"Testing of Technical Analysis Tools As A Signal For Entry A

Testing of Technical Analysis Tools As a Signal for Entry & Exit of Stock Market
1.1 Investment
Investment in various types of assets is an interesting activity that attracts people from all walks of life irrespective of their occupation, economic status, education and family background. When a person has more money than requires for current consumption, that person would be considered as a potential investor. The investor who is having extra cash could invest it in securities or in any other assets like gold or real estate or could simply deposit it in his bank account. The companies that have extra income may like to invest their money in the extension of the existing firm or undertake new venture. All of these activities in a broader sense mean investment.
1.1.1 Definition
Investment is the employment of funds on assets with the aim of earning income or capital appreciation. To the economist, investment is the net addition made to the nations capital stocks that consist of goods and services that are used in the production process. Financial investment is the allocation of money to assets that are expected to yield some gain over a period of time. It is an exchange of financial claims such as stocks and bonds for money.
1.1.2 Investment Attributes

For evaluation of investment avenues, the following attributes are relevant. Rate of return Risk Marketability Tax shelter Convenience
The Oxford College of Business Management
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1.2 Security analysis
The share price movement is analyzed broadly with two approaches, namely, fundamental approach and the technical approach. Fundamental Approach analyses the share prices on the basis of economic, industry and company statistics. If the price of the share is lower than its intrinsic value, investor buys it. But, if he finds the price of the share higher than the intrinsic value he sells and gets profit. A technical Approach analysis is the process of identifying trend reversals at an earlier stage to formulate the buying and selling strategy. With the help of several indicators they analyze the relationship between price volume and supply for the overall market and the individual stock. Volume is favorable on the upswing i.e. the number of shares traded is greater than before and on the downside the number of shares traded dwindles. If it is the other way round, trend reversals can be expected. Basically, technical analysis and the fundamental analysts aim at GOOD RETURN on investment.
1.3 Technical Analysis

Technical analysis involves a study of market generated data like prices and volumes to determine the future direction of price movement. It is the process of identifying trend reversal at an early stage to formulate the buying and selling strategy.
1.3.1 Characteristics
Technical analysis employs models and trading rules based on price and volume transformations, such as the relative strength index, moving averages, regressions, inter-market and intra-market price correlations, business cycles, stock market cycles or, classically, through recognition of chart patterns. Technical analysis stands in contrast to the fundamental analysis approach to security and stock analysis. Technical analysis analyzes price, volume and other market information, whereas fundamental analysis looks at the actual facts of the company, market, currency or commodity. The Oxford College of Business Management Page 2
Most large brokerage, trading group, or financial institutions will typically have both a technical analysis and fundamental analysis team. Technical analysis is widely used among traders and financial professionals and is very often used by active day traders, market makers and pit traders. In the 1960s and 1970s it was widely dismissed by academics. In a recent review, Irwin and Park reported that 56 of 95 modern studies found that it produces positive results but noted that many of the positive results were rendered dubious by issues such as data snooping, so that the evidence in support of technical analysis was inconclusive; it is still considered by many academics to be pseudoscience. Academics such as Eugene Fama say the evidence for technical analysis is sparse and is inconsistent with the weak form of the efficient-market hypothesis. Users hold that even if technical analysis cannot predict the future, it helps to identify trading opportunities. In the foreign exchange markets, its use may be more widespread than fundamental analysis. This does not mean technical analysis is more applicable to foreign markets, but that technical analysis is more recognized there as to its efficacy there than elsewhere. While some isolated studies have indicated that technical trading rules might lead to consistent returns in the period prior to 1987, most academic work has focused on the nature of the anomalous position of the foreign exchange market. It is speculated that this anomaly is due to central bank intervention, which obviously technical analysis is not designed to predict. Recent research suggests that combining various trading signals into a Combined Signal Approach may be able to increase profitability and reduce dependence on any single rule.
1.3.2 Basic premises of Technical analysis

Market prices are determined by the interaction of supply and demand forces. Shifts in demand and supply bring about change in trend. Barring minor deviations, stock prices tend to move in fairly persistence trends. Supply and demand are influenced by both rational and irrational factors. Because of the persistence and patterns, analysis of past market data can be used to predict future price behavior. The Oxford College of Business Management Page 3
1.3.3 Three Beliefs of Technical Analysis Price action in the market discounts everything
Technical analysis holds that because every possible bit of information is Immediately included in the price of a security, it is not necessary to explicitly analyze the fundamental, economic, political, etc. factors that might influence that price. Because all possible information is reflected in the price, only a study of the price movement is required. This theorem is similar to the strong and semi-strong forms of market efficiency. Technical analysts believe that the current price fully reflects all information. Because all information is already reflected in the price, it represents the fair value, and should form the basis for analysis. After all, the market price reflects the sum knowledge of all participants, including traders, investors, portfolio managers, buy-side analysts, sell-side analysts, market strategist, technical analysts, fundamental analysts and many others. It would be folly to disagree with the price set by such an impressive array of people with impeccable credentials. Technical analysis utilizes the information captured by the price to interpret what the market is saying with the purpose of forming a view on the future.
Prices move in trends

Most technicians agree that prices trend. However, most technicians also acknowledge that there are periods when prices do not trend. If prices were always random, it would be extremely difficult to make money using technical analysis. A technician believes that it is possible to identify a trend, invest or trade based on the trend and make money as the trend unfolds. Because technical analysis can be applied to many different time frames, it is possible to spot both shortterm and long term trends. While it cannot be shown that prices must trend, technical analysis relies on empirical evidence and common sense to assert that prices do trend. To a technician, markets are trending up, trending down, or trending sideways (flat). This definition of a price trend is essentially the one put forward by Dow Theory. A person who does not believe that prices move in trends will find little use for technical analysis. The assumption that prices must trend is probably the most important concept in technical analysis.
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History tends to repeat itself
To a technical analyst, the human characteristics of the market might be irrational, but they exist. Because investors' attitudes often repeat, investors' actions in the marketplace often repeat as well. i.e., patterns of price movement will develop on a chart that a technical analyst believes have predictive qualities. Technical analysis is not limited to charting. Technical analysis is always primarily concerned with price trends. Anything that can influence the price trend is of interest to a technical analyst. As an example, many technical analysts monitor surveys of investor enthusiasm. These surveys attempt to gauge the general attitude of the investment community to determine whether investors are bearish or bullish. Technical analysts use these surveys to help determine whether a trend will reverse or whether a new trend will develop. A technical analyst will be alerted that a trend might change when these surveys report extreme investor reactions. When surveys are overly bullish, for example, a technical analyst will look for evidence that an uptrend will reverse. The logic being that if most investors are bullish, then they would have already bought the market (anticipating that the market will move higher). But because most investors are bullish and have invested, it is safe to assume that there are few buyers remaining in the market with most investors long. There are more potential sellers in the market than buyers despite the fact that the overall attitude of investor is bullish.
1.4 Oscillators
Oscillators indicate the market momentum or scrip momentum. Oscillator shows the share price movement across a reference point from one extreme to another. Momentum indicates It indicates if the share is over bought or oversold. It indicates possible trend reversal. Rise or decline in momentum.
1.4.1 Types of oscillators

o Relative Strength Index (RSI) o Rate of Change(ROC) The Oxford College of Business Management Page 5
Relative strength index
It is an oscillator used to identify the inherent technical strength and weakness of a particular scrip or market. RSI can be calculated for any number of days depending on the wish on the technician analyst.RSI is calculated for 5, 7, 9, 14 days. If the time period is taken more the possibilities of getting wrong signal is reduced. The broad rule is if the RSI crosses 73 there may be downturn and it is time to sell. If the RSI falls below 30 it is time to pick up the scrip.
Rate of change
It helps to measure the ROC between current price and price n number of days in the past. The main advantage of ROC should be identified at first to locate the overbought and oversold region. The historic high and low values of the ROC should be identified at first to locate the overbought and oversold region. If the scrip reaches the historic high values the scrip is in the overbought region and a fall in the value can be anticipated. If the ROC reaches the historic low value the scrip is in the oversold region and a rise in the scrips price can be anticipated. Investors can sell the scrip in the overbought region.
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1.5 Technical analysis verses fundamental analysis
Technical analysis verses fundamental analysis 1) Is a medley of science & art, no 1) algebraic / empirical formulae. 2) 3) Involves study of price charts and oscillators derived thereon. Study regards price as the ultimate factor, which factors in fundamental factors as well. Does not subscribe to the random walk theory. Signals generated by market action on 4) 5) 6) 7) 8) 4) prices. Chances of multiple interpretations are higher. 5) Will generate more signals, works for catching MOST price movements. Will generally generate signals in 6) advance. Involves built-in capital / risk 7) 8) 2) 3)
Is a pure science form, involves preset parameters for investment decision support systems. Involves study of Balance sheets, P & L accounts. Study regards price movements as a random phenomenon, caused by market forces. Signals generated by corporate
actions. Chances of multiple interpretations are lower. Will generate fewer signals, works better for catching major moves. Will generally generate delayed signals. Involves no risk / capital management techniques.
management techniques.
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2.1 Title of the study TESTING OF TECHNICAL ANALYSIS TOOLS AS A SIGNAL
FOR ENTRY AND EXIT OF STOCK MARKET
2.2 Statement of the Problem

Indian capital market is experiencing a tough situation by the various economical and financial reforms involving the various sub markets in the financial system. As the stock market is highly volatile, it is very difficult for the ordinary investor or speculator to predict the movements of stock prices. The movements of stock prices are predicted where investors could minimize their risk and there by maximize their profits. Once an investor is able to identify the trend, through this he can maximize his profits. In this scenario many options are available. Many people want to invest in shares in order to make huge profits. In this scenario many companies are available and the investors are in a dilemma to choose a particular company for investing which gives more returns for them rather than putting their hands in a company, which is of more risky. To assess the potential for an industry group, an investor would like to consider the overall growth rate, market size, and importance to the economy. While the individual company in still important, its industry group is likely to exert just as much, or more, influence on the stock price. When stocks move, they usually move as groups; there are very few lone guns out there. Many times it is more important to be in the right industry than in the right stock. Once the industry is chosen, an investor would need to narrow the list of companies before proceeding to a more detailed analysis. Investors are usually interested in finding the leaders and the innovators within a group. The first task is to identify the current business and competitive environment within a group as well as the future trend. Technical analysis will help in identifying those companies, which are best to invest with an edge by using various methods like moving averages, relative strength index etc. By the end of this study it helps the investors to choose the companies to invest and also tells the investors when to buy the shares as well as to sell the shares in order to avoid risk and make huge profits. The Oxford College of Business Management Page 8
2.3 Need of the Study
1. Technical analysis provides tools and techniques to study part patterns and predict future prices. 2. It attempts to explain and forecast changes in security prices by only the market data rather than information about the company. 3. The technical indicators help the investors to make an active investment strategy, constantly evaluating their holdings and reshuffling at the stocks they hold. 4. The methodology of technical analysis can be applied almost identically in any market anywhere and the same techniques can be applied to currencies, commodities, bonds and equities. 5. Technical indicators help to measure how fast, how often, how much and so on and give a measurement of the heat and speed of the market, as well as identifying the best and worst constituents at the time.
2.4 Review of Literature

