TRADING OF THE SECURITIES IN INDIAN STOCK MARKET A BRIEF ANALYSIS

Submitted by HEMANTA BARUAH MASTER OF BUSINESS ECONOMICS (MBE) GAUHATI UNIVERSITY ROLL NO-30

In professional courses like MBE (Master of Business Economics), we are equipped with the knowledge of Business Operation. Since our course is Finance Specialized so it is very essential to understand the real business situation of the corporate world and professional way of working. Therefore to reinforce this strong theoretical base by practical knowledge, students are sent to repute Business Organization to undergo 60 days of summer training to get acquainted with the Business World. The students are assigned certain projects and are asked to prepare a project report on it. I was assigned to work at The Gauhati Stock Exchange Ltd. This is only stock exchange in the North East with its registered office at Guwahati. I worked with the organization on a project titled Trading of securities in Indian Stock MarketA Brief Analysis. In this project, the concept of trading and market share price fluctuation in some large, medium and small companies are analyzed. The various information in The Gauhati Stock Exchange w.r.t. securities market with other stock exchanges of India has been studied during the short period.

RESEARCH DESIGN
Research Objectives Scope of Research Sources of Data Research Methodology Limitations of the study

Research Objectives
The concept of trading of securities is very vast, it is impossible to research all area, so, some selected objectives are set to convenient my analysis. My Research objectives are To observe how the share price of a company fluctuates and changes revenue, To see how different companies perform and earn different returns, with the investment of money in different companies, To do technical analysis of a company. To know about the settlement process very shortly. To know the basic idea of trading in stock market

Scope of Research In this study, trading activities and the price fluctuation of the companies are analysed. The basic concept, role, advantages, disadvantages and demutualisation of stock exchange, the technical analysis of a daily traded company, settlement process and SEBI Act are included also.

Sources of Research Both primary and secondary data have been used in the study to understand about the stock exchange (especially Gauhati Stock Exchange) and the trading system. Primary data are collected from the members of the Gauhati Stock Exchange personally. The secondary data are collected from various sources viz. BSEs website and Books, GSEs Annual Report and documents, reference Book etc.

Limitations of the study Since GSE is not having any regional trading as per the SEBI Guideline, we didnt get primary data on trading process so a large portion of secondary data is used in my project. There is a greater possibility of less accuracy and inappropriateness of the secondary data which may default the project. Moreover, the time is very limited compare with my topic so many concepts are excluded and studied briefly. .

Research Methodology The research method used for this project is both descriptive and quantitative by nature.. Here, information has been gathered or tabulated in a suitable order from the related sources to analyze them.

INTRODUCTION
The stock exchanges constitute an organised market where securities already issued by the central and state government, public bodies, joint stock companies and mutual companies are traded .It is a centralised market for buying and selling stocks where price is determined through the operation of demand and supply for the transaction of orders by members brokers for individual and institutional investor. It is the single most important institution in the secondary market which provides a platform to the investors for buying and selling through its members. The members may act either as agent for their customers, or as principals for their own accounts. It also facilitates for the issue and redemption of securities and other financial instruments including the payment of income and dividend. The trade of an exchange is only by members and stock brokers who have a seat on the exchange. The buyers and sellers are connected by only computers over a telecommunications network.

1.2 ROLES/ RELEAVANCE OF STOCK EXCHANGES

The stock exchanges have multiple roles in the economy, these may be included as following: a. b. c. d. e. f. g. h. Raising capital for business. Mobilizing savings for investment Facilitating company growth Redistribution of wealth Corporate governance Creating investment opportunities for small investors Government capital-raising for development projects Barometer of the economy

LIST OF STOCK EXCHANGES

There are 23 stock Exchanges available in India. These are as follows Bombay stock Exchange( BSE ) National stock Exchange( NSE) Regional stock Exchange Ahmadabad , Bangalore , Bhubaneswar , Calcutta , Cochin, Delhi ,Gauhati , Hyderabad , Inter connected , Jaipur , Ludhiana, Madhya Pradesh, Madras , Meerut, Mangalore , Over The Counter(OTC) , Pune , Saurashtra Kutch , Uttar Pradesh and Vadodara stock exchange

BOMBAY STOCK EXCHANGE (BSE)

BSE is the most oldest stock Exchange in India which was established in 1875 and it was known as The Native Share and Stock Brokers Association at that period.BSE is the first stock exchange in the country which obtained permanent recognition (in 1956)from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE s pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. It migrated from the open outcry system to an online screen-based order driven trading system in 1995 , in 1986, came out a Stock Index-SENSEX- that subsequently became the barometer of the Indian stock market. BSE On-line Trading (BOLT) facilitates an investor to on-line screen based trading of securities in computers. BOLT is currently operating in 25,000 Trader Workstations located across over 359 cities in India. BOLT helps in improving trading volumes, significantly reducing the spread between buy and sale orders, better trading in odd lot shares, fixed income instruments, and dealing in the renunciation of rights shares..

