Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
A Study on
EQUITY RESEARCH USING TECHNICAL ANALYSIS
for
MR.PRAVEEN MADHAVAN
SCMS COCHIN SCHOOL OF BUSINESS
by
FK-2804
DECLARATION
I, the undersigned, hereby declare that this project report entitled A
STUDY ON EQUITY RESEARCH USING TECHNICAL
ANALYSIS
FOR
FOURTH
DIMENSION
WEALTH
ii
CERTIFICATE
This is to certify that the project work entitled A STUDY ON
EQUITY RESEARCH USING TECHNICAL ANALYSIS FOR
FOURTH DIMENSION WEALTH MANAGEMENT SERVICES
PVT.LTD, Bangalore has been carried out under my guidance by
ROHIT AGARWAL ANIL Roll No: FK-2804 in partial fulfilment of
his Post Graduate Diploma in Management during the academic year
2015 - 2017.
iii
BANGALORE'
has
been
carried
out
by
ROHIT
iv
ACKNOWLEDGEMENT
I express my enormous gratitude to all who have provided instructions and guidance for
doing the project.
First of all, I would like to thank God almighty without whose blessings this project would
not have been reality.
I am highly grateful to Prof. K. J. Paulose, Dean PGDM, of SCMS Cochin School of
Business, for having allowed me to carry out the project successfully.
I am also thankful to our Dr. Filomina P. George, Director PGDM, of SCMS Cochin
School of Business, for providing me such an opportunity to come to real situation.
I would like to thank the organization Fourth Dimension Wealth Management Services
Pvt. Ltd for providing me an opportunity to undertake this internship study and allowing me
to explore the area of finance which would prove out to be very beneficial to me in my future
assignments, my studies and my career ahead. I wish to place on records, my deep sense of
gratitude and sincere appreciation to my company guide Mr. Ashwin Kumar (Co-founder
& Director) and C.A. Lakshminaryanan R (Co-founder & Director) who provided me
valuable guidance and deep insights throughout the preparation of my project.
I also express my sincere thanks to my faculty guide Mr. Praveen Madhavan for sharing
his views on the subject matter and patiently replying to all my queries despite their very busy
schedule.
I express my sincere gratitude to my mentor Prof. R.T.R Varma for coming to Bangalore
all the way from Cochin to guide, encourage and support me for carrying out the project.
Lastly, I wish to thank my family and friends for their valuable help and support.
Contents
List of Tables ........................................................................................................................................ viii
List of Figures .........................................................................................................................................ix
Executive Summary ................................................................................................................................xi
CHAPTER-I .......................................................................................................................................... 1
INTRODUCTION AND THEORETICAL BACKGROUND OF STUDY ..................................... 1
1.1 INTRODUCTION ............................................................................................................................ 2
1.2 DEFINITION .................................................................................................................................... 2
1.3 ASSUMPTIONS OF TECHNICAL ANALYSIS ............................................................................ 2
1.4 TECHNICAL V/S FUNDAMENTAL ANALYSIS......................................................................... 4
1.5 RELEVANCE OF TECHNICAL ANALYSIS ................................................................................ 5
1.6 CHARTS ........................................................................................................................................... 5
1.7 KEY CONCEPTS IN TECHNICAL ANALYSIS SUPPORT AND RESISTANCE ................... 7
1.8 TREND ............................................................................................................................................. 9
1.9 TECHNICAL INDICATORS ......................................................................................................... 11
Chapter-II ............................................................................................................................................ 20
RESEARCH METHODOLOGY ...................................................................................................... 20
2.1 OBJECTIVES ................................................................................................................................. 21
2.2 SCOPE OF THE STUDY ............................................................................................................... 21
2.3 MANAGERIAL USEFULNESS OF THE STUDY ....................................................................... 21
2.4 RESEARCH DESIGN .................................................................................................................... 21
2.5 METHOD OF DATA COLLECTION ........................................................................................... 22
2.6 DATA ANALYSIS ......................................................................................................................... 22
2.7 TOOLS USED FOR ANALYSIS ................................................................................................... 23
2.8 LIMITATIONS OF THE STUDY.................................................................................................. 23
Chapter-III .......................................................................................................................................... 24
COMPANY PROFILE ...................................................................................................................... 24
3.1 SERVICES OFFERED BY THE COMPANY ............................................................................... 25
3.2 MILESTONE .................................................................................................................................. 26
3.3 SWOT ANALYSIS ........................................................................................................................ 26
Chapter-IV .......................................................................................................................................... 27
ANALYSIS AND INTERPRETATION OF DATA ........................................................................ 27
4.1 Exponential Moving Average ......................................................................................................... 29
4.2 Moving Average Convergence Divergence (MACD) .................................................................... 39
vi
vii
List of Tables
Table 1: Weightage of Banks in Index (Bank Nifty) .............................................................. 23
Table 2: Exponential Moving Average (SBI) ......................................................................... 29
Table 3: Exponential Moving Average (ICICI Bank) ............................................................. 31
Table 4: Exponential Moving Average (HDFC Bank) ............................................................ 33
Table 5: Exponential Moving Average (AXIS Bank) ............................................................. 34
Table 7: Exponential Moving Average (Bank Nifty) .............................................................. 37
Table 8: Moving Average Convergence Divergence (SBI) ..................................................... 39
Table 9: Moving Average Convergence Divergence (ICICI Bank) ........................................ 40
Table 10: Moving Average Convergence Divergence (HDFC Bank) ..................................... 41
Table 11: Moving Average Convergence Divergence (AXIS Bank) ...................................... 42
Table 12: Moving Average Convergence Divergence (Bank of Baroda) ................................ 43
Table 13: Moving Average Convergence Divergence (Bank Nifty) ....................................... 44
Table 14: Relative Strength Index (SBI) ................................................................................. 47
Table 15: Relative Strength Index (ICICI Bank) ..................................................................... 48
Table 16: Relative Strength Index (HDFC Bank).................................................................... 49
Table 17: Relative Strength Index (AXIS Bank) ..................................................................... 50
Table 18: Relative Strength Index (Bank of Baroda) .............................................................. 51
Table 19: Relative Strength Index (Bank Nifty) ...................................................................... 52
Table 20: Money Flow Index (SBI) ......................................................................................... 55
Table 21: Money Flow Index (ICICI Bank) ............................................................................ 57
Table 22: Money Flow Index (HDFC Bank) ........................................................................... 58
Table 23: Money Flow Index (AXIS Bank) ............................................................................ 59
Table 24: Money Flow Index (Bank of Baroda) ...................................................................... 60
Table 25: Money Flow Index (Bank Nifty) ............................................................................. 61
Table 26: Stochastic (SBI) ....................................................................................................... 63
Table 27: Stochastic (ICICI Bank) .......................................................................................... 65
Table 28: Stochastic (HDFC Bank) ......................................................................................... 67
Table 29: Stochastic (AXIS Bank) .......................................................................................... 69
Table 30: Stochastic (Bank of Baroda) .................................................................................... 71
Table 31: Stochastic (Bank Nifty) ........................................................................................... 73
Table 32: Returns according to Technical Indicators. ............................................................. 76
Table 33: Ranking of Banks on Performance of Banks according to Technical Indicators .... 77
viii
List of Figures
Figure 1: Example for Line chart ............................................................................................... 6
Figure 2: Example for Bar Chart ............................................................................................... 6
Figure 3: Example for Candlestick chart ................................................................................... 7
Figure 4: Example for Support and Resistance.......................................................................... 8
Figure 5: Example for Upward and Downward Trend ............................................................ 10
Figure 6: Example for Sideways Trend ................................................................................... 10
Figure 7: Exponential Moving Average (SBI)......................................................................... 30
Figure 8: Exponential Moving Average (ICICI Bank) ............................................................ 32
Figure 9: Exponential Moving Average (HDFC Bank) ........................................................... 33
Figure 10: Exponential Moving Average (AXIS Bank) .......................................................... 34
Figure 11: Exponential Moving Average (Bank of Baroda) ................................................... 36
Figure 12: Exponential Moving Average (Bank Nifty) ........................................................... 37
Figure 13: Returns according to Exponential Moving Average .............................................. 38
Figure 14: Moving Average Convergence Divergence (SBI) ................................................. 39
Figure 15: Exponential Moving Average (ICICI Bank) .......................................................... 41
Figure 16: Moving Average Convergence Divergence (HDFC Bank) ................................... 42
Figure 17: Moving Average Convergence Divergence (AXIS BANK) .................................. 43
Figure 18: Moving Average Convergence Divergence (Bank of Baroda) .............................. 44
Figure 19: Returns according to MACD .................................................................................. 46
Figure 20: Relative Strength Index (SBI) ................................................................................ 47
Figure 21: Relative Strength Index (ICICI Bank).................................................................... 49
Figure 22: Relative Strength Index (HDFC Bank) .................................................................. 50
Figure 23: Relative Strength Index (AXIS Bank).................................................................... 51
Figure 24: Relative Strength Index (Bank of Baroda) ............................................................. 52
Figure 25: Relative Strength Index (Bank Nifty) .................................................................... 53
Figure 26: Returns according to Relative Strength Index ........................................................ 54
Figure 27: Money Flow Index(SBI) ........................................................................................ 55
Figure 28: Money Flow Index (ICICI Bank) ........................................................................... 57
Figure 29: Money Flow Index (HDFC Bank).......................................................................... 58
Figure 30: Money Flow Index (AXIS Bank) ........................................................................... 59
Figure 31: Money Flow Index (Bank of Baroda) .................................................................... 60
Figure 32: Money Flow Index (Bank Nifty) ............................................................................ 61
ix
Executive Summary
The study was done on Equity Research using Technical Analysis. It was aimed to have a
better understanding of stock market. A better understanding of stock market trend will
facilitate allocation of financial sources to the most profitable investment opportunity.
The objective of this project was to determine the trend of Bank Index, SBI, ICICI Bank,
HDFC Bank and Bank of Baroda using Technical Analysis and also to establish behavioural
patterns of Index and stocks of chosen sector. Another objective was to find out which equity
share is preferable for investors i.e. when to buy and when to sell a particular and to better
time the market for higher gains. The type of research conducted was Descriptive Research.
Historical price movements and volume data were required for executing the project and they
were collected from secondary sources like Money control, NSE India website, icharts
website. The share price analysis was done on past five years using Technical Indicators like
Exponential Moving Average (EMA), Moving Average Convergence Divergence (MACD),
Relative Stock Index (RSI), Money Flow Index (MFI) and Stochastic.
It has been found that different indicators give different signals. The signals that are given by
technical indicators do not guarantee surety of positive return. Most of the indicators have
given highest return in Bank Nifty followed by Axis Bank and HDFC Bank as they were in
bullish trend. ICICI Bank, SBI and Bank of Baroda are highly volatile stock. The share prices
of these stocks were highly fluctuating indicating their high riskiness. There are many other
technical indicators available. It would be better for any trader to combine two or three
indicators to get better buy and sell signals. It is also suggested to consider other things
like Risk and Money Management, Stop loss tool, maintain discipline and patience while
monitoring their portfolio. Last but not the least is to stick to the fundamental of investing
which shall increase the chance of earnings from a stock. Technical Analysis does not
guarantee positive returns. It serves as a road map for Investors and traders to forecast the
probable direction of the stock market based on the historical price movements combined
with technical tools like volume, chart patterns and indicators. It focuses more on the
direction of the market and not the reason behind it.
xi
CHAPTER-I
INTRODUCTION AND THEORETICAL BACKGROUND OF
STUDY
1.1 INTRODUCTION
Technical Analysis is the forecasting of future financial price movements based on an
examination of past price movements. Like weather forecasting, technical analysis does not
result in absolute predictions about the future. Instead, Technical Analysis can help investors
anticipate what is likely to happen to prices over time.
