that they need in order to qualify.
29
 1. The real body is at the upper end of the trading range and that the color
(white or black) is not important.
2. The lower part or the “shadow” should be at least twice the length of the
real body.

3. It should have little or no upper shadow like a shaved head candle

2) Hanging man:-
A bearish reversal pattern that will often mark a top or strong resistance level.
When price is rising, the formation of a hanging man indicates that sellers are
beginning to outnumber the buyers. The long lower shadow demonstrates that
sellers pushed prices lower during the session.

The hanging man appears during an uptrend, and its real body can be either black
or white. While it signifies a potential top reversal, it requires confirmation during
the next trading session. The hanging man usually has little or no upper shadow.

30
 3) Towers:-
Towers are single candlestick reversal signals. There are bullish towers and bearish
towers.

a) Bullish Tower:-
It occurs after a bearish trend, Bullish Towers are strong green candlesticks that
have a low that is the same as it’s open and closes at or near it’s high. Towers
should be used to forecast reversals. Bullish towers should forecast a rally.
Bullish towers can be used to confirm support. If a candlestick breaks the support
level, look for the trend to end If the next candlestick closes under the bullish
tower, the reversal signal becomes void.

a) Bearish Towers:-
It occurs after a bullish trend, Bearish Towers are strong red candlesticks that
have a high that is the same as it’s open and closes at or near it’s low. It should
forecast a downtrend. If the next candlestick closes above the bearish tower, the
reversal signal becomes void.

31
 Bearish towers can be used to confirm resistance. If a candlestick breaks the
resistance level, look for the trend to end.

B. Multi-Candle Reversal Indicators

 Engulfing Patterns

 Harami Patterns

 Tweezers Tops and Bottoms

 Head and Shoulders / Inverted Head and Shoulders

 Twin Tower Tops and Bottoms

1) Engulfing Patterns :-

32
Engulfing patterns are important reversal signals that are composed of two opposite
color real bodies. The second candlestick must be the opposite color and be larger
than the previous candlestick
There are several factors that we need to consider when evaluating the reliability of
an engulfing pattern. They are:
 If the first candlestick in the pattern is a doji or a very small real bodied
candlestick, the odds of a reversal occurring are increased. The reason being is
because the doji or very small real bodied candlestick represents the trend losing
steam. The engulfing second candlestick only supports this conclusion.
 If the engulfing pattern occurs after one or more large candlesticks, the odds of
a reversal occurring are increased. This occurs because the market is either
overbought or oversold which makes vulnerable to profit taking.
 If the engulfing candlestick is a high volume trading session, the odds of a
reversal occurring are increased.

a) Bullish Engulfing Pattern:-

It occurs during an uptrend, a is comprised of a red real body, then is
engulfed by a larger green real body. It is indicated when a white candle's real body
completely covers the previous black candle's real body. It is also relevant to note
that the opening is lower than the first candles real body and the close is above the
first candles middle portion of the body. The engulfing bullish pattern is bullish
during a downtrend. It signifies that the momentum may be shifting from the bears
to the bulls.
Engulfing patterns primary use is to signal trend reversals, however, they can also
be used to offer support and resistance levels.Bullish engulfing patterns can offer
support levels. Use the lowest low of the two candlesticks.

33
There are three criteria for an engulfing pattern to be valid. They are-

 A bullish engulfing pattern must come after a downtrend.

 A bullish engulfing pattern must comprise of a red real body engulfed by a

larger green real body.
 The second candlestick must always engulf the first candlestick.

b) Bearish Engulfing Pattern:-

It has a distinct pattern. As you can see the engulfing bearish line is signaled
where a black candle's real body completely covers the previous white candle's
real body. It is important to note that the opening is higher than the first candles
real body and the close is below the first candles middle portion of the body. The
engulfing bearish pattern occurs during an uptrend. It signifies that the momentum
may be shifting from the bulls to the bears. It occurs during a downtrend; it is
comprised of a green real body, then engulfed by a larger red real body.