NATIONAL STOCK EXCHANGE (NSE)

NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and The National Stock Exchange of India Limited (NSE), is a Mumbai-based stock exchange. It is the largest stock exchange in India in terms of daily turnover and number of trades, for both equities and derivative trading. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India and between them are responsible for the vast majority of share transactions. The NSE's key index is the S&P CNX Nifty, known as the Nifty, an index of fifty major stocks weighted by market capitalisation. The NSE is the third largest Stock Exchange in the world in terms of the number of trades in equities. According to recommendation of Pherwani committee, National Stock Exchange was established in 1992, started functioning from June 1994.The purpose was to establish a nationwide trading facility for equities, debt instruments and to provide fair, efficient and transparent securities to investors through an electronic trading system by creating a world class stock exchange

Sensex & the Nifty

The Sensex is an indicator of all the major companies of the BSE. On the other hand, The Nifty is an indicator of all the major companies of the NSE. If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells that the stock price of most of the major stocks on the BSE have gone down. Just like the Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE. The BSE is the Bombay Stock Exchange and the NSE is the National Stock Exchange. The BSE is situated at Bombay and the NSE is situated at Delhi.

OVER THE COUNTER EXCHANGE OF INDIA (OTCEI)

OTCEI was set up as a stock exchange providing small and medium sized companies in the means to generate capital. It was the resulted for the much functional inefficiency of the stock exchanges such as absence of liquidity, lack of transparency, undue delay in settlement of transaction, fraudulent practices etc. With the objective of providing more efficient services to the investors, the countrys first electronic stock exchange was set up in 1992 which facilitates ringless and scripless trading. It was sponsored by the countrys premier financial institutions such as UTI, ICICI, IDBI, SBI Capital Markets, IFCI, GIC and its subsidiaries and canbank financial services.

INTERCONNECTED STOCK EXCHANGE OF INDIA

To evolve an interconnected market system by pooling the resources of the regional stock exchanges (excluding Calcutta, Delhi, Ahmadabad, Pune and Ludhiana joined together and promoted a new organisation called Inter Connected stock exchange of India Ltd.in 1998. The ISE was recognised as a stock exchange by SEBI and it commenced trading in February, 99. The first objectives of setting up ISE was to optimally utilise the already existing infrastructure and other resources of participating stock exchanges which were until now underutilised the ISE aims to provide cost effective trading linkage to all the members of the participating exchange on a national level. This will help to widen the market for the securities listed on the regional stock exchanges. The trading settlement and funds transfer operation of the ISE are completely automated.

DEMUTUALISATION OF STOCK EXCHANGE

Demutualisation is the process by which any number owned organisation can become a shareholder owned company. Such a company could either be listed on a stock exchange or be closely held by its shareholders. Stock exchanges in India exempted from all taxes. Through Demutualisation, a stock exchange becomes a corporate entity, changing from a nonprofit making company to a profit making and taxpaying company.

ADVANTAGES OF INDIAN STOCK EXCHANGES

It provides a fair market place for purchase and sale of securities i.e. shares, bonds, debentures etc. It provides liquidity to the investment in securities i.e. it gives the investors a place to liquidate their holdings. It helps in the valuation of securities by providing market quotations of the prices of securities It protects the investors right and regulates the markets. Full information about the companies are available here. It provides the linkage between the savings in the household sector and the investments in the corporate sector.

DISADVANTAGES OF INDIAN STOCK EXCHANGE

Uncertainty of execution prices Uncertain delivery and settlement periods. Front running , trading ahead of a client based on knowledge of the client order Lack of transparency High transaction costs Absence of risk management Systematic failure of the entire market and market closures due to scams Club mentality of brokers Kerb tradingprivate off market deals.

