university report new

RESEARCH ON EQUITY MUTUAL FUNDS

AND

LEARNING ADVANCED TECHNICAL

ANALYSIS PATTERNS

SUBMITTED TO

CHITKARA BUSINESS SCHOOL

In partial fulfilment of the requirements for the award of degree of

Masters of Business Administration

2015-17

Submitted by: Supervised by:

RAGHAV AGGARWAL C. A. AMAN CHUGH1520981014 MANAGING DIRECTOR

MARKETCONNECTED

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TO WHOMSOEVER IT MAY CONCERN

This is to certify that the project titled “RESEARCH ON EQUITY MUTUAL FUNDS AND LEARNING ADVANCED TECHNICAL ANALYSIS PATTERNS” studied out by Mr RAGHAV AGGARWAL, S/o ANIL KUMAR AGGARWAL has been accomplished under my guidance and supervision as a duly registered MBA student of Chitkara University. This project is being submitted by her in the partial fulfilment of the requirements for the award of the Masters of Business Administration from Chitkara University.

Her dissertation represents her original work and is worthy of consideration for the award of degree of Masters of Business Administration.

CA AMAN CHUGHMANAGING DIRECTORMARKETCONNECTED

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DECLARATION

I RAGHAV AGGARWAL, hereby declare that the work presented

herein is genuine work done originally by me and has not been published

or submitted elsewhere. Any literature, data or work done by others and

cited in the report has been given due acknowledgement and listed in the

reference section.

RAGHAV AGGARWAL

1520981014

Date:

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ACKNOWLEDGEMENT

I would like to express my gratitude to all those who gave me the possibility to complete this project. I want to thank the department of Chitkara Business School for giving me the opportunity to do such an interesting and wide topic, i.e., the study of Mutual Funds and Technical Charts.

I would like to thank my supervisor for being a support throughout my project work. C.A. Aman Chugh has always encouraged me to stay focused towards my project no matter what the conditions were.

The goal of new idea and development can only be obtained by hard working it is only key to success. For one to achieve success, the best way is suggestion and guidance provided by one’s mentor.

I would also like to thank God for giving me the patience throughout my project and my parents who supported me and helped me in any ways. Without all, I could not have successfully completed my project properly in time with adequate data and relevant substance in it.

RAGHAV AGGARWAL1520981014MBA (FMP)

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E x e c uti v e S u m m a ry

This report is all about operations at MARKETCONNECTED. The main aim of this report is to have an adequate knowledge of mutual funds and technical charting and research. MarketConnected is a research based firm which deals in the investment strategies.

Problem Identification: There are so many investment avenues. So that investors do not know which avenues provides best return. As per the financial rule of “Do not put all the eggs in one basket” investor’s portfolio are most diversified. So that risk should be minimized. If the person do not have knowledge of how to get maximum return with minimum risk or vice-versa then they should invest in mutual fund but it is not important that he will earn more returns from there. There are so many funds and schemes are available in mutual fund market. Investors know that how much risk they can take and based on that they have to choose schemes.

So we conducted a study which would lighten the path of investor in making appropriate investing decision. As per our mentor’s guidance we started comparing the Mutual Fund return with its top 10 holding returns. The primary objective of the study is to know about whether mutual funds give higher performance within 3 years or whether we will get more return if we directly invest in top 10 holdings of the same fund for the same period.

Methodology: For the purpose of this study, 4 open ended equity based growth mutual funds were selected as the Sample. The data, which is the NAV’s of the funds and the closing prices of the top 10 holdings, were collected for a period of 3 years starting 01/01/2013 To 31/12/2015. Different statistical tools were used on the data obtained to calculate the Average returns, Standard deviation, Fund Beta, etc. We calculate monthly return of mutual fund for 3 years. Then this return is compared with weighted average return of top 10 holdings during the same period.

In the second part of our project we learn Advance Technical Analysis Patterns to identify meaningful Entry & Exit levels. This helps us to trade in stocks and predict its future price movements. We conduced detail study of these patterns and analysed them on actual markets. We identify the parameters for the pattern identification and then we examine the rules fi=or trading the Technical Patterns.

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Conclusion: Usually the top 10 holdings of mutual fund give major returns because they weight about 40-50% of corpus of the fund. Top 10 holdings generally don’t vary much within a year for large cap funds but they may vary for mid cap and small cap funds. By choosing to invest directly in mutual fund top 10 holdings, investor has to update his portfolio on monthly basis. Other than 3-5% savings on AM fees and brokerage charges, investor earns about 11-12% extra return by investing directly into top holdings in case of large cap funds and for small and midcap it may go up to 40-50%.

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Table of Content

SL. NO. PARTICULARS PAGE NO.

I. Introduction to the company

Business carried on by the company

About founders

Trend following turtle concept

Significance of brand “MarketConnected”

Organisation structure

SWOT analysis of the company

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II. Introduction to the project 23

III. Need of study 31

IV. Objectives of the study 32

V. Review of Literature 33

VI. Research methodology adopted 34

VII. Details of actual work undertaken 37

VIII. Interpretation and analysis 60

IX. Conclusion and suggestion 64

X. References 66

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INTRODUCTION TO THE

COMPANY

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MARKETCONNECTED

Marketconnected Advisors LLP has been founded by CA Aman Chugh & CA Sheetu Maheshwari.

BUSINESS CARRIED ON BY THE COMPANY

To provide Foreign Exchange and Interest Rate Risk Management advisory to Corporate and HNI clients including setting up of their Risk Management Policy & guiding them by generating daily newsletter in such domain titled as “ Turtle Trend Broadcast: FX”

To enable Corporate/HNIs/NRIs to make informed decisions while managing Portfolios/Investing/Trading in markets (Equity / Foreign Exchange / Commodities) through educating/training them (Through our Trainings & Workshops services) on our proprietary Technical Analysis system titled as “CANDO” and “Turtle Trend Recognition System (TTRS)”and managing Risk through “Turtle Advanced Risk Management System (TARMS)”. We also handhold them further in their learning with us (Through our Technical Advisory Services) & guide them by generating daily newsletter in such domain titled as “Turtle Trend Broadcast: Macro” & “Turtle Trend Broadcast: Equity”.

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SERVICES OFFERED

Risk Management Policy Advisory

a) Evaluation of Existing Risk Management framework and identifying weaknesses of the system and helping to overcome them and providing report to Senior Management b) Identification & Measurement of FX and Interest Rate Risk & Defining Maximum value at Risk c) Designing Hedge strategy within permitted instruments which is adaptable to any market conditions d) Developing Customized MIS for recording, monitoring transactions and management reporting. e) Risk management Audit & Compliance

Remittances Advisory

a) We help the Corporate/SMEs in timing of their conversion of receivables and payables b) We help the Corporate/SMEs to negotiate better rates with banks ensuring competitive and lower spreads.