34
There are two criteria for an engulfing pattern to be valid. They are:

 A bearish engulfing pattern must come after an uptrend

 A bearish engulfing pattern must comprise of a green real body engulfed by a

larger red real body.Bearish engulfing patterns can offer resistance levels.
Use the highest high of the two candlesticks

1) The Harami Pattern:-

The Harami pattern is a small real bodied candlestick that is contained within a
long real red or green bodied candlestick. Harami is an old Japanese word meaning
“pregnant”. The Japanese have nicknames for the long real bodied candlestick
“mother” and “baby” for the small real bodied candlestick. Meaning, the first
larger “mother” candlestick is giving birth to the second smaller “baby”
35
candlestick. The harami pattern can also be used as a support or resistance level
when paired with another harami.
Only the real body of the second candlestick must be within the larger first real
body. You don’t have two concentrate on the shadows.

a) The Bullish Harami:-

It must come after a bearish trend.The first candlestick in the pattern must be a tall
real bodied candlestick. The second candlestick in the pattern must be a small real
bodied candlestick.The two candlesticks do not need to be opposite colors,
however, the odds of the pattern being a valid reversal signal increase if they are
opposite.

36
a) The Bearish Harami:-
It must come after a bullish trend. The first candlestick in the pattern must be a tall
real bodied candlestick. The second candlestick in the pattern must be a small real
bodied candlestick. The two candlesticks do not need to be opposite colors,
however, the odds of the pattern being a valid reversal signal increase if they are
opposite

In an uptrend, a black (but preferably a white) body is followed by a small white or

black candle that is completely covered by the first candle body. A top reversal
signal after confirmation. White-black and white-white combinations are the most
common.

37
2) Harami Cross:-
The harami cross pattern is composed of a long real bodied candlestick followed by
a doji candlestick. It is more powerful than the regular harami pattern. The reason
being, the smaller the second real bodied candlestick is the less steam the market
has in that direction, meaning a reversal is very likely. It should only be used to
call top reversals.

3) Head & shoulder:-

The Head and Shoulders pattern is by far the most reliable and widely used of all
reversal patterns. This pattern indicates a reversal of an uptrend. This pattern
occurs at the end of a bull market and is characterized by two smaller advances
flanking a higher advances just as the head lies in between two shoulders. This is
one of the most popular and reliable chart patterns in technical analysis. It is a
reversal chart pattern that when formed, signals that the security is likely to move
against the previous trend.
This differs from the double top in that the first evidence of its
development is the generation of a lower high rather than an equal high; in other
words, sellers are beginning to appear at lower levels than they did previously and
the buyers no longer have the same appetite at these higher levels as before.
There are several criteria for a head and shoulders that must take place in order
for the patterns to be valid reversal patterns. They are:
 The price must be at a high in order for a head and shoulders to occur.

 The high must be tested 3 times, without breaking the resistance level in order
for a head and shoulders to occur.

38
 The middle mountain top must be significantly higher than the other two
mountains.

It occurs when the central mountain top is significantly higher than the others. The
line drawn from the two bottoms of the head is called the neckline. Typically, the
neckline makes a great resistance level.

4) Inverted Head and Shoulders :-

It is the same pattern only inverted. This pattern occurs when the central mountain
bottom is significantly lower than the others. The line drawn from the two tops of
the inverted head is called the inverted neckline. Typically, the inverted neckline
makes a great support level.

There are several criteria for inverted head and shoulders that must take place in
order for the patterns to be valid reversal patterns. They are:
 The price must be at a low in order for an inverted head and shoulders to occur.

 The low must be tested 3 times, without breaking the support level in order for a
head and shoulders to occur.
 The middle mountain bottom must be significantly lower than the other two
mountains.
39
5) Tweezer top & bottom:-
Two or more candles making highs together. Preferably, the highs are made with
high prices, but they also can be combinations of any of the other prices. Size and
color are not important. This is a reversal pattern that, most of the time, is part of
another pattern.It occurs after a rally. The pattern begins with a long green tower
followed by several small bodied candlesticks, finishing with a long red tower.
Hence, the name twin tower tops.
There are three criteria for a twin tower top or bottom to be valid. They are:

 A twin tower top pattern must come after an uptrend.