Gauhati Stock Exchange Ltd (GSE)

The Gauhati Stock Exchange Ltd (GSE) is located in Guwahati, Assam. It is incorporated on 29th Nov, 1983 as the 13th stock exchange of the country. But it was recognized by the government of India in 1st May, 1984. It is only the stock exchange in the north eastern region. The Gauhati Stock exchange Ltd. Was inaugurated by Mr. Pranab Mukharjee, the then union finance minister, govt of India and late Hiteswar Saikia, the then Chief Minister of Assam, was the guest of honour. GSE was the fourth stock exchange in India to computerize India has 23 stock exchanges. But like Bhubaneswar, Patna, Madhya Pradesh, Cochin, most of them have not trading ,Delhi Stock exchange in hardly having any trading. Due to lack of trading, most stock exchanges face the problem of delisting. The companies want to delist from the stock exchange to save their annual fees. In GSE They have more money to get from companies as the annual listing fees which are yet unpaid. Members also decrease.

ANALYSIS

We want to invest Rs.1, 00,000 in stock market diversified in different companies. We firstly diversify like Big Company, Medium Company, and Small Company & for daily trading. . Big/Large Company are companies that have a market cap between $10-200 billion dollars. Medium companies range from $2 billion to $10 billion dollars.. Small companies are typically new or relatively young companies and have a market cap between $100 million to $1 billion dollar. Market capitalization is calculated by multiplying the number of a company's shares outstanding by its stock price per share.

I have invested money in different sectors to reduce risk. Like, Oil exploration, Banking, Telecommunication, Computers, Diamond cutting, Entertainment, Tyres, Steel, Pharmaceuticals and personal care etc. We have selected different big companies (like ONGC, SBI, AIRTEL) , medium companies ( like TATA ELAXSI, GITANJALI GEMS,SRI ASTHAVINAYAK) , SMALL COMPANIES (like CEAT, VISA STEEL, NATCO PHARMA) and HINDUSTHAN UNILEVER for Daily Trading. Except Daily Trading, we will analysis price fluctuation, profit earning after one month. In other words, I invest money i.e. I have bought different shares of different companies at different price in 3th October, 2011 and I will sell it in 3th November. Moreover, I will trade daily from 3th Oct to 3th Nov, 2011, for a month. Now the earning or loss is examined after one month. Which company / sector is very profitable or which company gives how much earnings or losses are all these examined bellow with the help of chart and table from collected data.

Table: Investment in different Companies (3-Oct-11)

No. COMPANY Big Company a b c ONGC SBI AIRTEL SECTOR OIL EXPLORATION BANKING TELECOMMUNICATION Buying Price 269.6 1862.75 380.55 Shares 20 10 20

of Total Price 5392 18628 7611

Total Value
Medium Company A B C TATA ELAXSI GITANJALI GEMS SRI ASTHAVINAYAK COMPUTERS DIAMOND CUTTING ENTERTAINMENT 194.2 343.9 5.5 Total Value= Small Company a b c CEAT VISA STEEL NATCO PHARMA TYRES STEEL PHARMACHEUTICALS 75.095 58.5 229.1 Total Value For Daily Trading HIND. UNILEVER PERSONAL CARE 334.34 30 79 75 80 55 50 330

31631
10681 17195 1815 29691 5932.5 4387.5 18328 28648 10030

TOTAL INVESTMENT=
31631+ 29691+ 28648+10030= 100000

FIG :

PIE REPRESENATION OF DIFFERENT

INVESTMENT

10030

5392

18628 18328

ONGC
SBI AIRTEL

7611 4387.5 5932.5 1815 17195

TATA ELAXSI GITANJALI GEMS SRI ASTAVINAYAK

10681

CEAT VISA STEEL NATCO PHARMA

DAILY TRADING

The percentages of investment in different companies are like as ONGC=5% SBI= 19% AIRTEL=8% TATA ELAXSI=11% GITANJALI GEMS=17% SRI ASTHAVINAYAK=2% CEAT=6% VISA STEEL=4% NATCO PHARMA= 18% DAILY TRADING (HUL) = 10%

