RECENT TOOLS FOR STOCK PRICE

FORCASTING

PRESENTED BY:
• HIMANSHU KUMAR
• VIKAS KUMAR PANDEY
ANCHOR FACULTY:
• PRAGYA PARIMEETA
• KUMARI SWATI
PROF. SUDIPTA NANDA • SUMITA MUKHERJEE
 INTRODUCTION

There are two types of analysis for predicting the performance

of a company’s stock –

FUNDAMENTAL ANALYSIS

TECHNICAL ANALYSIS
 FUNDAMENTAL ANALYSIS

Fundamental analysis involves analyzing the fundamentals of a

company like :
1. the analysis of the economy the company is present in,
2. analysis of the industry the company is present in, and
3. finally analysis of the company through its financial statements..
 TECHNICAL ANALYSIS
This involves predicting the stock prices using the past
prices of the stock.
Looks for peaks, bottoms, trends, patterns, and other
factors affecting a stock’s price movement.
Makes a buy/sell decision based on those factors.
Fundamental Analysis - which stock to buy
Technical Analysis - when to buy
OBJECTIVES & IMPACTS OF TECHNICAL
ANALYSIS
 To predict the continuation of a trend.

 To identify reversal patterns.

 To minimize risk arising from future price changes.

 To identify any prominent event like bursting of an asset

bubble, terror-trading or other crises.
 TOOLS OF TECHNICAL ANALYSIS
VOLUME OF TRADE
ODD LOT TRADING
RELATIVE STRENGTH INDEX
RATE OF CHANGE
HEAD AND SHOULDERS
TRIANGLES
 VOLUME OF TRADE

Technical analysts use volume as an excellent method of

confirming the trend.
The market or individual security will continue to have the
same trend if the volume of trading is large.
If there is a sharp fall in the volume then it indicates that
the trend is going to change.
 ODD LOT TRADING

Share, sold in smaller lots, fewer than 100 are called odd lot.
Odd lot purchases to odd lot sales is the odd lot index.
The notation behind is that odd lot purchase is
concentrated at the top of the market cycle and selling at
the bottom.
If there is increase of odd-lot purchases or odd-lot sales
during the upward or downward trend respectively then
there may be a high chance of change in the trend.
 RELATIVE STRENGTH INDEX(RSI)
It is a tool used to identify the inherent technical strength
and weakness of a particular scrip or market.
Prices close higher in strong market periods, and lower in
weaker periods.
RSI can be calculated for a scrip by adopting the following
formula :-
RSI = 100 – { 100/(1+RS)}

RS = average gain per day

average loss per day
 Calculation of day RSI for ACC
DATE PRICE GAIN LOSS
Feb 4 300 -- --
6 304 4 --
7 319 15 --
8 317 -- 2
11 319 2 --
12 333 14 --
13 331 -- 2
14 332 1 --
18 348 16 --
19 346 -- 2
52/6 = 8.67 6/3 = 2
RS = 8.67/2
= 4.335 RSI = 100 – {100/(1+4.335)}
= 100 – 18.74
= 81.26
RELATIVE STRENGTH INDEX(RSI)
 RATE OF CHANGE
Rate of change indicator 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 and oversold position in a
scrip.
 The historic high and low values of the ROC should be identified
at first to locate the overbought and oversold region.
If the scrip’s ROC reaches the historic high values, the scrip is in
the overbought region and a fall in the value can be anticipated.
If the scrip’s ROC reaches the historic low value, the scrip is in the
oversold region and a rise in the scrip price can be anticipated.
Calculation of ROC for 12 weeks or 12 months is most popular.

ROC= Today’s price × 100

Price ‘n’ days back

ROC= Today’s price × 100 - 100

Price ‘n’ days back
 Date Price ROC-I ROC-II
Method Method
(in percent) (in percent)
Aug 1999 235.20 __ __
20
21 232.85 __ __
24 236.65 __ __
25 234.20 __ __
26 231.70 __ __
27 244.75 __ __
28 257.95 __ __
31 254.90 108.38 8.38
sep 1 249.85 107.30 7.30
2 244.60 103.36 3.36
3 234.05 99.94 0.06
4 234.25 101.10 1.10
7 235.80 96.34 -3.66
8 232.70 90.21 -9.79
 HEAD AND SHOULDERS
This pattern is easy to identify and the signal
generated by this pattern is considered to be reliable.
In the head and shoulder there are three rallies
resembling the left shoulder and a right shoulder.
A neckline is drawn connecting the lows of the tops.
When the stock price cuts the neckline from above , it
signals the bear market.
HEAD AND SHOULDERS
 TRIANGLES
 The triangle formation is easy to identify and
popular in technical analysis.
 The triangles are of symmetrical, ascending,
descending and inverted.

1. Symmetrical triangle,
2. Ascending triangle,
3. Descending triangle.
 Symmetrical triangle
This pattern is made up of series of fluctuation, each
fluctuation smaller than the previous one.
Top do not attain the height of the previous tops. Likewise
bottoms are higher than the previous bottoms.
It indicates the slow down or temporary halt in the
direction of the original trend.
 Ascending triangle
Here, the upper trend line is almost a horizontal trend line
connecting the tops and the lower trend line is a rising
trend line connecting the rising bottoms.
When the demand for the scrip overcomes the supply for it,
then there will be a break out. The break will be in favour of
bullish trend.
 Descending triangle
Here, connecting the lower tops forms the upper trend line.
The upper trend line would be a falling one.
The lower trend line would be almost horizontal connecting
the bottoms. The lower line indicates the support level.
The possibility for a downward breakout is high in this
pattern. This pattern is seen during the downtrend.
 CONCLUSION
•The prediction of stock price is not a simple procedure. It
involves complex methods.

•Fundamental and technical analysis both should be used

for forecasting the stock prices.

•The sentiments of the investors also play a big role in

estimating the future stock prices.

•The area of technical analysis is a dynamic one and each

day a new model is coming out to predict the future stock
prices.
ANY QUERIES
THANK
YOU