 A twin tower top pattern must comprise of a long green real body followed by
several small bodied candlesticks, finishing with a long red real body.
 The twin towers must be significantly long real bodied candlesticks.

40
Twin Tower Bottoms occurs after a bearish trend. The pattern begins with a long
red tower followed by several small bodied candlesticks, finishing with a long
green tower. Hence, the name twin tower bottoms
There are two criteria for a twin tower top or bottom to be valid. They are:-
 A twin tower bottom pattern must come after a downtrend

 A twin tower bottom pattern must comprise of a long red real body followed by
several small bodied candlesticks, finishing with a long green real body.

6) Triple bottom & Triple Top:-

A pattern used in technical analysis to predict the reversal of a prolonged
downtrend. The pattern is identified when the price of an asset creates three troughs
at nearly the same price level. The third bounce off the support is an indication that
buying interest (demand) is outweighing selling interest (Supply) and that trend is
in the process of reversing.
Once the first bottom is created, the price reaches a peak and retraces back
toward the prior support. This is when buyer enters again and pushes the price of
the asset higher, creating bottom No.2. The price of the asset then created another
peak and heads lower for its final test of the support. The final bounce of the
support level creates bottom No.3 and traders will get ready to enter a long
position once the price breaks above the previous resistance (Illustrated by the
black on the chart). This pattern is considered to be a very reliable indication that
the downtrend has reversed and that the new trend in the upward direction.
Sudden change in the price direction of a stock, index, commodity or derivative
security. Also referred to as a “Trend Reversal”, “Rally” or “Correction”.

41
 A pattern used in technical analysis to predict the reversal of prolonged up trend.
This pattern is identified when the price of an asset creates three peaks at nearly
the same price level. The bonus off the resistance near the third peak is clear
indication that buying interest is becoming exhausted. The traders to predict the
reversal of the uptrend use it.

The three consecutive tops make this pattern visually similar to the head and
shoulders pattern but, in this case, the middle peak is nearly equal to the other
peak rather than being higher. Many traders will enter into a short position once
the price of asset falls below the identified support level.

42
1) Shooting star:-
The Shooting Star is a single line pattern that indicates an end to the uptrend. It is
easily identified by the presence of a small body with a shadow at least two times
greater than the body. It is found at the top of an uptrend. The Japanese named this
pattern because it looks like a shooting star falling from the sky with the tail
trailing it.
The upper shadow should be at least two times the length of the body. Prices gap
open after an uptrend. A small real body is formed near the lower part of the price
range. The color of the body is not important although a black body should have
slightly more bearish implications. The lower shadow is virtually non-existent.
The following day needs to confirm the Shooting Star signal with a black candle
or better yet, a gap down with a lower close.

During an uptrend, the market gaps open and rallies to a new high. The
price opens and trades higher. The bulls are in control. But before the close of the
day, the bears step in and take the price back down to the lower end of the trading
range, creating a small body for the day.

This could indicate that the bulls still have control if analysing a Western
bar chart.

43
However, the long upper shadow represents that sellers had started stepping in at
these levels. Even though the bulls may have been able to keep the price positive
by the end of the day, the

evidence of the selling was apparent. A lower open or a black candle the next day
reinforces the fact that selling is going on.

2) Star
The Star is called such when it is at the top of an up trend. It usually can signal a
reversal. Here again the color does not matter but the body should be at the lower
end of the trading range with a long shadow.

The significance here is that it shows the market opened near the low of the day
then had an explosive rally that failed and then closed back down near the low
of the day. Usually there is little or no lower shadow like a shaven bottom.
When it is at the bottom of a downtrend this is called an inverted Hammer. The
color (white or black) is not important. This is not a tremendously reliable candle
as a bottom indicator on it’s own. Usually a white candle opening above the
inverted hammer’s body the next trading session can verify the potential for a buy
signal.

