wealth management final internship project

8/10/2019 wealth management Final Internship Project

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Declaration

We hereby declare that the following Summer Intern

Project Report of Summer Internship is an authentic work don

by us. This is to declare that all work indulged in the completio

this work such as research, analysis of activities of Indian apital

Market Present Market) is a profound and honest work of ours

Industry Guide Faculty Guide Prepared By

Mr. Ajeet Kumar Singh Prof. Mukesh Bhatia Santu Kumar Mishra

(Vice President) Roll No: 20130142

ACKNOWLEDGEMENT


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We would like to express my hearty gratitude to my TraiGuide Mr. Ajeet Kumar Singh & Faculty guide Prof. Muk

Bhatia for giving us the opportunity to prepare a project repor

Indian Capital Market Present Market) and for his valuabl

guidance and sincere cooperation, which helped us in compthis project.

Industry Guide Faculty Guide Prepared By

Mr. Ajeet Kumar Singh Prof. Mukesh Bhatia Santu Kumar Mishra

(Vice President) Roll No: 20130142

Table of Content


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Topic Page No.

Executive Summary 04

Introduction 05

Introduction to Fundamental Analysis

Market Capitalization

06

07

Quarterly P/E ratios of SENSEX 12

Analysis of the Ratio 13

Introduction of Capital Market

Co-relation between SENSEX & NIFTY

14

19

Technical Analysis 20

Trading Strategy 29

Process for the Study 31

Company Profile

Our Approach

Top Management

Our Vision & Mission

Our Products

36

37

3839

38

Objective of Study 47

Limitation of Study 48

Research Methodology 49

Conclusion 50Bibliography 51

Executive Summary


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This report brings you a sample of key details from the capital markets and some

macroeconomic variables that are related to it. This report primarily focuses on the Indian Capital

market with more impetus given on key ratios governing the same. An analysis of stock market

capitalization to GDP ratio is done to find out the historical valuation of Indian stock market and

their present valuation. To further corroborate the findings, an analysis of Sensex PE ratio is also

done.

A study has been done to find out the correlation between the two biggest stock market of

India, i.e., Sensex and Nifty. This report also focuses on the general economic situation in India,

and its relation to the Maslows hierarchy of needs. Analysis of the stock movements of HDFC

is also given in this report.

Along with the fundamental analysis, this report also shows the importance of technical

analysis and its key indicators. There are more than 100 tools and indicators that are used in

technical analysis but I have focused mainly on moving average, moving average convergence

divergence (MACD), relative stre ngth index (RSI) and Williams % R.

Finally the report throws light on the importance of candlesticks as a tool for delivery

trading. A comparison between two different trading strategies is done to find out which one

is more profitable over a one year period. Based on that a candlestick chart analysis of Nifty 50

stock futures is done using hourly data.

INTRODUCTION


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Indian Capital Market since liberalization has undergone tremendous changes and

ha s evolved as a vibrant system of investment flows. A dynamic capital market is an

important segment of the financial system of any country as it plays a significant role in

mobilizing savings and channeling them for productive purposes. The efficient fund allocation

depends on the stock market efficiency in pricing the different securities traded in it.

The project has been divided into two parts- fundamental analysis and technical

analysis. This has been done because it has often been said that an ideal trading system would be to

use both fundamental and technical analysis in tandem prior to making an investment.

The first part of the project deals with fundamental analysis and certain key

macroeconomic variables that are important prior to making an investment. The first of these

ratios is the market capitalization to GDP ratio which indicates the overall condition of the

market. It is a ratio that is used to find out if the market is undervalued or overvalued. The second

important ratio is the price to earnings ratio of Sensex, which indicates how much the investor is

willing to pay per rupee earning of the company. The next part of fundamental analysis deals

with Maslows hierarchy of needs and its importance in making investment decisions. This part

of the project deals specifically with the Indian population and where they lie on the Maslows

hierarchy of needs level.

The second part of the project deals with technical analysis and its importance to

generate buy and sell signals at key points. A One year study of 15 scrips is done using an

important technical indicator i.e., Exponential Moving Averages through two different strategies to

generate delivery based calls. Similarly, a one year study is done on Nifty 50 scrips to generate

long and short calls for Delivery trading.

Introduction to Fundamental Analysis

Fundamental analysis is a process of looking at a business at the basic or fundamental

financial level. The primary assumption of fundamental analysis is that the all the factors are not


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discounted in the current market price. There is something called the intrinsic value of the stock

which is its true value. Fundamental analysis also assumes that the market will reach its true

intrinsic value in the long term and hence the market value and the intrinsic value will reach

equilibrium. Hence if the market value at present is lower than its intrinsic value, then it is good time

to invest and vice versa.

The steps involved in fundamental analysis are:

1. Macroeconomic analysis, which involves considering currencies, commodities and

indices.

2. Industry sector analysis, which involves the analysis of companies that are a part of the

sector.

3. Situational analysis of a company.

4. Financial analysis of the company.

5. Valuation

Fundamental Analysis Tools

There are several tools used for fundamental analysis. Some of the most popular are:

i. Earnings per Share

ii. Price to Earnings

iii. Projected Earning Growth (PEG)

iv. Price to Sales (P/S)

v. Price to Book (P/B)

vi. Dividend Payout ratio

vii. Dividend yield

viii. Book value

ix. Return on Equity (ROE)

x. Ratio analysis

Market Capitalization


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Market capitalization of a company is determined by multiplying the

price of its stock by the number of shares issued by the company. Similarly, market capitalization

of an index is calculated by adding the individual market capitalization of the companies in the

index. Free float market capitalization method is used to calculate the market capitalization of

SENSEX. Free float market capitalization is defined as that proportion of total shares issued by the

company that are readily available for trading in the market. It excludes promoters holding,

government holding, etc.

Gross Domestic product

GDP is defined as the total market value of all final goods and services produced within

the country in a given period of time.

GDP = C + I + G + NX

C - Consumption expenditure

I - Investment expenditure

G - Government expenditure

NX - Net exports = Exports -Imports

Stock Market Capitalization to GDP ratioThe stock market cap to GDP ratio is used to measure whether a market is overvalued or

undervalued. Usually a value of over 100% indicates that the market is overvalued and best not

to invest. A value of below 100% is considered undervalued and hence the right time to invest.

Warren buffet said that if the ratio is around 80% it is a good time to invest and if it is more than

200% then it is better to stay away from investing in that market.