Literature review has under taken for analyze various literature and research papers available in the related field. Further research can be undertaken where sufficient study is not done in particular field. Various sources of information have been used in this review include technical Analysis books, financial journals, articles and research papers. The use of market timing has long been the subject of much discussion several researchers question the usefulness of such techniques, arguing that such techniques usually cannot produce better returns to a buy- and hold (B-H) strategy. Although techniques recognize the value of information on future economic prospects of the firm, their position in that such information is not mandatory for a successful trading strategy. The reason is that whatever the fundamental reason for a change in stock price, if the stock price is sluggish to adjust, the analyst should be able to identify a trend that could be exploited during the adjustment period. Consequently, the key to successful technical analysis is a lazy response of stock price to fundamental supply-and
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demand phenomena. Note that this prerequisite is diametrically opposite to the notion of an efficient market. The guiding principle of technical analysis is to identify and go along with trend. When there is a trend, whether started by random or fundamental factor, technical methods will tend to generate signals in the same direction. These reinforce the original trend, especially when many investors rely on the technical indicators. Thus, even if the original trend were a random occurrence, the subsequent prediction made by the technical indicator could be self-fulfilling. This self-fulfilling nature leads to formation of speculative bubbles ( see for example, Froot, sharfstein and stein, 1992) frankel and froot (1990b) suggested that the over-pricing of the US, dollar in the 1980s with respect to the underlying economic fundamentals could be due to the influence of technical analysis. Shiller (1984, 1987) found that irrational investor behavior resulted in excess bond and stock market volatility. He also suggested that the October 1987 world-wide stock market crash could be largely due to technical analysis. Fama and French (1988) proposed a mean reverting to explain stock price movements. They also found that autocorrelation of returns become strongly negative for a 3-5 year horizon. Debondt and Thaler (1985, 1987) found that stocks that were extreme loser over a 3-5 year period tend to have strong returns relative to market during the following years. Conversely extreme winners tend to have weaker returns in subsequent years. Sy (1990) had argued against Sharpes (1975) conclusion saying that there was no need for the predictive accuracy to be as high as 70 percent for the gains to be large. In addition he demonstrated that market timing would be increasingly rewarding when the differences in return between cash and stocks were narrowed and when market volatility increased. Neftci (1991) showed that a few of the rules used in technical analysis generate well-defined techniques of forecasting, but even well-defined rules were shown to be useless in prediction if the economic time series is Gaussian. However, if the processes under consideration are nonThe Oxford College of Business Management Page 10
linear, then the rules might capture some information. Tests showed that this may indeed be the case for the moving average rule. Taylor and Allen (1992) report the results of a survey among chief foreign exchange dealers based in London in November 1988 and found that at least 90 per cent of respondents placed some weight on technical analysis, and that there was a skew towards using technical, rather than fundamental, analysis at shorter time horizons. In a comprehensive and influential study Brock, Lakonishok and LeBaron (1992) analysed 26 technical trading rules using 90 years of daily stock prices from the Dow Jones Industrial Average up to 1987 and found that they all outperformed the market. Blume, Easley and OHara (1994) show that volume provides information on information quality that cannot be deduced from the price. They also show that traders who use information contained in market statistics do better than traders who do not. Neely (1997) explains and reviews technical analysis in the foreign exchange market. Neely, Weller and Dittmar (1997) use genetic programming to find technical trading rules in foreign exchange markets. The rules generated economically significant out-of-sample excess returns for each of six exchange rates, over the period 19811995. Lui and Mole (1998) report the results of a questionnaire survey conducted in February 1995 on the use by foreign exchange dealers in Hong Kong of fundamental and technical analyses. They found that over 85% of respondents rely on both methods and, again, technical analysis was more popular at shorter time horizons. Neely (1998) reconciles the fact that using technical trading rules to trade against US intervention in foreign exchange markets can be profitable, yet, longterm, the intervention tends to be profitable. LeBaron (1999) shows that, when using technical analysis in the foreign
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exchange market, after removing periods in which the Federal Reserve is active, exchange rate predictability is dramatically reduced. Lo, Mamaysky andWang (2000) examines the effectiveness of technical analysis on US stocks from 1962 to 1996 and finds that over the 31-year sample period, several technical indicators do provide incremental information and may have some practical value. Fernandez-Rodrguez, Gonzalez-Martel and Sosvilla-Rivero (2000) apply an artificial neural network to the Madrid Stock Market and find that, in the absence of trading costs, the technical trading rule is always superior to a buy and- hold strategy for both bear market and stable market episodes, but not in a bull market. One criticism is that beating the market in the absence of costs seems of little significance unless one is interested in finding a signal which will later be incorporated into a full system. Secondly, it is perhaps nave to work on the premise that bull and bear markets exist. Lee and Swaminathan (2000) demonstrate the importance of past trading volume. Neely and Weller (2001) use genetic programming to show that technical trading rules can be profitable during US foreign exchange intervention. Cesari and Cremonini (2003) make an extensive simulation comparison of popular dynamic strategies of asset allocation and find that technical analysis only performs well in Pacific markets. Cheol-Ho Park and Scott H. Irwin wrote The profitability of technical analysis: A review Park and Irwin (2004), an excellent review paper on technical analysis. Kavajecz and Odders-White (2004) show that support and resistance levels coincide with peaks in depth on the limit order book 1 and moving average forecasts reveal information about the
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relative position of depth on the book. They also show that these relationships stem from technical rules locating depth already in place on the limit order book.
Research papers
1. TECHNICAL ANALYSIS AND TYPICAL COGNITIVE BIASES Piotr Zielonka, Warsaw University SGGW and Leon Kozminski Academy of Entrepreneurship and Management, Poland ABSTRACT The paper describes a study carried out on a group of 24 Polish financial analysts. The Analysts responded to a questionnaire with 24 items (signals). They were asked to rate the Predictive value of different signals for the movements of stock prices. The signals were of three types: (a) Regular technical analysis signals, representing some common psychological biases (Gamblers fallacy, ignoring the principle of regression to mean, anchoring effect and herd behavior) (b) technical-like signals created by the author of the research that imitated technical Signals and represented the same types of biases as real technical signals,
2. Technical Analysis in the Foreign Exchange Market: A Co-integration- Based Approach. Nobert Fiess, University of Strathclyde and U. K. Ronald MacDonald, University of strathclyde, U. K. Most technical analysis studies are concerned with the profitability of technical trading rules and almost all of them focus exclusively on trend following patterns. In this paper they examine a different kind of technical indicator which suggests a structural relationship between High, Low, and Close prices of daily exchange rates. Since, for a given exchange rate, it can be shown that these prices have different time series properties, it is possible to explore the structural The Oxford College of Business Management Page 13
relationships between them using multivariate co-integration methods. This methodology facilitates the construction of dynamic structural econometric models, which are used to derive dynamic out of- sample forecasts over different time horizons. Compared to standard benchmarks, it turns out that these models have extremely good forecasting properties, even when allowance has been made for transactions costs and risk premium
2.5 Objectives of the Study

1. 2. 3. 4. 5. 6. 7. To know about how price fluctuations take place in the stock market. To analyze that how trading volume is determined in the stock market. To know about the factors which affect the technical analysis. To know about the effectiveness of technical analysis while making To identify the trend and recognize when one trend comes to an end and To view the price changes and their significance mainly through price and To measure price-volume, supply-demand relationships for the overall
trading decisions. price start in the opposite direction. volume statistics. market as well as for individual stocks.
2.6 Scope of the study

1. The scope is limited to five companies. 2. And also it is limited to daily closing share prices. 3. The study deals only with Technical Analysis. 4. The study deals with mainly two indicators of technical analysis i.e. relative strength index and rate of change.
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2.7 Operational definitions of the study: 1. Capital Market: Which includes term lending institutions, banks, investors, companys,
and just about anybody and everybody who are engaged in providing long term capital, whether share capital or debt capital, to the industrial sector.
2. Primary Market: Primary market is the market for issue of new securities (share,
debenture).
3. Secondary market: Secondary market is the market for trading in existing securities,
after they have been created in the primary market.
4. Buying and Selling Securities: Securities can be bought either from the primary of from
the secondary market. Bonds or debenture can be sold either in the secondary market or deemed in the primary market at the time of maturity. However, shares can be sold only in the secondary market.
5. Securities Exchange Board of India: It has been set up in Bombay by the government
to oversee the orderly development of stock exchange in the country. All companies wishing to raise capital from the public are required to list their securities on at least one stock exchange. Stock exchange also facilitates trading in securities of the public sector companies as well as government services.
6. Stock: The definition of the stock is a share in the ownership of company. Stock
represents a claim on the companys assets and earnings.
7. Owning Stock: Holding a companys stock is a share means that you are one of the
many owners (shareholders) of a company, and as much, you have a claim to everything the company owns.
8. Undha Badla or Backwardation charge: Badla is the charge the buyer pays the seller
for his inability to pay the seller on the settlement day. Undha Badla is the charge a seller pays a buyer for his inability to deliver the share certificate on the settlement day.
9. Faceless Transaction: A buyer does not know from whom he is buying a share and a
seller does not know to whom he is selling a share.
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10. Kerb Trading: Often transaction may be carried out after official trading hours, even
though such trading among the members is not strictly legal. Such unofficial trading carried out outside the stock exchange premises is known as kerb Trading.
11. Daily Margins: To begin with, they may impose a daily margin on the settlement trading
(and sometimes even on the crash trading) of the concerned security. The margin may be a % of the share price, or simply an absolute amount on each share.
12. Carry Over Margins: Carry over margin, which is levied only if a transaction is carried
forward to the next settlement period. The purpose of the carry over margin is to discourage indiscriminate carrying forward of the transactions and induce the speculators to settle at least some of their transactions through actual deliveries.
13. N S E: National Stock Exchange inaugurated in 1994, the NSE seeks to establish a
nationwide trading facility, debt and hybrids facilitate equal access to investors across the country, impart fairness, efficiency and transparency to securities, shorten settlement cycle and meet international securities market standards.
14. B S E: Bombay Stock Exchange established in 1875, the BSE is one of the oldest
organized exchanges in the work with a long, colorful and chequered history.
15. O T C exchange of India: Over the counter exchange of India (OTCEI) was setup in the
1992 for promoting trading in an entirely new set of companies sponsored by the members of OTCEI.
16. Stock Broker: Stock Broker, who is a licensed member of a recognized stock exchange. 17. Portfolio: Portfolio is a combination of various assets or instrument of investment. 18. Risk: It is inherent in any investment. This risk may relate to loss or delay in repayment
of the principal capital or loss or non-payment of interest or variability of returns.
19. Technical Analysis: It is a process of identifying trend reversals at an earlier stage to

