+technical analysis & its relevance

Technical Analysis

THE STUDY OF TECHNICAL ANALYSIS AND

ITS RELEVANCE

Submitted in partial fulfillment of the

Requirements for MBA Degree of Bangalore University

Submitted By

SANTHOSH HEGDE

Registration Number:

04XQCM6077

Under the Guidance Of:

Prof. B.V. Rudramurthy

M.P.BIRLA INSTITUTE OF MANAGEMENT

Associate Bharatiya Vidya Bhavan

Race Course Road, Bangalore-560 001

M. P. BIRLA INSTITUTE OF MANAGEMENT 1

Technical Analysis

DECLARATION

I am Santhosh Hegde, the student of M.P.Birla Institute of

Management hereby declaring that the project titled “The technical analysis and its

relevance” is an original work carried out by me as a partial fulfillment for the

requirement of MBA DEGREE OF Bangalore University. This project has not been

previously submitted for award of any degree or diploma of Bangalore University of

any other University.

Place: Date: Santhosh Hegde


Technical Analysis

GUIDE’S CERTIFICATE This is to certify that the Research Report entitled “TECHNICAL ANALYSIS AND

ITS RELEVANCE”, done by SANTHOSH HEGDE bearing Registration No.04

XQCM 6077 is a bonafide work done carried under my guidance during the academic

year 2005-06 in a partial fulfillment of the requirement for the award of MBA degree by

Bangalore University. To the best of my knowledge this report has not formed the basis

for the award of any other degree.

Place: Bangalore Prof. B. V. Rudramurthy Date :


Technical Analysis

PRINCIPAL’S CERTIFICATE

This is to certify that this dissertation entitled "Technical analysis and its

relevance” is the result of research project work carried out by

Mr.Santhosh Hegde under the guidance and supervision of Prof. B, V

Rudramurthy, M.P. Birla Institute of Management, Bangalore.

Place: Bangalore (Dr. Nagesh S Mallavalli)

Date: Principal


Technical Analysis

ACKNOWLEDGEMENT

I would like to express my indebtedness to Prof. B.V. Rudramurthy,

Project guide, M.P.Birla Institute of Management., for his valuable guidance in

completing this project work.

I extend my sincere thanks to Dr. T. V. N. Rao, Professor of

Finance, for his significant advice and suggestions at every stage of the project.

I wish to express my heartful thanks to Smitha for her fruitful

suggestions and constant encouragement throughout this project work.

Further, I would like to thank all my lovely friends who have directly

and indirectly helped me in this project work.

Place: Date: Santhosh Hegde


Technical Analysis

CONTENTS

Sl. No. Content Page No.

1 INTRODUCTION 1

2 LITERATIVE REVIEW 11

3 RESEARCH METHODOLOGY 18

4 PROBLEM STATEMENT 18

5 OBJECTIVES OF THE STUDY 18

6 DATA ANALYSIS 26

7 CHARTS 50

8 ANALYSIS OF RESULTS 74

9 RESEARCH FINIDINGS 78

10 SUMMARY 78

11 CONCLUSION 79

12 GLOSSARY 81

13 BIBLIOGRAPGY 82


Technical Analysis


CHAPTER -1

INTRODUCTION

Technical Analysis

INTRODUCTION TO TECHNICAL ANALYSIS

It is important to form a view on the likely trend of the over all market, and it is helpful

to have some idea of how to go about selecting individual stocks. Naturally, all investors

would like their investments to appreciate rapidly in price, but stocks, which may satisfy

this wish, tend to accompanied by a substantially greater amount of risk then many

investors are normally willing to accept. However, it is important to understand that

investors can be very conscious when it comes to stock ownership. Technical analysis is the use of numerical series generated by market activity,

such as price and volume, to predict future price trends. The techniques applied to any

market with a comprehensive price history.

Primarily, but not exclusively, technical analysis is conducted by studying charts of past

price movement. Many different methods and tools are used in technical analysis, but

they all rely on the assumption that price patterns and trends exist in markets, and that

they can be identified and exploited Technical analysis does not try to analyze the

financial data of a company such as cash flow, dividends and projection of future

dividends. That type of analysis is called Fundamental analysis. Nor does it claim to be

100% accurate. It attempts to give the "most likely" outcome.

Some speculators combine elements from both technical and fundamental analysis.

Technical analysis is viewed by many of its practitioners as more art than science. Many

academic studies conclude that technical analysis has little, if any, predictive power.

However, the practice has a dedicated following especially among active traders and does

have support amongst the academic community.

As an example of the debate regarding the efficacy of technical analysis, Peter Lynch, a

very well-known and successful fundamental analyst, once commented, "Charts are great

for predicting the past." On the other hand, the U.S. Federal Reserve once published a


Technical Analysis

study saying that certain elements of technical analysis were effective in price

forecasting.

The premises of technical analysis were derived from empirical observations of financial

markets over hundreds of years. Perhaps the oldest branch of technical analysis is the use

of candlestick techniques by Japanese traders at least as early as the 18th century, and

still very popular today.

Dow Theory, a theory based on the collected writings of Dow Jones co-founder and

editor Charles Dow, inspired the increasingly widespread use and development of

technical analysis from the end of the 19th century. Modern technical analysis considers

Dow Theory its cornerstone.

New tools and theories have been produced and existing tools have been enhanced at a

rapid rate in recent decades, with an increasing emphasis on computer-assisted

techniques.

Technical analysis is not concerned with why a price is moving but rather whether it is

moving in a particular direction or in a particular chart pattern. Technical analysts believe

that profits can be made by "trend following." In other words if a particular stock price is

steadily rising (trending upward) then a technical analyst will look for opportunities to

buy this stock. Until the technical analyst is convinced this uptrend has reversed or ended,

all else equal, he will continue to own this security. Additionally, technical analysts look

for various price patterns to form on a price chart and will take positions in anticipation

of the expected move following that pattern. The various tools of technical analysis assist

the technician in determining when trends have formed, ended, etc. and when particular

patterns are unfolding.

Technical analysis may be at odds with fundamental analysis. Fundamental analysis

maintains that markets may misprice a security and, through various methods of

fundamental analysis, the "correct" price can be calculated. Profits can be made by

trading the mispriced security and then waiting for the market to recognize its "mistake"


Technical Analysis

and reprice the security. In contrast, a technical analyst is not interested in a security's

"correct" price, only in price movement.

The beauty of technical analysis lies in its versatility. Because the principles of technical

analysis are universally applicable, each of the analysis steps above can be performed

using the same theoretical background. You don't need an economics degree to analyze a

market index chart. You don't need to be a specialist to analyze a stock chart. It does not

matter if the time frame is 2 days or 2 years. It does not matter if it is a stock, market

index or commodity. The technical principles of support, resistance, trend, trading range

and other aspects can be applied to any chart. While this may sound easy, technical

analysis is by no means easy. Success requires serious study, dedication and an open

mind.

One of the forecasting tools very popular among practitioners is technical

analysis. Technical analysis is the examination of past price movements in order to

forecast future price movements. Technical analysis is open to interpretation. Many times

two technicians will look at the same chart and paint two different scenarios or see

different patterns. Both would be able to come up with logical support to justify their

position.

In addition, even if stock prices completely followed a random walk, people would

be able to convince themselves that there are patterns having a predictive value. It has

become more and more popular, as it offered an unlimited set of tools and signals and

seemed to be an interesting method of market analysis. It has been proven that stock

prices most of the time approximately follow a random walk pattern. Psychologists have

described a number of ways in which people deal with randomness. Additionally, market

participants may be subject to herd behavior.

Technical analysis is applicable to stocks, indices, commodities, futures or any

tradable instrument where the price is influenced by the forces of supply and demand.

Price refers to any combination of the open, high, low, or close for a given security over a

specific time frame. The time frame can be based on intraday (1-minute, 5-minutes, 10-

minutes, 15-minutes, 30-minutes or hourly), daily, weekly or monthly price data and last


Technical Analysis

a few hours or many years. In addition, some technical analysts include volume or open

interest figures with their study of price action.

Technical analysts believe that their methods will permit them to beat the market.

Economists have traditionally been skeptical of the value of technical analysis, affirming

the theory of efficient markets that holds no strategy should allow investors and traders to

make unusual returns except by taking excessive risk.

Three Beliefs of Technical Analysis

Price action in the market discounts everything

Technical analysis holds that because every possible bit of information is immediately

included in the price of a security, it is not necessary to explicitly analyze the

fundamental, economic, political, etc. factors that might influence that price. Because all

possible information is reflected in the price, only a study of the price movement is

required.

This theorem is similar to the strong and semi-strong forms of market efficiency.

Technical analysts believe that the current price fully reflects all information. Because all

information is already reflected in the price, it represents the fair value, and should form

the basis for analysis. After all, the market price reflects the sum knowledge of all

participants, including traders, investors, portfolio managers, buy-side analysts, sell-side

analysts, market strategist, technical analysts, fundamental analysts and many others. It

would be folly to disagree with the price set by such an impressive array of people with

impeccable credentials. Technical analysis utilizes the information captured by the price

to interpret what the market is saying with the purpose of forming a view on the future

Prices move in trends

Most technicians agree that prices trend. However, most technicians also acknowledge

that there are periods when prices do not trend. If prices were always random, it would be

extremely difficult to make money using technical analysis. A technician believes that it


Technical Analysis

is possible to identify a trend, invest or trade based on the trend and make money as the

trend unfolds. Because technical analysis can be applied to many different time frames, it

is possible to spot both short-term and long-term trends.

While it cannot be shown that prices must trend, technical analysis relies on

empirical evidence and common sense to assert that prices do trend. To a technician,

markets are trending up, trending down, or trending sideways (flat). This definition of a

price trend is essentially the one put forward by Dow Theory. A person who does not

believe that prices move in trends will find little use for technical analysis. The

assumption that prices must trend is probably the most important concept in technical

analysis.

History tends to repeat itself

To a technical analyst, the human characteristics of the market might be irrational, but

they exist. Because investors' attitudes often repeat, investors' actions in the marketplace

often repeat as well. I.e., patterns of price movement will develop on a chart that a

technical analyst believes have predictive qualities.

Technical analysis is not limited to charting. Technical analysis is always primarily

concerned with price trends. Anything that can influence the price trend is of interest to a

technical analyst. As an example, many technical analysts monitor surveys of investor

enthusiasm. These surveys attempt to gauge the general attitude of the investment

community to determine whether investors are bearish or bullish. Technical analysts use

these surveys to help determine whether a trend will reverse or whether a new trend will

develop. A technical analyst will be alerted that a trend might change when these surveys

report extreme investor reactions. When surveys are overly bullish, for example, a

technical analyst will look for evidence that an uptrend will reverse. The logic being that

if most investors are bullish, then they would have already bought the market

(anticipating that the market will move higher). But because most investors are bullish

and have invested, it is safe to assume that there are few buyers remaining in the market.


Technical Analysis

With most investors long, there are more potential sellers in the market than buyers

despite the fact that the overall attitude of investors is bullish.

Weakness of Technical Analysis

Analyst Bias

Just as with fundamental analysis, technical analysis is subjective and our personal biases

can be reflected in the analysis. It is important to be aware of these biases when analyzing

a chart. If the analyst is a perpetual bull, then a bullish bias will overshadow the analysis.

On the other hand, if the analyst is a disgruntled eternal bear, then the analysis will

probably have a bearish tilt.

Open to Interpretation

Furthering the bias argument is the fact that technical analysis is open to interpretation.

Even though there are standards, many times two technicians will look at the same chart

and paint two different scenarios or see different patterns. Both will be able to come up

with logical support and resistance levels as well as key breaks to justify their position.

While this can be frustrating, it should be pointed out that technical analysis is more like

an art than a science, somewhat like economics. Is the cup half-empty or half-full? It is in

the eye of the beholder.

Too Late

Technical analysis has been criticized for being too late. By the time the trend is

identified, a substantial portion of the move has already taken place. After such a large

move, the reward to risk ratio is not great. Lateness is a particular criticism of Dow

Theory.

Always another Level

Even after a new trend has been identified, there is always another "important" level close

at hand. Technicians have been accused of sitting on the fence and never taking an


Technical Analysis

unqualified stance. Even if they are bullish, there is always some indicator or some level

that will qualify their opinion.

Trader's Remorse

Not all technical signals and patterns work. When you begin to study technical analysis,

you will come across an array of patterns and indicators with rules to match. For instance:

A sell signal is given when the neckline of a head and shoulders pattern is broken. Even

though this is a rule, it is not steadfast and can be subject to other factors such as volume

and momentum. In that same vein, what works for one particular stock may not work for

another. A 50-day moving average may work great to identify support and resistance for

IBM, but a 70-day moving average may work better for Yahoo. Even though many

principles of technical analysis are universal, each security will have its own

idiosyncrasies.

Lack of evidence Although chartists assert that their techniques provide excess returns over time, this

assertion is controversial. Many academics believe that technical analysis has no

predictive power. Burton Malkiel in his book "A Random Walk Down Wall Street" (8th

edition, 2003) and Eugene Fama in "Efficient Capital Markets: A Review of Theory and

Empirical Work," May 1970 Journal of Finance summarize many early studies,

conducted from the 1950s-70s, that show that after trading costs are considered, the

returns generated by many technical strategies under perform a simple buy and hold

strategy.

Critics of technical analysis include well known fundamental analysts. Warren Buffett

has exclaimed, "I realized technical analysis didn't work when I turned the charts upside

down and didn't get a different answer" and "If past history was all there was to the game,

the richest people would be librarians."


Technical Analysis

Inconsistencies with Other Market Hypotheses The Efficient Market Hypothesis The efficient market hypothesis concludes that technical analysis cannot be effective.

According to this hypothesis, all relevant information is quickly reflected in a security's

price through the actions of traders who have that information. Thus, it is impossible to

"beat the market," and technical analysis cannot work. News events and new fundamental

developments which influence prices occur randomly and are unknowable in advance.

Advocates of EMH have produced many studies that reject the efficacy of technical

analysis.

Proponents of technical analysis counter that technical analysis does not completely

contradict the efficient market hypothesis. Technicians agree with EMH in that they

believe that all available information is reflected within a security's price; that is why

technicians say a study of the price movement is necessary. Technicians argue that EMH

ignores the realities of the market place, namely that many investors base their future

expectations on past earnings, track records, etc. Because future stock prices can be

strongly influenced by investor expectations, technicians claim it only follows that past

prices can influence future prices.

