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A Report of

A Study on
EQUITY RESEARCH USING TECHNICAL ANALYSIS
for

FOURTH DIMENSION WEALTH MANAGEMENT


SERVICES PVT.LTD
Submitted to the

Department of Management Studies


In partial fulfilment of the

Post Graduate Diploma in Management


Under the Guidance of

MR.PRAVEEN MADHAVAN
SCMS COCHIN SCHOOL OF BUSINESS
by

ROHIT AGARWAL ANIL


BATCH 24

FK-2804

SCMS COCHIN SCHOOL OF BUSINESS


SCMS CAMPUS, PRATHAP NAGAR, MUTTOM, ALUVA, COCHIN-106.
September 2016

DECLARATION
I, the undersigned, hereby declare that this project report entitled A
STUDY ON EQUITY RESEARCH USING TECHNICAL
ANALYSIS

FOR

FOURTH

DIMENSION

WEALTH

MANAGEMENT SERVICES PVT.LTD, BANGALORE has


been written and submitted under the guidance of Mr. Praveen
Madhavan and is my original work.

I understand that detection of any copying is liable to be punished in


any way the school deems fit.

ROHIT AGARWAL ANIL

ii

SCMS COCHIN SCHOOL OF BUSINESS


SCMS CAMPUS, PRATHAP NAGAR, MUTTOM, ALUVA, COCHIN-106.

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.

Mr. PRAVEEN MADHAVAN


FACULTY GUIDE

iii

SCMS COCHIN SCHOOL OF BUSINESS


SCMS CAMPUS, PRATHAP NAGAR, MUTTOM, ALUVA, COCHIN-106.

This is to certify that the project work entitled ' A STUDY ON


EQUITY RESEARCH USING TECHNICAL ANALYSIS FOR
FOURTH DIMENION WEALTH MANAGEMENT SERVICES
PVT.LTD,

BANGALORE'

has

been

carried

out

by

ROHIT

AGARWAL ANIL in partial fulfilment of his Post Graduate


Diploma in Management.

Dr. Filomina P. George


DIRECTOR

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.

ROHIT AGARWAL ANIL

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

4.3 Relative Strength Index (RSI) ......................................................................................................... 47


4.4 Money Flow Index (MFI) ............................................................................................................... 55
4.5 Stochastic ........................................................................................................................................ 63
4.6 Returns According to Technical Indicators .................................................................................... 76
CHAPTER-V....................................................................................................................................... 78
FINDING AND CONCLUSIONS ..................................................................................................... 78
5.1 FINDINGS ...................................................................................................................................... 79
5.2 CONCLUSION ............................................................................................................................... 79
CHAPTER VI ..................................................................................................................................... 80
SUGGESTIONS AND RECOMMENDATIONS ............................................................................ 80
Bibliography .......................................................................................................................................... 82

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

Figure 33: Returns according to Money Flow Index ............................................................... 62


Figure 34: Money Stochastic (SBI) ......................................................................................... 64
Figure 35: Stochastic (ICICI Bank) ......................................................................................... 66
Figure 36: Stochastic (HDFC Bank) ........................................................................................ 68
Figure 37: Stochastic (AXIS Bank) ......................................................................................... 70
Figure 38: Stochastic (Bank of Baroda)................................................................................... 72
Figure 39: Stochastic (Bank Nifty) .......................................................................................... 74
Figure 40: Returns according to Stochastic ............................................................................. 75

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.

THEORETICAL BACKGROUND OF STUDY


1.2 DEFINITION
(Murphy, 1999)"Technical analysis is the study of market action, primarily through the use of
charts, for the purpose of forecasting future price trends. In its purest form, technical
analysis considers only the actual price behaviour of the market or instrument, based on the
premise that price reflects all relevant factors before an investor becomes aware of them
through other channels.

