A Summer Internship at

Analysing Indian Stock Market

- Sujay S Phatak

School of Economics, DAVV Indore

Summer Internship Report on –

Analysis of Indian Stock Market

Submitted To -

School of Economics

Submitted By -

Sujay S Phatak

Declaration

I, Sujay S PhatakSujay S PhatakSujay S PhatakSujay S Phatak, declare that the internship report entitled:

“Analysis of Indian Stock MarketAnalysis of Indian Stock MarketAnalysis of Indian Stock MarketAnalysis of Indian Stock Market” is an original piece of work

carried out by me under the guidance and supervision of Mr. Mr. Mr. Mr.

Ankesh BariaAnkesh BariaAnkesh BariaAnkesh Baria (Director, GroundWork Services). The work has been

submitted in partial fulfillment of the requirement of MA

[Economics] course to our college.

19th August 2014 Sujay S PhatakSujay S PhatakSujay S PhatakSujay S Phatak

Indore

Acknowledgements

A summer project is a golden opportunity for learning and self-development. I consider

myself very lucky and honored to have so many wonderful people to back me through

completion of this project.

I wish to express my indebted gratitude and special thanks to Mr. Ankesh Baria, DirectorMr. Ankesh Baria, DirectorMr. Ankesh Baria, DirectorMr. Ankesh Baria, Director

at GroundWork ServGroundWork ServGroundWork ServGroundWork Servicesicesicesices who in spite of being extraordinarily busy with his duties, took

time out to hear, guide and keep me on the correct path and allowing me to carry out

my summer internship training at their esteemed organization. I do not know where I

would been without him.

I also thank MMMMssss. Mita . Mita . Mita . Mita BBBBashaniashaniashaniashani & Mr. Sanjay MaratheMr. Sanjay MaratheMr. Sanjay MaratheMr. Sanjay Marathe for giving necessary advices and

guidance and arranging all necessary facilities to make my life at GroundWork easier. I

choose this moment to acknowledge their contribution gratefully.

I express my deepest thanks to Dr. Rekha AcharyaDr. Rekha AcharyaDr. Rekha AcharyaDr. Rekha Acharya, Dr. Sakharam MujaldeDr. Sakharam MujaldeDr. Sakharam MujaldeDr. Sakharam Mujalde, Ms. Era TiwariMs. Era TiwariMs. Era TiwariMs. Era Tiwari

and Mr.Mr.Mr.Mr. Mohitash NagotraMohitash NagotraMohitash NagotraMohitash Nagotra for their guidance and support. All of them supported me by

helping me in selecting the best field out of my areas of interest along with choosing an

appropriate organization for internship.

Finally, I move towards acknowledging all those individuals who collectively form a major

part of my life. These are: my parents, who taught me the basics of ethics and humility;

my friends, who, at times, gave a new definition to my life; my teachers, who guided me

through all the difficulties I went through at different levels; and many others. There is no

doubt in my mind, that all of them have contributed greatly, for me to complete this

report. I thank all of them.

- Sujay S Phatak

19th August 2014, Indore

Table of ContentsTable of ContentsTable of ContentsTable of Contents

SR. NO.SR. NO.SR. NO.SR. NO. TITLETITLETITLETITLE PPPPAAAAGGGGEEEE

1 IntroductionIntroductionIntroductionIntroduction 1

1.1 GroundWork Stock Advisory Pvt. Ltd. 1

1.2 School of Economics, DAVV 3

1.3 The Program 3

2 The CourseworkThe CourseworkThe CourseworkThe Coursework 4

2.1 Training 4

2.2 Job 6

2.3 Analysis 8

3 ConclusionConclusionConclusionConclusion 13

Introduction

Internships are known for giving students the opportunity to apply their knowledge in

real world environments. At the same time, they will also develop skills which will help

them perform better at their jobs. This report provides insight of a summer internship

program at GroundWork Stock Advisory Private Limited from May 15th, 2014 to June 30th,

2014 as part of the third semester curriculum for MA [Economics] at School of Economics,

DAVV.

