SUMMER TRAINING REPORT ON

“EQUITY RESEARCH AT IM STOCKS: TECHNICAL ANALYSIS OF

STOCKS IN DIFFERENT SECTORS OF NSE”

UNDERTAKEN AT
“IM STOCKS”

Submitted in the partial fulfilment the requirements for the award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

(BBA G 2020-2023)

UNDER THE SUPERVISION OF

Dr. NUPUR ARORA

SUBMITTED BY:

LAKSHAY TYAGI

ENROLLMENT NO. 07017701720

Vivekananda School of Business Studies

Vivekananda Institute of Professional Studies
Guru Gobind Singh Indraprastha University
December 2022
 CONTENTS

PAGE
TOPIC
NO

 Certificate i

 Summer Training Appraisal ii

 Certificate from the guide iii

 Acknowledgement iv

 Executive Summary 1

 Chapter I: Introduction 2 -15

 Chapter II: Review of Literature 16 - 34

 Chapter III: Research Methodology

a) Objectives of the study
35 - 39
b) Research Design
c) Data Collection

 Chapter IV: Data Analysis & Interpretation 40 - 47

 Chapter V: Findings 48 - 49

 Chapter VI: Conclusions & Suggestions 50 - 51

 References 52 - 53
CERTIFICATE

i
 To Whom It May Concern

I Lakshay Tyagi, Enrolment No. 07017701720 from BBA-V Sem of the

Vivekananda Institute of Professional Studies, Delhi hereby declare that the
Summer Training Report (BBA 311) entitled “EQUITY RESEARCH AT IM
STOCKS: TECHNICAL ANALYSIS OF STOCKS IN DIFFERENT SECTORS
OF NSE” at IM Stocks is an original work and the same has not been submitted
to any other Institute for the award of any other degree. A presentation of the
Summer Training Report was made on , and
the suggestions as approved by the faculty were duly incorporated.

Date:

Signature of the Student

ii
 CERTIFICATE FROM THE GUIDE

Certified that the Summer Training Report submitted in partial fulfilment of

Bachelor of Business Administration (BBA) to be awarded by G.G.S.I.P.
University, Delhi by Lakshay Tyagi, Enrolment No. 07017701720 has been
completed under my guidance and is satisfactory.

Date:

Signature of the Guide

Name of the Guide:

Designation:

iii
 ACKNOWLEDGEMENT

No work is complete without the contribution and encouragement from many people.

First of all, I would like to thank almighty for making me capable enough to write and
present this report to the reader.

His blessings are enormous, and I am short of words to thank him for this.

Secondly, this report would not have been possible without – Dr. Nupur Arora,
Assistant Professor, VSBS, VIPS as her patient and expert guidance as well as
enthusiastic encouragement not to mention the appreciation and constructive critique
of my work had paved the way for the development of this report.

Her advice and assistance in keeping my progress on schedule has been very much
appreciated.

I would like to thank IM Stocks for providing me the unique opportunity to work in a
dual role as an intern and trainee in their organization.

Finally, I would like to thank my family, friends and supportive batchmates who
believed in me and supported my vision to present my ideas in the form of this small
piece of information. I am really grateful and blessed.

Lakshay Tyagi

iv
 EXECUTIVE SUMMARY

This past summer I had the unique opportunity to work in a dual role as a Social
Media Marketing Intern & Equity Research Trainee at IM Stocks for a tenure of 6
weeks. This report titled “Equity Research at IM Stocks: Technical Analysis of stocks
in different sectors Of NSE” is based on the latter role as an Equity Research Trainee.

IM Stocks is an NSE registered Stock Market Education and Consulting firm based in
New Delhi, helping traders and investors of all experiences to become profitable. To
cater the audience or clients to optimize the end results, the company offers live
training, personal sessions, portfolio management service, courses, and advisory
services for anyone aspiring to earn from the Stock Market. Today, the members of
IM Stocks include businessmen, big corporate names, students, housewives, new
traders and even experienced ones, all under a single umbrella. With over 250k+
followers on Instagram, they are well set for more exponential growth in the coming
months. The founders aim to make IM Stocks the largest and most successful stock
trading community India has ever seen.

As being completely new to Technical Analysis and Stock market, every minute
spent gave me some amount of experience which cannot be explained in words. But
nevertheless, this was quite beneficial for my career. The training sessions gave me
an edge over theoretical textbook knowledge and I was able to take basic trades on
my own. In the end, I had to execute 15 paper trades using Technical Analysis (stocks
were spread across different sectors) and submit a research project report of it very
much like how a real-world securities analyst would.

With limited knowledge and experience, I tried my best to make this report as much
understandable as possible and translated my experience into this documentation.
Chapter-I deals with Introduction, Objectives and Scope of the study along with
profile of the company and its industry. Chapter-II contains review of existing
literature/research on the topic. Chapter-III deals with Research Methodology.
Chapter-IV is about analysis and interpretation of stock price chart data. Chapter-V
contains findings of the results from Chapter-IV. Lastly, Chapter-VI is about
conclusions and suggestions drawn from the study and its limitations.

1
 CHAPTER I

INTRODUCTION

1.1. Introduction:

1.1.1. Meaning of Technical Analysis

Technical analysis is an analysis methodology for analysing and

forecasting the direction of prices through the study of past market
data, primarily price and volume (Kirkpatrick & Dahlquist, 2006). It is
the study of market action, primarily through the use of charts, for the
purpose of forecasting future price trends (Murphy, 1999).

Technical analysis in its most basic form is the study of prices in freely
traded markets with the intent of making profitable trading or
investment decisions. Technical analysis is rooted in basic economic
theory (Edwards & Magee, 1948).

Technical analysis assumes that :

• Stock prices are determined solely by the interaction of demand and

supply.

• Stock prices tend to move in trends.

• Shifts in demand and supply cause reversals in trends.

• Shifts in demand and supply can be detected in charts.

• Chart patterns tend to repeat themselves.

Thus, Technical analysis provides a strategy where one hopes to buy a

security at the beginning of an upward trend at a low price, ride the
trend, and sell the security when the trend ends at a higher price (Buy
low, Sell high). Although this strategy sounds simple in theory,
implementing it in practice is exceedingly complex.

2
1.1.2. Rationale for choosing the topic under study

 Stock Market is everything – from exciting, unpredictable, erratic to

sometimes downright crazy. If it were not, one would not be
interested it in the first place. Such is the human nature that the
thrill of finding the unknown is so invigorating that one would
unconsciously run after it no matter what.
 If the stock market was a stable place, it would be pretty boring after
a while. There would not be any exciting stories about getting
valuable stocks at low prices or selling a particular stock right before
its price started plummeting. On the other hand, fear and nervousness
withholds many who either hesitate to participate in it or shun it away
completely.
 However, the market itself is a collective of people who are always at
odds with one another and there are always those, crores in fact, who
are seduced by the charm of stock market, flocking daily, fired up by
its tales and other’s exploits, keen to replicate their success and make
a fortune.
 In a real sense, the stock market reflects the economy and is a
function of supply and demand.
 The Indian economy is in a very exciting phase right now, poised to
touch the $5 trillion dollar mark. Number of Demat accounts have
crossed the 10 crore (100 million) mark! The Indian stock market (5th
largest) having withstood pandemics, recessions, and wars which
makes it a very attractive prospect to participate in.
 The market always looks at the future. Economic fundamentals propel
the market which shows the Indian stock market is about to perform
well in near future making it. Right now, literacy rate as well as
financial awareness in India is at an all-time high which is facilitating
the market’s growth and participation rate at an unreal pace.
 The bottom line is that though the stock market is a wild place, it is
possible to understand it if one arms themselves with knowledge
and prudence, which is possible only if one carefully research it
beforehand and then apply that learning.