Hedging Advisory

On Current Account Transactions

a) To decide on the amount of Hedge based on objective 10 Factor Model (Uniquely designed by MarketConnected) rather than subjective method. b) To design their portfolio of Hedges by taking judicious blend of Forwards, Options, Strategies.c) To time the forward cover rather than entering arbitrarily. d) To formulate Options strategies which are better than pure forward. e) To price/value forwards and option strategies and help in negotiating with the bank. f) To get deal execution done at bare minimum margin/charges on exchanges.

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On Capital Account Transactions

(A) On Working Capital Loan- Currency Exposure in Buyers Credit, FCNR we help Corporates / SMEs in:

a) Reducing the cost of hedge by entering into option strategy as against forward on Currency exposure. b) Pricing the deal with our pricing models to negotiate well with the banks c) Arranging for alternate banks to quote if required.

(B) On Term Funding- INR- Cost Reduction in Loan (Working of Swap explained in Annexure-1 below) we help Corporates / SMEs in:

a) Such Notional Derivative contract can be executed with any bank who is willing to sanction the Derivative Limits (Bank or Exchange)

b) The timing of the hedge is made in a manner when we expect the INR to appreciate so that the position can be considered to be squared in profits. As an example if INR appreciates by 1% which is 61.40 levels, and then Client earns Rs1 as profit.

c) Risks: In case the INR depreciates beyond the forward implied rate than client can have loss on the deal. However in case C is an exporter, this structure acts as a natural hedge

(C) On Term Funding- Foreign Currency example Buyers Credit, ECB-Cost Reduction in Loan we help corporate/SME’s in:

a) Pricing the deal with unique pricing models to negotiate well with the banks. b) Designing option strategies to hedge exposure and reduce cost. c) Getting the deal executed with alternate banks if required.

Trading Advisory

Trading within Hedge Book on Trading within Hedge we help Corporates / SMEs to:

a) Actively trade within the hedge book to earn that extra income while protecting the budgeted rate. b) Avoid any speculative and excess risk taking trades. c) Execute the deal at bare minimum margin/charges on exchange.

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Pure Trading Book on Pure Trading we help Corporates / SMEs in:

a) Active trading in cross currencies based on technical and fundamentals. For this we give complementary views on the same for corporate to develop trust and faith on our views. b) To execute the deals at bare minimum margin/charges on exchange.

Arbitrage Advisory.

We help in designing and execution of Arbitrage profit generating trades.

Other Services

a) In Setting up and running Treasury as Profit Centre.b) Undertaking MTM Valuation of Derivatives.c) Training on Derivatives.d) Publication on Derivatives: Turtle Trend Broadcast: FX.

Trend Following Turtle’s Training Services

1. Our Clients & Associations speak on such service four.

2. Foundation-Financial Derivatives & Risk Management.

3. Advanced-Financial Derivatives: The Currency & Rates Factor.

4. Advanced-Financial Derivatives: Turtle Trend Risk Management.

5. Foundation-Financial Derivatives & Technical Analysis.

6. Advanced-CANDO Technical Analysis & Turtle Trend Recognition System.

7. Advanced: Turtle Trend Advanced Risk Management on Technical Analysis.

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ABOUT THE FOUNDERS

CA Aman Chugh

CA Aman Chugh, whose name is a keyword on Google with over 1.2 million searches & with over 10,000 Fan following over Social Media, stands as a reputed name in the World of Financial Markets. Being one of the youngest Chartered Accountants of India & having gained huge experience and expertise in complex fields including Investment Banking, Corporate Banking, Derivatives (Including Equity & Currency) & Risk Management, he is currently the most sought consultant in the Corporate & Financial World on such domains.

He has gained his experiences while having worked at Senior & Middle level Management positions with reputed Brands including Price Water House, Ernst Young (Dubai), General Electric (USA) and ICICI Bank. Having been exposed to International Financial Markets and to almost all Financial Instruments for over a decade, he also holds varied positions such as including Chairman, Chairperson, Advisor, Consultant and Trainer to various Fortune 500 Companies, Large Corporates, SMEs, & Bodies and Associations including Confederation of Indian Industries, RBI & Other Government Organizations.

He has to his name the credit of being the First Author in the World to have written a Book on Financial Derivatives which covers Currency and Interest Rates strategies & which has been published by PEARSON and has reviews from reputed Senior Management people from Ministry of Finance, RBI & Large Corporates including Reliance Industries, Indian Oil, Larsen Toubro, TCS, Wipro and others. He also delivers sessions at reputed B-Schools and Institutions such as ICAI, ICSI, IIT-Delhi, MDI, IIFT and SRCC.

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Below is a short description of his achievements and associations:

Training Board Member of ICICI Group on Derivatives Chairman to the All India Committee on MSME Total Cost and Finance

Management of CII(Confederation of Indian Industries) Chairperson/Trainer/Advisor/Speaker of CII on important forums on Financial

markets, Derivatives & Innovative financing. Trainer and Advisor with Capital Markets Group of ICAI (The Institute of

Chartered Accountants of India). Member of Content Developing Committee wherein has contributed on certain

modules used in various MDPs & Other Programs run by ICAI for Senior Chartered Accountants at decision making positions with reputed Corporates & in Private practice.

Author of first practical book titled as "Financial Derivatives – The Currency and Rates Factor" published by Pearson. The book has been reviewed and praised by various eminent personalities which include Joint Secretary-Ministry of Finance, General Manager-RBI, & Treasury Heads of reputed Corporates such as Reliance Industries, L&T, Wipro, TCS, Indian Oil, Dr Reddy’s Lab and many more. It is a recommended book in IIT Delhi, SRCC-Delhi University, MDI, IIFT, ICAI, ICSI, and NIFM-Ministry of Finance.

Has gained a judicious blend of experience in auditing, corporate banking, investment banking, trade services, Foreign exchange and Interest Rate Derivatives while working with eminent Brands like PriceWaterHouse, Ernst Young (Dubai), General Electric (US and India) and ICICI Bank.

Conducts and provides consultancy / corporate trainings / seminars / Guest lectures in varied Fortune 500 Corporates, Ministries of Govt and other Govt Bodies & premier organizations/associations.

Has been a part of Guest / Visiting faculty to reputed Institutes and Universities which include ICAI, ICSI, IIT Delhi, IIFT, MDI, IMT, SRCC and others.

His name has become a keyword on Google with over 1.2 million searches and has over 8000 fan following on Facebook. His views have often been covered by leading newspapers and magazines, including Hindustan Times, Indian Express, Business Standard, The Financial World, and others.

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CA Sheetu Maheshwari

Sheetu is a Chartered Accountant by qualification and has an extensive experience in Technical Analysis of financial markets and Turtle Trading Risk Management System.

