AN OVERVIEW OF TECHNICAL ANALYSIS Concept of Technical analysis : It is the process of identifying trend reversal at an earlier stage to formulate the

buying and selling strategy. With the help of several indictors they analyze the relationship between price- volume and supply demand for the overall market and the individual stock. Volume is favorable on the upswing it means the number of share traded is greater than before and on the downside the number of shares traded dwindles. If it is the other way round, trend reversal can be expected. Technical analysis is mainly concerned with the study of historical past price movements of the stocks and on its volume of trade in the market to predict the future behavior of the stocks. However, it does not consider any fundamental factors of the company like earnings, growth rates, dividends, financial ratios etc. The rational behind technical analysis is that the share price behavior repeats itself over a time and technical analysts attempt to derive methods to predict these repetitions. The basic concept behind technical analysis is that prices move in trends or waves, which may be upward or downward and the present trends are influenced by past trends and the projection of future trends is possible by an analysis of past price trends. Hence, technical analysts use this trend as an important tool for security analysis and mainly concentrate on trend movements. Technical analysis is applicable to all stocks, indices, commodities, futures or for any other tradable instruments where the prices are influenced by the forces of demand and supply. Price refers to any combination of the open, high, low, close for a given security over a specific period. The period can be based on intraday (1-minute, 5minutes, 10-minutes, 15-minutes, 30-minut

5.2 SUGGESTIONS Technical analysis will improve the investment decision.

required for technical analysis is free available as compared to fundamental analysis

from maximum investment

o select stock to buy in new industries after making careful study prospects and charts of the stock

both fundamental and technical analysis will reduce errors in forecasting future prices

Executive Summary Prices of securities in the stock market fluctuate daily on account of continuous buying and selling. Stock prices move in trends and cycles and are never stable. An investor in the stock market is interested in buying securities at a low price and selling them at a high price so as to get a good return on his investment. Technical Analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as fast prices and volume. Technical analysis does not give the intrinsic value of a security, but instead it includes charts and other tools to identify patterns that can suggest future activity. The rationale behind the technical analysis is that the share price behavior repeats itself over time and analysts attempt to derive methods to predict this repetition. A technical analyst looks at the past share price data to see if he can establish any patterns. He then looks at the current price data to see if any of the established patterns are applicable and if so, extrapolations can be made to predict the future price movements. Although past share prices are the major data used by technical analysts, other statistics such as volume of trading and stock market indices are also utilized to some extent. Technical analysis studies supply and demand in a market in an attempt to determine what direction or trend will continue in the future. In other words, technical analysis attempts to understand the emotions in the market by studying the market itself as opposed to its components.

FUNDAMENTAL TECHNICALANALYSIS ANALYSIS Technical analysis :-

Technical analysis refers to the study of market generated data like prices & volume todetermine the future direction of prices movements. Technical analysis mainly seeks to predict the short term price travels. It is important criteria for selecting the company to invest. It also provides the base for decision-making in investment. Theone of the most frequently used yardstick to check & analyze underlying price progress. For thatmatter a verity of tools was consider. This Technical analysis is helpful to general investor inmany ways. It provides important & vital information regarding the current price position of thecompany.Technical analysis involves the use of various methods for charting, calculating & interpretinggraph & chart to assess the performances & status of the price. It is the tool of financial analysis,which not only studies but also reflecting the numerical & graphical relationship between theimportant financial factors.The focus of technical analysis is mainly on the internal market data, i.e. prices & volume data. Itappeals mainly to short term traders. It is the oldest approach to equity investment dating back tothe late 19th century.It uses charts and computer programs to study the stocks trading volume and price movementsin the hope of identifying a trend. In fact the decision made on the basis of technical analysis isdone only after inferring a trend and judging the future movement of the stock on the basis of thetrend. Technical Analysis assumes that the market is efficient and the price has already taken intoconsideration the other factors related to the company and the industry. It is because of thisassumption that many think technical analysis is a tool, which is effective for short-terminvesting. History of Technical Analysis Technical Analysis as a tool of investment for the average investor thrived in the late nineteenth century when Charles Dow, then editor of the Wall Street Journal, proposed the Dow theory. He recognized that the movement is caused by the action/reaction of the people dealing in stocks rather than the news in itself. Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. Just as there are many investment styles on the fundamental side, there are also many different types of technical traders. Some rely on chart patterns; others use technical indicators and oscillators, and most use some combination of the two. In any case, technical analysts' exclusive use of historical price and volume data is what separates them from their fundamental counterparts. Unlike fundamental analysts, technical analysts don't care whether a stock is undervalued the only thing that matters is a security's past trading data and what information this data can provide about where the Security might move in the future. Basic premises of technical analysis :1.Market prices are determined by the interaction of supply & demand forces. 2.Supply & demand are influenced by variety of supply & demand affiliated factors bothrational & irrational. 3.These include fundamental factors as well as psychological factors.

4.Barring minor deviations stock prices tend to move in fairly persistent trends. 5.Shifts in demand & supply bring about change in trends. 6.This shift s can be detected with the help of charts of manual & computerized action, becauseof the persistence of trends & patterns analysis of past market data can be used to predict future prices behaviors.

Drawbacks / limitations of technical analysis: 1. Technical analysis does not able to explain the rezones behind the employment or selection of specific tool of Technical analysis.2. The technical analysis failed to signal an uptrend or downtrend in time.