1.3 ASSUMPTIONS OF TECHNICAL ANALYSIS


1. The market discounts everything.
2. Price moves in trends.
3. History tends to repeat itself

1. The Market discounts everything


(Murphy, 1999)The first assumption seeks to incorporate all the fundamental, political, macro
and micro economic data as well as the risk component of a stock into the current market
price at any one period. This infers that the market price can be heavily influenced by an
investor's perception of supply and demand, as well as the general broad economic overview
at the time the price is captured. Therefore, it can be assumed that Technical Analysts believe
that the companys fundamentals, along with broader economic factors and market
psychology, all are priced into the stock removing the need to actually consider these factors
separately.
This is one of the key reasons that Technical Analysts do not focus on the underlying data
behind price variation, but rather focus on what the market is valuing the stock at. The price
of the security quoted represents the hopes, fears and inside information received by the
market players. Inside information regarding the issuing of bonus shares, right issues may
support the prices. The loss of earnings and information regarding the forthcoming labour
problem may result in fall in price. These factors may cause a shift in demand and supply,
changing the direction of trends.
2. Price Moves in Trends
Prices can move in one of three directions - up, down or sideways. Once a trend in any of
these directions is in effect, it usually will persist. The market trend is simply the direction of
market prices, in technical analysis, price movements are believed to follow trends. This
means that after a trend has been established, the future price movement is more likely to be
in the same direction unless something happens to change the supply -demand balance. Such
changes will take time and are usually detectable in the action of the market itself, most
technical trading strategies are based on this assumption. It is a concept which is absolutely
essential to the success of technical analysis.
3. History tends to repeat itself
The third assumption in Technical Analysis is that, History tends to repeat itself, mainly in
terms of price movement. (CHATNANI, 2012)Technical analysis includes the psychology of
the market place. Patterns of human behaviours have been identified and categorized for
several hundred years and are found to be repetitive in nature. In other words, (Packer,
2012)market participants tend to provide a consistent reaction to similar market stimuli over
time. The repetitive nature of the market place is illustrated by specific chart patterns, from
which one can forecast the next move for the prices.

1.4 TECHNICAL V/S FUNDAMENTAL ANALYSIS


Technical Analysis takes into account all the information of the company (good or bad) is
reflected in the stock price. While Fundamental Analysis involves evaluating all economic
factors (macro and micro) as well as company specific data (financials, sales, profit, growth,
future plans) to evaluate the long term potential of a stock.
In financial terms, an analysts attempts to measure a companys intrinsic value. In this, it is
easy to determine the investment decision of the company.

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.

1.5 RELEVANCE OF TECHNICAL ANALYSIS

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.

Major Types of Chart

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.

Figure 1: Example for Line chart


Bar Chart
(Rafan, 2011)The Bar chart is one of the most commonly used tools of a technical Analyst. A
chart that has open, high, low, and close data sets in a vertical line in the form of a bar is
called a Bar or OHLC chart. These are the most popular type of chart used in technical
analysis. The visual representation of price activity over a given period of time is used to spot
trends and patterns. The top of the vertical line indicates the highest price a security traded at
during the day, and the bottom represents the lowest price. The closing price is displayed on
the right side of the bar, and the opening price is shown on the left side of the bar. The
following single bar represents one day of trading.

Figure2: Example for Bar Chart

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.

Figure 3: Example for Candlestick chart

1.7 KEY CONCEPTS IN TECHNICAL ANALYSIS SUPPORT AND


RESISTANCE
(binary-secrets.com)In technical analysis, support and resistance is a concept that the
movement of the price of a security will tend to stop and reverse at certain predetermined
price levels. These levels are denoted by multiple touches of price without a breakthrough of
the level.
Support When a stock sees a continuous fall in its price, the price level at which the stock
is held from falling even low is called the support level. This is the level at which the stock
price tend to rise up rather than fall further. (Kristopher, 2014)Support is the point where
buying pressure is more than the selling pressure demand is greater than supply.

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.

Figure 4: Example for Support and Resistance

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.

Figure 5: Example for Upward and Downward Trend


Sideways trend
(Kristopher, 2014)Stocks that trade in a range are in a sideways trend. Stocks trading in a
sideways trend trade between strong levels of support and resistance. When stocks are in a
sideways trend, the buying and selling pressure are almost at equilibrium. This is why the
stocks trade in a range. In a sideways trend, its advisable to buy stock at support levels and
sell at resistance levels.

Figure 6: Example for Sideways Trend

10

1.9 TECHNICAL INDICATORS


(John Murphy's "Charting Made Easy")Technical Indicators are used to predict the future
price levels, or simply the general price direction. Most charting software includes dozens of
different indicators that can be displayed on the charts. Technical Indicator is a mathematical
calculation based on historic price and/or volume information that aims to show probable
financial market direction.
(www.stock-options-made-easy.com)A technical indicator is a series of data points that are
derived by applying a formula to the price data of a security. Price data includes any
combination of the open, high, low or close over a period of time. Some indicators may use
only the closing prices, while others incorporate volume and open interest into their formulas.
The price data is entered into the formula and a data point is produced.
Technical Indicators are fundamental part of Technical Analysis and are typically plotted as a
chart pattern to try to predict the market trend.
Technical indicators, collectively called "technicals", are distinguished by the fact that they
do not analyze any part of the fundamental business, like earnings, revenue and profit
margins. (www.stocktradingguide.com)They are used most extensively by active traders in
the market, as they are designed primarily for analyzing short-term price movements. To a
long-term investor, most technical indicators are of little value, as they do nothing to shed
light on the underlying business. (www.motilaloswal.com)The most effective uses of
technical for a long-term investor are to help identify good entry and exit points for the stock
by analyzing the long-term trend. Many technical indicators have been developed and new
variants continue to be developed by traders with the aim of getting better results.
The following Technical Indicators have been used in this project.
1. Exponential Moving Average (EMA)
2. MACD
3. Relative Strength Index
4. Money Flow Index (MFI)
5. Stochastic

