7.

0 INTRODUCTION TO THE CONCEPT:

TECHNICAL ANALYSIS: It is important to form a view on the likely trend of the overall market, and it is helpful to have some idea of how to go about selecting individual stocks. Naturally, all investors would like their investments to appreciate rapidly in price, but stocks, which may satisfy this wish, tend to accompanied by a substantially greater amount of risk then many investors are normally willing to accept. However, it is important to understand that investors can be very conscious when it comes to stock ownership. Technical analysis is the use of numerical series generated by market activity, such as price and volume, to predict future price trends. The techniques applied to any market with a comprehensive price history. According to the technical analysis the share prices are determined by the demand supply forces in the market which are in turn influenced by the number of other fundamental factors. The combined impact of all the factors is reflected in the share price movements .technical analyst claims that future share prices can be accurately predicted, by examining past share movements. BASIC PRINCIPLES: Security prices behave in a manner that their movement is continuous in a particular direction for some length of time. Trends in stock prices change when there is a shift in demand and supply. Shifts in demand and supply can be detected through charts Patterns help in identifying trends to make forecasts.

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DOW THEORY The roots of technical analysis were originated by dow theory which was formulated by Charles. H. Dow the editor of the wall street journal during 1900 to 1902. He formulated a hypothesis that the stock does not move on a random basis, but it is influenced by three distinct movements. They are: Primary long term cycle that carries up or down .it is the long term trend in the market. It resembles the tides.. Secondary short term cycle that acts as a restraining force for the primary movement. It is also called as corrections. They resemble the waves. They last for only a short durations. This is called secondary reactions. Tertiary they are minor movements which are the day to day fluctuations in the market. There are of very short term durarion and they are highly fluctuating and insignificant. It resembles ripples. Price movements can be identified by means of line chart. Closing price of share of index can be plotted and presented as follows for bullish and bearish trends. BULLISH TREND During bullish trend each peak would be higher than the previous peak. Each bottom will be higher than the previous bottom. Higher bottoms and higher tops will indicate bullish trend.

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BEARISH TREND: Bearish market is indicated by lower tops and bottoms.

RELATIVE STRENGTH INDEX This is a power full indicator that signals buying and selling opportunities ahead of the market. RSI for a share is calculated by using the following formula. RS = average gain per day/ average loss per day RSI = [100/(1+RS)] the most commonly used time period for the calculation of RSI is 7 days. For the calculations a 7 day RSI , the gain per day or loss is arrived at by comparing the closing price of a day with that of the previous day of a period of 7 days. The gains are added up and divided by 7 to get the average gain per day. Similarly, the losses are added up and divided by 7 to get the average loss per day. The average gain per day and average loss per day are used in the above formula for calculating the RSI for a day. In this way RSI values can be calculated for number of days. The parameters used for identifying the trends: When RSI crosses 70 mark line, it significantly a bullish ahead for the scrip.

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As soon as RSI crosses 70 mark line it signifies the overbought market. Now it is expected that the peak will be touched.

When RSI declines after the peak , it signifies the bearish market ahead When RSI crosses 70 mark line upward and continuously declines, but not reached 30 mark line it indicates bearish market.

As soon as RSI crosses 30 mark line from upward, it signifies the oversold market. Now it is expected that the bottom will be touched soon. This is the early signal of bullish market

When RSI is above 30 mark line and progressing towards 70 mark, it signifies a bullish market

MOVING AVERAGE CONVERGENCE AND DIVERGENCE(MACD) MACD is an oscillator that measures the convergence and divergence between two exponential moving averages. A short term exponential moving average and a long term exponential moving average are calculated with the help of the closing price date. A 15 day and 40- day exponential moving averages constitute a popular combination. The difference between the short- term EMA and the long term EMA represents MACD. Exponential moving average (EMA) EMA is calculated by using the following formula: EMA = (current closing price previous EMA)* factor +previous EMA Where factor = 2/n +1 And n = number of days for which the average is to be calculated. The MACD values for different days are derived by deducting the long- term EMA for each day from the corresponding short- term EMA for the day. The parameters used for identifying the trends: Whenever the MACD line is above the zero mark line, it indicates the signal of

bullish market of the script.

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Whenever the MACD line is above the zero market line, but declining it is

early warning signal of a bearish market. Whenever MACD line is below the zero mark line, it is the signal of a bearish

market. Whenever MACD line is below the zero mark line but raising it gives the

signal of the bullish market ahead. Whenever the MACD line forms a peak at the top it gives signals that the

market will soon turn bearish, i.e. it represents overbought situation. Whenever MACD line reaches its bottom it signifies oversold situation, i.e. the

market will start becoming bullish STOCHASTIC OSCILLATOR Stochastic oscillator is a momentum indicator which shows the location of the close relative to the high and low range over a set number of period .it is also used to identify bull and bear setups to anticipate the future reversal . Calculation : %K=(current close-lowest low)/(highest high lowest low)*100 %D=3daySMA of %K. Where , Highest high = Highest high of the look back period Lowest low = Lowest low of the look back period 14 period is the default setting for the stochastic oscillator , the 14 period may be days, weeks, months. For the calculation of %K recent closing value is taken for %D 3-day, week, month simple moving average of %K is done , both %K and %D will be plotted along side , where %K acts as a trigger line Low reading i.e. below 20 it indicates the price is near its low for the time period and oversold situation .High reading i.e. above 80 it indicates that the price is near its high for the given period it shows overbought situation.
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8.0 RESEARCH METHODOLOGY

8.1 PROJECT TITLE: A STUDY ON TECHNICAL ANALYSIS OF IT AND PHARMACEUTICAL INDUSTRY WITH REFERANCE TO BSE AT RELIGARE SECURITES LIMITD

8.2 STATEMENT OF THE PROBLEM: The Indian pharmaceutical and IT sector are growth oriented sectors so this study is conducted to analyse both the sectors performance using technical analysis. Securities market has always have fluctuations, with these fluctuations several investors have gained as well as lost in the stock market. In order to make the investment safe in stock market, investor has to adopt technical analysis to make better investment decision.

