SUMMER TRAINING REPORT

ON

Fundamental Analysis and Technical Analysis

On the Selected Stock of the Stock Market

Submitted in partial fulfillment for the award of Degree of

MASTER OF BUSINESS ADMINISTRATION

(2020-2022)

SUPERVISOR SUBMITTED BY

Mr. Megesh Muskan Singhal

Mr. Krishna 42010003

SUBMITTED TO:

DEPARTMENT OF BUSINESS ADMINISTRATION

NATIONAL INSTITUTE OF TECHNOLOGY,

KURUKSHETRA

August 2021
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 48/2, 2nd Floor KC Das Building
Church street, St Marks Rd,
Bengaluru- 560001
Email :[email protected]

GROWTH ARROW www.thegrowtharrow.com

Date: 13-08-2021

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Ms. Muskan Singhal has completed her Internship as “Equity
Research Analyst” at Growth Arrow, Bangalore, from 01-06-2021 to 31-07-2021.

During her tenure she has demonstrated her skills with determination and sincerity. As we
observed, she was an active and could perform all of assigned tasks effectively.

Moreover, she demonstrated excellent behaviour and attitude during her internship with
us. We found her to be sincere, truthful, reliable, and sociable. She was also a pleasant
person to talk and work within a team.

We wish her all the best for her upcoming career.

Sr. Branch Manager

Krishna Raju

www.thegrowtharrow.com Phone: 080-42118225

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 ACKNOLEDGEMENT

I would like to express my special thanks of gratitude to The Growth Arrow team for giving
me this golden opportunity to intern with their company and learn fundamental and technical
basics of stock market. The research strategies shared by the team enable me to formulate my
own strategy and assisted me to forecast price action along with this, the team also solved all
the queries.

Last but not the least, I would also like to thank my parents and friends who helped me a lot
in this project within the limited time frame.

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Contents
INDUSTRY PROFILE .......................................................................................................... 11

About the Industry............................................................................................................. 11

Top 10 Non-Banking Financial Companies of India ,2021 ............................................ 12

ORGANISATIONAL PROFILE ......................................................................................... 13

About the Company ........................................................................................................... 13

Services offered by Growth Arrow: ................................................................................. 13

Objective of the internship:............................................................................................... 14

METHODOLOGY ................................................................................................................ 15

A. Ethnographic study ................................................................................................. 15

B. Maintenance of journal ........................................................................................... 16

About Financial service sector .............................................................................................. 17

OBSERVATIONS .................................................................................................................. 20

1. Types of charts: ........................................................................................................... 21

a. Bar charts ................................................................................................................. 21

b. Line charts ............................................................................................................ 21

c. Candlestick charts: .................................................................................................. 22

2. Patterns: ....................................................................................................................... 23

a. Marubuzo ............................................................................................................. 23

b. Piercing pattern: .................................................................................................. 24

c. Big black candle....................................................................................................... 25

d. Big white candle:.................................................................................................. 25

e. Doji............................................................................................................................ 26

f. Bullish engulfing: .................................................................................................... 27

g. Bearish engulfing: ................................................................................................ 27

h. Tweezer top: ......................................................................................................... 28

i. Tweezer bottom ....................................................................................................... 28

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 j. Morning star: ........................................................................................................... 29

k. Evening star.......................................................................................................... 30

3. Support and resistance levels ..................................................................................... 30

4. Indicators:.................................................................................................................... 31

a. Bollinger Bands .................................................................................................... 31

b. Relative Strength Index....................................................................................... 32

c. Stochastic oscillator: ............................................................................................... 34

d. Moving Averages: ................................................................................................ 35

5. Strategies: .................................................................................................................... 36

a. Pivot point/ OHLC: ............................................................................................. 36

b. Volume Strategy: ................................................................................................. 37

c. 15 min trade strategy: ............................................................................................. 38

d. 3 little pig strategy: .............................................................................................. 38

e. FIBO levels ............................................................................................................... 39

FUNDAMENTAL ANALYSIS ............................................................................................. 40

TECHNICAL INDICATOR V/S FINANCIAL INDICATOR .......................................... 44

BIBLIOGRAPHY .................................................................................................................. 45

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 PREFACE

The present report is the outcome of the internship program of the NIT KURUKSHETRA
organized at the Growth arrow. The objective of the internship program was to familiarise the
student with the implementation of the knowledge that they earned in through the online
classes. The internship allowed me to gain the practical skills that will prove to be beneficial
in my future corporate life.

I would like to take this opportunity to express my gratitude towards the opportunity that I
received.

I am Thankful to Growth arrow for being a positive catalyst in promoting my knowledge and
skills.

The organisation and the work motivated me enough to achieve my goals and complete them
with flying colours.