formulate the buying and selling strategy. With the help of several indicators they analyses the relationship between price-volume is favorable on the upswing i.e. the number of shares traded is greater than before and on the down side the number of shares traded dwindles. If it is the other way round, trend reversals can be expected.
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20. Technical Tools: Generally used technical tools are, Dow Theory, volume of trading,
short selling, odd lot trading, bars and line charts, moving averages and oscillators.
21. Trend: Trend is the direction of movement. The share prices can either increase or fall or
remain flat. The three directions of the share price movements are called as rising, falling and flat trends.
22. Primary Trend: Each peak is higher than the previous peak. The bottoms are also higher
than the previous bottoms. The trend is called as Primary Trend.
23. Secondary Trend: The secondary trend or the intermediate trend moves against the main
trend and leads to correction. In the bull market the secondary trend would result in the fall of about 33-66% of the earlier rise. In the bear market, the secondary trend carries the price upward and corrects the main trend. The correction would be 33-66% of the earlier fall.
24. Minor Trends: Minor trends are simply the daily price fluctuations. Minor trend tries to
correct the secondary trend movement.
25. Bull Market: When the market exhibits the increasing trend, it is called bull market. The
bull market shows three clear-cut peaks. Each peak is higher than the previous peak. The bottoms are also higher than the previous bottoms. The trend is called as Primary Trend
26. Bear market: The reversal is true with the bear market. Here, the first phase of fall starts
with the abandonment of hopes. The chance of prices moving back to the previous high level seemed to be low.
27. Indicators: Technical indicators are used to find out the direction of the overall market.
The overall market movements affect the individual share price. The indicators are price and volume of trade. The volume of trade is influenced by the behavior of price.
2.8 Research Methodology 2.8.1 Type of research:

The research design constitutes the blue print for the collection, measurement and analysis of data. A research design is the plan, structure and strategy of investigation convinced
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so as to obtain answer to research questions and to control variances. A research design specifies the methods and procedures for conducting a particular study. It may be emphasized that the main criteria of a good research design is that it must answer the questions posed earlier. For this project, causal research has to be selected in order to know the cause and effect relationship between two or more variables. Such studies are based on reasoning along well-tested lines.
2.8.2 METHOD OF THE DATA COLLECTION

The Statistical data collected for this study can be classified under two heads: 1. 2. Primary Date Secondary Data
2.8.2.1 Primary Data: It refers to information that is collected for the first time and hence
such data are original in character.
2.8.2.2 Secondary Data: It is that type of data which has already been collected by some
other persons and which have passed through the statistical machine at least one.
2.8.3 SOURCES OF DATA 2.8.3.1 Primary data

There is no primary data collected.
2.8.3.2 Secondary data

Secondary data is collected from
www.nse.com www.bse.com www.wikipedia.com

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2.8.4 Techniques of data analysis

1. Moving average method. 2. Relative strength index.
3. Rate of change. Day Moving Average

Day Moving averages are one of the most popular and easy to use tools available to the technical analyst. They smooth a data series and make it easier to spot trends, something that is especially helpful in volatile markets. They also form the building blocks for many other technical indicators and overlays. The two most popular types of moving averages are the daily Moving Average (SMA) and the Exponential moving Average (EMA). In this study day moving average has taken. For example: a 5-day simple moving average is calculated by adding the closing prices for the last 5 days and dividing the total by 5. The calculation is repeated for each price bar on the chart. The averages are then joined to form a smooth curving line - the moving average line. Continuing our example, if the next closing price in the average is 15, then this new period would be added and the oldest day, which is 10, would be dropped. The new 5-day simple moving average would be calculated as follows: 11+12+13+14+15=65 65/5=13
Relative Strength Index (RSI):

RSI was developed by wells wilder. It is an oscillator used to identify the inherent technical strength and weakness of a particular scrip or market. RSI can be calculated for scrip by adopting the formula. Calculation: RSI = 100 100 / (1+RS) Average gain = (Total gains / n) The Oxford College of Business Management Page 19
Average loss = (Total loss / n) Relative Strength = Average gain / Average loss Relative Strength Index = 100 100 / ( 1+ RS ) N = number of RSI periods. The RSI can be calculated for any number of days pending on the wish of the technical analyst and the time frame of trading adopted in a particular stock market. RSI is calculated for 5, 7, 9 and 14 days .If the period taken for calculation is more, the price of scrip is foretold by the RSI. If the share price is falling and RSI is rising, a divergence is said to have occurred. Divergence indicates the turning point of the market. If the RSI is rising in the overbought zone, it would indicate the down fall of the price. IF RSI falls in the overbought zone, it gives a clear signal of sell. The term overbought describes the price level at which momentum can no longer be maintained and the price has to go down. This condition occurs after a sharp rise in price during a period of heavy buying when the RSI is in the oversold region, it generates the buy signal. The term oversold is used to describe a security or market that has declined to an unreasonably low level. This condition is characterized by an increase in sales and excess of net declines. For a 10 -period RSI, the Average Gain equals the sum total all gains divided by 10. Even if there are only 5 gains (losses), the total of those 5 gains (losses) is divided by the total number of RSI periods in the calculation (10 in this case). The Average Loss is computed in a similar manner.
Rate of change (ROC):

Rate of change indicators or the ROC measures the rate of change between the current price and the price n number of days in the past. ROC helps to find out the overbought positions in scrip. It is also useful in identifying the trends reversal. Closing prices are used to calculate the ROC. Daily closing prices are used for the daily ROC and weekly closing prices for weekly ROC. Calculation of ROC for 12 weeks or 12 month is most popular. ROC = Todays Price X 100 Page 20
Price n days back Calculation is done by considering todays price (1315.55) divided by price 10 days back (1426.05) multiply by 100 is equal to 92.25. In same manner rest is calculated. The main advantage of ROC is the identification of overbought and oversold region. The historic high and low values of the ROC should be identified at first to locate the over bought and sold region. If the scrips ROC reaches the historic high values, the scrip is in the overbought region and a fall in the valve can be anticipated. Likewise, if the scrips Roc reaches the historic low valve, the scrip is in the oversold region; a rise in the scrips price can be anticipated. Investor can sell the scrip in the ever overbought region and buy it in the oversold region. The following methods are used for this analysis: 1. Moving averages 2. Rates of change 3. RSI For the purpose of analyzing the short term trading(weekly trading) three indictors are used namely moving average method, RSI and rate of change method to know the variations of the shares in the share market and companies that are considered for this analysis are: 1. TATA MOTORS. 2. HERO HONDA MOTORS 3. BAJAJ AUTO 4. MARUTI SUZUKI AUTO Ltd 5. MAHINDRA & MAHINDRA Ltd
2.9 Limitations of the study

1. This study is limited to the daily closing prices of three months. 2. Daily closing share prices of Bombay stock exchange. The Oxford College of Business Management Page 21
3. This study considers the technical analysis as the technique to forecast the future share prices.
2.10 Chapter scheme

This project is divided into five chapters scheme and consists of the following: Chapter 1: Introduction This chapter includes the introduction to investment, security markets and security analysis. Chapter 2: Research Design of the Study It deals with the methodology used in the study. It also throws light on the objectives, scope and limitations of the study. It briefly tells about data collection tools and includes overview of the chapters. Chapter 3: Industry profile This chapter deals with history of automobile industry, growth, competition, India's Position in World's Production, turnover of the industry, major players of automobile industry. Chapter 4: Data Analysis and Interpretations: This chapter contains calculation of moving averages and Rate of Change percentages of six different companies. Interpretations are drawn and graphs are drawn. Chapter 5: Summary of findings, suggestions and conclusion This chapter contains valid findings of the study, recommendations and conclusion for the dissertation.
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3.1 Automobile Industry History :

In the year 1769, a French engineer by the name of Nicolas J. Cugnot invented the first automobile to run on roads. This automobile, in fact, was a self-powered, three-wheeled, military tractor that made the use of a steam engine. The range of the automobile, however, was very brief and at the most, it could only run at a stretch for fifteen minutes. In addition, these automobiles were not fit for the roads as the steam engines made them very heavy and large, and requiFred ample starting time. Oliver Evans was the first to design a steam engine driven automobile in the U.S. A Scotsman, Robert Anderson, was the first to invent an electric carriage between 1832 and 1839. However, Thomas Davenport of the U.S.A. and Scotsman Robert Davidson were amongst the first to invent more applicable automobiles, making use of non-rechargeable electric batteries in 1842. Development of roads made travelling comfortable and as a result, the short ranged, electric battery driven automobiles were no more the best option for travelling over longer distances. The Automobile Industry finally came of age with Henry Ford in 1914 for the bulk production of cars. This lead to the development of the industry and it first begun in the assembly lines of his car factory. The several methods adopted by Ford, made the new invention (that is, the car) popular amongst the rich as well as the masses.
According the History of Automobile Industry US, dominated the automobile markets around the globe with no notable competitors. However, after the end of the Second World War in 1945, the Automobile Industry of other technologically advanced nations such as Japan and certain The Oxford College of Business Management Page 23
European nations gained momentum and within a very short period, beginning in the early 1980s, the U.S Automobile Industry was flooded with foreign automobile companies, especially those of Japan and Germany. The current trends of the Global Automobile Industry reveal that in the developed countries the Automobile Industries are stagnating as a result of the drooping car markets, whereas the Automobile Industry in the developing nations, such as, India and Brazil, have been consistently registering higher growth rates every passing year for their flourishing domestic automobile markets. Asia becoming automotive production center. World's major automobile makers have known no more territorial borders in expanding their operations including manufacturing operations. For efficiency and marketing, they established production bases outside their countries of origin in a bid to control or have a larger share of the global market. Currently Asia has been chosen as a new production center. Many worlds' class auto makers have made Asian countries notably Southeast Asian count.
3.2 In the context of Indian economy