Technical analysis is applicable to stocks, indices, commodities, futures or any tradable
instrument where the price is influenced by the forces of supply and demand.
The person performing technical analysis is called the technical analyst. The technical
analyst uses charts and technical indicators to predict the future price movements. Technical
analysts are known for forecasting the probabilities of future price movements. There isnt
a standard process for technical analysis. One analysts guess will be different from another
analysts guess. It is used by short term traders and rarely by long term investors. It is a
process of identifying trend reversals at an early stage to formulate the buying and selling
strategy. With the help of several indicators they analyse the relationship between pricevolume and supply-demand for the overall market and the individual stock.
It is a method of evaluating securities by analyzing the statistics generated by market activity,
such as past prices and volume.
Technical Analysis is more short term in nature than fundamental analysis. It can be used on
a timeframe of weeks, days or even minutes. While Fundamental Analysis takes a relatively
long-term approach to analyze the market compared to technical analysis. It often looks at
data over a number of years.
The goals of a purchase (or sale) of a stock are usually different for each approach. In
general, Technical Analysis is used for a trade, whereas fundamental analysis is used to make
an Investment. Investors buy those assets in which they believe there can be an increase in
value, while traders buy those assets in which they believe, it can be sold to somebody else at
a higher price.
Technical Analyst focuses mainly on the direction of the market and not the reason behind it.
Technical Analysis provides signals to buy, sell, hold or stay away from the market.
We need to understand and interpret them clearly so that it helps in making better decisions to
increase the probability of the success in the market.
Fundamental Analysis is mainly What to buy and What to sell whereas Technical Analysis
is mainly When to buy and When to sell. So, Technical Analysis helps to time the market
perfectly.
The need to use Technical Analysis is to establish a future roadmap under the current
market setup. It guides us where the market is headed.
Technical Analysts do not attempt to measure a securitys intrinsic value i.e. no need to
worry about companys value, what are the products it manufactures etc but instead use
charts and other tools to identify patterns that can suggest future activity. Technical
Analysis relies on market prices which is a reflection of the supply and demand for that
stock. It provides a signal or a pattern to trade a particular stock
Technical Analysis is entirely based on two aspects price and volume data.
Price actions discount everything. Technical Analyst would not be bothered about the
reason behind the movement. It is assumed that if price is going up (good news is
following into the market and if price falls (lot of negativity in the particular stock.
It focuses mainly on the movement of the stock price and not the stock itself.
1.6 CHARTS
Charts are the valuable and easiest tools in the Technical Analysis. They are key to Technical
Analysis. The graphic presentation of the data helps the investor to find out the trend of the
price without any difficulty. Charts are not perfect but they provide clues as when people are
buying or selling. Charts make statistical assumptions about stock price. If the chart is weak,
though we like the company, we probably want to avoid it. In technical Analysis Chart,
Timeframes can be customised according to our convenience. We can change timeframes to
weekly, monthly, quarterly to view long-tem charts. Technical Analysis is based on charts;
therefore sometimes Technical Analysts are called Chartists.
Line Chart,
Bar chart
Candlestick charts.
Line Chart
A line chart is the simplest type of chart. Line Chart is drawn by plotting the closing price of
the stock on a given day and connecting them to make charts. Line charts are easy to read and
understand but they do not provide visual information of the trading range for the individual
points such as the high, low and opening prices. (Bhat, 2009)However, the closing price is
often considered to be the most important price in stock data compared to the high and low
for the day and this is why it is the only value used in line charts.
Candlestick Chart
(http://finance.yahoo.com/news/why-different-types-charts-used-170052635.html,
2014)A
chart that has open, high, low, and close data sets in a candle form is called a candlestick
chart. It is popular with so many traders, as they show so much information including the
psychology of the market. Candlestick charts and bar charts show the same thing.
However, candlestick charts are easier to read. Compared to traditional bar charts, many
traders consider candlestick charts more visually appealing and easier to interpret.
(Blench, 2012)The relationship between the open and close is considered vital information
and forms the essence of candlesticks. Hollow candlesticks, where the close is greater than
the open, indicate buying pressure. Filled candlesticks, where the close is less than the open,
indicate selling pressure.
Support is the psychological point where traders are willing to buy on the expectation that the
stock price wont drop more. The nearest support is just below the stocks current market
price.
Resistance When a stock see a continuous raise in its price, the price level at which the
stock is held from raising further is called the resistance level. The stock may see a fall after
the resistance. Resistance is the point where selling pressure is more than the buying
pressuresupply is greater than the demand. Resistance is the psychological point where
traders are willing to sell with the expectation that the stock price wont increase more. The
nearest resistance line is just above the stocks current market price.
This can be explained numerically say for example, if a scrip price hovers around 150 for
some weeks, then it may rise and reach 210. At this point the price halts and then falls back.
The scrip keeps on falling back to around its original price 150 and halts. Then it moves
upward. In this case, 150 becomes the support level.
At this point, the scrip is cheap and investors buy it and demand makes the price move
upward. Whereas 210 becomes the resistance level, the price is high and there would be
selling pressure resulting in the decline of the price.
1.8 TREND
(Murphy, 1999)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 rends. The share prices move in zigzag manner.
Trend lines are straight lines drawn connecting either the tops or bottoms of the share price
movement. To draw a trend line, the technical analyst should have at least two tops or
bottoms.
Importance of Trend
(Kumar, 2008)It is important to be able to understand and identify trends so that we can trade
with them rather than trade against them. Two important sayings in technical analysis are the
trend is your friend and dont buck the trend Illustrating how important trend analysis is
for technical trade.
Types of Trend
There are three types of trend:
Uptrend
Downtrend
Sideways/Horizontal Trends
Uptrend
(Kristopher, 2014)Stocks are in an uptrend when theyre making higher highs and higher
lows. Higher highs mean consecutive peaks higher than the previous peaks. Higher lows
mean bottoms higher than the previous low. An uptrend forms when psychological or
fundamental factors are improving. Depending on the source and duration of the driver, the
uptrend may last as short as a few weeks to as long as a few years. During an uptrend, its
advisable to buy stocks on dips. Theres optimism in the market that the stock price will go
higher. When the stock market is in a long-term uptrend, its called a bull market.
Downtrend
(Kristopher, 2014)Stocks that are making lower highs and lower lows are in a downtrend.
Lower highs mean the stocks previous peak is higher than the current peak. Lower lows
mean the current bottom is lower than the previous bottom. A downtrend forms when
psychological or fundamental factors are weakening. Its advisable to sell stocks on bounces
when the stock is in a downtrend. Theres pessimism in the market that the stock could
decrease more. When the stocks are in a long-term downtrend, its called a bear market.
In simple terms, Downtrend means stock is moving lower and lower. Downtrends are
frustrating for bullish investors and traders. If we are holding a stock that is in downtrend, we
are probably losing money.
10
11
Moving Average
(Cameron, 2015)Technical analysis has been around for decades and through the years,
traders have seen the invention of hundreds of indicators. While some technical indicators are
more popular than others, few have proved to be as objective, reliable and useful as
the moving average. A moving average is the average price of a security over a set amount of
time. By plotting a security's average price, the price movement is smoothed out. Once the
day-to-day fluctuations are removed, traders are better able to identify the true trend and
increase the probability that it will work in their favour.
(Sasidharan, 2011)A stock price movement above the moving average indicates a buy and the
price movement below the line indicates a sell.
Simple Moving Average
This is the most common method used to calculate the moving average of prices. It simply
takes the sum of all of the past closing prices over the time period and divides the result by
the number of prices used in the calculation.
For example, to calculate a basic 10-day moving average we would add up the closing prices
from the past 10 days and then divide the result by 10. If a trader wishes to see a 50-day
average instead, the same type of calculation would be made, but it would include the prices
over the past 50 days. The resulting average below (11) takes into account the past 10 data
points in order to give traders an idea of how an asset is priced relative to the past 10 days.
Many individuals argue that the usefulness of this type of average is limited because each
point in the data series has the same impact on the result regardless of where it occurs in the
sequence. (www.investopedia.com)The most recent data is more important and, therefore, it
should also have a higher weighting. It was one of the main factors that have led to the
invention of other forms of moving averages namely Linear Weighted Moving Average and
Exponential Moving average.
12
in
an
attempt
to
make
it
more
responsive
to
new
information.
It focuses more on most recent prices rather than on a long series of data points, as the simple
moving average required. (Sasidharan, 2011)When the closing price of a stock is above the
EMA, it indicates buy and price movement below the EMA indicates sell.
Calculation of Exponential Moving Average is complex as compared to Simple Moving
Average.
While calculating first value of EMA, we will notice that there is no previous value. So, in
order to get first value, SMA (Simple Moving Average) should be done for the first value and
then continue with the above formula.
Moving Averages are a totally customizable indicator, which means the time frame, can be
chosen freely according to the users wants. The most common time periods used in moving
averages are 15, 20, 30, 50, 100 and 200 days. The shorter the time span used to create the
average, the more sensitive it will be to price changes. The longer the time spans, the less
sensitive, or more smoothed out, the average will be. There is no "right" time frame to use
when setting up your moving averages.
For my analysis I have chosen 21-week Exponential moving average.
21-week EMA has been done for five banks namely SBI, Axis Bank, ICICI Bank, HDFC
Bank, Bank of Baroda and Bank Index for past five years.
Period for Analysis: 5-8-2011 to 29-7-2016.
Lets consider an example of Axis Bank.
The Closing price of the stock on 5-8-2011 was Rs.241.85. For the calculation of 21-week
EMA of first value (5-8-2011), previous EMA value is required.
13
As there was no previous value, SMA (Simple Moving Average) was done for the 21 period
i.e. from 18-3-2011 to 5-8-2011.
Simple Moving Average is done by adding up the closing prices of the past 21 week and then
divides the result by 21.
Let the closing prices of past 21 weeks be 253.8, 272.99, 281.55, and 289.94 and so on.
Therefore Simple Moving Average would be calculated as follows:SMA = (253.84+272.99+281.55+289.94+.........+248.41)/21 = Rs.260.31.
260.31 is the
required value which would be considered as previous value for the first EMA value. Further
EMA values are calculated by using EMA formula
Calculation of EMA value of Axis Bank
So, for 12-8-2011, EMA value is calculated as followsCurrent EMA= ((Price (current) - previous EMA))* multiplier) + previous EMA.
Multiplier (Smoothing Factor) = 2/(1+N) i.e. 2/(1+21) = 9.09%
EMA for 12-8-2011 = ((241.85 - 260.31)*9.09%)+260.31 = 258.63
258.63 is the EMA for 12-8-2011.
Trend can be identified by comparing Closing price value and EMA value.
If
Closing price is greater than EMA value, it is Bullish and if the Closing price is less
than the value of EMA, it is considered as Bearish.
On 12-8-2011, the Closing Price of the stock was Rs.241.85 and EMA value was 258.63. It
shows Bearish trend as the closing price was less than the value of EMA, i.e. 241.85 <
258.63. In case if the Closing Price was Rs.241.85 but EMA value was 236.60, then it
indicates bullish trend.
