Final Report Chapter 1-5.docx

INTRODUCTION

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1.1 TECHNICIAL ANALYSIS Technical Analysis is very important to form a view on the likely trend of the overall market, and it is helpful to have some idea of how to go about choosing perfect individual stocks. Naturally, all investors would like their investments to appreciate promptly ion their price, but stocks, which may satisfy this wish, tend to escorted by substantively greater amount of risk then many of the investors are normally willing to accept. However, it is very imperative to understand that investors can be very conscious when it comes to stock ownership.

Technical analysis is the use of numerical series produced by the market activity, such as prices and volume, to forecast a future price trends. The methods applied to any market with a comprehensive price history. Primarily, but not completely, Technical analysis is conducted by a studying charts of past price program. They are using

Many different techniques and tools in

technical analysis, but they all rely on the supposition that price pattern and trend exist in a market, and they can be identified and exploited.

Technical analysis is charting is measured to be as a supplement to Fundamental Analysis of a securities. As an approach to investment analysis, technical analysis is radically different from fundamental analysis. While the fundamental analysis believe that the market is 90% in mental and 10% in logical. Technical analysis can be applied to a any market with a complete price history. The premises of technical analysis were derived from observed of a financial markets over hundreds of years. Perhaps the oldest branch of a technical analysis is the use of Candlestick techniques by Japanese buyers at least as early as the 18th century, and still very popular today.

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DOW THEORY Dow Theory was formulated from a series of Wall Street Journal articles authored by Charles H. Dow from 1900 till the time of his death in 1902. These editorials reflected Dow's politics on how the stock market behaved and how the market could be used to measure the health of the business environment. Due to his death, Dow never published his whole theory on the markets, but several followers and associates have announced works that have expanded on the editorials. Some of the most important gifts to the Dow Theory were William P. Hamilton's "The Stock Market Barometer" (1922), Robert Rhea's "The Dow Theory" (1932), E. George Schaefer's "How I was Aided More Than 10,000 Investors To Profit In Stocks" (1960) and Richard Russell's "The Dow Theory Today" (1961). Dow believed that the stock market as a whole was consistent measure of the overall business conditions within the economy and that by examining the overall market, one could accurate gauge of those conditions and identify the direction of major market trends and the likely direction of a individual stocks. Dow used his 1st theory to create the Dow Jones Manufacturing Index and the Dow Jones Rail Index (now Transportation Index), which were originally collected by the Dow for The Wall Street Journal. Dow created these indexes because he felt they were an precise reflection of the business conditions within the economy because they covered by b two major economic segments: industrial and rail (transportation). While these indexes have changed over the last 100 years, the theory still these applies to current market indexes. Technical analysis is appropriate to the stocks, indices, commodities, futures, or any tradable instrument where the price is manipulated by the forces of the supply and demand. Price refers to a any combination of the open, high, low or closes for a given security over a exact time frame. The time frame can be founded on the intraday (1- minute, 5- minutes, 10-minutes, 15-minutes, 30-minutes, or hourly), daily, weekly, or monthly price data and last of few hours or many years. In addition, some technical analysts contain volume or open interest figures with their study of price action. Economist have traditionally been skeptical of the volumes of the technical analysis, affirming theory of an efficient markets that holds no plan should allow investors and trade to make unusual returns except by taking excessive risk.

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Security Analysis: The analysis of numerous tradable of financial instruments is called security analysis. Security analysis helps a financial expert or a security analyst to regulate the value of assets in a portfolio. Security analysis is a technique which helps to calculate the value of various assets and also find out the effect of a various market variations on the value of tradable financial instruments (also called securities). Security Analysis is broadly classified into three categories: 

Fundamental Analysis



Technical Analysis



Quantitative Analysis.

Fundamental Analysis: Fundamental Analysis refers to the calculation of a securities with the help of certain fundamental business issues such as a financial statement, current interest rates as well as competitor's products and financial market.

Financial statements are nothing but proofs or written records of a various financial transactions of an investor or company. Financial statements are used by the financial experts to study and analyze the profits, liabilities, assets of an organization or an individual.