Below is the short description of her achievements and associations:

She has developed her own proprietary models to identify trend, momentum and volatility. This enhances the probability of forecasts and these models are used by Marketconnected to provide output to its client.

She has developed robust risk management and trading system which is the backbone of trading in financial markets.

In the past she has worked with KPMG, Infosys and Aditya Birla Group in Corporate Finance & Taxation giving her strong background in understanding financial health of companies.

She trains and mentors people to advance their skills in Technical Analysis allowing them to have consistent return from the financial markets.

She conducts and provides consultancy/corporate/trainings/seminars/Guest lecturers in varied organizations.

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TREND FOLLOWING TURTLE CONCEPT

INTRODUCTION

Investors / Traders have preference for either going long or Short i.e. Bulls / Bears. Bulls

suffer when market goes down and Bears suffer when market goes up. However, we follow

the trend and ride the trend in Turtle style. All our services integrate “The Trend Following

Turtle” style.

As you would know 99 % of people lose money in Financial Markets, & only 1% make money. The ones who make money normally follow models which are based on VAR (Value at Risk). Normally such similar models are developed & followed by the following players:

o Large Hedge Fundso Investment Banks

Corporates/Retail Players/HNIs/NRIs/Brokers/Sub Brokers segment of the market do not have access/time/expertise/experience in implementing such advanced models based on VAR (Value at Risk)

BACKGROUND

The original Turtle model was applied primarily in US markets on Commodities and

Currencies in 1980’s. Some of the Famous Trend Followers have been:

Jesse Livermore: “Great Bear of Wall Street “- An American stock trader. He was famed for making and losing several multi-million dollar fortunes and short selling during the stock market crashes of in 1907 & 1929.

George Soros: “The Man broke the Bank of England”- He brought Bank of England to its knees when he demolished the monetary system of Great Britain with an elegantly constructed bet against its currency.

Richard Donchian: “Creator of the managed futures industry: MarketConnected has modified the model for its application in India designed/innovated/back tested/implemented substantially advanced techniques to identify trends.

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UNIQUE CONTRIBUTION BY MARKETCONNECTED

The original Turtle model was applied primarily in US markets on Commodities and

Currencies in 1980’s. MarketConnected has modified the model for its application in India

and has designed/innovated/backtested/implemented substantially advanced techniques to

identify trends. We have named this model as “Trend Following Turtle” Model.

UNIQUE FEATURES OF MARKET “THE TREND FOLLOWING TURTLE” STYLE

The Key Features of Trend Following Turtle Style are:

Diversification -

Trend Following Turtle Style has been blended with multiple underlings, which gives a perfect diversification in any mood of markets.

Pyramiding –

Trend Following Turtle Style helps in accumulating at different levels (i.e. Averaging when price goes in direction of trend) by doing 4 hits in one underlying.

Maximum Drawdown risk –

Trend Following Turtle Style has a very robust risk management system which defines the Value at Risk (VAR). VAR refers to a risk assessment measure that is used to establish the relationship between a possible declines in the market value of a portfolio over a specific period of time.

(a) Portfolio Level VAR-

Max Draw Down Risk ->30% Normal VAR -> i.e. Overnight VAR

I.e. one day VAR -> 5%

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(b) Individual underlying Level VAR-

Based on the volatility prevailing of each underlying and the co-relation between each underlying the model determines individual underlying level.

KNOW MORE

Our Model neither uses fundamental nor complex technical to trade. That’s why the model is named as Trend Following Turtle.

Our Model does not try to forecast / predict market. Our Model lets the trend determine direction of market and the trade. Our Model is never eager to book profits and lets the profitable positions run and loss making

positions exit. Our Model decides Entry and Exit based on the volatility of the markets. Our Model restricts the Position Size to prevent over leverage in the market. Our Model believes in unique diversification& helps the model to have participation in all

segments decided. Our Model does not keep profit targets and exits the position through trailing stop

loss method. Our Model divides the trades into 4 parts and each trade is done sequentially as the trend

becomes stronger. Our Model has an inbuilt capacity to allocate more funds to trending underlying and less or

nothing to non-trending underlying. In case a particular underlying becomes non-trending, the model has inbuilt method to exit that position and allocate funds to the trending underlying.

IMP NOTE: In case all the underlying / asset classes do not have any trending move and are only in consolidation phase, then such model would not be able to generate the desired returns.

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SIGNIFICANCE OF BRAND “MARKETCONNECTED”

1. Markets are connected in today’s globalised world, the independence and correction between various markets have increased significantly. Thus, decision making on one underlying/asset class cannot be done in isolation and models to identify market trends have to be robust. Market connected through its experience of more than a decade has developed its unique models which help our clients to stay ahead in the competitive world.

2. Connect with the markets irrespective of one’s stream of profession, in today’s world one cannot afford to be ignorant of financial markets. However considering the amount of random and unstructured information available in the market, people tend to ignore market on account of its complexities. Marketconnected educates and trains people to interpret the market in a simple manner with goal of making people more informed and educated for financially successful life.

SIGNIFICANCE OF TAG LINE “TREND FOLLOWING TURTLE”

We describe the significance of our tag line “Trend Following Turtle” style with the unique features of turtle:

FIT TO SURVIVE

Turtles have been for more than 200 million years and are able to survive through stable periods and times of extreme environmental changes.

Similarly, the “Trend Following Turtle” style of decision making can survive the stable as well as crisis phase of financial markets.

SHOCK SIGHTEDNESS

Turtles are able to predict the upcoming risks/shocks/surprises which may harm them and they react their necks into their protective shells.

Similarly, the “Trend Following Turtle” style through its quick Turtle Trend Recognition System (TTRS) and knowledge of advanced instruments, like Exotic Options & Advanced Option Strategies, is able to devise defensive strategies in the times of crisis.

TOUGH LOOKS, SOFT FEEL

The prospective skeletal structure of a turtle is armoured enclosure to protect the soft vital internal organs.

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Similarly, “Trend Following Turtle“ style not only protects from the adverse impact of financial markets through the use of defensive strategies but also assist to generate stable and consistent returns during such adverse markets.

MAKE IT LARGE

The large body cavity enables the turtles to produce and hold a large volume of eggs.

In a similar manner, “Trend Following Turtle” style is also able to hold large amount of information and decipher the same through the Turtle Trend Recognition System (TTRS).

VOLATILITY- WE SMILE

Turtles can remain under water for a long period of time through for their efficient oxygen retention system.

Similarly, “Trend Following Turtle” style helps to survive through volatile times through its Turtle Advance Risk Management System (TARMS).

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ORGANIZATION STRUCTURE

Marketconnected has a simple organizational structure. In simple organizational structure, top

manager controls the work of employees. This is most widely practiced in smaller businesses,

in which the coordination of work can be effectively structured around a different set of

activities.