14
15
16
Divergence occurs when a security makes a new high or low in price but the RSI does not
make a corresponding new high or low value. Bearish divergence, when price makes a new
high but the RSI does not is taken as a sell signal. Bullish divergence that is interpreted as a
buy signal occurs when price makes a new low, but the RSI value does not.
Lets consider an example where the price of a stock rises to Rs.56, and the RSI makes a high
reading of Rs 71. A little later the stock price moves downward and then the security
subsequently makes a new high of Rs.59, but the RSI only rises to 63. The RSI has bearishly
diverged from the movement of price.
Money Flow Index (MFI)
The money flow index (MFI) is a momentum indicator that measures the inflow and outflow
of money into a security over a specific period of time. The MFI uses a stock's price and
volume to measure trading pressure. Because the MFI adds trading volume to the relative
strength index (RSI), it's sometimes referred to as volume-weighted RSI.
The MFI is measured on a 0 100 scale and is often calculated using a 14 day period. The
MFI compares the ratio of "positive" money flow and "negative" money flow, if typical price
today is greater than yesterday, then it is considered positive money. For a 14 day average.
The sum of all positive money from those 14 days is the positive money flow. The MFI is
based on the ratio of positive/negative money flow (money ratio. By using MFI indicator,
Chartist can know the Overbought and Oversold levels. If it gives an indication of
Overbought i.e. above 80 (>80), then the trader must sell and if it gives an indication of
Oversold i.e. below 20 (<20), the shares should be bought. For analysis, 50 are taken as the
point which defines the bullish and bearish zones.
The logic behind this is if we were to go by the traditional approach of using 80/20 as
overbought and oversold zone we will have stocks oscillating between 80 and 20 in other
words neutral zones or no trade zone. Alternatively, we can use 70/30 but we will still have
no trade zones. Hence we have modified the numbers to 50 as the point which separates OB
and OS zones.
Bullish and Bearish reversals can be used to identify trend reversals. A Bearish Divergence
forms when a stock price move to a higher high, but the indicator (MFI) formed a
significantly lower high and a Bullish Divergence forms when the stock price moves to a
lower low, but the indicator forms a higher low.
17
Identifying Overbought and Oversold levels - Much like any range bound indicator,
Overbought/Oversold conditions are primary signals generated by the Stochastic
Oscillator. The default thresholds are 20 for oversold and 80 for overbought.
18
Bullish Divergence occurs when price records a lower low, but the Stochastic records
a higher low. And Bearish Divergence occurs when price records a higher high but the
stochastic records a lower high.
A Bull Setup occurs when price records a lower high, but Stochastic records a higher
high. The setup then results in a dip in price which can be seen as a Bullish entry point
before price rises. And a Bear Setup occurs when price records a higher low, but
Stochastic records a lower low. The setup then results in a bounce in price which can
be seen as a Bearish entry point before price falls.
19
Chapter-II
RESEARCH METHODOLOGY
20
2.1 OBJECTIVES:
To determine the trend of the stock prices of Bank Index- SBI, ICICI Bank, HDFC
Bank, AXIS Bank and BANK of BARODA using Technical Analysis.
To establish behavioural patterns of Index and Stocks of chosen sector with Technical
Analysis.
To find out which equity share is preferable for the investors i.e. when to buy and
when to sell a particular stock and to better time the market for higher gains.
SAMPLING PLAN:
No sampling plan exists as the data collected is secondary.
21
SECONDARY DATA:
The source of data used in the study is collected in secondary nature. It includes the
historical price movements of the stocks chosen for the project i.e.
o Open, High, Low, Close data
o Volume data
The stocks chosen are
o SBI
o ICICI BANK
o HDFC BANK
o AXIS BANK
o BANK OF BARODA
PRIMARY DATA:
This study didnt require any collection of primary data.
22
26.16
19.79
16
9.03
BANK OF BARODA
4.39
Technical Analysis is commonly prepared with the advantage of hindsight and it usually
gives a lot of false signals
Financial risk is not involving in hypothetical trading and in actual trading there is no
trading record that can absolutely account for the impact of financial risk.
23
Chapter-III
COMPANY PROFILE
24
th
Management Services to Clients. The company structure consists of two Directors Mr. Ashwin Kumar and C.A Lakshminarayanan.R. It has three employees and a turnover
of one crore. It has developed a discipline approach to wealth management in order to reduce
financial anxiety; create financial freedom and certainty for their clients.
Insurance Broking:
The company makes sure that among the various insurance products available, only the
suitable product is made available to Clients to ensure they lead a stress free and secured
life.
Allied/Associate Services:
o Accounting and Assurance
o Project Reports
o Taxation Services
25
3.2 MILESTONE:In the process of SEBI Registration for Investment Advisory Company
Strengths:
o Diverse financial products
o In-house research wing
o Better pricing compared to competitors
o Established training wing
Weakness:
o Relatively new brand in the market
o Competing with identical products to other established players
Opportunities:
o An unfilled customer base
p Application of unique and proprietary knowledge to obtain market advantage.
o High scope for tie ups with existing market players
Threats:
o Knowledge security
o Strong regulatory environment
o High fee negotiating power of clients
o Low fees
26
Chapter-IV
ANALYSIS AND INTERPRETATION OF DATA
27
was having
Rs.1,00,000 and he want to invest the whole amount by purchasing shares of Bank.
But, the individual wants to know if he would have invested the same amount five
years ago, how much he would have earned profit or incurred losses. As the
individual is confused which bank is best for investment, Technical analysis is done
for past five years for banks Axis Bank, HDFC Bank, ICICI Bank, Bank of
Baroda, SBI and Bank Index (Bank Nifty) by using Indicators like Exponential
Moving Average (EMA), MACD, Relative Strength Index (RSI), Money Flow
Index (MFI) and Stochastic. Stop-loss is done entirely on the basis of Signal to
Signal given by indicators.
Weightage of Financial Services in NIFTY INDEX is 31.65%. Also, the
weightage of chosen Banks in Index (Bank Nifty) are as follows:-
26.16
19.79
16
9.03
BANK OF BARODA
4.39
Entry price is the buy signal and Exit price is the sell signal that has been generated
while calculating those indicators.
No. of shares purchased is the amount available for investment i.e. Rs.100000/entry
price. And Total profit/loss is equal to profit/loss per share multiplied by no. of shares
purchased.
EMA
SBI
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/loss
per unit
20-01-2012
08-06-2012
21-09-2012
30-11-2012
15-03-2013
18-04-2013
11-05-2013
03-11-2013
29-11-2013
07-03-2014
13-02-2015
17-04-2015
15-05-2015
07-08-2015
22-04-2016
27-05-2016
04-05-2012
27-07-2012
16-11-2012
08-02-2013
22-03-2013
03-05-2013
24-05-2013
08-11-2013
13-12-2013
06-02-2015
05-03-2015
24-04-2015
22-05-2015
14-08-2015
29-04-2016
29-07-2016
193.29
217.95
221.32
217.03
226.20
229.97
230.57
188.63
181.95
164.97
306.95
291.75
287.45
281.30
200.15
195.90
199.63
194.10
210.85
228.62
208.40
221.38
223.47
174.43
174.36
290.30
293.80
275.55
282.45
268.50
189.00
229.40
6.34
-23.85
-10.47
11.59
-17.80
-8.59
-7.10
-14.20
-7.59
125.33
-13.15
-16.20
-5.00
-12.80
-11.15
33.50
No. of
shares
purchased
517.36
458.82
451.83
460.77
442.09
434.84
433.71
530.14
549.60
606.17
325.79
342.76
347.89
355.49
499.63
510.46
Total
Profit/Loss
3280.05
-10942.88
-4730.71
5340.28
-7869.14
-3735.27
-3079.33
-7527.96
-4171.48
75971.39
-4284.09
-5552.70
-1739.43
-4550.30
-5570.82
17100.56
37938.17
29
30
EMA
ICICI Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/
loss
per unit
No.
of
Total
shares
Profit/Loss
purchased
20-01-2012
13-04-2012
168.49
173.00
4.51
593.51
2676.72
22-06-2012
22-02-2013
170.34
218.51
48.17
587.06
28278.74
08-03-2013
15-03-2013
227.86
213.50
-14.36
438.87
-6302.12
18-04-2013
14-06-2013
224.53
220.43
-4.10
445.37
-1826.04
20-09-2013
27-09-2013
197.45
184.66
-12.79
506.46
-6477.59
11-10-2013
10-01-2014
199.41
204.90
5.49
501.48
2753.12
24-01-2014
31-01-2014
211.64
197.54
-14.10
472.50
-6662.26
28-02-2014
01-10-2014
208.77
285.77
77.00
479.00
36882.69
10-10-2014
06-02-2015
291.79
329.35
37.56
342.71
12872.27
13-02-2015
20-12-2015
343.85
330.95
-12.90
290.82
-3751.64
28-02-2015
13-03-2015
346.15
330.20
-15.95
288.89
-4607.83
30-04-2015
08-05-2015
331.15
317.00
-14.15
301.98
-4272.99
17-07-2015
24-07-2015
317.45
300.60
-16.85
315.01
-5307.92
01-04-2016
08-04-2016
238.30
221.25
-17.05
419.64
-7154.85
13-04-2016
06-05-2016
240.65
218.60
-22.05
415.54
-9162.68
27-05-2016
24-06-2015
243.15
230.95
-12.20
411.27
-5017.48
01-07-2016
29-07-2016
240.35
262.90
22.55
416.06
9382.15
32302.31
31
Here, i.e. in ICICI Bank, he would have made a profit of Rs. 32302.31 i.e. 5.76%
p.a. return according to EMA indicator.
ICICI Bank touched a high of Rs.346.15 on 28-2-2015 which was the highest in the
last 5years (period from 5-8-2011-29-7-2016) and lowest being Rs.168.49. Now i.e. at
the end of July 2016, ICICI bank is showing a bullish trend as the closing price is
higher than the EMA i.e. red line passes below the scrip price. It is indicating a buy
signal giving high probability of earning good profit.
32
EMA
HDFC Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
02-09-2011
14-10-2011
20-01-2012
08-06-2012
08-02-2013
08-03-2013
12-04-2013
28-06-2013
20-09-2013
04-10-2013
29-11-2013
21-02-2014
22-05-2015
19-06-2015
18-09-2015
20-11-2015
18-12-2015
23-03-2016
23-09-2011
11-11-2011
11-05-2012
01-02-2013
01-03-2013
15-03-2013
14-06-2013
26-07-2013
27-09-2013
14-11-2013
31-01-2014
24-04-2015
12-06-2015
04-09-2015
10-11-2015
04-12-2015
08-01-2016
29-07-2016
472.80
473.90
490.55
539.10
650.05
657.30
643.70
669.50
659.05
640.45
661.30
664.40
1024.30
1030.50
1049.75
1070.85
1073.00
1049.35
456.40
464.05
510.55
640.15
622.50
639.40
665.05
644.10
608.90
642.50
628.50
1006.45
1009.15
996.05
1054.60
1058.90
1062.35
1246.20
Profit/
loss
per unit
-16.40
-9.85
20.00
101.05
-27.55
-17.90
21.35
-25.40
-50.15
2.05
-32.80
342.05
-15.15
-34.45
4.85
-11.95
-10.65
196.85
No. of
shares
purchased
211.51
211.01
203.85
185.49
153.83
152.14
155.35
149.37
151.73
156.14
151.22
150.51
97.63
97.04
95.26
93.38
93.20
95.30
Total
Profit/Loss
-3468.70
-2078.50
4077.06
18744.20
-4238.14
-2723.26
3316.76
-3793.88
-7609.44
320.87
-4959.93
51482.54
-1479.06
-3343.04
462.01
-1115.94
-992.54
18759.23
61360.27
33
In HDFC Bank, X would have made a profit of Rs.61360 i.e. 10.04% p.a. return.