A small real body that gaps away from the large real body preceding it is known as
star. It’s still a star as long as the small real body does not overlap the preceding real
body. The colour of the star is not important. Stars can occur at tops or bottoms.

1) 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. This candlestick can also be a doji, in which case the pattern would
be a morning doji star.
3. A long white candlestick.

44
 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 ceases or slows significantly after the
gap and a small candlestick forms. The small candlestick indicates indecision and
a possible reversal of trend. If the small candlestick is a doji, the chances of a
reversal increase. The third long white candlestick provides bullish
confirmation of the reversal.

It is a major bottom reversal pattern that is a three candle formation. The first
candle has a long black real body; the second candle has a small real body that gaps
lower than the first candles body. If the second candle is a Doji then the formation
leads to a stronger signal. The third candle’s body sometimes gaps higher than the
second one but does not happen often. It is important that it is a white candle and
closes well above the midpoint of the first candles real body.
Let us understand what does doji? It has nearly the same opening as the
closing price. They indicate a change of direction. They aremore powerful as an
indicator for a market top (especially after a long white or hollow candlestick
meaning themarket closed above the open). They signify indecision and
uncertainty. They can work to indicate bottoms butthere are more signals needed to
confirm a bottom using Doji.

2) Evening star-
It signals a major top. This is a three “candle” formation. The first one is
normally a tall white or hollow real body the second one is a small real body It can
be white or black) this gaps higher and can form star formation (a Doji can also be
in the middle and that is considered even more bearish). Anyway the third is a

45
black candlestick and the important concept here is to know that it should close
well into the first candles real body.
The Evening Star is a top reversal pattern that occurs at the top of an uptrend. It is
formed by a tall white body candle, a second candle with a small real body that
gaps above the first real body to form a “star” and a third black candle that closes
well into the first session’s white real body.

This pattern is that a strong uptrend has been in effect. Buyers have been piling up
the stock. However, it is the level where sellers start taking profits or think the
price is fairly valued.
The next day all the buying is being met with the selling, causing for a small
trading range. The bulls get concerned and the bears start taking over. The third
day is a large sell off day.
3) Some more pattern

1) Cup & handle pattern:-

This chart is a bullish continuation pattern in which the upward trend has paused
but will continue in an upward direction once the pattern is confirmed

46
This price pattern forms what looks like a cup, which is preceded by an upward
trend. The handle follows the cup formation and is formed by a generally
downward/sideways movement in the security's price. Once the price movement
pushes above the resistance lines formed in the handle, the upward trend can
continue. There is a wide ranging time frame for this type of pattern, with the span
ranging from several months to more than a year.

2) Rounding bottom pattern:-

A rounding bottom, also referred to as a saucer bottom, is a long-term

reversal pattern that signals a shift from a downward trend to an upward trend.
This pattern is traditionally thought to last anywhere from several months to
several years.

47
A rounding bottom chart pattern looks similar to a cup and handle pattern but
without the handle. The long-term nature of this pattern and the lack of a
confirmation trigger, such as the handle in the cup and handle, makes it a difficult
pattern to trade.

1) Triangles:-
Triangles are some of the most well-known chart patterns used in technical
analysis. The three types of triangles, which vary in construct and implication, are
the symmetrical triangle, ascending and descending triangle. These chart patterns
are considered to last anywhere from a couple of weeks to several months.

48
The symmetrical triangle is a pattern in which two trend lines converge toward
each other. This pattern is neutral in that a breakout to the upside or downside is a
confirmation of a trend in that direction. In an ascending triangle, the upper trend
line is flat, while the bottom trend line is upward sloping. This is generally thought
of as a bullish pattern in which chartists look for an upside breakout. In a
descending triangle, the lower trend line is flat and the upper trend line is
descending. This is generally seen as a bearish pattern where chartists look for a
downside breakout.