On the canvas of the Indian economy, automotive industry occupies a prominent place. Due to its deep forward and backward linkages with several key segments of the economy, automotive industry has a strong multiplier effect and is capable of being the driver of economic growth. A sound transportation system plays a pivotal role in the country's rapid economic and industrial development. The well-developed Indian automotive industry ably fulfils this catalytic role by producing a wide variety of vehicles: passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles such as jeeps, scooters, motorcycles, mopeds, three wheelers, tractors etc. Automotive Industry comprises of automobile and auto component sectors and is one of the key drivers of the national economy as it provides large-scale employment, having a strong multiplier effect. Being one of the largest industries in India, this industry has been witnessing impressive growth during the last two decades. It has been able to restructure itself, absorb newer technology, align itself to the global developments and realize its potential. This has significantly The Oxford College of Business Management Page 24
increased automotive industry's contribution to overall industrial growth in the country. The automotive industry (including components & tyres) has already attained a turnover of US$ 48.86 billion. The industry provides direct and indirect employment to 13.1 million people. The contribution of the automotive industry to GDP has risen from 2.77% in 1992-93 to 4.14% in 2008-09.The industry is also making a contribution of 17% to the kitty of indirect taxes of the Government.
3.3 Growth Drivers of Indian Automobile Market

Rising industrial and agricultural output Rising per capita income Favorable demographic distribution with rising working population and middle class Urbanization Increasing disposable incomes in rural agriculture-sector Availability of a variety of vehicle models meeting diverse needs and preferences Greater affordability of vehicles Easy finance schemes Favorable government policies Robust production
3.4 India's Position in World's Production

Well-developed, globally competitive auto ancillary industry Established automobile testing and R&D centers Among one of the lowest cost producers of steel in the world Worlds second largest manufacturer of two wheelers Fifth largest manufacturer of commercial vehicles Manufactures largest number of tractors in the world Ninth largest car manufacturer in world Page 25
3.5 Growth of Automobile Industry

One of the major industrial sectors in India is the automobile sector. Subsequent to the liberalization, the automobile sector has been aptly described as the sunrise sector of the Indian economy as this sector has witnessed tremendous growth. Automobile Industry was de-licensed in July 1991 with the announcement of the New Industrial Policy. The passenger car industry was, however, de-licensed in 1993. No industrial license is required for setting up of any unit for manufacture of automobiles except in some special cases. The norms for Foreign Investment and import of technology have also been progressively liberalized over the years for manufacture of vehicles including passenger cars in order to make this sector globally competitive. At present 100% Foreign Direct Investment (FDI) is permissible under automatic route in this sector including passenger car segment. The import of technology/technological up gradation on the royalty payment of 5% without any duration limit and lump sum payment of US$ 2 million is also allowed under automatic route in this sector. With the gradual liberalization of the automobile sector since 1991, the number of manufacturing facilities in India has grown progressively. According to the data provided by Society of Indian Automobile Manufacturers (SIAM), the cumulative sales data for April-February 2011 shows domestic sales growth of 26.92 percent over same period last year. In February 2011 as compared to February 2010, domestic sales grew at 21.32 percent.
3.5.1 Domestic Sales
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Passenger Vehicles segment grew at 29.85 percent during April-February 2011 over same period last year. Passenger cars grew by 30.34 percent, Utility Vehicles grew by 19.69 percent and Multi-Purpose Vehicles grew by 43.28 percent in this period. February 2011 figures for domestic sales of Passenger Cars show a growth of only 22.63 percent over the same month last year. However, in absolute numbers, this segment recorded highest ever sales. Total passenger vehicle sales figures for February 2011 compared to February 2010 shows growth stands at 20.88 percent. The overall Commercial Vehicles segment registered growth of 28.65 percent during AprilFebruary 2011 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) registered growth of 34.18 percent, Light Commercial Vehicles grew at 24.08 percent. In contrast to the last February sales figures, February 2011 registered a growth of 10 percent. Three Wheelers sales recorded a growth rate of 19.96 percent in April-February 2011. While Passenger Carriers grew by 22.39 percent during April-February 2011, Goods Carriers registered growth of 10.31 percent. Two Wheelers registered a growth of 26.55 percent during April-February 2011. Mopeds, Motorcycles and Scooters grew by 23.79 percent, 23.30 percent and 44.40 percent respectively. If we compare February 2011 to February 2010, the growth figures for three and two wheelers are at 24.03 percent and 22.04 percent respectively.
3.5.2 Exports
During April-February 2011, overall automobile exports registered a growth rate of 30.62 percent. Passenger Vehicles registered decline and the growth rate was (-) 0.86 percent in this period. Commercial Vehicles, Three Wheelers and Two Wheelers segments recorded growth of 72.82 percent, 59.29 percent and 36.97 percent respectively during April-February 2011. In February 2011 compared to February 2010, overall automobile exports registered a growth of 27.57 percent. The Oxford College of Business Management Page 27
Domestic Market Share for 2008-09 Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers 15.96% 3.95% 3.6% 76.49%
3.6 Major Automotive Players in India

Companies Ashok Leyland Asian Motor Works Bajaj Auto BMW India Daimler Chrysler India Eicher Motors Fiat India Force Motors Ford India General Motors India Hero Honda Motors Hindustan Motors Honda Hyundai Motors Kinetic Motor Mahindra & Mahindra Maruti Suzuki Piaggio Segments LCVs, M&HCVs, buses M & HCVs Two and three wheelers Cars and MUVs Cars LCVs, M & HCVs Cars MUVs and LCVs Cars and MUVs Cars & MUVs Two wheelers Cars, MUVs and LCVs Two wheelers, cars and MUVs Cars and MUVs Two wheelers Three wheelers, cars, MUVs, LCVs Cars, MUVs, MPVs Three wheelers, LCVs Page 28
Royal Enfield Motors Skoda Auto India Suzuki Motorcycles Swaraj Mazda Ltd Tata Motors Cars Toyota Kirloskar TVS Motor Co Volvo India Volkswagen India Yamaha Motor India MUVs: Multi utility vehicles; MPVs: Multipurpose vehicles; LCV: Light commercial vehicles; M&HCVs: Medium and heavy commercial vehicles GROSS TUNROVER OF THE AUTOMOBILE INDUSTRY IN INDIA Year 2004-05 2005-06 2006-07 2007-08 2008-09 Conversion Rate Rs.40 = 1USD (IN USD MILLION) 20,896 27,011 34,285 36,612 38,238 Two wheelers Cars Two wheelers LCVs, M & HCVSs, buses MUVs, LCVs, M&HCVs, buses Cars, MUVs Two wheelers M & HCVs, buses Cars Two wheelers
Page 29
TABLE: 4.1 showing calculation of MOVING AVERAGE and RATE OF CHANGE of

TATA MOTARS Ltd DATE CLOSING PRICE MOVING AVG RATE OF CHANGE Page 30
6-Apr-10 13-Apr-10 21-Apr-10 27-Apr-10 4-May-10 11-May-10 18-May-10 25-May-10 1-Jun-10 8-Jun-10 15-Jun-10 22-Jun-10 29-Jun-10 6-Jul-10 13-Jul-10 20-Jul-10 27-Jul-10 3-Aug-10 10-Aug-10 17-Aug-10 24-Aug-10 31-Aug-10 7-Sep-10 15-Sep-10 22-Sep-10 28-Sep-10 4-Oct-10 11-Oct-10 19-Oct-10 26-Oct-10 2-Nov-10 9-Nov-10 16-Nov-10 23-Nov-10 30- Nov-10 7-Dec-10 14-Dec-10 21-Dec-10 29-Dec-10 4-Jan-11 11-Jan-11 18-Jan-11 25-Jan-11 774.15 774.7 809.4 846.55 842.2 799.9 772.35 673.45 724.95 735.8 759.7 797.65 770.95 767.9 801.9 813.05 844.55 841.8 957.3 1006.65 1011.75 1010.35 1039.15 1024.6 1070.9 1080.5 1139.05 1151.6 1174.15 1194.75 1154.25 1269.9 1205.55 1213.5 1234.95 1335.4 1305.95 1365.15 1268.9 1298.4 1158.05 1199.55 1166 809.4 814.55 814.08 786.89 762.57 615.29 607.25 612.31 631.81 640.4 653.62 664.29 673.67 687.84 725.72 694.67 734.41 676.57 807.04 820.05 833.35 847.1 872.84 895.33 925.24 950.01 966.68 1004.56 981.86 989.73 997.77 1034.00 1041.21 1073.81 1084.21 1096.30 1060.83 1039.55 999.72
98.13 102.96 95.25 90.71 95.21 101.64 109.35 124.99 142.15 138.85 137.5 137.31 136.78 128.45 138.91 140.71 142.04 141.64 139.03 141.93 120.57 126.15 101.36 118.44 115.32 123.59 114.65 118.54 108.07 108.67 100.32 94.6 96.62 Page 31
1-Feb-11 8-Feb-11 15-Feb-11 22-Feb-11 1-Mar-11 8-Mar-11 15-Mar-11 22-Mar-11 31-Mar-11 1069.05 1112.25 1237.35 1136.85 1141.85 1162.15 1142.1 1136.1 1248.35 959.75 922.52 938.38 925.84 921.07 939.63 945.6 925.35 947.65 88.09 91.66 100.19 85.13 87.43 91.59 87.96 91.8 107.79
CHART: 4.1.1 showing calculation of MOVING AVERAGE of TATA MOTARS Ltd
MO VING A AGEOFT T MO AR L VER AA T S td

1600 1400 1200 1000 800 600 400 200 0
Closingprice
Movingaverage
Tata motars
INTERPRETATION:
From the above chart it is interpreted that closing price is increasing over a period of time which indicates good profits for speculators. Moving average is increasing is slow rate where speculators can invest in shares to make profits. There is risk for short term investors. The Oxford College of Business Management Page 32
CHART: 4.1.2 showing calculation of RATE OF CHANGE of TATA MOTARS Ltd
INTERPRETATION:
From the above chart it is interpreted that over a period of 7 months, scrip is overbought so it is time to sell the scrip. Short term investors can make good returns on investment has ROC is overbought. In the month of October ROC is over 135, it indicates making profit by selling the shares with anticipating fall in future. The Oxford College of Business Management Page 33