Its clear from the chart that HDFC Bank is in Bullish trend. Every year it is
reaching a new high. I t was on 29-7-2016, it touched Rs.1246.20 being the highest
high. The lowest price was only on the beginning date of the period (i.e. period taken
into consideration for analysis - 5-8-2011). HDFC Bank is performing well as
compared to SBI and ICICI. HDFC Bank is moving in a continuous upward trend,
being the most non-volatile scrip chosen for analysis. This is one of the best scrip to
make good profit because of its continuous bullish trend and its less-volatility.
Table 5: Exponential Moving Average (AXIS Bank)
EMA
AXIS Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/loss
per unit
27-01-2012
10-08-2012
21-09-2012
18-04-2013
18-10-2013
29-11-2013
24-01-2014
21-02-2014
30-04-2015
18-03-2016
13-04-2016
28-04-2012
31-08-2012
22-03-2013
07-06-2013
08-11-2013
10-01-2014
31-01-2014
17-04-2015
21-08-2015
08-04-2016
29-07-2016
214.61
214.00
224.93
285.88
231.24
231.19
240.92
238.67
567.80
436.10
440.50
224.24
198.36
260.01
275.65
223.84
232.81
224.59
533.70
525.30
421.60
546.15
9.63
-15.64
35.08
-10.23
-7.40
1.62
-16.33
295.03
-42.50
-14.50
105.65
No. of
shares
purchased
465.96
467.29
444.58
349.80
432.45
432.54
415.08
418.99
176.12
229.31
227.01
Total
Profit/Loss
4487.21
-7308.41
15595.96
-3578.42
-3200.14
700.72
-6778.18
123614.20
-7485.03
-3324.93
23984.11
136707.09
Rs.1, 36,707.09 would have been the profit X would have earned according to
EMA if invested in Axis Bank. The return would have been 18.81% p.a. return.
Axis Bank touched a high of Rs.567.80 on 30-4-2015 which was the highest high in
the 5year period from 5-8-2011 to 29-7-2016. When the red line (EMA) passes the
scrip price from below, it indicates buy signal and when it passes from above it
indicates sell signal. From mid-2013 to mid-2016, Axis Bank was reaching new
high. But, on March 2016 the share price fell showing Bearish trend. Again it
started rising, giving a buy signal as the red line (EMA) is below the scrip price.
Now, its good time to buy the Axis Bank share to gain good amount of profit. But, it
is highly volatile when compared with HDFC Bank which is also in Bullish trend.
Entry
Date
Exit
Date
Entry
pt
Exit
pt
04-11-2011
20-01-2012
29-06-2012
21-09-2012
30-11-2012
17-05-2013
11-10-2013
25-10-2013
17-01-2014
07-03-2014
18-07-2014
17-10-2014
31-07-2015
27-11-2015
04-03-2016
01-04-2016
13-04-2016
17-06-2016
01-07-2016
11-11-2011
20-04-2012
06-07-2012
23-11-2012
08-02-2013
24-05-2013
18-10-2013
10-01-2014
24-01-2014
11-07-2014
10-10-2014
30-01-2015
23-10-2015
04-12-2015
11-03-2016
08-04-2016
20-05-2016
24-06-2016
29-07-2016
162.94
155.98
146.58
156.06
152.52
148.09
112.56
118.88
125.67
129.91
167.38
174.39
177.50
179.60
148.90
152.80
152.45
150.60
156.60
155.17
151.99
145.36
145.56
153.65
138.30
110.82
122.51
120.50
156.53
171.82
193.15
173.10
166.90
140.70
143.10
135.05
147.15
151.70
No.
of
Profit/loss
shares
per unit
purchased
-7.77
613.72
-3.99
641.11
-1.22
682.22
-10.50
640.78
1.13
655.65
-9.79
675.27
-1.74
888.42
3.63
841.18
-5.17
795.73
26.62
769.76
4.44
597.44
18.76
573.43
-4.40
563.38
-12.70
556.79
-8.20
671.59
-9.70
654.45
-17.40
655.95
-3.45
664.01
-4.90
638.57
Total
Profit/Loss
-4768.63
-2558.02
-832.31
-6728.18
740.89
-6610.84
-1545.84
3053.50
-4113.95
20491.11
2652.65
10757.50
-2478.87
-7071.27
-5507.05
-6348.17
-11413.58
-2290.84
-3128.99
-27700.90
35
X would have incurred a loss of Rs.27, 700.90 i.e. -6.28% p.a. if invested in Bank
of Baroda according to EMA indicator.
Bank of Baroda is highly volatile. The share prices are fluctuating heavily. The red
line (EMA) below the scrip price indicates buy signal and when the red line is
above the scrip price it indicates sell signal. The lowest price was at Rs.110.82 on
18-10-2013. It was on 30-1-2015, it touched the highest high being at Rs.193.15
during r the period (5-8-2011 to 29-7-2016). Bank of Baroda is having very sloppy
low. X would have incurred huge loss if he would have invested in Bank of Baroda
for 5years according to signals given by EMA. This scrip isnt good for investment
when compared with HDFC, ICICI, Axis and SBI.
36
EMA
Bank Index
Entry
Date
Exit
Date
Entry
pt
Exit
pt
28-10-2011
20-01-2012
08-06-2012
14-09-2012
08-03-2013
18-04-2013
18-10-2013
29-11-2013
07-03-2014
01-04-2015
22-05-2015
26-06-2015
16-10-2015
23-03-2016
13-04-2016
04-11-2011
04-05-2012
31-08-2012
01-03-2013
15-03-2013
14-06-2013
22-11-2013
10-01-2014
27-03-2015
17-04-2015
05-06-2015
21-08-2015
30-10-2015
08-04-2016
29-07-2016
9917.05
9516.85
9998.85
10642.90
12197.25
12288.25
10744.90
11153.95
11884.75
18617.85
18433.30
18371.50
17912.85
15887.85
16278.55
9836.35
9802.35
9990.50
11540.50
11816.55
11922.85
10677.35
10805.30
18044.80
18345.55
17549.25
18057.20
17354.50
15568.35
18953.15
No.
of
Profit/loss
shares
per unit
purchased
-80.70
50.00
285.50
50.00
-8.35
50.00
897.60
50.00
-380.70
50.00
-365.40
50.00
-67.55
50.00
-348.65
50.00
6160.05
50.00
-272.30
50.00
-884.05
50.00
-314.30
50.00
-558.35
50.00
-319.50
50.00
2674.60
50.00
Total
Profit/Loss
-4035.00
14275.00
-417.50
44880.00
-19035.00
-18270.00
-3377.50
-17432.50
308002.50
-13615.00
-44202.50
-15715.00
-27917.50
-15975.00
133730.00
320895.00
37
In Bank Index, shares can be purchased only in lot size. Here, if X would have
purchased 50 shares then he would have made a profit of Rs.3, 20,895 i.e. 33.3%
p.a. return which is the highest return, anybody could earn in 5years compared
to the scrips chosen for analysis.
When the red line (EMA) passes below the scrip price, it indicates bullish trend i.e.
buy signal and when it passes from above the scrip price, it indicates bearish trend
i.e. sell signal. Here, the lowest price according to EMA was on 28-10-2011 being at
Rs.9917. Bank Nifty is good for investment as it would have given the maximum
return when compared with other stocks. Now i.e. at the end of July 2016, it is
moving in upward trend indicating buy signal as the EMA red line is below the
scrip price. Its a good time to buy this scrip.
EMA
3,50,000.00
3,00,000.00
2,50,000.00
2,00,000.00
1,50,000.00
EMA
1,00,000.00
50,000.00
0.00
-50,000.00
SBI
Bankof
Baroda
Bank Index
38
MACD
SBI
Entry
Date
Exit
Date
Entry
pt
Exit
pt
05-08-2011
04-11-2011
02-12-2011
07-01-2012
15-06-2012
21-09-2012
11-05-2013
04-10-2013
14-03-2014
14-11-2014
07-08-2015
23-10-2015
06-11-2015
18-03-2016
12-08-2011
18-11-2011
30-12-2011
04-05-2012
27-07-2012
15-02-2013
31-05-2013
24-01-2014
01-08-2014
06-02-2015
28-08-2015
30-10-2015
18-12-2015
29-07-2016
223.49
196.62
188.69
166.91
218.31
221.32
230.57
165.07
165.42
278.79
281.30
253.40
243.00
196.60
219.70
172.67
161.91
199.63
194.10
223.35
204.68
162.12
243.72
290.30
248.95
237.05
226.50
229.40
No.
of
Profit/loss
shares
per unit
purchased
-3.79
447.45
-23.95
508.60
-26.78
529.97
32.72
599.13
-24.21
458.06
2.03
451.83
-25.89
433.71
-2.95
605.80
78.30
604.52
11.51
358.69
-32.35
355.49
-16.35
394.63
-16.50
411.52
32.80
508.65
Total
Profit/Loss
-1695.83
-12180.86
-14192.59
19603.38
-11089.73
917.22
-11228.69
-1787.12
47334.06
4128.56
-11500.18
-6452.25
-6790.12
16683.62
11749.47
.
39
MACD
(ICICI Bank)
ICICI Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/loss
per unit
28-10-2011
13-01-2012
29-06-2012
30-11-2012
11-05-2013
04-10-2013
07-03-2014
28-08-2014
07-11-2014
23-01-2015
17-07-2015
23-10-2015
18-03-2016
11-11-2011
04-05-2012
23-11-2012
08-02-2013
14-06-2013
31-01-2014
11-07-2014
26-09-2014
16-01-2015
06-02-2015
24-07-2015
06-11-2015
29-07-2016
186.67
157.89
179.90
219.97
233.59
186.12
240.38
311.36
336.94
370.70
317.45
286.25
230.20
164.2
166.67
205.02
226.03
220.43
197.54
271.32
295.59
353.85
329.35
300.6
267.1
262.9
-22.47
8.78
25.12
6.06
-13.16
11.42
30.94
-15.77
16.91
-41.35
-16.85
-19.15
32.70
No. of
shares
purchased
536
633
556
455
428
537
416
321
297
270
315
349
434
Total
Profit/Loss
-12037.29
5560.83
13963.31
2754.92
-5633.80
6135.83
12871.29
-5064.88
5018.70
-11154.57
-5307.92
-6689.96
14205.04
14621.50
40
MACD
HDFC Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
20-01-2012
22-06-2012
03-05-2013
11-10-2013
07-03-2014
23-10-2014
10-07-2015
23-10-2015
01-04-2016
18-05-2012
11-01-2013
21-06-2013
31-01-2014
08-08-2014
20-03-2015
21-08-2015
10-11-2015
29-07-2016
490.55
544.35
680.95
661.30
711.45
896.45
1090.75
1108.50
1064.45
500.55
669.3
635.25
628.5
796.15
1055.9
1061.3
1054.6
1246.4
Profit/
loss
per unit
10.00
124.95
-45.70
-32.80
84.70
159.45
-29.45
-53.90
181.95
No. of shares
purchased
204
184
147
151
141
112
92
90
94
Total
Profit/Los
s
2038.53
22953.98
-6711.21
-4959.93
11905.26
17786.83
-2699.98
-4862.43
17093.33
52544.39
41
MACD
AXIS Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
05-08-2011
28-10-2011
20-01-2012
13-07-2012
21-09-2012
03-05-2013
04-10-2013
07-03-2014
07-11-2014
04-03-2016
12-08-2011
18-11-2011
28-04-2012
14-09-2012
01-03-2013
14-06-2013
31-01-2014
01-08-2014
20-03-2015
29-07-2016
248.41
230.10
201.81
206.94
224.93
294.96
218.51
281.36
469.05
416.05
241.85
192.84
224.24
201.98
272.74
259.6
224.59
387
556.25
546.15
No.