1) Flag & pennant:-

These two short-term chart patterns are continuation patterns that are formed when
there is a sharp price movement followed by a generally sideways price
movement. This pattern is then completed upon another sharp price movement in
the same direction as the move that started the trend. The patterns are generally
thought to last from one to three weeks.

49
 There is little difference between a pennant and a flag. The main difference
between these price movements can be seen in the middle section of the chart
pattern. In a pennant, the middle section is characterized by converging trend
lines, much like what is seen in a symmetrical triangle. The middle section on the
flag pattern, on the other hand, shows a channel pattern, with no convergence
between the trend lines. In both cases, the trend is expected to continue when the
price moves above the upper trend line.

CHAPTER 4
DATA ANALYSIS

NSE BANK NIFTY-

In 2000 the India Index Service and Product Limited (IISL) launched the BANK
NIFTY is a bank index of NSE (National Stock Exchange).This index shows the
whole performance of banking sector so it gives the standard of the banking sector.
Bank nifty involves following stocks

50
Below is the list of Companies that are included in Bank Nifty Weightage Index
(Nifty Bank Index Stocks) as released by NSE India on basis of closing prices of
May 31, 2021.

1. HDFC Bank – 28.29%

2. ICICI Bank – 21.37%
3. Kotak Mahindra Bank – 12.36%
4. State Bank of India (SBI) – 12.21%
5. Axis Bank – 12.15%
6. IndusInd Bank – 5.05%
7. AU Small Finance Bank Ltd. – 1.85%
8. Bandhan Bank – 1.84%
9. Federal Bank – 1.54%
10.IDFC First Bank Ltd. – 1.38%
11.Punjab National Bank (PNB)- 1.11%
12.RBL Bank – 0.85%

51
 TECHNICAL ANALYSIS OF

Tools used for analysis-

Candlestick Chart (Time Interval-
1) AXIS BANK

• 1 day)
• Indicator- Bollinger Band, Volume, RSI,
MACD

Figure 4.1- Axis Bank Technical Chart

Interpretation-
The above candlestick chart of Axis Bank with Indicators Bollinger Band,
Volume, RSI, MACD shows the daily price movement wherein it shows BUY
signal at 23rd April, 2021 Because of in Bollinger Band indicator double bottom
created, In Volume indicator green bar of volume crossed EMV line, In MACD
indicator MACD line crossed to Signal line i.e. positive crossover, In RSI EMA

52
 TECHNICAL ANALYSIS OF

Tools used for analysis-

Candlestick Chart (Time Interval-
line above 50% and passed oversold situation. Buy position trade can take in
CASH, F&O also. (We create trade Buy range 655, Target 726. Stop loss 635)
At 19th Feb, 2021 SELL signal formed because of in Bollinger Band indicator High
candle low breaks, In MACD indicator MACD line(Blue line) crossed to Signal
line (Red line) i.e. negative crossover, In Volume indicator Red bars forming
below the 20 EMV line, In RSI indicator after overbought situation trend goes
downside. Sell Position only can take in Future and Option segment.
(We create trade Sell range 770, Target 626, Stop loss 801)
2) HDFC BANK

• 1 day)
• Indicator- Bollinger Band, Volume, RSI,
MACD

Figure 4.2- HDFC Bank Technical Chart

53
 TECHNICAL ANALYSIS OF

Tools used for analysis-

Candlestick Chart (Time Interval-

Interpretation-
The above candlestick chart of HDFC Bank with Indicators Bollinger Band,
Volume, RSI, MACD shows the daily price movement wherein it shows BUY
signal at 23rd April, 2021 Because of in Bollinger Band indicator double bottom
created, In Volume indicator green bar of volume crossed EMV line, In MACD
indicator MACD line crossed to Signal line i.e. positive crossover, In RSI EMA
line above 50% and passed oversold situation. Buy position trade can take in
CASH, F&O also. (We create trade Buy at 1410, Target 1490, Stop loss 1360)
At 18th Feb, 2021 SELL signal formed because of in Bollinger Band indicator High
candle low breaks, In MACD indicator MACD line(Blue line) crossed to Signal
line (Red line) i.e. negative crossover, In Volume indicator Red bars forming
below the 20 EMV line, In RSI indicator after overbought situation trend goes
downside. Sell Position only can take in Future and Option segment. (We create
trade Sell at 1600, Target 1370. Stop loss 1645)