This is shown with the help of Bar diagram

20000 18628 18000 17195 18328

16000

14000

12000

10681
10030 10000 7611 5932.5 5392 4387.5

8000

6000

4000
1815

2000

0 ONGC SBI AIRTEL TATA ELAXSI GITANJALI SRI ASTAVINAYAK GEMS CEAT VISA STEEL NATCO PHARMA DAILY TRADING

Fig: Investment in different Companies

3 NOV, 2011 No. of COMPANY Big Company a b c ONGC SBI AIRTEL SECTOR OIL EXPLORATION BANKING TELECOMMUNICATION Selling Price 278 1934.5 392.55 Total Value Shares 20 10 20 Total Price 5560 19345 7851 32756

Medium Company

a
b

TATA ELAXSI
GITANJALI GEMS

COMPUTERS
DIAMOND CUTTING

226.55
353

55
50

12460
17650

SRI ASTHAVINAYAK

ENTERTAINMENT

7.2 Total Value=

330

2376 32486

Small Company

a b c

CEAT VISA STEEL NATCO PHARMA

TYRES STEEL PHARMACHEUTICALS

72.9 58.5 242.75 Total Value

79 75 80

5759 4387 19420 29566

From Daily Trading the Profit / Loss of HINDS.

UNILEVER is =

3520

Diagrammatical Representation
5560 ONGC SBI AIRTEL 19345 TATA ELAXSI 19420 7851 4387.5 5759 2376 17650 DAILY TRADING 12460 GITANJALI GEMS

13550

SRI ASTAVINAYAK

CEAT VISA STEEL NATCO PHARMA

Fig : pie Diagram of overall earnings The percentages of earnings in different companies are ONGC =5% SBI=18% TATA ELEXSI= 11% GITANJALI GEMS= 16% CEAT= 5% VISA STEEL= 4% DAILY TRADING= 13%

AIRTEL= 7% SRI ASTHAVINAYAK= 2% NATCO PHARMA= 18%

Fig : Bar Diagram of overall earnings

25000

20000

19345 17650

19420

15000 13550 12460

10000 7851

5560 5000

5759 4387.5

2376

0 ONGC SBI AIRTEL TATA ELAXSI GITANJALI GEMS SRI ASTAVINAYAK CEAT VISA STEEL NATCO PHARMA DAILY TRADING

TABLE : AN OBSERVATION OF PROFIT/ LOSS

3 OCT, 2011

3 NOV, 2011

BIG

COMPANY=
MEDIUM COMPANY= SMALL COMPANY= DAILY TRADING=

31631

BIG COMPANY=

32756

29691

MEDIUM COMPANY=

32486

28648

SMALL COMPANY=

29566

10030

FROM DAILY TRADING=

13550

TOTAL
INVESTMENT= 100000 TOTAL EARNING= 108358

NET PROFIT=8358

We have mentioned already about the earnings of Daily Trading. T he process of buy and sale of daily Trading including opening stock, closing stock, highest / lowest price of the day, buying price, no. Of Shares are shown this page. In the next page the sale activity and daily profits are shown clearly.

Table : Buying of shares (HUL)

BUY
Day 2011 3-Oct 4-Oct High 339 337 Low 333.1 323.7 318.8 Closing Stock 334.45 327.05 322.05 329.2 332.4 326.55 329.65 326.75 332.1 333.1 opening stock 339 333.75 326 328 331 333.1 325.5 330.05 320.8 326.5 327.2 326.7 327.4 326.8 x 30= x 30= x 30= x 30= x 30= x 30= x 30= x 30= 9624 9795 9816 9801 9822 9804 9862.5 9846 Share value 334.5 No. of shares x 30= Investment 10030

SALE
No. of shares Earnin gs profit / loss

x30 x30 x30 x30 x30 x30 x30 x30 x30

10074 9822 9861 9978 10005 9889.5 9936 9972 10011

34 198 66 162 204 67.5 132 109.5 165

5-Oct 328.6

7-Oct 330.25 325.5 10-Oct 334.4 11-Oct 334.4 12-Oct 13-Oct 331 332 325.6 325.5 325.5 324