Technical analysis: Technical analysis refers to the analysis of securities and assistances the finance professionals to forecast the price trends through the past price trends and market data. Technical analysis takes a very different tactics; it doesn't care one bit about the "value" of a company or a commodity. Technicians (sometimes called chartists) are only absorbed in the price movements in the market.

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1.2 POINTERS OF TECHNICAL ANALYSIS: 

Bollinger Band Width



Moving Average Convergence and Divergence



Rate of Change



Relative Strength Index

BOLLINGER BAND WIDTH: Bollinger Bands is a technical analysis tool that designed by John Bollinger in the 1980s as well as a term trademarked by him in 2011. Having progressed from the concept of trading bands, Bollinger Bands and the connected pointers % band bandwidth can be used to measure the "highness" or "lowness" of the price relative to the earlier trades. Bollinger Bands are a volatility pointer similar to the Kellner channel. Bollinger Bands consist of: 

an N-period moving average (MA)



an upper band at K times an N-period standard deviation above the moving average (MA + Kσ)



a lower band at K times an N-period standard deviation below the moving average (MA − Kσ)

Typical values for the N and K are 20 and 2, respectively. The default choice for the average is a very simple moving average, but other types of averages can be employed as needed. Exponential moving averages is a usual second choice. Usually the same period is used for both the middle band and the calculation of the standard deviation.

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MOVING AVERAGE CONVERGENCE AND DIVERGENCE:

MACD, short for moving average convergence/divergence, is a trading pointer used in technical analysis of a stock prices, created by Gerald Appel in the late 1970s. It is supposed to reveal changes in the strength, direction, momentum, and duration of a trend in a stock's price. The MACD pointer (or "oscillator") is a collection of three-time series computed from historical price data, most often the closing price. These three series are: the MACD series proper, the "signal" or "average" series, and the "divergence" series which is the modification between the two. The MACD series is the difference between a "fast" (short period) exponential moving average (EMA), and a "slow" (longer period) EMA of the price series. The average series is an EMA of the MACD series itself. The MACD pointer thus depends on three-time parameters, namely the time numbers of the three EMAs. The notation "MACD (a, b, c)" usually denotes the pointer where the MACD series is the difference of EMAs with distinguishing times a and b, and the average series is an EMA of the MACD series with characteristic time c. These parameters are usually measured in days. The most commonly used values are 12, 26, and 9 days, that is, MACD (12, 26, 9). As true with most of the technical pointers, MACD also finds its period settings from the old days when technical analysis used to be mainly based on the daily charts. The reason was the lack of the current trading platforms which show the altering prices every moment. As the working week used to be 6-days, the period settings of (12, 26, 9) represent 2 weeks, 1 month and one and a half week. Now when the trading weeks have only 5 days, possibilities of changing the period settings cannot be overruled. However, it is always improved to stick to the period settings which are used by the majority of traders as the buying and selling choices based on the standard settings further push the prices in that direction.

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RATE OF CHANGE: The Rate of Change (ROC) pointer measures the percentage change of the current price as compared to the price a certain number of periods ago. The ROC pointer might be used to confirm price moves or detect divergences; it might also be used as a guide for determining overbought and oversold conditions. The formula for Rate of Change is expressed below: [(Current Price / Price n periods ago) - 1] x 100 Generally, the Rate of Change is computed based on 14-periods for input n, but of course can be altered to any trader preferred period.

RELATIVE STRENGTH INDEX: Trading Systems, and in Commodities magazine (now Futures magazine) in the June 1978.1.3 STATEMENT OF THE PROBLEM: The relative strength index (RSI) is a technical pointer used in the analysis of financial markets. It is intended to chart the present and historical strength or weakness of a stock or market created on the closing prices of a recent trading period. The pointer should not be puzzled with relative strength. The RSI is classified as a momentum oscillator, measuring the velocity and magnitude of directional price movements. Momentum is the rate of the rise or fall in price. The RSI computes momentum as the ratio of higher closes to lower closes: stocks which have had more, or stronger positive changes have a higher RSI than stocks which have had more or greater negative changes. The RSI is most typically used on a 14-day timeframe, measured on a scale from 0 to 100, with high and low levels marked at 70 and 30, respectively. Shorter or longer timeframes are used for alternately shorter or longer viewpoints. More extreme high and low levels-80 and 20, or 90 and 10-occur less frequently but indicate stronger thrust. The relative strength index was developed by J. Welles Wilder and published in a 1978 book, New Concepts in Technical.