of
Profit/loss
shares
per unit
purchased
-6.56
403
-37.26
435
22.43
496
-4.96
483
47.81
445
-35.36
339
6.08
458
105.64
355
87.20
213
130.10
240
Total
Profit/Loss
-2640.80
-16192.96
11114.41
-2396.83
21255.50
-11988.07
2782.48
37546.20
18590.77
31270.28
89341.00
42
MACD
Entry
Date
Exit
Date
Entry
pt
Exit
pt
05-08-2011
04-11-2011
20-01-2012
06-07-2012
21-09-2012
20-09-2013
14-03-2014
19-09-2014
14-11-2014
31-07-2015
11-03-2016
12-08-2011
25-11-2011
28-04-2012
27-07-2012
15-02-2013
31-01-2014
11-07-2014
26-09-2014
30-01-2015
30-10-2015
29-07-2016
172.45
162.94
155.98
145.36
156.06
110.03
131.38
189.89
202.96
177.50
140.70
165.05
145.41
152.1
129.96
151.52
109.68
156.53
179.35
193.15
160.2
151.7
No.
of
Profit/loss
shares
per unit
purchased
-7.40
580
-17.53
614
-3.88
641
-15.40
688
-4.54
641
-0.35
909
25.15
761
-10.54
527
-9.81
493
-17.30
563
11.00
711
Total
Profit/Loss
-4291.10
-10758.56
-2487.50
-10594.39
-2909.14
-318.10
19142.94
-5550.58
-4833.46
-9746.48
7818.05
-24528.31
43
MACD
Bank Index
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/lo
ss
per unit
28-10-2011
20-01-2012
29-06-2012
14-09-2012
11-05-2013
11-10-2013
07-03-2014
07-11-2014
17-07-2015
18-03-2016
18-11-2011
04-05-2012
31-08-2012
08-02-2013
14-06-2013
31-01-2014
01-08-2014
13-02-2015
21-08-2015
29-07-2016
9917.05
9516.85
10340.65
10642.90
12780.15
10622.15
11884.75
17347.05
19094.70
15654.85
8850.25
9802.35
9990.5
12280.15
11922.85
10237.75
15127.8
19369.7
18057.2
18953.15
-1066.80
285.50
-350.15
1637.25
-857.30
-384.40
3243.05
2022.65
-1037.50
3298.30
No.
of
shares
purchase
d
50
50
50
50
50
50
50
50
50
50
Total
Profit/Loss
-53340.00
14275.00
-17507.50
81862.50
-42865.00
-19220.00
162152.50
101132.50
-51875.00
164915.00
339530.00
44
If X would have purchased 50 shares of Bank Index. He would have made a profit of
Rs.339530 i.e. 34.46% p.a. return which is on just Rs.1, 00,000 investment.
MACD indicator has given good buy and sell signals. If investment were made
according to those signals, then it would have given a very good return. Its clear from
the chart that at the end of June 2016, both the lines i.e. the fast line (red line) and
slow line are in the bullish zone i.e. above 0. Also, the fast line is above the slow
indicating buy signal. There is a high probability that the share price of Bank Nifty
may further go up, touching new high.
45
MACD
400000
350000
300000
250000
200000
MACD
150000
100000
50000
0
SBI
ICICI
HDFC
Axis
BankofBa
Bank Index
SCRIP
-50000
According to MACD, Bank Index has performed well and it would have given him
the maximum return if X would have invested five years ago. The next best return
would have been from Axis Bank, HDFC Bank, ICICI Bank and SBI respectively. If
the capital was invested in Bank of Baroda, then it would have resulted in loss i.e.
leading to eradication of capital. So, according to MACD, BANK Nifty is the best to
invest for higher returns.
46
SBI
RSI
Entry
Date
Exit
Date
Entry
pt
Exit
pt
20-01-2012
21-09-2012
07-12-2012
15-03-2013
18-04-2013
17-05-2013
27-12-2013
28-03-2014
07-11-2014
10-04-2015
07-08-2015
21-08-2015
10-06-2016
13-07-2012
02-11-2012
22-02-2013
22-03-2013
03-05-2013
24-05-2013
31-01-2014
31-10-2014
27-03-2015
17-04-2015
14-08-2015
28-08-2015
29-07-2016
193.29
221.32
231.62
226.20
229.97
242.49
177.01
190.20
274.25
285.75
281.30
267.50
205.95
217.85
215.25
219.60
208.40
221.38
215.12
152.39
270.28
263.60
291.75
268.50
248.95
229.40
Profit/
loss
per
unit
24.56
-6.07
-12.02
-17.80
-8.59
-27.37
-24.62
80.08
-10.65
6.00
-12.80
-18.55
23.45
No. of
shares
purchased
Total
Profit/Loss
517.36
451.83
431.74
442.09
434.84
412.39
564.94
525.76
364.63
349.96
355.49
373.83
485.55
12706.30
-2742.64
-5189.53
-7869.14
-3735.27
-11287.06
-13908.82
42103.05
-3883.32
2099.74
-4550.30
-6934.58
11386.26
8194.68
In terms of market analysis and trading signals, RSI moving above the horizontal 30
reference level is viewed as a bullish indicator, while the RSI moving below the
horizontal 70 reference level is seen to be a bearish indicator. But, for the analysis 50
is taken as the point for bullish and bearish zones. The logic behind this is if we were
to go by the traditional approach of using 70/30 as overbought and oversold zone we
will have stocks oscillating between 70 and 30 in other words neutral zone or no trade
zone. As we can see from the above chart, the share price oscillates between 30 and
70. Only, two or three signals would have been generated according to RSI.
Alternatively, we can use 60/40 but we will still have no trade zones. Hence we have
modified the numbers to 50 as the point which separates OB and OS zones. So, when
the RSI moves above 50, it is considered as buy signal and sell when it moves
below the reference level 50. Also traditionally it is advisable to sell when the stock
enters OB region and buy when the stock enters OS region. But practically what we
have identified is that stocks have the tendency to stay in OB and OS regions for some
time and In fact it is advisable in modern times to buy a stock when it enters OB as
against to sell since the stock actually picks up momentum when it enters Over bought
zone. SBI is highly volatile. The share price of SBI has back to the same level where
it was five years ago.
Table 15: Relative Strength Index (ICICI Bank)
RSI
ICICI Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
20-01-2012
30-03-2012
06-07-2012
20-07-2012
08-03-2012
12-04-2013
11-05-2013
29-11-2013
17-10-2014
10-06-2016
23-03-2012
22-06-2012
13-07-2012
01-03-2013
22-03-2013
03-05-2013
31-05-2013
10-10-2014
27-03-2015
29-07-2016
168.49
178.04
187.02
187.03
227.86
209.07
233.59
217.73
301.04
252.60
182.11
170.34
185.21
211.27
205.67
225.99
230.89
291.79
314.55
262.90
Profit/
loss
per unit
13.62
-7.70
-1.81
24.24
-22.19
16.92
-2.70
74.06
13.51
10.30
No. of
shares
purchased
593.51
561.67
534.70
534.67
438.87
478.31
428.10
459.28
332.18
395.88
Total
Profit/
Loss
8083.57
-4324.87
-967.81
12960.49
-9738.44
8092.98
-1155.87
34014.61
4487.78
4077.59
55530.02
48
RSI
HDFC Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
05-08-2011
02-09-2011
30-09-2011
14-10-2011
13-01-2012
12-04-2013
11-05-2013
28-06-2013
03-11-2013
14-11-2013
13-12-2013
21-02-2014
03-07-2015
18-09-2015
22-01-2016
08-04-2016
16-08-2011
23-09-2011
07-10-2011
11-11-2011
22-03-2013
26-04-2013
21-06-2013
02-08-2013
08-11-2013
22-11-2013
14-02-2014
19-06-2015
28-08-2015
04-12-2015
12-02-2016
29-07-2016
473.05
472.80
467.65
473.90
469.60
643.70
702.80
669.50
680.45
642.20
689.95
664.40
1074.25
1049.75
1030.30
1059.35
438.95
456.40
450.00
464.05
605.25
689.10
635.25
631.25
652.50
642.15
641.80
1030.50
1027.95
1058.90
971.40
1246.20
Profit/
loss
per
unit
-34.10
-16.40
-17.65
-9.85
135.65
45.40
-67.55
-38.25
-27.95
-0.05
-48.15
366.10
-46.30
9.15
-58.90
186.85
No. of
shares
purchased
Total
Profit/
Loss
211.39
211.51
213.84
211.01
212.95
155.35
142.29
149.37
146.96
155.71
144.94
150.51
93.09
95.26
97.06
94.40
-7208.54
-3468.70
-3774.19
-2078.50
28886.29
7052.97
-9611.55
-5713.22
-4107.58
-7.79
-6978.77
55102.35
-4309.98
871.64
-5716.78
17638.17
56575.83
49
RSI
AXIS Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
20-01-2012
17-02-2012
21-09-2012
13-12-2013
03-07-2015
17-07-2015
07-08-2015
22-04-2016
27-01-2012
22-06-2012
14-06-2013
19-06-2015
10-07-2015
24-07-2015
21-08-2015
29-07-2016
201.81
255.64
224.93
247.96
585.95
602.10
580.30
475.85
214.61
202.86
259.60
551.55
578.10
580.45
525.30
546.15
Profit/l
oss
per
unit
12.80
-52.78
34.67
303.59
-7.85
-21.65
-55.00
70.30
No. of
shares
purchas
ed
495.52
391.18
444.58
403.29
170.66
166.09
172.32
210.15
Total
Profit/Loss
6342.60
-20646.22
15413.68
122435.07
-1339.70
-3595.75
-9477.86
14773.56
123905.39
50
RSI
Entry
Date
Exit
Date
Entry
pt
Exit
pt
20-01-2012
04-04-2012
25-05-2012
21-09-2012
30-11-2012
03-11-2013
14-11-2013
21-02-2014
23-10-2014
20-02-2015
07-08-2015
06-11-2015
18-12-2015
10-06-2016
30-03-2012
04-05-2012
01-06-2012
23-11-2012
15-02-2013
08-11-2013
14-02-2014
10-10-2014
06-02-2015
20-03-2015
30-10-2015
11-12-2015
24-12-2015
29-07-2016
155.98
160.25
134.46
156.06
152.52
135.54
120.64
103.60
177.84
183.30
185.00
167.05
159.00
146.30
159.23
137.39
131.64
145.56
151.52
120.31
107.26
171.82
175.95
172.65
160.20
155.25
158.30
151.70
Profit/
loss
per unit
3.25
-22.86
-2.82
-10.50
-1.00
-15.23
-13.38
68.22
-1.89
-10.65
-24.80
-11.80
-0.70
5.40
No. of
shares
purchased
641.11
624.02
743.72
640.78
655.65
737.79
828.91
965.25
562.30
545.55
540.54
598.62
628.93
683.53
Total
Profit/
Loss
2083.60
-14265.21
-2097.28
-6728.18
-655.65
-11236.54
-11090.85
65849.42
-1062.75
-5810.15
-13405.41
-7063.75