The present is not free of limitations. There might be few drawbacks, limitations, minor
mistakes. Though, I have tried my best to keep the free from errors. I apologize if any error
found which was not deliberately made.

If the report can be of help to any person, I would feel that the purpose of my report has been
fulfilled

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INDUSTRY PROFILE
About the Industry

A stock exchange is a regulated market for the trading of securities. For the purpose of
borrowing funds and raising resources, the government, semi-government agencies, public
sector undertakings, and companies issue these securities. Securities are defined as any
monetary claims (promissory notes or IOUs), as well as shares and other similar instruments.
If these securities are marketable, like government stock, they can be transferred by
endorsement and are movable property. They can be traded on the stock market. Companies'
case shares are the same way.

Trading in approved contracts must also be done through registered members of the exchange,
according to the aforementioned act. As per the rules made under the above act, trading in
securities permitted to be traded would be in the normal trading hours (10 A.M to 3.30 P.M)
on working days in the trading ring, as determined by the purpose of trading. The following
contracts have been approved for trading:
A. Spot delivery agreements provide for shares to be delivered the same day or the
following day after payment is received.
B. Hand deliveries are agreements to deliver shares within 7 to 14 days of the contract

11
 date.
C. Delivery through clearing for delivering shares within two months of the contract's date,
which has now been shortened to 15 days. (In demat trading, this has been reduced to
two days.)
D. Special Delivery agreements for the delivery of shares for longer periods of time, as
permitted by the stock exchange's regulatory board.

Except for those transactions that are to be delivered on a spot basis, all other transactions must
be handled by a stock exchange's licensed brokers. The Securities Contracts (Regulation) Rules
of 1957 established the conditions for such trading, including trading hours, trading rules,
dispute resolution, and so on, between members and members with respect to their clients.

Top 10 Non-Banking Financial Companies of India ,2021

1) Bajaj Finance Ltd.

2) Cholamandalam Investment & Finance Co. Ltd.
3) Ebix Cash World Money India Ltd. (Weizmann Forex)
4) Housing Development Finance Corporation Ltd. (HDFC)
5) L&T Infrastructure Finance Co. Ltd.
6) LIC Housing Finance Ltd.
7) Mahindra & Mahindra Financial Services Ltd.
8) Muthoot Finance Ltd.
9) Power Finance Corporation Ltd.
10) Tata Capital Financial Services Ltd.

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ORGANISATIONAL PROFILE

About the Company

GROWTH ARROW

Growth arrow is a self-contained financial services company based in Bangalore, India. They
are trying to upgrade and enhance their offerings after many years of expertise. Developing a
strong commitment of customers and trainees in an easy manner is vital for improved
understanding and learning. They create and implement tried-and-true methods for a wide
range of clientele. Growth Arrow is a new platform for educating and guiding the theory
towards wealth and success, with 1000+ clients worldwide as testimonials.

Services offered by Growth Arrow:

The company offers the many services to its clientele and help them manage their portfolio
by giving advice. The following are some of the major services offered by Growth Arrow:

1. Financial planning: To discover amazing investment opportunity.

2. Advisory services: Advice on portfolio management, capital and global markets.

3. Wealth management: Customized investment strategy.

4. Training Program.

5.

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Objective of the internship:

The main objectives of the internship can be summarized as:

1. Imparting knowledge and awareness of stock market movements and assist in

identifying investing strategies.

2. Imparting training to identify stock market swings and factors which influence the
investment. Stock prices may be turbulent, and some experts claim that this volatility
is excessive. Therefore, it is not possible to investigate or predict the reason behind
all the swings.

3. Enabling analysis of stocks belonging same sector on the basis of technical analysis.

4. Use of Indicators which can be employed to simplify price information, offer trend
trading indications, and assessing warning of trade reversal patterns which may be
utilized on all time frames and include variables that may be changed to meet the
individual preferences of each trader.

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METHODOLOGY

A. Ethnographic study

With the help of recording and live sessions from the growth arrow group I am able to
predict the movement of the stocks, with the assistance of taught strategies and indicators.
Along with this there are several strategies that the company has developed by themselves
with over 10-12 years of experience of their team, some of them while observed by me
was really accurate. Till now I have 60-65% accuracy with all the strategies and usage of
indicators. Given below is the list of strategies and indicators which were observed over
the period of this internship

1. Candle stick patterns

a. Marubuzo

b. Piercing pattern

c. Big black candle

d. Big white candle

e. Doji

f. Bullish engulfing

g. Bearish engulfing

h. Tweezer top

i. Tweezer bottom

j. Morning star

k. Evening star

2. Support and resistance levels

3. Indicators

a. Bollinger bands

b. Relative strength index

c. Stochastic oscillator

d. Moving averages

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 4. Strategies

a. Pivot point

b. Volume strategy

c. 15 min trading strategy

d. 3 little pig strategy

e. FIBO levels

B. Maintenance of journal

It was suggested by the company to maintain a journal on 6th or 7th session to record
trades, which has formatting similar to paper trading. Over the period of two months as I
maintain the journal my largest winning trade was Adani power which purchase for short
term on the basis of candlestick, volume, RSI and stochastic. Not every trade was a
winning trade my worst pick of all stocks was TCS, I sold this stock as an intraday trader
because of news and formations on 5 min charts with less confirmations, therefore my
learning is even if you are an intraday trader, it is important look for other time frames as
well to understand the trend of the market.