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Quarterly Stock Market Capitalization to GDP ratios of India

r Q1 Q2 Q3 Q4

1979-80 0.01 0.01 0.01 0.01

1980-81 0.01 0.01 0.01 0.01

1981-82 0.01 0.01 0.01 0.01

1982-83 0.01 0.01 0.01 0.01

1983-84 0.01 0.01 0.01 0.01

1984-85 0.02 0.02 0.02 0.02

1985-86 0.02 0.02 0.02 0.02

1986-87 0.03 0.03 0.03 0.03

1987-88 0.03 0.04 0.04 0.05

1988-89 0.05 0.05 0.05 0.05

1989-90 0.05 0.05 0.06 0.06

1990-91 0.06 0.07 0.07 0.08

1991-92 0.12 0.17 0.22 0.27

1992-93 0.24 0.21 0.18 0.15

1993-94 0.18 0.21 0.25 0.28

1994-95 0.28 0.29 0.30 0.31

1995-96 0.32 0.33 0.34 0.34

1996-97 0.33 0.31 0.30 0.28

1997-98 0.29 0.31 0.32 0.33

1998-99 0.32 0.31 0.31 0.301999-00 0.34 0.39 0.43 0.47

2000-01 0.42 0.37 0.32 0.28

2001-02 0.28 0.28 0.28 0.28

2002-03 0.27 0.27 0.26 0.25


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2003-04 0.32 0.38 0.44 0.50

2004-05 0.55 0.58 0.62 0.66

2005-06 0.77 0.88 0.99 1.09

2006-07 1.11 1.13 1.15 1.17

2007-08 1.46 1.36 1.46 1.54

2008-09 1.36 1.18 1.02 0.85

2009-10 1.00 1.13 1.24 1.29

2010-11 1.21

Table 1.2: Quarterly Market Cap to GDP ratio

Changes in Stock Market Capitalization to GDP ratio

Chart 1.2: Changes in stock market capitalization to GDP ratio


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Analysis of the ratio

The Stock Market capitalization to GDP ratio is used to determine whether an overall

market is undervalued or overvalued. The ratio can be used to focus on specific markets, such as the

Indian market, or it can be applied to the world market depending on what values are used in

the calculation.

For the first time in Indias history, the market cap italization of the BSE crossed the

countrys domestic GDP. This statistic can be observed in the graph as well, where the market

capitalization to GDP ratio crossed 1 for the first time.

As the chart above suggests, for India, the average market cap to GDP number over the

past 2 decades has been 52%. Indian markets were trading near this ratio in March 2009 (when

the downward rally started). And as we stand currently, the markets are back at almost their 2008

peak. As per Buffett, a 70-80% range on this ratio indicates that markets are somewhere

between moderate valuation and fair valuation. If the ratio exceeds 115%, the markets are in

the overvalued zone where odds of investing are not in the favor of investor.

Price to Earnings Ratio of the SENSEX

P/E ratio - The price to earnings ratio is an important indicator used by several

fundamental analysts. The P/E of a company tells us how much the investor is willing to pay,

based on the earnings of the company. The P/E ratio also tells us how much the market is willing

to pay the investor per rupee earning of the company.

The P/E ratio is calculated as

P/E= Stock price/Earnings per share

The stock price is the current market value of the stock.

The EPS can be calculated in three ways. EPS is calculated as the net earnings divided


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by the outstanding shares. If the EPS is calculated based on the net earnings of the previous

four quarters, it is called trailing P/E. If the EPS is calculated based on the estimated earnings of

the next four quarters, it is called a forward P/E. Sometimes the EPS is calculated using the

net earnings of the previous two quarters and the next two quarters. Hence there are types of P/E

ratio.

Significance of the ratio

The P/E ratio cannot be the only indicator to base ones investment. There are two ways to

read the P/E ratio. One method is to compare the P/E of the company to the industry P/E. If the P/E

of the company is higher than the P/E of the industry it means that the market is expecting some

positive events from the company as far as earnings are concerned. This can be interpreted in two

ways. It could mean that the company is outperforming the market and hence is overheated or it

could mean that there are some positive events associated with the company and hence a good

time to invest. The second method to read the P/E is to compare the P/E of the company with its

competitors in the same industry. This gives a general idea as to whether the stock price is

undervalued or overvalued.

Quarterly P/E ratios of SENSEXAR Q1 Q2 Q3 Q4 Sensex

1990-91 16.73 23.52 19.69 19.68 1049.53

1991-92 21.52 24.75 23.98 44.32 1879.51

1992-93 39.6 38.76 31.35 29.34 2895.67

1993-94 29.26 36.9 39.64 46.83 2898.69

1994-95 51.93 45.84 34.72 30.37 3974.91

1995-96 23.15 18.67 15.76 17.29 3288.681996-97 20.17 13.83 11.51 14.57 3469.24

1997-98 15.2 14.66 13.04 15.24 3812.86

1998-99 13.32 11.5 11.65 14.59 3294.78

1999-00 16.53 20.41 20.91 22.69 4658.63

2000-01 29.39 24.09 20.84 19.72 4269.69


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security, financial security, etc.

Social needs

This, according to Maslows, is the first level of higher level needs. Social needs are

those related to interaction with others and they include friendship, belonging to a group, etc.

Esteem needs

Esteem needs can be internal esteem needs or external esteem needs. The esteem needs

include self-respect, achievement, attention, recognition and reputation. The first two are internal

esteem needs where as the last three are external esteem needs.

Self-actualization

Self- actualization is the summit of Maslows hierarchy of needs. It is the quest of reaching

ones full potential as a person. T he needs associated with self-actualization include truth, justice,

wisdom, etc.


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Introduction

Despite the economic reforms of 1991, Indias economic growth has been slow compared to

the levels achieved by the other Asian economies in the past. From 1991 - when the economic

reforms began - till 2000 end, Indias GDP per capita has grown at 4.2% a year. Up to the early

1980s, GDP per capita grew at only 1.6% a year. From the mid 1980s to 1991, GDP per capita grew

to around 2.6% a year. Currently the growth rate hovers around 6% to 9%.

The growth patterns of the Indian economy are an indicator of not just the economic scope in

the country but societal pattern as well. The further study analyses specific indicators of the Indian

economy relative to the GDP growth, which may support the positioning of the Indian people on

Maslows Hierarchy of Needs. Through the findings, it seems most probable that India has the

majority of its population lying in the Security and Social Needs of Maslows Hierarchy.

Subsequent passages show examples from the demographics of the country which may

corroborate this position of the Indian population on the Hierarchy of Needs.

Background Facts

Population: 1.18 Billion

Demography (Age):


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0-14 years - 31.1%

15-64 years - 63.6%

65 & above - 5.3%

Average age: 24.9 years

Poverty:

The following figures show the percentage of population below poverty line

2000 - 26%

2006 - 22%

Literacy:

2001 - 65.38%

2007 - 64.8%

2009 - 61%

Infant Mortality rates:

2007 - 34.61 per 1000 babies

2008 - 32.31 per 1000 babies

2009 - 30.15 per 1000 babies

Life expectancy:

2006 - 63 years

2009 - 69.89 years


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Findings

The demography pattern of India shows that the majority of the population lies in the 15 -

64 years age bracket. This by itself can lead to an assumption that the majority of the population fall

in the Security and Social needs of Maslows Hiera rchy. If we look at the average age of the

population we notice that India is by and large a young nation, which further substantiates the

finding.

The poverty figures have been declining over the years. From 26% in 2000, the population

below the poverty line by 2006 estimates dropped to 22%. The literacy rates of India are

unimpressive at a mere 61% and have decreased over the years, which is not a promising sign.

The decreasing mortality rates and increasing life expectancy show that healthcare in India has

been bettering over the years. As such, even on the healthcare front Security needs of the Indian

people even though improving, need substantial improvement.