HEROHONDA AUTO Ltd DATE 6-Apr-10 13-Apr-10 21-Apr-10 27-Apr-10 4-May-10 11-May-10 18-May-10 25-May-10 1-Jun-10 8-Jun-10 15-Jun-10 22-Jun-10 29-Jun-10 6-Jul-10 13-Jul-10 20-Jul-10 27-Jul-10 3-Aug-10 10-Aug-10 17-Aug-10 24-Aug-10 31-Aug-10 7-Sep-10 15-Sep-10 22-Sep-10 28-Sep-10 CLOSING PRICE 2039.1 1977.15 1889.15 1848.85 1889.15 1900.95 1858.6 1898.75 1986.45 1930.65 2027.95 2020 2047.3 2013.95 1978.75 1944.85 1863 1860.4 1866.7 1905.05 1889.95 1791.55 1708.85 1742.15 1814.1 1865.1 MOVING AVG RATE OF CHANGE
1928.68 1901.05 1877.34 1879.26 1906.78 1915.08 1940.48 1972.76 2002.47 2007.97 2017.59 2000.97 1969.57 1932.19 1902.74 1888 1877.02 1862.73 1832.42 1807.51 1789.32 1784.35
99.45 102.16 112.26 110.45 104.71 101.32 97.48 100.88 99.34 93.24 95.32 88.38 83.41. 82.33 90.46 93.12 Page 34
4-Oct-10 11-Oct-10 19-Oct-10 26-Oct-10 2-Nov-10 9-Nov-10 16-Nov-10 23-Nov-10 30- Nov-10 7-Dec-10 14-Dec-10 21-Dec-10 29-Dec-10 4-Jan-11 11-Jan-11 18-Jan-11 25-Jan-11 1-Feb-11 8-Feb-11 15-Feb-11 22-Feb-11 1-Mar-11 8-Mar-11 15-Mar-11 22-Mar-11 31-Mar-11 1822.85 1879.5 1838.7 1859.3 1867.65 1809.95 1913.35 1951.05 1781.2 1758.1 1621.55 1922.8 1956.25 1979.35 1845.5 1786.85 1774.55 1610.35 1506.95 1517 1390.55 1491.85 1537.7 1510.15 1475.6 1589.45 1790.61 1824.74 1828.84 1832.88 1840.52 8150.41 1851.32 1862.11 1864.64 1865.31 1805.05 1866.32 1875.40 1872.31 1802.44 1797.45 1791.21 1732.33 1743.62 1730.42 1681.33 1642.40 1631.23 1489.45 1472.63 1488.54 94.36 96.13 90.43 104.32 106.38 101.84 112.43 124.64 93.42 96.23 82.14 104.34 114.62 116.48 132.92 141.52 83.42 84.32 88.23 85.41 93.41 73.68 78.95 79.34 77.77 94.13
CHART: 4.2.1 showing calculation of MOVING AVERAGE of HEROHONDA AUTO Ltd
Page 35
INTERPRETATION:
From the above chart it is interpreted that closing price is fluctuating in every month, it is not advisable to speculator to invest in shares. Considering moving average, it is declining over period but its indicating less risky to invest in shares and can make stable profits.
CHART: 4.2.2 showing calculation RATE OF CHANGE of HEROHONDA AUTO Ltd

INTERPRETATION:
From the above chart it is interpreted that when ROC is above 100, shares are overbought where speculators can sell shares to make profits and when ROC is below 100, shares are oversold where speculators can buy with anticipation of price fall in future.

BAJAJ AUTO Ltd The Oxford College of Business Management Page 37
DATE 6-Apr-10 13-Apr-10 21-Apr-10 27-Apr-10 4-May-10 11-May-10 18-May-10 25-May-10 1-Jun-10 8-Jun-10 15-Jun-10 22-Jun-10 29-Jun-10 6-Jul-10 13-Jul-10 20-Jul-10 27-Jul-10 3-Aug-10 10-Aug-10 17-Aug-10 24-Aug-10 31-Aug-10 7-Sep-10 15-Sep-10 22-Sep-10 28-Sep-10 4-Oct-10 11-Oct-10 19-Oct-10 26-Oct-10 2-Nov-10 9-Nov-10 16-Nov-10 23-Nov-10 30- Nov-10 7-Dec-10 14-Dec-10 21-Dec-10 29-Dec-10 4-Jan-11 11-Jan-11
CLOSING PRICE 2040.6 2097.9 2093.3 2065.25 2070.45 2125.95 2182.2 2018.55 2163.6 2194.65 2288.1 2330.65 2483.2 2437.9 2400.95 2398.1 2654.15 2713.2 2705.3 2660.8 2775.3 2796.15 3004 1472.35 1458.4 1450.85 1581.7 1523.75 1514.45 1498.8 1548.75 1610 1590.85 1638.45 1576.6 1606.9 1493.45 1444.9 1484.3 1374.5 1286.95
MOVING AVG
RATE OF CHANGE
2001.4 2022.49 2014.6 2006.54 2019.32 2045.66 2093.44 2143.67 2182.321 2179.69 2168.32 2160.42 2241.32 2321.48 2314.14 2302.68 2318.22 2353.66 2521.68 1981.62 1972.81 1970.54 1980.32 1971.63 1968.32 1952.12 1964.26 1982.32 1641.32 1633.72 1638.98 1642.06 1583.12 1504.62 1482.41 1444.32 1368.34
122.6 131.91 139.21 136.82 122.61 121.41 138.21 119.32 113.14 111.89 132.91 121.23 125.61 58.33 60.86 61.48 59.25 55.56 55.59 57.67 55.55 57.14 53.26 114.38 107.14 110.34 94.87 95.36 98.01 91.73 83.01 Page 38
18-Jan-11 25-Jan-11 1-Feb-11 8-Feb-11 15-Feb-11 22-Feb-11 1-Mar-11 8-Mar-11 15-Mar-11 22-Mar-11 31-Mar-11 1321.8 1286.15 1246.1 1239.2 1328.1 1329.8 1335.5 1390.6 1365.95 1362 1463.25 1323.82 1312.91 1306.41 1281.49 1293.48 1286.21. 1321.44 1314.62 1341.92 1321.62 1342.69 81.25 85.71 75.21 86.52 101.32 92.84 90.02 94.34 99.13 106.41 112.42
CHART: 4.3.1 showing calculation of MOVING AVERAGE of BAJAJ AUTO Ltd
3500 3000 2500 2000 1500 1000 500 0 Closingprice Movingaverage
INTERPRETATION:
From the above chart it is interpreted that moving average is showing positive returns on investment. It is advisable to speculators to invest in shares. But considering closing price, there is a good return for short term speculators. Long term investors need to take risk.
Page 39
CHART: 4.3.2 showing calculation of RATE OF CHANGE of BAJAJ AUTO Ltd
INTERPRETATION:
From the above chart it is interpreted that initially ROC is overbought-where an investor can sell the shares to make profits over a period of time. In the month of October it was oversold when share prices came down. It is advisable to the speculator to buy the shares with anticipating price rise in future. The Oxford College of Business Management Page 40

MARUTI SUZUKI AUTO Ltd. DATE 6-Apr-10 13-Apr-10 21-Apr-10 27-Apr-10 4-May-10 11-May-10 18-May-10 25-May-10 1-Jun-10 8-Jun-10 15-Jun-10 22-Jun-10 29-Jun-10 6-Jul-10 13-Jul-10 20-Jul-10 27-Jul-10 3-Aug-10 10-Aug-10 17-Aug-10 24-Aug-10 31-Aug-10 7-Sep-10 15-Sep-10 22-Sep-10 28-Sep-10 4-Oct-10 11-Oct-10 CLOSING PRICE 1376.65 1363.3 1352.35 1283.3 1265.35 1268.1 1242.45 1198.75 1257 1294.35 1362 1369.05 1388.95 1392.35 1409.1 1358.5 1207.5 1213.2 1227.25 1256.55 1245.1 1235.35 1315.4 1346.5 1425.8 1463.85 1430.05 1516.7 MOVING AVG RATE OF CHANGE
1326.41 1301.21 1262.93 1243.11 1221.63 1214.32 1249.92 1264.31 1306.46 1319.12 1362.14 1372.61 1353.98 1293.14 1241.63 1224.49 1233.41 1239.93 1249.84 1294.61 1341.21 1363.14 1394.32 1416.31
101.42 100.98 102.66 116.41 129.49 126.14 94.21 96.63 97.86 90.41 91.66 88.98 89.31 91.69 104.23 116.11 119.41 132.66 Page 41
19-Oct-10 26-Oct-10 2-Nov-10 9-Nov-10 16-Nov-10 23-Nov-10 30- Nov-10 7-Dec-10 14-Dec-10 21-Dec-10 29-Dec-10 4-Jan-11 11-Jan-11 18-Jan-11 25-Jan-11 1-Feb-11 8-Feb-11 15-Feb-11 22-Feb-11 1-Mar-11 8-Mar-11 15-Mar-11 22-Mar-11 31-Mar-11 1557.4 1513.65 1534.8 1471.95 1405.4 1441.5 1422 1428.65 1413.85 1394.1 1417.9 1428.75 1318.45 1277.6 1288.15 1242.4 1176.8 1236.7 1181.1 1290.75 1256.15 1214.15 1171.95 1262.15 1439.29 1466.49 1491.32 1516.71 1504.68 1493.31 1481.62 1426.73 1432.33 1416.83 1419.95 1421.64 1411.33 1396.41 1352.69 1326.14 1298.31 1242.64 1221.99 1216.98 1198.32 1183.14 1176.91 1219.31 121.14 126.46 121.19 110.46 96.42 99.66 99.82 96.41 94.31 90.66 96.14 88.42 85.63 80.42 86.91 81.61 82.13 87.11 83.91 90.53 91.64 94.14 90.66 103.41
CHART: 4.4.1 showing calculation of MOVING AVERAGE of MARUTI SUZUKI AUTO

Ltd
Page 42
INTERPRETATION:
From the above chart it is interpreted that shares are moving in positive trend where the speculators can book profits. Short term speculators are making reasonable profits where risk is going hand in hand. It is advisable to invest in shares for short term rather than long term which will result in risk taking.
CHART: 4.4.2 showing calculation of RATE OF CHANGE of MARUTI SUZUKI AUTO

Ltd
Page 43
INTERPRETATION:
From the above chart it is interpreted that ROC is fluctuating over one year period time. The scrip is overbought in the month July where the speculators can sell shares and in the month February shares were oversold indicating price rise in future. It is advisable to invest in shares for short period.