-440.25
3691.05
-2231.95
51
RSI
Bank Index
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/loss
per unit
20-01-2012
17-08-2012
14-09-2012
12-04-2013
13-12-2013
21-02-2014
17-07-2015
07-08-2015
13-05-2016
27-05-2016
13-07-2012
31-08-2012
22-03-2013
31-05-2013
14-02-2014
24-04-2015
24-07-2015
28-08-2015
20-05-2016
29-07-2016
9516.85
10417.90
10642.90
11410.10
11366.90
10554.35
19094.70
18893.55
16716.90
17511.80
10594.45
9990.50
11204.05
12475.65
10203.75
18001.90
18635.85
17211.95
16481.45
18953.15
1077.60
-427.40
561.15
1065.55
-1163.15
7447.55
-458.85
-1681.60
-235.45
1441.35
No. of
shares
purcha
sed
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
Total
Profit/
Loss
53880.00
-21370.00
28057.50
53277.50
-58157.50
372377.50
-22942.50
-84080.00
-11772.50
72067.50
381337.50
52
53
RSI
450000
400000
350000
300000
250000
200000
RSI
150000
100000
50000
0
-50000
SBI
ICICI Bank
HDFC Bank
Axis Bank
Bankof
Baroda
Bank Index
54
Entry
Date
Exit
Date
Entry
pt
Exit
pt
02-12-2011
13-01-2012
15-06-2012
29-06-2012
05-10-2012
17-05-2013
22-11-2013
28-03-2014
22-08-2014
05-09-2014
17-10-2014
20-03-2015
17-04-2015
15-05-2015
03-07-2015
07-08-2015
18-09-2015
27-11-2015
22-04-2016
13-05-2016
16-12-2011
04-05-2012
22-06-2012
20-07-2012
28-03-2013
14-06-2013
10-01-2014
14-08-2014
28-08-2014
10-10-2014
13-03-2015
01-04-2015
24-04-2015
29-05-2015
24-07-2015
21-08-2015
24-09-2015
15-01-2016
06-05-2016
29-07-2016
188.69
177.61
218.31
215.90
233.95
242.49
173.80
190.20
252.47
251.58
252.19
278.25
291.75
287.45
269.40
281.30
242.00
249.70
200.15
184.85
167.91
199.63
215.78
213.20
207.28
204.59
160.82
236.25
246.07
245.12
280.75
273.45
275.55
278.15
263.25
267.50
239.05
184.30
184.35
229.40
Profit/
loss
per unit
-20.78
22.02
-2.53
-2.70
-26.67
-37.90
-12.98
46.05
-6.40
-6.46
28.56
-4.80
-16.20
-9.30
-6.15
-13.80
-2.95
-65.40
-15.80
44.55
No. of
shares
purchased
529.97
563.03
458.06
463.18
427.44
412.39
575.37
525.76
396.09
397.49
396.53
359.39
342.76
347.89
371.20
355.49
413.22
400.48
499.63
540.98
Total
Profit/Loss
-11012.77
12397.95
-1158.90
-1250.58
-11399.87
-15629.51
-7468.35
24211.36
-2534.95
-2567.77
11324.79
-1725.07
-5552.70
-3235.35
-2282.85
-4905.79
-1219.01
-26191.43
-7894.08
24100.62
-33994.27
55
According to MFI, if X would have invested in SBI, then he would have incurred a
loss of Rs.33994.24 i.e. -7.97% p.a. As its clear from the above chart, the scrip is
highly volatile. Generally, when MFI moves above the reference level 80, it is
considered Overbought indicating sell signal. And when it moves below 20, it is
considered Oversold indicating buy signal. As we can see from the chart that at the
end of 2013, MFI moves below 30 (violet shade) indicating the shares has been
oversold so its time to buy. And in the mid 2015, MFI moves above the reference
level 80 (pink colour) indicating the shares has been Overbought, so its time to
sell. In terms of market analysis and trading signals, RSI moving above the
horizontal 30 reference level is viewed as a bullish indicator, while the RSI moving
below the horizontal 70 reference level is seen to be a bearish indicator. But, for the
analysis 50 is taken as the point for bullish and bearish zones. The logic behind this is
if we were to go by the traditional approach of using 80/20 as overbought and
oversold zone we will have stocks oscillating between 80 and 20 in other words
neutral zone or no trade zone. As we can see from the above chart, the share price
oscillates between 20 and 80. Only, two or three signals would have been generated
according to MFI. Alternatively, we can use 70/30 but we will still have no trade
zones. Hence we have modified the numbers to 50 as the point which separates OB
and OS zones. So, when the RSI moves above 50, it is considered as buy signal and
sell when it moves below the reference level 50. Also traditionally it is advisable to
sell when the stock enters OB region and buy when the stock enters OS region.
But practically what we have identified is that stocks have the tendency to stay in OB
and OS regions for some time and In fact it is advisable in modern times to buy a
stock when it enters OB as against to sell since the stock actually picks up momentum
when it enters Over bought zone. SBI is highly volatile. The share price of SBI has
come back to the almost same level where it was five years ago.
56
MFI
ICICI Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/loss
per unit
10-02-2012
06-07-2012
03-11-2013
28-08-2014
17-10-2014
20-03-2015
23-03-2016
13-04-2016
20-04-2012
05-04-2013
13-06-2014
26-09-2014
13-03-2015
10-04-2015
08-04-2016
29-07-2016
186.09
187.02
226.28
311.36
301.04
318.60
234.20
240.65
172.21
199.63
285.67
295.59
330.20
318.30
221.25
262.90
-13.88
12.61
59.39
-15.77
29.16
-0.30
-12.95
22.25
No. of
shares
purchased
537.37
534.70
441.93
321.17
332.18
313.87
426.99
415.54
Total
Profit/Loss
-7458.76
6742.59
26246.24
-5064.88
9686.42
-94.16
-5529.46
9245.79
33773.79
MFI
HDFC Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/loss
per unit
13-01-2012
08-06-2012
11-05-2013
25-10-2013
14-02-2014
28-08-2014
03-07-2015
18-09-2015
20-11-2015
22-01-2016
19-02-2016
11-03-2016
13-04-2016
18-05-2012
25-01-2013
26-07-2013
31-01-2014
11-07-2014
24-04-2015
28-08-2015
16-10-2015
15-01-2016
29-01-2016
26-02-2016
08-04-2016
29-07-2016
469.60
539.10
702.80
672.55
614.80
843.55
1074.25
1049.75
1070.85
1030.30
989.30
1028.70
1081.75
500.00
665.05
644.10
628.50
811.80
1006.45
1027.95
1100.05
1042.15
1049.85
961.00
1059.35
1246.20
30.40
125.95
-58.70
-44.05
197.00
162.90
-46.30
50.30
-28.70
19.55
-28.30
30.65
164.45
No. of
shares
purchased
212.95
185.49
142.29
148.69
162.65
118.55
93.09
95.26
93.38
97.06
101.08
97.21
92.44
Total
Profit/Loss
6473.59
23363.01
-8352.31
-6549.70
32042.94
19311.24
-4309.98
4791.62
-2680.11
1897.51
-2860.61
2979.49
15202.22
81308.91
MFI
AXIS Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/loss
per unit
02-09-2011
16-09-2011
10-02-2012
08-06-2012
06-07-2012
10-08-2012
21-09-2012
25-10-2013
11-04-2014
17-10-2014
22-05-2015
26-06-2015
24-09-2015
18-03-2016
09-09-2011
30-09-2011
18-05-2012
22-06-2012
20-07-2012
14-09-2012
15-03-2013
04-04-2014
10-10-2014
20-03-2015
05-06-2015
28-08-2015
01-10-2015
29-07-2016
216.08
226.67
223.61
209.88
207.50
214.00
224.93
238.15
299.15
401.60
568.65
565.50
513.95
436.10
220.66
203.78
189.88
202.86
208.16
209.18
267.97
285.63
379.20
556.25
548.40
508.15
496.25
546.15
4.58
-22.89
-33.73
-7.02
0.66
-4.82
43.04
47.48
80.05
154.65
-20.25
-57.35
-17.70
110.05
No. of
shares
purchased
462.79
441.17
447.21
476.46
481.93
467.29
444.58
419.90
334.28
249.00
175.86
176.83
194.57
229.31
Total
Profit/Loss
2119.59
-10098.38
-15084.30
-3344.77
318.07
-2252.34
19134.84
19937.01
26759.15
38508.47
-3561.07
-10141.47
-3443.91
25235.04
84085.94
59
MFI
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/loss
per unit
23-09-2011
02-12-2011
27-01-2012
17-02-2012
24-08-2012
09-11-2012
18-10-2013
30-04-2015
22-05-2015
03-07-2015
31-07-2015
20-11-2015
04-12-2015
13-04-2016
07-10-2011
16-12-2011
03-02-2012
20-04-2012
31-08-2012
08-03-2013
10-10-2014
15-05-2015
26-06-2015
24-07-2015
30-10-2015
27-11-2015
18-12-2015
29-7-206
155.17
146.16
152.05
172.70
128.82
151.37
110.82
169.00
155.40
150.80
177.50
171.90
166.90
152.45
148.11
140.85
152.44
151.99
126.37
146.47
171.82
160.15
144.55
155.75
160.20
179.60
159.00
151.70
-7.06
-5.31
0.39
-20.71
-2.45
-4.90
61.00
-8.85
-10.85
4.95
-17.30
7.70
-7.90
-0.75
No. of
shares
purchased
644.45
684.18
657.68
579.04
776.28
660.63
902.36
591.72
643.50
663.13
563.38
581.73
599.16
655.95
Total
Profit/Loss
-4549.85
-3633.00
256.49
-11991.89
-1901.88
-3237.10
55044.22
-5236.69
-6981.98
3282.49
-9746.48
4479.35
-4733.37
-491.96
10558.34
MFI
Bank Index
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/loss
per unit
02-12-2011
13-01-2012
06-07-2012
03-08-2012
14-09-2012
03-11-2013
22-05-2015
26-06-2015
18-09-2015
27-11-2015
23-03-2016
13-04-2016
09-12-2011
28-04-2012
27-07-2012
08-09-2012
01-03-2013
30-04-2015
05-06-2015
28-08-2015
01-10-2015
15-01-2016
08-04-2016
29-07-2016
9172.75
8975.05
10655.35
10315.60
10642.90
11614.05
18433.30
18371.50
17409.15
17370.95
15887.75
16278.55
8811.10
10212.65
10140.55
10147.05
11540.05
18338.10
17549.25
17211.95
17150.20
15206.30
15568.35
18953.15
-361.65
1237.60
-514.80
-168.55
897.15
6724.05
-884.05
-1159.55
-258.95
-2164.65
-319.40
2674.60
No. of
shares
purchased
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
50.00
Total
Profit/Loss
-18082.50
61880.00
-25740.00
-8427.50
44857.50
336202.50
-44202.50
-57977.50
-12947.50
-108232.50
-15970.00
133730.00
285090.00