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Top Manager

CA Aman Chugh

Employee 1Pankaj Chabra

Employee 2Abhishek Sharma

SWOT ANALYSIS

STRENGTH

Efficient and Skill Manpower Specific Knowledge and

CapabilitiesHedging against Global Risk Customer Orientation Different services offered Investment Advice Transparent Functioning

WEAKNESS

Lack of awareness due to low publicity

Lack of investor Knowledge Stiff Competition Less penetration in rural areas

OPPORTUNITY

Tapping the growing rural market Earning urban+ youth looking for

investment option Awareness Education level Increasing market in investment

field

THREAT

Technology based business Dynamic Environment Price war New competitors Macroeconomic factors

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INTRODUCTION TO THE

PROJECT

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MUTUAL FUNDS

Definition

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document.

Meaning

A mutual fund is a trust/company that pools money from several investors who share a common financial goal. The money thus collected is then invested in stocks, bonds, short–term money-market instruments, other securities or assets, or some combinations of these investments. For the money invested by investors, investors will receive units in mutual funds. Investors can sell their units when they want. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them.

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Diagrammatic representation of Mutual Funds

Frequently Used Terms

Asset AllocationAsset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame.

Asset Management Company (AMC)A firm that invests the pooled funds of investors in securities, in line with the stated investment objectives. For a fee, the investment company provides diversification, liquidity, and professional management service.

Assets Under ManagementAssets under Management is commonly referred to as AUM, is the total money managed by the Mutual Fund.

Entry loadEntry load is the amount or fee charged from an investor while entering a scheme or joining the company as an investor.

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Exit LoadA fee charged by some funds when units are sold. The amount sometimes depends on how long the investment was held, so the longer the time period, the smaller the charge.

Front-end loadA one - time charge that investors pay at the time when they buy fund units.

Fund of Funds (FOF)A fund that invests in other mutual funds, unlike a normal fund which invests in equity and fixed income securities.

Load fundA mutual fund that charges a sales fee. There are 2 types of loads: front-end (charged at the time of purchase) and back- end (charged at the time of redemption).

Lock-in periodA period of time during which the investor is restricted from selling a particular investment.

Market riskThe potential loss that is possible as a result of short-term volatility of the stock market. Owning mutual funds may shield an investor from some market risk that a stockholder may be vulnerable to, if their portfolio is not well diversified.

Net Asset ValueThe NAV is the market value of mutual fund shares. It is calculated each business day based on the value of the assets of the fund minus its liabilities, divided by the number of shares outstanding.

No-load fundA general term applied to mutual funds that sell shares at net asset value, either directly to the public or through an affiliated distributor, without the addition of a sales charge.

Open-end fundA mutual fund that does not have a fixed number of shares (as does a closed-end fund.) The mutual fund will offer as many shares as investors are willing to buy. Most mutual funds are open-ended unless otherwise noted.

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Public Offering Price (POP)The price at which mutual fund shares are offered for sale to the public. Also known as offering price. The public offering price represents the net asset value plus any applicable initial sales charges. The price at which mutual fund shares are offered for sale to the public. Also known as offering price. The public offering price represents the net asset value plus any applicable initial sales charges.

Redemption loadA fee charged by some funds for redeeming or buying back fund shares. These charges often decline or are eliminated after a certain number of years.

Redemption priceThe price at which a mutual fund’s units are redeemed or bought back by a fund. The redemption price is usually equal to the current net asset value per unit minus the exit load if any.

Sales chargeA charge added on to the price of a mutual fund when investor buy it.

Systematic Investment Plan (SIP)A Systematic Investment Plan allows an investor to automatically buy shares or units according to a schedule that the investor creates. It allows the investor to use the rupee cost averaging investment strategy.

Systematic Withdrawal Plan (SWP)

A Systematic Withdrawal Plan permits the investor to receive regular payments of a fixed amount from his investment in a mutual fund scheme on a periodic basis. Retirees in need of a regular income often opt for this.

Examples of Mutual Funds

SBI Small & Midcap Fund – Growth Franklin India Low duration Fund IDFC Infrastructure Fund Reliance Diversified Power Sector Fund UTI Banking Sector Fund

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Why Mutual Funds?

Professional Management

Diversification

Affordability &

Investment size

Tax Benefits

Liquidity

Transparency

Regulated

Others

Advantages of Investing in Mutual Funds

Since creation, Mutual funds have been a popular investment vehicle for investors. Their simplicity along with other attributes provide great benefit to investors with limited knowledge, time or money. To help investor decide whether Mutual funds are suitable for investor and his situation, let’s look at some reasons why one might want to consider investing in them.

Professional-ManagementWhen one invest in a mutual fund, his money is managed by finance professionals. Investors who don’t have time or skill to manage their own portfolio can invest in mutual funds. By investing in mutual funds, one can gain the services of professional fund managers, which would otherwise be costly for an individual investor.

DiversificationMutual funds provide the benefits of diversification across different sectors and companies. Different investors having varied interests and size of investments pool in their money under different schemes of mutual funds. Because of large pool size of money, mutual funds widen investments across various industries and asset classes. Thus, by investing in a mutual fund, one can gain from the benefits of diversification and asset allocation, even if investor’s individual portfolio/investment size is small.

Affordability & Investment sizeIf investor have been postponing to start his investing program because of certain challenges like lack of knowledge, expertise, time, information etc, (and investor can't

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afford his own personal investment consultant!), mutual funds will get anyone on way at a bare minimum cost.

Also, investing in a mutual fund usually doesn’t require a large sum of money. Although most fund organizations have minimum amounts needed to open an account, yet such minimum benchmark of investments is quite small. Even an investor with small investment size can get started on mutual funds because of the small size of minimal investment requirements investor can invest with a minimum of Rs.500 in a Systematic Investment Plan (SIP) on a regular basis.

Tax benefits Section 80C: Amount invested in tax-saving funds (ELSS) would be eligible for

deduction under Section 80C, however the aggregate amount deductible under the said section cannot exceed Rs 150,000.

Tax on Dividends: Dividends declared by debt-oriented mutual funds (i.e. mutual funds with less than 50% of assets in equities), are tax-free in the hands of the investor. Similarly, Dividends declared by equity-oriented funds (i.e. mutual funds with more than 50% of assets in equities) are tax-free in the hands of investor.

A dividend distribution tax of 12.5% (including surcharge) is to be paid by the mutual fund on the dividends declared by the fund.

LiquidityMutual funds are usually very liquid investments. Unless they have a pre-specified lock-in period, investor’s money is available to him anytime. However, in case of an early withdrawal, one may be subject to exit load. Normally funds take a couple of days in returning investor’s money. Since they are well integrated with the banking system, most funds can transfer the money directly to one’s bank account.