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About Financial service sector
Market structure and size:

India’s financial service sector comprises of Capital markets, insurance, and non-banking
financial sector (NBFCs). In 2019, India's gross national savings (GNS) as a proportion of its
Gross Domestic Product (GDP) was 30.50 percent. In 2019, 17 initial public offerings (IPOs)
raised a total of $2.5 billion (IPOs). Between 2020 and 2025, the number of ultra-high net-
worth people (UHNWIs) with wealth of US$ 30 million or more is predicted to increase by 63
percent to 11,198, with India having the second-fastest growth rate in the world.

In 2021 itself several reports suggest around 30 companies to raise more than Rs. 30,000
crores in the form of IPOs. Major organisations include LIC, Zomato, Bajaj Energy,
Nykaa, Nuvoco Vistas etc.

The mutual fund industry's AUM stood at Rs. 32.29 lakh crore (US$ 438.27 billion) as of
January 2021. In 2019, mutual fund inflows via the Systematic Investment Plan (SIP) channel
were Rs. 82,453 crore (US$ 11.70 billion). By the end of December 2019, equity mutual funds
had had a net inflow of Rs. 8.04 trillion (US$ 114.06 billion).

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In 2020, the S&P Sensex and the Nifty50 climbed 15.75 and 14.90 percent, respectively. The
Sensex increased by 173 percent and the Nifty increased by 169 percent in the decade ending
in 2020.

Several reports and warning have been issued by RBI in 2021 regarding stock market
bubble which is because indices reflect the performance of economy, due to lockdown and
other business activity contractions stock market isn’t supposed to perform so well
however indices are breaking all time high records. Therefore, upcoming stock market
crash has been suggested in several articles and reports.

NBFCs are rapidly gaining importance as retail credit intermediaries. In India, it funds more
than 80% of equipment leasing and hire purchase activities. NBFC public funds increased at a
CAGR of 14.04 percent from US$ 278.23 billion in 2016 to US$ 470.74 billion in 2020.

Few major Government initiatives impacting financial service sector:

1. The Indian government has made a number of efforts to further capital market reforms,
including simplifying the IPO process to allow qualified foreign investors (QFIs) to
access the Indian bond market
2. In January 2021, the Central Tax Board launched a departmental electronic e-portal to
address and collect tax evasion complaints and unrevealed buttocks, as well as to record
complaints on "Benami" assets.
3. In November 2020, the Union Cabinet approved the Government Infrastructure Finance
Limited (INIF) and Infrastructure Finance Limited (NIIF) Equity Injection Programme
(NIIF) in the NIIF Debt Platform for Rs. 6000 crores (UD 814.54 million) (NIIF-IFL).
4. The RBI announced the development of its Innovation Hub in November 2020. This
policy will build an infrastructure in order to promote access to financial resources and
commodities and promote financial inclusion. The Reserve Bank's Innovation Hub
(RBIH) is aimed at promoting financial sector-wide innovation by using technologies
and building an atmosphere conducive to innovation.

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Snapshot of financial service sector as on June, 2021

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OBSERVATIONS
Many technical and statistical tools are frequently used in market trend analysis. A huge
number of the quantitative indicators, as well as some of the key notions of technical analysis,
are overlooked. There are still unresolved issues with the shift in information indications
during the course of the market trend.

, and there is untapped potential in the analytical approaches, emphasizing the necessity for a
more detailed examination of the primary exchange indicators.

There are numerous ways available to discover the price pattern and trend of securities in a
specific market that are independent of the company's financial position or profitability.

Assumptions

Unlike fundamental analysts, technical analysts are unconcerned about whether a stock is
undervalued or overvalued. In reality, the only thing that matters are the stock's prior trading
data (price and volume), as well as the insight this data may provide about the security's future
movement.

Following assumptions must be recognized in order to attain the best results:

1. Market discounts everything: This assumption states that the current stock price
reflects all publicly available information, both known and unknown. For example, an
insider in the company might be buying a large number of shares in anticipation of a
positive quarterly earnings report. The price reacts to his operations while he is doing
it discreetly, signaling to the technical analyst that this could be a good opportunity.

