Abstract

Technical analysts believe that the historical performance of stocks and markets are indications
of future performance. Technical analysis is the forecasting of future financial price movements
based on an examination of past price movements. this study is on the technical analysis of select
listed companies in BOMBAY STOCK EXCHANGE. Technical analysis does not result in
absolute predictions about the future with regard to forecasting. Instead, technical analysis can
help investors anticipate what is possible to happen to prices over time. Technical analysis is
study of predicting prices of securities for future the main aim of technical analysis is to generate
returns by charter person decide when to enter and when to exit in the security. Technical
analysis is of the stock market relating to factors affecting the supply and demand of stocks. It
helps in understanding the indicators the intrinsic value of shares and knowing whether the
shares are undervalued or overvalued. The stock market indicators would help the investors to
identify major market turning points. This is a significant technical analysis of selected
companies which helps to understand the price behavior of the shares, the signals given by them
and the major turning points of the market price. This study is aims at carrying out technical
analysis of the securities of the selected companies and to assist investment decision in this
Indian Market.
 INTRODUCTION

Technical Analysis can be defined as an art and science of forecasting future prices based on an
examination of the past price movements. Technical analysis is not astrology for predicting
prices.Technical analysis is based on analyzing current demand-supply of commodities, stocks,
indices, futures or any tradable instrument. Technical analysis involve putting stock information
like prices, volumes and open interest on a chart and applying various patterns and indicators to
it in order to assess the future price movements. The time frame in which technical analysis is
applied may range from intraday (5-minute, 10-minutes, 15-minutes, 30-minutes or hourly),
daily, weekly or monthly price data to many years.
There are essentially two methods of analyzing investment opportunities in the security market
viz fundamental analysis and technical analysis. Fundamental information like financial and non-
financial aspects of the company or technical information which ignores fundamentals and
focuses on actual price movements a may be used. The technical analyst assumes that it is 90
percent psychological and 10 percent logical. 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 securities intrinsic value, but instead use
charts and other tools to identify patterns that can suggest future activity.

The study on technical analysis of selected companies based on Stratified sampling technique
issignificant as it helps in understanding the intrinsic value of shares and to know whether the
shares are undervalued or overvalued or correctly priced. Further it helps in understanding the
price behaviour of the shares, the signals given by them and the major turning points of the
market price. The concept of analysis comes into picture when decision has to be made on
choosing a particular company’s shares for investment. Technical analysis is a security analysis
technique that claims the ability to forecast the future direction of prices through the study of
past market data primarily price and volume.
The Basic Assumptions of Technical Analysis are
1. Market Fluctuations Discount Everything else.
Technical analysts believe that changes in the price of a security and how well it trades in the
market embody all available information about that security from everyone involved with it and
therefore represents the fair value of that security. Sudden changes in how a stock trades often
precedes major news about the company that issued the stock. Technical analysts don't concern
themselves with the price-to-earnings ratio, shareholder equity, return on equity or other factors
that fundamental analysts do.
2. Price Movements can often be Charted and Predicted.
Technical analysts acknowledge that there are periods when prices move randomly, but there are
also times when they move in an identifiable trend. Once a trend is identified, it is possible to
make money from it, either by buying low and selling high during an upward trend (bull market)
or by selling short during a downward trend (bear market). By adjusting the length of time the
market is being analyzed, it
is possible to spot both short- and long-term trends.
3. History Repeats Itself.
People don't change their motivations overnight; therefore, traders will react the same way to
conditions as they did in the past when those conditions repeat themselves. Because people react
the same way, technical analysts can use the knowledge of how other traders reacted in the past
to profit each time those conditions repeat them.
 INDUSTRY PROFILE

The working of stock exchanges in India started in1875.bse is the oldest stock market in India.
This history of Indian stock trading starts with 318 persons taking membership in native share &
stock brokers association. Which we now know by the name Bombay stock exchange or bse in
short. In 1965, bse got permanent recognition from the Government of India. National stock
exchanges comes second to bse in terms of popularity. Bse&Nse represent themselves as
synonyms of Indian stock market the history of Indian stock market is almost the same as the
history of bse

The 30 stock sensitive index or sensex was first compiled in 1986. The
Sensex is compiled based on the performance of the stocks of 30 financially sound benchmark
companies In 1990 the bse crossed the 1000 mark for the first time. It crossed 2000, 3000 &
4000 figures in 1992. The reason for such huge surge in the stock market was the liberal
financial policies announced by the then financial minister. Dr Man Mohan Singh.