Other examples corroborating the findings

The following specifics of India have been used to substantiate our findings:


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A majority of Indians have per capita space equivalent to or less than a 10 feet x 10 feet room

for their living, sleeping, cooking, washing and toilet needs. The average is 103 sq ft per person in

rural areas and 117 sq ft per person in urban areas. It may then be inferred that most of the

population are somehow satisfying the physiological need of housing.

Though the number of companies providing insurance is being increasing but the contrasting

fact is only 1% of the population is insured for life. The insurance sector is still highly untapped. On

the telecommunications front, more than half of the population own mobile phones. In absolute

numbers this translates into 600 million mobile users in the country. In comparison, land lines are

only a meager 150 million. Consequently we assume that with the shift of preference to mobile

phones over the years, the Indian people are addressing their social needs as well. However,

this does not indicate that the majority of the population may have surpassed the social needs status

on Maslows hierarchy.

Analysis

From the GDP growth it can be understood that India is an emerging growing economy.

The average age of the Indian population is 24.9 years and hence by and large a relatively

young population. Also a majority of the population fall under the 15-64 years age bracket

which substantiates the finding that majority of the Indian population lie in the Social and Security

needs of Maslows hierarchy. What this indicates is that the Indian government needs to address

the security needs of the Indian population through more reforms in the insurance sector, more

impetus on rural education and finally more investment in the rural household sector. The last of the

three is substantiated by the fact that the poverty figures in India are very disheartening and there is

an urgent requirement from the government to spend heavily on the rural household sector.

The poverty figures indicate that 22% of the population is struggling to address their

physiological needs. Only about 30% of the population is urbanized and hence this further

substantiates the findings that majority of the population falls in the security needs of Maslows

hierarchy. To further confirm the above findings it is important to note that only 1% of the


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population is insured for life and 0.2% is covered under mediclaim. With the increasing number

of insurance companies, Indian population is trying to fulfill their security needs.

I would also like to add that though most of the Indian people are carrying cell phones with

them, they cannot be placed on the social needs of Maslows hierarchy. The fact that a large section

of the population are still struggling to meet their security needs cannot be ruled out. The research

also led me to believe, albeit inconclusively, that not more than 5% of the population of India has

surpassed the social needs stage. Hence it may easily be concluded that Indians lie on the Security

needs stage of the Maslows hierarchy.

Correlation between SENSEX and Nifty

SENSEX is the sensitive Index of Bombay Stock Exchange (BSE), India, a Market

Capitalization Weighted average of 30 large and financially stable companies BSE stock

prices. These 30 companies account for a half of the total market capitalization of BSE. Started

since 1986, SENSEX is monitored by most of the global markets as well.

NIFTY is Standard & Poors CRISIL NSE Index 50, is the index for large and

financially sound companies whose stocks are being traded on National of National Stock

Exchange (NSE) of India. Started since November 1995, nifty is most widely used for

benchmarking index funds, index based derivatives and to evaluate the overall performance of the

nations stock market over time. On plotting the daily closing values of Sensex and Nifty for about

last three and a half years (2 nd Jan 2007 to 31 st May 2010), with the hypothesis that SENSEX is

independent variable and Nifty is dependent on SENSEX, by performing ANOVA or Analysis

of variables test in MS-Excel, the coefficient of correlation or R-square comes out to be 85%

and the hypothesis proves to be correct with 95% confidence. The inference from above

mathematical analysis is that even though both indices belong to separate markets, their

performance/daily movement is almost identical, which can be spotted visually as well, because

both the curves fit very well and mostly give identical information.


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The war between the two has intensified due to the ever rising competition between NSE

and BSE. Both of them have their own USPs. The market Capitalization of NSE is almost twice of

BSE, but, the BSE is the oldest stock exchange in Asia and has its own history. The fact that both

are having many independent powers & separate entities worsens the situation. So, the only common

link between them now is SEBI, which has a totally different role, as its a regulatory authority to

watch and control the legal and ethical aspects of the market and protect the interests of

shareholders. Hence, no one, not even the SEBI is an intermediary between the two, thereby,

intensifying the competition between them to become the preferred exchange for top

companies. Even though the competition is healthy for any company to emerge stronger, provide

more value added services and work smarter, it becomes totally unhealthy and destructive when

there are price wars and a red ocean causing them to put their riches in advertising and other

undue marketing/brand building expenses.

So, whom to track? Whom to believe and follow? Which of them is a better indicator of

the market? Who is better in gauging the Indian stocks? Ironically, it doesnt matter at all.

Both SENSEX and Nifty are well diversified and contains many similar companies stocks. So,

even though Nifty has got 20 more companies, thats 67% more variety, both SENSEX and Nifty

moves in the same direction and the trend seems like totally correlated. There is a definite

difference in scale or magnitude, but, after scaling and equalizing both to similar bases, there will be

hardly any difference in both indices. So, the choice is based only on convenience and not

on the performance. The global markets prefer SENSEX because that was the only option with

them earlier and they dont want to switch to other without any clear reason for that sudden change.

Technical Analysis

Introduction to Technical Analysis

Technical analysis is the study of market action, primarily through the use of charts, for the

purpose of forecasting future price trends. For technical analysts, the term market action includes

three sources of information. They are price, volume and open interest. Open interest is used only in


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futures and options.

There are three premises on which technical analysis is based. They are

a. Market action discounts everything - Anything and everything that affects the price is actuallyreflected in the price of that market. Hence a technical analyst will only study the price action and

not the reasons behind the change in the price.

b. Prices move in trends - There are three types of trends. They are uptrend, downtrend and

sideways trend. The assumption of technical analysis is that a trend in motion is more likely

to

continue than reverse or a trend in motion will continue in the same direction until it reverses.

c. History repeats itself - The meaning of the phrase history repeats itself is that the key to

understanding the future lies in the study of the past, or that the future is just a repetition of 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

which define 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 which there

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 which there


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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).

Close - This is the last price that the security traded during the period. Due to its availability, the Close

is the most often used price for analysis. The relationship between the Open (the first price) and the

Close (the last price) are considered significant by most technicians. This relationship is emphasized in

candlestick charts.

Volume - This is the number of shares (or contracts) that were traded during the period. The

relationship between prices and volume (e.g., increasing prices accompanied with increasing volume)

is important.

Open Interest - This is the total number of outstanding contracts (i.e., those that have not been

exercised, closed, or expired) of a future or option. Open interest is often used as an indicator.

Bid - This is the price a market maker is willing to pay for a security (i.e., the price you will receive if

you sell).

Ask - This is the price a market maker is willing to accept (i.e., the price you will pay to buy the

security).

Chart Styles

Price in a chart can be displayed in following styles:

Bar Chart.

Line Chart. Candlestick Chart.

Bar Charts:

The highs and lows of a stock are plotted in a diagram and the points are joined with vertical

lines (bars). A small horizontal tick to the left denotes the opening level while a small horizontal tick to


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the right represents the closing price of each interval.

Line Chart

It gives the detailed information about every aspect. The stock prices for each time period are

plotted in a diagram and the points are joined. Prices on the y-axis and time on the x-axis. The line chart

chooses for example the closing price of consecutive time periods, but can also work with daily, official

fixings.