3
1.2. Objectives of Study:

Primary Objectives –
1. “To examine entry and exit points in a trade.
2. To identify and analyze support and resistance levels in a chart.
3. To summarize a visual representation of the market.
4. To compare performance of stocks across different sectors.”

Secondary Objectives –
1. “To extrapolate the future market trend.
2. To compare short-term and long-term trends.
3. To assess the drawbacks of Technical Analysis.
4. To distinguish different patterns to be able to make a profit.
5. To analyze trading data gathered from trading activity.”

1.3. Scope of Study:

The scope of the study refers to the parameters in which the study will be
operating in. The scope of study clearly mentions the activities that are
actually performed in this study. It includes the period of study, the functional
area and volume of work carried out in the study. This study provides an in-
depth understanding of performance of stocks across different sectors in the
market. 15 paper trades were undertaken spreading across different time
periods spanning different sectors. The prep and strategy were done in the
context of Technical Analysis on the basis of analysis of price chart patterns.
Different trends were identified and analyzed, and final decision was taken in
purview of that. These mock trades gave a taste of real-time live dynamic
trades, some of them being intraday and most of them on a positional/swing
basis. It was summarized into a report listing entry and exit points, stoploss for
that trade, profit or loss made on a particular trade and the prep done for
executing that trade. In lieu of above, the scope of study is as follows:
“To execute trades across different sectors of market based on Technical
Analysis of stocks with its data spanning from 2021 to 2022 and formalizing it in
a report.”
4
1.4. Company Profile:

1.4.1. About the Company - IM Stocks

IM Stocks (formerly known as InvestMentor Stocks) is a NSE

registered Stock Market Education & Consulting Firm based out of
New Delhi with a track record of providing consistent returns to their
clients in an array of services including Portfolio Management,
Intraday and Swing Recommendations, Hedge Fund, Account
Handling and Stock Market Training Programs.
At the moment, IM Stocks is India’s largest Stock Trading
Community, and the client base varies from big corporate names to
businesspersons, housewives, students, and new traders willing to
enter the market. IM Stocks is also a pioneer in launching a merch
store which is the first trader focused Merchandise Store in India and
even launched a podcast on Spotify, the first ever in the country by a
trading community.

 Name of the Company: IM Stocks

 Founded: 2020
 Location: New Delhi, Delhi
 Contact: +91 8287474816, +91 7044144526
 Email Address: investmentorstocks@gmail.com
 Website: https://www.imstocks.in
 Areas of operation: 230 cities across 17 countries

5
1.4.2. Nature of IM Stocks

 Type of Business: Providing service as well as products

 Type of Industry: Financial Market Services
 Specific functional area:
1. Finance,
2. Equity Trading,
3. Investment,
4. Portfolio management,
5. Stock Signals & Callouts,
6. Options Trading,
7. Education & Training,
8. Merchandising

1.4.3. Vision & Mission

Vision
IM Stocks has an amazing community of more than 5000 members
and a 250k+ following base, which it aims to grow even further. The
team has expanded into hedge fund services with a fund size of 60 Cr
which they are planning to scale up. The company is also planning to
fund other startups as an angel investor in the near future.

Mission
The company’s mission is to make one independent, not a seeker. The
team is committed to spread knowledge and awareness through its
courses and programs to the general public by helping one foster a
growth mindset. They firmly believe that “First you Learn, then you
remove that L and earn.”

6
1.4.4. Product range

1. Full time trading programs/courses:

Imperial (covers equity market) &
Infinitus (covers equity as well as derivative markets)
2. Intraday & Swing Callouts
3. Portfolio Management Services
4. Merchandise

1.4.5. Size

Manpower: 30, core team consisting of 5 members including the

founders that handle administration, client relations and
mentorship.

Revenue: < $5 million

7
1.4.6. Organisation Structure

IM Stocks has a line/hierarchical organizational structure with its

divisions organised around mentorship for courses and programs, client
relations for handling accounts and portfolios, operations and admin,
and community/business development. Since IM Stocks is a small
startup with 30 employees, this kind of structure is suitable and keeps
things simple. Although there is a level of autonomy in admin dept and
community development dept, the CEO & founder is directly engaged
and involved in most functions.

1.4.7. Market share & position in the industry

1.4.7.1. Market Share

IM Stocks provides several services and products to the public,

so it operates in several markets. Its Stock Training Courses and
Programs are rated very positively by learners, and it hosts a
community of more than 5000 members, so its market share in
Stock training and mentoring is presumed to be significant.
It also provides Portfolio Management Services and Hedge Fund
services but since it is relatively a new player in this market, its
market share is presumed to be small. It also sells stock/trading
themed merchandise of its own brand, which is one of a kind,
having generated numerous positive reviews.

1.4.7.2. Position in the industry

Some of the key stats of IM Stocks position in the industry:

 250k+ followers
 5000+ member strong community
 Rated 4.9 on Google based on 100+ reviews
 Operates pan-India and has a global presence across 17
countries

8
1.5. Industry Profile:

1.5.1. Brief Overview of Stock Market in India

Mark Twain once divided the world into two kinds of people: those
who have seen Taj Mahal, and those who haven’t. Same could be said
about investors.
There are two kinds of investors: those who know about the investment
opportunities in India and those who don’t.
Most of the trading in the Indian stock market takes place on two
exchanges – Bombay Stock Exchange (BSE) and the National Stock
Exchange (NSE). Although BSE having been in existence since 1875
is much older than NSE, NSE is the largest exchange in terms of
volume of trading. BSE has 5000+ listed companies while NSE has a
little less than 2000 listed companies. Trading takes place between
9:15 A.M. and 3:30 P.M. IST, Monday through Friday except for
declared holidays. Delivery of shares must be made in dematerialized
form.
The two prominent indexes in India are SENSEX and NIFTY.
SENSEX is the older index including the top 30 stocks of firms listed
on BSE. NIFTY includes top 50 stocks of firms listed on NSE.
The overall responsibility of development, regulation, and supervision
of the stock market rests with the Securities and Exchange Board of
India (SEBI), which was formed in 1992 as an independent authority.
It enjoys vast powers of imposing penalties on market participants, in
case of a breach. Foreign investments are classified into two
categories: Foreign Direct Investment (FDI) and Foreign Portfolio
Investment (FPI). All investments in which an investor takes part in the
day-to-day management and operations of the company are treated as
FDI, whereas investments in shares without any control over
management and operations are treated as FPI.

9
1.5.2. NSE

National Stock Exchange (NSE) was incorporated in 1992, 30 years

ago in Mumbai. NSE was set up by a group of leading Indian financial
institutions at the behest of the Government of India to bring
transparency to the Indian capital market.
NSE was recognized as a stock exchange in 1993 under the Securities
Contracts (Regulation) Act, 1956, when P. V. Narasimha Rao was the
Prime Minister of India and Manmohan Singh was the Finance
Minister.
NSE offers trading, clearing and settlement services in equity, equity
derivative, debt, commodity derivatives, and currency derivatives
segments.
It was the first exchange in India to introduce an electronic trading
facility thus connecting the investor base of the entire country.
Instead of trading memberships being confined to a group of brokers,
NSE ensured that anyone who was qualified, experienced, and met the
minimum financial requirements was allowed to trade.
In this context, NSE was ahead of its time when it separated ownership
and management of the exchange under SEBI's supervision.