8.3 OBJECTIVES: To assess the stock price movements of the selected companies. To analyse the performance of the selected companies using technical analysis. To determine the risk and return involved in the selected companies.

8.4 SCOPE OF THE STUDY:

The study covers only two sectors Pharmaceutical Information technology

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The study covers only 4 companies 2 in pharmaceutical and 2 companies in IT sector Pharmaceutical companies: CIPLA RANBAXY

IT companies: INFOSY TATA COUNSULTANCY SERVICES

8.5 TYPE OF RESEARCH: The study is an analytical study based on secondary data, question it asks analytical research attempt to establish why it is that way, or why it came 8.6 STATISTICAL TOOLS USED: Relative strength index moving average convergence and divergence(MACD) Stochastic oscillator.

OTHER TOOLS USED FOR ANALYSIS: Charts. Bar graphs. Line graph.

8.7 LIMITATIONS OF THE STUDY: Due to time constraint, the study is confined to only few technical analysis

indicators. The forecasting of technical analysis is purely dependent on previous price

movement irrespective of the news in the market will make major change Only few pharmaceutical companies and I T companies are considered for the

purpose of calculation, which may not be enough to take the decision regarding the whole sectors.

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9.0 DATA ANALYSIS AND INTERPRETATION

TABLE 1: SHOWING RISK AND RETURN OF THE YEAR 2010. COMPANY NAME 1. INFOSYS 2. TCS (Source:moneycontrol.com) Analysis By comparing the returns of 2 IT companies, risk and return TCS has got highest return of 4.41% when compared to Infosys even though TCS has highest risk of 0.76% than Infosys has risk of 0.55% in 2010. GRAPH 1: SHOWING RETURN AND RISK OF I.T COMPANIES FOR THE YEAR 2010.
5 4 3 2 1 0 INFOSYS TCS 0.55 0.76 3.18 RETURN 2010 RISK 2010 4.41

I. T

COMPANIES FOR

RETURN 3.18 4.41

BETA 0.55 0.76

(Source: Table 1)

INTERPRETATION: The US market crashed down in January 2008 carried till 2010 , in 2010 IT companies were recovering their losses they suffered from 2008,2009 in 2010.TCS has got higher return because it has is major operations with in India but Infosys has global operations and changes in other economy will have impact on the returns this made the difference in their returns.
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TABLE 2: SHOWING RISK AND RETURN OF IT COMPANIES FOR THE YEAR 2011. COMPANY NAME 1.INFOSYS 3.TCS (Source: money control.com) ANALYSIS: from the above graph we analyse that Infosys has got highest risk of 0.72% and negative returns of -0.64% compared to that TCS got moderate return of 0.13% and with risk of 0.47%. GRAPH 2: SHOWING RETURN AND RISK OF I T COMPANIES FOR THE YEAR 2011.
0.8 0.6 0.4 0.2 0 -0.2 -0.4 -0.6 -0.8 -0.64 INFOSYS TCS 0.13 RETURN 2011 RISK 2011 0.72 0.47

RETURN -0.64 0.13

BETA 0.72 0.47

(Source: Table 2) INTERPRETATION: Change in the leadership and strategic decisions of the leader the Infosys company faced lot of losses.TCS got affected by the low GDP/ high inflation in the country affected the return in the year 2011.

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TABLE 3: SHOWING RISK AND RETURN OF I . T COMPANIES FOR THE YEAR 2012. COMPANY NAME 1.INFOSYS 2.TCS (Source: money control.com) ANALYSIS: From the above graph TCS and Infosys has risk of 0.65 %and 0.67%, and Infosys has got negative returns of -1.27% and TCS got return of 1%. GRAPH 3: SHOWING RETURN AND RISK OF I . T COMPANIES FOR RETURN -1.27 1 BETA 0.65 0.67

THE YEAR 2012.

1.5 1 1 0.5 0 INFOSYS -0.5 -1 -1.5 -1.27 TCS RETURN 2012 RISK 2012 0.65 0.67

(Source: Table 3) INTERPRETAION: The negative returns for Infosys are due to exchange rate fluctuations and also economic fluctuations in other markets, as Infosys is a globally operated firm. While TCS got better returns of 1% as it has major operations in India.

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TABLE 4: SHOWING RISK AND RETURN OF PHARMACEUTICAL COMPANIES FOR THE YEAR 2010. COMPANY NAME 1. CIPLA 2. RANBAXY (Source: money control.com) ANALYSIS: From the above graph of pharmaceutical companies, Ranbaxy got highest return of 2.7% and cipla has got return of 1.5%. Ranbaxy has got highest risk of 0.72% and cipla got 0.22% GRAPH 4: SHOWING RETURN AND RISK OF PHARMACEUTICAL RETURN 1.5 2.7 BETA 0.22 0.72

COMPANIES FOR THE YEAR 2010.