Candlestick Chart

Although candlestick charts are nearly identical to typical Western bar charts, there is one

important distinction: candlestick charts are far more dramatic in their presentation. Instead of the

standard high-to-low vertical lines accompanied by horizontal ticks that identify the day's open and

close, candlestick charts employ two-dimensional bodies to depict the open-to-close trading range

and upper and lower stems (or shadows) to mark the day's high and low. A candlestick is black if

the closing price is lower than the opening price. A candlestick is white if the closing price is higher

than the opening price.

Bullish Patterns

1) Long white (empty) line. This is a bullish line. It occurs when prices open near the low and close

significantly higher near the period's high.

2) Hammer. This is a bullish line if it occurs after a significant downtrend. If the line

occurs after a significant up-trend, it is called a Hanging Man. A Hammer is identified by a

small real body (i.e., a small range between the open and closing prices) and a long lower

shadow (i.e., the low is significantly lower than the open, high, and close). The body can

be empty or filled-in.

3) Piercing line. This is a bullish pattern and the opposite of a dark cloud cover. The first

line is a long black line and the second line is a long white line. The second line opens

lower than the first line's low, but it closes more than halfway above the first line's real


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body.

4) Bullish engulfing lines. This pattern is strongly bullish if it occurs after a significant downtrend

(i.e., it acts as a reversal pattern). It occurs when a small bearish (filled-in) line is engulfed by a large

bullish (empty) line.

5) Morning star. This is a bullish pattern signifying a potential bottom. The "star" indicates a

possible reversal and the bullish (empty) line confirms this. The star can be empty or filled-in.

6) Bullish doji star. A "star" indicates a reversal and a doji indicates indecision. Thus, this pattern usually

indicates a reversal following an indecisive period. You should wait for a confirmation (e.g., as in the

morning star, above) before trading a doji star. The first line can be empty or filled in.

Bearish Patterns

1) Long black (filled-in) line. This is a bearish line. It occurs when prices open near the high and close

significantly lower near the period's low.

2) Hanging Man. These lines are bearish if they occur after a significant uptrend. If this pattern occurs

after a significant downtrend, it is called a Hammer. They are identified by small real bodies (i.e., a

small range between the open and closing prices) and a long lower shadow (i.e., the low was

significantly lower than the open, high, and close). The bodies can be empty or filled-in.

3) Dark cloud cover. This is a bearish pattern. The pattern is more significant if the second line's

body is below the center of the previous line's body (as illustrated).

4) Bearish engulfing lines. This pattern is strongly bearish if it occurs after a significant uptrend (i.e., it

acts as a reversal pattern). It occurs when a small bullish (empty) line is engulfed by a large bearish

(filled-in) line.


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5) Evening star. This is a bearish pattern signifying a potential top. The "star" indicates

a possible reversal and the bearish (filled-in) line confirms this. The star can be empty

or filled in.

6) Doji star. A star indicates a reversal and a doji indicates indecision. Thus, this pattern usually

indicates a reversal following an indecisive period. You should wait for a confirmation (e.g., as in

the evening star illustration) before trading a doji star.

7) Shooting star. This pattern suggests a minor reversal when it appears after a rally.

The star's body must appear near the low price and the line should have a long upper

shadow.

Reversal Patterns

1) Long-legged doji. This line often signifies a turning point. It occurs when the open

and close are the same, and the range between the high and low is relatively large.

2) Dragon-fly doji. This line also signifies a turning point. It occur when the open and

close are the same, and the low is significantly lower than the open, high, and closing

prices.

3) Gravestone doji. This line also signifies a turning point. It occurs when the open, close, and low

are the same, and the high is significantly higher than the open, low, and closing prices.

4) Star. Stars indicate reversals. A star is a line with a small real body that occurs after a line with a

much larger real body, where the real bodies do not overlap. The shadows may overlap.

5) Doji star. A star indicates a reversal and a doji indicates indecision. Thus, this pattern usually

indicates a reversal following an indecisive period. You should wait for a confirmation (e.g., as in

the evening star illustration) before trading a doji star.


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Neutral Patterns

1) Spinning tops. These are neutral lines. They occur when the distance between the high and low, and

the distance between the open and close, are relatively small.

2) Doji. This line implies indecision. The security opened and closed at the same price.

These lines can appear in several different patterns. Double doji lines (two adjacent

doji lines) imply that a forceful move will follow a breakout from the current

indecision.

3) Harami ("pregnant" in English). This pattern indicates a decrease in momentum. It occurs when a

line with a small body falls within the area of a larger body. In this example, a bullish (empty) line

with a long body is followed by a weak bearish (filled in) line. This implies a decrease in the bullish

momentum.

4) Harami cross. This pattern also indicates a decrease in momentum. The pattern is similar to a

harami, except the second line is a doji (signifying indecision).

Key Technical Indicators

There are several indicators that are used in technical analysis. But I have chosen to highlight

the following indicators as I have used some of these further in the project.

1. Moving average

2. Relative Strength Index (RSI)

3. Larry Williams % R

4. Moving average Convergence Divergence (MACD)

5. Fibonacci tools

1) Moving average - The moving average essentially a trend following indicator or a lagging

indicator as it is formed after the price movement occurs. Its purpose is to identify or signal that a

new trend has begun or that an old trend has ended or reversed. Its purpose is to track the


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progress of the trend.

There are three types of moving averages that are used by technical analysts. They are

a) Simple moving average - It is calculated by taking the average of the previous 10 or 15closing

prices. The weights given to each day is the same i.e. in a 10 day simple moving average, the

weight given for the 10th day closing price is the same as the weight given for the 1st day

closing price. The disadvantage of the simple moving average is that it reacts slower

to the price movement when compared to an exponential moving average.

b) Linearly weighted moving average - In this type of moving average weights are given in a

linear proportion to each days closing price i.e. the 10th day closing price is multiplied with

10, the 9th day with 9, and so on. The greater weight is given to the most recent closing.

c) Exponential moving average - The exponential moving average assigns greater weight to more

recent data and it includes in its calculation all of the data in the life of the instrument.

The advantage of using exponential moving averages is that it reacts quicker to the price

movement than a simple moving average.

Analyzing moving averages

There are two ways to analyze moving averages. They are as follows:

i. Single moving average and price - A single moving average is used to generate buy and

sell signals. When the price line moves above the moving average, a buy signal is

generated. Conversely, when the price line moves below the moving average, a sell signal is

generated.

ii. Double crossover method - In this case two moving averages are used. One is a shorter moving

average and the other a longer moving average. When the shorter moving average crosses

above the longer moving average, a buy signal is generated. Conversely, when the

shorter moving average crosses below the longer moving average, a sell signal is generated.


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2) Relative Strength Index (RSI) - Relative strength generally means a ratio line comparing two

different entities. A ratio of a stock or industry group to the Sensex is one way of gauging relative

strength of different stocks or industry groups against one objective benchmark. Relative strength

index solves the problem of erratic movement and the need for constant upper and lower

boundary.