NSE was also instrumental in creating the National Securities

Depository Limited (NSDL) which allows investors to securely hold
and transfer their shares and bonds electronically. It also allows
investors to hold and trade in as few as one share or bond. This not
only made holding financial instruments convenient but more
importantly, eliminated the need for paper certificates and greatly
reduced incidents involving forged or fake certificates and fraudulent
transactions that had plagued the Indian stock market. The NSDL's
security, combined with the transparency, lower transaction prices,
and efficiency that NSE offered, greatly increased the attractiveness of
the Indian stock market to domestic and international investors.

10
NSE's trading systems are a state-of-the-art application. It has an
uptime record of 99.99% and processes more than 450 million
messages every day with a sub-millisecond response time.

NSE has taken huge strides in technology in 20 years. In 1994, when

trading started, NSE technology was handling 2 orders a second. This
increased to 60 orders a second in 2001. Today NSE can handle
1,60,000 orders/messages per second, with the ability to scale up at
short notice on demand, NSE has continuously worked towards
ensuring that the settlement cycle comes down.

NSE has collaborated with several universities like Gokhale Institute

of Politics & Economics (GIPE), Pune, Bharati Vidyapeeth Deemed
University (BVDU), Pune, Guru Gobind Singh Indraprastha
University, Delhi, the Ravenshaw University of Cuttack and Punjabi
University, Patiala, among others to offer MBA and BBA courses.

NSE has also provided mock market simulation software called NSE
Learn to Trade (NLT) to develop investment, trading, and portfolio
management skills among the students.

NSE also conducts online examinations and awards certification, under

its Certification in Financial Markets (NCFM) programs. Since August
2009, it has offered a short-term course called NSE Certified Capital
Market Professional (NCCMP). NCCMP or NSE Certified Capital
Market Professional is a 100-hour program for over 3–4 months,
conducted at colleges, and covers theoretical and practical training in
subjects related to the capital markets. NCCMP covers subjects like
equity markets, debt markets, derivatives, macroeconomics, technical
analysis, and fundamental analysis. Successful candidates are awarded
joint certification from NSE and the concerned.

11
1.5.3. Top players in Stock Market Training/Coaching industry

1.5.3.1. BSE Academy

BSE academy offers multiple courses for stock market investors

who wish to polish their knowledge on the markets.

Some of the certificate courses offered by the academy are:

 Risk management
 Technical analysis
 Stock market
 Bond market
 Investment banking
 Equity research

The exams and certification of these courses are handled by the

BSE Academy Certification on Financial Management or
BCFM.

1.5.3.2. NSE Academy

This academy was established to offer basic financial

knowledge and education to beginner investors who are starting
off their stock market journey. The academy offers a range of
courses focused on sharing financial knowledge with learners
along with certification for those who wish to enhance their
career profiles.

Certification programs offered by NSE academy are:

 NSE academy certification in financial markets – NCFM

 NCFM foundation, intermediate, and advanced courses

12
  Certified market professional – NCMP
 Proficiency certificate

Out of the above-mentioned, one of the most sought-after

courses is the NCFM course. The course structure provides
practical knowledge and online testing for skills required to
operate in the financial markets.
NSE academy courses, apart from enhancing stock market
knowledge, can also benefit individuals who wish to build a
good resume for a financial career.

1.5.3.3. Nifty Trading Academy

Nifty Trading Academy (NTA) is a platform that provides live

market sessions that is totally based on Technical Analysis.

Some of the course offerings include:

 Diploma in Technical Analysis course

 Stock market beginners’ course
 Intraday trading course
 Advanced technical analysis
 Software-based Pure profit course for traders

1.5.3.4. (NIFM) National Institute of Financial Markets

This institute was set up by the Ministry of Finance in 1993. It

offers a wide range of stock market courses online along with
exams for certification.
Some of the courses offered are:

 Post-graduate diploma in financial management

 Post-graduate diploma in research analysis

13
  Fellow programme in Management – FPM
 NIFM certified technical analyst
 NIFM certified smart investor
 NIFM certified preparation module

NIFM courses are focused on conceptual understanding rather

than practical stock market knowledge making them lengthier
relatively.

1.5.3.5. National Institute of Securities Market Certifications

(NISM)

Founded by the Securities and Exchange Board of India (SEBI),

this institute imparts the best practices, knowledge, and learning
about the financial markets. The institute has many centres
across the country to cover maximum test takers.

Some of the courses offered by NISM include:

 Currency derivatives certification exam

 Registrar and transfer agents certificate exam for
corporate and mutual funds
 Securities intermediaries compliance exam
 Issuers compliance certificate exam
 Interest rate derivatives certificate exam

1.5.4. Aftermath of COVID-19 & future roadmap

The Indian stock markets have attracted millions of people across all
eligible age groups over the years. Especially when it comes to the
millennials, stock market investment acts as an alternative source of
generating additional income.

14
However, the stock market is as much about risk of losses as it is about
fetching profits.
Since the COVID-19 Pandemic struck India in 2020, Stock markets all
across the globe have witnessed tremendous change which had a
direct impact on the global economy.
Indian markets also witnessed significant change in price movements
across all charts in all sectors, something which has not occurred in
the recent past decades.
One positive take was that the volume in trading increased
significantly, with a record number of demat accounts being opened
during the pandemic adding crores of new traders/investors to the
market.
Naturally, this has led to a surge in the number of Stock training
programs and courses being offered in the market which has captured
the interest of young Indians who were attracted by the prospect of
learning to trade from home opening the doors for attaining financial
freedom.
This was the backdrop in which IM Stocks emerged as a rising startup
rapidly growing since 2020, training thousands of traders from
scratch to highly advanced levels.
The online education industry has grown remarkably since the
pandemic and is projected to grow even further.
As mentioned above, financial market trading has seen supernormal
levels of growth which when taken in recognition of the increasing
popularization of online teaching has created a golden opportunity for
the industry which is up for grabs to be seized.

15
 CHAPTER II

REVIEW OF LITERATURE

2.1 Preface

This chapter is a comprehensive compilation of information obtained from

various published and unpublished sources of data in the area of domain of this
study. A methodical examination of available study materials (Books, Research
papers & Web articles) on the topic of this study was undertaken in this
process. Only reputable and credible works of notable authors were included.
It gives a glimpse of different perspectives providing new ways of interpreting
the field of study. Lastly, it has helped me identify the relevant gaps and
understand how the problem has been researched till date.