2. Prices move in a trend: All major market movements follow a trend. The concept of
trend is central to technical analysis. The latest gain in the NIFTY Index from 6400
to 7700, for example, did not happen overnight. Over the period of 11 months, this
change took place in stages. Another way to look at it is that once a trend has been
established, the price will move in the direction of the trend.

3. History tends to repeat itself: In technical analysis, the price trend tends to repeat
itself. When market participants react to price variations in a remarkably similar way
each time the price moves in a given direction, this occurs. Market participants
become greedy in up trending markets, for example, and desire to buy regardless of
the high price. In a decline, market participants opt to sell despite the low and
unfavorable pricing. This human reaction guarantees that past pricing patterns will be

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 replicated.

While learning the strategies and indicators, what I observed about each and every strategy
and indicator is described below:

1. Types of charts:

a. Bar charts: Bar charts are made up of many price bars, each of which depicts
how the price of an asset or security changed over time. Each bar usually displays
the open, high, low, and closing (OHLC) prices, though this can be changed to
display only the high, low, and close prices (HLC). To aid in trading decisions,
technical analysts employ bar charts—or other chart types such as candlestick or
line charts—to watch price action. Traders can use bar charts to study trends,
anticipate probable trend reversals, and track volatility and price fluctuations.

b. Line charts: A line chart is a graphical representation of an asset's historical price

activity that uses a continuous line to connect a sequence of data points. This is
the most basic sort of chart in finance, and it usually merely shows the closing
prices of a securities over time. Line charts can be used for any timescale;

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 however, they are most commonly employed to show daily price fluctuations.

c. Candlestick charts: Candlestick charts were conceived in Japan over a century

before bar and point-and-figure charts were developed in the West. While there
was a link between pricing and rice supply and demand in the 1700s, a Japanese
man named Homma observed that the markets were heavily impacted by traders'
emotions.

Candlesticks depict this emotion by using different colors to graphically express the
size of price movements. Traders use candlesticks to make trading decisions based on
patterns that appear on a regular basis and help forecast the price's short-term
direction. A daily candlestick chart, like a bar chart, displays the market's open, high,

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 low, and closing prices for the day. The candlestick features a broad section known as
the "Real body." This actual body reflects the price range between the open and
closing of trade on that particular day. When the true body is filled in or black, this
indicates that the close was lower than the open. If the genuine body is empty, it
indicates that the close was greater than the open.
2. Patterns:

a. Marubuzo: Marubuzo is possibly the only candlestick pattern that can be traded
without having to look for a past trend. Regardless of the previous trend, a
Marubuzo can emerge anywhere on the chart, and the trading implications remain
the same.

The bearish marubuzo is

represented by the red candle,
while the bullish marubuzo is
represented by the green candle.
A bullish marubuzo suggests
that the stock had so much
buying interest that market
participants were willing to
acquire it at any price point
during the day, likewise red
candle denotes the selling
pressure and the sellers were
willing to sell the stock at any
price during the day. Whatever
the previous trend had been, the
action on the marubuzo day
indicates that sentiment had
reversed.

Bullish marubuzo which I observed on 5 min chart of reliance daily after

which stock price soared high.

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 Bearish marubuzo
observed on reliance 5 min
chart post which stock price
subsequently fell for a short
span of time.

b. Piercing pattern: A piercing pattern is a two-day candlestick price pattern that

indicates a possible short-term trend reversal from a downward to an upward
trend. The first day of the pattern has an average or larger trading range and opens
near the high and closes near the low. It also contains a gap down after the first
day of trade, with the second day opening around the low and closing near the
high. The closing should likewise be a candlestick that covers at least half of the
red candlestick body's upward length from the previous day.

Piercing pattern observed in day

chart of axis bank

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 c. Big black candle: big black Candle has a lengthy, dark body with a wide variety
of highs and lows. Prices start at a high point and end at a low point. This is a
bearish trend indicating candle.

Big black candle formed in

nifty 100 day chart

d. Big white candle: big White Candle has an exceptionally lengthy white body with
a large range of daytime highs and lows. Prices start at a low point and end at a
high point. This is a bullish trend indicating candle.