3 2.5 2 1.5 1.5 1 0.5 0 CIPLA RANBAXY 0.22 0.72 RETURN 2010 RISK/BETA 2010 2.7

(Source: Table 4)

INTERPRETATION: Ranbaxys global presence has contributed to the companies return. cipla has got less global presence and it rely on exporting and strategic alliance with the other companies for its operations so its returns are moderate .

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TABLE 5:

SHOWING RISK AND RETURN OF PHARMACEUTICAL

COMPANIES FOR THE YEAR 2011. COMPANY NAME 1. CIPLA 2. RANBAXY (Source: money control.com) ANALYSIS: From the above table we can analyse that cipla got a moderate return of 0.13% with highest risk of 0.59% when compared with Ranbaxy it has got negative return of 2.08% with a risk of 0.37. GRAPH 5: SHOWING RETURN COMPANIES FOR THE YEAR 2011.
1 0.5 0 -0.5 -1 -1.5 -2 -2.5 -2.08 CIPLA RANBAXY RETURN 2011 BETA RISK 2011 0.13 0.59

RETURN 0.13 -2.08

BETA 0.59 0.37

AND RISK OF PHARMACEUTICAL

0.37

(Source: Table 5) INTERPRETATION: The negative return for Ranbaxy company is due the issues with its US food and drug administration on its operations this slowdown the companies operation. cipla also had problem with logistics this slow down the operations it able to earn return of 0.13%.

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TABLE 6: SHOWING RISK AND RETURN OF PHARMACEUTICAL COMPANIES FOR THE YEAR 2012. COMPANY NAME 1. CIPLA 2. RANBAXY (Source: money control.com) ANALYSIS : From the graph we can say cipla got highest return of 1.7% and moderate risk of 0.74% when compared to Ranbaxy with highest risk of 0.95% and return of 1.15%. GRAPH 6: SHOWING THE RETURN AND RISK OF PHARMACEUTICAL COMPANIES FOR THE YEAR 2012.
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 CIPLA RANBAXY 0.74 1.15 0.95 RETURN 2012 RISK 2012 1.7

RETURN 1.7 1.15

BETA 0.74 0.95

(Source: Table 6) INTERPRETATION: Ranbaxy Company resolved it problems with the US government and earned profits of 1.15%in the year 2012. Cipla has overcome with the logistic problems and able to earn profits of 1.7% higher than that of previous year.

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 TECHNICAL INDICATOR
1.Relative strength index : IT COMPANIES: TABLE 7: showing Calculations of R S I INFOSYS
CLSG MONTH PR Avg Gain RSI Avg Loss MONT H CLSG PR Avg Gain RSI Avg Loss 1027.45 1122.75 -1009.5 -1009.5 -946.35 -832.25 -853.95 -713.35 -299.8 -702.15 -724.9 -457.25 -732.4 -710.7 -710.7 -870.75 -468.4 -563.75

Jan-10

99.55

Jul-11

84.05

349.25

25.36864

Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11

95.55 92.6 94.5 86.75 91.15 86.4 79.8 90.1 78.9 62.25 66.35 60.15 62.1 65.75 75.25 84.75 83.8 390.65 599.65 586.15 544.95 940.5 809.6 809.3 1043 709.1 709.1 744.8 -160.25 -160.25 -231.65 -231.65 -153.15 -481.85 -595.1 -513.35 -844.15 -886.85 -886.85 70.91124 78.9117 71.674 70.17126 85.99643 62.68923 57.62603 67.01577 45.65266 44.43122 45.64704

Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

66.85 70.2 70.9 65.75 64.9 73.45 68.65 80.2 77.2 75.25 78.45 82 93.5 110.75 109.05 101.75 106.9

349.25 540.25 647.95 647.95 805.45 689.9 821.95 821.95 630.95 289.55 352.25 194.75 340.6 369.3 369.3 442.4 442.4

23.72622 34.86046 39.09319 40.64166 49.18178 44.68698 53.53677 73.2739 47.32953 28.54256 43.51452 21.00523 32.39798 34.19444 29.78106 48.57268 43.96959

(Source: money control.com)

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GRAPH 7: SHOWING RSI OF INFOSYS

RSI
100 90 80 70 60 50 40 30 20 10 0 Jan/10 Feb/10 Mar/10 Apr/10 May/10 Jun/10 Jul/10 Aug/10 Sep/10 Oct/10 Nov/10 Dec/10 Jan/11 Feb/11 Mar/11 Apr/11 May/11 Jun/11 Jul/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12

RSI

(Source: Table 7) INTERPRETATION OF RSI LINE OF INFOSYS STOCK: RSI line of the Infosys stock is oscillating between 20-80. From the above graph RSI line above is above the 70 line when the RSI line shows up trend hen the investor should hold the scripts and it reached highest i.e. 80 between the month of November 2010 to January 2011 after that script shows down trend then its the signal for the investor to sell the script then the script falls to the lowest i.e.to the point 30 between the July 2011 and September due the currency rate fluctuation company operations were affected and when it show the indication of uptrend and this is the signal for the investor to buy the script and wait until it reaches to the next high i.e. between the month January 2012-march 12 is because the Infosys tie up with galaxo smithkline for optimise digital channel deal . after that the RSI give signal of the next down trend after march 12 the script should be sold and wait till lowest point 30 and show up trend then investor is advised to buy the script.