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

Exponential Moving Average


The exponential moving average is a type of moving average that gives more weight to recent
prices

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

Moving Average Convergence Divergence (MACD)


MACD is one of the simplest and most effective momentum indicators available. MACD is a
trend-following momentum indicator that shows the relationship between two moving
averages of prices. This is a very important tool used by experts. MACD can be pronounced
as either Mac-Dee or M-A-C-D. Closing prices are used for these moving averages.
MACD comprises of two lines fast and slow. The fast line is the difference between the 26day Exponential moving average and 12-day Exponential moving average. The slow line,
also called the signal line, is the nine-day moving average.
(www.onlinetradingconcepts.com)When the fast line (i.e. MACD) crosses above the slow
line (9 EMA of MACD), its a buy signal and when the slow line crosses the fast line, its
a sell signal.
Calculation of MACD
There are a number of calculations involved in the creation of the total (MACD) indicator, all
involving the use of exponential moving averages.
Firstly, 12-period EMA of price is to be calculated for the chosen period. Then, 26-period
EMA is calculated. After that, 26-period EMA is to be subtracted from 12-period EMA,
which will be referred as MACD. The last step is to calculate 9-period moving average of the
MACD value which is the signal line.
Smoothing Factor for moving average = 2/ (n+1) where n refers to period.
So, for 12-period moving average, Smoothing Factor = 2/ (12+1) = 15.38.
For 26-period moving average, Smoothing Factor = 2/ (26+1) = 7.41%
and for 9-period moving average Smoothing Factor = 2/ (9+1) = 22.22%
After getting the Smoothing factor, EMA is calculated. MACD value is the difference
between the 12-period EMA and 26-period EMA.
MACD has positive value whenever the 12-period EMA is above the 26-period EMA and a
negative value when the 12-period EMA is below the 26-period EMA.
Positive value here signifies Buy signal / Bullish and negative values signify sell signal
/ Bearish.

15

Lets consider an example of Axis Bank.


On 5-8-2011, 12 period EMA = 256.52; 26 period EMA = 257.71
MACD = (12 EMA value 26 EMA value) i.e. 256.52 - 257.71 = -1.19.
After calculating MACD, 9-period EMA is calculated for the result (MACD value).
If MACD value > 9 EMA, then the trend that exist is considered to be Bullish and if the
MACD value <9 EMA then it is Bearish.
On 5-8-2011, MACD value (-1.19) is greater than the value of 9-period EMA (-2.16), so the
trend is Bullish.

Relative Strength Index (RSI)


RSI compares the magnitude of recent gains to recent losses to see if an asset is oversold or
overbought. RSI is plotted on a scale of 0-100. (Nathan, 2013)Generally, if it is above 70, it is
considered overbought and so one can look to sell it. Similarly an RSI of less than 30
indicates the stock is oversold and can be bought. Though, for the analysis 50 are taken as the
point which defines the bullish or bearish zone. 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 zones or no trade zone. 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. 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.
The default time frame for comparing up periods to down periods is 14.
Calculation of RSI
Average Gain = Total of gains during the past 14 periods/114
Average Loss = Total of Losses during the past 14 periods /114
RS = Average Gain/Average Loss
RSI =100-(100/ (1 + RS))
Watching for divergence between price and the RSI indicator is another means of refining its
application.

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

Calculation of Money Flow


Typical Price = High + Low + Close)/3
Raw Money Flow = Typical Price* Volume
Money Flow Ratio = (14-period Positive Money Flow)/ (14-period Negative Money Flow)
Money Flow Index = 100-100/ (1+Money Flow Ratio)
Lets consider an example of ICICI Bank.
On 24-8- 2012, the High, low and closing price of the bank were Rs.211.94, Rs.190 and
Rs.193.30 respectively. And the volume was 5, 49, and 54,520.
Typical price = 197.78+190.44+190.87=193.03.
Therefore, Raw Money Flow = (54954520)*(193.03) = 10607870995.60
If typical price is higher than the previous one then it is Positive Money flow and if it is lesser
than the previous typical price then it is Negative Money flow.
14-period positive money flow = Sum of all positive money flow of past 14days. .
14-period negative money flow = Sum of all negative money flow of past 14days.
14 period money flow as on 24-8-2012 was 2159.63 and 14-period negative money flow on
the same date was 349.33
Money Flow Ratio = 2159.63/349.33 = 6.18
Money Flow Index = 100-100/ (1+6.18) = 86.08
As the MFI value is above 80, it indicates Overbought level, so it should be sold.
STOCHASTIC
(www.economictimes.indiatimes.com)The term stochastic refers to the point of a current
price in relation to its price range over a period of time. This method attempts to predict price
turning points by comparing the closing price of a security to its price range. Typically, the
Stochastic Oscillator is used for three things

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.