14-Oct 333.5 326.55 17-Oct 334.75 329.8

327 328.75 334.75 328.2

18-Oct 335.3

328

330.55
331.55 332.05 326.1 336.35 340.4 342.85 349.45 375.25 388.45

331.35
331.9 331 332 328.8 335.1 341.5 344.1 351 372

327.4
329.3 929.3 325.7 329.5 338.2 342.7 347 355.9 377.4

x 30=
x 30= x 30= x 30= x 30= x 30= x 30= x 30= x 30= x 30=

9822
9879 9879 9771 9885 10146 10281 10410 10677 11322

x30
x30 x30 x30 x30 x30 x30 x30 x30 x30

10032
9975 9948 9936 10080 10251 10305 10509 11124 11595

210
96 69 165 195 105 24 99 447 273

19-Oct 333.35 328.15 20-Oct 21-Oct 334 332 327.85 325.1 328.8

24-Oct 337.3

25-Oct 343.85 334.4 26-Oct 344.45 341.5 28-Oct 31-Oct 351 377 344.1 348.25 371.5

1-Nov 393.2

Table : selling of shares Share value 335.8 327.4 328.7 332.6 333.5 329.65 331.2 332.4 333.7 334.4 332.5 331.6 331.2 336 341.7 343.5 350.3 370.8 386.5 390.4 379.5 No. of shares x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 x30 Earnings 10074 9822 9861 9978 10005 9889.5 9936 9972 10011 10032 9975 9948 9936 10080 10251 10305 10509 11124 11595 11712 11385 profit / loss 34 198 66 162 204 67.5 132 109.5 165 210 96 69 165 195 105 24 99 447 273 528 171

TOTAL PROFIT=3520

Now we observe the two periods to analyse fluctuating price, company wise or sector wise earnings which helps to understand the impact of trading in changing revenues of different companies in different time. The following table shows that different companies performances are different. If we invest in HUL and trade daily, we get more profit i.e. 35.09%. But it is very necessary to thorough observation of the market and fluctuation of price. We should invest or buy shares when price is decreasing and sell it when price is increasing. Instead of daily trading, when we sell our shares after one month of buying, then TATA ELEXSI performs well (16.66%) and CEAT performs worst(-2.92%). VISA STEEL earns zero profit. Overall the profit of investment in stock market is 8.35%.

Table : ANALYSIS BETWEEN TWO PERIOD

3 OCT, 2011
COMPANY INVESTMENT EARNING

3, NOV,2011
PROFIT/ LOSS % INCREASE/DECREASE

ONGC SBI

5392 18628

5560 19345

168 717

3.11 3.84

AIRTEL

7611

7851

240

3.15

TATA ELAXSI GITANJALI GEMS

10681 17195

12460 17650

1779 455

16.66 2.65

SRI ASTAVINAYAK

1815

2376

561

30.9

CEAT VISA STEEL NATCO PHARMA

5932.5 4387.5 18328

5759 4387.5 19420

-173.5

-2.92

1092

5.96

DAILY TRADING TOTAL

10030 100000 108358.5

13550 8358.5

3520 8.35

35.09

The profit earnings of different companies are shown below with the help of following diagram

Fig : profits earning of different companies

40 35.09 35 30.9 30

25

20 16.66 15

10 5.96 5 3.11 3.84 3.15 2.65

-5

-2.92

Now, we analyse which portfolio is benefited or which portfolio gives higher profit. The selection of portfolio is dependent on the higher return with existing same risk .The performance of the portfolio is cited below with the help of table & diagrammatical representation .The vertical line shows percentage of profits and the horizontal line shows the companies. The first 3 bar shows ONGC, SBI & AIRTEL, The second 3 bar shows TATA ELAXSI, GITANJALI GEMS & SRI ASTAVINAYAK. The negatively sloped bar indicates CEAT, the blank space shows zero profit i.e. VISA STEEL earns no profit or no loss. The next two bars show NALCO PHARMA & HUL. The daily trading earns more profit i.e. HUL.

FIG: ANALYSIS OF PORTFOLIOS

COMPANY

INVESTMENT

EARNIN PROFIT/ G LOSS % OF PROFIT/ LOSS

LARGE CAP

31631

32756

1125

3.55

MID CAP

29691

32486

2795

9.41

SMALL CAP DAILY TRADING(HUL)

28648

29566

918

3.2

10030

13550

3520

35.09

TOTAL

100000

108358

8358

8.35

This table shows that Daily Trading gives higher profit and mid cap company performs better. The performance of small cap is not so good. So, it will be a better decision to invest in midcap industries. Specially, the investment in Tata Elaxsi, Sri Astavinayak and HUL is beneficial comparatively other mentioned companies