2.2 The Basic Principle of Technical Analysis – The Trend

The art of technical analysis - for it is an art - is to identify trend changes at an

early stage and to maintain an investment position until the weight of the
evidence indicates that the trend has reversed (Pring, 2002).
The analysis of trends is the “fuzzy” aspect of technical analysis (Kirkpatrick &
Dahlquist, 2006). Technical analysis points towards price behavior that suggests
the possible initiation, conclusion, or continuation of a trend (Schwager, 1999).
Technical analysis is based on one major assumption: Freely traded, market
prices, in general, travel in trends (Kirkpatrick & Dahlquist, 2006).
Trends of different lengths tend to have the same characteristics. In other
words, a trend in annual data will behave the same as a trend in five-minute
data.
Trends are obvious in hindsight, but ideally, we would like to spot a new trend
right at its beginning, buy, spot its end, and sell. The fact that market prices
trend has been known for thousands of years. Academics have disputed that
markets tend to trend because if it were true, it would spoil their theoretical
models. However, recent academic work has shown that the old financial

16
models have many problems when applied to the behavior of real markets.

17
2.2.1. What is a Trend?

A Trend is a directional movement of prices that remains in effect long

enough to be identified and still be profitable. Anything less makes
technical analysis useless (Kirkpatrick & Dahlquist, 2006). In a
general sense, the trend is simply the direction of the market, which
way it’s moving (Murphy, 1999). Markets generally don’t move in a
straight line in any direction. Market moves are characterized by a
series of zigzags. These zigzags resemble a series of successive waves
with fairly obvious peaks and troughs.
It is the direction of those peaks and troughs that constitutes market
trend (Murphy, 1999). If a trend is not identified until it is over, we
cannot make money from it. If it is unrecognizable until too late, we
cannot make money from it. In retrospect, looking at a graph of prices,
for example, many trends can be identified of varying length and
magnitude, but such observations are observations of history only. A
trend must be recognized early and be long enough for the technician
to profit (Kirkpatrick & Dahlquist, 2006).
An uptrend looks something like Chart A in Figure1.1. The standard
definition of an uptrend is higher highs and higher lows (Schwager,
1999).
A downward trend, or downtrend, is the opposite: when prices reach
lower troughs and lower peaks (Kirkpatrick & Dahlquist, 2006). It can
also be defined as a succession of lower highs and lower lows
(Schwager, 1999). Chart B in Figure 1.1 shows this downward trend in
price.
Uptrends and downtrends are also often defined in terms of trend lines.
An uptrend line connects a series of higher lows; a downtrend line
connects a series of lower highs (Schwager, 1999).
A sideways or flat trend occurs when prices trade in a range without
significant underlying upward or downward movement.

18
 Figure 1.1 The Trend
Source: (Kirkpatrick & Dahlquist, 2006)

Chart C in Figure 1.1 is an example of a sideways trend; prices move

up and down but on average remain at the same level (Kirkpatrick &
Dahlquist, 2006). Figure 1.1 shows a theoretical example of an
uptrend, downtrend, and sideways trend. But defining a trend in the
price of real-world securities is not quite that simple. Price movement
does not follow a continuous, uninterrupted line. Small countertrend
movements within a trend can make the true trend difficult to identify
at times. Also, remember that there are trends of differing lengths.
Shorter-term trends are parts of longer-term trends.

19
2.2.2. Identification of a trend

There are many methods of identifying trends, but the most basic and
traditional method is to look at a graph of prices for extreme points,
tops, and bottoms, separated by reasonable time periods, and to draw
lines between these extreme points (see Figure 1.2). These lines are
called trend lines (Kirkpatrick & Dahlquist, 2006). This traditional
method is an outgrowth of the time before computer graphics software
when trend lines were hand drawn. It still works, however. Using this
method to define trends, you must define reversal points. By drawing
lines between them, top to top and bottom to bottom, we get a
“feeling” of price direction and limits. We also get a “feeling” of slope,
or the rate of change in prices. Trend lines can define limits to price
action, which, if broken, can warn that the trend might be changing.
One way to determine a trend in a data set is to run a linear least-
squares regression. This statistical process will provide information
about the trend in security prices. Unfortunately, this particular
statistical technique is not of much use to the technical analyst for trend
analysis (Kirkpatrick & Dahlquist, 2006).
The regression method depends on a sizable amount of past price data
for accurate results. By the time enough historical price data
accumulates, the trend is likely changing direction (Kirkpatrick &
Dahlquist, 2006). Despite the tendency for trends to be persistent
enough to profit from, they never last forever.

20
Figure 1.2 Hand-drawn trend lines from top to top and bottom to bottom

Source: (Kirkpatrick & Dahlquist, 2006)

2.2.3. Kinds of Trend based on time period

The number of trend lengths is unlimited. Investors and traders need to

determine which length they are most interested in, but the methods of
determining when a trend begins and ends are the same regardless of
length. This ability for trends to act similarly over different periods is
called their fractal nature (Kirkpatrick & Dahlquist, 2006). Thus, for
analysis purposes, the length of the trend is irrelevant because the
technical principles are applicable to all of them. The trend length of
interest is determined solely by the investor’s or trader’s period of
interest. This is not to say that different trend lengths should be

21
 ignored. Because shorter trends make up longer trends, any analysis of
a period of interest must include analysis of the longer and shorter
trends around it. For example, the trader interested in ten-week trends
should also analyze trends longer than ten weeks because a longer
trend will affect the shorter trend. Likewise, a trend shorter than ten
weeks should be analyzed because it will often give early signals of a
change in direction in the larger, ten-week trend. Thus, whatever trend
the trader or investor selects as the trend of interest, the trends of the
next longer and next shorter periods should also be analyzed.

2.3 Support and Resistance

In the previous section of trends, it was stated that prices move in a series of
peaks and troughs, and that the direction of those peaks and trough determined
the trend of the market.
The troughs, or reaction lows, are called support (Murphy, 1999). It indicates
that support is a level or area on the chart under the market where buying
interest is sufficiently strong to overcome selling pressure. As a result, a decline
is halted and prices turn back up again. Usually, a support level is identified
beforehand by a previous reaction low.
Resistance is the opposite of support and represents a price level or area over
the market where selling pressure overcomes buying pressure and a price
advance is turned back (Murphy, 1999). When prices have been rising and then
reverse downward, the highest point in the rise, the peak, is referred
to as a resistance point, a level at which the advance has met with selling
“resistance.” (Kirkpatrick & Dahlquist, 2006). Usually, a resistance level is
identified by a previous peak. In an uptrend, the resistance levels represent
pauses in that uptrend and are usually exceeded at some point. In a downtrend,
support levels are not sufficient to stop the decline permanently, but
are able to check it at least temporarily. Over time, previous support will
become resistance, and previous resistance will become support.

22
 Figure 1.3 Shows rising support and resistance levels in uptrend. Points
2 and 4 are support levels which are usually previous reaction lows. Points 1
and 3 are resistance levels, usually marked by previous peaks.

Source: (Murphy, 1999)

Figure 1.4 Shows support and resistance in a downtrend.

Source: (Murphy, 1999)

2.4 Charts

A chart is the traditional tool of the technical analyst. Charts are merely
graphical displays of data (Kirkpatrick & Dahlquist, 2006). Traditionally,
technical analysis has been closely associated with price patterns, perhaps even
more than it should be.

23
Prior to the advent of the computer, hand-drawn charts of prices were the only
technical resources available. Trend lines and patterns were the principal means
of analyzing price behavior. The computer has diversified technical analysis
because it has made other mathematical relationships easier to calculate
(Kirkpatrick & Dahlquist, 2006).