Spot Divergence - Divergence can also be used to formulate buyand-sell signals.


When looking for divergence the %D line is the one most used as it gives clearer
signals due to its smoothed nature. A divergence signal is formed when the %D and
the security move away from one another, signalling a weakening of the trend.

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.

Stochastic is a good way to measure momentum which is important because changes in


momentum precede changes in price. Stochastic is a range bound oscillator consisting of two
line that move between 0 and 100. The first line (known as %k) displays the current close in
relation to user defined periods high/low range. The second line (known as %D) is a simple
moving average of the %K line. The most common choices are a 14 period %K and a 3
period SMA for %D.
If %K rises above %D, thats a buying signal (unless the values are greater than 80) and
if it falls lower than %D, thats a selling signal.
Calculation of Stochastic
Stochastic can be broken down into two parts - %K and %D.
%K = (Current Close Lowest Low) / (Highest high Lowest Low)
Lowest Low = Lowest price of the 14 period previous low price
Highest high = Highest price of the 14 period previous high price
%D = 3 period Simple Moving Average of %K.

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.

2.2 SCOPE OF THE STUDY:


The scope of the study is the analysis of equity stock using Technical Analysis which is being
conducted to know the stock price movement of chosen banks scrip value. A better
understanding of stock market trend will facilitate allocation of financial sources to the most
profitable investment opportunity. The study on fluctuations of Equity market helps in
understanding the behaviour of equity market. Exponential Moving Average indicates the buy
and sell signal to investors. This helps the investors in taking good decisions when investing
in equity shares.

2.3 MANAGERIAL USEFULNESS OF THE STUDY:


It will help in providing guidelines to investors to choose the right stock for investment in
equity shares.

2.4 RESEARCH DESIGN:


The type of research which is conducted for the study is a descriptive research. Anything that
can be observed and counted falls in the category of descriptive research. Equity Research
using Technical Analysis involves gathering hard numbers to describe or measure a
phenomenon.

SAMPLING PLAN:
No sampling plan exists as the data collected is secondary.

21

2.5 METHOD OF DATA COLLECTION:

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

Sources of data iCharts, Money Control and NSE India Website.

PRIMARY DATA:
This study didnt require any collection of primary data.

2.6 DATA ANALYSIS:


To analyze the price movements and results (profit/loss) of the entry and exit signals
generated in the said software for the chosen stocks. Banking Sector is chosen for analysis as
it has got the highest weightage in the Index as compared to other 12 sectors. The share price
movements will be analysed for past five years.
Weightage of Financial Services in NIFTY INDEX is 31.65%, Also, the weightage of chosen
Banks in Index (Bank Nifty) are as follows:-

22

Table 1: Weightage of Banks in Index (Bank Nifty)

Name of the Bank

Weightage in Bank Nifty

STATE BANK OF INDIA

26.16

ICICI BANK LTD.

19.79

HDFC BANK LTD.

16

AXIS BANK LIMITED

9.03

BANK OF BARODA

4.39

2.7 TOOLS USED FOR ANALYSIS:


By using Exponential Moving Average (EMA), Money Flow Index (MFI), Relative Strength
Index (RSI) and other prominent technical indicators like Moving average convergence
divergence (MACD), Stochastic, data is analysed.

2.8 LIMITATIONS OF THE STUDY:

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

Fourth Dimension Wealth Management Services Pvt. Ltd. is an Indian Non-Government


Company. It was registered on 4

th

June 2015 with a view to provide unique Wealth

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.

3.1 SERVICES OFFERED BY THE COMPANY:

Broking- Equity, Derivatives (Futures and Options), Currency Derivatives:


The company offers a trading platform where the clients can seamlessly invest/trade in
all segments of Indian Equity, Futures & Options and Currency Derivatives Market. Its
service includes training the Client to have a basis while taking the trades and
providing necessary infrastructure and platform so that the client can take prudent
decision effortlessly.