MAHINDRA & MAHINDRA Ltd
Page 44
DATE 6-Apr-10 13-Apr-10 21-Apr-10 27-Apr-10 4-May-10 11-May-10 18-May-10 25-May-10 1-Jun-10 8-Jun-10 15-Jun-10 22-Jun-10 29-Jun-10 6-Jul-10 13-Jul-10 20-Jul-10 27-Jul-10 3-Aug-10 10-Aug-10 17-Aug-10 24-Aug-10 31-Aug-10 7-Sep-10 15-Sep-10 22-Sep-10 28-Sep-10 4-Oct-10 11-Oct-10 19-Oct-10 26-Oct-10 2-Nov-10 9-Nov-10 16-Nov-10 23-Nov-10 30- Nov-10 7-Dec-10 14-Dec-10 21-Dec-10 29-Dec-10 4-Jan-11 11-Jan-11 18-Jan-11 CLOSING PRICE 533.5 508.3 508.25 536.75 517.85 563.7 560.45 515.95 564.25 570.75 608.15 633.15 613.9 627.05 602.1 639.85 651.8 641.1 620.2 616.1 626.7 630.15 629.25 676.1 681.9 698.75 740.45 735.85 699.1 728.95 759.9 806.35 753 757.45 802.5 800.95 757.85 756.2 773.15 771.05 751.25 750.85 MOVING AVG RATE OF CHANGE
511.8 529.1 534.69 540.11 541.92 552.14 573.19 584.31 588.93 601.19 611.98 626.14 639.85 631.99 628.01 629.42 631.49 624.39 620.14 633.34 642.36 663.19 689.66 696.14 695.32 709.3 740.34 752.61 732.83 762.73 774.93 792.41 784.32 775.88 764.32 761.22 754.31 764.11
114.32 115.14 111.92 113.14 108.32 110.41 103.21 104.32 110.41 105.62 93.41 99.81 101.39 110.46 103.81 109.73 123.41 119.32 113.43 121.38 116.43 129.14 120.32 110.39 117.64 116.38 104.39 101.66 110.38 104.81 96.32 99.41 Page 45
25-Jan-11 1-Feb-11 8-Feb-11 15-Feb-11 22-Feb-11 1-Mar-11 8-Mar-11 15-Mar-11 22-Mar-11 31-Mar-11 733.55 705.65 652.6 669.55 616 615.75 664.7 644.4 654.1 686.35 752.61 728.41 706.43 701.98 690.49 689.31 672.43 639.41 641.32 663.14 94.21 96.83 86.14 87.32 80.46 80.11 86.14 83.21 84.61 89.44
CHART: 4.5.1 showing calculation of MOVING AVERAGE of MAHINDRA &

MAHINDRA Ltd
900 800 700 600 500 400 300 200 100 0 Closingprice Movingaverage
INTERPRETATION:
From the above chart it is interpreted that moving average is increasing upward which is indicating by selling shares speculators can make profits with minimum risk. Short term
Page 46
investors can book more profits by selling the shares compare to long term speculators. It is advisable to investors to buy shares of M&M where they can expect good returns.
CHART: 4.5.2 showing calculation of RATE OF CHANGE of MAHINDRA &

MAHINDRA Ltd
INTERPRETATION:
From the above chart it is interpreted that scrip is overbought where speculators can book profits by selling shares. Investment in M&M gives good returns to investors where the investors need to face minimum risk. When ROC falls below 100, shares are oversold this helps speculators to The Oxford College of Business Management Page 47
buy shares by expecting price rise in future. ROC helps in predicting shares are overbought or oversold.
TABLE: 4.6 showing calculation of RSI of TATA MOTARS Ltd

DATE CLOSING GAIN LOSS AVG GAIN 0.55 34.7 37.15 4.35 4.23 27.55 98.9 51.5 10.82 23.9 37.95 26.7 3.05 34 11.15 31.5 2.75 115.5 49.35 5.1 1.4 28.8 14.55 46.3 9.6 58.53 12.39 14.75 15.05 15.05 15.05 14.73 15.85 19 19 25.4 30.30 28.45 24.66 24.14 23.02 24.5 25.66 31.31 13.5 14.88 14.88 17.25 17.12 16.71 13.94 13.95 14.25 13.14 13.14 13.14 10.61 10.31 11.77 11.77 11.77 11.48 0.92 0.99 1.01 0.87 0.88 0.87 1.15 1.46 1.36 1.92 2.31 2.15 2.4 2.1 2.09 2.08 2.27 2.82 47.92 49.75 50.24 45.32 46.11 45.32 51.11 59.35 56.14 62.11 69.78 69.12 72.14 72.01 72.11 72.09 72.81 73.14 Page 48 AVG LOSS RELATIVE RSI STRENGH PRICE 6-04-10 774.15 13-04-10 774.7 21-04-10 809.4 27-04-10 846.55 4-05-10 842.2 11-05-10 799.9 18-05-10 772.35 25-05-10 673.45 1-06-10 724.95 8-06-10 735.8 15-06-10 759.7 22-06-10 797.65 29-06-10 770.95 6-07-10 767.9 13-07-10 801.9 20-07-10 813.05 27-07-10 844.55 3-08-10 841.8 10-08-10 957.3 17-08-10 1006.65 24-08-10 1011.75 31-08-10 1010.35 7-09-10 1039.15 15-09-10 1024.6 22-09-10 1070.9 28-09-10 1080.5 4-10-10 1139.05
11-10-10 19-10-10 26-10-10 2-11-10 9-11-10 16-11-10 23-11-10 30- 11-10 7-12-10 14-12-10 21-12-10 29-12-10 4-01-11 11-01-11 18-01-11 25-01-11 1-02-11 8-02-11 15-02-11 22-02-11 1-03-11 8-03-11 15-03-11 22-03-11 31-03-11 1151.6 1174.15 1194.75 1154.25 1269.9 1205.55 1213.5 1234.95 1335.4 1305.95 1365.15 1268.9 1298.4 1158.05 1199.55 1166 1069.05 1112.25 1237.35 1136.85 1141.85 1162.15 1142.1 1136.1 1248.35 12.55 22.55 20.6 40.5 115.65 64.35 7.95 21.45 100.45 29.45 59.2 96.25 29.5 140.35 41.5 33.55 96.95 43.2 125.1 100.5 5 20.03 20.05 6 112.25 21.01 18.34 19.89 19.89 28.57 28.57 24.74 25.93 30.12 28.86 32.53 30.46 33.42 21.85 26 25.21 23.07 17.34 29.8 23.3 23.38 22.88 22.88 18.73 29.96 11.48 11.47 11.48 15.39 15.39 20.37 20.37 20.27 20.37 23.31 23.31 28.89 28.89 36.49 36.49 39.84 39.65 39.65 37.71 46.76 46.76 37.13 39.14 25.72 25.72 1.91 1.64 1.73 1.29 1.87 1.40 1.21 1.25 1.52 1.22 1.39 1.07 1.18 0.58 0.72 0.64 0.59 0.43 0.81 0.53 0.52 0.63 0.58 0.73 1.16 62.14 62.04 62.08 62.01 62.14 62.01 61.11 61.18 61.14 61.31 61.44 61.01 61.13 36.71 41.21 39.14 37.62 31.11 42.32 36.11 34.11 36.18 35.31 41.11 52.11
CHART: 4.6.1 showing calculation of RSI of TATA MOTARS Ltd
Page 49
INTERPRETATION:
From the above chart it is interpreted that initially RSI is increasing over 50 where shares are overbought speculators can sell the shares during this time. Short term speculators can make profits than long term speculators. RSI moving below 50 is the time of oversold of shares where prices of shares are less, buy the shares and speculators can make good profits with anticipating price rise in future.
TABLE: 4.7 showing calculation of RSI of HEROHONDA AUTO Ltd

DATE CLOSING GAIN LOSS AVG AVG RELATIVE RSI Page 50
6-04-10 13-04-10 21-04-10 27-04-10 4-05-10 11-05-10 18-05-10 25-05-10 1-06-10 8-06-10 15-06-10 22-06-10 29-06-10 6-07-10 13-07-10 20-07-10 27-07-10 3-08-10 10-08-10 17-08-10 24-08-10 31-08-10 7-09-10 15-09-10 22-09-10 28-09-10 4-10-10 11-10-10 19-10-10 26-10-10 2-11-10 9-11-10 16-11-10 23-11-10 30- 11-10 7-12-10 14-12-10 21-12-10 29-12-10 4-01-11 11-01-11 18-01-11 PRICE 2039.1 1977.15 1889.15 1848.85 1889.15 1900.95 1858.6 1898.75 1986.45 1930.65 2027.95 2020 2047.3 2013.95 1978.75 1944.85 1863 1860.4 1866.7 1905.05 1889.95 1791.55 1708.85 1742.15 1814.1 1865.1 1822.85 1879.5 1838.7 1859.3 1867.65 1809.95 1913.35 1951.05 1781.2 1758.1 1621.55 1922.8 1956.25 1979.35 1845.5 1786.85 GAIN 69.95 88 40.3 40.3 11.8 42.35 40.16 88.1 55.8 97.3 7.95 27.3 33.35 35.2 33.9 81.85 2.6 6.3 38.35 15.1 98.4 82.7 33.3 71.25 51 42.25 56.65 40.85 20.6 8.35 57.7 103.4 37.7 169.85 23.1 136.55 301.25 33.45 23.1 133.85 58.65 27.77 27.77 30.45 26.46 25.29 25.29 21.27 12.46 13.09 7.15 7.15 7.15 4.47 7.79 14.99 20.09 20.09 25.75 21.92 23.98 24.81 24.81 31.82 28.4 27.77 27.77 22.10 52.23 53.51 52.23 49.89 49.89 28.84 23.44 14.64 13.94 10.42 9.58 17.76 18.02 12.44 12.44 13.16 23.00 27.93 24.41 21.02 12.84 24.10 24.10 28.18 28.18 18.34 15.84 15.84 15.84 32.82 35.13 44.56 44.56 40.4 40.4 53.87 53.96 0.96 1.18 2.07 1.89 2.42 2.63 1.19 0.69 1.05 0.57 0.54 0.31 0.15 0.31 0.71 1.56 0.83 0.93 0.72 0.85 1.35 1.56 2.00 1.79 0.79 0.79 0.49 1.17 1.32 1.25 0.92 0.92 49.10 55.87 68.50 66.60 71.20 73.50 45.66 41.10 52.70 37.60 36.90 23.66 44.20 23.66 41.52 60.94 45.35 48.18 41.86 45.94 57.44 60.93 66.66 64.15 44.13 44.13 32.88 53.91 56.81 55.55 47.91 47.91 Page 51 LOSS STRENGH
25-01-11 1-02-11 8-02-11 15-02-11 22-02-11 1-03-11 8-03-11 15-03-11 22-03-11 31-03-11 1774.55 1610.35 1506.95 1517 1390.55 1491.85 1537.7 1510.15 1475.6 1589.45 12.3 164.2 103.4 10.05 126.45 101.3 45.84 27.55 34.55 113.85 39.55 35.78 35.78 36.78 36.78 16.79 18.03 15.2 15.2 27.1 55.19 69.85 63.21 61.2 59.88 59.88 59.88 62.64 52.71 46.84 0.84 0.51 0.55 0.56 0.62 0.27 0.30 0.24 0.28 0.58 45.65 33.77 35.48 35.89 38.27 21.26 23.07 19.35 21.87 36.70
CHART: 4.7.1 showing calculation of RSI of HEROHONDA AUTO Ltd
INTERPRETATION:
From the above chart it is interpreted that speculators who invest for short term will have to face risk. RSI is gradually increasing which indicates future fall in price; it is advisable to speculators to sell the scrip to make profits. RSI going below, it is advisable to buy the scrip. The Oxford College of Business Management Page 52
TABLE: 4.8 showing calculation of RSI of BAJAJ AUTO Ltd