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Table 8: showing Calculations of RSI Tata consultancy services

CLSG MONTH Jan-10 PR 735.45 Avg Gain Avg Loss RSI MONT H Jul-11 CLSG PR 1134.45 91.1 Feb-10 761 Aug-11 1040.6 91.1 Mar-10 780.8 Sep-11 1037.5 98.25 Apr-10 766 Oct-11 1114.2 98.25 May-10 742 Nov-11 1113.1 146.4 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 751.15 841.1 147.2 843.85 200.35 922.55 309.8 1051.8 334.7 1076.7 423.05 1165.05 0 50 Jun-12 1277.55 413.9 Jan-11 Feb-11 Mar-11 Apr-11 1157.15 323.95 1112.95 390.75 1182.5 312.05 1163.6 -71 81.46456 Oct-12 1313.4 Page 16 -52.1 88.23529 Sep-12 1294 235.75 -90.2 72.32704 -52.1 86.14546 Aug-12 1347.3 216.35 -143.4 60.13899 -7.9 98.12707 Jul-12 1240.65 306.9 -90.1 77.30479 200.25 120.85 62.36375 -24 93.30917 May12 1245.8 248.4 -83.95 74.74048 -38.8 88.86976 Apr-12 1244.9 216.65 -85.05 71.80974 -38.8 83.77587 Mar-12 1167.85 292.45 -85.05 77.4702 -38.8 79.13978 Feb-12 1221.05 215.4 -88.15 70.9603 Dec-11 Jan-12 1161.25 124.85 1130.5 215.4 -128.8 62.5799 -174.7 41.67919 143.95 50.4219 148.75 39.77733 166.55 37.10347 166.55 35.35804 207.65 30.49372 Avg Gain 91.1 Avg Loss -121.7 RSI 42.81015

182.8 May-11 Jun-11 1158.8 179.45 1180.35

-75.8 -75.8

70.68832 Nov-12 70.30362 Dec-12 1258.55 1312.85

158.7 103.5

-90.75 -90.75

63.61996 53.28185

(Source: money control.com)

Graph 8: showing RSI of Tata consultancy services

RSI
110 100 90 80 70 60 50 40 30 20 10 0 Jan/10 Feb/10 Mar/10 Apr/10 May/10 Jun/10 Jul/10 Aug/10 Sep/10 Oct/10 Nov/10 Dec/10 Jan/11 Feb/11 Mar/11 Apr/11 May/11 Jun/11 Jul/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12

RSI

(Source: Table 8) INTERPRETATION From the above graph of TCS company RSI line oscillates between 80-30, In the graph RSI line starts with a higher point and show higher trend and after certain time it showed down trend due to some corrections in the market and then show up trend and reaches highest point of 98 between the month January 2011 to march 2011and gives the signal of downtrend this is the signal for the investor to sell the script and wait till the scrip reaches the lowest point 30 between the month of July2011-sept11 because of the currency rate fluctuations and shows up trend then it the signal to buy and that script and the investor should be hold it till it reaches the next highest point i.e. 77.4 between the month July2012-sept12 and when the script show down trend its the signal to the investor to sell the script.

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 PHARAMASITICAL SECTOR TABLE 9: showing Calculations of RSI Cipla Company

CLSG MONTH PR Avg Gain Avg Loss RSI MONT H CLSG PR Avg Gain Avg Loss RSI

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10

317.3 315.3 337.1 342.55 318.95 337.75 326.6 303.35 321.65 352.25 46.05 64.35 73.15 -60 -58 -58 43.42291 52.59501 55.77583

Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12

307.85 280 282.7 294.55 327.95 319.55 349.15 316.8 304.55 311.85

42.85 42.85 45.55 36.05 69.45 52.2 77.55 77.55 77.55 82.15

-104.9 -95.1 -62.55 -62.55 -50.35 -58.75 -58.75 -68.6 -53 -53

29.00169 31.06198 42.13691 36.56187 57.97162 47.04822 56.89655 53.06192 59.40253 60.78431

Nov-10

343.7

67.7

66.55 -

50.42831

May-12

309.65

70.3

-55.2

56.01594

Dec-10 Jan-11 Feb-11

369.9 332.25 299.7

93.9 75.1 75.1

42.95 -80.6 -102 -

68.61527 48.23378 42.40542

Jun-12 Jul-12 Aug-12

316.4 338.55 378.15

43.65 65.8 75.8

-55.2 -46.8 -46.8

44.15781 58.43694 61.82708

Mar-11

321.05

96.45

78.75 -

55.05137

Sep-12

380.6

78.25

-14.45

84.41208

Apr-11

308.85

78.15

90.95

46.21526

Oct-12

363.5

78.25

-19.3

80.21527

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May-11 Jun-11 326.1 330.35 64.8 69.05 90.95 -82.4 41.60514 45.5926 Nov-12 Dec-12 414 414.1 121.45 -292.9 121.55 -290.7 29.31097 29.48454

(Source: money control.com) GRAPH 9: SHOWING RSI OF CIPLA COMPANY

90 80 70 60 50 40 30 20 10 0 Jan/10 Feb/10 Mar/10 Apr/10 May/10 Jun/10 Jul/10 Aug/10 Sep/10 Oct/10 Nov/10 Dec/10 Jan/11 Feb/11 Mar/11 Apr/11 May/11 Jun/11 Jul/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 RSI

(Source: Table 9) INTERPRETATION RSI line of the cipla stock is oscillating between 30-80. Which indicates that the investor has to sell at the points where the stock s reaching more than 70 between November 2010 January 2010 and buy when the stock reaches below 30 are at 30 and show up trend then its a indication for the investor to sell the script . As it is oscillating above 70 line only once, hence it is better for the investor if he holds for the stock to be uptrend or downtrend and sell the scrip when it reaches highest above 80 and when it starting to show the down trend then the investor is advised to sell the script. The company had had problem with logistics this slow down the operations in the year February to July 2011.