Mutual fund distribution:


Mutual funds are diversified, professionally-managed portfolios of securities that are
best suited for any kind of financial goal. It brings in disciplined approach to Investment
and will enhance savings.

Distribution of Fixed Income Securities:


Fixed Income Securities consist of Company fixed deposits, fixed maturity plans, tax
free bonds and debentures are necessary to diversify the risk in portfolio. These products
offer a steady stream of income over a period of time to the investor. The Company
facilitates in these products based on suitability analysis.

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

o Corporate Law Services


o Real Estate

Workshops and Training Programs Outline:


The company also provides an exclusive platform for training and education on Stock
Market and Personal Finance to help individuals develop a well defined, wise and
structured approach in making trading and investment decisions. They also offer clients
the combination of technical and financial tools with customizable strategies best suited
for Indian Investors.

3.2 MILESTONE:In the process of SEBI Registration for Investment Advisory Company

3.3 SWOT ANALYSIS:

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

The Analysis is done in such a way as if an Individual say X

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:-

Name of the Bank

Weightage in Bank Nifty

STATE BANK OF INDIA

26.16

ICICI BANK LTD.

19.79

HDFC BANK LTD.

16

AXIS BANK LIMITED

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.

Profit/Loss = Entry price Exit price


Total Profit/Loss = Profit/Loss*No. of shares purchased
The following are the Total Profit earned or loss incurred if purchase and sale of
shares of banks were done according to various Indicators.
28

4.1 Exponential Moving Average


Table 2: Exponential Moving Average (SBI)

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

Figure 7: Exponential Moving Average (SBI)


X would have earned a profit of Rs.37, 938.17 i.e. 6.64% p.a., if he had invested in
SBI according to EMA indicator.
The above chart shows State Bank of India (SBI) with 21-week Exponential moving
average. The direction of the moving average conveys important information about
prices. A rising moving average shows that prices are generally increasing. A falling
moving average indicates that prices, on average, are falling. A rising long-term
moving average reflects a long-term uptrend. A falling long-term moving average
reflects a long-term downtrend. When the Closing price is higher than the EMA, it is
bullish and when it is lower than the EMA, it is bearish. Here, in the chart red line
indicates the EMA. So, when the red line passes the closing price from below it gives
a buy signal. On 20-1-2012, we can see the red line passes the price of the scrip from
below which indicates Bullish/ buy signal. On 4-5-2012, the red line (EMA) passes
above the scrip price indicating Bearish/ sell signal. The highest price SBI touched
in the five years (period from 5-8-2011-29-7-2016) was Rs.306 on 13-2-2015 and
lowest was Rs.164.97 on 7-3-2014.Now, SBI is showing Bullish trend as the EMA
(red line) is below the scrip price. So, there is possibility to gain good gain if invested
in SBI now.

30

Table 3: Exponential Moving Average (ICICI Bank)

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

Figure 8: Exponential Moving Average (ICICI Bank)

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

Table 4: Exponential Moving Average (HDFC Bank)

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

Figure 9: Exponential Moving Average (HDFC Bank)

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

Figure 10: Exponential Moving Average (AXIS Bank)


34

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.

Table 6: Exponential Moving Average (Bank of Baroda)


EMA

BANK OF BARODA Bank

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

Figure 11: Exponential Moving Average (Bank of Baroda)

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

Table 7: Exponential Moving Average (Bank Nifty)

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

Figure 12: Exponential Moving Average (Bank Nifty)

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

ICICI Bank HDFC Bank Axis Bank

Bankof
Baroda

Bank Index

Figure 13: Returns according to Exponential Moving Average


If X would have invested in any of these shares according to EMA indicator, the
returns he would have earned is clear from the above. BANK NIFTY would have
given the highest return followed by Axis Bank, HDFC Bank, SBI Bank and ICICI
Bank respectively. But, Bank of Baroda would have incurred him loss resulting in
eradication of capital. Also, it is the most volatile scrip where shares prices are
fluctuating heavily. Its better not to invest in such shares. Bank Index would have
been the best choice according to EMA indicator.

38

4.2 Moving Average Convergence Divergence (MACD)


Table 8: Moving Average Convergence Divergence (SBI)

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
.