Transparency Mutual funds provide investors with updated information pertaining to the markets and schemes through factsheets, offer documents, annual reports etc.

Well-regulatedMutual funds in India are regulated and monitored by the Securities and Exchange Board of India (SEBI), which endeavours to protect the interests of investors. All funds are registered with SEBI and complete transparency is enforced. Mutual funds are required to provide investors with standard information about their investments, in addition to other disclosures like specific investments made by the scheme and the quantity of investment in each asset class.

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Disadvantages of Investing in Mutual Funds

Costs despite Negative ReturnsInvestors must pay sales charges, annual fees, and other expenses despite of how the fund performs.

Lack of ControlInvestors typically cannot ascertain the exact make-up of a fund’s portfolio at any given time, nor can they directly influence which securities the fund manager buys and sells or the timing of those trades.

Price UncertaintyWith an individual stock, one can obtain real-time (or close to real-time) pricing information with relative ease by checking financial websites or by calling his broker. Investor can also monitor how a stock’s price changes from hour to hour—or even second to second. However, with a mutual fund, the price at which investor purchase or redeem shares will typically depend on the fund’s NAV, which the fund might not calculate until many hours after investor have placed his order. In general, mutual funds normally calculate their NAV at least once every business day.

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Disadvantages Of Mutual

Funds

Costs Despite

Negative Returns

Lack of Control

Price Uncertainity

NEED OF STUDY

Mutual funds have gained popularity among the investing public especially in the last two

decades. The Mutual Funds in India are handled by Fund Managers, also called Portfolio

managers. The Securities Exchange Board of India (SEBI) regulates the Mutual Funds in

India.

Purpose of doing this project was to know about mutual funds, its functioning and also about

the miss-selling of mutual fund products in the markets. Detailed analysis of mutual fund

industry help us in gaining in depth knowledge about mutual funds right from its inception

stage, growth and future prospects.

There are various questions before us which arises the need for this study. Some of the vital

issues are:

1. How one should approach towards the mutual fund investments?

2. Where are the good opportunities in Mutual fund investments?

3. How to identify the miss-selling done by various Asset management companies?

4. How one can overrule the mutual funds and earn better by investing in its holdings?

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OBJECTIVE OF STUDY

The objective of the research is to study and analyse the awareness level of investors

of mutual funds.

Evaluating and comparatively analysing the Equity based Mutual Funds on various

parameters which includes Returns, Standard deviation, Sharpe ratio and Treynor’s

ratio.

To analyse the stock selection ability of the Mutual Fund Managers.

Comparing returns of mutual funds with its top holdings return.

To study Advance technical analysis patterns and there implications on live markets.

Designing Derivative Strategies on Equity Underlying based on Market Positioning,

Trends, Volatilities and Macro Factors.

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REVIEW OF LITERATURE

William F. Sharpe –

An American economist who won the 1990 Nobel Prize in Economics, along with Harry Markowitz and Merton Miller, for developing models to assist with investment decision making. Sharpe's capital asset pricing model (CAPM) calculates expected returns based on varied levels of risk and states that taking on more risk is necessary to earn a higher return. Corporations, institutions and pension fund managers have all used CAPM theory to manage risk.

Sharpe was born in Boston in 1934. He earned his PhD from the University of California at Los Angeles and has taught at the University of Washington, the University of California at Irvine and Stanford University. He has been a consultant to numerous major corporations and founded the consulting firm William F. Sharpe Associates. Sharpe also developed the Sharpe ratio, another tool for analysing investment performance.

Jack Treynor -

Developed by Jack Treynor, the Treynor ratio (also known as the "reward-to-volatility ratio") attempts to measure how well an investment has compensated its investors given its level of risk. The Treynor ratio relies on beta, which measures an investment's sensitivity to market movements, to gauge risk. The premise underlying the Treynor ratio is that systematic risk--the kind of risk that is inherent to the entire market (represented by beta)--should be penalized because it cannot be diversified away.

Jack Lawrence Treynor (February 21, 1930 – May 11, 2016) was an American economist who served as the President of Treynor Capital Management in Palos Verdes Estatates, California. He was a Senior Editor and Advisory Board member of the Journal of Investment Management, and was a Senior Fellow of the Institute for Quantitative Research in Finance. He served for many years as the editor of the CFA Institute's Financial Analysts Journal.

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY ADOPTED

Research Methodology has many dimensions, it include not only research methods but also considers the logic behind the methods used in the context of the study and explains why only a particular method of technique has been used so that research leads to proper evaluations. Thus in a way it is a written game plan for concluding research therefore in order to solve research problem it is necessary to design a research methodology for the problem as the same differ from problem to problem.

R e s e a r c h D e s ig n :

The research design is a pattern or an outline of a research project. It is a statement only the essential of a study that provides the basic guidelines for the details of the project.The present study being conducted follows a Descriptive Research and the ExploratoryResearch. It is a cross section of the situation design of the descriptive studies including the nature and the analytical method.

Data C olle c tio n :

After the research problem has been defined and the research design has been chalked out, the task of date collection begins. The data collection technique would be Secondary DataCollection. Secondary data would be collected from the internet and different websites and newspaper articles. And other research paper would be taken into consideration to find out the better result from the research paper.

R e s e a r c h T ools and T e c hn i ques:

Tools and techniques are used for the stock selection and to manage the risk and return on the portfolio. Major things to be considered are the sector preference for the selection of the stock because diversification should be into different sectors so as to maximize the return and taking advantage of whole economy related environment and news. Stock selection will be based on the Fundamental analysis and Beta for the stock selection.

D e tails of tools and te ch n iq u es:

Standard Deviation: Standard Deviation is absolute measure of volatility. It suggests the deviation of returns from its mean.

Beta: It is the measure of the volatility of a security or a portfolio as compared to the market as a whole. Beta signifies the risk or volatility relative to the Benchmark Indices. By definition, benchmark index holds Beta of 1. For example – If a fund's Beta is 1.2, it simply means that the fund is 1.2 times more volatile than the benchmark index.

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Sharpe Ratio: The Sharpe ratio, also known as Reward to Risk Ratio, measures the risk-adjusted performance. It indicates the excess return per unit of risk associated with the excess return. To calculate Sharpe ratio, risk free rate is subtracted from portfolio returns and dividing the result by the standard deviation of the portfolio returns. The higher the Sharpe Ratio, the better the performance. A negative Sharpe indicates that a rational investor would choose risk-less asset over the risky investment under analysis.