3) ICICI BANK

• 1 day)
• Indicator- Bollinger Band, Volume, RSI,
MACD

54
 TECHNICAL ANALYSIS OF

Tools used for analysis-

Candlestick Chart (Time Interval-

Figure 4.3- ICICI Bank Technical Chart

Interpretation-
The above candlestick chart of ICICI Bank with Indicators Bollinger Band,
Volume, RSI, MACD shows the daily price movement wherein it shows BUY
signal at 22nd April, 2021 Because of in Bollinger Band indicator double bottom
created, In Volume indicator green bar of volume crossed EMV line, In MACD
indicator MACD line crossed to Signal line i.e. positive crossover, In RSI EMA
line above 50% and passed oversold situation. Buy position trade can take in
CASH, F&O also. (We create trade Buy at 560, Target 620, Stop loss 530)
At 18th Feb, 2021 SELL signal formed because of in Bollinger Band indicator
High candle low breaks, In MACD indicator MACD line(Blue line) crossed to
Signal line (Red line) i.e. negative crossover, In Volume indicator Red bars
forming below the 20 EMV line, In RSI indicator after overbought situation trend
goes downside. Sell Position only can take in Future and Option segment.

55
 TECHNICAL ANALYSIS OF

Tools used for analysis-

Candlestick Chart (Time Interval-
(We create trade Sell at 630, Target 520, Stop loss 652)
4) KOTAK MAHINDRA BANK

• 1 day)
• Indicator- Bollinger Band, Volume, RSI,
MACD

Figure 4.4- ICICI Bank Technical Chart

Interpretation-
The above candlestick chart of KOTAK Bank with Indicators Bollinger
Band, Volume, RSI, MACD shows the daily price movement wherein it shows
BUY signal at 23rd April, 2021 Because of in Bollinger Band indicator double
bottom created, In Volume indicator green bar of volume crossed EMV line, In
MACD indicator MACD line crossed to Signal line i.e. positive crossover, In RSI

56
 TECHNICAL ANALYSIS OF

Tools used for analysis-

Candlestick Chart (Time Interval-
EMA line above 50% and passed oversold situation. Buy position trade can take in
CASH, F&O also. (We create trade Buy at 1740, Target 1820, Stop loss 1670)
At 23rd Feb, 2021 SELL signal formed because of in Bollinger Band indicator
High candle low breaks, In MACD indicator MACD line(Blue line) crossed to
Signal line (Red line) i.e. negative crossover, In Volume indicator Red bars
forming below the 20 EMV line, In RSI indicator after overbought situation trend
goes downside. Sell Position only can take in Future and Option segment. (We
create trade Sell at 1950, Target 1700, Stop loss 2010)

5) STATE BANK OF INDIA

• 1 day)
• Indicator- Bollinger Band, Volume, RSI,
MACD

57
 TECHNICAL ANALYSIS OF

Tools used for analysis-

Candlestick Chart (Time Interval-
Figure 4.5- SBI Bank Technical Chart

Interpretation-
The above candlestick chart of SBI Bank with Indicators Bollinger Band,
Volume, RSI, MACD shows the daily price movement wherein it shows BUY
signal at 26th April, 2021 Because of in Bollinger Band indicator double bottom
created, In Volume indicator green bar of volume crossed EMV line, In MACD
indicator MACD line crossed to Signal line i.e. positive crossover, In RSI EMA
line above 50% and passed oversold situation. Buy position trade can take in
CASH, F&O also. (We create trade Buy at 342, Target 420, Stop loss 320)
At 22nd Feb, 2021 SELL signal formed because of in Bollinger Band indicator
High candle low breaks, In MACD indicator MACD line(Blue line) crossed to
Signal line (Red line) i.e. negative crossover, In Volume indicator Red bars
forming below the 20 EMV line, In RSI indicator after overbought situation trend
goes downside. Sell Position only can take in Future and Option segment. (We
create trade Sell at 395, Target 325, Stop loss 428)