Fig : Investment in different portfolios

10030

BIG COMPANY=
31631

MEDIUM COMPANY= SMALL COMPANY= DAILY TRADING=

28648

29691

The percentage of different portfolios in the time of investment BIG COMPANY= 31.63% MEDIUM COMPANY=29.69% SMALL COMPANY= 28.65% DAILY TRADING (HUL)= 10 .03%

The percentage of different portfolios in the time of investment BIG COMPANY= 31.63% MEDIUM COMPANY=29.69% SMALL COMPANY= 28.65% DAILY TRADING (HUL)= 10 .03% But if we observe the earning of the portfolios, we get like this Fig : Earnings of different portfolios
13550

32756

LARGE CAP

MID CAP 29566 SMALL CAP

DAILY TRADING(HUL) 32486

The percentage of the earnings of the portfolios LARGE CAP= 30.22% MID CAP = 30% SMALL CAP= 27.28% DAILY TRADING =12.5%

If we compare the investment and earnings of the portfolios then we see that HUL and Midcap Companies performance is well.

Now we compare the investment and returns of different portfolios with the help of Bar Diagram Fig : Large Cap Company

33000 32800 32600 32400 32200 32000 31800 31600 31400 31200 31000 1

LARGE CAP
32756

31631

LARGE CAP

INVESTMENT=Rs. 31631

RETURN= =Rs.32756

Fig : Mid Cap Company

MID CAP
33000 32500 32000 31500 31000 30500 30000 29500 29000 28500 28000 1

32486

MID CAP

29691

INVESTMENT=Rs. 29691

RETURN= Rs. 32486

Fig : Small Cap Company

35000 30000 25000 20000

15000
10000 5000 0 0 1 2

28648

29566

INVESTMENT= Rs. 28648

RETURN= Rs. 29566 Fig : Daily Trading (HUL)

16000 14000 12000 10030 10000 8000 6000 4000 2000 0 1

DAILY TRADING

13550

DAILY TRADING

Investment= Rs. 10030

Earning= Rs. 13550

Fig: Total Investment

110000 108000 106000 104000 102000 100000 98000 96000 94000 1 2 3 100000

TOTAL

108358.5

TOTAL

INVESTMENT= RS. 1, 00,000

RETURN = RS. 1, 08,358

Now, all the companies investment and earnings are analysed through diagrammatically..... BIG COMPANIES