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1.3 STATEMENT OF THE PROBLEM: The above study is undertaken to equate the selected technical analysis tools available for forecasting and how they can be valuable for taking investment decisions. The study tries to capture the contradicting views of diversed tools used in technical analysis for forecasting the stock prices.

1.4 SCOPE THE STUDY: This study mainly attentions on investment decisions by predicting future stock price movements through the use of Technical analysis and helps the investor in making investment decision and analyze the variation of stock price movement in security market. This Study is related to stock price and volume data of 5 selected banks throughout the period of 6 months. (April-September).

1.5 THE STOCKS WHICH WERE SELECTED ARE AS FOLLOWS: 

AXIS BANK LTD.



HDFC BANK LTD



ICICI BANK LTD.



KOTAK MAHINDRA BANK.



YES BANK LTD.

1.6 OBJECTIVE OF THE STUDY: 

To examine the support and resistance stages of individual stocks with the assistance of past value to make entry and exit.



To analyze tools of technical analysis that can be used in forecasting stock price.



To know how best we can use these analysis to meet the financial goals.

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RESEARCH DESIGN: For the study, 5 banking companies are selected from CNX Nifty.

1.7 METHODOLOGY: Research design: Descriptive research

Source of data: Secondary data 

Descriptive method of research will be working to describe the variables that influence the Stock price.



Secondary data, the data relating to Indian stock market is collected from NSE website.



The sample size will be past 9 month’s Stock price and past 9 month’s P/E Multiple.

PLAN OF ANALYSIS: 

Chi-square Test

The data collected will be tabulated and analyzed using different charts. Hypothesis will be verified using Chi-Square Test. Chi-Square statistics points out the requirement of Technical pointers on various fundamental factors under study.

HYPOTHESIS: 

H0: Stock prices given by technical pointers are independent of the price based on performance.



H1: Stock prices given by technical pointers are dependent of the price based on performance.

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TECHNICAL TOOLS USED FOR DATA ANALYSIS: 

Line charts



Candlestick Chart.



Chi-Square Test.

POINTERS OF THE STUDY:

Rate of change Pointer (ROC) Bollinger Band Width Moving average, convergence and

Relative strength index (RSI)

divergence.(MACD)

1.8 LIMITATIONS OF THE STUDY: 

The analysis is focused on five companies on same sector.



The study is only for academic purpose.



Study restricted to a smaller sample size because of lack of time and resources.

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CHAPTER 1 LITERATURE REVIEW

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Review of Previous literature:

TECHNICAL ANALYSIS IN SELECT STOCKS OF BANKS. “Technical Analysis is the forecasting of future financial price actions based on an examination of past price movements. Technical analysis does not result in absolute calculations about the future with regard to forecasting. Instead, technical analysis can help investors anticipate what is "possible" to ensue to prices over time. Technical analysis is study of predicting prices of securities for future the main aim of technical analysis is to generate returns by charter person decide when to enter and when to exit in the security.” (C. Boobalan) Technical Analysis is of the stock market relating to factors affecting the supply and demand of stocks. It helps in accepting the intrinsic value of shares and knowing whether the shares are undervalued or overvalued. The stock market pointers would help the investor to classify major market turning points. This is a significant technical analysis of particular companies which helps to understand the price behavior of the shares, the signals given by them and the major turning points of the market price. This paper is aims at carrying out Technical Analysis of the securities of the particular companies and to assist investment conclusions in this Indian Market. The study of the capital market of a country in terms of a wide range of macro-economic and financial variables has been the area below conversation of many researches during the last two decades. Empirical studies make known that when financial deregulation arises to pass, the stock markets of a country become more delicate to both domestic and peripheral factors and one of these factors is the Technical Pointer.