- GroundWork Stock Advisory Pvt. Ltd. Founded on 1st of April, 2013 by Mr. Ankesh Baria and Mr. Nitesh Bashani with a

mission “to facilitate long term relations with clients by drawing maximum profit”,

GroundWork is an investment advisory company, where recommendation for

various Stocks [Cash and F&O] traded in NSE and BSE is provided. Their services

are not only restricted to stock market but they also provide research on:

- Cash Segment A service made especially for NSE and BSE Stock

Cash Traders, with our excellent Intraday Cash Market

Calls

- Future Segment Future segment are the Stock Future Tips made

to improve the future life of customer. Groundwork

provides Intraday Calls on Stock.

- Option Segment Intraday Calls are provided to clients regarding

Call/Put option tips. Also, premarket calls are

generated on a regular basis.

- NIFTY+BANKNIFTY In Nifty & Bank nifty Futures Tips Nifty Levels

are provided. Customers get calls for Current Month.

- BTST/STBT Buy Today Sell Tomorrow (BTST) is a facility

offered by ICICIDirect wherein the customer will be

able to sell the shares that he/she purchased even

before he/she receives the delivery of the shares from

the Exchange. He/she will not wait till the time he/she

receives the delivery from the Exchange thus increasing

his liquidity. GW provides Daily follow-ups and news

updates along with calls.

- Bulls Eye A one eye-one call target of 10,000 with small Stop

loss.

- GW Ultimate Ultimate is the word for long targets and holding

purpose; with an emphasis on the Risk to Reward ratio. 10-12

calls are provided in a month with minimum stop loss of INR

2000 (with minimum target of INR 5000).

- HNI (High Net Worth) This package made for those traders who want to take

more than 5 lots in F&O and in Commodities.

- FOREX FOREX services are uniquely designed for the FOREX

traders trading in MCXSX market. With its huge volume and

liquidity, it acts as a brilliant platform for day traders for

making profits.

- Bullion Metal The best service for intraday recommendations in

Bullions Commodities like Gold, Silver traded in MCX. Clients

get calls in Bullions metal Current Month.

- Base Metal A complete strategy along with Targets & SL much

before time. Clients get calls in Base Metal Current Month

with full-to information about the base metal in the Stock

market

- Energy Purely intraday calls in Energy for Full time traders and

Stock Brokers to trade maximum and to earn maximum.

Company focuses on facilitating long term relations with clients by providing them

excellent market research. Their services are purely based on technical analysis.

GroundWork is on the toil, teaching the naïve investors or players the strategies

of the stock market, or you can say the strategies of winning in the stock market.

GroundWork Clubs provide its members an opportunity to increase their

communication area and gain variety of knowledge by interacting with investors

with variety of backgrounds.

Following are the clubs that any individual can join and discuss their strategies

accordingly: - GroundWork Learning Centre

- GroundWork Entrepreneur’s Club

- GroundWork Investor’s Club

- School of Economics, DAVV

School of Economics, a pioneering institute of Devi Ahilya University was

established in 1976 as the University Teaching Department under the faculty of

Social Science to impart quality education and research in the field of economics.

The department offers a wide range of post graduate programmes in economics

and management. It has been attracting lot of sponsored Research Projects from

various National Research Agencies.

- The Program

The internship program at GroundWork is a certified full time on-job training

program scheduled for 6-8 weeks (~ 45 days). Certificate is provided with ratings

mentioned on each certificate based on individual performance in test, discipline

and code of conduct carried by a student throughout his/her training program.

The Coursework

Coursework of my summer internship program is categorized in following parts:

- Training

- Job

- Analysis

The categories mentioned above were covered in 6 weeks, whose descriptive schedule is

mentioned below:

Training

The building is only as tall as the foundation is strong enough to build on! The very first

part of my internship was designed to build a strong foundation of knowledge on which

the rest of my work in the company would stand. During first week of internship, the

theoretical part was covered by Mr. Ankesh Baria which indeed helped all the interns in

understanding the system of financial market prevailing in India. The details are mentioned

below:

- Getting started with Finance Market As an introduction, the interns were acquainted with Indian financial

market. Market structure was taught in a summarized way.

- Basics of Stock Market, Commodity and FOREX Market The basics included the common market terminology and structure of each

of the market. Some other concepts which were covered are – fiscal cliff;

various government policies and their impact on market etc.