DATE 6-04-10 13-04-10 21-04-10 27-04-10 4-05-10 11-05-10 18-05-10 25-05-10 1-06-10 8-06-10 15-06-10 22-06-10 29-06-10 6-07-10 13-07-10 20-07-10 27-07-10 3-08-10 10-08-10 17-08-10 24-08-10 31-08-10 7-09-10 15-09-10 22-09-10 28-09-10 CLOSING GAIN PRICE 2040.6 2097.9 2093.3 2065.25 2070.45 2125.95 2182.2 2018.55 2163.6 2194.65 2288.1 2330.65 2483.2 2437.9 2400.95 2398.1 2654.15 2713.2 2705.3 2660.8 2775.3 2796.15 3004 1472.35 1458.4 1450.85 LOSS AVG GAIN 57.3 4.6 28.05 5.2 55.5 56.5 163.65 145.4 31.05 93.45 42.55 152.55 45.3 36.95 2.85 256.05 59.05 7.9 44.5 114.5 20.85 207.85 13.95 7.55 35.09 44.43 42.96 58.22 52.66 47.02 47.02 58.08 60.81 51.53 47.31 43.51 45.59 66.37 66.37 66.37 40.77 19.5 19.5 19.01 16.23 20.13 23.69 7.57 7.58 7.58 8.37 12.82 12.82 12.82 8.29 4.59 5.71 64.6 1.84 2.34 2.16 3.34 2.6 2.04 6.71 8.28 8.51 6.37 3.92 3.58 3.56 8.25 16.5 17.32 0.62 67.78 70.05 68.35 77.37 72.22 67.10 87.02 89.22 89.48 86.43 79.67 78.16 78.07 89.18 94.28 94.54 38.27 Page 53 AVG LOSS RELATIVE RSI STRENGH
4-10-10 11-10-10 19-10-10 26-10-10 2-11-10 9-11-10 16-11-10 23-11-10 30- 11-10 7-12-10 14-12-10 21-12-10 29-12-10 4-01-11 11-01-11 18-01-11 25-01-11 1-02-11 8-02-11 15-02-11 22-02-11 1-03-11 8-03-11 15-03-11 22-03-11 31-03-11 1581.7 1523.75 1514.45 1498.8 1548.75 1610 1590.85 1638.45 1576.6 1606.9 1493.45 1444.9 1484.3 1374.5 1286.95 1321.8 1286.15 1246.1 1239.2 1328.1 1329.8 1335.5 1390.6 1365.95 1362 1463.25 130.85 57.95 9.3 15.65 49.95 61.25 19.15 47.6 61.85 30.3 113.45 48.55 39.4 109.8 87.55 34.85 35.65 40.05 6.9 88.9 1.7 5.7 55.1 24.65 3.95 101.25 47.95 47.95 47.95 36.50 39.41 24.75 24.75 29.51 29.51 19.46 19.46 19.46 23.34 18.40 12.28 15.21 10.45 10.45 7.42 16.31 16.48 17.01 18.62 18.62 18.62 25.27 64.6 11.46 7.94 8.87 8.87 8.87 10.79 9.39 14.82 14.82 20.37 24.3 22.73 33.71 42.47 40.56 44.12 41.94 42.63 31.28 26.43 26.43 15.45 91.6 19.28 16.43 0.74 4.29 6.71 4.5 4.87 3.21 2.4 2.83 2.66 1.36 0.95 0.79 1.05 0.54 0.28 0.37 0.23 0.24 0.17 0.51 0.71 0.66 1.21 0.19 1.34 1.56 42.52 81.02 87.02 81.81 82.96 76.24 70.58 73.89 72.67 57.62 48.71 44.13 51.22 35.06 21.87 27.00 18.70 19.35 14.53 33.77 41.52 39.76 54.75 15.96 57.26 60.94
CHART: 4.8.1 showing calculation of RSI of BAJAJ AUTO Ltd
Page 54
INTERPRETATION:
From the above chart it is interpreted that RSI is increasing above 70 in the beginning where scrip is overbought; it is advisable to sell the shares with anticipating price fall in future. In October scrip was oversold as RSI is falling below 50, it is advised to speculators to buy the scrip to make profits in future.
TABLE: 4.9 showing calculation of RSI of MARUTI SUZUKI AUTO Ltd

DATE CLOSING GAIN LOSS AVG AVG RELATIVE RSI Page 55
6-04-10 13-04-10 21-04-10 27-04-10 4-05-10 11-05-10 18-05-10 25-05-10 1-06-10 8-06-10 15-06-10 22-06-10 29-06-10 6-07-10 13-07-10 20-07-10 27-07-10 3-08-10 10-08-10 17-08-10 24-08-10 31-08-10 7-09-10 15-09-10 22-09-10 28-09-10 4-10-10 11-10-10 19-10-10 26-10-10 2-11-10 9-11-10 16-11-10 23-11-10 30- 11-10 7-12-10 14-12-10 21-12-10 29-12-10 4-01-11 11-01-11 18-01-11 PRICE 1376.65 1363.3 1352.35 1283.3 1265.35 1268.1 1242.45 1198.75 1257 1294.35 1362 1369.05 1388.95 1392.35 1409.1 1358.5 1207.5 1213.2 1227.25 1256.55 1245.1 1235.35 1315.4 1346.5 1425.8 1463.85 1430.05 1516.7 1557.4 1513.65 1534.8 1471.95 1405.4 1441.5 1422 1428.65 1413.85 1394.1 1417.9 1428.75 1318.45 1277.6 GAIN 13 10.95 69.05 17.95 2.75 25.65 43.7 58.25 37.35 67.65 7.05 19. 3.4 16.75 50.6 151 5.7 14.05 29.3 11.45 9.75 80.05 31.1 79.3 38.05 33.8 86.65 40.7 43.75 21.15 62.85 66.55 36.1 19.5 6.65 14.8 19.75 23.8 10.85 110.3 40.85 9.35 16.59 17.11 19.14 19.93 26.82 26.82 26.2 21.5 18.46 13.93 6.05 4.31 17.41 12.5 20.6 24.3 23.6 30.61 31.4 31.4 33.1 33.1 25.4 26.3 18.3 14.6 14.6 16.3 14.4 15.3 13.41 13.62 18.03 17.4 16.2 10.4 9.7 9.7 12.2 29.8 25.6 25.6 25.6 27.3 26.4 26.4 26.4 26.4 21.3 9.5 9.5 9.5 13.8 12.6 14.6 16.31 16.31 21.43 21.43 22.64 23.42 23.42 23.42 31.40 30.1 0.54 1.41 1.32 1.93 2.1 3.41 3.1 0.81 0.73 0.64 0.55 0.31 0.44 0.40 0.46 0.71 1.31 2.8 2.9 3.8 3.7 3.6 2.5 1.6 1.8 0.8 0.6 0.61 0.64 0.75 0.82 0.5 0.4 35.05 58.50 56.89 65.87 67.74 77.32 75.60 44.75 42.19 39.02 35.48 23.66 30.55 28.57 31.50 41.52 56.70 73.68 74.35 79.16 78.72 78.26 74.42 61.53 64.28 44.44 37.50 37.88 39.02 42.85 45.05 33.33 28.57 Page 56 LOSS STRENGH
25-01-11 1-02-11 8-02-11 15-02-11 22-02-11 1-03-11 8-03-11 15-03-11 22-03-11 31-03-11 1288.15 1242.4 1176.8 1236.7 1181.1 1290.75 1256.15 1214.15 1171.95 1262.15 10.55 45.75 65.6 59.9 55.6 109.65 34.6 42 38.2 86.2 14.6 13.4 11.3 16.32 17.32 27.44 25.6 24.3 24.3 31.4 28.61 24.32 28.41 28.41 31.66 30.14 31.1 20.14 19.6 16.8 0.51 0.55 0.41 0.44 0.49 0.71 0.83 1.26 1.43 2.41 33.77 35.48 29.07 30.55 32.88 41.52 45.35 55.75 58.84 70.67
CHART: 4.9.1 showing calculation of RSI of MARUTI SUZUKI AUTO Ltd
INTERPRETATION:
From the above chart it is interpreted that RSI is fluctuating from month to month. It is not advisable to speculators to invest in shares where they need to take more risk. When shares are
Page 57
overbought- sell the shares and when shares are oversold- buy the shares. Critical levels exist at 75-25.
TABLE: 4.10 showing calculation of RSI of MAHINDRA & MAHINDRA Ltd