2.4.1. Bar Chart

Bar chart has already been acknowledged as the most widely used type
of chart in technical analysis (Murphy, 1999).
A bar chart shows at least three pieces of information: the high, the
low, and the closing price for each time interval.
Some bar charts also contain a fourth piece of price information: the
opening price. Each time interval (that is, day, week, or five-minutes)
is represented by one bar (Kirkpatrick & Dahlquist, 2006).
The daily bar chart is most useful for trading purposes, but bar charts
for longer data periods provide an extremely important perspective
(Schwager, 1999). It's called a bar chart because each day's range is
represented by a vertical bar. The bar chart shows the open, high, low,
and closing prices. The tic to the right of the vertical bar is the closing
price. The opening price is the tic to the left of the bar (Murphy, 1999).
We see that the first bar in Figure 1.5 represents trading information
for AAPL January 2, 2015. The lowest point of the bar is $107.35,
which is the lowest price that a share of AAPL traded for on that day.
The highest price anyone paid for a share of AAPL that day was
$111.44, represented by the top of the bar. The opening price for
AAPL was
$111.39, represented by the left hash mark. The right hash mark at
$109.33 represents the closing price. The bar for trading day 2 in
Figure 1.5 closed lower than it opened, and it opened below the close
of day 1, indicating the trend is downward. Another quick observation
is that the bar for trading on day 5 has a lower high than the low of day
6. This space is called a gap. Thus, the bar chart makes it easy to spot
changes in trend and price action from bar to bar.
24
Figure 1.5 Weekly bar chart for Apple Computer (AAPL) (January 1–May 29, 2015)

Source: (Kirkpatrick & Dahlquist, 2006)

2.4.2. Line Charts

These charts provide information about two variables: price and time.
A line chart has price data on the vertical, or y, axis. On the
horizontal, or x, axis, it has a time measure (hours, days, weeks, and
so on) (Kirkpatrick & Dahlquist, 2006).
In the line chart, only the closing price is plotted for each successive
day. Many chartists believe that because the closing price is the most
critical price of the trading day, a line (or close-only) chart is a more
valid measure of price activity (Murphy, 1999).
Close only (line) charts are based on closing values and ignore high
and low-price information. Some price series can be depicted in only

25
 close only chart formats because intraday data are not readily available
(Schwager, 1999). Furthermore, as a practical matter, bar charts are
far more readily available than close only charts (Schwager, 1999).
Simple line charts are especially useful when studying long-term
trends. Because line charts display summary statistics, they are often
used when information about several different variables is being
plotted in the same graph (Kirkpatrick & Dahlquist, 2006).
Line charts, however, can be used to present data collected at any time
interval.

Figure 1.6 Line charts using weekly closing prices of the DJIA, S&P 500, and Nasdaq
Composite (June 2013–May 2015)

Source: (Kirkpatrick & Dahlquist, 2006)

26
2.4.3. Candlestick Charts

Candlestick charts are the Japanese version of bar charting and have
become very popular in recent years among western chartists (Murphy,
1999). Candlestick charts add dimension and color to the simple bar
chart. The segment of the bar that represents the range between the
open and close is represented by a two-dimensional
real body, while the extensions beyond this range to the high and low
are shown as lines (called shadows) (Schwager, 1999).
This charting method was used as early as the mid-1600s to trade rice
futures in the Japanese markets and continues to be the most popular
form of technical analysis in Japan (Kirkpatrick & Dahlquist, 2006).
On the candlestick chart, prices seem to jump off the page presenting a
stereoscopic view of the market as it pushes the flat, two-dimensional
bar chart into three dimensions. In this respect, candlecharts are
visually exciting (Nison, 1991). The thick part of the candlestick line is
called the real body (Nison, 1991). It represents the range between that
session's opening and closing. When the real body is black (i.e., filled
in) it means the close of the session was lower than the open. If the real
body is white (i.e., empty), it means the close was higher than the
open. The thin lines above and below the real body are the shadows.
These shadows represent the session's price extremes. The shadow
above the real body is called the upper shadow and the shadow under
the real body is known as the lower shadow (Nison, 1991).
Accordingly, the peak of the upper shadow is the high of the session
and the bottom of the lower shadow is the low of the session. If a
candlestick line has no upper shadow it is said to have a shaven head
(Nison, 1991). A candlestick line with no lower shadow has a shaven
bottom (Nison, 1991). To the Japanese, the real body is the essential
price movement. The shadows are usually considered as extraneous
price fluctuations.
You can easily see how the candlestick chart got its name; many times,
the real body will look like a candle and the upper shadow will look
like the wick (Kirkpatrick & Dahlquist, 2006). Individual candlesticks

27
can take on a variety of interesting sizes.

28
 Some have long shadows; others have short shadows. Some have tall
boxes; other have short boxes. The color of the box, the lengths of the
boxes and shadows, and where the box sits relative to the shadows tell
something about the trading that occurred over the time period
represented by the candlestick (Kirkpatrick & Dahlquist, 2006).

Figure 1.7 Daily candlestick chart for (AAPL) (January 1–May 29, 2015)

Source: (Kirkpatrick & Dahlquist, 2006)

2.4.3.1. Morning Star and Evening Star

The morning star is a bottom reversal pattern. Its name

is derived because, like the morning star (the planet Mercury)
that foretells the sunrise, it presages higher prices (Nison, 1991).
The morning star is a three-bar, market bottom pattern
(Kirkpatrick & Dahlquist, 2006).
29
 The evening star is a three-bar candlestick pattern that occurs at
market tops (Kirkpatrick & Dahlquist, 2006). The evening star is
the bearish counterpart of the morning star pattern. It is aptly
named because the evening star (Venus) appears just before
darkness sets in (Nison, 1991).

Figure 1.8 Evening star and morning star candlestick patterns

Source: (Kirkpatrick & Dahlquist, 2006)

The evening star pattern, pictured in Figure 1.10, starts with a long
white body followed by a star of either color. The morning star, which
occurs at a market bottom, is the opposite formation of the evening
star. As shown in Figure 1.10, it begins with a black-bodied
candlestick, followed by a star. In each of these patterns, the second
bar, or middle candlestick, is known as a star. A star is a candlestick
that has a small body that lies outside the range of the body before it
(Kirkpatrick & Dahlquist, 2006). It implies an opening gap, as does a
dark cloud and piercing line pattern, but it can later cover part of the
previous bar’s shadow. The important point is that its body does not
overlap the previous bar’s body at all (Kirkpatrick & Dahlquist, 2006)
30
 2.4.4. Limitations of Candlestick Charts

Candlestick charts provide many useful trading signals. They do not,

however, provide price targets. There are other methods to forecast
targets (such as prior support or resistance levels, retracements, swing
objectives, and so on) (Nison, 1991).
The candlestick charts show different biases. The technical analysis of
the market remains subjective in this case. It further creates clashing
signals, especially when the indicators are added (7Newswire , 2022).
Candlestick Charts though being considered more reliable and accurate
often giving an early sign of trend reversal, suffer from the same
fundamental criticism as other charts - it gives no clue in a market
having sideways trend.