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TABLE 10 : showing Calculations of RSI Ranbaxy company

Avg Gain Avg Loss RSI MONTH CLSG PR Avg Gain Avg Loss RSI

CLSG MONTH PR Jan-10 Feb-10 Mar-10 Apr-10 453.15 467.05 474.9 443.1

Jul-11

539

115.05

-174.7

39.71 38.05 67.29 62.18

Aug-11 473.15 115.05 -187.3 Sep-11 Oct-11

513.9 501.1 155.8 145.6 -75.75 -88.55 154.85 -184.4 175.85 196.45 -130.6 -130.6

May-10 Jun-10

429.85 460.6

Nov-11 434.8 Dec-11

405.25

133.45 40.75

46.29 18.10

Jul-10

449.3

Jan-12

450.35

85.85

32.80

Aug-10 Sep-10 Oct-10

490.25 557.15 579.75

93.45 146.45 161.2

-56.35 -56.35 -56.35

62.38 72.21 74.10

Feb-12

428.4

85.85 126.45 120.8

30.41 49.19 48.05

Mar-12 469 Apr-12 May504.1

Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11

571.45 598.65 545.4 433.85 444.05 456.2

161.2 188.4 157.65 157.65 126.9 72.15

-32.85 -19.6 -72.85 -173.1 -173.1 -173.1

83.07 90.58 68.39 47.66 42.30 29.42

12 Jun-12 Jul-12

517.15 490.35 497.5

133.85 133.85 141 149.7 149.7 109.1

-117.8 -78.3 -48.75 -48.75 -48.55 -52.5

53.19 63.09 74.31 75.43 75.51 67.51

Aug-12 551.3 Sep-12 Oct-12

529.55 525.6

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May-11

548.9

142.25

-173.1 173.35

45.11

Nov-12 503.25 74 Dec-12

-74.85

49.71

Jun-11

540.35

142.25

45.07

502.75

60.95

-75.35

44.72

(SOURCE: moneycontrol.com)

GRAPH 10: SHOWING RSI OF RANBAXY COMPANY

100 90 80 70 60 50 40 30 20 10 0 Jan/10 Feb/10 Mar/10 Apr/10 May/10 Jun/10 Jul/10 Aug/10 Sep/10 Oct/10 Nov/10 Dec/10 Jan/11 Feb/11 Mar/11 Apr/11 May/11 Jun/11 Jul/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 RSI

(Source: Table 10) INTERPRETATION The RSI line rises to the peak point that is 90 between the month November 2010jannuary 2011 and when it start to show down trend then its ideal time for the investor to selling pressure then the script will be sold then the market will be bearish ,when the RSI line reaches 30 and bellow that den buying pressure will be more and market turn to up trend then it is a indication for the investor to buy the scripts and the market will be in bullish but the movement is gradually between march 2011 to September 2011 and due to correction market become bearish and reaches lowest between the month of nov2011 and January 2012 and market become bullish slowly . The Ranbaxy Company is due the issues regarding a drug with US food and drug administration on its operations in the year 2011 the effect of that we can observe in the above graph.
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INDICATOR 2 : MOVING AVERAGE CONVERGENCE AND DIVERGENCE (MACD) TABLE 11: showing Calculations of MACD INFOSYS CLSG MONTH Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 PR 99.55 95.55 92.6 94.5 86.75 91.15 86.4 79.8 90.1 78.9 62.25 66.35 60.15 62.1 65.75 75.25 84.75 MACD MONTH Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 CLSG PR 84.05 66.85 70.2 70.9 65.75 64.9 73.45 68.65 80.2 77.2 75.25 78.45 82 93.5 110.75 109.05 101.75 -4.61856 -2.82911 -2.10665 -2.18264 -2.00034 -1.64884 0.596125 2.995561 5.070237
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MACD

Jun-11

83.8

Dec-12

106.9

7.653141

(SOURCE: moneycontrol.com)

GRAPH 11: SHOWING MACD OF INFOSYS

9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5 -6

MACD of Infosys

(Source: Table 11) INTERPRETATION: From the above graph the MACD line starts below the 0 line and show rising trend between march 2012 to may 2012 it indicates bullish market ahead and it indicates the investor to buy the script and hold it till it crosses above 0 mark line, when the MACD line reaches highest point i.e. 7.65 point and show declining signal then investor is advised to sell the script. Infosys Company has global presence so the currency rate fluctuation and slow down of the other economy , increasing rate of inflation rate home country and change in the leader has affected the performance of the company and later the supporting economies were stabilised and the strategic alliance with glaxo smitkline company for optical digital channel deal the company has regained it market value .