Technicians point to the new field of behavioral finance. Behavioral finance essentially

says that people are not the rational participants EMH makes them out to be. Market

participants can and do act irrationally. Technicians have long held that irrational human

behavior influences stock prices and claim to have ways of predicting probable outcomes

based on this behavior.


Technical Analysis

The Random Walk Hypothesis The random walk hypothesis is also at odds with technical analysis and charting.

Essentially, the hypothesis claims that stock price moments either independent or

uncorrelated increments. In this model, future stock prices are not dependent on past

stock prices, so trends cannot exist and technical analysis has no basis. Again, proponents

of this theory have generated substantial research in support of the hypothesis

.

Technical analysts maintain that trends are identifiable in the market and that it is

impractical to believe that market prices move in a random fashion. To a technician, over

time prices will trend in a direction until supply equals demand. Therefore, there cannot

be any pure random price movement. As stated earlier, one of the cornerstones of

technical analysis is that prices trend. If one does not believe this concept, one will not

agree with technical analysis.

Also, with regards to EMH and Random Walk Theory, technicians claim that both

theories ignore the realities of the marketplace. To a technician, the market is neither

composed of completely rational participants as EMH assumes (participants can be

greedy, overly risky, etc. at any given time) nor is its stock price movement completely

independent of its prior movement

Proponents of Technical Analysis To many traders, trading in the direction of the trend is the most effective means to be

profitable in financial or commodities markets. John Henry, Larry Hite, Ed Seykota

Richard Dennis, Bruce kovner, and Michael Marcus have each amassed massive fortunes

through the use of technical analysis and its concepts. George Lane, a technical analyst,

coined one of the most popular phrases on Wall Street, "The trend is your friend!"

Many non-arbitrage algorithmic trading systems rely on the idea of trend-following, as do

many hedge funds. A relatively recent trend, both in research and industrial practice, has


Technical Analysis

been the development of increasingly sophisticated automated trading strategies. These

often rely on underlying technical analysis principles


Technical Analysis


CHAPTER -2

LITERATURE

REVIEW

Technical Analysis

LITERATURE REVIEW Literature review has under taken for analyze various literature and research papers

available in the related field. Further research can be undertaken where sufficient study is

not done in particular field. Various sources of information have been used in this review

include technical analysis books, financial journals, articles and research papers.

Research papers

1. TECHNICAL ANALYSIS AND TYPICAL COGNITIVE BIASES

Piotr Zielonka, Warsaw University SGGW and Leon Kozminski Academy of

Entrepreneurship and Management, Poland

ABSTRACT

The paper describes a study carried out on a group of 24 Polish financial analysts. The

analysts responded to a questionnaire with 24 items (signals). They were asked to rate the

predictive value of different signals for the movements of stock prices. The signals were

of three types:

(a) regular technical analysis signals, representing some common psychological biases

(gambler's fallacy, ignoring the principle of regression to mean, anchoring effect and

herd behavior)

(b) technical-like signals created by the author of the research that imitated technical

signals and represented the same types of biases as real technical signals,

(c) other technical-like signals that did not represent any biases.

It turned out that the analysts tended to ascribe high predictive value to the questionnaire

items associated with psychological biases (either technical or technical-like signals). At

the same time, these items were rated very similarly by different analysts. On the other

hand, the technical-like signals not related to any biases were given very low predictive


Technical Analysis

values by the analysts. These results suggest that popularity of technical analysis is

associated with its relation to the typical cognitive biases of humans.

METHODOLOGY

The study was carried out in Warsaw in January-February 2002. The participants were 24

financial analysts or dealers employed by banks and Polish capital market institutions.

The sample was not random. Each participant was administered a 24–item questionnaire.

There were three groups of items within the questionnaire. Each group consisted of 8

items. The first group consisted of regular technical analysis signals representing four

common psychological inclinations. Each inclination was represented by two signals.

Usually one from a pair of signals was a predictor of a stock fall (-), whereas the other

signal was a predictor of a stock rise (+).

The group consisted of technical-like signals, created by the author of the

questionnaire, that did not represent any psychological inclinations.

- Drop of chemical companies' prices,

- Horizontal, typically sinusoidal WIG index movement,

- Rising WIG index creates longer and longer horizontal shelves,

- A fan formation support line moves upward,

- Diminishing dynamics of price rise in textile branch,

- An alternate large and small daily trade volume,

- Second MACD derivative goes negative,

- WIG index creates horizontal small amplitude sinusoid curve.

The cover page of the questionnaire stated that the survey was designed to better

understand the opinions of experts on implementation of technical analysis. This remark

allowed the participants to feel more like experts whose opinion is needed for some

further research rather than merely the persons to be examined. Respondents were

assured of confidentiality.

CONCLUSION The present research shows that many technical analysis signals represent common

psychological biases such as the gambler’s fallacy, anchoring effect or herd behavior.


Technical Analysis

All real technical analysis signals were assigned a high predictive value by the financial

analysts who responded to the questionnaire. The “technical” signals created by the

author of the research either represented psychological biases or not. If they did, they

received high scores from respondents as good predictors the of stock market behavior. If

they did not, the respondents estimated them as bad predictors. In addition, the

respondents were in general agreement about their judgments. These results confirm both

hypotheses of this research: technical analysis signals represent some common

psychological biases and financial analysts are subject to these biases.

2. Technical Analysis in the Foreign Exchange Market: A Co-integration-

Based Approach. Nobert Fiess, University of Strathclyde and U. K. Ronald MacDonald, University of

strathclyde, U. K.

Most technical analysis studies are concerned with the profitability of technical trading

rules and almost all of them focus exclusively on trend following patterns. In this paper

they examine a different kind of technical indicator which suggests a structural

relationship between High, Low, and Close prices of daily exchange rates. Since, for a

given exchange rate, it can be shown that these prices have different time series

properties, it is possible to explore the structural relationships between them using

multivariate co-integration methods. This methodology facilitates the construction of

dynamic structural econometric models, which are used to derive dynamic out of- sample

forecasts over different time horizons. Compared to standard benchmarks, it turns out that

these models have extremely good forecasting properties, even when allowance has been

made for transactions costs and risk premium


Technical Analysis

Methods and Results

A. Structural Econometric Modeling

Their modeling strategy follows recent developments in the econometric literature, in

particular the work of Clements and Mizon (1991), Hendry and Mizon (1993) and

Johansen (1988), and they label it structural econometric modeling.6 Via a series of

testable restrictions and reductions, this modeling strategy transforms an initial vector

autoregressive model (VAR) in levels into a set of linear structural equations that

incorporate both long and short-run dynamics. Starting from an unrestricted VAR, the

hypothesis of co integration is formulated as a hypothesis of reduced rank of the long-run

impact matrix . The VAR is generated by the vector, which defines the

potential endogenous variables of the model.

B. Co integration and the Stochastics

. The Stochastics establish a structural relationship between the Close of today and the

Maximum and Minimum price of a moving period, measured as the highest High and the

lowest Low. Specifying a VAR with the data vector testing for co-integration between the

three variables should reveal if, when using the Stochastics, an investor is intuitively

exploiting Granger causality among the three series. Each VAR included a constant in the

cointegration space and 15 lags of each of the variables, which was sufficient to produce

random errors

CONCLUSION The forecasting models were estimated over the first 2500 data observations, thus sparing

roughly 10% of the total sample for forecasting. Since the classic paper of Meese and

Rogoff (1983), the crucial factor in determining the worth of an exchange rate model is

how well it forecasts in an out-of-sample context relative to a random walk, using the

metric of the root mean square error (RMSE) criterion. In table 5, Their statistics are

calculated as the ratio of the RMSE of the forecasting model over the RMSE of a drift

less random walk; a value.


Technical Analysis

3. MARKET EFFICIENCY AND THE RETURNS TO TECHNICAL ANALYSIS

Hendrik Bessembinder and Kalok Chan,Department of Finance, College of Business,

Arizona State University

Abstract They investigate and provide interpretation for the intriguing Brock, Lakonishok, and

LeBaron (1992) finding that simple forms of technical analysis contain significant

forecast power for U.S. equity index returns. They document that the forecast ability is

partially, but not solely, attributable to return measurement errors arising from non

synchronous trading. They argue that the evidence of technical forecast power need not

be inconsistent with market efficiency. "Breakeven" one-way trading costs are computed

to be 0.39% for the full sample and 0.22% since 1975, which are small compared to

recent estimates of actual trading costs. Further, they test but fail to reject a key

restriction that most equilibrium models place on return forecast ability: that the technical

rules should not reliably identify periods of negative market risk premium.

Methodology

A. Description of the Rules. Brock et. al. emphasize the danger of obtaining spurious empirical results if

trading rules are both discovered and tested in the same data set. They note that there is

no complete remedy for “data snooping” biases, but attempt to mitigate the problem by

using a long data series and by reporting results for all rules evaluated. To avoid

compounding the dangers of data snooping biases, they evaluate precisely the same set of

twenty six technical rules as Brock et. al. These include ten Variable Length Moving

Average (VMA) rules, ten Fixed Length Moving Average (FMA) rules, and six Trading

Range Break (TRB) rules.


Technical Analysis

B. Measuring Returns The results reported by Brock et al. are based on percentage changes in the DJIA,

data on which was available for a long time horizon. However, some limitations of the

Dow Jones data potentially affect the interpretation of their evidence. First, changes in

the [stock index] understate actual returns due to the omission of dividends. They do not

expect this omission to have much effect on measures of differences between mean

returns during technical buy signals and mean returns during technical sell signals, or on

tests of whether the technical rules possess forecast power. However, the omission of

dividends will introduce bias to tests of whether mean returns during periods of technical

sell signals differ significantly from zero (or any other specific benchmark).

Conclusions

Brock, et. al. (1992) demonstrate that a set of relatively simple technical trading rules

possess statistically significant forecast power for changes in the Dow Jones Industrial

Average over a long sample period. They extend their analysis to ascertain whether this

evidence can be reconciled with market efficiency.

4.The use of fundamental and technical analyses by foreign exchange

dealers: Hong Kong evidence. David Mole, Department of economics and finance, City university of Hong Kong.

Abstract This article reports the results of a questionnaire survey conducted in February 1995 on

the use by foreign exchange dealers in Hong Kong of fundamental and technical analyses

to form the forecasts of exchange rate movements. Findings of this study reveal that >

85% of respondents rely on both fundamental and technical analysis for predicting future

price at different time horizons. At shorter horizons, there exists a skew towards reliance

on technical analysis as opposed to fundamental analysis, but the skew becomes steadily

reversed as the length of horizon considered is extended.


Technical Analysis

METHODOLOGY

To prepare the survey, they concluded dealers at the Hong Kong monetary Authority and

most of the major banks. After consultation, they designed a questionnaire investigating

the following.

1. The usefulness of fundamental and technical analysis is forecasting trends and

turning points.

2. Dealers give personal importance to fundamental and technical analyses over

seven forecasting horizons.

3. Dealers views of the complimentarily of fundamental and technical analyses in

exchange rate forecasting.

4. The usefulness of central bank intervention in influencing exchange rates over the

horizons of intraday, intra-month and month.

The Hong Kong Forex Association with its membership list as of September 1994

provided them. A total of 153 fully completed questionnaires were returned. A response

rate of 19%. Most respondents firms are active participants in the market, with over 60%

in number having a daily average turnover greater than US $ 100 million.

Conclusion: At all the time horizons, a very high proportion of respondents place some weight on both

fundamental and technical analysis when forming views. Dealers perceive value in using

both fundamental and technical analyses to predict both trends. Technical analysis is

considered only slightly more useful than fundamental analysis.


Technical Analysis

CHAPTER -3

RESEARCH

METHODOLOGY


Technical Analysis

PROBLEM STATEMENT The above study is undertaken to compare the selected technical analysis tools available

for forecasting. The study tries to capture the contradicting views of different tools used

in technical analysis. This study is aims to exploration of the topic “TECHNICAL

ANALYSIS AND ITS RELEVANCE”.

OBJECTIVES OF THE STUDY:

1. To find out the accuracy of technical analysis in individual stock price prediction.

2. To introduce a structured approach to market analysis that will helps to perform a

quick top to bottom assessment of the market, to decide which actions are

appropriate

SCOPE OF THE STUDY:

Technical analysis of market data has long been a pervasive activity in both security and

future markets. Technical analyst believe that price and volume data provide indicators of

future price movements, and that by examining these data, information may be extracted

on the fundamentals driving returns. If markets are efficient in the sense that the current

price impounds all information then such activity is clearly pointless. But if the process

by which prices adjust to information is not immediate, then the market statistics may

impound information that is not yet incorporated in to the current market price.

Technical analysis is very useful because it provides tools that allow investors to identify

the signs that new information is being priced into a stock before news is released. Stocks

that trade abnormally often do so because of significant new information, both positive

and negative. In this way, technical analysis helps to reveal fundamental changes in the

company before the broader market is aware of it.


Technical Analysis

In spite of a long list of publications showing that market movement is random or at least

very difficult to predict, a lot of effort has been made in forecasting future stock prices In

this dissertation, the market data is investigate to find out the future stock price

movements. The charts we will keep will become increasingly valuable to the traders as

the charts history builds up. In this connection I hope this study is resourceful to the

technical analysts. This study is useful for those who are risk avers and those who wants

to protect themselves from the risk arising from the unexpected market movements and

also this study focuses on the effectiveness of the hedged portfolio and also tests that

effectiveness

DATA: The data collected for the research purpose are secondary data. Index prices were

collected through National Stock Exchange website and through prowess website. The

data employed in this study comprises of one year observations on the NIFTY stock

index Closing price. Daily data are preferred in this study. The choice of daily closing

price is realistic and helpful to calculate and testing the results in technical analysis.

DATABASE:

The data relating to the study is taken from PROWESS database.

The data regarding index share price was also taken from website:

www.nseindia.com.

The supplementary sources of data:

Technical analysis of stock trends, 8th Edition, Robert D. Edwards, John Magee.

Technical analysis of stock trends by Martin Pring.