DATE 6-04-10 13-04-10 21-04-10 27-04-10 4-05-10 11-05-10 18-05-10 25-05-10 1-06-10 8-06-10 15-06-10 22-06-10 29-06-10 6-07-10 13-07-10 20-07-10 27-07-10 3-08-10 10-08-10 17-08-10 24-08-10 31-08-10 7-09-10 15-09-10 CLOSING GAIN PRICE 533.5 508.3 508.25 536.75 517.85 563.7 560.45 515.95 564.25 570.75 608.15 633.15 613.9 627.05 602.1 639.85 651.8 641.1 620.2 616.1 626.7 630.15 629.25 676.1 LOSS AVG GAIN 25.2 0.05 28.5 18.9 45.85 3.25 44.5 48.3 6.5 37.4 25 19.25 13.15 24.95 37.8 11.95 10.7 20.9 4.1 10.6 3.45 0.90 46.85 12.91 16.93 19.45 16.11 17.41 13.01 16.92 18.31 13.94 13.31 9.81 7.61 5.16 5.16 8.11 9.19 7.4 7.35 9.04 7.81 9.4 4.6 4.6 6.1 8.4 8.8 8.8 6.7 7.2 7.2 1.52 2.4 2.8 1.83 2.8 1.5 4.1 4.32 2.4 1.8 1.14 0.91 0.82 0.71 1.32 60.32 70.58 73.31 64.74 71.24 60.11 81.40 21.16 71.41 64.39 54.21 48.36 54.94 58.47 43.11 Page 58 AVG LOSS RELATIVE RSI STRENGH
22-09-10 28-09-10 4-10-10 11-10-10 19-10-10 26-10-10 2-11-10 9-11-10 16-11-10 23-11-10 30- 11-10 7-12-10 14-12-10 21-12-10 29-12-10 4-01-11 11-01-11 18-01-11 25-01-11 1-02-11 8-02-11 15-02-11 22-02-11 1-03-11 8-03-11 15-03-11 22-03-11 31-03-11 681.9 698.75 740.45 735.85 699.1 728.95 759.9 806.35 753 757.45 802.5 800.95 757.85 756.2 773.15 771.05 751.25 750.85 733.55 705.65 652.6 669.55 616 615.75 664.7 644.4 654.1 686.35 5.8 16.85 41.7 4.6 36.75 29.85 30.95 46.45 53.35 4.45 45.05 1.55 43.1 1.65 16.95 2.1 19.8 0.4 17.3 27.9 53.05 16.95 53.55 0.25 48.95 20.3 9.7 32.35 12.33 9.41 12.11 12.11 12.11 13.19 16.19 20.13 19.71 21.11 25.81 34.31 24.31 25.31 26.43 26.81 28.1 19.41 20.14 22.4 26.1 24.9 29.6 27.1 26.8 28.3 26.1 26.06 7.2 5.1 3.5 2.9 5.1 5.1 5.1 4.9 9.6 9.6 9.6 11.21 15.1 17.3 18.6 18.8 20.3 20.7 16.8 19.3 24.04 23.41 27.48 23.14 23.11 25.16 25.04 21.61 1.71 1.92 4.6 3.9 2.6 2.4 3.2 4.2 2.6 2.8 2.9 2.3 1.7 1.5 1.3 1.4 1.3 0.91 1.2 1.3 1.11 1.03 1.2 1.04 1.32 1.16 1.01 1.32 64.90 66.20 88.85 79.40 73.40 71.40 77.60 81.31 73.70 65.70 74.60 69.30 63.01 60.00 57.50 58.60 57.40 48.35 55.50 57.40 53.40 51.80 55.40 51.90 57.10 54.30 51.70 57.10
CHART: 4.10.1 showing calculation of RSI of MAHINDRA & MAHINDRA Ltd.
Page 59
INTERPRETATION:
From the above chart it is interpreted that RSI of the company is moving above 50 indicating the instrument is becoming overbought; it is advisable to the speculators to sell the shares to make profits. Investment in scrip will gives god returns to speculators. RSI is calculated for period of one year, to avoid possibilities of wrong signals long time consideration is advisable.
FINDINGS
Page 60
If share price shows a slight upward trend, then it is advisable to buy the shares during this kind of market condition and sell it later when the trend goes down. If RSI crosses 73 there may be downturn and it is time to sell. If RSI falls below 30 it is time to pick up the scrip, going above 50, the instrument is becoming overbought, if it falls below it is becoming oversold. Critical level exist at 75-25 ROC shows whether the scrip is overbought-sell or oversold-buy. Weekly closing prices of five automobile companies are used to calculate MOVING AVERAGE, ROC and RSI. Moving average is the most appropriate tool to predict the stock price movement. Not all the tools used here will gives the same result for the same period. RSI used in identifying the inherent technical strength and weakness of a particular scrip or market. Moving average indicates whether stock prices are declining-buy the shares or increasing- sell the shares. Considering ROC short term speculators can make profits than long term speculators in MAHINDRA and MAHINDRA Ltd. RSI of MARUTI SUZUKI Ltd is lying between 30 to 75 which indicates good sign for speculators to make good profits over short term period. Moving average of TATA MOTARS Ltd indicates good return to long term speculators rather than short term investors in shares.
Recommendations
If RSI goes above 73, shares are overbought-sell the shares, RSI goes below 30, the shares are oversold-buy the shares. RSI going above 50, the instrument is become overbought, if it falls below it is becoming oversold. Critical levels exist at 75-25. If the time period is taken more the possibility of getting wrong signals is reduced. Day moving average is the most appropriate tool to predict the stock price movement. The historic high and low values of the ROC should be identical at first to locate the overbought and oversold region. In ROC if the scrip reaches the historic high values the scrip is in the overbought region and a fall in the value can be anticipated. If the scrip ROC reaches the historic low value the scrip is in the oversold region, a rise in the scrips price can be anticipated. If ROC is in the overbought region investor can sell the scrip.
Conclusions
The study is concerned with the relevant features of technical analysis and about its indicators. Technical analysis is widely accepted worldwide and a very useful tools for the analysis of share price behavior. The share market is more challenging, fulfilling and rewarding to resourceful investors willing to learn the art of cyclical timing to study of technical analysis. The technical approach to invest is essentially a reflection of the idea that price moves in trends which are determined by the challenging attitudes of investors towards a variety of economic, monetary, political and psychological forces. By studying the nature of previous market turning points it is possible to develop some characteristics that can help to identify major markets top and bottoms. The recognition of top and bottoms is in nutshell of technical analysis process. Entering the market at the beginning of the up-trend and getting out of it at the first stroke of the formation in the reversal is the basis of this analysis. In this particular dissertation the researcher has identified five indicators, which are useful for trading (long and short term) viz; MOVING AVERAGE METHOD, OSCILLATORS, and RATE OF CHANGE AND RELATIVE STRENGTH INDEX. The researcher for the purpose of analyzing the long term trading (daily trading) has used three indicators namely moving average method, rate of change method and relative strength index. For the purpose of analysis five scrip Viz TATA MOTARS Ltd, MARUTI SUZUKI Ltd,BAJAJ AUTO Ltd, HEROHONDA Ltd and MAHINDRA & MAHINDRA have been selected. Analyses of these five scrip have been made and conclusions have been drawn.
BIBLIOGRAGHY
Text Books
Security Analysis and Portfolio Management, by Punithavathy Pandian, published by Vikas publishing house Pvt Ltd, fifth reprint 2005. Investment Analysis and Portfolio Management, by Prasanna Chandra, published by Tata McGraw Hill, Second edition fifth reprint 2005.
Websites
www.bseindia.com www.moneycontrol.com www.nseindia.com www.google.com
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Testing of Technical Analysis Tools As a Signal for Entry & Exit of Stock Market

1.1.2 Investment Attributes

The Oxford College of Business Management

1.3 Technical Analysis

1.3.2 Basic premises of Technical analysis

Prices move in trends

The Oxford College of Business Management

1.4.1 Types of oscillators

The Oxford College of Business Management

The Oxford College of Business Management

2.2 Statement of the Problem

2.4 Review of Literature

The Oxford College of Business Management

The Oxford College of Business Management

The Oxford College of Business Management

2.5 Objectives of the Study

2.6 Scope of the study

The Oxford College of Business Management

The Oxford College of Business Management

19. Technical Analysis: It is a process of identifying trend reversals at an earlier stage to

The Oxford College of Business Management

2.8 Research Methodology 2.8.1 Type of research:

The Oxford College of Business Management

2.8.2 METHOD OF THE DATA COLLECTION

2.8.3 SOURCES OF DATA 2.8.3.1 Primary data

2.8.3.2 Secondary data

www.nse.com www.bse.com www.wikipedia.com

2.8.4 Techniques of data analysis

3. Rate of change. Day Moving Average

Relative Strength Index (RSI):

Rate of change (ROC):

The Oxford College of Business Management

2.9 Limitations of the study

2.10 Chapter scheme

The Oxford College of Business Management

3.1 Automobile Industry History :

3.2 In the context of Indian economy

3.3 Growth Drivers of Indian Automobile Market

3.4 India's Position in World's Production

The Oxford College of Business Management

3.5 Growth of Automobile Industry

3.5.1 Domestic Sales

The Oxford College of Business Management

3.6 Major Automotive Players in India

The Oxford College of Business Management

The Oxford College of Business Management

TABLE: 4.1 showing calculation of MOVING AVERAGE and RATE OF CHANGE of

The Oxford College of Business Management

The Oxford College of Business Management

CHART: 4.1.1 showing calculation of MOVING AVERAGE of TATA MOTARS Ltd

MO VING A AGEOFT T MO AR L VER AA T S td

CHART: 4.1.2 showing calculation of RATE OF CHANGE of TATA MOTARS Ltd

TABLE: 4.2 showing calculation of MOVING AVERAGE and RATE OF CHANGE of

The Oxford College of Business Management

CHART: 4.2.1 showing calculation of MOVING AVERAGE of HEROHONDA AUTO Ltd

The Oxford College of Business Management

CHART: 4.2.2 showing calculation RATE OF CHANGE of HEROHONDA AUTO Ltd

TABLE: 4.3 showing calculation of MOVING AVERAGE and RATE OF CHANGE of

The Oxford College of Business Management

CHART: 4.3.1 showing calculation of MOVING AVERAGE of BAJAJ AUTO Ltd

3500 3000 2500 2000 1500 1000 500 0 Closingprice Movingaverage

The Oxford College of Business Management