Big white candle in nifty

200 day chart

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 e. Doji: When the opening and closing prices are nearly identical. Shadows come in
a variety of lengths. If prior trends have been negative, a Doji may indicate that
the market is set to turn bullish. There are four types of doji pattern, mostly ina
day frame it it considered to be indicsive however if combined with specific
candles it suggest strong sentiments.

i. Long-Legged Doji: A Doji with extremely long upper and lower

shadows. Strong opposing forces are represented by this symbol. After a
long legged doji, the market may be set to turn bearish.

ii. Dragonfly doji: When the opening and closing prices are at their highest
for the day, it is called a Dragonfly Doji. If the bottom shadow is longer,
it indicates a more bullish trend. It is considered a reversal indicator when
it appears at market bottoms.

iii. Gravestone Doji: When the opening and closing prices are at their lowest
of the day, it is called a Gravestone Doji. If the top shadow is longer, it
indicates a negative trend. When it emerges at the top of the market, it is
regarded as a reversal indication.

iv. Four- price Doji: Four-Price doji candle is a simple candle with all four
prices equal (i.e. open, close, low and high). In most circumstances, this
indicates we're dealing with a small number of transactions, and in some
cases, a single transaction. As a result, its significance is restricted and is
suggested to ignore tradind in such stocks.

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 Long- legged doji

Dragonfly doji
Gravestone doji

Four – price doji

Multiple doji’s were observed in Renuka sugar’s chart

f. Bullish engulfing: On the bullish side of the market, an engulfing pattern emerges
when buyers outweigh sellers. This is depicted on the chart as a long green real
body encircling a small red real body. Now that the bulls have regained control,
the price may soar.

observed bullish engulfing

pattern in finnify weekly
chart

g. Bearish engulfing: In an upswing, a bearish engulfing pattern emerges when

selling outnumber buyers. This motion is reflected by a long red real body
consuming a small green genuine body. The pattern indicates that sellers have
reclaimed control of the market and that the price may continue to decrease.

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 Bearish engufing observed in
sensex day chart/

h. Tweezer top: Two or more candlesticks with matching tops make up this set. The
candlesticks may or may not be in chronological order, and their sizes and colours
may differ. It's a small reversal indicator that gets more significant when the
candlesticks develop a different pattern.

Tweezer top observed in nestle india’s 15

min timefrafe after which stock price
went high for a short period of time.

i. Tweezer bottom: Two or more candlesticks with matching bottoms make up this
set. The candlesticks may or may not be in chronological order, and their sizes and
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 colours may differ. It's a small reversal indicator that gets more significant when
the candlesticks develop a different pattern.

tweezer botton observed

in nesetle india chart
depicts the short period
trend reversal.

j. Morning star: After a downward trend, a morning star appears, signalling the
start of an upward trend. It denotes a price trend reversal from the previous one.
Traders look for the formation of a morning star and then utilise other indicators
to determine whether or not a reversal is occurring.

Observed Morning star formed in day

chart on priviscl

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 k. Evening star: It is a topping pattern. The pattern's final candle, which opens
beneath the previous day's modest actual body, identifies it. It's possible that the
small genuine body is red or green. The final candle had closed deep into the
genuine body of the candle two days before. The pattern depicts buyers waiting,
followed by sellers grabbing control. It's possible that more people will sell.

Evening star observen in axis bank

recent which means in the upcoming
sessions stock price is expected to go
down.

3. Support and resistance levels

The support is what prevents the price from plummeting even farther. The support level is
a price point on the chart where the trader anticipates the most demand for the stock/index
(in terms of buying). The price will almost probably bounce if it falls below the support
line.

The current market price is always lower than the level of support.

The price will most likely fall until it reaches support, then consolidate, absorb all demand,
and finally begin to rise. Support is one of the most crucial technical levels to look for in a
dropping market. The support is often utilized as a signal to buy.

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 The term "resistance" refers to something that prevents the price from climbing further.

The resistance level is a price point on the chart where traders expect the stock to be sold
to its utmost extent. It's always above the current market price. It is quite possible that the
price will rise to the resistance level, consolidate, absorb all supply, and then fall. It
frequently serves as selling indicator.

4. Indicators: Traders should analyze the trading strategy's objectives as well as the
current market state when seeking for the most effective technical indicators.
Individuals trading stocks may find it useful to apply indicators to the stock index to
which that stock belongs in order to get a holistic view of the larger market.
The most often used technical indicators for stock analysis are listed below:

a. Bollinger Bands: Bollinger bands (BB) were created by John Bollinger in the
1980s and are one of the most important indicators in technical analysis. BBs are
used to identify overbought and oversold levels, with a trader attempting to sell
when the price reaches the top of the band and buying when the price reaches the
bottom.
The BB is made up of three parts:

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 1. The middle line is the closing prices of 20-day simple moving average.
2. An upper band — this is the middle line's +2 standard deviation.
3. A lower band – this is the center line's -2 standard deviation.
Example:
1. 20 days SMA = 7500
2. Upper band = 7650

3. Lower band = 7350

The current market price should be around 7500, average price. However, if the
current market price is around 7650, it is regarded costly in comparison to the
average, and shorting opportunities should be considered with the hope that the
price would return to its average. Therefore, the trade would be to sell at 7650,
with a target of 7500. Likewise, if the current market price hovers around 7350, a
trader would be to short the stock at 7350 with the target of 7500.