Financial journals, dailies like capital market, dalal street, and Economic times are

also used.


http://www.nseindia.com/

Technical Analysis

SAMPLE SIZE:

The one year nifty index has taken for testing the relevance of technical analysis.

STATISTICAL TOOLS USED:

1. Day Moving Average.

2. Relative strength index.

3. Rate of change method.

4. The Momentum.

Day Moving Average Day Moving averages are one of the most popular and easy to use tools available to the

technical analyst. They smooth a data series and make it easier to spot trends, something

that is especially helpful in volatile markets. They also form the building blocks for many

other technical indicators and overlays.

The two most popular types of moving averages are the daily Moving Average(SMA)

and the Exponential moving Average (EMA). In this study day moving average has

taken.

For example: a 5-day simple moving average is calculated by adding the closing prices

for the last 5 days and dividing the total by 5.

The calculation is repeated for each price bar on the chart. The averages are then joined

to form a smooth curving line - the moving average line. Continuing our example, if the

next closing price in the average is 15, then this new period would be added and the

oldest day, which is 10, would be dropped. The new 5-day simple moving average would

be calculated as follows:


Technical Analysis

averaging process then moves on to the next day where the 10-day SMA for day 12 is

calculated by adding the prices of day 3 through day 12 and dividing by 10.

HOW ARE MOVING AVERAGES USED

The primary purpose of moving averages is to "smooth" data so that trends are more

discernable. They are used to construct market indicators and to assist in interpretation of

price charts.

Moving average crossovers can also be used as signals to buy and sell. This is normally

done in two ways: (1) by watching for price to cross whatever moving average you may

be using, or (2) running two moving averages of the same price or index, one faster than

the other, and buying or selling when the faster average crosses the slower.

The weakness of moving average buy and sell systems is that they will most likely

become unprofitable when the stock or index begins moving sideways in a narrow

trading range. Under these circumstances price never moves above or below the average

far enough to become profitable.

I don't recommend pure moving average systems for timing purposes, but, in spite of

their weaknesses, if you are trying to develop your own system of timing, the use of

moving averages is a good place to start looking.

Rate of Change (ROC)

The Rate of Change (ROC) indicator is a very simple yet effective oscillator that

measures the percent change in price from one period to the next. The ROC calculation

compares the current price with the price n periods ago.


Technical Analysis

ROC = ((Today’s Close-Close n periods ago) / (Close n periods ago)) * 100

The plot forms an oscillator that fluctuates above and below the zero line as the Rate of

Change moves from positive to negative. The oscillator can be used as any other

momentum oscillator by looking for higher lows, lower highs, positive and negative

divergences, and crosses above and below zero for signals.

ROC can be plotted using different periods such as 10 days or 30 days by changing the

value. The longer the time span used, the greater the fluctuation in the indicator (in terms

of both magnitude and duration).

Rate of Change (ROC) vs the "Momentum" Indicator

There is another popular indicator called "Momentum" that is almost identical to the Rate

of Change indicator. The only difference is that the Rate of Change indicator adds 100 to

the ROC's value. Momentum also uses 100 as its center line instead of zero like the

ROC. Because both indicators give identical signals, StockCharts.com has choosen to

only implement the Rate of Change version. People that are used to using the

Momentum indicator can simply replace that with the ROC indicator on their charts.

Relative Strength Index (RSI)

The Relative Strength Index (RSI) is an extremely useful and popular momentum

oscillator. The RSI compares the magnitude of a stock's recent gains to the magnitude of

its recent losses and turns that information into a number that ranges from 0 to 100. It

takes a single parameter, the number of time periods to use in the calculation.

Calculation:

RSI = 100 – 100 / (1+RS)

Average gain = (Total gains / n)

Average loss = (Total loss / n)


Technical Analysis

Relative Strength = Average gain / Average loss

Relative Strength Index = 100 – 100 / ( 1+ RS )

N = number of RSI periods.

To simplify the formula, the RSI has been broken down into its basic components which

are the Average Gain, the Average Loss, the First RS, and the subsequent Smoothed

RS's.

For a 20 -period RSI, the Average Gain equals the sum total all gains divided by 20. Even

if there are only 5 gains (losses), the total of those 5 gains (losses) is divided by the total

number of RSI periods in the calculation (20 in this case). The Average Loss is computed

in a similar manner.

Calculation of the First RS value is straightforward: divide the Average Gain by the

Average Loss. All subsequent RS calculations use the previous period's Average Gain

and Average Loss for smoothing purposes. See the "Smoothed RS" formula above for

details. The table below illustrates the formula in action.

Date Closing price Gain loss Avg.gain Avg.loss

Relative Strenght RSI

31-Dec-03 1879.75 1-Jan-04 1912.25 32.5 2-Jan-04 1946.05 33.8 5-Jan-04 1955 8.95 6-Jan-04 1926.7 28.3 7-Jan-04 1916.75 9.95 8-Jan-04 1968.55 51.8 0 9-Jan-04 1971.9 3.35 0

12-Jan-04 1945.6 26.3 13-Jan-04 1963.6 18 0 14-Jan-04 1982.15 18.55 0 15-Jan-04 1944.45 37.7 16-Jan-04 1900.65 43.8 19-Jan-04 1935.35 34.7 0 20-Jan-04 1893.25 42.1 21-Jan-04 1824.6 68.65 22-Jan-04 1770.5 54.1


Technical Analysis

23-Jan-04 1847.55 77.05 0 27-Jan-04 1904.7 57.15 0 28-Jan-04 1863.1 41.6 16.7925 17.625 0.952765957 48.790629-Jan-04 1843.6 19.5 16.7925 18.6 0.902822581 47.446530-Jan-04 1809.75 33.85 15.1675 20.2925 0.747443637 42.77353-Feb-04 1769 40.75 13.4775 22.33 0.603560233 37.63884-Feb-04 1822.2 53.2 0 15.69 22.33 0.702642185 41.26785-Feb-04 1804.5 17.7 15.69 21.8 0.719724771 41.85126-Feb-04 1833.65 29.15 0 17.1475 21.3025 0.80495247 44.59699-Feb-04 1880.7 47.05 0 16.91 21.3025 0.793803544 44.2525

10-Feb-04 1880.75 0.05 0 16.745 21.3025 0.786057974 44.010811-Feb-04 1891.5 10.75 0 17.2825 19.9875 0.864665416 46.371112-Feb-04 1885.3 6.2 16.3825 20.2975 0.807119103 44.663313-Feb-04 1913.6 28.3 0 16.87 20.2975 0.83113684 45.389116-Feb-04 1913.55 0.05 16.87 18.415 0.916101005 47.810717-Feb-04 1920.1 6.55 0 17.1975 16.225 1.059938367 51.454918-Feb-04 1916.45 3.65 15.4625 16.4075 0.942404388 48.517419-Feb-04 1858.3 58.15 15.4625 17.21 0.898460198 47.325720-Feb-04 1852.65 5.65 15.4625 14.06 1.099751067 52.375323-Feb-04 1808.2 44.45 15.4625 13.5775 1.138832628 53.245524-Feb-04 1821.35 13.15 0 12.2675 13.5775 0.903516848 47.465725-Feb-04 1786.8 34.55 9.41 15.305 0.614831754 38.07426-Feb-04 1765.8 21 9.41 14.275 0.659194396 39.729827-Feb-04 1800.3 34.5 0 11.135 13.3 0.837218045 45.5699

The momentum

The momentum is certainly the easiest one to compute. The momentum is the difference

between today's price and the one of n days before.

With:

Pt today's price.

Pt-n the price at the date t-n

The momentum is:

MOt = Pt - Pt-n


Technical Analysis

The most often used are 5, 10, 20, 25 and 28 days. Here 20 days momentum is used to

find out the short term appliance of the momentum.

LIMITATIONS OF THE RESEARCH

Sample is restricted only to NIFTY.

The research is subject to a time span of three months.

Results arrived at, are generalized for the entire sample.


Technical Analysis


CHAPTER – 4

ANALYIS OF DATA

AND

INTERPRETATION

Technical Analysis

20 DAYS DAY MOVING AVERAGE FOR NIFTY INDEX PRICE 2005

Date Closing price

20 days DMA

31-Dec-04 2059.85 3-Jan-05 2080 4-Jan-05 2100.55 5-Jan-05 1990.15 6-Jan-05 1984.25 7-Jan-05 1992.55

10-Jan-05 1974.8 11-Jan-05 1947.35 12-Jan-05 1900.85 13-Jan-05 1916.95 14-Jan-05 1922.85 17-Jan-05 1902.45 18-Jan-05 1925.35 19-Jan-05 1922.35 20-Jan-05 1900.05 24-Jan-05 1902.9 25-Jan-05 1894.4 27-Jan-05 1929 28-Jan-05 1950.85 31-Jan-05 2006.35 1960.19251-Feb-05 2045.25 1959.46252-Feb-05 2045.5 1957.73753-Feb-05 2052.35 1955.32754-Feb-05 2060.8 1958.867-Feb-05 2049.85 1962.148-Feb-05 2043.6 1964.69259-Feb-05 2055.2 1968.7125

10-Feb-05 2049.85 1973.837511-Feb-05 2063.35 1981.962514-Feb-05 2083.05 1990.267515-Feb-05 2081.2 1998.18516-Feb-05 2059.45 2006.03517-Feb-05 2045.85 2012.0618-Feb-05 2048.85 2018.38521-Feb-05 2039.9 2025.377522-Feb-05 2036.6 2032.062523-Feb-05 2051.35 2039.9124-Feb-05 2052.4 2046.0825-Feb-05 2051.2 2051.097528-Feb-05 2047.7 2053.1651-Mar-05 2073.8 2054.59252-Mar-05 2080.55 2056.345


Technical Analysis

3-Mar-05 2093.35 2058.3954-Mar-05 2129.1 2061.817-Mar-05 2143.05 2066.478-Mar-05 2154 2071.999-Mar-05 2141.35 2076.2975

10-Mar-05 2145.75 2081.092511-Mar-05 2148.7 2085.3614-Mar-05 2140.9 2088.252515-Mar-05 2122 2090.292516-Mar-05 2121.1 2093.37517-Mar-05 2090.45 2095.60518-Mar-05 2077.2 2097.022521-Mar-05 2089.35 2099.49522-Mar-05 2056.5 2100.4923-Mar-05 2019.85 2098.91524-Mar-05 2007.35 2096.662528-Mar-05 2015.25 2094.86529-Mar-05 1971.55 2091.057530-Mar-05 1971.15 2085.92531-Mar-05 1994.5 2081.6225

1-Apr-05 2024.25 2078.16754-Apr-05 2054.9 2074.45755-Apr-05 2043.7 2069.496-Apr-05 2051.3 2064.3557-Apr-05 2048.05 2059.698-Apr-05 2024.8 2053.6425

11-Apr-05 2001.85 2046.312-Apr-05 2002.75 2039.392513-Apr-05 2018.1 2034.197515-Apr-05 1952.75 2025.7818-Apr-05 1914.85 201719-Apr-05 1902.8 2008.2820-Apr-05 1902.9 1998.957521-Apr-05 1911.4 1991.702522-Apr-05 1950 1988.2125-Apr-05 1952.4 1985.462526-Apr-05 1951.8 1982.2927-Apr-05 1930.35 1980.2328-Apr-05 1921.05 1977.72529-Apr-05 1896.3 1972.8152-May-05 1898.15 1966.513-May-05 1911 1959.3154-May-05 1920.15 1953.13755-May-05 1942.05 1947.6756-May-05 1947.3 1942.63759-May-05 1978.05 1940.3

10-May-05 1989.1 1939.662511-May-05 1975.05 1938.2775


Technical Analysis

12-May-05 1981.95 1936.4713-May-05 1978.9 1937.777516-May-05 1989.7 1941.5217-May-05 1984.75 1945.617518-May-05 1964.65 1948.70519-May-05 1983.15 1952.292520-May-05 1975.95 1953.5923-May-05 1991.7 1955.55524-May-05 2009.55 1958.442525-May-05 2019 1962.87526-May-05 2025.65 1968.10527-May-05 2069.5 1976.76530-May-05 2064.85 1985.131-May-05 2066.55 1992.8775

1-Jun-05 2081.2 2000.932-Jun-05 2062.55 2006.9553-Jun-05 2061.35 2012.65754-Jun-05 2087 2018.1056-Jun-05 2087.4 2023.027-Jun-05 2084.35 2028.4858-Jun-05 2094.05 2034.099-Jun-05 2097.55 2040.0225

10-Jun-05 2086.3 2044.852513-Jun-05 2081.7 2049.714-Jun-05 2098.7 2056.402515-Jun-05 2110.35 2062.762516-Jun-05 2114.55 2069.692517-Jun-05 2103.9 2075.302520-Jun-05 2124.65 2081.057521-Jun-05 2140.15 2087.11522-Jun-05 2167.35 2094.223-Jun-05 2174.05 2099.427524-Jun-05 2162.95 2104.332527-Jun-05 2188.15 2110.412528-Jun-05 2165.9 2114.647529-Jun-05 2162 2119.6230-Jun-05 2189.45 2126.025

1-Jul-05 2198.9 2131.624-Jul-05 2211.4 2137.825-Jul-05 2205.1 2143.85756-Jul-05 2211.3 2149.727-Jul-05 2171.25 2153.4058-Jul-05 2179.05 2158.0425

11-Jul-05 2195.55 2163.73512-Jul-05 2191.7 2168.38513-Jul-05 2200.05 2172.8714-Jul-05 2178.6 2176.072515-Jul-05 2181.85 2179.97


Technical Analysis

18-Jul-05 2212.95 2184.38519-Jul-05 2227.2 2188.737520-Jul-05 2236.9 2192.21521-Jul-05 2221.2 2194.572522-Jul-05 2223.15 2197.582525-Jul-05 2266.65 2201.507526-Jul-05 2279.8 2207.202527-Jul-05 2292.85 2213.74529-Jul-05 2280.85 2218.3151-Aug-05 2294.25 2223.08252-Aug-05 2319.75 2228.53-Aug-05 2345.2 2235.5054-Aug-05 2352.05 2242.54255-Aug-05 2355.95 2251.77758-Aug-05 2320.05 2258.82759-Aug-05 2303.1 2264.205