ONGC
5600 5550 5500 5450 5400 5350 5300 1 2 3 5392 ONGC 5560

Investment= Rs. 5392

Earning=Rs. 556

SBI
19400 19200 19000 18800 18628 18600 19345

SBI

18400
18200 1 2 3

Investment= Rs.18628

Earning= Rs. 19345

AIRTEL
7900 7850 7800 7750 7851

7700
7650 7600 7550 7500 7450 1 2 3 7611 AIRTEL

Investment= Rs.7611

Earning= Rs.7851

MEDIUM COMPANIES
13000 12500 12000 11500 11000 10500 10000 9500 1 10681

TATA ELAXSI
12460

TATA ELAXSI

Investment= Rs.10681

Earning=Rs.12460.25

GITANJALI GEMS
17700
17600 17500 17400 17300 17200 17100 17000 16900 1 2 3 17195 GITANJALI GEMS 17650

Investment= Rs. 17195

Earning= Rs.17650

SRI ASTAVINAYAK
2500 2000 1500 1000 500 0 1 2 3 SRI ASTAVINAYAK 2376

1815

Investment=Rs. 1815
SMALL COMPANIES
5950 5900 5850 5800 5932.5

Earning= Rs. 2376

CEAT

5759

CEAT

5750
5700 5650 1 2 3

Investment= Rs.5632.5

Earning= Rs.5467.5

VISA STEEL
5000 4500 4000 4387.5 4387.5

3500
3000 2500 2000 1500 1000 500 0 1 2 3 VISA STEEL

Investment= Rs. 4387.5

Earning= Rs. 4387.5

NATCO PHARMA
19600 19400 19420

19200
19000 18800 18600 18400 18200 18000 17800 17600 1 2 3 18328 NATCO PHARMA

Investment= Rs. 18328

Earning= Rs. 19420

TECHNICAL ANALYSIS OF HUL We have analyzed the portfolios with observing all the companies. The investment and return of the company helps a person to take a decision of selection the portfolio and the efficient company. Now we go to the technical analysis of HUL with the help of stock market data. # WHAT IS TECHNICAL ANALYSIS Technical analysis shows that share prices are determined by the demand and supply forces operating in the market. It is a forecasting technique to predict the future stock price that utilize historical share price or volume movement data. The rationale behind technical analysis is that the share price behavior repeats itself over time and analyst attempt to derive methods to predict the repetitions. # THE PRINCIPLES OF TECHNICAL ANALYSIS The basic principles on which technical analysis is based may be summarized as follows= The market value of a security is related to demand and supply factors operating in the market. There are both rational and irrational factors which surround the supply and demand factors of a security. Security prices behave in a manner that their movement is continuous in a particular direction for some length of time. The shifts in demand and supply can be detected through charts prepared specially to show market action. Trends in stock prices have been seen to change when there is a shift in the demand and supply factors. Patterns which are projected by charts record price movements and tense recorded patterns are used by analysts to make forecasts about the movement in future. LINE CHART It is the simplest price chart where the closing price of a share is plotted on the XY graph on a day to day basis. The closing price of each day would be represented by on a point on the XY graph. All these points are connected by a straight line which would indicate the trend of the market

Fig: Line Chart of a closing stock (HUL)

11-

13-

15-

17-

19-

21-

23-

25-

27-

29-

31-

450 400 350 300 250 200 150 100 50 0 3-Oct 5-Oct 7-Oct 9-Oct

Closing Stock

Closing Stock

B.JAPANESE CANDLESTICK CHARTS

450 400 350 300 250 200 150 Low High

100
50 0

Fig : Japanese candlesticks (HUL)

2-Nov

The Japanese candlesticks show the opening price, closing price, highest and lowest price of a share in a day. The lower part indicates the opening price and upper point indicates the closing price. The highest price and lowest price of a day are joined by a vertical bar. The opening price and closing price of the day which would fall between the highest and the lowest prices would be represented by a rectangle so that the price bar chart looks like a candlestick. If a vertical line is seen above the box then we know that the highest price of the day is higher than the closing stock and if it is vertically bellow the box ,it indicates that the lowest price of the day is lower than the opening price SIMPLE MOVING AVERAGE Fig : SIMPLE MOVING AVERAGE(HUL
Day 2011 3-Oct 4-Oct 5-Oct 7-Oct 10-Oct 11-Oct 12-Oct 13-Oct 14-Oct 17-Oct 18-Oct 19-Oct 20-Oct 21-Oct 24-Oct 25-Oct 26-Oct 28-Oct 31-Oct 1-Nov 2-Nov 3-Nov Closing Stock 334.45 327.05 322.05 329.2 332.4 326.55 329.65 326.75 332.1 333.1 330.55 331.55 332.05 326.1 336.35 340.4 342.85 349.45 375.25 388.45 390.2 382.1 Total prices of 5 days _ _ _ _ 1645.15 1637.25 1639.85 1644.55 1647.45 1648.15 1652.15 1654.05 1659.35 1653.35 1656.6 1666.45 1677.75 1695.15 1744.3 1796.4 1846.2 1885.45 Five day moving average _ _ _ _ 329.03 327.45 327.97 328.91 329.49 329.63 330.43 330.81 331.87 330.67 331.32 333.29 335.55 339.03 348.86 359.28 369.24 377.09

Moving Average are mathematical indicators of the underlying trend of the price movement. The closing prices of the shares are generally used for the calculation of moving average. Simple Moving Average is the sum of prices of a share for a specific number of days divided by the number of days. In a simple moving average , a set of averages are calculated for a specific number of days, each average being calculated by including a new price and excluding an old price. Here, we take moving average for 5 days. Suppose sum of 1st five closing price is 1645.15 so moving average will be 1645.15/5 = 329.03 etc. This can be shown diagrammatically as below Fig : calculation of five days moving average (HUL)
390 380 370 360 350 340 Series1

330
320 310 300 1-Nov 2-Nov

14-Oct

10-Oct

11-Oct

12-Oct

13-Oct

15-Oct

16-Oct

17-Oct

18-Oct

19-Oct

20-Oct

21-Oct

22-Oct

23-Oct

24-Oct

25-Oct

26-Oct

27-Oct

28-Oct

29-Oct

30-Oct

31-Oct

3-Nov