2.5. Patterns

Patterns are the distinctive formations created by the movements of security

prices on a chart and are the foundation of technical analysis (Adam Hayes,
2022). Price patterns are pictures or formations, which appear on price charts of
stocks or commodities, that can be classified into different categories, and that
have predictive value (Murphy, 1999). A pattern is identified by a line
connecting common price points, such as closing prices or highs or lows, during
a specific period. History repeats itself in “patterns” of past price behavior will
tend to recur in the future. Thus, if through careful analysis of price charts one
develops an understanding of “patterns”, this can be used to predict the future
behavior of prices (Fama, 1965). Patterns are like tools to invest. Whether
someone uses it successfully to make money is entirely upto them (Bulkowski,
2000). In the literature and usage of technical analysis, the terms pattern and
formation are used interchangeably. A pattern is simply a configuration of
price action that is bounded, above and below, by some form of either a line or
a curve (Kirkpatrick & Dahlquist, 2006).

31
2.5.1. Entry and Exit

All patterns have a combination of an entry and an exit. The entry

describes the trend preceding the formation, and the exit is usually the
signal for action (Kirkpatrick & Dahlquist, 2006). A pattern can occur
after a decline, in which case, the entry is from above, or after an
advance, in which case, the entry is from below. The exit, of course,
can also be downward or upward. Figure 1.15, a double top, shows an
entry from above and an upward breakout. On the other hand, a top
formation has an entry from below and an exit downward.

Figure 1.9 Showing entry and exit for a trade

Source: (Kirkpatrick & Dahlquist, 2006).

Pullbacks occur when prices break out downward and then “pull back”
to their breakout level. Throwbacks occur when prices break out
upward and then “throw back” to their breakout level (Magee, 1948).
Figure 1.15 shows an example of a pullback.
Thus, although each may provide a second opportunity for action at the
breakout level, the subsequent rise or fall generally will be less than if
there were no pullback or throwback (Kirkpatrick & Dahlquist, 2006).

32
2.5.2. List of Chart Patterns

Figure 1.10 Index of top chart patterns

Source: (Burns, 2021)

33
2.5.2.1. Inverted Head and Shoulders

Head and Shoulders bottom or better known as Inverted Head

and Shoulders pattern is a mirror image of its topping pattern
(Murphy, 1999). These are quite easy to spot and can be very
profitable, meeting its price target 83% of time (Bulkowski,
2000). It’s a pattern seen when a security’s price falls and rises
three times to form three successive troughs, the second of
which is deepest (Chen, 2022). Volume plays a much more
critical role in the identification and completion of a head and
shoulders bottom (Murphy, 1999)

Figure 1.11 Example of an inverse head and shoulders

Source: (Murphy, 1999)

2.5.2.2. Double Bottom

Much more common reversal pattern is the double bottom and

next to the head and shoulders, is the most widely recognized
(Murphy, 1999). For obvious reasons, it is also referred to as a
‘W’ pattern. A double bottom is an indicator of positive signals
as the stock’s reached its low, and the second bottom will

34
 mostly be followed by a continuous increase in the stock price
(CFI, 2022). A double bottom is considered completed when
prices above the reaction high between the two bottoms of the
formation (Schwager, 1999). The biggest surprise with double
bottoms is the high failure rate at 64% and only a third of
formations classify as true double bottoms (Bulkowski, 2000).
Interestingly a third of successful formations give gains as high
as 50% (Bulkowski, 2000) making it a high-risk high-reward
pattern.

2.5.2.3. Triangles

The rectangle pattern is bounded by parallel lines. If the same

general pattern has nonparallel boundary lines such that when
extended into the future they cross each other, the formation is
a triangle pattern (Kirkpatrick & Dahlquist, 2006). There are
three basic types of triangle patterns: symmetrical ascending
and descending. A symmetrical triangle is usually followed by
a continuation of the trend that preceded it (Schwager, 1999).
Some chartists include a fourth type of triangle known as an
expanding triangle, or broadening formation (Murphy, 1999).
Ascending Triangle is formed when the horizontal top line of
resistance repels prices and they rebound off a steadily rising
support line below. The two narrowing lines, one horizontal
and the other sloping up, outline a triangular shape joining at
the apex (Bulkowski, 2000). Descending Triangle is formed
prices rebound from the base of the formation following a
horizontal trendline, whereas prices along the top obey a
downward sloping trend. Volume throughout the formation
follows a downward trend as well (Bulkowski, 2000).

35
 2.5.2.4. Wedge Formation

A wedge pattern is a triangle pattern with both trend lines

heading in the same direction (Kirkpatrick & Dahlquist, 2006).
The wedge formation is similar to a symmetrical triangle both
in terms of its shape and the amount of time it takes to form
(Murphy, 1999). What distinguishes the wedge is its noticeable
slant. The wedge pattern has a noticeable slant either to the
upside or the downside. In a rising wedge, prices edge steadily
higher in a converging pattern (Schwager, 1999). The declining
wedge or falling wedge has both lines headed downward, with
the upward bound falling more quickly than the lower bound
(Kirkpatrick & Dahlquist, 2006). Therefore, a falling wedge is
considered bullish and a rising wedge is bearish (Murphy,
1999).

2.6. Limitations/Drawbacks/Criticism of Technical Analysis

The popularity of Technical Analysis is not exactly mirrored in the academic

and scientific community. This is not surprising given the fact that the
majority of academics opposes the use of technical analysis. In fact, a study by
Robert Strong (1988) showed that more than 60% of PhDs do not believe that
technical analysis can be used as an effective tool to enhance investment
performance (Kirkpatrick & Dahlquist, 2006). Burton Malkiel in his book
A Random Walk Down the Wall Street refers to technical analysis as
“sharing a pedestal with alchemy”. These individuals believe that prices move
in a random fashion and have no “memory.” This assumption would imply that
technical analysis, which depends on prices predicting prices, has no foundation
because all price motion is random. As early as 1915, Wesley C. Mitchell
noticed that the distribution of price changes does not exactly follow Normal
distribution indicating that stock prices are more likely to deviate
extraordinarily from the mean more often than the normal. Some scientists have
gone as far as labelling Technical Analysis as “pseudoscience” referring to it as
the “astrology of price predictions”.

36
 CHAPTER III

RESEARCH METHODOLOGY

3.1. Prelude

This Chapter basically covers the objectives of the study, sources of data
collection and methods of data collection for this study. It gives a design of this
study and aims to address the research objectives and data collection
specifically.

3.2. Objectives of the study

Objectives are outcomes that one aims to achieve after undertaking the
research/study. Studies usually contain one or more than one objectives which
can be either classified further as primary/secondary or main/specific.
In the case of this study, It has more than one objective(s) which are divided
into primary and specific objectives.
Objectives are formulated from the research questions raised in context of the
relevant topic.
This section of Chapter IV is just an extension of the objectives already covered
in Chapter I.
The way the objectives for this study were formulated is as follows-
 The broad area of subject (field of study) here is “Technical Analysis of
stocks in different sectors of NSE”.
 Dissecting it further into specific subareas, we get a picture like this –
A. “Technical Analysis versus Fundamental Analysis”
B. “Philosophy of Technical Analysis”
C. “Empirical Support behind Technical Analysis”
D. “Technical Analysis as a forecasting tool”
E. “History of Technical Analysis”
F. “Core Principle behind Technical Analysis”

37
 G. “Terminologies in Technical Analysis”
H. “Method/Approach to Technical Analysis”
I. “Characteristics of Technical Analysis”
J. “Types of Technical Analysis”
K. “Theories in Technical Analysis”
L. “Criticism of Technical Approach”
M.“Myths surrounding Technical Analysis”

Selecting areas of interest (fields of study) most relevant to this study, we are
left with D, F, G, H, I & L.