10-Aug-05 2322.05 2270.722511-Aug-05 2355.5 2278.49512-Aug-05 2356.9 2287.4116-Aug-05 2356.85 2296.1617-Aug-05 2357.5 2303.387518-Aug-05 2380.7 2311.062519-Aug-05 2378.45 2318.1422-Aug-05 2355.75 2324.867523-Aug-05 2320.35 2329.727524-Aug-05 2300.45 2331.417525-Aug-05 2320.7 2333.462526-Aug-05 2340.2 2335.8329-Aug-05 2312.6 2337.417530-Aug-05 2337.75 2339.592531-Aug-05 2355 2341.3551-Sep-05 2382.9 2343.242-Sep-05 2396.1 2345.44255-Sep-05 2414.95 2348.39256-Sep-05 2417 2353.248-Sep-05 2429 2359.5359-Sep-05 2441.9 2365.5275

12-Sep-05 2455.85 2370.54513-Sep-05 2477.1 2376.55514-Sep-05 2476 2382.512515-Sep-05 2492.75 2389.27516-Sep-05 2519.05 2396.192519-Sep-05 2550.45 2404.792520-Sep-05 2546.6 2414.33521-Sep-05 2504.9 2423.562522-Sep-05 2465.85 2431.832523-Sep-05 2453.05 2438.4526-Sep-05 2477.85 2445.3325


Technical Analysis

27-Sep-05 2549.85 2457.19528-Sep-05 2559.85 2468.329-Sep-05 2589.45 2480.022530-Sep-05 2567.75 2489.265

3-Oct-05 2597.2 2499.324-Oct-05 2629.6 2510.05255-Oct-05 2636.6 2521.03256-Oct-05 2571.3 2528.14757-Oct-05 2547.55 2533.43

10-Oct-05 2561 2538.687511-Oct-05 2533.7 2541.517513-Oct-05 2529.05 2544.1714-Oct-05 2478 2543.432517-Oct-05 2459.5 2540.45518-Oct-05 2452.5 2535.557519-Oct-05 2394.95 2527.97520-Oct-05 2363.55 2520.907521-Oct-05 2384.05 2516.817524-Oct-05 2388.4 2513.58525-Oct-05 2390.85 2509.23526-Oct-05 2401.1 2501.797527-Oct-05 2338.6 2490.73528-Oct-05 2307.45 2476.63531-Oct-05 2314.2 2463.95751-Nov-05 2366.8 2452.43752-Nov-05 2367.75 2439.3457-Nov-05 2411.6 2428.0958-Nov-05 2460 2422.539-Nov-05 2475.7 2418.9375

10-Nov-05 2480.85 2414.9311-Nov-05 2500.85 2413.287514-Nov-05 2534.4 2413.55516-Nov-05 2559.45 2417.627517-Nov-05 2558.45 2422.57518-Nov-05 2595.15 2429.707521-Nov-05 2591.75 2439.547522-Nov-05 2567.05 2449.722523-Nov-05 2563.1 2458.67524-Nov-05 2608.7 2469.6925-Nov-05 2633.75 2481.83526-Nov-05 2664.7 2495.01528-Nov-05 2682.65 2512.217529-Nov-05 2679.9 2530.8430-Nov-05 2647.1 2547.4851-Dec-05 2641.95 2561.24252-Dec-05 2691.5 2577.435-Dec-05 2654.35 2589.56756-Dec-05 2647.35 2598.935


Technical Analysis

7-Dec-05 2662.3 2608.2658-Dec-05 2673.5 2617.89759-Dec-05 2698 2627.755

12-Dec-05 2756.4 2638.85513-Dec-05 2764.65 2649.11514-Dec-05 2788.3 2660.607515-Dec-05 2763.35 2669.017516-Dec-05 2766.5 2677.75519-Dec-05 2803.45 2689.57520-Dec-05 2815.2 2702.1821-Dec-05 2799.45 2711.717522-Dec-05 2818.65 2720.962523-Dec-05 2799.7 2727.712526-Dec-05 2741.8 2730.6727-Dec-05 2725.7 2732.9628-Dec-05 2780 2739.60529-Dec-05 2792.75 2747.14530-Dec-05 2812.75 2753.2075


Technical Analysis

MOMENTUM FOR NIFTY INDEX 2005

Date Closing price Momentum


10-Jan-05 1974.8 11-Jan-05 1947.35 12-Jan-05 1900.85 13-Jan-05 1916.95 14-Jan-05 1922.85 17-Jan-05 1902.45 18-Jan-05 1925.35 19-Jan-05 1922.35 20-Jan-05 1900.05 24-Jan-05 1902.9 25-Jan-05 1894.4 27-Jan-05 1929 28-Jan-05 1950.85 31-Jan-05 2006.35 1-Feb-05 2045.25 -14.62-Feb-05 2045.5 -34.53-Feb-05 2052.35 -48.24-Feb-05 2060.8 70.657-Feb-05 2049.85 65.68-Feb-05 2043.6 51.059-Feb-05 2055.2 80.4

10-Feb-05 2049.85 102.511-Feb-05 2063.35 162.514-Feb-05 2083.05 166.115-Feb-05 2081.2 158.3516-Feb-05 2059.45 15717-Feb-05 2045.85 120.518-Feb-05 2048.85 126.521-Feb-05 2039.9 139.8522-Feb-05 2036.6 133.723-Feb-05 2051.35 156.9524-Feb-05 2052.4 123.425-Feb-05 2051.2 100.3528-Feb-05 2047.7 41.351-Mar-05 2073.8 28.552-Mar-05 2080.55 35.053-Mar-05 2093.35 41


Technical Analysis

4-Mar-05 2129.1 68.37-Mar-05 2143.05 93.28-Mar-05 2154 110.49-Mar-05 2141.35 86.15

10-Mar-05 2145.75 95.911-Mar-05 2148.7 85.3514-Mar-05 2140.9 57.8515-Mar-05 2122 40.816-Mar-05 2121.1 61.6517-Mar-05 2090.45 44.618-Mar-05 2077.2 28.3521-Mar-05 2089.35 49.4522-Mar-05 2056.5 19.923-Mar-05 2019.85 -31.524-Mar-05 2007.35 -45.0528-Mar-05 2015.25 -35.9529-Mar-05 1971.55 -76.1530-Mar-05 1971.15 -102.6531-Mar-05 1994.5 -86.05

1-Apr-05 2024.25 -69.14-Apr-05 2054.9 -74.25-Apr-05 2043.7 -99.356-Apr-05 2051.3 -102.77-Apr-05 2048.05 -93.38-Apr-05 2024.8 -120.95

11-Apr-05 2001.85 -146.8512-Apr-05 2002.75 -138.1513-Apr-05 2018.1 -103.915-Apr-05 1952.75 -168.3518-Apr-05 1914.85 -175.619-Apr-05 1902.8 -174.420-Apr-05 1902.9 -186.4521-Apr-05 1911.4 -145.122-Apr-05 1950 -69.8525-Apr-05 1952.4 -54.9526-Apr-05 1951.8 -63.4527-Apr-05 1930.35 -41.228-Apr-05 1921.05 -50.129-Apr-05 1896.3 -98.22-May-05 1898.15 -126.13-May-05 1911 -143.94-May-05 1920.15 -123.555-May-05 1942.05 -109.256-May-05 1947.3 -100.759-May-05 1978.05 -46.75

10-May-05 1989.1 -12.7511-May-05 1975.05 -27.712-May-05 1981.95 -36.15


Technical Analysis

13-May-05 1978.9 26.1516-May-05 1989.7 74.8517-May-05 1984.75 81.9518-May-05 1964.65 61.7519-May-05 1983.15 71.7520-May-05 1975.95 25.9523-May-05 1991.7 39.324-May-05 2009.55 57.7525-May-05 2019 88.6526-May-05 2025.65 104.627-May-05 2069.5 173.230-May-05 2064.85 166.731-May-05 2066.55 155.55

1-Jun-05 2081.2 161.052-Jun-05 2062.55 120.53-Jun-05 2061.35 114.054-Jun-05 2087 108.956-Jun-05 2087.4 98.37-Jun-05 2084.35 109.38-Jun-05 2094.05 112.19-Jun-05 2097.55 118.65

10-Jun-05 2086.3 96.613-Jun-05 2081.7 96.9514-Jun-05 2098.7 134.0515-Jun-05 2110.35 127.216-Jun-05 2114.55 138.617-Jun-05 2103.9 112.220-Jun-05 2124.65 115.121-Jun-05 2140.15 121.1522-Jun-05 2167.35 141.723-Jun-05 2174.05 104.5524-Jun-05 2162.95 98.127-Jun-05 2188.15 121.628-Jun-05 2165.9 84.729-Jun-05 2162 99.4530-Jun-05 2189.45 128.1

1-Jul-05 2198.9 111.94-Jul-05 2211.4 1245-Jul-05 2205.1 120.756-Jul-05 2211.3 117.257-Jul-05 2171.25 73.78-Jul-05 2179.05 92.75

11-Jul-05 2195.55 113.8512-Jul-05 2191.7 9313-Jul-05 2200.05 89.714-Jul-05 2178.6 64.0515-Jul-05 2181.85 77.9518-Jul-05 2212.95 88.3


Technical Analysis

19-Jul-05 2227.2 87.0520-Jul-05 2236.9 69.5521-Jul-05 2221.2 47.1522-Jul-05 2223.15 60.225-Jul-05 2266.65 78.526-Jul-05 2279.8 113.927-Jul-05 2292.85 130.8529-Jul-05 2280.85 91.41-Aug-05 2294.25 95.352-Aug-05 2319.75 108.353-Aug-05 2345.2 140.14-Aug-05 2352.05 140.755-Aug-05 2355.95 184.78-Aug-05 2320.05 1419-Aug-05 2303.1 107.55

10-Aug-05 2322.05 130.3511-Aug-05 2355.5 155.4512-Aug-05 2356.9 178.316-Aug-05 2356.85 17517-Aug-05 2357.5 144.5518-Aug-05 2380.7 153.519-Aug-05 2378.45 141.5522-Aug-05 2355.75 134.5523-Aug-05 2320.35 97.224-Aug-05 2300.45 33.825-Aug-05 2320.7 40.926-Aug-05 2340.2 47.3529-Aug-05 2312.6 31.7530-Aug-05 2337.75 43.531-Aug-05 2355 35.251-Sep-05 2382.9 37.72-Sep-05 2396.1 44.055-Sep-05 2414.95 596-Sep-05 2417 96.958-Sep-05 2429 125.99-Sep-05 2441.9 119.85

12-Sep-05 2455.85 100.3513-Sep-05 2477.1 120.214-Sep-05 2476 119.1515-Sep-05 2492.75 135.2516-Sep-05 2519.05 138.3519-Sep-05 2550.45 17220-Sep-05 2546.6 190.8521-Sep-05 2504.9 184.5522-Sep-05 2465.85 165.423-Sep-05 2453.05 132.3526-Sep-05 2477.85 137.6527-Sep-05 2549.85 237.25


Technical Analysis

28-Sep-05 2559.85 222.129-Sep-05 2589.45 234.4530-Sep-05 2567.75 184.85

3-Oct-05 2597.2 201.14-Oct-05 2629.6 214.655-Oct-05 2636.6 219.66-Oct-05 2571.3 142.37-Oct-05 2547.55 105.65

10-Oct-05 2561 105.1511-Oct-05 2533.7 56.613-Oct-05 2529.05 53.0514-Oct-05 2478 -14.7517-Oct-05 2459.5 -59.5518-Oct-05 2452.5 -97.9519-Oct-05 2394.95 -151.6520-Oct-05 2363.55 -141.3521-Oct-05 2384.05 -81.824-Oct-05 2388.4 -64.6525-Oct-05 2390.85 -8726-Oct-05 2401.1 -148.7527-Oct-05 2338.6 -221.2528-Oct-05 2307.45 -28231-Oct-05 2314.2 -253.551-Nov-05 2366.8 -230.42-Nov-05 2367.75 -261.857-Nov-05 2411.6 -2258-Nov-05 2460 -111.39-Nov-05 2475.7 -71.85

10-Nov-05 2480.85 -80.1511-Nov-05 2500.85 -32.8514-Nov-05 2534.4 5.3516-Nov-05 2559.45 81.4517-Nov-05 2558.45 98.9518-Nov-05 2595.15 142.6521-Nov-05 2591.75 196.822-Nov-05 2567.05 203.523-Nov-05 2563.1 179.0524-Nov-05 2608.7 220.325-Nov-05 2633.75 242.926-Nov-05 2664.7 263.628-Nov-05 2682.65 344.0529-Nov-05 2679.9 372.4530-Nov-05 2647.1 332.91-Dec-05 2641.95 275.152-Dec-05 2691.5 323.755-Dec-05 2654.35 242.756-Dec-05 2647.35 187.357-Dec-05 2662.3 186.6


Technical Analysis

8-Dec-05 2673.5 192.659-Dec-05 2698 197.15

12-Dec-05 2756.4 22213-Dec-05 2764.65 205.214-Dec-05 2788.3 229.8515-Dec-05 2763.35 168.216-Dec-05 2766.5 174.7519-Dec-05 2803.45 236.420-Dec-05 2815.2 252.121-Dec-05 2799.45 190.7522-Dec-05 2818.65 184.923-Dec-05 2799.7 13526-Dec-05 2741.8 59.1527-Dec-05 2725.7 45.828-Dec-05 2780 132.929-Dec-05 2792.75 150.830-Dec-05 2812.75 121.25


Technical Analysis

CALCULATION OF RATE OF CHANGE FOR NIFTY INDEX 2005

Date Closing price

ROC 1st Method

ROC 2nd Method


10-Jan-05 1974.8 11-Jan-05 1947.35 12-Jan-05 1900.85 13-Jan-05 1916.95 14-Jan-05 1922.85 17-Jan-05 1902.45 18-Jan-05 1925.35 19-Jan-05 1922.35 20-Jan-05 1900.05 24-Jan-05 1902.9 25-Jan-05 1894.4 27-Jan-05 1929 28-Jan-05 1950.85 31-Jan-05 2006.35 1-Feb-05 2045.25 99.29121053 -0.7087894752-Feb-05 2045.5 98.34134615 -1.6586538463-Feb-05 2052.35 97.70536288 -2.2946371194-Feb-05 2060.8 103.5499837 3.549983677-Feb-05 2049.85 103.306035 3.3060350268-Feb-05 2043.6 102.5620436 2.5620436129-Feb-05 2055.2 104.0712984 4.071298359