The formula used for calculating RSI is

RSI=100-100/1+RS

RS=Average of x days up close/ Average of x days down close

Analyzing Relative Strength Index

RSI is plotted on a vertical scale of 0 to 100. Movements above 70 are considered

overbought while an oversold condition would be move under 30. Because of shifting that

takes place in bull and bear market, the 80 level usually becomes overbought level in bull

market and the 20 level the oversold level in bear market.

3) Larry Williams % R - Larry Williams % R measures the latest close in rel ation to its price

range over a given number of days. Todays close is subtracted from the price high of the range for

a given number of days and that difference is divided by the total range for the same period. In

technical analysis this is a momentum indicator measuring overbought and oversold levels. It is used

to determine market entry and exit points.

4) Moving Average Convergence Divergence (MACD) - MACD is comprised of two sets of

line. One is called the faster line and the other the slower line. The faster line is the difference

between two exponential moving averages (usually 12 and 26). It is also called the MACD line.

The slower line is usually a 9 day exponential moving average of the MACD line. It is also called

the signal line. The buy and sell signals are based on the crossovers between the two lines. Hence it

is very similar to the double crossover method of moving averages.


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5) Fibonacci tools - Fibonacci tools utilize special ratios that naturally occur in nature to help

predict points of support or resistance. Fibonacci numbers are 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89,

etc. The sequence occurs by adding the previous two numbers (i.e. 1+1=2, 2+3=5) The main ratio

used is .618, this is found by dividing one Fibonacci number into the next in sequence Fibonacci

number (55/89=0.618). The logic most often used by Fibonacci based traders is that since

Fibonacci numbers occur in nature and the stock, futures, and currency markets are creations of

nature - humans. Therefore, the Fibonacci sequence should apply to the financial markets.

Technical Analysis Software - The technical analysis software used is Metastock, which is

created by Equis International, a Thomson Reuters company. It is the most widely used technical

analysis software. The major competitors of Reuters are Bloomberg and Dow Jones Newswires.

Trading Strategy

As part of my technical analysis I worked on a technique for delivery based trading. I have

used 15 minute candlestick chart along with 2 exponential moving averages (8 EMA & 34 EMA)

for my study. Candlestick chart is used as they are far more dramatic in their presentation and it

employ two-dimensional bodies to depict the open-to-close trading range and upper and lower stems(or shadows) to mark the day's high and low. The idea of using exponential moving average is that

it assigns greater weight to more recent data, and thereby reacts quicker to the price movement

than a simple moving average. I have specifically used 8 and 34 EMAs as they are Fibonacci

numbers and hold much importance in analyzing stock prices.

I have analyzed both the EMAs with double crossover method, i.e., when the 8 EMA

crosses above the 34 EMA, a buy signal is generated. Conversely, when the 8 EMA crosses below

the 34 EMA, a sell signal is generated. For my study I have considered only buy signals as we can

shortsell only in intraday trading. For the buy signal, I have considered the closing price of the

candlestick which is forming just after the crossover. The position has to be kept until I get a signal to

close the position. To close the position I have followed two different strategies. They are:


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1. Closing the position with the first candlestick being formed below the lower moving

average.

2. Closing the position when a candlestick is formed whose closing is below the lower

moving average.

Process for the study

The purpose of this project was to find a successful trading system using candlesticks

and moving averages in tandem. Two exponential moving averages were used namely 8 EMA

and 34 EMA with the help of which trading signal has to be generated over a one year time

period from May 2009 to June 2010. Two different strategies were used as mentioned above and

the study was done on 14 selected securities namely, Balrampur Chini, DLF, ITC, Reliance

Capital, Suzlon Energy, JP Associates, Sesa Goa, Bhushan Steel, Infosys, Ansal Properties, ICICI

Bank, HUL, L&T and ONGC. Along with this the same study is also done on Nifty futures.

The study was conducted by plotting fifteen minute candlestick chart along with the

two EMAs simultaneously on Metastock.

Findings

The following table illustrates the accuracy and the returns for the study over a period of

one year:

Scrips Returns in 1st Returns in 2nd

strategy (%) strategy (%)

Accuracy Accuracy

(1st) % (2nd) %Balrampur Chini 18.78 23.74 47.19 42.7

DLF 57.3 50.3 39.8 41.84

ITC 2.73 4.13 39.13 34.78

Reliance Capital 0.65 17.39 30.48 28.57

Suzlon Energy 42.53 15.83 36.67 33.33


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JP Associates 37.97 32.29 50 50

Sesa Goa 76.49 9.39 34.95 33.98

Bhushan Steel 100.23 11.6 41.7 37.5

Infosys 12.4 14.63 44.68 46.81

Ansal Properties 12.89 -4.25 38.55 31.33

ICICI Bank 36.92 31.94 49.44 50.56

HUL 15.39 19 38.71 35.48

L & T 11.68 15.05 38.46 33.65


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ONGC 4.98 13.4 32.14 33.93

Table 2.1: Outcome showing returns and accuracy for both the strategies

Analysis

In the first strategy, the returns were highest for Bhushan Steel at 100.23% followed by Sesa

Goa at 76.49% and DLF at 57.3%. On the other hand the lowest return was given by Reliance

Capital at 0.65% followed by ITC at 2.73% and ONGC at 4.98%.

Study of Nifty Futures for a period of May 2009 to June 2010

With the same strategies, a similar study was conducted on one of Indias premier Index

futures, i.e., Nifty Futures. The following table shows the outcome of the study:

Nifty Futures

Return in 1 st strategy 395.7 points

Accuracy in 1 st Strategy 36.84%

Return in 2 nd strategy 173.8 points

Accuracy in 2 nd Strategy 33.68%

Table 1: Outcome of Nifty Futures

With the first strategy, there was a benefit of about 400 points where as, with the second

strategy it was 173.8 points.

Conclusion of the study of both the trading strategies

With the study of 14 different scrips and an Index future on both the trading strategies, it

was observed that the first strategy was comparatively better than the second strategy. For most of the

scrips the returns were higher if trading is done with the first strategy. The return for all the 14 scrips

taken together comes to 430.94% and 254.44% taking the first and the second strategies

respectively. For Nifty futures also, the returns were higher with the first trading strategy.


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From the above study, it can be clearly concluded that the first strategy stands ahead

in comparison with the second. Based on this conclusion, a further study is conducted for the

futures contract of the entire 50 scrips comprising Nifty.

Nifty Fifty Stock Futures analysis for a period of one year from May 2009 to June 2010 After

an in-depth study of both the trading strategies, it has already been concluded that the first strategy

stay ahead in comparison with the second one. Based on the outcome of the previous study,

another research is carried out with the futures contract of the 50 scrips comprising the Nifty.

In this study, I have analyzed both the EMAs with double crossover method, i.e., when the 8

EMA crosses above the 34 EMA, a buy signal is generated. Conversely, when the 8 EMA crosses

below the 34 EMA, a sell signal is generated. As these are future contracts, I am considering both

the long and short calls for the purpose of study, as this will enable the readers to understand the

returns in both the calls.

Findings

Following table shows the outcome of the above study. It contains the return and accuracy

for both long and short calls.