58
 CHAPTER 5
FINDINGS, RECOMMENDATION AND SUGGESTION
Nifty Bank Index is an index comprised of the most liquid and large capitalized Indian Banking
stocks. It provides investors and market intermediaries with a benchmark that captures the capital
market performance of Indian Banks. The index has 12 stocks from the banking sector which
trade on the National Stock Exchange.

Nifty Bank companies as on Jun-2021

1) HDFC BANK-

• Rising Net Cash Flow and Cash from Operating activity

• Growth in Quarterly Net Profit with increasing Profit Margin (YoY)
• Increasing Revenue every quarter for the past 2 quarters
• Annual Net Profits improving for last 2 years
• Company with Zero Promoter Pledge
• FII / FPI or Institutions increasing their shareholding
• Recent Results : Growth in Operating Profit with increase in operating
margins (YoY)
2) ICICI BANK-
Strengths-

• Rising Net Cash Flow and Cash from Operating activity

•
Company with high TTM EPS Growth
Strong Annual EPS Growth
• Growth in Net Profit with increasing Profit Margin (QoQ)
• Growth in Quarterly Net Profit with increasing Profit Margin
•
(YoY)
Increasing profits every quarter for the past 4 quartersStrong
• cash generating ability from core business - Improving Cash
Flow from operation for last 2 years
Annual Net Profits improving for last 2 years
• Book Value per share Improving for last 2 years
FII / FPI or Institutions increasing their shareholding
•
Companies with rising net profit margins - quarterly as well as
• TTM basis
•

KOTAK MAHINDRA BANK-

3) Strengths-

Rising Net Cash Flow and Cash from Operating activity

Company with high TTM EPS Growth
• Effectively using Shareholders fund - Return on equity (ROE)
• improving since last 2 year
Growth in Quarterly Net Profit with increasing Profit Margin
•
(YoY) Strong cash generating ability from core business -
Improving Cash Flow from operation for last 2 years
• Company able to generate Net Cash - Improving Net Cash
• Flow for last 2 years
Annual Net Profits improving for last 2 years
Book Value per share Improving for last 2 years
•
Company with Zero Promoter Pledge

• STATE BANK OF INDIA

Strengths-
•

60
 • Rising Net Cash Flow and Cash from Operating activity
Effectively using Shareholders fund - Return on equity (ROE)
4) improving since last 2 year
Annual Net Profits improving for last 2 yearr
Book Value per share Improving for last 2 years
• Company with Zero Promoter Pledge
• FII / FPI or Institutions increasing their shareholding
• Near 52 Week High
• Strong Momentum: Price above short, medium and long term moving
averages

5) AXIS BANK
Strengths-

• Company with Zero Promoter Pledge

• FII / FPI or Institutions increasing their shareholding
• Near 52 Week High
• Strong Momentum: Price above short, medium and long term moving
averages
• Company with Zero Promoter Pledge
• FII / FPI or Institutions increasing their shareholding
• Recent Results : Growth in Operating Profit with increase in operating
margins (YoY)
• Companies with rising net profit margins - quarterly as well as TTM basis
• Strong Momentum: Price above short, medium and long term moving
averages

6) INDUSIND BANK

In the year 2019 merged with Bharat Financial Inclusion making it a perfect
fit to the Bank’s rural banking and microfinance theme. Backed by solid domain
knowledge and coverage, the Bank is able to make huge strides in vehicle
financing. It has managed to contain and reduce its bad loans over a period of years
along with consistent double digit growth in profitability and net interest income.
IndusInd Bank is focused on increasing retail lending, reducing dependency of
large deposits from government & corporates and maintaining sustainable liquidity
under the newly appointed MD & CEO Mr. Sumant Kathpalia. Bank’s CASA ratio
is at 40% one of the best among private sector banks in India. Its provision
coverage ratio of 87% helps the bank withstand shocks arising out of the
COVID19 pandemic. After the Yes Bank saga, IndusInd Bank witnessed migration
of large deposits from government & corporates to larger banks, however, it did
manage to bring the migrated deposit reporting 10% YoY growth in deposit base.