These fields of study pose certain questions like –

 What are the steps in Technical Analysis?

 Why is Technical Analysis criticized by the scientific community?
 What are resistance and support levels?
 When do we enter a trade and when do we exit one?
 What are the different kinds of chart patterns?
 What are the underlying principles behind Technical Analysis?
 What are the various terms used in Technical Analysis?
 Can past patterns predict future?

Now we formulate our objectives on the basis of these research questions raised
and categorize the most relevant and of most interest to this study as ‘primary’
and the rest as ‘secondary’.

Primary Objectives of the study -

1. To examine entry and exit points in a trade.

2. To identify and analyze support and resistance levels in a chart.
3. To summarize a visual representation of the market.
4. To compare performance of stocks across different sectors.

38
 Secondary Objectives of the study -

1. To extrapolate the future market trend.

2. To compare short-term and long-term trends.
3. To assess the drawbacks of Technical Analysis.
4. To distinguish different patterns to be able to make a profit.
5. To analyze trading data gathered from trading activity.

3.3. Research Design

Once the problem and objectives are crystal-clear, the next phase is designing
the study execution plan, better known as research design. It is sometimes
referred to as the framework or blueprint for conducting the study. Although a
broad approach to the problem has already been developed, the research design
specifies the details - the nuts and bolts - of implementing that approach.
This makes research design an extremely crucial element of research process as
most researches lose out because either the research design was not
conceptualized properly, or the design formulated was weak.

Typically, a research design involves the following components, or tasks:

1. Define the objectives (Chapter-I & Chapter-III)

2. Describe the type of research (Chapter-III)
3. Data collection sources and methods (Chapter-III)
4. Develop a plan of data analysis (Chapter-IV)

In short, research design can be classified into Exploratory Research and

Conclusive research.

Conclusive Research is further classified into Descriptive Research and Causal

Research.

Descriptive Research are of two types – Cross- sectional and Longitudinal.

39
 There is a descriptive aspect to this study as the topic of the study – Technical
Analysis is described comprehensively in the study. Further the study is cross-
sectional as specific samples of data were taken and analyzed in a specific time
period. Both the sample and time period were small/short.

Just like design of research, design of analysis can be classified into two types –
1. Qualitative
2. Quantitative

Qualitative research/analysis involves collection and analysis of non-numerical

data. This is highly subjective in nature. On the other hand, Quantitative
research/analysis involves collection and analysis of numerical data which is
highly objective in nature. This study is primarily quantitative in nature as the
data techniques and the data itself are quantitative i.e. numerical in nature. Thus,
the broad approach to this study is quantitative.

3.4. Sources of Data Collection

There are mainly two sources of data-

the first is primary and contextual, and the second is secondary and historical.

Data collected for this study is of secondary nature which is most apt
considering it in context of the field of the study.
Secondary data is further classified based on the source into –
1. Internal secondary data
2. External secondary data

Internal secondary data is organization/environment specific like company

records, employee records or sales data.

External secondary data is data compiled by an outside source that is external to

the organization like published sources (public as well as private), computer-
based information sources and syndicated sources.

40
 Therefore, in light of the context of the topic of the study, only external
secondary data was chosen as it was found to be most appropriate and suitable
for the furtherance of this study.

3.5. Methods of Data Collection

As the data collected this for study was quantitative in nature, therefore only
methods relevant to collection of such data is mentioned.
The specific secondary data sources referred for the study were as follows-

Books - The simplest, easily accessible, and user-friendly source of

data. A thorough and exhaustive examination was undertaken and
the volume carried a range of technical relevant to the topic of
interest.

Studies and Journals - Past studies/research that were conducted on the topic
were analyzed and evaluated. Data published in past
journals were also examined.

Directories and Indices - Different market indices Indian as well as

international were tracked and their data was
analyzed for this study.

Internet - A plethora of web articles, databases, and other content on the

internet was referred. Platforms and tools relevant to the topic of
the study were used as well making Internet the most crucial
source of data in this study.

Media - Online as well as offline media sources also collaborated data and
information for this study.

41
 CHAPTER IV

DATA ANALYSIS & INTERPRETATION

4.1. Prologue

Secondary raw data in the form of charts is presented in this chapter

This chapter also include inferences and interpretation drawn from the data in
tabular form. Only established theoretical concepts/tools/techniques were used to
interpret the data.

4.2. Data Analysis and Interpretation

4.2.1. WOCKPHARMA Trade analysis

Sector – Pharmaceuticals

Aspects of Interpretation Price Time

Entering trade at what price ₹270.10 01 Apr 2022
Exiting trade at what price ₹315.90 07 Apr 2022
Stoploss put for the trade ₹261.70 01 Apr 2022

42
Profit made on the trade ₹45.80 07 Apr 2022
Observations - Following a downtrend towards the end of March,
a morning star pattern is observed at which an entry can be made
as soon as the 3rd candle engulfs the 1st candle and the stoploss can be placed
at the wick of the 2nd candle. The exit point is taken when the resistance level
is broken.

4.2.2. JUSTDIAL Trade analysis

Sector – Services

Aspects of Interpretation Price Time

Entering trade at what price ₹728.05 09 Dec 2021
Exiting trade at what price ₹ 818.10 09 Dec 2021
Stoploss put for the trade ₹ 698.50 09 Dec 2021
Profit made on the trade ₹ 90.05 09 Dec 2021
Observations - An inverted head-and-shoulders pattern is observed marking
a bullish reversal. Entry is made at the point where the neckline breaks
placing the stoploss at the apex of the right shoulder. Exit is made when the
target is acquired by projecting the distance between neckline and head.

43
44
 4.2.3. JKCEMENTS Trade analysis

Sector - Infrastructure

Aspects of Interpretation Price Time

Entering trade at what price ₹2526.50 04 Apr 2022
Exiting trade at what price Hit Stoploss 03 Jun 2022
Stoploss put for the trade ₹2165.35 04 Apr 2022
Loss suffered on the trade ₹361.15 03 Jun 2022
Observations - A potential double-bottom pattern is observed after a
downtrend and entry is made when the neckline breaks. However, it turned
out to be a false breakout and the price fell sharply even after the retest,
eventually hitting the stoploss.

45
 4.2.4. BOSCH LTD Trade analysis

Sector – Auto (MNC)

Aspects of Interpretation Price Time

Entering trade at what price ₹14664.45 29 Jun 2022
Exiting trade at what price ₹15966.10 04 Jul 2022
Stoploss put for the trade ₹13241.35 29 Jun 2022
Profit made on the trade ₹1301.65 04 Jul 2022
Observations - Double bottom pattern is formed at the end of a downtrend.
Move is made as soon as the neckline breaks putting stoploss at swing low of
right shoulder. Exit is made once the target is achieved giving a great upside.

46
 4.2.5. ASIAN PAINTS Trade analysis

Sector – Chemicals

Aspects of Interpretation Price Time

Entering trade at what price ₹2603.60 14 May 2021
Exiting trade at what price ₹2876.85 25 May 2021
Stoploss put for the trade ₹2525.50 14 May 2021
Profit made on the trade ₹273.25 25 May 2021
Observations - A triangle is spotted at an uptrend marking a continuation
in trend . Entry made as soon breakout is confirmed from resistance.
Exit is made once the target is achieved. Target is set by projecting the width
of the triangle.