S. No.

Nifty 50

Stock Futures

Long Calls

Return Accuracy

Short Calls

Return Accuracy

1 ABB 11.70% 48.5% 5.90% 33.3%

2 ACC -4.24% 30.8% 10.80% 48.0%

3 Ambuja Cements -9.02% 46.9% -10.91% 31.0%

4 Axis Bank 52.57% 62.5% 18.93% 48.1%

5 Bharti Airtel 9.22% 46.4% 25.81% 51.7%

6 BHEL 15.32% 46.4% -3.55% 48.1%

7 BPCL 36.95% 53.3% 3.46% 46.7%

8 Cairn India 26.36% 54.8% 5.46% 36.7%


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9 Cipla 3.62% 38.2% -15.73% 34.4%

10 DLF 41.70% 42.3% 59.17% 64.0%

11 GAIL 10.74% 53.8% 0.85% 42.3%

12 HCL Tech 55.62% 58.3% 12.27% 47.8%

13 HDFC 30.73% 61.5% 11.61% 46.2%

14 HDFC Bank 37.47% 57.7% 13.13% 40.0%

15 Hero Honda 28.83% 54.2% 14.33% 54.2%

16 Hindalco 45.45% 58.3% 22.07% 47.8%

17 HUL 32.95% 57.7% 14.98% 56.5%

18 ICICI Bank 44.48% 59.3% 34.26% 59.3%

19 Idea Cellular 15.45% 42.3% 23.95% 42.3%

20 IDFC 45.15% 60.7% 19.35% 48.1%

21

S. No.

Infosys

Nifty 50

Stock Futures

53.25% 71.4%

Long Calls

Return Accuracy

11.39% 50.0%

Short Calls

Return Accuracy

22 ITC 19.34% 55.2% -4.83% 44.8%

23 Jaiprakash Asso. 38.41% 44.4% 32.19% 38.5%

24 jindal Steel 81.73% 67.9% -6.51% 26.9%

25 Kotak Mahindra 45.30% 64.3% 10.74% 44.4%

26 Larsen & Toubro 14.38% 41.9% 5.24% 26.7%

27 Mahindra & Mah. 55.15% 54.2% 8.08% 47.8%

28 Maruti Suzuki 41.99% 45.8% 22.12% 52.2%

29 NTPC 11.85% 51.9% 12.33% 44.4%

30 ONGC 8.60% 31.3% 6.47% 21.9%

31 PNB 35.72% 46.7% -8.57% 33.3%

32 Power Grid Corp 16.20% 50.0% 20.26% 50.0%

33 Ranbaxy labs 53.02% 43.5% 17.43% 50.0%


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34 Reliance Capital 29.23% 57.9% 48.00% 70.0%

35 Reliance 52.85% 75.0% 21.00% 47.8%

36 Reliance Comm. 44.24% 62.5% 47.68% 43.5%

37 Reliance Infra 3.41% 33.3% 40.20% 42.3%

38 Reliance Power 37.41% 60.9% 41.78% 68.2%

39 SAIL 52.59% 59.1% 16.48% 64.0%

40 SBI 66.70% 68.2% 20.25% 63.2%

41 Siemens 65.44% 70.0% 38.09% 60.0%

42 Sterlite India 75.59% 71.4% 17.61% 50.0%

43 Sun Pharma 53.86% 94.1% 16.33% 53.3%

44 Suzlon Energy 31.64% 45.0% 100.54% 68.2%

45 Tata Motors 98.75% 62.5% 23.74% 37.5%

46 Tata Power 29.44% 50.0% -4.65% 25.0%


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ompany profle

History Of The M ax Growth Capital Pvt. Ltd.

Goodness & Good Money is how we define what MaxGrowth Capital believes

in. But when we say Goodness what do we mean? Heres a handy guide to the values

and principle we will live by and live up to. MaxGrowth Capital exists for the very

reason of helping investors to reap huge returns from their

investments in Equity, Commodities, Spot Commodities &

other investment instruments through a well researched &thought out investment advisory services by keeping

Interests of Investors utmost priority. The MaxGrowth

Capital Management is one of Punjab leading Investment Advisory and Financial

Planning companies. We are also SEBI-approved.

We offer personalised Investment Advisory and Financial Planning services to

individual investors, corporate houses, institutional investors, Non-Resident Indians

(NRIs) and High Networth Clients, among others.

As one of Punjab leading distributors of financial products, we offer a wide range

of investment products such as Direct Equity, mutual funds, Security Trading, life and
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general insurance, bonds, post office schemes, etc. offered by reputed public and private

and government organisations.

Professional Man agement

MaxGrowth is a professionally managed Company comprising of qualified and

well experienced professionals at all levels drawn from various financial services.

Approach

Client Focus

Max Growth Capital is driven by the emphasis we place on building long-term

relationships with our clients. We work closely with our clients to equip them with the

ability to address large, fast-growing market opportunities. Our emphasis on long-term

relationships also means that we have a significant ongoing involvement with almost all

of the clients that we work with.

Execution O rientation

We focus obsessively on delivering high quality execution through our

experienced team of professionals. Each team is led by senior personnel and is highly

research and ideas driven. We place strong emphasis on confidentiality and integrity in a

sensitive business environment.

CultureMaxGrowth Capital fosters a culture that is entrepreneurial and results-driven and

that emphasizes teamwork and intellectual rigour. Our team is encouraged to display

higher levels of initiative, drive, and hunger for learning and taking on additional

responsibility.


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Professional Integrity

We place a strong emphasis on confidentiality, honesty and integrity in our business dealings. We expect our people to maintain high ethical standards, both in their

professional and personal lives. We strive to be fair in all our dealings. We respect our

competitors.

Research Driven

All our businesses are built on a research and analytics foundation. Our

understanding of underlying market trends and strong analytical expertise has resulted in

a demonstrated ability to identify emerging trends and themes early. We seek to provide

the highest quality research and investment opinions to our clients.

Business Ethics

Max Growth lays special emphasis on ethical conduct of business transactions.

Transparency in dealing & fair business terms are at the core of its business philosophy.

Anywhe re Services

Whether you visit our Corporate Office you will be serviced by our highly skilled

& dedicated Relationship Managers. Hence, you need not restrict yourself to Corporate

Office only & can get benefits of our services while on the move.

W ide Range O f Financial ServicesMax Growth provides a host of financial services that are crucial to financial

planning and wealth management. Thus a customer is assured of exclusive attention from

a single point of contact.


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Top M anagement

Manoj Sarna

Managing D irector)

Manoj Sarna is a Managing Director of MaxGrowth Capital (P) Ltd. Mr. Sarna has

over 20 year of rich experience in the field of financial services industry. He previously

has been a member of Ludhiana Stock Exchange since 1995. He handled various profiles

i.e. director Ludhiana Stock Exchange from 2004 to 2005, Director of LSE Securities

from 2002 to 2004 and 2007 to 2009. He also served as Vice Chairman in LSE Securities

from 2008 to 2009.

Rajesh Kapoor

Director)

Rajesh Kapoor is a Director of MaxGrowth Capital (P) Ltd. Mr. Kapoor graduated

as a B.Tech with 11 year experience, who has spent considerable time across functions in

the organization. He is a Director in Balance Investment Corporation Ltd and Balance

construction Pvt. Ltd.