To have an idea given below is the Bollinger band applies in nestle chart this is
how it works.

b. Relative Strength Index: The Relative Strength Index, or simply RSI, was
developed by J. Welles Wilder and is a widely used indicator. The RSI is a
leading momentum indicator that can be used to spot a trend reversal. The RSI
indicator oscillates between 0 and 100, and market expectations are set based on
the most recent indicator reading. The phrase "Relative Strength Index" is a little

32
 deceptive because it does not measure the relative strength of two securities, but
rather displays the security's internal strength. The most widely used leading
indicator, the RSI, provides the best alerts during sideways and non-trending
zones.
The purpose of employing RSI is to assist traders in identifying overbought and
oversold price zones. Overbought indicates that the stock's upward momentum is
so high that it may not be sustainable for long, implying that a correction is likely.
An oversold position, on the other hand, implies that the negative momentum is
considerable, indicating a likely reversal.

The indication of RSI can be summarized as:

1. The stock is said to be oversold when the RSI reading is between 30 and
0 and on the verge of a reversal. When the stock reading is between 70 and
100, the security is heavily bought and on the verge of a downward trend.
2. Instead of shorting, seek for buying opportunities if the RSI is stuck in an
overbought region for an extended length of time. Because of an excess of
positive momentum or both, the RSI remains in the overbought zone.
3. Look for selling chances rather than buying if the RSI is stuck in an
oversold range. Because of an overabundance of negative momentum, the
RSI stays in the oversold band for a long time.

This is how RSI look, when applied on chart, given the current situation stock
is unpredictable on the basis of RSI, however one can look for shorting
opportunities in upcoming trading sessions.

33
 NOTE: sole trading on the basis of RSI is not suggested, it is always better to
have more confirmations before buying or shorting.

c. Stochastic oscillator: A stochastic oscillator is a momentum indicator that

compares a stock's closing price to a range of its prices over a given time period. It
uses a 0–100 defined range of values to generate overbought and oversold trading
signals. The charting of a stochastic oscillator usually consists of two lines: one
indicating the oscillator's actual value for each session, and the other reflecting its
three-day simple moving average. Because price is supposed to follow
momentum, the intersection of these two lines is taken as an indication that a
reversal is approaching, as it signals a significant movement in momentum from
day to day.
If the slow line intersects the fast line from bottom, it indicates bullish trend
likewise if slow line intersects the fast line from top, it indicated bearish
movements.

Slow line and fast line are currently very close, if it is watched over few trading
sessions shorting opportunities may arise soon.

NOTE: When a negative trend reaches a new lower low but the oscillator prints a
higher low, it could indicate that the bears are losing steam and a bullish reversal
is on the way and vice versa.

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 d. Moving Averages: For spotting price patterns, moving averages are widely
applied. They smooth out market price volatility, making it easier to spot
underlying trends. They notify traders as soon as possible when substantial
changes in any direction occurs. Moving averages can be calculated over any
timeframe, ranging from minutes to years. Based on your needs, you can choose
any time window from the charting software.
1. Simple moving average: The moving average is the average price of a stock
over a specific time period. It is, in essence, the sum of all values. Because it
fluctuates over time, it is called a moving average. The simple moving
average, for example, is calculated by summing the closing prices of the past
50 days, then dividing by 50. however, this varies on a daily basis, and the
new price is updated in the moving average computation on each new day.
SMA periods that are shorter are more volatile as those that are longer.
Therefore, fluctuations and pattern may be better forecasted using shorter
moving average.

2. Exponential Moving Average: An exponential moving average (EMA) is a

type of MA that gives more weight and significance to the most recent data
points. The exponential moving average, also known as the exponentially
weighted moving average (EWMA), reacts more strongly to recent price
movements than a simple moving average (SMA), which gives all
observations in the period identical weight.

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 5. Strategies: some of trade strategies which were discussed in the sessions is described
below:

a. Pivot point/ OHLC: This strategy is also called pivot point which is calculated
by taking average of open, high, low, close of last candle. It can be a day’s candle
or of any timeframe based on which if the trade is taken, this point provides the
optimal point of buying and selling. This strategy used alone does not lead to any
direction as just with OHLC you cannot determine the direction of the market,
therefore combined with other indicators and strategy this point can be used to
enter into a long or short.
When the market is giving bullish indicators, it is good to buy at pivot point of last
candle, likewise if the market is having bearish sentiments, you can short the stock
at pivot point.