10-Feb-05 2049.85 105.2635633 5.26356330411-Feb-05 2063.35 108.5488071 8.54880711314-Feb-05 2083.05 108.6648061 8.66480607215-Feb-05 2081.2 108.2351718 8.2351717516-Feb-05 2059.45 108.2525165 8.25251649217-Feb-05 2045.85 106.2586023 6.25860233218-Feb-05 2048.85 106.5804874 6.58048742421-Feb-05 2039.9 107.3603326 7.36033262322-Feb-05 2036.6 107.026118 7.0261180323-Feb-05 2051.35 108.2849451 8.28494510124-Feb-05 2052.4 106.3970969 6.39709694125-Feb-05 2051.2 105.1439116 5.14391162828-Feb-05 2047.7 102.0609565 2.0609564631-Mar-05 2073.8 101.3959174 1.395917372-Mar-05 2080.55 101.7135175 1.713517477


Technical Analysis

3-Mar-05 2093.35 101.9977099 1.9977099424-Mar-05 2129.1 103.3142469 3.3142468947-Mar-05 2143.05 104.5466741 4.5466741478-Mar-05 2154 105.4022314 5.4022313569-Mar-05 2141.35 104.1918062 4.19180615

10-Mar-05 2145.75 104.6783911 4.67839110211-Mar-05 2148.7 104.1364771 4.13647708814-Mar-05 2140.9 102.7771777 2.77717769615-Mar-05 2122 101.9604075 1.96040745716-Mar-05 2121.1 102.9935177 2.99351768717-Mar-05 2090.45 102.180023 2.18002297318-Mar-05 2077.2 101.3837031 1.38370305321-Mar-05 2089.35 102.4241384 2.42413843822-Mar-05 2056.5 100.9771187 0.97711872723-Mar-05 2019.85 98.46442587 -1.53557413424-Mar-05 2007.35 97.80500877 -2.1949912328-Mar-05 2015.25 98.24736739 -1.75263260529-Mar-05 1971.55 96.28119353 -3.71880646630-Mar-05 1971.15 95.05014948 -4.94985051631-Mar-05 1994.5 95.8640744 -4.135925597

1-Apr-05 2024.25 96.69907087 -3.3009291334-Apr-05 2054.9 96.51495937 -3.4850406275-Apr-05 2043.7 95.3640839 -4.6359161016-Apr-05 2051.3 95.23212628 -4.7678737237-Apr-05 2048.05 95.64293553 -4.3570644698-Apr-05 2024.8 94.36327624 -5.636723756

11-Apr-05 2001.85 93.16563504 -6.83436496512-Apr-05 2002.75 93.54710636 -6.45289364313-Apr-05 2018.1 95.10367578 -4.89632422215-Apr-05 1952.75 92.06308048 -7.93691952318-Apr-05 1914.85 91.59989476 -8.4001052419-Apr-05 1902.8 91.60408242 -8.39591758120-Apr-05 1902.9 91.07617202 -8.92382798521-Apr-05 1911.4 92.94432288 -7.05567712122-Apr-05 1950 96.54182241 -3.45817758725-Apr-05 1952.4 97.26256009 -2.73743990826-Apr-05 1951.8 96.85150726 -3.14849274327-Apr-05 1930.35 97.91027364 -2.08972635728-Apr-05 1921.05 97.4583365 -2.54166349629-Apr-05 1896.3 95.07646027 -4.9235397342-May-05 1898.15 93.7705323 -6.2294677043-May-05 1911 92.99722614 -7.0027738584-May-05 1920.15 93.95459216 -6.0454078395-May-05 1942.05 94.6741091 -5.3258908986-May-05 1947.3 95.08068651 -4.9193134939-May-05 1978.05 97.69112999 -2.308870012

10-May-05 1989.1 99.36308914 -0.63691085711-May-05 1975.05 98.61690176 -1.38309824


Technical Analysis

12-May-05 1981.95 98.20871116 -1.79128883613-May-05 1978.9 101.3391371 1.33913711416-May-05 1989.7 103.9089224 3.9089223717-May-05 1984.75 104.306811 4.30681101518-May-05 1964.65 103.245047 3.24504703319-May-05 1983.15 103.753793 3.75379303120-May-05 1975.95 101.3307692 1.33076923123-May-05 1991.7 102.0129072 2.01290719124-May-05 2009.55 102.9588073 2.95880725525-May-05 2019 104.5924314 4.59243142426-May-05 2025.65 105.444939 5.44493896627-May-05 2069.5 109.1335759 9.13357591130-May-05 2064.85 108.7822353 8.78223533431-May-05 2066.55 108.1397174 8.139717425

1-Jun-05 2081.2 108.3873656 8.387365572-Jun-05 2062.55 106.2047836 6.2047836053-Jun-05 2061.35 105.8568274 5.8568274024-Jun-05 2087 105.5079497 5.5079497486-Jun-05 2087.4 104.9419335 4.9419335387-Jun-05 2084.35 105.5340371 5.5340371138-Jun-05 2094.05 105.6560458 5.6560458139-Jun-05 2097.55 105.9957552 5.995755218

10-Jun-05 2086.3 104.8550033 4.85500326713-Jun-05 2081.7 104.8847462 4.8847461914-Jun-05 2098.7 106.8230983 6.82309826215-Jun-05 2110.35 106.4140383 6.41403827216-Jun-05 2114.55 107.0143475 7.01434752917-Jun-05 2103.9 105.6333785 5.63337852120-Jun-05 2124.65 105.7276505 5.72765046921-Jun-05 2140.15 106.0004953 6.00049529522-Jun-05 2167.35 106.9952855 6.99528546423-Jun-05 2174.05 105.0519449 5.05194491424-Jun-05 2162.95 104.7509504 4.75095043227-Jun-05 2188.15 105.8842031 5.8842031428-Jun-05 2165.9 104.0697674 4.06976744229-Jun-05 2162 104.8217013 4.82170129230-Jun-05 2189.45 106.2143741 6.214374075

1-Jul-05 2198.9 105.3617633 5.3617632974-Jul-05 2211.4 105.9404043 5.9404043315-Jul-05 2205.1 105.7931729 5.7931729326-Jul-05 2211.3 105.5991977 5.5991977277-Jul-05 2171.25 103.513623 3.5136230368-Jul-05 2179.05 104.4456694 4.445669367

11-Jul-05 2195.55 105.4690878 5.46908776512-Jul-05 2191.7 104.4313146 4.43131462313-Jul-05 2200.05 104.2504798 4.25047977814-Jul-05 2178.6 103.0290133 3.02901326515-Jul-05 2181.85 103.705024 3.705024003


Technical Analysis

18-Jul-05 2212.95 104.1559786 4.15597863219-Jul-05 2227.2 104.0674719 4.06747190620-Jul-05 2236.9 103.2089879 3.20898793521-Jul-05 2221.2 102.1687634 2.16876336822-Jul-05 2223.15 102.7832359 2.78323585825-Jul-05 2266.65 103.5875054 3.58750542726-Jul-05 2279.8 105.2587839 5.25878387727-Jul-05 2292.85 106.0522664 6.0522664229-Jul-05 2280.85 104.1745644 4.1745643881-Aug-05 2294.25 104.336259 4.3362590392-Aug-05 2319.75 104.8996111 4.8996111063-Aug-05 2345.2 106.3534534 6.3534533584-Aug-05 2352.05 106.3650341 6.3650341435-Aug-05 2355.95 108.5066206 8.506620618-Aug-05 2320.05 106.4707097 6.4707097139-Aug-05 2303.1 104.8985448 4.898544784

10-Aug-05 2322.05 105.9474381 5.94743806211-Aug-05 2355.5 107.0657485 7.06574850612-Aug-05 2356.9 108.184155 8.18415496216-Aug-05 2356.85 108.0207164 8.02071636517-Aug-05 2357.5 106.5320048 6.5320047918-Aug-05 2380.7 106.8920618 6.89206178219-Aug-05 2378.45 106.3279539 6.32795386522-Aug-05 2355.75 106.0575365 6.05753646723-Aug-05 2320.35 104.3721746 4.37217461724-Aug-05 2300.45 101.4911874 1.49118743525-Aug-05 2320.7 101.794017 1.79401701926-Aug-05 2340.2 102.0651155 2.06511546829-Aug-05 2312.6 101.3920249 1.39202490330-Aug-05 2337.75 101.8960445 1.89604445931-Aug-05 2355 101.5195603 1.5195602971-Sep-05 2382.9 101.6075388 1.6075388032-Sep-05 2396.1 101.8728343 1.8728343365-Sep-05 2414.95 102.5042976 2.5042976296-Sep-05 2417 104.1787893 4.178789258-Sep-05 2429 105.4665451 5.4665450919-Sep-05 2441.9 105.1613876 5.161387567

12-Sep-05 2455.85 104.260242 4.26024198713-Sep-05 2477.1 105.0999194 5.09991938614-Sep-05 2476 105.0554766 5.0554765915-Sep-05 2492.75 105.7370095 5.73700954416-Sep-05 2519.05 105.811316 5.81131599919-Sep-05 2550.45 107.2316004 7.23160041220-Sep-05 2546.6 108.1014539 8.10145388921-Sep-05 2504.9 107.9535415 7.95354149222-Sep-05 2465.85 107.1898976 7.18989762923-Sep-05 2453.05 105.7030206 5.7030206426-Sep-05 2477.85 105.8819759 5.881975899


Technical Analysis

27-Sep-05 2549.85 110.2590158 10.2590158328-Sep-05 2559.85 109.5005882 9.50058817229-Sep-05 2589.45 109.955414 9.95541401330-Sep-05 2567.75 107.7573545 7.757354484

3-Oct-05 2597.2 108.392805 8.3928049754-Oct-05 2629.6 108.8883828 8.8883827825-Oct-05 2636.6 109.0856434 9.085643366-Oct-05 2571.3 105.8583779 5.8583779337-Oct-05 2547.55 104.326549 4.326548999

10-Oct-05 2561 104.2816133 4.28161329111-Oct-05 2533.7 102.28493 2.28492995813-Oct-05 2529.05 102.1425687 2.14256865914-Oct-05 2478 99.40828402 -0.59171597617-Oct-05 2459.5 97.63601358 -2.36398642318-Oct-05 2452.5 96.15950126 -3.84049873619-Oct-05 2394.95 94.04500118 -5.95499882220-Oct-05 2363.55 94.35706016 -5.64293983821-Oct-05 2384.05 96.68268548 -3.31731451624-Oct-05 2388.4 97.36450541 -2.63549458825-Oct-05 2390.85 96.48889158 -3.51110842126-Oct-05 2401.1 94.16632351 -5.83367649127-Oct-05 2338.6 91.35691544 -8.64308455628-Oct-05 2307.45 89.10965649 -10.8903435131-Oct-05 2314.2 90.12559634 -9.8744036611-Nov-05 2366.8 91.12890805 -8.8710919452-Nov-05 2367.75 90.04221174 -9.9577882577-Nov-05 2411.6 91.46628233 -8.5337176678-Nov-05 2460 95.67145024 -4.3285497619-Nov-05 2475.7 97.17964319 -2.820356813

10-Nov-05 2480.85 96.87036314 -3.12963686111-Nov-05 2500.85 98.70347713 -1.29652287214-Nov-05 2534.4 100.2115419 0.21154188316-Nov-05 2559.45 103.2869249 3.28692493917-Nov-05 2558.45 104.0231754 4.02317544218-Nov-05 2595.15 105.8165138 5.81651376121-Nov-05 2591.75 108.2172905 8.21729054922-Nov-05 2567.05 108.60993 8.60992997823-Nov-05 2563.1 107.5103291 7.51032906224-Nov-05 2608.7 109.2237481 9.22374811625-Nov-05 2633.75 110.1595667 10.1595666826-Nov-05 2664.7 110.9783016 10.9783016128-Nov-05 2682.65 114.7117934 14.7117933829-Nov-05 2679.9 116.1411948 16.1411948330-Nov-05 2647.1 114.3851007 14.385100681-Dec-05 2641.95 111.6254014 11.625401392-Dec-05 2691.5 113.6733186 13.673318555-Dec-05 2654.35 110.0659313 10.065931336-Dec-05 2647.35 107.6158537 7.615853659


Technical Analysis

7-Dec-05 2662.3 107.5372622 7.5372621888-Dec-05 2673.5 107.7654836 7.7654836049-Dec-05 2698 107.8833197 7.883319671

12-Dec-05 2756.4 108.7594697 8.75946969713-Dec-05 2764.65 108.0173475 8.01734747714-Dec-05 2788.3 108.9839551 8.98395512915-Dec-05 2763.35 106.4813209 6.48132092616-Dec-05 2766.5 106.7425485 6.74254847119-Dec-05 2803.45 109.2090142 9.20901423820-Dec-05 2815.2 109.8357458 9.83574577721-Dec-05 2799.45 107.3120711 7.31207114722-Dec-05 2818.65 107.0204082 7.02040816323-Dec-05 2799.7 105.0662363 5.06623634926-Dec-05 2741.8 102.2049093 2.20490932527-Dec-05 2725.7 101.709019 1.70901899328-Dec-05 2780 105.0205886 5.02058856929-Dec-05 2792.75 105.7079051 5.70790514630-Dec-05 2812.75 104.5049229 4.504922905