47
 4.2.6. SUNTV Trade analysis

Sector – Media

Aspects of Interpretation Price Time

Entering trade at what price ₹454.60 09 Mar 2022
Exiting trade at what price ₹483.85 30 Mar 2022
Stoploss put for the trade ₹425.00 09 Mar 2022
Profit made on the trade ₹29.25 30 Mar 2022
Observations - In Sun TV price chart, a double bottom is observed at the
bottom of the trend. Entry is made as soon as the neckline breaks
placing the stoploss at lower support. Target is achieved after 2-3 retests and
consequently trade is exited.

48
 4.2.7. BATA INDIA Trade analysis

Sector – Footwear, Leather (MNC)

Aspects of Interpretation Price Time

Entering trade at what price ₹1724.40 09 Mar 2022
Exiting trade at what price ₹1824.75 10 Mar 2022
Stoploss put for the trade ₹1688.95 09 Mar 2022
Profit made on the trade ₹100.35 10 Mar 2022
Observations - Following the appearance of an inverted head-and-shoulder
pattern on the intraday price chart, entry is made at the point where the
neckline breaks. Stoploss is put at the high of right shoulder and
trade is exited by projecting the distance between neckline and head.

49
 4.2.8. HINDALCO Trade analysis

Sector – Metal

Aspects of Interpretation Price Time

Entering trade at what price ₹384.30 10:14 AM
Exiting trade at what price ₹ 385.55 10:19 AM
Stoploss put for the trade ₹384.00 10:14 AM
Profit made on the trade ₹1.25 10:19 AM
Observations - In HINDALCO price chart, an opportunity is realized
for an intraday trade. A falling wedge is spotted following which
an entry is made when resistance breaks placing stoploss
at highest low of support. The trade is exited once the price hits the target.
Despite the correct analysis, the trade failed to return a considerable profit.

50
 CHAPTER V

FINDINGS

5.1. Outline

This Chapter presents the result of the study supported by facts and figures in
narrative form culled from Chapter-IV. Basically a bird’s eye point of view of
information is presented in a summarized form. The data and information is
simplified in a reader-friendly language. The sequence of the results are
consistent with the objectives of the study mentioned in Chapter-I.

5.2. Findings based on sectors

Based on the results from Chapter IV, all stocks analyzed belonged to different
sectors of the market. WOCKPHARMA belongs to Pharma sector, JUSTDIAL
belongs to Service sector, JK CEMENTS belongs to Infra sector BOSCH LTD
belongs to Auto sector and ASIAN PAINTS belongs to Chemicals sector.
However, there is an overlap and ambiguity in determining which stock belongs
to which specific sector such as ASIAN PAINTS can also be considered as part
of Consumption sector and JK CEMENTS can be similarly considered to be a
part of Commodities sector. Similarly, HINDALCO can fall under both Metal &
Commodities sector. Moreover such findings do not give rise to any significant
applications.

5.3. Findings based on kind of trade

Most trades were of intermediate term ranging from few days to weeks i.e., only
JUSTDIAL & HINDALCO were intraday trades; BATA INDIA could be
considered quasi-intraday day, but the rest were swing/positional trades. Intraday
trades are considered more risky or less fruitful for investors especially

51
 beginners as advanced technicals are employed for such trades, therefore this
study contains mostly swing/positional trades.

5.4. Findings based on Profit/loss made on trade

Almost all trades returned profit except JK CEMENT which gave a huge
downside eventually saved by the stoploss which was put for situations like this.
Most of the trades gave good upside with BOSCH LTD notably returning profits
in 3 digits! Trades like HINDALCO turned over a meager profit despite the
correct analysis which is quite a common sight in intraday trades as these do not
witness considerable swings.
Incorrect/False identification of the pattern not supported by other technicals are
the primary reasons for getting the trade going wrong.
For trades like JKCEMENTS, this is actually in tandem with the fact mentioned
in section 2.5.3.4. of Chapter-II that double bottom patterns fails 64% of the
time and 66.67% are falsely identified which this particular pattern of this trade
turned out to be as implied statistically. Also once the pattern gives the breakout
(analysis worked correctly) the gains made are huge providing big upside like in
the BOSCH LTD trade.

5.5. Findings based on entry/exit points

All trades were entered and exited at the accurate time and price based on
technicals. Except JK CEMENTS the patterns seemed solid and good, and the
entry prices were right on point at the beginning of the formation of the
trend/pattern. The exit points were solely based on technicals and were fixed
regardless of intensity of price increase or decrease.

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 CHAPTER VI

CONCLUSION AND SUGGESTIONS

6.1 Conclusion

Technical Analysis is much bigger than the scope of this study. Only a fraction
of technicals are discussed as it is so vast that a single study cannot cover all of
it. It is a blend of approaches, and each approach adds something to the
knowledge about the market. Also, the key to knowing and understanding
technical analysis is by actually doing it in practical as experience is often
termed as the best source of knowledge. Technical analysis is much like
solving a puzzle - it takes time and is not easy and requires several trials and
errors and much like how it requires different pieces to solve, market analysis
requires as many different tools and techniques which can be combined
meaningfully to form a suitable strategy. It pays to understand that trading and
investing are not just a matter of entry into positions. Technical signals are
useful for entry, but technical understanding of risk is even more important. As
most great traders preach, Entry is easy; Exit is difficult. Hence, the size of the
position and exit strategies are most important and crucial aspect of Technical
Analysis thus should be carefully kept in mind when creating and managing
portfolios. It is what ultimately prevents a disaster from cascading.

Also, realizing now that Money Management is considered far more important
than trading by almost every one familiar and experienced with stock market.
Money Management protects risks in losses of individual trades or in complete
systems.

Technical analysis urges one to constantly seek clues from future market
movements. But the first and final clue is embedded in Murphy’s Law that
anything that can go wrong, will go wrong eventually which can be positively
interpreted as losing is an intrinsic part of the game. A win in the long run
generally overshadows the former.

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6.2 Suggestions and Scope for further study

It is very evident and clear that results of the study are not absolute; in fact no
study produces absolute results. There is definitely always a scope for further
study as the findings from the study are from a limited data and not an
extensive one.
One important observation which should be suggested, that for the completion
of this study, other similar studies were referred and reviewed but there is a
scarcity of studies relevant to this topic and hopefully in future more studies
relevant for such topics become readily available and more common.
Also since there is a limited amount of statistical data related to effectivity and
profitability from technicals in the literature, so subsequent future studies can
hopefully shed a light on it.

6.3 Limitations

Limitations presented in this section are combined; relevant to the subject

matter as well as relevant to the process of undertaking the study.
These clear revelations are mentioned so that the reader keeps it in their mind
when analyzing the results and implications of the study.
The data analyzed was limited and specific so the results may not be applicable
outside that scope. As such these results cannot be scaled and generalized and
is restricted to a small-scale sample of data.
Reliability and validity of Technical Analysis are debatable. One who is not
aware of technicals may not be critical of it but most academic and scientific
experts have rejected technical approach to trading since a long time. The
philosophy or the principle behind Technical Analysis which are assumptions
has been characterized as a flaw scientifically. Even practically, technical
analysis does not guarantee profits and returns.
The drawbacks of the topic of the study are already discussed at the the end of
Chapter-II.
Lastly data insufficiency, time constraints and resource constraints were
encountered contributing to the difficulties faced while undertaking the study.

54
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