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LITERATURE REVIEW: Technical analysis claims the capability to forecast the future trend of the asset prices through study of past market data. Many studies have been conducted on technical analysis applicability on numerous financial products. Goldberg and Schulmeister (1988) in their study inspects the profitability of technical analysis in the foreign exchange market and stock market during 1970s and 1980s. Its purpose is to test whether additional profits are made using technical analysis tools. One major results of this learning is that all of the technical rules examined are significantly more profitable with hourly data than they are with daily data. Neely, Paul and Dittmar (1997) in their study use technical analysis rules, to find strong proof of economically significant out of sample additional returns to those rules for each of six exchanges rated over period 1981-1995. This report also tries to find out price movement patterns that are not captured by arithmetical models and find out profitability against the risk using bootstrap methodology in foreign exchange market. Bessembinder and Chan (1998) in their study inspect and provide simple forms of technical analysis holds significant forecast power for U.S. equity index returns. Lo, Mamaysky and Wang (2000) intheir study highlight the presence of geometric figures in historical price charts is often in the eyes of the beholder. Park and Irwin (2004) in their research work assessments the profitability of technical analysis. The report comprehensively reviews survey, theoretical and empirical studies concerning technical trading strategies. The survey literature designates that technical analysis has been widely used by market participants in futures markets and foreign exchange markets, and that about 30% to 40% of practitioners appear to believe that technical analysis is an important factor in determining price movement at shorter time horizons up to 6 months. Larsen (2010) tried to forecast the direction of future stock prices. And developed stock price prediction model and used a novel two-layer thinking approach that employs domain knowledge from technical analysis in the first layer of reasoning to guide a second layer of reasoning based on machine learning. Based on a number of portfolio simulations with trade signals produced by the model. Chitra (2011). The objective of this project is to make a study on the technical analysis on selected stocks of energy sector and understand on whether to buy or sell them by using systems. This in turn would help investors to identify the current trend and risks involved with the scrip on par with market. The stock market pointers would help the investor to identify major market turning points. This is a significance of technical analysis of particular 13

companies which helps to understand the price behavior of the shares, the signals given by them and the major rotating points of the market price. For Technical Analysis, the everyday share price movements of the selected companies in NSE were absorbed for the 3 years i.e. 01-April-2007 to 31-March-2010. The finishing prices of share prices were taken and the upcoming price movement was analyzed using various tools like beta, RSI, Moving averages.

C. L. OSLER: has published in-house papers of the India Bulls on March , 2001 “Microstructural Explanation For The Success of Two Familiar Predictions From Technical Analysis”: provides a trends tend to be inverted at expectable support and resistance levels, and trends gain momentum once predictable support and fighting levels are crossed. Review Of Literature C. L. Osler (2001) provides a micro mechanical explanation for the success of two aware predictions from technical analysis: (1) trends tend to be reversed at expectable support and resistance levels, and (2) trends gain momentum once expectable support and resistance levels are crossed. There are marked changes between the clustering patterns of stop-loss and take-profit orders, and between the patterns of stop-loss buy and stop-loss sell orders. These differences explain the success of the two expectations. CESARI, R. and D. CREMONINI, Gupta, (2003) examined the observations about the main foundations of his worries concerning the stock market. A sample comprise of middle-class household‟s spread over 21 sates/union territories. The study reveals that the leading cause of worry for household investors is deceitful company management and in the second place is too much volatility and in the third place is too much price influence. Ravindra and Wang (2006) examine the association of trading volume to stock indices in Asian markets. Stock market indices from six developing markets in Asia are analysed over the 34 month period ending in October 2005. In the South Korean market, the causality extends from the stock indices to trading volume while the connection is the conflicting in the Taiwanese market. Subrata Kumar Mitra (2002) has identified persuasive reasons to believe the relationship between stock prices and determinants are compound nonlinear process. The analysis was achieved by using moving average and filters combination of stock prices of ACC, Reliance‟s industries, State bank of India, TISCO and BSE index. He found the productivity changes widely with changes of periods and the two methods are giving lucrative results that help us to believe that making profits in stock market is not just a matter of chance and there is need of analytical and systematic approaches to making profits in cumulative basis. Parvez Ahmed, Kristine Beck, Elizabeth Goldreyer (2005) 14

studies the efficacy of using moving average technical trading rules with currencies of emerging economies. If technical trading rules are successful, they can become a risk.