Figure 14: Moving Average Convergence Divergence (SBI)

39

According to MACD indicator, X would have made a profit of Rs.11749.47


(2.25% p.a. return) in SBI.
MACD is a trend-following momentum indicator that shows the relationship between
two moving averages of prices. When the fast line (i.e. MACD) crosses above the
slow line (9 EMA of MACD), its a buy signal and when the slow line crosses the
fast line, its a sell signal. At the end of June 2016, we can see the fast line (red line)
is above the (9 EMA of MACD) violet line, it indicates buy signal. There is high
probability that the share price may go up. It is showing bullish trend. When red line
is above violet line, we must make sure that both the lines are in bullish zone i.e.
above 0. If both the lines are below 0, then it may not be the right time to buy as it
would be in bearish zone.
Table 9: Moving Average Convergence Divergence

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

Figure 15: Exponential Moving Average (ICICI Bank)


Rs.14621.50 (2.77% p.a.) would have been the return X would have got if invested in
ICICI Bank according to MACD.
At the end of June 2016, we can see MACD giving buy signal. It is buy signal
because, both fast line and slow line are above 0, also the fast line is above the slow
line. Once, the slow line (violet line) crosses the fast line (red line), its a sell
signal.
Table 10: Moving Average Convergence Divergence (HDFC Bank)

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

Figure 16: Moving Average Convergence Divergence (HDFC Bank)


Rs.52, 544.39 would have been the profit i.e. 8.81% p.a., if invested in HDFC Bank
according to MACD. HDFC Bank is in bullish trend. There is probability that the
share price of this stock may go up according to MACD. This is because; the MACD
fast line (red line) is above the slow line (violet line) and also they are above the 0
level. There is high probability that the Investment in this share would give good
return if invested at this moment. (i.e. after June 2016).
Table 11: Moving Average Convergence Divergence (AXIS Bank)

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

Figure 17: Moving Average Convergence Divergence (AXIS BANK)


If Axis Bank was chosen for Investment, then he would have made a profit of Rs.89,
341 i.e. 13.62% p.a. return. As we can see from the chart that the Axis Bank is
showing Bullish trend according to MACD. At the end of June 2016, the fast line
(red line) is above the slow line (violet line) and also they are in the bullish zone
indicating good buy signal to get goof return. There is high probability that the share
price of this stock i.e. Axis Bank will go up.
Table 12: Moving Average Convergence Divergence (Bank of Baroda)

MACD

BANK OF BARODA Bank

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

Figure 18: Moving Average Convergence Divergence (Bank of Baroda)


Bank of Baroda would have been the wrong choice of Investment as it could have
led him to incur a loss of Rs.24528.31 (-5.47% p.a.) according to MACD indicator.
Table 13: Moving Average Convergence Divergence (Bank Nifty)

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

Figure 19: Returns according to MACD

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

4.3 Relative Strength Index (RSI)


Table 14: Relative Strength Index (SBI)

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

Figure 20: Relative Strength Index (SBI)


X would have made a profit of Rs.8194.68 i.e. 1.59% if invested in SBI according
to RSI.
Generally, movements above 70 are interpreted as indicating overbought conditions;
conversely, movements under 30 reflect oversold conditions.
47

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

Figure 21: Relative Strength Index (ICICI Bank)


In ICICI Bank also, X would have made a profit of Rs.55530.02 i.e. (9.24% p.a.)
according to RSI. Here in the chart, when the RSI moves above 50, it is considered
buy signal and when it moves below 50, sell signal is considered. It reached
highest high of 5years at Rs.301.04 on 17-10-2015 and lowest at Rs.168.49 on 20-12012.
Table 16: Relative Strength Index (HDFC Bank)

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

Figure 22: Relative Strength Index (HDFC Bank)


Rs.56575.83 would have been the profit if invested in HDFC Bank i.e. 9.38% p.a.
return according to RSI.
HDFC Bank is moving in upward trend i.e., bullish. Generally, RSI indicates
overbought signal, when RSI moves above the reference level 70 indicating the time
to sell. Oversold signal is when the RSI moves below the reference level 30. RSI
indicator is also giving good buy and sell signal for HDFC Bank.
Table 17: Relative Strength Index (AXIS Bank)

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

Figure 23: Relative Strength Index (AXIS Bank)


In Axis Bank, Rs.123905.39 (17.49% p.a. return) would have been the profit
according to RSI. Axis Bank is in Bullish trend as the RSI is above 50 reference level.
The highest high price it touched was at Rs.602.5 on 17-7-2015. We can see from the
above chart, during the beginning of 2015, RSI moved above the reference level 70,
indicating overbought i.e. time to sell. When the RSI goes below the reference level
30, it is Oversold i.e. it indicates buy signal.
Table 18: Relative Strength Index (Bank of Baroda)

RSI

BANK OF BARODA Bank

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

Figure 24: Relative Strength Index (Bank of Baroda)