Ashutosh Sarna

Director)

Ashutosh Sarna is a Director of MaxGrowth Capital (P) Ltd. Mr.Sarna has over 3

year of rich experience after M.Business has played the leading role in company's

progress.
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Our V ision :

As a team of professionals we always look ahead to deliver investment optionsthat enables our clients to benefit in the long run. Simultaneously, to become a globally

respected business group by transforming our knowledge and expertise into creation of

wealth for our investors.

Our M ission :

At MaxGrowth Capital, we have set our eyes on creating customer friendly

lucrative investment opportunity that generates maximum profits. To be the financial

mentor of choice for all Investors. Maxgrowth Capital has a mission of creating financial

excellent services to one and all which is key to socio-economic upliftment. At

MaxGrowth Capital, we have set our eyes on creating customer friendly lucrative

investment opportunity that generates maximum profits.

Our B usiness Values

o Integrity : We share common values rooted in Integrity and Excellenceo Customer Orientation: Our succ ess lies in our customers prosperity and

satisfaction; simplification of customers life always pays rich dividends.

o Team : Great success is achieved when people with different strengths work as a

team towards a common objective happily

o Management: Focus of higher management is always on thinking process to

develop systems and higher operational efficiency and product range and to

control power of mind.

o Changes: Nothing but change is stable in the world, which offers both

opportunities and challenges.
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o Work Ethics: We promote a strong work ethic where our team take pride in what

they do, enjoy the people they work with and certainly feel that they are at one of

the greatest places to work at.Exclusive Advantages Of Becoming A Maxgrowth Cap ital Business Partner:

Attractive commercial proposition Opportunity to partner a fast growing organization In-depth equity research with comprehensive coverage across sectors and

segments

MaxGrowth Capital Investment Solutions experience in Investment

Seamless access to multiple transaction channels to end clients Unique competitive offerings such as Wealth Advisory Services, AMO, Model

Portfolio, Consolidated Statement, Online Equity and Commodity transactions and

Portfolio tracking through www.maxgrowthcap.com

Products

1. Equity

Many investors go about their investing in an irrational way: They are tipped of a

'news'/ rumour' in a 'hot stock' from their broker. They impulsively buy the scrip. And

after the purchase wonder why they bought the stock. He is a fool to act in such an

irrational manner. We suggest a three-step approach to investing in equities. The moment

you get a tip on any stock, get the first hand news immediately. You'll find informationon the following sites:

www.maxgrowthcap.com

www.nseindia.com

www.bseindia.com
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The news, if any, will be on the sites. Be it announcements earnings, dividend

payoffs, corporate move to buy another company, flight of top management to anothercompany, these sites should be your first stop. Do some number crunching. Check out the

growth rate of the stock's earnings, as shown in a percentage and analyze those graphs

shown on your stockbrokers site. Learn more about the P/E ratio (price -to-earnings

ratio), earning per share (EPS), market capitalization to sales ratio, projected earnings

growth for the next quarter and some historical data, which will tell what the company

has done in the past. Get the current status of the stock movement such as real-time

quote, average trades per day, total number of shares outstanding, dividend, high and lowfor the day and for the last 52 weeks. This information should give you an indication of

the nature of the companys performance and stock movement. Yld (Yield) : Dividend

divided by price. Bid and Ask (Offer) Price When you enter an order to buy or sell a

stock, you will essentially see the Bid and Ask for a stock and some numbers. What

does this mean? The Bid is the buyers price. It is this price that you need to know when

you have to buy a stock. Bid is the rate/price at which there is a ready buyer for the stock,

which you intend to sell. The Ask (or offer) is what you need to know when you're

buying i.e. this is the rate/ price at which there is seller ready to sell his stock. The seller

will sell his stock if he gets the quoted Ask pri ce. Bid size and Ask (Offer) size If an

investor looks at a computer screen for a quote on the stock of say SBI bank Ltd, it might

look something like this: Bid Price : 1750 Offer Price : 1755 Bid Qty : 40T (T stands for

Thousands) Offer Qty : 20T What this means is that there is total demand for 40,000

shares of company FGH at Rs 1750 per share. Whereas the supply is only of 20,000

shares, which are available for sale at a price of Rs 1755 per share. The law of demand

and supply is a major factor, which will determine which way the stock is headed Armed

with this information, you've got a great chance to pick up a winning stock. Again dont

be in a hurry, ferret out some more facts, try to find out as to who is picking up the stock

(FIIs, mutual funds, big industrial houses? The significance of which you will learn in


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section II of our learning center). Watch for the daily volume in a day: is it more/less than

the average daily volume? If it's more, maybe some fund is accumulating the stock. Next

time you hear or read a 'hot tip': do some research; try to know all you can about the stockand then shoot your investing power into the stock. With practice, you'll be hitting a

bulls eye more often than not. MaxGrowth Capital recommends investors to be aware of

the technical tools of measuring stock performances before investing. Learn to identify

the signals that the market emits.

2. Currency Derivatives

Indian investor can now add one more 'investment option' in their portfolio Currency Derivatives. Regula tory approval from RBI and SEBI was recently made

available (Aug 2008) and this allowed exchanges in

India to launch currency derivatives for trading,

similar to equity/commodities derivatives trading.

With launch of currency derivatives in India through

stock exchanges, there would be dynamic shift in

currency trading and hedging. Indian entity would be able to take positions on the

external value of the rupee without having an underlying foreign currency exposure. It

would enhance overall efficiency of the currency market via transparency in pricing,

increase investor based and categories, enhancing opportunities to invest and eliminate

counter-party risk. Currency Derivatives is a emerging segment in India & to tap this

emerging segment we have acquired the membership of NSE, MCX-Sx & USE. We offer

our broking services in Currency Derivatives segment which provides access to a new

asset class for trading to all Resident Indians. Our strength lies in our ability to develop

innovative tailor made advisory as per requirement of customer enabling them to earn

efficient post tax return in accordance with their specific risk, return and maturity

profiles. Currency derivatives is a product with benefits, such as: Access to a new asset

class for trading to all Resident Indians Hedging current exposure: Importers and


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exporters can hedge future payables and receivables Borrowers can hedge Foreign

Currency loans for interest or principal payments Hedge for offshore investment for

Resident Indians Arbitrage opportunity for entities who can access onshore and nondeliverable forward markets and non deliverable forward markets Volatility and

multiplier make it a significant trading option for traders.

3. Mutual Fund

The wide-eyed child putting his precious coins in a piggy bank is not very

different from the grown-up, prudent investor investing his money. Both are saving for a

rainy day, a future emergency - be it an urgent craving for candies or a sudden need offunds in the family.

In the context who could be a better guide for

you other than your MaxGrowth Wealth Advisor to

take stock of your present and plan for your future?

At MaxGrowth Capital, we offer a variety of schemes to invest based on individual risk

return appetite.

An investor is guided to choose a scheme that best serves their financial objectives

and their investment needs by balancing the ratio of Equity to Debt so as to help the

investor to negotiate the rapid market movements.