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TABLE 12: showing Calculations of MACD Tata consultancy services

MONTH Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11

CLSG PR 735.45 761 780.8 766 742 751.15 841.1 843.85 922.55 1051.8 1076.7 1165.05 1157.15 1112.95 1182.5 1163.6 1158.8 1180.35

MACD

MONTH Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

CLSG PR 1134.45 1040.6 1037.5 1114.2 1113.1 1161.25 1130.5 1221.05 1167.85 1244.9 1245.8 1277.55 1240.65 1347.3 1294 1313.4 1312.85 1258.55

MACD

121.8578 105.067 93.35256 82.72012 71.29235 63.20726 65.59492 68.78961 67.55023 68.39808

(SOURCE: moneycontrol.com)

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GRAPH 12: SHOWING MACD OF TATA COUNSULTANCY SERVICES

MACD OF TCS
140 120 100 80 60 40 20 0 MACD OF TCS

(Source: Table 12) INTERPRETATION: From the above graph we can interpret that MACD line of TCS company start from the highest i.e. in the month of march 2012 i.e. 121.857 and then the MACD line is above the zero mark line but it show declining in between July and august 2012 its a early warning signal of bearish market and it declined to a low point i.e. 63.2 and show little up tend this is an indicator next it show bullish market so, Investor has to hold the script till it reaches next highest point to sell the script. .

TCS Company also got affected with the currency rate fluctuations to a little extent and it managed that with its strong domestic business.

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TABLE 13: showing Calculations of MACD cipla company. CLSG MONTH Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 PR 317.3 315.3 337.1 342.55 318.95 337.75 326.6 303.35 321.65 352.25 343.7 369.9 332.25 299.7 321.05 308.85 326.1 330.35 MACD MONTH Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 CLSG PR 307.85 280 282.7 294.55 327.95 319.55 349.15 316.8 304.55 311.85 309.65 316.4 338.55 378.15 380.6 363.5 414 414.1 -8.86295 -9.52885 -9.32467 -9.61198 -9.33376 -6.74215 -0.15657 5.546407 9.105837 12.91311 MACD

(SOURCE: moneycontrol.com)
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GRAPH 13: SHOWING MACD OF CIPLA

MACD -CIPLA
15 10 5 0 -5 -10 -15 MACD -CIPLA

(Source: Table 13) INTERPRETATION: From the above MACD line of cipla company starts below the zero mark line in the month of march2012 and shows increasing trend this is the signal for the investor the next trend will be bullish market and investor are preferred to buy the scripts in the month of April 2012 and it show up trend in the month of august to September 2012 and hold till the MACD line crosses the zero mark line and it reaches the highest point 12.9 in the month of December 2012 at this point selling pressure will be more when the market signal down trend then its the ideal time for the investor to sell the scripts . Cipla was facing problems with the logistics in the year 2011 and in 2012 it overcome with the problem in between the month of august to September 2012 and improved its performance in the later months.

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TABLE 14: showing Calculations of MACD Ranbaxy company. MONTH Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 CLSG PR
453.15 467.05 474.9 443.1 429.85 460.6 449.3 490.25 557.15 579.75 571.45 598.65 545.4 433.85 444.05 456.2 548.9 540.35

MACD

MONTH Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

CLSG PR
539 473.15 513.9 501.1 434.8 405.25 450.35 428.4 469 504.1 517.15 490.35 497.5 551.3 529.55 525.6 503.25 502.75

MACD

-9.84971 -8.15036 -6.59332 -11.1057 -17.0384 -21.6651 -19.3942 -20.945 -19.4733 -11.2707

(SOURCE: moneycontrol.com)

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GRAPH 14: SHOWING MACD OF RANBAXY

MACD OF RANBAXY
0

-5

-10 MACD OF RANBAXY -15

-20

-25

(Source: Table 14) INTERPRETATION: From the above graph of MACD line of Ranbaxy company starts below the zero mark line in the month of march 2012 and showed rising it shows bullish trend between may 2012 to June 2012 and still its below the zero mark line and show a signal of bearish market and reaches its bottom it shows the oversold situation this the point where investor has to buy the script and the market become bullish slowly between the month September 2012 to December 2012. From the graph the major down trend is due to the issue of Ranbaxy Company with the US food and drug administration in the year 2011 and in the year 2012 it cleared all the issues with the US government and started improving its operations.

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INDIATOR 3 : STOCHASTICS
TABLE 15: showing calculation of stochastic for Infosys CLSG MONTH PR Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11
2476.7 2601.6 2615.1 2736.15 2657.65 2788.55 2788.85 2707.1 3041 2969.6 3049.45 3445 3116.3 3003.05 3236.75 2905.95 2791.85 57.71566 77.84573 49.35182 74.01403 61.63774 67.07053

%K

%D

CLSG MONTH PR Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12
2766.8 2342.8 2533.8 2875.2 2607.55 2765.05 2743.35 2875.4 2864.95 2462.6 2439.85 2502.55 2227.4 2373.25 2534 2363.5 2436.6

%K

%D

63.1441 1.426492 29.22853 78.92285 39.96361 62.88937 59.73071 78.95197 77.43086 32.02439 29.25 36.89634 13.69304 29.57478 47.079 28.51309 36.47302

76.60359 52.40774 31.26638 36.52596 49.37166 60.59195 54.19457 67.19068 72.03785 62.8024 46.23508 32.72358 26.61313 26.72139 30.11561 35.05563 37.35504

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Jun-11

2907.4

92.65263

72.00616

Dec-12

2318.5

23.613

29.53304

(SOURCE: moneycontrol.com)

