A STUDY ON TECHNICAL ANALYSIS ON EQUITY STOCK

EXECUTIVE SUMMARY

Technical analyzing helps in timing the entry or exit from a particular stock. It holly
depends on the historical trends for predicting future price movements based on study of charts
and graphs. It aims at determining the appropriate time to enter or exit the market with the help
of technical indicators and charts.

Although the technical analysis tools can be applied to other markets like commodities,
currencies, bonds etc the present study is restricted to the stock market or the equity stock.

Hence, the present study undergone at KARVY STOCK BROCKING LTD Kannur is
made to analyze the direction of share price movements by using various tools of technical
analysis. To attain this objective of the study, four sectors viz information technology
pharmaceutical, oil and gas and banking has been selected and analyzed.

OBJECTIVES OF THE STUDY

To analyze and interpret the direction of share price movement in the stock market through
various tools of technical analysis

To analyze the price fluctuation in equity stock

To assess the technical condition of the market

To evaluate the usefulness of technical analysis

SCOPE OF THE STUDY

Technical analysis is the most widely used tool for analyzing and predicting the trend of
the stock market. This approach is the oldest approach to equity investment. Technical analysis
helps to study the behaviour of the price of the stock to determine the future prices of the stock.
Hence the study conducted at KARVY STOCK BROKING Ltd.. is made to analyze the price
fluctuation in the stock market. For this purpose four major sectors viz IT, Pharmaceuticals, Oil
and gas and Banking sector. The blue chip three companies are considered from among these
sectors for the study purpose.

LIMITATIONS OF THE STUDY

Only 6 months samples were taken for analysis. In case data spanning more than this analysis
may show yet another result.

Indepth and broad study and analysis of all the major and minor companies in each of the
selected sector were not possible with limited time of 45 days.

This analysis is based on the assumption that history repeats itself it may not be true under the
influence of some fundamental factors like economic, industrial and companies factors.

RESEARCH METHODOLOGY

Research design

Research design is the frame work or plan or blue print based on which the researcher is
collecting data, analyzing data and providing solution to the problem. This research study is
based on exploratory research design. The exploratory research design does not deal with
providing solution to the problem. It is only fact finding approach.

Data collection method:

Secondary data - websites, magazines, journals etc.

Sampling

For the purpose of study the 6 months (1st January to 21st July 2009) stock price of
various companies are collected.
Statistical Technique

In order to find out the solution for the research problems, various statistical tools are
taken. They are

Close only chart

Moving average

ROC ( Rate Of Change)

RSI (Relative Strength Index)

Run Test

High, low, close chart

Candlestick

Up trend line

Down trend line

The equity share movements of the companies from the selected sectors have been

analysed hereby using the various tools of technical analysis. Technical analysis has been very

helpful in identifying and getting a clear picture of the company’s equity price movements. It

has also helped in detecting the shift in demand and supply and as provided clues to future price

movements. Tools of technical analysis helped in identifying the trends of price movements,

which are helpful in aids in investment decision making