- Introduction to World Markets and Global Indices Global markets (NYSE, NASDAQ, Euronext, Shanghai Stock Exchange, Hong

Kong Stock Exchange etc.) and their indexes were introduced.

- Introduction to Derivative Concept of derivatives was taught and theoretical aspects of the area were

covered. Derivative market structure was made aware of.

- Getting started with ODIN (Open Dealer Integrated Network) The Multi-Exchange, Multi-Currency Front Office trading and risk

management system - makes trading on multiple markets easier through the

use of a single application. It incorporates appealing features and works on

advanced technology which facilitates higher accessibility, ensuring speedy

performance and advanced risk management.

- Understanding Dealing Trading activities (buy; sell; short sell) in various markets along with other

concepts such as trade limit; stop loss; lot size; finding the script etc. were

made aware of.

- Live market watch Each of the intern was assigned to watch the market and study script(s) of

his/her own choice.

- Concept of TVM Time Value of Money as a part of market analysis was taught.

- Understanding CRM Customer relationship management (CRM) is a system for managing a

company’s interactions with current and future customers. It involves using

technology to organize, automate and synchronize sales, marketing,

customer service, and technical support.

- NISM/NCFM preparation Interns were made aware of various certifications provided by NSE, BSE,

and other agencies.

- Technical Analysis Technical analysis is a security analysis methodology for forecasting the

direction of prices through the study of past market data, primarily price

and volume. Basically, it is a study of 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. The

study covered general description; principles; and charts.

- Fundamental Analysis Fundamental analysis of a business involves analyzing its financial statements

and health, its management and competitive advantages, and its

competitors and markets. Fundamental analysis is performed on historical

and present data, but with the goal of making financial forecasts.

- How to find hot stocks for intraday trade The process of finding hot stocks for intraday trade was explained. Certain

rules applicable in selection of stock for intraday trading were discussed.

Job

After being trained in theoretical aspects of market, each intern was assigned a job which

was focused to expose them into the corporate world. Sales profile was assigned with an

objective of converting clients for various finance market services offered by GroundWork.

All the calls were forwarded through CRM. All interns were provided with a CRM-ID and

were assigned a job to call various individuals and try to persuade them into accepting a

“Free Trial”. After registration, the list of clients who accepted the trial (called as leads)

was sent to the Sales Head who then activated the free trial period (of 2 days). The leads

were then persuaded to join the company membership or to opt for a suitable service out

of the available services. Once a lead opted for either a service or membership at one of

the clubs at GroundWork, i.e. when a lead became a client, daily calls were forwarded to

them based on the information provided by the analytical team. A feedback was also

taken from clients after completion of one week. This feedback was then reported to the

Sales Head as part of the daily report. The job also included providing suitable advices to

the clients regarding their investments and portfolio management.

Following is a statistical study of the work done by me on job:

In the first week of job, 65 leads were registered (for free trials) by me in the company

out of which 20 became clients for services offered by GroundWork.

Presented below is a detailed view of the statistical study.

Table 1 Leads Registered

Table 1 shows the registered leads for 5 days in various services. As san be seen, highest

number of leads were registered in Cash/Equity segment, followed by F&O then Bullion

Commodities and so on. Only 1 HNI lead was registered in a 5 day span.

Day Cash/

Equity F&O HNI N+BN FOREX

Commodities Total

Base Bullion Energy

1 7 3 - 2 1 - 1 1 15

2 4 1 - - - 2 1 1 09

3 10 2 1 - 1 - 2 - 16

4 - 3 - 1 2 2 3 1 12

5 5 1 - - - 3 2 2 13

Total 26 10 1 3 4 7 9 5 65

Average Leads

per day 5.2 2 0.2 0.6 0.8 1.4 1.8 1 13

F&O: Future & Options; N+BN: NIFTY+BANKNIFTY

Table 2 Registered Clients and CCR

Table 2 shows the number of leads who converted into clients. Here, Client Conversion

Ratio (CCR) is used to define the percentage value of leads who were successfully

converted into clients. By deriving data from the table, we can see that CCR of HNI is

highest amongst all the service segments (100%), despite of the fact that average leads per

day were 0.2 HNI segment, while the Cash/Equity segment, having highest average leads

per day (5.2), had lowest CCR equal to 19.2%. On an average, 30.8% leads provided by

me were converted into clients.