Treynor’s Ratio: The Treynor’s ratio, also known as the Reward to Volatility ratio, measures returns earned in excess of that which could have been earned on a risk-less investment per each unit of market risk. To calculate Treynor’s ratio, risk free rate is subtracted from portfolio returns and dividing the result by the Beta of the portfolio returns. Treynor’s ratio is a risk-adjusted measure of return based on systematic risk. It is similar to the Sharpe ratio, but the Treynor’s ratio uses beta as the measurement of volatility whereas Sharpe ratio uses Standard Deviation. The higher Treynor’s Ratio score means better the fund.

Alpha: The excess return of the fund relative to the return of the benchmark index is a fund's alpha. Alpha is the actual return in excess to what was predicted using the CAPM model. Alpha is often considered to represent the value that a portfolio manager adds to or subtracts from a fund's return. The higher Alpha score means better the fund.

Diversification – A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated (ideally perfectly negatively correlated).

Risk Adjusted Returns – We should know that how much risk is involved in producing an investment's return. The return generated in excess of risk is known as Risk Adjusted Return and is generally expressed as a number or rating. Risk-adjusted returns are applied to individual securities and investment funds and portfolios. There are five principal risk measures: Alpha, Beta, R-squared, Standard Deviation and the Sharpe ratio. Each risk measure is unique in how it measures risk

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DETAILS OF ACTUAL WORK UNDERTAKEN

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(a)MUTUAL FUNDS

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MUTUAL FUNDS

Mutual Fund: A Portfolio Perspective

A Portfolio ApproachThe major characteristic of any portfolio is the diversification benefit provided by the portfolio. A portfolio can be considered a risk reducing or a risk mitigating strategy whereby an investor tries to maximize the returns or minimize the risk by investing in diversified financial instruments. A mutual fund also has the similar characteristics. Instead of investing in a single security, it helps in diversifying by investing in different securities including stocks, bonds, etc, depending upon the structure and investment objective of the fund.

Let’s assume an investor who doesn’t have the expertise to invest in financial markets but wants to take exposure in the large cap equities can do so by purchasing the units in a large cap fund such as Birla sun Life top 100. Similarly, for an investor who is seeking an exposure in both equity and bonds can invest in a balanced fund like ICICI pru balanced fund. So, investor has the liberty to choose from variety of funds depending on his views, risk taking ability and investment objective.

Myths about investing in Mutual funds and SIPIt is a common misconception that mutual funds always generate positive returns. Mutual funds don’t guarantee return on one’s investments. A fund manager follows and invests according to the stated objective of the fund. However, he is not liable for any losses incurred by the fund. Although funds do earn positive returns for the investors, but a part of the returns get eroded due to various kind of fees paid by the investor to the Mutual funds.

Long term returns on mutual funds are always positive and better than other investment alternatives.Assume an investor, who had invested in a Mutual fund in 2007 with an objective to remain invested for 5 years and earn at least his opportunity cost. However, Global markets went into recession in 2008 and bounced back to their 2007 levels in 2012. The investor might have earned some positive returns. However, these returns were not sufficient to cover the opportunity cost of the investor.

If investor would have invested in a 5 year government security, investor’s return would be much higher compared to mutual funds.

If investor would have invested in gold or Property, his returns would be much higher

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Investments in SIP are safe and investor will get positive returns because of Cost Averaging.

Scenario A: When investor started investing in a SIP, NAV of mutual fund was 10 and when investor exited form SIP, NAV was 15. During 12 months NAV reached its peak of 20. For 12 months investor’s average NAV cost was 18. This implies that market peaked during these 12 months and investor purchased at a higher rate (average is higher than the net value). So, investor has incurred a loss. As investor has invested more during upward phase thus investor’s average cost is higher than today’s NAV.

Scenario B: when investor started investing, NAV of mutual fund was 10 and when investor exited NAV of his fund was 13. During 12 months NAV took a nosedive at 7 for few months and averaged around 11. This implies that investor have purchased at a lower rate because of which his average NAV is low at 11. However, at the exit of SIP, NAV is 13. Therefore, investment is profitable.

Meaning and Calculation of NAV

The net asset value of a fund is the market value of the assets minus the liabilities on the day of valuation. In other words, it is the amount which the shareholders will collectively get if the fund is dissolved or liquidated. The NAV of a unit is the net asset value of fund divided by the number of outstanding units.

NAV = CORPUSNUMBER OF UNITS

CORPUS = MARKET VALUE OF ALL INVESTMENTS + ACCRUED INCOME + PREPAID EXPENSES + OTHER RECIEVABLES (Short Term) – OUTSTANDING EXPENSES – PRE RECIEVED INCOME – OTHER PAYABLES (Short Term)

FORMULAES USED IN STUDY

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Holding Period ReturnThe total return received from holding an asset or portfolio of assets over a period of time, generally expressed as a percentage. Thus, HPR is the change in value of an investment, asset or portfolio over a particular period.

HPR=(Final Value−InitialValue )

Initial Value∗100

Annualized Holding Period ReturnTo annualize a holding period return means to find the equivalent rate of return per year.

Standard Deviation: Standard Deviation is absolute measure of volatility. It suggests the deviation of returns from its mean.

Beta: It is the measure of the volatility of a security or a portfolio as compared to the market as a whole. Beta signifies the risk or volatility relative to the Benchmark Indices.

Sharpe Ratio: The Sharpe ratio, also known as Reward to Risk Ratio, measures the risk-adjusted performance. It indicates the excess return per unit of risk associated with the excess return.

Treynor’s Ratio: The Treynor’s ratio, also known as the Reward to Volatility ratio, measures returns earned in excess of that which could have been earned on a risk-less investment per each unit of market risk.

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Alpha: The excess return of the fund relative to the return of the benchmark index is a fund's alpha. Alpha is the actual return in excess to what was predicted using the CAPM model.

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The objective of the study is to compare Mutual Fund Return with its Top 10 Holding’s Return. Calculation of return is done in the following manner.

Step1. Firstly we calculate the mutual fund return for the period of three years. By comparing the NAV given on the official website of AMC, monthly return is calculated in three year period starting from Jan 2013 to Dec 2015. Snip showing the detail calculation done on the spread sheet is given as follows:

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Cumulative total of monthly return comes around 42.01% and annualised return is 12.40%.

Step2. In this step we start calculating the returns of Top 10 holdings. Firstly we segregate those top holdings of mutual funds which comprise at least 50% of the mutual fund’s total holdings. This exercise is done on monthly basis, since mutual fund companies can change their holding patterns.

First column shows the name of the holding and second column shows the weight of it in particular month. We calculate the monthly weights of the mutual fund holdings for the period starting from Jan 2013 to Dec 2015. Then this 50% holding is squared up as 100% to make comparison of investing in these top holdings of fund with investing in Mutual fund itself.

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Step3. Final calculation is done for calculating the weighted return of the selected top holdings as per step two. It is also calculated for the period of three years starting from Jan 2013 to Dec 2015. Snip showing weighted return of one of the holding is as follows:

Firstly monthly return is calculated and it was then multiplied with their weights of a given month. Weighted return was calculated in the same way for each stock.