GRAPH 15: SHOWING STOCHASTIC OF INFOSYS

100 90 80 70 60 50 40 30 20 10 0 Feb/11 Mar/11 Apr/11 May/11 Jun/11 Jul/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 %K %D

(Source: Table 15) INTERPRETATION: From the above stochastic graph %K started high and in march 2011 to may 2011 the major situation in which %K cuts %D from the bellow this is the signal to buy the script. The %K reaches the highest point 92.5 which is above the 80 mark line which shows the overbought zone the script. In month of June 2011 July 2011 the %K line cuts the %D line from the above its a signal to sell the script and the script reaches below 20 mark line which indicates oversold zone . In august2011 to September 2011 the %K line cuts %D line from bellow it signals to buy the script by that the %K reaches the point 80 which shows overbought zone. In the month of February to march 2012 the %K line cut the %D line from the above this is the signal to sell the script.

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TABLE 16: showing calculation of stochastic of TCS company CLSG MONTH PR Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11
735.45 761 780.8 766 742 751.15 841.1 843.85 922.55 1051.8 1076.7 1165.05 1157.15 1112.95 1182.5 1163.6 1158.8 1180.35 79.57467 92.72212 84.97297 84.10811 87.99099 85.75659 87.26773 85.69069

%K

%D

CLSG MONTH PR Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12
1134.45 1040.6 1037.5 1114.2 1113.1 1161.25 1130.5 1221.05 1167.85 1244.9 1245.8 1277.55 1240.65 1347.3 1294 1313.4 1312.85 1258.55

%K

%D

79.72072 62.81081 62.25225 76.07207 75.87387 84.54955 79.00901 90.09707 81.03713 94.15872 91.87127 97.13835 91.01692 95.45521 80.69705 83.29759 83.22386 75.94504

83.93994 76.84084 68.26126 67.04505 71.3994 78.83183 79.81081 84.55188 83.38107 88.43097 89.02237 94.38945 93.34218 94.53683 89.05639 86.48328 82.40617 80.82216

(Source: moneycontrol.com)
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GRAPH

16:

SHOWING

STOCHASTIC

OF

TATA

CONSULTANCY

SERVICES
110 100 90 80 70 60 50 40 30 20 10 0 Mar/11 Mar/12 Aug/11 Aug/12 Jun/11 Oct/11 Jun/12 Nov/11 Oct/12 Nov/12 Feb/11 Sep/11 Jan/12 Feb/12 Dec/11 Sep/12 Jul/11 %K %D

Apr/12

Jul/12

May/11

(Source: Table 16) INTERPRETATION: From the above stochastic graph the %K started at the highest point, from the month of February 2011 to march 2011 indicates overbought zone. In the month June 2011 to July 2011 the major situation, in which %K line cuts %D line from the above which indicates to sell the script .In the month of august 2011 to September 2011the major change i.e. the %K line cuts the %D line from the bellow which indicates to buy the script.In between the January 2012 October 2012 the script is in overbought zone and small amount of buying and selling of the script took place and in between October 2012 to December 2012 the script reaches above the 80 mark line it is the situation of overbought zone and %K line cuts %D line which indicates to sell the script .

May/12

Dec/12

Apr/11

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PHARMACEUTICAL SECTOR TABLE 17: showing calculation of stochastic of cipla company CLSG MONTH PR Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11
317.3 315.3 337.1 342.55 318.95 337.75 326.6 303.35 321.65 352.25 343.7 369.9 332.25 299.7 321.05 308.85 326.1 3.852993 29.1642 14.70065 36.13543 15.90595 26.66676

%K

%D MONTH Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12

CLSG PR
307.85 280 282.7 294.55 327.95 319.55 349.15 316.8 304.55 311.85 309.65 316.4 338.55 378.15 380.6 363.5 414

%K

%D

14.82779 5.529522 8.488806 19.54291 50.69963 42.86381 70.47575 40.29851 28.87127 35.68097 33.62873 39.92537 60.58769 97.52799 87.81288 73.77924 98.66479

30.6869 20.48493 9.615372 11.18708 26.24378 37.70211 54.67973 51.21269 46.54851 34.95025 32.72699 36.41169 44.71393 66.01368 81.97619 86.37337 86.7523

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Jun-11

330.35

41.09749

30.64453

Dec-12

414.1

89.83376

87.42593

(Source: moneycontrol.com) GRAPH 17: SHOWING STOCHASTIC OF CIPLA

110 100 90 80 70 60 50 40 30 20 10 0 Mar/11 Mar/12 Aug/11 Nov/11 Aug/12

%K %D

Oct/12

Oct/11

Jan/12

Jul/11

Jun/11

Jun/12

Jul/12

Nov/12

Feb/11

Sep/11

Feb/12

Dec/11

Sep/12

May/11

(Source: Table 17) INTERPRETATION: From the above stochastic graph %K started with lowest point in the month of February 2011.In between the month may 2011 to June 2011 the %K line cuts %D line from the above which give signal to sell the script .In the month of July 2011 the script reached lowest point i.e. bellow the 20 mark line which indicates overbought zone .The major situation happened in between the month of august 2011 to September 2011 the %k line cuts the %D line from bellow which indicate to buy the script. The next major situation was in the month of December 2011 to January 2012 where the %K line cuts the %D line from bellow which signals to sell the script.The third major situation was in the month of March 2012 to April 2012 where the %K line cuts the %D line from the bellow which indicates to buy the script.Between the month of June 2012 to august 2012 and in between the month October 2012 to

November 2012 the script is above the 80 mark line which indicates the overbought zone.