3. The technical analysis must be a self defeating proposition. As more & more people use,employ it the value of such analysis trends to reduce. Why we use TECHNICAL ANALYSIS? 1) Technical analysis provides information on the best entry and exit points for a trade. 2) On a chart, the trader can see where momentum is rising, a trend is forming, a price is dippingor other events are developing that show the best entry point and time for the most profitabletrade. With the constant movement of various currencies against each other in the Forex market,most traders will focus on using technical indicators to find and place their trades. Is TECHNICAL ANALYSIS difficult? 1) Technical analysis is not difficult, but it requires studying different types of charts such as the hourly or daily charts, knowing which technical indicators to use and how to use them. 2) Computers and the Internet have made this process much easier. Most brokers provide basiccharts and technical indicators for free or at a very low cost. 3) One way to avoid getting frustrated by all the lines, colors, and graphics is to focus on usingonly a few indicators that will provide you with the information needed. Try not to clutter your chart with too much information. Fundamental vs. Technical Analysis Technical analysis and fundamental analysis are the two main schools of thought in the financialmarkets. As we've mentioned, technical analysis looks at the price movement of a security anduses this data to predict its future price movements. Fundamental analysis, on the other hand,looks at economic factors, known as fundamentals.Fundamental analysis takes a relatively long-term

approach to analyzing the market compared totechnical analysis. While technical analysis can be used on a timeframe of weeks, days or evenminutes, fundamental analysis often looks at data over a number of years. The future can be found in the past If prices are based on investor expectations, then knowing what a security should sell for (i.e.,fundamental analysis) becomes less important than knowing what other investors expect it to sellfor. That's not to say that knowing what a security should sell for isn't important--it is. But thereis usually a fairly strong consensus of a stock's future earnings that the average investor cannotdisprove.Technical analysis is the process of analyzing a security's historical prices in an effort todetermine probable future prices. This is done by comparing current price action (i.e., currentexpectations) with comparable historical price action to predict a reasonable outcome. Thedevout technician might define this process as the fact that history repeats itself while otherswould suffice to say that we should learn from the past. Usually the following tools & instruments are used to do the technical analysis: Price Fields Technical analysis is based almost entirely on the analysis of price and volume. The fields whichdefine a security's price and volume are explained below. Open - This is the price of the first trade for the period (e.g., the first trade of the day). When analyzing daily data, the Open is especially important as it is the consensus price after all interested parties were able to "sleep on it." High - This is the highest price that the security traded during the period. It is the point at whichthere were more sellers than buyers (i.e., there are always sellers willing to sell at higher prices, but the High represents the highest price buyers were willing to pay). Low - This is the lowest price that the security traded during the period. It is the point at whichthere were more buyers than sellers (i.e., there are always buyers willing to buy at lower prices, but the Low represents the lowest price sellers were willing to accept). WHATS THIS EQUITY ANALYSIS? Professional investor will make more money & less loss than, who let their heart rule. Their head eliminate all emotions for decision making. Be ruthless & calculating, you are out to makemoney. Decision should be based on actual movement of share price measured both in money & percentage

term & nothing else. Greed must be avoided patience may be a virtue, but impatiencecan frequently be profitable. In Equity Analysis anticipated growth, calculations are based onconsidered FACTS & not on HOPE. Equity analysis is basically a combination of twoIndependent analyses, namely fundamental analysis & Technical analysis. The subject of Equity analysis, i.e. the attempt to determine future share price movement &its reliability by references to historical data is a vast one, covering many aspect from thecalculating various FINANCIAL RATIOS , plotting of CHARTS to extremely sophisticatedindicators.A general investor can apply the principles by using the simplest of tools: pocket calculator, pencil, ruler, chart paper & your cautious mind, watchful attention. It should be pointed out that,this equity analysis does not discuss how to buy & sell shares, but does discuss a method whichenables the investor to arrive at buying & selling decision. The financial analysts always needyardsticks to evaluate the efficiency & performances of any business unit at the time of investment. Fundamental analysis is useful in long term investment decision. In Fundamentalanalysis company goodwill, its performances, liquidity, leverage, turnover, profitability &financial health was checked & analysis with the help of ratio analysis for the purpose of longterm successful investment.Technical analysis refers to the study of market generated data like prices & volume todetermine the future direction of prices movements. Technical analysis mainly seeks to predictthe short term price travels.The focus of technical analysis is mainly on the internal market data, i.e. prices & volumedata. It appeals mainly to short term traders. It is the oldest approach to equity investment dating back to the late 19th century.

Assumptions for the Equity Analysis 1.) Works only in normal share-market conditions with great reliability, it also Works inabnormal sharemarket conditions, but with low reliability. 2.) Equity analysis is purely based on the INVESTMENT PHILOSOPHY, so the investmentobject has vital importance associated to return along with risk .3.) Cash management gets the magnitude role, because the scenario of equity analysis isrevolving around the term money. 4.) Portfolio management, risk management was up to the investor s knowledge.

5.) Capital market trend is always a friend, whether it is short run or long run. 6.) You are buying stock & not companies, so don t be curious or panic to do post-mortem of companies performances. 7.) History repeats: investors & speculators react the same way to the same types of eventshomogeneously. 8.) Capital market has a typical market psychology along with other issues like; perceptions, thecrowd the individual, tradition s & trust. 9.) An individual perceptions about the investment return & associated risk may differ fromindividual to individual. 10.) Although the equity analysis is art as well as sciences so, it also has some exceptions.