Cash/

Equity

F&O HNI N+BN FOREX Commodities

Total Base Bullion Energy

Leads 26 10 1 3 4 7 9 5 65

Clients 05 4 1 2 1 2 3 2 20

CCR (in %) 19.2 40 100 66.7 25 28.6 33.3 40 30.8 CCR: Client Conversion Ratio= (Clients/Leads)*100

Analysis

As the final part of summer internship at GroundWork Services, analysis of market was

carried out by all the interns in a specific area assigned to them. I was assigned the area of

technical analysis of Cash/Equity segment in NSE.

For this purpose, stocks of banking sector companies were taken into account and with

the help of candle stick chart, different patterns in these stocks were explored and the

future expected trend in these stocks was recommended. Also BANKNIFTY index of NSE

was also studied. Bank Nifty represents the 12 most liquid and large capitalized stocks from

the banking sector which trade on the National Stock Exchange (NSE). It provides investors

and market intermediaries a benchmark that captures the capital market performance of

Indian banking sector. The study was based on historical prices/index value.

The details of my study are given below:

State Bank of India (SBINState Bank of India (SBINState Bank of India (SBINState Bank of India (SBIN)

Candlestick chart for SBI (NSE) was analyzed to predict the future trend of its prices. Prices

of April-June 2014 were studied and the results are shown below in Table 3 and Figure 1.

Table 3 Price History of SBI

DATE PARTICULARS OPEN HIGH LOW CLOSE VOLUME

27/05 Left Shoulder 2697 2700 2616.70 2627 21,14,104

28/05 1st Support 2637 2645.90 2590.15 2612.30 22,10,312

29/05 2nd Support 2602.95 2642.60 2580 2595.35 38,17,762

09/06 Head 2755 2761.50 2697.10 2706.10 16,76,220

19/06 3rd Support 2647 2688.35 2595.40 2608 21,44,663

26/06 Right Shoulder 2700 2717.55 2639.45 2653.75 17,97,309

Figure 1 Candlestick Chart for SBI

Table 3 shows the price history of SBI based on which a head and shoulder pattern was

identified in the candlestick chart. Head and shoulders is a reversal chart pattern that when

formed, signals that the security is likely to move against the previous trend. As can be

seen in Figure 1, this pattern was formed and hence it was concluded that the trend will

be reversed into downward sloping.

The results of this analysis were positive. The trend line sloped downwards in July 2014,

as can be seen in Figure 2.

ICICI Bank LimitedICICI Bank LimitedICICI Bank LimitedICICI Bank Limited ((((ICICIBANKICICIBANKICICIBANKICICIBANK))))

When analyzed, ICICI Bank Limited showed a descending triangle. The descending triangle

is a bearish formation that usually forms during a downtrend as a continuation pattern.

Prices of April-June 2014 were studied. Following are statistics of the study:

Table 4 Price History of ICICIBANK

DATE PARTICULARS OPEN HIGH LOW CLOSE VOLUME

16/05 Support 1450 1593.20 1417.70 1470.30 117,29,001

21/05 Support 1455 1456.95 1421.10 1435 51,383.76

09/06 Down Trend 1 1486.15 1511.70 1483.50 1484 38,55,080

11/06 Down Trend 2 1,478 1,502.10 1,460 1462.50 23,18,042

13/06 Support 1462.30 1479 1421.60 1424 30,51,395

24/06 Support 1,426 1,445.90 1,416.70 1441.85 22,81,372

25/06 Support 1,434 1,434 1,417.30 1418.10 12,57,222

30/06 Down Trend 3 1,392 1,430.70 1,392.00 1415.65 24,20,118

Figure 2 Trend Line of SBI

Table 4 shows the prices of ICICI BANK stock in NSE which were observed during the

analysis that showed a descending triangle pattern which can be seen in Figure 3.

Figure 3 shows the “Descending Triangle” pattern marked in blue shaded region. As this is a

bearish continuous pattern, the conclusion drawn was that the prices of this stock will fall, which

held true till 15th July, 2014 as can be seen in Figure 3. After that it retained the support line by

boosting up.