May/12

Dec/12

Apr/11

Apr/12

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TABLE 18: showing calculation of stochastic of Ranbaxy CLSG MONTH PR Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11
453.15 467.05 474.9 443.1 429.85 460.6 449.3 490.25 557.15 579.75 571.45 598.65 545.4 433.85 444.05 456.2 548.9 540.35 32.42551 37.17412 42.83054 85.98696 82.00652 37.47672 55.33054 70.27467

%K

%D MONTH Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

CLSG PR
539 473.15 513.9 501.1 434.8 405.25 450.35 428.4 469 504.1 517.15 490.35 497.5 551.3 529.55 525.6 503.25 502.75

%K

%D

81.37803 50.7216 69.69274 63.73371 32.86778 19.1108 40.10708 29.88827 48.78957 65.13035 71.20577 58.72905 62.05773 87.10428 76.97858 75.13966 64.73464 64.50186

83.12384 71.36872 67.26412 61.38268 55.43141 38.57076 30.69522 29.70205 39.59497 47.93606 61.70857 65.02173 63.99752 69.29702 75.3802 79.74084 72.2843 68.12539

(Source: moneycontrol.com)
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GRAPH 18: SHOWING STOCHASTIC OF RANBAXY

100 90 80 70 60 50 40 30 20 10 0 Feb/11 Mar/11 Apr/11 May/11 Jun/11 Jul/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 %K %D

(Source: Table 18) INTERPRETATION: From the above stochastic graph the %K started low in the month of February 2011.In between the month of march 2011 to April 2011the scrip line is above the 80 mark line which shows overbought zone .In between the may 2011 to June 2011 the %K line cuts the %D line from the above which indicates to sell the script. In between the month of august 2011 to September 2011 the %k cuts the %D line form the bellow which indicates to buy the script. The major situation in the month of September 2011 to October 2011 the %K line cuts the %D line from the above which give signal to sell the script. The second major change is in the month of January 2012 to February 2012 %k cut %D from bellow which indicates to buy the script. In the month of July 2012 and august 2012 %K reaches highest point which is above the 80 mark line which shows over bought zone.

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10.0 FINDINGS: IT companies have high risk i.e. high beta value that is because most of IT

operations are subjected to international exchange risk and dependent on the different countries economies so the rate of risk and uncertainty are more. Pharmaceutical companys beta value less i.e. risk is comparatively low so

diversification of portfolio may help the investor to eliminate the controllable risk associated with this stocks .the growth in pharmacy stock mainly because of the growing strength of the Indian pharmaceutical companies. Stochastic will give specific signals to the investor when to buy and to sell the

script and also overbought and oversold situation. RSI give signal to the investor to buy when the script reaches below 30 mark line

and sell the script when the script reaches above 70 mark line. Technical analysis provides guidelines to the speculators. It is useful only to long-

term investors and technical analysts evaluate securities by analysing statistics generated by market activity, past prices and volume. The stock price always takes a correction after a major peak. Technical analysis tools are most convenient way to view and analyse the market

trends. Though 2 oscillators RSI and MACD are very helpful tools of the technical

analysis, which help in depicting the future market, amongst the two tools implemented in this study, RSI exhibit the potential to provide good entry and exit point. In technical analysis the stock price is in its lowest, till it show rising trend

investor should not take any decisions. Relaying on single indicator will not provide full information to take decision

because one indicator will not give the exact situation to take buy or sell decision.

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11.0 SUGGESTIONS: The risk and return will provide a aerial view of the risk that is faced by the selected companies and the return what the investor will earn by investing on the selected companies. RSI and MACD indicator give ideal signals for investor to buy and sell the script. It is better to go for long term investment rather than short term investment.

Because it is less risky and also provide sufficient return. Pharmaceuticals sector is definitely a better arena when compared to the I T for

the investment. Pharmaceutical is a booming sector and is not highly volatile like software sector. Practically, stock market activities are very risky, so a good research of technical

analysis could be done carefully while investing. In case of stock market half knowledge is very dangerous. So, whenever a person

wants to invest in stock market he should take necessary tips from the experts or the technical analysts. Investor always better to relay on two indicator rather than many indicators if

they follow too many indicator there is a chance investors may be mislead in taking decision . Investor have to utilize the softwares provided by stock broking company

because they contain different indicators and information source for taking the appropriate decision.

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12.0 CONCLUSIONS: Technical analysis is an approach which helps the investor to enter in to the market and provide ideal guidance in buying and selling of the different script and reduce the investor losses. In technical analysis, they plot the previous closing prices on the graph, based on the plotted graph analysis is done to know the trends to take decision. It is stated that historical trend always repeat in the market so using of technical analysis will be helpful. By the study, it is found that the pharmaceutical sector is the better sector for the investments. Information technology is more volatile in nature, amongst selected IT companies TCS is the best performer. For the long term investment IT sector is best. There are numerous theories in technical analysis, based on which indicator investor use to identify the signals correctly and reap the benefit. In technical analysis relaying on one indicator is good, and for confirmation of the market signal referring to second indicator is better. If the investor follows more than two indicators they may be mislead in the process of decision making. From the study we can conclude that technical analysis is the power full and reliable source, in providing technical signals for buying and selling of scripts.

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