62
Bank has managed maintain their NIM’s at 4.12% with lower pace of NPA
formation (i.e. NNPA at 0.22%).
 SUGGESTION
While it is time to rejoice at the booming Indian economy and the historical
journey of the Sensex, the foremost question in the minds of all investors is whether
it is the right time to buy or sell stocks now. The main rules are

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

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

3. Avoid trading/timing the market: 'timing' leads to huge monetary losses and
mental tension.

4. Avoid actions based on sentiments: Don't be emotionally attached to stocks

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

6. Stay invested, possibly continue to invest more: It is natural to book profits

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

7. Diversify: diversify a bit, looking at stocks, mutual funds, commodities and

gold (for a longer-term). If equities pick up some of these stocks again.

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

These rules are frequently used in technical analysis. The rules are clear and
consistent but they are difficult to use in practice. Much experience is needed to use
them. The investor always kept in the mind we have limited capital but the
unlimited opportunity. Once you lose the capital you cannot opportunity. But if you
lose opportunity then hundreds of other opportunity waiting for us.
 CHAPTER 6
CONCLUSION

Technical analysis is the study of behavior of buyer & seller. It is very useful tool
to capture gain with the help of technical analysis. It is very important analysis is
the study of investor behavior and its effect on the subsequent price action of
financial instruments. The main data that we need to perform our studies are the
price histories of the instruments, together with time and volume information.

Technical analysts examine the price action of financial markets instead of

fundamental factors that to effect to market prices. It is important to understand to
enter in the transaction & understand the trade management once you understand
this psychology then it is easier to predict future & earn profit.

The Impact of COVID-19 on the Banking Sector

COVID-19 has raised doubts on the banking sector’s ability to grow strongly
with sound asset quality for the near term. Recently, prudent banks are preparing
for an unforeseen rise in NPA which has kept provisions elevated impacting
profitability and in the effort to be proactive many have already raised buffer
capital. The already lagging economy kept business growth muted and this got
further accentuated by lockdowns. Moratorium by RBI has certainly kept asset
quality stable though revival in repayment when the moratorium ends remains an
overhang. Moratorium is expected to create a new cycle of bad loans in the entire
banking industry.

The sector as whole is likely to witness new NPLs especially from industries
like airlines, hotels, entertainment, leveraged corporate in real estate, power,
NBFCs as well as unsecured retails to an extent. Hence, the process of recovery
could certainly be delayed. However, in order to provide further support to the
borrowers, banks have provided one-time loan restructuring scheme. But how that
works and how many borrowers repay their loans only time will tell. The
possibility of defaults will certainly pressurize this sector as a whole but the moat
and ALM experience that each of them carry will certainly enable growth over the
long term.
BIBLIOGRAPHY
BOOKS

• John J. Murphy, Technical Analysis of the Financial Markets: A

Comprehensive guide to trading methods and applications, Penguin USE,

nd
2 edition, 1999.
• Steven B. Achelis,ndedition, Technical Analysis 2014. from A to Z,
McGraw-Hill Education, 2
• A to Z analysis by Steven Achilles
• Technical analysis for short term trade by Martin J Pring.
• Technical analysis by Gerald Appel
• Essential of technical analysis for financial market by James Chen
• Mastering Technical analysis by John Brooks
.

WEBILOGRAPHY

• https://in.tradingview.com/
• https://www.moneycontrol.com/
• https://stockcharts.com/
• https://www.investopedia.com/
• https://profitmart.in