Technical Analysis

CALCULATION OF RELATIVE STRENGHT INDEX FOR NIFTY INDEX 2005

Date Closing

price Gain Loss Average

gain Average

loss Relative Strength RSI

31-Dec-04 2,059.85

3-Jan-05 2,080.00 20.15

4-Jan-05 2,100.55 20.55

5-Jan-05 1,990.15 (110.40) 110.40

6-Jan-05 1,984.25 (5.90) 5.90

7-Jan-05 1,992.55 8.30

10-Jan-05 1,974.80 (17.75) 17.75

11-Jan-05 1,947.35 (27.45) 27.45

12-Jan-05 1,900.85 (46.50) 46.50

13-Jan-05 1,916.95 16.10

14-Jan-05 1,922.85 5.90

17-Jan-05 1,902.45 (20.40) 20.40

18-Jan-05 1,925.35 22.90

19-Jan-05 1,922.35 (3.00) 3.00

20-Jan-05 1,900.05 (22.30) 22.30

24-Jan-05 1,902.90 2.85

25-Jan-05 1,894.40 (8.50) 8.50

27-Jan-05 1,929.00 34.60

28-Jan-05 1,950.85 21.85

31-Jan-05 2,006.35 55.50 10.44 13.11 0.80 44.32

1-Feb-05 2,045.25 38.90 12.38 13.11 0.94 48.57

2-Feb-05 2,045.50 0.25 11.39 13.11 0.87 46.48

3-Feb-05 2,052.35 6.85 10.70 13.11 0.82 44.94

4-Feb-05 2,060.80 8.45 11.12 7.59 1.47 59.44

7-Feb-05 2,049.85 (10.95) 10.95 11.12 7.84 1.42 58.65

8-Feb-05 2,043.60 (6.25) 6.25 10.71 8.16 1.31 56.77

9-Feb-05 2,055.20 11.60 11.29 7.27 1.55 60.83

10-Feb-05 2,049.85 (5.35) 5.35 11.29 6.16 1.83 64.68

11-Feb-05 2,063.35 13.50 11.96 3.84 3.12 75.71

14-Feb-05 2,083.05 19.70 12.14 3.84 3.16 75.99

15-Feb-05 2,081.20 (1.85) 1.85 11.85 3.93 3.01 75.09

16-Feb-05 2,059.45 (21.75) 21.75 11.85 4.00 2.96 74.77

17-Feb-05 2,045.85 (13.60) 13.60 10.70 4.68 2.29 69.59

18-Feb-05 2,048.85 3.00 10.85 4.53 2.40 70.56

21-Feb-05 2,039.90 (8.95) 8.95 10.85 3.86 2.81 73.76

22-Feb-05 2,036.60 (3.30) 3.30 10.71 4.03 2.66 72.68

23-Feb-05 2,051.35 14.75 11.45 3.60 3.18 76.08

24-Feb-05 2,052.40 1.05 9.77 3.60 2.71 73.07

25-Feb-05 2,051.20 (1.20) 1.20 8.68 3.66 2.37 70.33

28-Feb-05 2,047.70 (3.50) 3.50 5.90 3.84 1.54 60.62

1-Mar-05 2,073.80 26.10 5.26 3.84 1.37 57.85

2-Mar-05 2,080.55 6.75 5.59 3.84 1.46 59.30


Technical Analysis

12.80 5.89 3.84 1.53 60.55 3-Mar-05 2,093.35

35.75 7.25 3.84 1.89 65.40 4-Mar-05 2,129.10

13.95 7.95 3.29 2.42 70.74 7-Mar-05 2,143.05

10.95 8.50 2.98 2.86 74.06 8-Mar-05 2,154.00

9-Mar-05 2,141.35 (12.65) 12.65 7.92 3.61 2.19 68.69 4.40 8.14 3.34 2.44 70.89 10-Mar-05 2,145.75

2.95 7.61 3.34 2.28 69.49 11-Mar-05 2,148.70

14-Mar-05 2,140.90 (7.80) 7.80 6.62 3.73 1.78 63.97

15-Mar-05 2,122.00 (18.90) 18.90 6.62 4.58 1.45 59.10

16-Mar-05 2,121.10 (0.90) 0.90 6.62 3.54 1.87 65.17

17-Mar-05 2,090.45 (30.65) 30.65 6.62 4.39 1.51 60.12

18-Mar-05 2,077.20 (13.25) 13.25 6.47 5.06 1.28 56.15 12.15 7.08 4.61 1.54 60.58 21-Mar-05 2,089.35

22-Mar-05 2,056.50 (32.85) 32.85 7.08 6.09 1.16 53.78

23-Mar-05 2,019.85 (36.65) 36.65 6.34 7.92 0.80 44.48

24-Mar-05 2,007.35 (12.50) 12.50 6.29 8.54 0.74 42.41 7.90 6.69 8.48 0.79 44.07 28-Mar-05 2,015.25