X would have made a loss of Rs.2231 (i.e. -0.45 p.a.) in case of Bank of Baroda
according to RSI. As its clear from the chart above, that this scrip is highly volatile. It
is very risky in nature. The buy signals were generated when the RSI moves above 50
reference level and sell signals were generated when it moves below the 50
reference level. Generally, when RSI is above 70, it is considered as overbought
indicating sell signal and its buy signal when it moves below 30 which is
considered as oversold. On 21-2-2014, the scrip has touched the lowest price being
at Rs.103.60 and highest on 7-8-2015 at Rs.185.
Table 19: Relative Strength Index (Bank Nifty)

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

Figure 25: Relative Strength Index (Bank Nifty)


Here, in Bank Index X would have made a profit of Rs.381337.50 i.e. 36.93% p.a.
return according to RSI.
BANK NIFTY is in Bullish trend as the RSI is moving above the reference level 50.
It is good to buy shares of this index now (i.e. after 27 June 2016). It is performing
well and also it is less volatile when compared to Bank of Baroda and SBI.

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

Figure 26: Returns according to Relative Strength Index


According to RSI also, Bank Index has performed well and it would have given him
the maximum return if X would have invested 5years 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. So,
according to RSI, BANK Nifty is the best to invest for higher returns.

54

4.4 Money Flow Index (MFI)


Table 20: Money Flow Index (SBI)

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

Figure 27: Money Flow Index(SBI)

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

Table 21: Money Flow Index (ICICI Bank)

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

Figure 28: Money Flow Index (ICICI Bank)


Rs.33773.79 would have been the profit i.e. 5.99% p.a. if invested in ICICI according
to MFI. It was on 20-4-2012, that the share price of ICICI has reached the lowest low
at Rs.172.21. As we can see the MFI moving above the reference level 50, indicating
bullish trend i.e. buy signal at the end of the June 2016. Its a good time to buy
shares at this price as it is supported by MFI. The shares should be sold once; we see
MFI falls below 50 reference level.
57

Table 22: Money Flow Index (HDFC Bank)

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

Figure 29: Money Flow Index (HDFC Bank)


In HDFC Bank, X would have made a profit of Rs.81308.91 i.e. 12.64% p.a. return
according to MFI. HDFC Bank is in Bullish trend. And its one of the non-volatile
share, where prices arent fluctuating as it was happening with SBI, Bank of Baroda.
Its one of the best share to invest to get good return. The highest high price it has
touched was at Rs.1246 on 29-7-2016. But, now i.e. at the end of June 2016, MFI is
moving above the reference level 80 i.e. its shares are overbought, indicating time to
sell. There is probability that the share price may fall.
58

Table 23: Money Flow Index (AXIS Bank)

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

Figure 30: Money Flow Index (AXIS Bank)


Rs.84085 (12.98% p.a.) would have been the profit if in invested in Axis Bank. It
was on 22-5-2015, the share price has touched the highest high i.e. at Rs.568.65. We
can see on the same date, MFI has moved below the reference level 50 indicating,
time to sell. Just after the sell signal given by MFI, the share price has gone down.
Now, at the end of June 2016, the share price is moving in upward trend, also the MFI
reference level is above 50. Once, MFI goes below the 50, it is better to sell as it may
be seen as a bearish trend according to MFI indicator.

59

Table 24: Money Flow Index (Bank of Baroda)

MFI

BANK OF BARODA Bank

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

Figure 31: Money Flow Index (Bank of Baroda)


Bank of Baroda would have given him a profit of Rs.10558.34 (i.e. 2.03% p.a.)
according to MFI.
On 27-11-2015, it has touched a highest high at Rs.179.60. As its clear from the
chart, that the Bank of Baroda is highly volatile. The share prices are fluctuating
heavily. Its very risky to invest in such shares. It would be better to prefer other
stocks for investment for better and safe returns.
60

Table 25: Money Flow Index (Bank Nifty)

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

Figure 32: Money Flow Index (Bank Nifty)


According to MFI, Bank Nifty would have given a return of Rs.285090 i.e. 30.95%
p.a.
Bank Nifty has touched Rs.18953.15 which is the highest high during the period 5-82011 to 29-7-2016. Bank Nifty is in bullish trend. But at the end of July 2016, we can
see MFI moving above the reference level 80 i.e. overbought indicating sell signal.
There is a high chance that the share price may fall.
61

MFI
350000

300000

250000

200000
MFI
150000

100000

50000

0
SBI

ICICI

HDFC

Axis

BankofBa

Bank Index

Figure 33: Returns according to Money Flow Index


If X would have invested in any of these shares according to MFI indicator, the
returns he would have earned is clear from the above chart. BANK NIFTY would
have given the highest return followed by Axis Bank, HDFC Bank, SBI Bank, ICICI
Bank and Bank of Baroda respectively.