MFI
350000
300000
250000
200000
MFI
150000
100000
50000
0
SBI
ICICI
HDFC
Axis
BankofBa
Bank Index
62
4.5 Stochastic
Table 26: Stochastic (SBI)
SBI
STOCHASTIC
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/
loss
per unit
No. of
shares
purchased
Total
Profit/Loss
02-09-2011
14-10-2011
04-11-2011
25-11-2011
07-01-2012
04-04-2012
18-05-2012
06-07-2012
03-08-2012
08-09-2012
30-11-2012
15-03-2013
12-04-2013
11-05-2013
14-06-2013
28-6-2013
08-08-2013
23-08-2013
11-10-2013
22-11-2013
27-12-2013
07-02-2014
21-02-2014
05-09-2014
10-10-2014
13-02-2015
27-03-2015
15-05-2015
19-06-2015
31-07-2015
10-09-2015
09-10-2015
10-11-2015
01-01-2016
22-01-2016
19-02-2016
04-03-2016
13-04-2016
03-06-2016
30-09-2011
28-10-2011
11-11-2011
16-12-2011
20-01-2012
28-04-2012
22-06-2012
13-07-2012
10-08-2012
21-09-2012
07-12-2012
22-03-2013
03-05-2013
17-05-2013
21-06-2013
05-07-2013
16-08-2013
27-09-2013
03-11-2013
29-11-2013
03-01-2014
14-02-2014
28-03-2014
26-09-2014
31-10-2014
28-02-2015
24-04-2015
29-05-2015
24-07-2015
14-08-2015
01-10-2015
30-10-2015
11-12-2015
08-01-2016
05-02-2016
26-02-2016
08-04-2016
22-04-2016
10-06-2016
199.35
188.52
196.62
169.06
166.91
216.26
194.06
222.27
200.54
189.85
217.03
226.20
208.18
230.57
204.59
195.38
166.42
155.91
165.28
173.80
177.01
152.76
150.21
251.58
245.12
306.95
263.60
287.45
260.15
270.05
227.45
243.45
241.20
227.80
184.60
164.70
188.40
191.90
196.60
191.11
190.98
179.84
167.91
193.29
213.13
215.78
217.85
188.78
221.32
231.62
208.40
221.38
242.49
198.91
189.45
157.06
164.07
188.63
181.95
171.97
147.51
190.20
244.53
270.98
301.65
275.55
278.15
263.25
268.50
235.15
237.05
227.30
208.95
168.20
155.90
183.10
200.15
205.95
-8.24
2.46
-16.78
-1.15
26.38
-3.13
21.72
-4.42
-11.76
31.47
14.59
-17.80
13.20
11.92
-5.68
-5.93
-9.36
8.16
23.35
8.15
-5.04
-5.25
39.99
-7.05
25.86
-5.30
11.95
-9.30
3.10
-1.55
7.70
-6.40
-13.90
-18.85
-16.40
-8.80
-5.30
8.25
9.35
502
530
509
592
599
462
515
450
499
527
461
442
480
434
489
512
601
641
605
575
565
655
666
397
408
326
379
348
384
370
440
411
415
439
542
607
531
521
509
-4133.43
1304.90
-8534.23
-680.23
15804.92
-1447.33
11192.41
-1988.57
-5864.17
16576.24
6722.57
-7869.14
6340.67
5169.80
-2776.28
-3035.11
-5624.32
5233.79
14127.54
4689.30
-2847.30
-3436.76
26622.73
-2802.29
10549.93
-1726.67
4533.38
-3235.35
1191.62
-573.97
3385.36
-2628.88
-5762.85
-8274.80
-8884.07
-5343.05
-2813.16
4299.11
4755.85
63
52218.17
64
ICICI Bank
STOCHASTIC
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/
loss
per unit
No. of
shares
purchased
Total
Profit/
Loss
01-07-2011
22-07-2011
02-09-2011
30-09-2011
02-12-2011
23-12-2011
07-01-2012
16-03-2012
18-05-2012
08-06-2012
08-09-2012
08-03-2013
28-03-2013
12-04-2013
08-08-2013
23-08-2013
11-10-2013
27-12-2013
14-02-2014
04-07-2014
18-07-2014
10-10-2014
28-02-2015
27-03-2015
30-04-2015
29-05-2015
12-06-2015
07-08-2015
10-09-2015
09-10-2015
20-11-2015
24-12-2015
22-01-2016
19-02-2016
04-03-2016
01-07-2016
08-07-2011
29-07-2011
16-09-2011
04-11-2011
09-02-2011
30-12-2011
03-02-2012
23-03-2012
01-06-2012
29-06-2012
14-09-2012
15-03-2013
05-04-2013
03-05-2013
16-08-2013
27-09-2013
18-10-2013
03-01-2014
07-03-2014
11-07-2014
01-08-2014
31-10-2014
13-03-2015
10-04-2015
15-05-2015
05-06-2015
24-07-2015
21-08-2015
24-09-2015
23-10-2015
04-12-2015
08-01-2016
05-02-2016
26-02-2016
08-04-2016
15-07-2016
218.97
213.61
177.43
175.08
157.54
144.35
149.04
183.54
161.04
165.83
188.20
227.86
209.04
209.07
175.01
170.61
199.41
222.05
197.69
292.57
296.09
291.79
346.15
314.55
331.15
317.25
295.95
310.15
267.40
286.10
264.95
257.95
232.75
198.80
220.50
240.35
212.04
207.35
176.78
176.86
143.23
136.93
183.26
182.11
156.34
179.9
201.6
213.5
199.63
225.99
171.72
184.66
201.77
213.36
240.38
271.32
295.13
325.33
330.2
318.3
312.35
284.1
300.6
296.5
268.3
286.25
261.45
245.05
209.4
184.8
221.25
265.75
6.93
6.26
0.65
-1.78
14.31
7.42
-34.22
1.43
4.70
-14.07
-13.40
14.36
9.41
-16.92
3.29
-14.05
-2.36
8.69
-42.69
21.25
0.96
-33.54
15.95
-3.75
18.80
33.15
-4.65
13.65
-0.90
-0.15
3.50
12.90
23.35
14.00
-0.75
-25.40
457
468
564
571
635
693
671
545
621
603
531
439
478
478
571
586
501
450
506
342
338
343
289
318
302
315
338
322
374
350
377
388
430
503
454
416
3164.82
2930.57
366.34
-1016.68
9083.41
5140.28
-22960.28
779.12
2918.53
-8484.59
-7120.09
6302.12
4501.53
-8092.98
1879.89
-8235.16
-1183.49
3913.53
-21594.42
7263.22
324.23
-11494.57
4607.83
-1192.18
5677.19
10449.17
-1571.21
4401.10
-336.57
-52.43
1321.00
5000.97
10032.22
7042.25
-340.14
-10567.92
-7143.38
65
66
STOCHASTIC
HDFC Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/
loss
per
unit
26-08-2011
07-10-2011
25-11-2011
16-12-2011
01-06-2012
08-02-2013
01-03-2013
22-03-2013
21-06-2013
16-08-2013
27-09-2013
17-01-2014
07-02-2014
30-05-2014
08-08-2014
01-04-2015
30-04-2015
12-06-2015
04-09-2015
10-11-2015
11-12-2015
15-01-2016
19-02-2016
16-09-2011
04-11-2011
02-12-2011
13-01-2012
08-06-2012
15-02-2013
15-03-2013
12-04-2013
12-07-2013
20-09-2013
11-10-2013
24-01-2014
28-02-2014
06-06-2014
14-08-2014
10-04-2015
29-05-2015
19-06-2015
09-10-2015
27-11-2015
01-01-2016
05-02-2016
08-04-2016
472.80
473.90
466.00
437.55
539.10
676.75
657.30
625.35
669.50
607.55
640.45
673.40
641.80
815.25
826.70
1019.80
982.00
1030.50
1011.00
1070.85
1073.00
1030.30
961.00
456.4
464.05
443.75
490.55
547.55
659.3
605.25
673.6
680
608.9
676.6
628.5
711.45
835.4
846.75
1016.05
1011.75
1062.85
1100.05
1058.9
1062.35
971.4
1081.75
-16.40
-9.85
-22.25
53.00
8.45
-17.45
-52.05
48.25
10.50
1.35
36.15
-44.90
69.65
20.15
20.05
-3.75
29.75
32.35
89.05
-11.95
-10.65
-58.90
120.75
No. of
shares
purchased
Total
Profit/
Loss
212
211
215
229
185
148
152
160
149
165
156
149
156
123
121
98
102
97
99
93
93
97
104
-3468.70
-2078.50
-4774.68
12112.90
1567.43
-2578.50
-7918.76
7715.68
1568.33
222.20
5644.47
-6667.66
10852.29
2471.63
2425.31
-367.72
3029.53
3139.25
8808.11
-1115.94
-992.54
-5716.78
12565.04
36442.41
67
68
STOCHASTIC
AXIS Bank
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/
loss
per unit
No. of
shares
purchased
Total
Profit/Loss
02-09-2011
07-10-2011
02-12-2011
23-12-2011
07-01-2012
04-04-2012
25-05-2012
08-06-2012
29-06-2012
03-08-2012
14-09-2012
12-04-2013
28-06-2013
02-08-2013
30-08-2013
04-10-2013
29-11-2013
24-01-2014
21-02-2014
17-10-2014
01-04-2015
30-04-2015
15-05-2015
12-06-2015
10-09-2015
16-10-2015
27-11-2015
24-12-2015
22-01-2016
04-03-2016
23-09-2011
4-11-111
16-12-2011
30-12-2011
03-02-2012
13-04-2012
01-06-2012
22-06-2012
27-07-2012
17-08-2012
21-09-2012
26-04-2013
05-07-2013
16-08-2013
27-09-2013
25-10-2013
06-12-2013
31-01-2014
07-03-2014
23-10-2014
17-04-2015
08-05-2015
05-06-2015
03-07-2015
01-10-2015
30-10-2015
04-12-2015
08-01-2016
05-02-2016
01-04-2016
216.08
206.06
201.19
175.99
170.44
233.33
200.08
209.88
203.15
208.22
201.98
252.86
265.04
220.64
166.59
218.51
231.19
240.92
238.67
401.60
487.00
567.80
562.05
551.45
482.60
504.65
471.00
450.75
424.15
416.05
217.37
225.7
201.95
161.62
219.87
232.43
192.91
202.86
199.43
222.04
224.93
297.27
257.61
209.79
206.18
238.15
255.95
224.59
281.36
423.75
533.7
540.8
548.4
585.95
496.25
475.4
460.5
413.7
399.55
449.9
1.29
19.64
0.76
-14.37
49.43
-0.90
-7.17
-7.02
-3.72
13.82
22.95
44.41
-7.43
-10.85
39.59
19.64
24.76
-16.33
42.69
22.15
46.70
-27.00
-13.65
34.50
13.65
-29.25
-10.50
-37.05
-24.60
33.85
463
485
497
568
587
429
500
476
492
480
495
395
377
453
600
458
433
415
419
249
205
176
178
181
207
198
212
222
236
240
597.00
9531.20
377.75
-8165.24
29001.41
-385.72
-3583.57
-3344.77
-1831.16
6637.21
11362.51
17563.08
-2803.35
-4917.51
23764.93
8988.15
10709.81
-6778.18
17886.62
5515.44
9589.32
-4755.20
-2428.61
6256.23
2828.43
-5796.10
-2229.30
-8219.63
-5799.83
8136.04
107706.97
69
70
STOCHASTIC
BANK OF BARODA
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/
loss
per unit
No. of
shares
purchased
Total
Profit/
Loss
02-09-2011
14-10-2011
04-11-2011
02-12-2011
07-01-2012
09-03-2012
18-05-2012
17-08-2012
08-09-2012
09-11-2012
30-11-2012
08-03-2013
12-04-2013
28-06-2013
08-08-2013
23-08-2013
04-10-2013
22-11-2013
28-02-2014
04-07-2014
25-07-2014
14-08-2014
05-09-2014
31-10-2014
26-12-2014
13-02-2015
01-04-2015
15-05-2015
26-06-2015
18-09-2015
06-11-2015
24-12-2015
22-01-2016
19-02-2016
03-06-2016
01-07-2016
30-09-2011
21-10-2011
18-11-2011
09-12-2011
03-02-2012
16-03-2012
13-07-2012
31-08-2012
21-09-2012
16-11-2012
07-12-2012
15-03-2013
24-05-2013
02-08-2013
16-08-2013
27-09-2013
25-10-2013
29-11-2013
22-03-2014
11-07-2014
08-08-2014
28-08-2014
12-09-2014
07-11-2014
09-01-2015
05-03-2015
24-04-2015
12-06-2015
24-07-2015
01-10-2015
04-12-2015
08-01-2016
12-02-2016
01-04-2016
24-06-2016