29-Mar-05 1,971.55 (43.70) 43.70 6.69 10.49 0.64 38.92

30-Mar-05 1,971.15 (0.40) 0.40 5.38 10.51 0.51 33.85

31-Mar-05 1,994.50 23.35 6.21 10.51 0.59 37.14

1-Apr-05 2,024.25 29.75 7.06 10.51 0.67 40.17

4-Apr-05 2,054.90 30.65 6.80 10.51 0.65 39.29

5-Apr-05 2,043.70 (11.20) 11.20 6.11 11.07 0.55 35.54

6-Apr-05 2,051.30 7.60 5.94 11.07 0.54 34.91

7-Apr-05 2,048.05 (3.25) 3.25 5.94 10.60 0.56 35.90

8-Apr-05 2,024.80 (23.25) 23.25 5.72 11.77 0.49 32.70

11-Apr-05 2,001.85 (22.95) 22.95 5.57 12.91 0.43 30.14

12-Apr-05 2,002.75 0.90 5.62 12.52 0.45 30.96

13-Apr-05 2,018.10 15.35 6.38 11.58 0.55 35.54

15-Apr-05 1,952.75 (65.35) 65.35 6.38 14.80 0.43 30.13

18-Apr-05 1,914.85 (37.90) 37.90 6.38 15.16 0.42 29.62

19-Apr-05 1,902.80 (12.05) 12.05 6.38 15.10 0.42 29.71

20-Apr-05 1,902.90 0.10 5.78 15.10 0.38 27.68

21-Apr-05 1,911.40 8.50 6.21 13.46 0.46 31.55

22-Apr-05 1,950.00 38.60 8.14 11.63 0.70 41.16

25-Apr-05 1,952.40 2.40 8.26 11.00 0.75 42.87

26-Apr-05 1,951.80 (0.60) 0.60 7.86 11.03 0.71 41.60

27-Apr-05 1,930.35 (21.45) 21.45 7.86 9.92 0.79 44.21

28-Apr-05 1,921.05 (9.30) 9.30 7.86 10.37 0.76 43.13

29-Apr-05 1,896.30 (24.75) 24.75 6.69 11.60 0.58 36.58

2-May-05 1,898.15 1.85 5.30 11.60 0.46 31.35

3-May-05 1,911.00 12.85 4.41 11.60 0.38 27.53

4-May-05 1,920.15 9.15 4.87 11.04 0.44 30.58

5-May-05 1,942.05 21.90 5.58 11.04 0.51 33.57

6-May-05 1,947.30 5.25 5.84 10.88 0.54 34.94

9-May-05 1,978.05 30.75 7.38 9.72 0.76 43.16

10-May-05 1,989.10 11.05 7.93 8.57 0.93 48.07

11-May-05 1,975.05 (14.05) 14.05 7.89 9.27 0.85 45.96


Technical Analysis

12-May-05 1,981.95 6.90 7.47 9.27 0.81 44.60

13-May-05 1,978.90 (3.05) 3.05 7.47 6.16 1.21 54.80

16-May-05 1,989.70 10.80 8.01 4.26 1.88 65.25

17-May-05 1,984.75 (4.95) 4.95 8.01 3.91 2.05 67.20

18-May-05 1,964.65 (20.10) 20.10 8.00 4.91 1.63 61.96

19-May-05 1,983.15 18.50 8.50 4.91 1.73 63.37

20-May-05 1,975.95 (7.20) 7.20 6.57 5.27 1.25 55.48

23-May-05 1,991.70 15.75 7.24 5.27 1.37 57.85

24-May-05 2,009.55 17.85 8.13 5.24 1.55 60.80

25-May-05 2,019.00 9.45 8.60 4.17 2.06 67.35

26-May-05 2,025.65 6.65 8.94 3.71 2.41 70.69

27-May-05 2,069.50 43.85 11.13 2.47 4.51 81.85

30-May-05 2,064.85 (4.65) 4.65 11.04 2.70 4.09 80.34

31-May-05 2,066.55 1.70 10.48 2.70 3.88 79.51

1-Jun-05 2,081.20 14.65 10.75 2.70 3.98 79.93

2-Jun-05 2,062.55 (18.65) 18.65 9.66 3.63 2.66 72.67

3-Jun-05 2,061.35 (1.20) 1.20 9.39 3.69 2.54 71.79

4-Jun-05 2,087.00 25.65 9.14 3.69 2.48 71.23

6-Jun-05 2,087.40 0.40 8.61 3.69 2.33 69.98

7-Jun-05 2,084.35 (3.05) 3.05 8.61 3.14 2.74 73.26

8-Jun-05 2,094.05 9.70 8.75 3.14 2.78 73.57

9-Jun-05 2,097.55 3.50 8.92 2.99 2.98 74.90

10-Jun-05 2,086.30 (11.25) 11.25 8.38 3.55 2.36 70.23

13-Jun-05 2,081.70 (4.60) 4.60 8.38 3.54 2.37 70.34

14-Jun-05 2,098.70 17.00 9.23 2.53 3.65 78.49

15-Jun-05 2,110.35 11.65 8.89 2.53 3.51 77.85

16-Jun-05 2,114.55 4.20 9.10 2.17 4.19 80.75

17-Jun-05 2,103.90 (10.65) 10.65 8.31 2.70 3.08 75.47

20-Jun-05 2,124.65 20.75 8.46 2.70 3.13 75.78

21-Jun-05 2,140.15 15.50 8.76 2.70 3.24 76.42

22-Jun-05 2,167.35 27.20 9.79 2.70 3.62 78.36

23-Jun-05 2,174.05 6.70 7.93 2.70 2.93 74.58

24-Jun-05 2,162.95 (11.10) 11.10 7.93 3.03 2.62 72.39

27-Jun-05 2,188.15 25.20 9.11 3.03 3.01 75.06

28-Jun-05 2,165.90 (22.25) 22.25 8.37 4.14 2.02 66.93

29-Jun-05 2,162.00 (3.90) 3.90 8.37 3.40 2.46 71.12

30-Jun-05 2,189.45 27.45 9.75 3.34 2.92 74.47

1-Jul-05 2,198.90 9.45 8.94 3.34 2.68 72.79

4-Jul-05 2,211.40 12.50 9.54 3.34 2.86 74.07

5-Jul-05 2,205.10 (6.30) 6.30 9.54 3.50 2.72 73.15

6-Jul-05 2,211.30 6.20 9.37 3.50 2.67 72.78

7-Jul-05 2,171.25 (40.05) 40.05 9.19 5.51 1.67 62.54

8-Jul-05 2,179.05 7.80 9.58 4.94 1.94 65.97

11-Jul-05 2,195.55 16.50 10.41 4.71 2.21 68.83

12-Jul-05 2,191.70 (3.85) 3.85 9.56 4.91 1.95 66.08

13-Jul-05 2,200.05 8.35 9.39 4.91 1.91 65.69

14-Jul-05 2,178.60 (21.45) 21.45 9.18 5.98 1.54 60.56

15-Jul-05 2,181.85 3.25 9.34 5.45 1.72 63.18


Technical Analysis

18-Jul-05 2,212.95 31.10 9.86 5.45 1.81 64.42

19-Jul-05 2,227.20 14.25 9.80 5.45 1.80 64.28

20-Jul-05 2,236.90 9.70 8.92 5.45 1.64 62.10

21-Jul-05 2,221.20 (15.70) 15.70 8.59 6.23 1.38 57.96

22-Jul-05 2,223.15 1.95 8.69 5.68 1.53 60.48

25-Jul-05 2,266.65 43.50 9.60 5.68 1.69 62.85

26-Jul-05 2,279.80 13.15 10.26 4.56 2.25 69.21

27-Jul-05 2,292.85 13.05 10.91 4.37 2.50 71.41

29-Jul-05 2,280.85 (12.00) 12.00 9.54 4.97 1.92 65.75

1-Aug-05 2,294.25 13.40 9.74 4.97 1.96 66.21

2-Aug-05 2,319.75 25.50 10.39 4.97 2.09 67.64

3-Aug-05 2,345.20 25.45 11.66 4.65 2.51 71.47

4-Aug-05 2,352.05 6.85 11.69 4.65 2.51 71.53

5-Aug-05 2,355.95 3.90 11.89 2.65 4.48 81.77

8-Aug-05 2,320.05 (35.90) 35.90 11.50 4.45 2.59 72.11

9-Aug-05 2,303.10 (16.95) 16.95 10.67 5.29 2.02 66.84

10-Aug-05 2,322.05 18.95 11.62 5.10 2.28 69.49

11-Aug-05 2,355.50 33.45 12.87 5.10 2.52 71.62

12-Aug-05 2,356.90 1.40 12.94 4.03 3.21 76.27

16-Aug-05 2,356.85 (0.05) 0.05 12.78 4.03 3.17 76.03

17-Aug-05 2,357.50 0.65 11.26 4.03 2.79 73.64

18-Aug-05 2,380.70 23.20 11.71 4.03 2.90 74.39

19-Aug-05 2,378.45 (2.25) 2.25 11.22 4.14 2.71 73.03

22-Aug-05 2,355.75 (22.70) 22.70 11.22 4.49 2.50 71.41

23-Aug-05 2,320.35 (35.40) 35.40 11.12 6.26 1.78 63.98

24-Aug-05 2,300.45 (19.90) 19.90 8.95 7.26 1.23 55.21

25-Aug-05 2,320.70 20.25 9.30 7.26 1.28 56.17

26-Aug-05 2,340.20 19.50 9.63 7.26 1.33 57.01

29-Aug-05 2,312.60 (27.60) 27.60 9.63 8.04 1.20 54.49

30-Aug-05 2,337.75 25.15 10.21 8.04 1.27 55.96

31-Aug-05 2,355.00 17.25 9.80 8.04 1.22 54.94

1-Sep-05 2,382.90 27.90 9.92 8.04 1.23 55.25

2-Sep-05 2,396.10 13.20 10.24 8.04 1.27 56.03

5-Sep-05 2,414.95 18.85 10.99 8.04 1.37 57.75

6-Sep-05 2,417.00 2.05 11.09 6.24 1.78 63.98

8-Sep-05 2,429.00 12.00 11.69 5.40 2.17 68.42

9-Sep-05 2,441.90 12.90 11.39 5.40 2.11 67.85

12-Sep-05 2,455.85 13.95 10.41 5.40 1.93 65.87

13-Sep-05 2,477.10 21.25 11.41 5.40 2.11 67.89

14-Sep-05 2,476.00 (1.10) 1.10 11.41 5.45 2.09 67.68

15-Sep-05 2,492.75 16.75 12.21 5.45 2.24 69.15

16-Sep-05 2,519.05 26.30 12.37 5.45 2.27 69.42

19-Sep-05 2,550.45 31.40 13.94 5.33 2.61 72.31

20-Sep-05 2,546.60 (3.85) 3.85 13.94 4.39 3.17 76.03

21-Sep-05 2,504.90 (41.70) 41.70 13.94 4.71 2.96 74.75

22-Sep-05 2,465.85 (39.05) 39.05 13.94 5.66 2.46 71.10

23-Sep-05 2,453.05 (12.80) 12.80 12.92 6.30 2.05 67.21

26-Sep-05 2,477.85 24.80 13.19 6.30 2.09 67.65


Technical Analysis

27-Sep-05 2,549.85 72.00 16.79 4.92 3.41 77.32

28-Sep-05 2,559.85 10.00 16.03 4.92 3.25 76.50

29-Sep-05 2,589.45 29.60 16.65 4.92 3.38 77.17

30-Sep-05 2,567.75 (21.70) 21.70 15.25 6.01 2.54 71.73

3-Oct-05 2,597.20 29.45 16.07 6.01 2.67 72.77

4-Oct-05 2,629.60 32.40 16.74 6.01 2.79 73.59

5-Oct-05 2,636.60 7.00 16.99 6.01 2.83 73.87

6-Oct-05 2,571.30 (65.30) 65.30 16.39 9.27 1.77 63.86

7-Oct-05 2,547.55 (23.75) 23.75 15.75 10.46 1.50 60.08

10-Oct-05 2,561.00 13.45 15.72 10.46 1.50 60.04

11-Oct-05 2,533.70 (27.30) 27.30 14.66 11.83 1.24 55.34

13-Oct-05 2,529.05 (4.65) 4.65 14.66 12.00 1.22 54.97

14-Oct-05 2,478.00 (51.05) 51.05 13.82 14.56 0.95 48.70

17-Oct-05 2,459.50 (18.50) 18.50 12.50 15.48 0.81 44.68

18-Oct-05 2,452.50 (7.00) 7.00 10.94 15.83 0.69 40.85

19-Oct-05 2,394.95 (57.55) 57.55 10.94 18.52 0.59 37.13

20-Oct-05 2,363.55 (31.40) 31.40 10.94 18.00 0.61 37.79

21-Oct-05 2,384.05 20.50 11.96 16.05 0.75 42.70

24-Oct-05 2,388.40 4.35 12.18 15.41 0.79 44.14

25-Oct-05 2,390.85 2.45 11.06 15.41 0.72 41.78

26-Oct-05 2,401.10 10.25 7.97 15.41 0.52 34.10

27-Oct-05 2,338.60 (62.50) 62.50 7.47 18.54 0.40 28.73

28-Oct-05 2,307.45 (31.15) 31.15 5.99 20.09 0.30 22.97

31-Oct-05 2,314.20 6.75 6.33 19.01 0.33 24.98

1-Nov-05 2,366.80 52.60 7.49 19.01 0.39 28.26

2-Nov-05 2,367.75 0.95 5.91 19.01 0.31 23.73

7-Nov-05 2,411.60 43.85 7.76 19.01 0.41 28.98

8-Nov-05 2,460.00 48.40 10.18 15.74 0.65 39.27

9-Nov-05 2,475.70 15.70 10.96 14.56 0.75 42.96

10-Nov-05 2,480.85 5.15 10.55 14.56 0.72 42.02

11-Nov-05 2,500.85 20.00 11.55 13.19 0.88 46.68

14-Nov-05 2,534.40 33.55 13.23 12.96 1.02 50.51

16-Nov-05 2,559.45 25.05 14.48 10.41 1.39 58.18

17-Nov-05 2,558.45 (1.00) 1.00 14.48 9.53 1.52 60.30

18-Nov-05 2,595.15 36.70 16.31 9.18 1.78 63.99

21-Nov-05 2,591.75 (3.40) 3.40 16.31 6.47 2.52 71.59

22-Nov-05 2,567.05 (24.70) 24.70 16.31 6.14 2.66 72.66

23-Nov-05 2,563.10 (3.95) 3.95 15.29 6.34 2.41 70.70

24-Nov-05 2,608.70 45.60 17.35 6.34 2.74 73.25

25-Nov-05 2,633.75 25.05 18.48 6.34 2.92 74.47

26-Nov-05 2,664.70 30.95 19.52 6.34 3.08 75.49

28-Nov-05 2,682.65 17.95 20.41 3.21 6.36 86.41

29-Nov-05 2,679.90 (2.75) 2.75 20.41 1.79 11.40 91.94

30-Nov-05 2,647.10 (32.80) 32.80 20.08 3.43 5.85 85.41

1-Dec-05 2,641.95 (5.15) 5.15 17.45 3.69 4.73 82.55

2-Dec-05 2,691.50 49.55 19.88 3.69 5.39 84.35

5-Dec-05 2,654.35 (37.15) 37.15 17.68 5.55 3.19 76.13

6-Dec-05 2,647.35 (7.00) 7.00 15.26 5.90 2.59 72.14


Technical Analysis

7-Dec-05 2,662.30 14.95 15.23 5.90 2.58 72.09

8-Dec-05 2,673.50 11.20 15.53 5.90 2.63 72.48

9-Dec-05 2,698.00 24.50 15.75 5.90 2.67 72.77

12-Dec-05 2,756.40 58.40 17.00 5.90 2.88 74.25

13-Dec-05 2,764.65 8.25 16.16 5.90 2.74 73.27

14-Dec-05 2,788.30 23.65 17.34 5.85 2.97 74.79

15-Dec-05 2,763.35 (24.95) 24.95 15.50 7.09 2.19 68.61

16-Dec-05 2,766.50 3.15 15.66 6.92 2.26 69.35

19-Dec-05 2,803.45 36.95 17.51 5.69 3.08 75.48

20-Dec-05 2,815.20 11.75 18.10 5.49 3.30 76.72

21-Dec-05 2,799.45 (15.75) 15.75 15.82 6.28 2.52 71.59

22-Dec-05 2,818.65 19.20 15.52 6.28 2.47 71.20

23-Dec-05 2,799.70 (18.95) 18.95 13.98 7.23 1.93 65.92

26-Dec-05 2,741.80 (57.90) 57.90 13.08 10.12 1.29 56.37

27-Dec-05 2,725.70 (16.10) 16.10 13.08 10.79 1.21 54.80

28-Dec-05 2,780.00 54.30 15.79 9.15 1.73 63.32

29-Dec-05 2,792.75 12.75 16.43 8.89 1.85 64.89

30-Dec-05 2,812.75 20.00 14.95 8.89 1.68 62.71


Technical Analysis

The entire monthly vice charts formed for Nifty index closing price 2005

DMA of JAN 2005 nifty index

1800

1850

1900

1950

2000

2050

2100

2150

1/3/20

05

1/10/2

005

1/17/2

005

1/24/2

005

1/31/2

005

PERIOD

PRIC

E closing priceDMA

DMA IN FEBRUARY

190019201940196019802000202020402060208021002120

2/1/20

05

2/8/20

05

2/15/2

005

2/22/2

005

PERIOD

PRIC

E ACTUAL CLOSING20 DAYS DMA


Technical Analysis

DMA OF MARCH

1850

1900

1950

2000

2050

2100

2150

2200

3/1/

2005

3/8/

2005

3/15

/200

5

3/22

/200

5

3/29

/200

5PERIOD

PRIC

E

ACTUAL CLOSINGPRICEDMA

DMA OF APRIL

1800

1850

1900

1950

2000

2050

2100

2150

4/1/20

05

4/8/20

05

4/15/2

005

4/22/2

005

4/29/2

005

PERIOD

PRIC

E ACTUAL CLOSINGDMA


Technical Analysis

DMA OF MAY

1800

1850

1900

1950

2000

2050

2100

2150

5/2/

2005

5/9/

2005

5/16

/200

5

5/23

/200

5

5/30

/200

5PERIOD

E ACTUAL CLISING

PRIC

DMA

DMA OF JUNE

1900

1950

2000

2050

2100

2150

2200

2250

6/1/

2005

6/8/

2005

6/15

/200

5

6/22

/200

5

6/29

/200

5

PEROID

PRIC

E ACTUAL CLOSINGDMA


Technical Analysis

DMA OF JULY

2050

2100

2150

2200

2250

2300

2350

7/1/

2005

7/8/

2005

7/15

/200

5

7/22

/200

5

7/29

/200

5PERIOD

PRIC

E ACTUAL CLOSINGDMA

DMA OF AUG

2150

2200

2250

2300

2350

2400

2450

8/1/

2005

8/8/

2005

8/15

/200

5

8/22

/200

5

8/29

/200

5

PERIOD

PRIC

E ACTUAL CLOSINGDMA


Technical Analysis

DMA OF SEPT

2200

2250

2300

2350

2400

2450

2500

2550

2600

2650

9/1/2

005

9/8/2

005

9/15/

2005

9/22/

2005

9/29/

2005

PERIOD

PRIC

E ACTUAL CLOSINGDMA

DMA OF OCT

2100

2200

2300

2400

2500

2600

2700

10/3

/200

5

10/1

0/20

05

10/1

7/20

05

10/2

4/20

05

10/3

1/20

05

PERIOD

PRIC

E ACTTUAL CLOSINGDMA


Technical Analysis

DMA OF NOV

2200

2300

2400

2500

2600

2700

2800

11/1

/200

5

11/8

/200

5

11/1

5/20

05

11/2

2/20

05

11/2

9/20

05PERIOD

PRIC

E ACTUAL CLOSINGDMA

DMA OF DEC

2450

250025502600265027002750280028502900

12/1

/200

5

12/8

/200

5

12/1

5/20

05

12/2

2/20

05

12/2

9/20

05

PERIOD

PRIC

E ACTUAL CLOSINGDMA


Technical Analysis

MOMENTUM OF JAN

0

500

1000

1500

2000

2500

12/31

/2004

1/7/20

05

1/14/2

005

1/21/2

005

1/28/2

005

PERIOD

PRIC

E MOMENTUMCLOSING

MOMENTUM OF FEB

1850

1900

1950

2000

2050

2100

2150

2200

2250

2300

2/1/

2005

2/8/

2005

2/15

/200

5

2/22

/200

5

PERIOD

PRIC

E MOMENTUM OF FEBCLOSING


Technical Analysis

MOMENTUM OF MARCH

0

500

1000

1500

2000

2500

3/1/2

005

3/8/2

005

3/15

/200

5

3/22

/200

5

3/29

/200

5

PERIOD

PRIC

E MOMENTUMCLOSING

MOMENTUM OF APRIL

0

500

1000

1500

2000

2500

4/1/2

005

4/8/2

005

4/15

/200

5

4/22

/200

5

4/29

/200

5

PERIOD

PRIC

E MOMENTUMCLOSING


Technical Analysis

MOENTUM OF MAY

0

500

1000

1500

2000

2500

5/2/2

005

5/9/2

005

5/16

/200

5

5/23

/200

5

5/30

/200

5

PERIOD

PRIC

E MOMENTUM CLOSING

MOMENTUM OF JUNE

19001950200020502100215022002250230023502400

6/1/20

05

6/8/20

05

6/15/2

005

6/22/2

005

6/29/2

005

PERIOD

PRIC

E MOMENTUMCLOSING


Technical Analysis

MOMENTUM OF JULY

2050

2100

2150

2200

2250

2300

2350

2400

2450

7/1/20

05

7/8/20

05

7/15/2

005

7/22/2

005

7/29/2

005

PERIOD

PRIC

E MOMENTUMCLOSING

MOMENTUM OF AUG

2150

2200

2250

2300

2350

2400

2450

2500

2550

2600

8/1/

2005

8/8/

2005

8/15

/200

5

8/22

/200

5

8/29

/200

5

PERIOD

PRIC

E MOMENTUMCLOSING


Technical Analysis

MOMENTUM OF SEPT

2100

2200

2300

2400

2500

2600

2700

2800

2900

9/1/20

05

9/8/20

05

9/15/2

005

9/22/2

005

9/29/2

005

PERIOD

PRIC

E MOMENTUMCLOSING

MOMENTUM OF OCT

0

500

1000

1500

2000

2500

3000

3500

10/3/

2005

10/10

/2005

10/17

/2005

10/24

/2005

10/31

/2005

PERIOD

PRIC

E MOMENTUMCLOSING


Technical Analysis

MOMENTUM OF NOV

0

500

1000

1500

2000

2500

3000

3500

11/1/

2005

11/8/

2005

11/15

/2005

11/22

/2005

11/29

/2005

PERIOD

PRIC

E MOMENTUMCLOSING

MOMENTUM OF DEC

2400

2500

2600

2700

2800

2900

3000

3100

3200

12/1/

2005

12/8/

2005

12/15

/2005

12/22

/2005

12/29

/2005

PERIOD

PRIC

E MOMENTUMCLOSING


Technical Analysis

RSI of jan for Nifty 2005

01020304050607080

12/31

/2004

1/7/20

05

1/14/2

005

1/21/2

005

1/28/2

005

PERIOD

PRIC

E

Series1

RSI OF FEB

0

10

20

30

40

50

60

70

80

90

2/1

/2005

/ 0

2/82

0

2/1

5

5/200

2/2

5

2/200

PERIOD

PRIC

E

5

Series1


Technical Analysis

RSI OF MARCH

0

10

20

30

40

50

60

70

80

3/1/2

005

3/8/2

005

3/15

/200

5

3/22

/200

5

3/29

/200

5

PERIOD

PRIC

E

Series1

RSI OF APRIL

05

10152025

3035404550

4/1/2

005

4/8/2

005

4/15

/200

5

4/22

/200

5

4/29

/200

5

PERIOD

PRIC

E

Series1


Technical Analysis

RSI OF MAY

0102030405060708090

5/2/20

05

5/9/20

05

5/16/2

005

5/23/2

005

5/30/2

005

PERIOD

PRIC

E

Series1

RSI OF JUNE

586062646668707274767880

6/1/2

005

6/8/2

005

6/15

/200

5

6/22

/200

5

6/29

/200

5

PERIOD

PRIC

E

Series1


Technical Analysis

RSI OF JULY

0

10

20

30

40

50

60

70

80

7/1/2

005

7/8/2

005

7/15

/200

5

7/22

/200

5

7/29

/200

5

PERIOD

PRIC

E

Series1

RSI OF AUG

0

10

20

30

40

50

60

70

80

90

8/1/2

005

8/8/2

005

8/15

/200

5

8/22

/200

5

8/29

/200

5

PERIOD

PRIC

E

Series1


Technical Analysis

RSI OF SEPT

0102030405060708090

100

9/1/20

05

9/8/20

05

9/15/2

005

9/22/2

005

9/29/2

005

PERIOD

PRIC

E

Series1

RSI OF OCT

01020304050607080

10/3/

2005

10/10

/2005

10/17

/2005

10/24

/2005

10/31

/2005

PERIOD

PRIC

E

Series1


Technical Analysis

RSI OF NOV

0

10

20

30

40

50

60

70

80

90

100

11/1/

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5

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PERIOD

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Series1

RSI OF DEC

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Series1


Technical Analysis

ROC OF JAN

-10

-8

-6

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0

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ROC OF FEB

-4

-2

0

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005

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005

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Series1


Technical Analysis

ROC OF MARCH

-6

-4

-2

0

2

4

6

3/1/20

05

3/8/20

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005

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005

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Series1

ROC OF APRIL

-10

-9

-8

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005

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005

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Technical Analysis

ROC OF MAY

-8

-6

-4

-2

0

2

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005

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005

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Series1

ROC OF JUNE

0

1

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Technical Analysis

ROC OF JULY

0

1

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005

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Series1

ROC OF AUG

0123456789

10

8/1/20

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005

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Series1


Technical Analysis

ROC OF SEPT.