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Step4. Then weighted return of all top holdings is comprised into one sheet. From this we came to know the return on investing in top 10 holdings month wise for three years.

The sum total return on investing in Top 10 holdings of the mutual fund for the three years comes around 53.47%.

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(b)ADVANCED TECHNICAL

ANALYSIS PATTERN

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MEANING OF TECHNICAL ANALYSIS

Technical analysis is the study of market action, primarily through the use of charts for the

purpose of forecasting future price trends. We got an opportunity to work and learn Advance

Technical Chart Patterns during our internship period. We analyse the identification rules as

well as trading rules for different chart patterns. Some of the best chart patterns are copied

here.

1. BROADENING FORMATIONS, RIGHT –ANGLED AND DESCENDING

MEANING

This is a bullish reversal pattern. The pattern is formed by two diverging lines, the resistance being a horizontal line and the support a bearish slant. So it is an inverted ascending triangle. The oscillations between the two levels of the triangle are therefore becoming more and more important. Each line must be touched at least twice for validation.

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IDENTIFICATION GUIDELINES TRADING TACTICS

Megaphone, tilted down, with the top of the formation horizontal and bounded on the bottom by a down-slopping trend line.

Horizontal line of resistance joins the tops as a trend line. Must have least two distinct (minor highs) touches before drawing a trend line.

The expanding price series is bounded on the bottom by a down – slopping trend line. Must have at least two distinct minor lows to create a trend line.

For an established formation, when prices climb toward the trend line or decline toward the lower one but fail to touch it, prices often reverse direction and break out of the formation.

Follows the two trend lines into the future but is sporadic.

Compute the formation height by taking the difference between the horizontal top and lowest low in the formation. For upward breakouts, add the result to the value of the horizontal trend line. For downward breakouts, subtract the value from lowest low. Result is target price.

It is unclear which way prices will break out, so it is best to wait for prices to close outside the trend lines. Once they do, expect prices to continue moving in the direction of the breakout.

Once a breakout occurs, consider the opposite side of the formation as the stop-loss point. However, in many cases you will want something closer to our purchase price, so look for nearer support or resistance zones. Once the stock moves substantially, advance the stop to the break-even point or higher.

IMPORTANT NOTES

Select patterns that follow the trend: upward breakouts in a bull market, downward breakouts in a bear market.

If you can determine when the trend changes, buy after the stock bottoms and hang on as price rises an average of 55%.

Failure rates are lowest for patterns with small moves in a bear market with downward breakouts. Patterns in a bull market with upward breakouts do better for price runs longer than 15%.

In a bull market, select patterns with breakouts in the middle of the yearly price range. In the bear market select those with breakouts near the yearly low.

Patterns with a u-shaped volume pattern do well after an upward breakout. Select patterns with dome-shaped volume and downward breakouts.

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2. BROADENING FORMATIONS, RIGHT –ANGLED AND ASCENDING

MEANING

This is a bearish reversal pattern. The pattern is formed by two diverging lines, the support being a horizontal line and the resistance a bullish slant. So it is an inverted descending triangle. The oscillations between the two levels of the triangle are therefore becoming more and more important. Each line must be touched at least twice for validation.

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Megaphone with one side horizontal. Bottom of formation follows a horizontal trend line, while an up-slopping trend line bounds the top side.

Top trend line touches at least two minor highs and minor lows as prices descend to trend line

Prices sometimes move horizontally for months before moving outside the formation high or low.

Prices drop below the horizontal trend line usually accompanied by surge in volume.

Compute the formation of height from highest high to the horizontal trend line. For upward breakout, add height to highest high in pattern and for down subtract height from value of horizontal trend line. It gives us target price. More accurate target use a formation height divided by 2.

Use a partial rise or decline as an entry signal. Use Fibonacci retracements.

If you own stock and prices close below the lower trend line, sell. As many times the breakout will be downward.

For tall patterns, buy near the lower trend line and sell near the top as prices curl down.

IMPORTANT NOTES

Trade with the market trend: in bull market, buy upward breakouts; in bear market short at downward breakouts.

Trade busted patterns or after price reaches the ultimate high or low. Patterns in bull markets with upward breakout have the lowest failure rates for moves

above 15%. In bull market, select patterns with the upward breakout near the yearly high.

Downward breakouts should be near the yearly low, regardless of market type. Throwbacks and pullbacks hurt performance. Look for nearby support or resistance to

a price move. In a bull market let your profits ride as it takes time for prices to rise. In bear market,

decline is likely to be steep and short.so use target profit to get out. Select tall patterns and wide patterns perform better when breakout direction follows

the general market trend. Choose patterns with heavy breakout volume except for those patterns with

downward breakouts in a bear market.

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3. CUP WITH HANDLE

MEANING

As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom As the cup is completed, a trading range develops on the right hand side and the handle is formed. A subsequent breakout from the handle's trading range signals a continuation of the prior advance.

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A rounded turn that looks like a cup with a handle on the right.

Upward leading to the pattern. Price should rise by at least 30% leading to the cup.

The cup should be U-shaped, not V-shaped. Consider handle length as the distance from the right cup lip to the breakout. Cup must have handle on right.

Cups to be sure prices in the handle drifted no lower than halfway down the cup. Remove those drifting lower.

From 7 to 65 weeks. Cup gently rounds over and climbs just

beyond old high then pauses. Price drift down in handle, along with down trending volume before breakout. Then volume surges and price move smartly upward.

Compute the formation height by subtracting the lowest low reached in the cup from the high at the right cup lip. Add the difference to the high at the right cup lip and the result is the target price to which prices will climb, at a minimum. Only 50% of the formations rise that far in a bull market; 27% hit the target in a bear market. Use half the cup height to get a more realistic price target.

If you discover a cup within a cup, buy on the breakout of the inner cup. Be prepared to sell at the price of the old high.

Place stop-loss order 0.15 below the handle to limit losses. Raise the stop to breakeven or just below the nearest support zone when prices rise.

IMPORTANT NOTES

Select cups in a bull market and avoid those in a bear market Cups in a bull market have a lower failure rate. Select cups with breakouts near the yearly low. After the breakouts, prices take longer to reach the ultimate high in a bull market, giving

them a better chance of a larger gain. Pick tall cups. Choose cups with short handles and higher left cup lips. Cups with U-shaped volume perform best.

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4. HEAD AND SHOULDERS BOTTOMS

MEANING

As a major reversal pattern, the Head and Shoulders Bottom forms after a downtrend, and its completion marks a change in trend. The pattern contains three successive troughs with the middle trough (head) being the deepest and the two outside troughs (shoulders) being shallower. Ideally, the two shoulders would be equal in height and width. The reaction highs in the middle of the pattern can be connected to form resistance, or a neckline.