15-07-2016
145.77
154.12
162.94
146.16
140.08
162.38
127.98
127.34
126.62
151.37
152.52
146.47
131.07
114.83
102.61
94.16
104.10
121.88
110.23
175.10
172.43
175.65
177.01
185.90
213.64
182.95
168.90
160.15
144.55
190.30
167.05
158.30
130.20
139.65
140.20
156.60
152.46
148.66
143.56
145.22
152.44
161.8
143.78
126.37
156.06
147.12
159.64
144.01
138.3
97.53
95.85
100.25
118.88
128.92
131.03
156.53
171.85
174.3
188.92
192.49
212.09
184.05
174.15
146.95
155.75
181.1
166.9
140.45
113.7
152.8
147.15
164.25
6.69
-5.46
-19.38
-0.94
12.36
-0.58
15.80
-0.97
29.44
-4.25
7.12
-2.46
7.23
-17.30
-6.76
6.09
14.78
7.04
20.80
-18.57
-0.58
-1.35
11.91
6.59
-1.55
1.10
5.25
-13.20
11.20
-9.20
-0.15
-17.85
-16.50
13.15
6.95
7.65
686
649
614
684
714
616
781
785
790
661
656
683
763
871
975
1062
961
820
907
571
580
569
565
538
468
547
592
624
692
525
599
632
768
716
713
639
4589.42
-3542.69
-11893.95
-643.13
8823.53
-357.19
12345.68
-761.74
23250.67
-2807.69
4668.24
-1679.52
5516.14
-15065.75
-6588.05
6467.71
14197.89
5776.17
18869.64
-10605.37
-336.37
-768.57
6728.43
3544.92
-725.52
601.26
3108.35
-8242.27
7748.18
-4834.47
-89.79
-11276.06
-12672.81
9416.40
4957.20
4885.06
52603.93
71
72
STOCHASTIC
Bank Index
Entry
Date
Exit
Date
Entry
pt
Exit
pt
Profit/
loss
per unit
No. of
shares
purchased
Total
Profit/
Loss
02-09-2011
14-10-2011
02-12-2011
23-12-2011
07-01-2012
09-03-2012
04-04-2012
18-05-2012
08-06-2012
03-08-2012
08-03-2013
28-03-2013
12-04-2013
12-07-2013
08-08-2013
23-08-2013
11-10-2013
27-12-2013
14-02-2014
14-08-2014
28-02-2015
01-04-2015
30-04-2015
19-06-2015
10-09-2015
09-10-2015
20-11-2015
24-12-2015
22-01-2016
19-02-2016
04-03-2016
23-09-2011
11-11-2011
09-12-2011
30-12-2011
27-01-2012
16-03-2012
28-04-2012
01-06-2012
29-06-2012
24-08-2012
15-03-2013
05-04-2013
03-05-2013
19-07-2013
16-08-2013
27-09-2013
25-10-2013
03-01-2014
07-03-2014
22-08-2014
13-03-2015
17-04-2015
05-06-2015
03-07-2015
01-10-2015
30-10-2015
04-12-2015
08-01-2016
05-02-2016
26-02-2016
08-04-2016
9581.35
9660.40
9172.75
8296.45
8452.80
10505.65
10340.10
9310.25
9998.85
10315.60
12197.25
11361.85
11410.10
11722.80
9816.40
9470.10
10622.15
11459.70
10203.75
15089.65
19691.20
18617.85
18338.10
17880.85
16597.65
17590.25
17055.60
16811.00
15497.55
14344.20
15339.20
9375.7
9292.55
8811.1
7968.65
9813.65
10391.4
10212.7
9267.6
10340.7
10332.9
11816.6
11099
12393.6
10973.9
9450.85
9899.75
10896.5
11181.7
11884.8
15819.2
18779.8
18345.6
17549.3
18729.7
17150.2
17354.5
16897.3
16142.7
15162.1
13791.5
15568.4
-205.65
-367.85
-361.65
-327.80
1360.85
-114.30
-127.45
-42.65
341.80
17.25
-380.70
-262.90
983.50
-748.90
-365.55
429.65
274.35
-278.05
1681.00
729.50
-911.40
-272.30
-788.85
848.80
552.55
-235.75
-158.30
-668.35
-335.50
-552.75
229.15
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
-10282.50
-18392.50
-18082.50
-16390.00
68042.50
-5715.00
-6372.50
-2132.50
17090.00
862.50
-19035.00
-13145.00
49175.00
-37445.00
-18277.50
21482.50
13717.50
-13902.50
84050.00
36475.00
-45570.00
-13615.00
-39442.50
42440.00
27627.50
-11787.50
-7915.00
-33417.50
-16775.00
-27637.50
11457.50
-2912.50
73
74
STOCHASTIC
120000
100000
80000
60000
STOCHASTIC
40000
20000
0
SBI
ICICI
HDFC
Axis
-20000
The above chart clearly shows the returns X would have got if he had invested in
various shares according to Stochastic.
Axis Bank would have given the maximum return followed by Bank of Baroda, SBI,
HDFC Bank and ICICI Bank. Stochastic buy and sell signals were not suited for
Bank Nifty. The signals provided by Stochastic would have incurred loss i.e.
eradication of capital.
75
Scrips
EMA
MACD
RSI
MFI
STOCHASTIC
SBI
6.64%
2.25%
1.59%
-7.97%
8.77%
ICICI Bank
5.76%
2.77%
9.24%
5.99%
-1.47%
HDFC Bank
10.04%
8.81%
9.38%
12.64
6.41%
AXIS Bank
BANK OF
BARODA
18.81%
13.62%
17.49%
12.98
15.74%
-6.28%
33.3%
-5.47%
34.46%
-0.45%
36.93%
2.03%
8.82%
30.95%
-0.59%
BANK NIFTY
The above table clearly shows the percentage returns per annum X would have
got if investments were made according to various indicators.
According to 21-week Exponential Moving Average, Bank Nifty would have given
the maximum return (33.3%) followed by AXIS Bank, HDFC Bank, SBI and ICICI
Bank. Bank of Baroda would have led to eradication of capital resulting in loss of
6.28%.
MACD Indicator would have given maximum return in Bank Nifty (34.46%)
followed by AXIS Bank, HDFC Bank, ICICI Bank and SBI. Here also, Bank of
Baroda would have incurred X a loss of 5.47%.
Bank Nifty would have given the maximum return (i.e. 36.93%) if buy and sell
signals were followed according to RSI. Bank of Baroda would have incurred X a
loss of 0.45%
According to MFI indicator also, Bank Nifty would have given the maximum return
(30.95%) when compared with other stocks. The next best return would have been
from AXIS Bank followed by HDFC Bank, ICICI Bank and Bank of Baroda. Here,
76
SBI would have incurred him loss (7.97% loss). The buy and sell signals provided by
MFI were not favourable for this stock.
Last but not the least Stochastic Indicator would have given maximum return
(15.74%) from AXIS Bank followed by Bank of Baroda, SBI and HDFC Bank.
According to Stochastic, X would have incurred loss from two stocks ICICI Bank
and BANK NIFTY.
Table 33: Ranking of Banks on Performance of Banks according to Technical Indicators
Indicators
RANK 1
EMA
Bank Nifty
MACD
Bank Nifty
RSI
Bank Nifty
MFI
Bank Nifty
RANK 2
Axis
Bank
Axis
Bank
Axis
Bank
Axis
Bank
Bank of
Baroda
RANK 3
HDFC
Bank
HDFC
Bank
HDFC
Bank
HDFC
Bank
SBI
RANK 4
SBI
ICICI
Bank
ICICI
Bank
ICICI
Bank
HDFC
Bank
RANK 5 RANK 6
ICICI
Bank of
Bank
Baroda
Bank of
SBI
Baroda
Bank of
SBI
Baroda
Bank of
Baroda
SBI
Bank
ICICI
Nifty
Bank
As its clear from the above table, that BANK NIFTY has given the maximum return
in the past 5years (i.e. period from 5-8-2011 to 29-7-2016). Four indicators Out of
five indicators ranked Bank Nifty as 1st for giving highest return.
Again four Indicators out of five indicators ranked AXIS Bank as 2nd and HDFC
Bank as 3rd for better returns.
Three out of five indicators ranked ICICI Bank as 4th best investment when
compared with BANK NIFTY, AXIS BANK, HDFC BANK, SBI and BANK OF
BARODA.
SBI and Bank of Baroda are not performing well. Bank of Baroda has incurred X loss
according to most of the indicators. And also, these stocks are highly volatile i.e. there
exists heavy share price fluctuations. They are risky in nature.
77
CHAPTER-V
FINDING AND CONCLUSIONS
78
5.1 FINDINGS
It has been found that different indicators give different signals. The signals
that are given by technical indicators do not guarantee surety of positive
return. Though, most of the indicators have given maximum return for BANK
NIFTY for the past five year period (5-8-2011 to 29-7-2016), Stochastic
indicator has given negative return for the same. Currently, Bank Nifty is in
uptrend i.e. Bullish.
The next best investment would have been AXIS Bank followed by HDFC
Bank. Both AXIS Bank and HDFC Bank are moving in upward trend. i.e.
Bullish.
It was found that SBI was not performing well for the past five years. It has
given negative or less return according to various indicators. There is a high
probability that the SBI will perform better from now i.e. from 29-7-2016
because most of the indicators that has been considered for analysis give a
very good buy signal for the same stock.
Bank of Baroda is the most volatile stock that has been chosen for analysis. It
is the most risky one when compared with Axis Bank, HDFC Bank, ICICI
Bank, SBI and Bank Nifty.
5.2 CONCLUSION
79
CHAPTER VI
SUGGESTIONS AND RECOMMENDATIONS
80
Different technical indicators give different signals. There are many other
technical indicators available. Some are leading and some are lagging indicators.
Any trader should not depend on single indicator. It is suggested to combine two
or three indicators to get better buy and sell signals. Though, for my analysis
Exponential Moving Average (EMA), Moving Average Convergence Divergence
(MACD), Relative Strength Index (RSI), Money Flow Index (MFI) and Stochastic
were considered, it does not mean that they are the best indicators. Other
Indicators which have not been taken into consideration may give better result i.e.
better return. For some stocks, EMA maybe best and for some other stock
Bollinger Bands maybe better.
Also, it is suggested to consider other things like Risk & Money Management,
Discipline and Patience in monitoring their portfolio. Also use Stop loss tool
which will be useful for those who will be unavailable to monitor their stocks
frequently.
81
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