Statement Of The Problem

Stock investment requires meticulous planning and careful evaluation of the underlying stock
before making investment. A statistical data in the recent past indicated that 95 per cent of the
investors in the stock markets are losers, since they undertake investment without any
information and without discipline.
 Which stock to invest?

 What type of security to buy?

 When to sell the securities?

 Where to Invest?

 How to Invest?

 Whether hold, sell or buy securities?

It is much required for the investors to study the market and to understand market psychology so
that they can make optimal decisions

Objectives of the Study

The following are the main objectives of this study,

 To find the right stock for investment and to provide the justification for the investment based on the
candlestick charts and indicators.

 To know the movements of stock prices of selected company stocks through Technical analysis.

 To know how best we can utilize these analyses to meet the financial goals
 Review Of Literature
C. L. Osler (2001) provides a micro structural explanation for the success of two familiar
predictions from technical analysis: (1) trends tend to be reversed at predictable support and
resistance levels, and (2) trends gain momentum once predictable support and resistance levels
are crossed. There are marked differences between the clustering patterns of stop-loss and take-
profit orders, and between the patterns of stop-loss buy and stop-loss sell orders. These
differences explain the success of the two predictions. CESARI, R. and D. CREMONINI, Gupta,
(2003) examined the perceptions about the main sources of his worries concerning the stock
market. A sample comprise of middle-class household‟s spread over 21 sates/union territories.
The study reveals that the foremost cause of worry for household investors is fraudulent
company management and in the second place is too much volatility and in the third place is too
much price manipulation. Ravindra and Wang (2006) examine the relationship of trading volume
to stock indices in Asian markets. Stock market indices from six developing markets in Asia are
analysed over the 34 month period ending in October 2005. In the South Korean market, the
causality extends from the stock indices to trading volume while the causality is the opposite in
the Taiwanese market. Subrata Kumar Mitra (2002) has identified persuasive reasons to believe
the relationship between stock prices and determinants are complex nonlinear process. The
analysis was performed by using moving average and filters combination of stock prices of
ACC, Reliance‟s industries, State bank of India, TISCO and BSE index. He found the
profitability changes widely with changes of periods and the two methods are giving profitable
results that help us to believe that making profits in stock market is not just a matter of chance
and there is need of analytical and systematic approaches to making profits in cumulative basis.
Parvez Ahmed, Kristine Beck, Elizabeth Goldreyer (2005) studies the efficacy of using moving
average technical trading rules with currencies of emerging economies. If technical trading rules
are successful, they can become a risk Effectiveness of Technical Analysis in Banking Sector of
Equity Market. [Link] 22 | Page management tool for multinational firms and
investors in emerging markets. They use 4 Variable Length Moving Average (VMA) trading
models and compare them to a simple buy and hold strategy. Results support the effectiveness of
trading models, which imply the presence of strong serial correlation among currency returns for
emerging markets. Hence, the predictability of future currency prices will allow investors to
create effective hedges in the often volatile emerging markets. Muhannad A. Atmeh, Ian M.
Dobbs (2006)analysis the performance of moving average trading rules in Jordanian stock
market. The conditional returns on buy or sell signals from actual data are examined for a wide
range of trading rules. These are compared with conditional returns from simulated series
generated by a range of models (random walk with a drift, AR (1), and GARCH-(M)) and the
consistency of the general index series with these processes is examined. The empirical results
show that technical trading rules can help to predict market movements, and that there is some
evidence that (short) rules may be profitable after allowing for transactions costs, although there
are some cautions on [Link], Jianjun Du, YixiNing (2009) tests two moving
average technical trading rules for 4 Asian markets. Identify that moving average rules do indeed
have predictive power and can discern recurring price patterns for profitable trading. It supports
the hypothesis that technical trading rules can outperform the buy-and-hold strategy. Break-even
one-way trading costs are estimated to be high for all 4 markets. It was concluded from the
statistical results that moving average rules are valid and indeed have predictive power. It is
implied that the trading rules may be used to design a trading strategy that will beat the buy-and-
hold strategy in the Hong Kong, Singapore, South Korea, and Taiwan markets.

SCOPE OF THE STUDY

 The scope of this project is limited to only one sector i.e. Banking sector. Thisproject is
concerned with only one sector of companies in the stock market. Theproject does not
extend its scope to any other sector of companies.
 Also, the project is concerned with only three banks among the major players in theBanking
sector i.e State Bank Of India, Bank Of India, Panjab National Bank

METHODOLOGY AND TECHNIQUES TO BE USED

The equity share movement of the company from the selected sector has been analyzed
Here by using the various tools of technical analysis. Technical analysis has been very
useful identifying and getting clear picture of the company’s equity price movements. It
has been helped detecting the shift in demand and supply and as provided clues to future
picture movements.