The Head and Shoulders Bottom, sometimes referred to as an Inverse Head and Shoulders, is a pattern that shares many common characteristics with its comparable partner, but relies more heavily on volume patterns for confirmation.

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A three-trough formation with the centre trough below the other two. It looks like a head and shoulders bust flipped upside down. The three troughs and two minor rises should appear well defined.

The left and right shoulders should be opposite one another about the head, there are wide variations, but the formation is noticeably symmetrical about the head.

A line that connects the rise between the two shoulders. A neckline pierce signals an upward breakout. For up-slopping neckline, use the highest high in the pattern as the breakout price.

Highest on the left shoulder or head and diminished on the right shoulder.

The breakout is upward, usually on high volume that powers price upward. A low volume breakout is not an indicator of an impending failure.

Compute the formation height by subtracting the value of the lowest low reached in the head from the neckline, measured vertically. Add the difference to the point where prices pierce the neckline. The result is the target price to which prices will rise, at a minimum. For up-sloping necklines, substitute the rise between the head and right shoulder for the neckline breakout price.

Place a stop-loss order below the lower of the two shoulders. Often, prices drop to the shoulders lows before meeting support. Raise the stop as price climb.

Wait for the price to close above the neckline or highest high. Make sure head and shoulder bottom pattern is present.

IMPORTANT NOTES

Trade this pattern in a bull market for the highest average rise and to select pattern. Patterns in a bull market show the lowest failure rates. In a bull market buy HSBs near the yearly high. In bear market patterns near the

yearly low do best. Throwbacks hurt performance in a bull market. Select patterns with breakout day gaps. Expect the price trend to weaken a month after the breakout in a bear market, 6 to 8

weeks in a bull market. Tall or narrow patterns perform better than short or wide ones. Patterns that are both

tall and narrow do best. Select HSBs with a falling volume trend. Select patterns with light breakout volume in a bull market and heavy breakout

volume in a bear market. Patterns with higher left shoulder lows tend to outperform.

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5. HORN BOTTOMS

MEANING

Find horns on the weekly charts and flip to the daily or intraday charts for trading. The twin downward spikes should be longer than most spikes over the prior year. The longer the spikes (the taller the pattern) the better the post-breakout performance, on average. Look for clear visibility surrounding the spikes, meaning that the bottom should look like a price reversal not part of a congestion area. The spikes should be well below the surround price landscape. Horn bottoms often appear near the end of declines but sometimes show at the bottom of retraces in uptrends. The pattern confirms as a valid one when price closes above the highest high in the 3-bar pattern.

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Two downward price spikes separated by a week on the weekly chart.

Use the weekly chart and locate two downward price spikes separated by a week. The two spikes should be longer than similar spikes over the prior year and be well below the low of the centre week. The formation should look like an inverted horn. Abnormally long spikes result in better performance.

In a downtrend, the horn lows should be well below the surrounding lows, especially to the left of the formation for several weeks (or months). Usually, horns appear near the end of declines but also happen on retraces in uptrends (where visibility is less clear to the left).

The pattern becomes a valid horn bottom when price closes above the highest high in the 3-week pattern.

Subtract the highest high from the lowest low and add it to the highest high. We get target price.

Price should climb smartly and weekly low should not be near the horn low. The week after the right horn is key.

Horns may appear near the end of uptrend also. Watch for trend to change.

Horns will form near the end of downtrend. Price might continue to drift down and head upward.

Place a stop $1 below the lowest horn to reduce the chance that a retest of the low will stop you out.

IMPORTANT NOTES To be sure you have the pattern correct. Horns have above average rises with bear markets showing steeper, shorter climb. For small gains, horns in bear market have a lower failure rate. For larger gains over

10% and bull markets outperform. Throwbacks hurt performance. Expect price weakness a month after the breakout in a bear market. Choose patterns with heavy breakout volume. Horns with a large price difference or a lower left spike do well. Inside week horns perform best.

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6. ROUNDING BOTTOMS

MEANING

A chart pattern used in technical analysis, which is identified by a series of price movements that, when graphed, form the shape of a "U". Rounding bottoms are found at the end of extended downward trends and signify a reversal in long-term price movements.

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A saucer like concave price turn. Use weekly scale to identify these and it works well with daily scale as well.

Price trend curves gently usually after an upward price trend. Connect the weekly low prices to visually construct a saucer or bowl shape in your mind.

Volume trend sometimes moves like price trend appearing as a bowl but more often dome shaped.

Subtract the lowest low from the right saucer lip. Add the difference to the value of the right saucer lip to get the target price. The measure rule only works about half of the time, so be conservative and lower your target.

Wait for prices to rise (close) above the left or right saucer lip before buying, whichever is at lower price.

Many times price will reach the level of left saucer lip then dip to form a handle. Buy when prices rise above the right saucer lip.

IMPORTANT NOTES

Trade rounding bottoms in a bull market. Continuations in bull market perform substantially better than reversals. Patterns in a bull market have lower failure rates. Select patterns with breakouts near the yearly high. Expect to take profits 4 to 5 weeks into the trade. Select tall patterns or wide patterns. Choose patterns with a rising volume trend and u-shape. Trade patterns with heavy breakout volume in a bull market. Pick rounding bottoms with the left rim higher than the right in a bull market.

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INTERPRETATION AND

ANALYSIS

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CONCLUSION

AND

SUGGESTIONS

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CONCLUSION

Usually the top 10 holdings of mutual fund give major returns because they weight about 40-

50% of corpus of the fund.

Top 10 holdings generally don’t vary much within a year for large cap funds but they may

vary for mid cap and small cap funds.

By choosing to invest directly in mutual fund top 10 holdings, investor has to update his

portfolio on monthly basis.

Other than 3-5% savings on AM fees and brokerage charges, investor earns about 11-12%

extra return by investing directly into top holdings in case of large cap funds and for small and

midcap it may go up to 40-50%.

Sectorial analysis is done for top holdings sectors which tell about current and future

outlook of a particular sector.

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REFERENCES

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www.amanchughca.com/

http://www.marketconnected.com/ca-shitu-maheshwari/

www.marketconnected.com/significance-of-brand-marketconnected/

www.marketconnected.com/services/

www.brownconsultancy.com/mffaq-schemetypes.aspx

https://en.m.wikipedia.org/wiki/Sharpe_ratio

https://en.m.wikipedia.org/wiki/Treynor_ratio

www.investopedia.com/ask/answers/10/mutual-funds-advantages-disadvantages.asp

https://www.axismf.com/Downloads.aspx?Value=factsheet#SchemeInformationDocs

http://www.itsallaboutmoney.com/equities/mutual-funds/types-of-mutual-fund-schemes/

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