Canara Bank (Canara Bank (Canara Bank (Canara Bank (CANBCANBCANBCANBKKKK))))

When analyzed, Canara Bank also showed Head and Shoulder pattern. A Head and

Shoulders reversal pattern forms after an uptrend, and its completion marks a trend

reversal. The pattern contains three successive peaks with the middle peak (heaheaheaheadddd) being

the highest and the two outside peaks (shouldersshouldersshouldersshoulders) being low and roughly equal. The

reaction lows of each peak can be connected to form support, or a necklinenecklinenecklineneckline. Hence, it

was concluded that the trend will be downward in the coming months. Following are

statistics of the study:

Table 5 Price History: CANBK

DATE PARTICULARS OPEN HIGH LOW CLOSE VOLUME

26/05 Left Shoulder 478 491.85 417.95 452.25 102,56,528

27/05 1st Support 448.50 452.10 417.15 425.55 59,60,664

09/06 Head 475 498 471.90 491.20 60,68,441

20/06 2nd Support 426.40 434 420.05 423.20 26,34,121

23/06 3rd Support 424 440.35 418 438.50 32,98,595

30/06 Right Shoulder 433 465 433 461.60 38,90,547

Figure 3 Patterns in ICICIBANK Stock

Figure 4 Head and Shoulders: CANBK

Table 5 shows the key prices of the head and shoulder pattern observed in Canara Bank share

prices. As can be seen in Figure 4, before the left shoulder, there is an upward trend in the stock

prices, and after forming the right shoulder, the upward trend reverses to downward trend. This

confirms the conclusion to be true.

BANK Nifty (BANK Nifty (BANK Nifty (BANK Nifty (CNX BANKCNX BANKCNX BANKCNX BANK))))

Bank Nifty, an index of banking sector companies in NSE, when analyzed for a period of

approximately 1.5 months (15th May to 30th June, 2014), showed rectangle pattern. A

Rectangle is a continuation pattern that forms as a trading range during a pause in the

trend. The pattern is easily identifiable by two comparable highs and two comparable

lows. The highs and lows can be connected to form two parallel lines that make up the

top and bottom of a rectangle. A rectangle formed can also be called as trading range, i.e.

a range in which the stock is traded. As a continuation pattern was observed, the expected

trend of BANK Nifty was to retain the trading range.

Following are the statistics of my study:

Table 6 shows the value of CNX Bank by which the rectangle pattern was confirmed in

the index. As can be seen in the shaded region of Figure 5, a rectangle is formed between

support and resistance levels of the index. As no major fluctuations in volume can be

observed, the index can be assumed to retain the trading range.

Table 6 Historical Value of CNX Bank

A test based on training given by GW was taken at the end of the program

and certificate was awarded on 15th July, 2014.

DATE PARTICULARS OPEN HIGH LOW CLOSE VOLUME

21/05 Support 15126.60 15126.60 14857.50 14952.10 369,14,763

06/06 Resistance 15405.75 15576.05 15320.75 15543.15 397,19,688

10/06 Resistance 15585.40 15585.40 15337.85 15427.80 304,67,964

13/06 Resistance 15506.75 15599.75 15083.90 15106.90 330,36,708

16/06 Support 15055.20 15091.30 14858.90 15030.00 327,28,056

Figure 5 Rectangle Pattern in CNX Bank

Conclusion

This internship program has provided valuable exposure and ample

opportunity to explore the exiting world of Stock Markets. Started right from

the initial theoretical stage, it went through a variety of work involving client

service and support; ascertaining the possible fluctuations and trends in

market; technical and fundamental analysis of market; marketing various

services offered by the company; and providing live market updates to

customers.

It has not only provided me a learning opportunity, but it also has provided

me with an inspiration to proceed in the chosen path and delivered a sense

of purpose and will to achieve my long term goals and a clear sense of

direction as to my future course of action.

Many things remain unspoken and many tasks are tedious and require hard

work and persistence, but it actually is the amount of involvement and

dedication thrown up during the project. Eventually, I had a great time

working with GroundWork Securities as this was, as I felt, the perfect

platform for having an insight on the structure of Indian Stock Market. It also

has provided theoretical and practical knowledge about online trading.