Our strength lies in our ability to develop innovative tailor made advisory as per

requirement of customer enabling them to earn efficient post tax return in accordance

with their specific risk, return and maturity profiles.

Brief descriptions of the services that we offer to our clients are mentioned here under:


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Need based advisory by dedicated advisors to help you build an innovative

portfolio.

Monthly review of portfolios together with analysis of various funds.Knowledge sharing through educational seminars and workshops.

4. Derivatives

Our experienced team of market makers and

our experienced team of market makers and salestraders pride itself on creating liquidity in illiquid

markets. We provide timely and efficient execution

of transactions in both NSE and BSE. Our trading

activities include the execution of retail orders & corporate equity repurchases, all of

which occur in a fast-paced and volatile marketplace. We are driven by keen

understanding of the business and are thus able to provide clients with solutions

appropriate to fit their needs. Our services include identifying clients investment

requirements, identifying suitable relevant investment opportunities, keeping clients

informed of company and market developments, maintaining a constant flow of

information to our clients and transacting buy and sell orders effectively and

professionally. MaxGrowth Capital, is a best brokerage house in India, committed to

provide the investors a wide array of investment products to meet their needs. Our team

consists of skilful, determined and energetic people who are driven by passion and have

extensive experience in the field of Capital Market. Our experts provide the advice to the

clients they need. Investment in equities may accrue handsome return if the associated

risk is managed and minimized by seeking expert advice and research. We at MaxGrowth

Capitals are dedicated to ensure development of investors' literacy beyond just short term

trading and intraday trading. We are increasingly widening the distribution network


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throughout the country to attract retail investors to capital market. On the basis of sound

reputation and excellent contacts, we have attracted a sizable volume of retail, High Net

worth Individuals (HNI) and Corporate clients. To provide a gateway to investors,traders, sub brokers and other participants for trading in equities and derivatives,

MaxGrowth Capital is presently having membership of all major stock exchanges: NSE :

Cash, Future & Option (F&O) and Currency Derivatives BSE : Cash, Future & Option

(F&O) MCX-Sx : Currency Derivatives USE : Currency Derivatives NSEIL : (National

Spot Exchange India Ltd): Commodity Trading.

5. CommoditiesInnovative Commodities Pvt. Ltd is a company providing commodity trading

facilities and related products and services on

MCX, NCDEX and NSEL. Our offerings include

Commodities Broking Services, Hedging

Solutions and Arbitrage strategies strongly

supported by a team of experts committed to

provide market advice to meet the requirements of all kinds of market participants.

Company is lead under the strong leadership of seasoned experts representing strong

team of Research Analysts and Advisors to guide and suggest the best of the solutions.

Key Features Of The Prod uct:

Promotes Systemic investment and savings

Invest in smaller denomination (1 gm gold and 100 gm Silver)

Transparent and uniform pan India pricing

Convenient and secure online buying and selling

No storage or holding costs

Physical delivery of accumulated demat units at multiple centres available

Extending trading hours from 10 am to 11.30 pm.
http://www.maxgrowthcap.com/commodity.aspxhttp://www.maxgrowthcap.com/commodity.aspx


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Objectives of the study

1. To understand and analyze the functioning of the capital markets

2. To understand the importance of macroeconomic variables and analyze its

effect on the Indian stock market

3. To relate Maslows hierarchy of needs and the economic situation of anemerging Indian market.

4. To study the trends in price movements of a stock using various tools of

Technical analysis.

5. To forecast the future price movements using various technical indicators.

6. To analyze intraday trading using candlestick charting.


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Limitations of the study

1. Availability of data for all the asset classes was limited.

2. The time frame used for technical analysis was limited and hence developing

a new trading system was difficult.

3. The data for the key ratios like the P/E ratio and the Market capitalization to

GDP ratios were not easily available.

4. The technical indicators used by itself are not enough to generate the buy andsell signals. Several indicators have to be used in tandem to generate an

ideal trading system.

5. Candlesticks are not yet widely followed in the Indian scenario. The most

widely used charting system is still the bar charts as they are tried and tested

in the Western countries.

6. Moving averages cannot be used as a standalone indicator as it is a lagging

indicator, implying that the moving averages are formed only after the price action

is generated. Hence a trader may lose out on profits if he uses only moving

averages to buy and sell.


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Research Methodology

Research in common parlance refers to a search for knowledge. One can alsodefine research as a scientific and systematic search for pertinent information on a

specific topic.

Research Design

Research Design is the conceptual structure within which research is

conducted. It constitutes the blueprint for collection, measurement and analysis of data.

The design used for carrying out this research is Exploratory.

Data type

In this research the type of data used is

o Primary Datao Secondary Data

Data source

The sources of collection of data are:

Websites

Books

Analysis of the long calls

In the long calls, the returns were highest for Tata Motors at 98.75% followed by

Jindal Steel at 81.73% and Sterlite Industries at 75.59%%. On the other hand the lowest

return was given by Ambuja Cements at -9.02% followed by ACC at -4.24% and Reliance

Infra at 3.41%.


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Conclusion

A study has been made which shows the relationship between different

economic variables and the market variables and the interrelationship between them.

Thus it has been observed that there is not a single factor that affects the movement in

the stock market but a number of variables like GDP, P/E, etc. influence a market to a

great extent. Any investor before making an investment should analyze the general

economic conditions prevailing in the economy and should make a suitable framework

for investment decisions. In the Maslows hierarchy we learnt that before a company

goes for overseas expansion it tries to study in which state of Maslows hierarchy the

desired country(India) is in. This makes the prediction of the various variables accurate

to some extent. Along with the fundamental analysis mentioned above an educated

investor would always emphasize the importance of technical analysis as a tool to

maximize profits and minimize risk. It is a common view of experts that fundamental

or technical analysis by itself are strong indicators to use before investing, however, an

educated investor should always use technical and fundamental analysis in tandem

before making an investment. This would give the investor a holistic view and hence

a more informed view of the investment.


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Bibliography

o http://www.hinduonnet .com/archives.htmo http://www.abrahammaslow.com/m_motivation/Hierarchy_of_Needs.aspo http://www.investopedia.com/terms/p/price-earningsratio.aspo http://stockcharts.com o http://www.sebi.com o http://www.moneycontrol.com o http://www.nseindia.com o http://www.bseindia.com
http://www.hinduonnet.com/archives.htmhttp://www.hinduonnet.com/archives.htmhttp://www.hinduonnet.com/archives.htmhttp://www.abrahammaslow.com/m_motivation/Hierarchy_of_Needs.asphttp://www.investopedia.com/terms/p/price-earningsratio.asphttp://stockcharts.com/http://stockcharts.com/http://www.sebi.com/http://www.sebi.com/http://www.moneycontrol.com/http://www.moneycontrol.com/http://www.nseindia.com/http://www.nseindia.com/http://www.bseindia.com/http://www.bseindia.com/http://www.bseindia.com/http://www.nseindia.com/http://www.moneycontrol.com/http://www.sebi.com/http://stockcharts.com/http://www.investopedia.com/terms/p/price-earningsratio.asphttp://www.abrahammaslow.com/m_motivation/Hierarchy_of_Needs.asphttp://www.hinduonnet.com/archives.htm

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