Example:

Open price = 700

High price = 720

Low price = 670

Close = 680

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 This is a bearish candle which has its pivot point as 692.5, if the subsequent candle
moves beyond 720 or 670, with a few more confirmations buy or short opportunities
would be looked forward respectively at 692.5 price.

b. Volume Strategy: In technical analysis, volume is quite important since it allows

us to confirm trends and patterns. The number of shares acquired and sold in a
certain period of time is referred to as volume. The larger the volume, the more
active the stock is.
Example: Suppose you decide to buy 100 Yes bank shares for Rs. 1375, and I
decide to sell 100 Yes Bank shares at Rs. 1375. A price and quantity match occurs,
resulting in a deal. Together, you and I have generated a volume of 100 shares.
Many people mistakenly believe that the volume count is 200 (100 buy + 100 sell),
which is not the case.

Volume data is meaningless on its own, it has no value. However, when you
combine today's volume data with the previous price and volume trend, volume data
takes on a whole new meaning. Given the table below is the strategy which is used
for predicting stock movement.

Action plan Price volume Open- interest Market

Sentiments

Buy Increase Increase Increase Bullish

Caution Increase Decrease Decrease Weak hands

buying

Caution Decrease Decrease Decrease Weak hands selling

Sale Decrease Increase Increase Bearish

Price and volume can be retrieved directly from NSE’s website under equity
segment whereas open-interest can be retrieved under derivatives segment.

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 There is no strategy which is 100% correct however, as per my trade journal
whenever I have applied this strategy, I had 70% accuracy

c. 15 min trade strategy: Under this strategy first candle stick of the day is
observed and no trade is taken during first fifteen minutes, later after the
formation of first candle, subsequent candlesticks are observed, if there is any
breakout, in other words if stock moves beyond the high and low of first candle
then buy or short actions are undertaken to book profit either market rally’s
upwards or downwards.
Example: In a 15 min trade strategy is the high price 2010 and low price 1988 in
reliance’s share, I’ll be looking at other candlestick breakout, if the candle breaks
high of first candle, along with some other indicators I’ll go for long and buy that
stock likewise if stock breaks the low of first candle, along with some other bearish
confirmations, I’ll short that stock.

d. 3 little pig strategy: This strategy works similarly as moving average, under this
strategy 3 MA of 21, 34 and 55 days are plotted, whenever there is a crossover,
stock price is expected to rise. So, buying is suggested as soon as crossover
occurs and stock can be held for several trading days. This strategy works best
when used in 4 hours timeframe and it is also suggested to not to trade in the
stock whenever candles are formed inside the three MAs.

38
 Observer this strategy recently on titan’s daily chart, post which stock price
soared high.
e. FIBO levels

a. Fibonacci Retrenchments: In Fibonacci retracements, horizontal lines are

utilized to define areas of support or resistance. The chart's high and low
points are used to calculate the levels. Following that, five lines are drawn:
the first at 100% (the highest point on the chart), the second at 61.8 percent,
the third at 50%, the fourth at 38.2 percent, and the fifth at 0%. (The lowest
point on the graph) Following a major price shift, new support and resistance
levels are generally formed at or near these lines.

39
 b. Fibonacci extensions: Traders can use Fibonacci extensions to set profit
targets or estimate how far a market will go after a pullback. Extension levels
have the potential to be price reversal points. Extensions are drawn on a chart
to show price levels that could be noteworthy. These levels are derived from
Fibonacci ratios and the magnitude of the price movement to which the
indicators were applied.

FUNDAMENTAL ANALYSIS

Fundamental analysis is a method of determining a stock's intrinsic value. Financial

statements, external factors, events, and industry trends are all included. It's important to
remember that a stock's fair value does not change overnight. This type of analysis aids in
identifying the company's key characteristics and analyzing its actual value while taking
macro and microeconomic factors into account.

Generally, three types of data are used in fundamental analysis which includes:

1. Historical data: historical data is used to see how things were in the past

2. Publicly available information: It includes details about the organization, such as

management statements and what others have to say about it

3. Information that is not publicly available but is useful, such as how the leadership

40
 handles crises, situations, and so on

Fundamental analysis takes consideration of factors included under Economy, sector,

Industry and company heads.

1. Economic factors: it includes macroeconomic factors namely saving and

investment, interest rates, tax structure, GDP, inflation rate and budget policies
which government has announced and it is to be mandatorily employed by the
company.

2. Sectoral analysis: A sector analysis is a study of the economic and financial state
and prospects of a certain economic sector. An investor can use sector analysis to
make a prediction about how well companies in the sector will perform. Investors
that specialize in a specific sector or who utilize a top-down or sector rotation
approach to investing frequently use sector analysis.

3. Industry analysis: to completely determine what control does company have and
up to what extent on others or what controls company’s performance that to what
extent, Porter analysis can be undertaken to study the performance of company at
industry level. Competitive rivalry, supplier power, buyer power, threat of
substitution, and threat of new entrance are all included in Porter's analysis.