0

2

4

6

8

10

12

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9/8/20

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005

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ROC OF OCT

-15

-10

-5

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Technical Analysis

ROC OF NOV

-15

-10

-5

0

5

10

15

20

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2005

11/8/

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11/22

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11/29

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Series1

ROC OF DEC

0

2

4

6

8

10

12

14

12/1/

2005

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Series1


Technical Analysis

CHARTS SIGNALS GIVEN BY DIFFERENT TOOLS IN THE YEAR 2005

MONTHS DMA ROC MOMENTUM RSI January Sell Sell Sell Sell February Buy Buy Sell Sell March Sell Sell Sell Sell April Sell Buy Sell Buy May Sell Buy Buy Buy June Buy Sell Buy Sell July Buy Sell Buy Sell August Buy Sell Buy Sell September Buy Sell Buy Sell October Sell Buy Sell Buy November Sell Buy Buy Buy December Buy Sell Sell Sell TOTAL BUY SIGNAL 6 5 6 4 TOTAL SELL SIGNAL 6 7 6 8

INTERPRETATION OF DAY MOVING AVERAGE

A Daily Moving Average is an indicator that shows the average value of a

security's price over a period of time. When calculating a daily moving average, a

mathematical analysis of the security's average value over a predetermined time period is

made. As the security's price changes, its average price moves up or down.

It is evident from the plotted graphs that trends in a stock prices can be very volatile. One

technique for dealing with volatile stock price is day moving average. It is constructed by

totaling a set of data and dividing the sum by the number of observation. Here in this

study 20 day moving average is constructed for the Nifty index price of 2005. The actual

closing price and the calculated DMA are plotted in the same graph monthly vice basis. A

rising DMA indicates market strength and a declining one denotes weakness. Changes in

the price trend are identified by the price itself crossing its day moving average.


Technical Analysis

The most popular method of interpreting a daily moving average is to compare the

relationship between a daily moving average of the security's closing price and the

security's closing price itself. A sell signal is generated when the security's price falls

below its daily moving average and a buy signal is generated when the security's price

rises above its moving average. This type of daily moving average trading system is not

intended to get in at the exact bottom and out at the exact top. Rather, it is designed to

keep in line with the security's price trend by buying shortly after the security's price

bottoms and selling shortly after it tops.

The critical element in a daily moving average is the number of time periods used in

calculating the average. When using hindsight, we can always find a moving average

that would have been profitable. The key is to find a moving average that will be

consistently profitable. Here I used 20-day moving average to find out the significance of

moving average in short term trading.

A change from a rising trend to declining price is signaled when the price moves

below its day moving average. A bullish signal is given when the price goes above the

DMA. The technicians gets the sell signal at the point where declining DMA crossover

the price line. Traders will buy the share at the point where rising trend crosses the actual

price line. The buy and sell signals generated by seeing the related graph in this study.

Day moving average exhibited sell signal in January, March, April, May, October and

November in the year 2005 (Nifty Index). It has given buy signals in the months of

February, June, July, August, September and the December.

RATE OF CHANGE

The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a

particular share (or other financial instrument) is moving. The theory is that if a price is

rising (or falling) very quickly there will soon come a time when it is thought to be


Technical Analysis

overbought (or oversold). When this occurs the price may still continue to rise (or fall),

but not as rapidly as it was before.

This oscillator always has a value between 0 and 10. And is calculated from the average

of all price rises in a given period divided by the average of all price falls in the same

period. Again the choice of period is arbitrary and dependent on your position in the

markets.

The major use of this oscillator is to identify the overbought and oversold zones. To

identify the overbought zone, look at the historic high values on the ROC chart for the

scrip that is been studied. If one finds that the current value is in the peak of the historic

high values, the scrip can be said to have entered the overbought zone. On the same

count, if the ROC touches the historic low values, the scrip can be said to have entered

the oversold zone. The Rate of change indicator is not necessarily same with the other

indicators. It has given 7 time sell signal and only 5 time buy signal for the nifty index

price 2005. This is because of different parameters are used for construction ROC.

Relative Strength Index

A popular method of analyzing the RSI is to look for a divergence in which the market

index is making a new high, but the RSI is failing to surpass its previous high. This

divergence would be an indication of an impending reversal. When the RSI then turns

down and falls below its most recent trough, it is said to have completed a failure swing.

The failure swing would be considered a confirmation of an impending reversal.

If the RSI goes above 70 the shares are overbought, and you should consider selling at

that price level. If the RSI goes below 30 the shares are oversold, and you should be

looking for buying opportunities. The neutral position of this oscillator is at 50; if it rises

above 50, the instrument is becoming overbought, if it falls below it is becoming

oversold. Critical levels exist at 75 and 25. An ROC above or below these levels indicates

the instrument is overbought or oversold. It has given 5 times buy signals and 7 times sell

signals in year.


Technical Analysis

The Momentum

The Momentum indicator measures the amount that a security's price has changed over a

given time span.

Interpretation:

The interpretation of the Momentum indicator is identical to the interpretation of the

Price ROC. Both indicators display the rate-of-change of a security's price. However, the

Price ROC indicator displays the rate-of-change as a percentage whereas the Momentum

indicator displays the rate-of-change as a ratio.

There are basically two ways to use the Momentum indicator: You can use the

Momentum indicator as a trend-following oscillator similar to the MACD. Buy when the

indicator bottoms and turns up and sell when the indicator peaks and turns down(this is

the method I prefer in this study).

If the Momentum indicator reaches extremely high or low values (relative to its

historical values), you should assume a continuation of the current trend. For example, if

the Momentum indicator reaches extremely high values and then turns down, you should

assume prices will probably go still higher. In either case, only trade after prices confirm

the signal generated by the indicator (e.g., if prices peak and turn down, wait for prices to

begin to fall before selling).

We can also use the Momentum indicator as a leading indicator. This method assumes

that market tops are typically identified by a rapid price increase (when everyone expects

prices to go higher) and that market bottoms typically end with rapid price declines

(when everyone wants to get out). As a market peaks, the Momentum indicator will climb

sharply and then fall off- diverging from the continued upward or sideways movement of

the price. Similarly, at a market bottom, Momentum will drop sharply and then begin to

climb well ahead of prices. Both of these situations result in divergences between the

indicator and prices. It has given both buy and sell signals 6 times each in year.


Technical Analysis

CHAPTER – 5

SUMMARY

AND

CONCLUSION


Technical Analysis

Summary

In this study, I have made 48 predictions in year. All tools are tested monthly vice for the

nifty index closing price 2005. The price movement plotted on the graph for calculated

data made the predictions. Relevance of the share price are tested by comparing the

actual price and signals of the graphs. Totally 26 predictions of the graphs were able to

make right decision and helped to investors to profitable trade. 24 predictions of the

graphs were false. They did not fetch the profit to the traders. Therefore, we can say

technical analysis is worked here to the extent of 54%.

FINDINGS

Technical analysis is worked to the extent of 54% in this study

Not all the tools used here will gives the same result for the same period.

Day moving average is the most appropriate tool to predict the stock price

movement.

Relative strength index and the Rate of change methods are not proved as reliable

from this study.

WHICH IS BETTER?

The result of this study shows that day moving average is the best tool to pick up the

stock. The day moving average prediction in the year 2005 for nifty index price is more

efficient compare to other tools. 9 out of 12 time the day moving average has given right

prediction. The traders who invested in the share according to the day moving average

trend were able to make maximum profit.

The Momentum also proven to be satisfactory to the traders in case of nifty index price

2005. It has given 7 times right prediction out of 12. Other tools which I have used in this

study are Relative strength index and Rate of change method. Both were given only 5


Technical Analysis

times right prediction. The investors who made their investment according to these

predictions have occurred a loss. It may not be 100% true, because the tools and the

software used in the chart here are not very advanced one as traders use in their analysis.

However, the day moving average is the one tool which is very simple to construct the

graph and more reliable to the regular traders.

Which technical analysis tool we use will depend on your trading and investing style and

preferences. The day moving average obviously has a lag, but the other tools which are

used here also be prone to quicker breaks. Some traders prefer to use Relative Strength

Index for shorter time periods to capture changes quicker. Some investors prefer simple

moving averages over long time periods to identify long-term trend changes. In addition,

much will depend on the individual security in question. The technical chart type and

length of time will depend greatly on the individual security and how it has reacted in the

past.

The initial thought for some is that greater sensitivity and quicker signals are bound to be

beneficial. This is not always true and brings up a great dilemma for the technical analyst:

the trade off between sensitivity and reliability. The more sensitive an indicator is, the

more signals that will be given. These signals may prove timely, but with increased

sensitivity comes an increase in false signals. The less sensitive an indicator is, the fewer

signals that will be given. However, less sensitivity leads to fewer and more reliable

signals. Sometimes these signals can be late as well.

CONCLUSION

Technical analysis can offer great insight, but if used improperly, they can also produce

false signals. While trend lines have become a very popular aspect of technical analysis,

they are merely one tool for establishing, analyzing, and confirming a trend. Trend lines

should not be the final arbiter, but should serve merely as a warning that a change in

trend may be very useful.

The price set by the market reflects the sum knowledge of all participants, and we

are not dealing with lightweights here. These participants have considered (discounted)


Technical Analysis

everything under the sun and settled on a price to buy or sell. These are the forces of

supply and demand at work. By examining price action to determine which force is

prevailing, technical analysis focuses directly on the bottom line: What is the price?

Where has it been? Where is it going?

Even though there are some universal principles and rules that can be applied, it

must be remembered that technical analysis is more an art form than a science. As an art

form, it is subject to interpretation. However, it is also flexible in its approach and each

investor should use only that which suits his or her style. Developing a style takes time,

effort and dedication, but the rewards can be significant


Technical Analysis

GLOSSARY The Random Walk Hypothesis: the hypothesis claims that stock price moments either

independent or uncorrelated increments.

The Efficient Market Hypothesis: all relevant information is quickly reflects in a

security's price through the actions of traders who have that information.

The Rate of Change: The Rate of Change indicator (ROC) is a way of showing how

rapidly the price of a particular share (or other financial instrument) is moving.

The GARP strategy: is a combination of both value and growth investing

Market-based valuation: valuing a stock is not only to estimate its fair value, but also to

determine its potential price range, taking into account market behavior aspects.

Momentum: The Momentum indicator measures the amount that a security's price has

changed over a given time span.

Moving Average: is an indicator that shows the average value of a security's price over a

period of time.

Projected Relative Value - Relative Value using Projected P/E.

Reward: Total Return OR Projected Average Return (PAR).

Value investing: the strategy of selecting stocks that trade for less than their intrinsic

value.


http://en.wikipedia.org/wiki/Market-based_valuation

http://www.investopedia.com/terms/v/



Technical Analysis

BIBLIOGRAPHY TEXT BOOKS: 1. Technical analysis of stock trends, 8th Edition,

Robert D. Edwards, John Magee.

2. Technical analysis of stock trends by Martin Pring.

ARTICLES: 1. MARKET EFFICIENCY AND THE RETURNS TO TECHNICAL ANALYSIS (Article published in December 1997)

Hendrik Bessembinder and Kalok Chan,Department of Finance, College of Business,

Arizona State University.

2. The use of fundamental and technical analyses by foreign exchange

dealers: Hong Kong evidence. Journal of international money and finance, 1998.

David Mole, Department of economics and finance, City university of Hong Kong.

3. Technical Analysis in the Foreign Exchange Market: A Co-integration-

Based Approach (Article in Multinational finance journal, 1999). Nobert Fiess, University of Strathclyde and U. K. Ronald MacDonald, University of strathclyde,

4. TECHNICAL ANALYSIS AND TYPICAL COGNITIVE BIASES

(article in journal of finance 2001) Piotr Zielonka, Warsaw University SGGW and Leon Kozminski Academy of Entrepreneurship and

Management, Poland.


Technical Analysis

Websites: 1. www.nseindia.com 2. www.google.com 3. www.investopedia.com. 4. The Journal of Finance 5. www.valuepro.net. 6. www.myiris.com. 7. www.Valuenotes.com.


http://www.nseindia.com/

http://www.google.com/

http://www.investopedia.com/

http://www.valuepro.net/

http://www.myiris.com/

+technical analysis & its relevance

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