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

Figure 34: Money Stochastic (SBI)


X would have made a profit of Rs.52, 218.17 (i.e. 8.77% p.a.) if invested in SBI
according to Stochastic.
As we can see in the chart, two lines red and violet. Red line is the stochastic and
blue line is the signal. If %K rises above %D, thats a buying signal (unless the
values are greater than 80) and if it falls lower than %D, thats a selling signal.
At the end of June 2016, we can see the %D is above the reference level 80 indicating
Overbought i.e. its time to sell. There is high probability that the share price may fall.
So, this is not the right time to invest.

64

Table 27: Stochastic (ICICI Bank)

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

Figure 35: Stochastic (ICICI Bank)


If X would have invested the whole amount in ICICI according to stochastic, he
would have incurred a loss of Rs.7143.38 (i.e. 1.47% loss).
Now i.e. at the end of June 2016, the stochastic line is above 80, indicating
overbought. There is a high probability that the share price may fall. So, its not the
right time to invest in this share.

66

Table 28: Stochastic (HDFC Bank)

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

Figure 36: Stochastic (HDFC Bank)


In HDFC Bank, Rs.36, 442.41 i.e. (6.41% p.a. return) would have been the profit if
invested according to Stochastic.
HDFC Bank is performing well. Its in bullish trend. Also, its one of the non-volatile
shares that have been chosen for analysis. As its clear from the chart, Stochastic
signal is above 80 at the end of June 2016. This means that, the shares have been
overbought and there is high probability that the share price may fall. So, its time to
sell shares if we are holding any.

68

Table 29: Stochastic (AXIS Bank)

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

Figure 37: Stochastic (AXIS Bank)


Axis Bank would have given a profit of Rs.1, 07,706.97 (i.e. 15.74% p.a. return)
according to Stochastic.
When the red line is above the violet line, it is buy signal unless it exceeds 80. It
indicates sell signal, if %D is below %K. Also, when the Stochastic is below the
reference level 30, it indicates oversold which means it gives buy signal.At the end
of June 2016, we can see the signal is above 80 indicating overbought. If we buy
shares at this moment, then there is high probability that we end up making loss. So,
its better to wait for right moment i.e. to get another buy signal from the Stochastic
Indicator.

70

Table 30: Stochastic (Bank of Baroda)

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

Figure 38: Stochastic (Bank of Baroda)


Rs.52, 603.93 i.e.8.82% p.a. would have been the profit in Bank of Baroda
according to Stochastic.
Though other indicators have given negative returns/loss for Bank of Baroda,
Stochastic buy and sell signals have proved to get better returns. At the end of
June 2016, the red line is below the violet line indicating bearish trend i.e. the stock
prices may fall. Its not the right time to invest in this share at this moment. Buy
signals are seen when red line is above the violet line i.e. when %D is above the %K
unless it exceeds 80.

72

Table 31: Stochastic (Bank Nifty)

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

Figure 39: Stochastic (Bank Nifty)


X would have incurred a loss of Rs.2, 912.50 (-.59% p.a.) if he would have
purchased 50 shares of Bank Index according to Stochastic.
All the indicators except Stochastic has provided better buy and sell signals for Bank
Nifty. We can see from the chart that, though Stochastic (red line) is above the violet
line, its not a buy signal because it has moved above the reference level 80. Thus, it
indicates bearish trend. The share price of this Index may fall. This is not the right
time to invest in this share.

74

STOCHASTIC
120000
100000
80000
60000
STOCHASTIC
40000
20000
0
SBI

ICICI

HDFC

Axis

BankofBa Bank Index

-20000

Figure 40: Returns according to Stochastic

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

4.6 Returns According to Technical Indicators


Table 32: Returns according to Technical Indicators.

Returns according to Technical Indicators


Technical Indicators

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

STOCHASTIC Axis Bank

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.

ICICI Bank is highly volatile. Though it seems bullish now according to


various indicators, the sell signal may be generated very soon. It is also risky
in nature.

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

Technical Analysis is a scientific method of stock analysis, serves as a roadmap for


Investors and traders alike to forecast the probable direction of the stock market based
on historical data of 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. This method attempts to measure the psychology of the crowds
within the cycle of greed and fear. Technical Analysis is the process of analysing
historical prices in an effort to determine the probable future prices.

79

CHAPTER VI
SUGGESTIONS AND RECOMMENDATIONS

80

The following are the suggestions and recommendation:

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.

It is also suggested to stick to the fundamental of investing. Hence do all possible


diligence on the work of company, its future growth potential, growth drivers, and
personal belief on the potential of growth. Going by this fundamental shall
increase the chance of earnings from a stock.

81

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82