The up-beat mood of the market was suddenly lost with market
was suddenly lost with harsh ad Mehta scam. It came to public knowledge that Mr. Mehta, also
known as the bid-bull of Indian stock market diverted huge funds from banks through fraudulent
means. He played with 270 companies. Millions of small scale investors became victims to the
fraud as the sensex fell flat shedding 570 points.

To prevent such frauds, the government formed the securities & exchanges, brokers, sub-brokers,
portfolio Managers investment advisors etc. SEBI oblige several rigid measures to protect the
interest of investors. Now with the inception of online. Trading & daily settlement the chance of
a fraud is nil says top officials of SEBI.
 RESEARCH METHODOLOGY

Research type

 Secondary data

The secondary data is collected from the annual reports of the company and company’s official
websites.

Statistical Tools Used

 Simple Moving Average Analysis.

 Relative strength index.
 STATEMENT OF THE PROBLEM

Technical analysis is the study of price movements & trend in market in order to forecast future
prices. Investment timing plays a crucial role for trading in stock market trading. The investors
face difficulty while identifying the opportunities so this analysis is directed towards the use of
different tools of technical analysis. Which help the investor to identify & decide when to buy or
sell.
 REVIEW OF LITERATURE

According to Achelis : “Technical analysis is the process of analyzing a security’s historical

prices in an effort to determine probable future prices”.

According to Edwards, Magee &Bassetti : “It refers to the study of the action of the market itself
as opposed to the study of the goods in which the market Deals. Technical analysis is the science
of recording, Usually in graphic form, the actual history of trading (price changes, volume of
transactions, etc) in a certain stock or in the averages & then deducing from that pictured history
the probable future trend”.

According to Murphy: “Technical analysis is the study of market action, primarily through the
use of charts, for the purpose of forecasting future price trend. The term “Market action’’

Includes the three principal sources of information available to the technician prices, volume, &
open interest.

According to PringThreat : Technical analysis, for it is an art. Is to identify a trend reversal

At a relatively early stage & ride on that trend until the weight of the evidence shows or proves
that the trend has reversed. Therefore, technical analysis is based on the assumption that people
will continue to make the same mistakes they have made in the past”.

According to cory Janssen, chad langager& Casey Murphy; ”Technical analysis is a method of
evaluating securities by analyzing the statistics generated by market activity, such as past prices
& volume. Technical analysis do not attempt to measure a security’s intrinsic value, but instead
use charts & other tools to identity patterns that can suggest future action.
 NEED & SIGNIFICANCE OF THE STUDY

1. Technical analysis is very useful because it provides tool that allow inventors to
identify the signs that new information is being priced into stock before news is
released.
2. To identify the companies to be included in the portfolio.
3. In this way, technical analysis helps to revel fundamental changes in the company
before the broader market is aware of it.
 OBJECTIVES OF THE STUDY

1. To study the relevance of technical analysis in Indian capital market.

2. To analyze the performance of select companies in Indian stock market and to predict the
future trends in the share prices through technical analysis.
3. To find out risk & return for selected securities.
4. Technical analysis on selected stocks & interpret on whether to buy or sell.

5.To suggesting the investors in making investment decisions in selected stock.

 SCOPE OF THE STUDY

Technical analysis of market data has long been a pervasive activity in both security and future
markets. Technical analyst believe that price and volume data provide indicators of future price
movements, and that by examining these data, information may be extracted on the fundamentals
driving returns. If markets are efficient in the sense that the current price impounds all
information then such activity is clearly pointless. But if the process by which prices adjust to
information is not immediate, then the market statistics may impound information that is not yet
incorporated in to the current market price.

Technical analysis is very useful because it provides tools that allow investors to identify the
signs that new information is being priced into a stock before news is released. Stocks that trade
abnormally often do so because of significant new information, both positive and negative. In
this way, technical analysis helps to reveal fundamental changes in the company before the
broader market is aware of it.
 LIMITATIONS OF THE STUDY

1.Analysis involves using of limited technical tools .

2.The study is restricted only to 3 selected stocks of nifty.

3. The study depends more on secondary data rather then on primary data.

4. we can’t predict the prices of the stocks for long term.

5. This technical analysis can’t be applicable to newly listed companies script.