4. Company analysis: company analysis includes analysis of company’s performance

as a whole, how it is managing itself independently in includes competitive edge,
Market share, stability, sales, growth prospective.

41
 To perform financial analysis of the company, some ratios are calculated which reflects
the performance of a company and also can be easily compared either internal or
externally which means for example growth rates can be compared with in the company
over the years and it can also be used to compare competitive performance with respect
to key competitors.

Overall ratios which can help in analysis of company’s performance includes:

1. Liquidity ratio: Liquidity ratios are a sort of financial indicator used to analyses a
debtor's ability to meet current debt commitments without raising extra funds.
Liquidity ratios measure a company's ability to satisfy financial commitments and its
margin of safety by calculating indicators such as the current ratio, quick ratio, and
operating cash flow ratio.

a. Current ratio: The current ratio measures a company's capacity to pay down
current liabilities (those due within a year) against its total current assets, which
include cash, accounts receivable, and inventories. The higher the ratio, the better
the company's liquidity condition.

b. Quick ratio: The quick ratio evaluates a company's capacity to meet short-term
obligations with its most liquid assets once inventory is removed. Another name
for it is the "acid-test ratio."

c. Operating cash flow ratio: It is the average number of days it takes for a business
to collect payment after a sale. A high operating cash flow indicates that a
corporation is locking up capital in receivables by taking an excessively lengthy
time to collect payment. It is calculated on a quarterly or annual basis in most
cases.

2. Asset management Ratio: Asset management ratios show how well a business
generates revenue from its assets. It reveals how efficiently and effectively a firm
generates revenue by utilizing its assets. They demonstrate a company's ability to
convert its assets into sales. Asset turnover ratios and asset efficiency ratios are
examples of asset management ratios.

3. Debt Management ratio: The debt management ratio determines how much of a
company's operations are funded by debt rather than other forms of capital such as
stock or personal savings. One of the markers of a company's risk of default is its
debt management ratio.

42
 Debt ratio = Total debt / Total assets.

The higher the ratio, the greater risk will be associated with the firm's operation

a. Profitability ratio: Profitability ratios are a set of financial indicators used to

assess a company's potential to generate earnings over time in relation to sales,
operating costs, balance sheet assets, or shareholders' equity, using data from a
certain point in time.

b. Margin Ratios: At various levels of measurement, margin ratios show a

company's ability to convert sales into profits. It includes profit margin,
operating profit margin, net profit margin, EBIT, EBITDA, NOPAT etc.

c. Return ratios: Return ratio indicates a corporation's potential to earn profits for
its shareholders. Return on assets, return on equity, return on debt, return on
capital employed, risk-adjusted return, and so on are all part of it.

4. Market Value ratio: The current share price of a publicly-held company's stock is
evaluated using market value ratios. Current and potential investors use these
measures to judge if a company's shares are over-priced or underpriced.

Ratios under market value calculation are:

a. Book value per share: Divide the total amount of stockholders' equity by the
number of outstanding shares to get this figure. This indicator can be used to
determine whether the market value per share has increased or decreased, as well
as to decide whether to buy or sell stock.

b. Dividend yield: Divide the total annual dividends paid by the current market price
of the stock. If the stock was purchased at the current market price, this represents
the investor's return on the investment.

c. Earnings per share: Estimate by dividing the company's reported earnings by the
total number of outstanding shares (there are several variations on this
calculation). This metric does not in any way reflect the market price of a
company's shares, but it can be used by investors to determine how much they
believe the shares are worth.

d. Market value per share: Divide the company's whole market value by the total
no. of outstanding shares to arrive at this figure. This indicates the value at which
market is willing to accrue each share of a company's stock at the moment.

43
 e. Price-earnings ratio: The ratio is estimated by dividing the current market value
of a share by the declared earnings per share. The resulting multiple is used to
determine whether the shares are overvalued or undervalued when compared to
similar ratio findings for comparable companies.

Other ratios may include:

• business risk ratios which include operating, financial and leverage ratios

• financial risk, includes interest coverage, debt service coverage

• stability ratios, which includes fixed asset ratio, current to fixed asset ratio etc.

TECHNICAL INDICATOR V/S FINANCIAL INDICATOR

Many investors get the terms technical analysis and fundamental analysis mixed up or use them
interchangeably.
Internal market data such as price and trading volume are examined in technical analysis.
Technical analysis is concerned with recognizing patterns and trends that will recur so that the
trader can profit from them. on the other hand, the goal of fundamental analysis is to create a
calculated forecast about a firm's cash flows based on how the economy, industry, and company
will perform. This provides the investor with an estimate of the company's or stock's value.

44
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