WILSON AND SHARDA studied prediction firm bankruptcy using neural networks and classical multiple discriminant analysis, where neural networks performed meaningfully better than multiple discriminant analysis (Wilson & Sharda, 1994). Min and Lee were doing prediction of bankruptcy using machine learning. They evaluated methods based on SVM, multiple discriminant analysis, logistic reversion analysis, and three-layer fully connected back-propagation neural networks. They results indicated that support vector machines outperformed outer approaches (Min & Lee, 2005). Similarly, Tam was predicting bank bankruptcy consuming neural networks (Tam, 1991). Lee was trying to predict credit rating of a company using support vector machines. They used various financial pointer and ratios such as interest coverage ratio, ordinary income to total assets, Net income to stakeholders’ equity, current liabilities ratio, etc. and achieved accuracy of around 60% (Lee, 2007). Predicting credit rating of the companies were also learnt using neural networks achieving accuracy between 75% and 80% for US and Taiwan markets (Huang, et al., 2004). Phua et al. performed a study predicting movement of major five stock indexes: DAX, DJIA, FTSE-100, HSI and NASDAQ. They used neural networks and they were able to predict the sign of price movement with accuracy higher than 60% by using component stocks as input for the prediction (Phua, et al., 2003). SVM was applied to predict the direction of time series. Kim (Kim, 2003) trained SVM on daily time series from of Korean stock market. He reported a hit rate of around 56%. Huang et al did a tried to use support vector machineries in order to predict weekly movement of Japanese NIKKEI 225 index. Their approach achieved 73% hit rate with SVM and 75% with combined model. Also SVM outperformed in their method backpropagation neural networks (Huang, et al., 2005). Schumaker and Chen examined the prediction that could be achieved by analysis of textual articles using SVM.

GITTMAN (2004, PP. 312) divided stock into two types, such as common stock and preferred stock. He also presented that dividends are the outcome of investment. So, common stocks are an ownership claim against primarily real or productive asset (Higgins, 1995), but he also said that if 15

the company prospers, stockholders are the chief beneficiaries, if it falters, they are the chief losers. Smith (1988) presented that stocks are one of the most well-liked forms of investment. People buy stocks for numerous reasons: some are interested in the long-term growth of their investment by buying low priced stock of a new company in the hope of substantially growth of share price over the next few years. Additional reason he suggested that in a well-established firm stockholders expect the stock growth will be stable over the long run. (Smith,1988). Stockholders expect dividend, but it is not assured (Gittman, 2004). Common stocks are hold by true owners of the business. Sometimes they are known as ‘residual owners’ as they receive whatever left after winding up of the company (Gittman, 2004; Higgins 1995). Another type of stock is known as publicly owned stock. Common stock owned by a broad group of unrelated investors or institutional investors is called as publicly owned stock. However, all common stock of a firm owned by a small group of investors is signified as closely owned stock. When all the stock is owned by a single person is known as privately owned stock. Due to the limit of number of share, stock can be confidential in to four types. Such as authorize share, outstanding share, treasury stock and issued stock (Gittman, 2004). Authorized shares represent the maximum number of shares a firm allows to issue. Outstanding shares are hold by public. Capital stock is repurchased by firm itself and it is no longer measured as outstanding share. Issued shared are the shares that have been put into circulation. Recently stock repurchase option is very popular as it is able to increase stock value by decreasing unresolved stock number (Port, 1976). Port also suggested that firms should avoid issuing stock to pay dividend as they slow down company growth. According to Short and Welsch (1990), Johns (1998) and Port (1976), a dividend is a usually distributed in cash form to stock holders of a corporation approved by the board of director. It may also include stock dividend or other forms of payment. A stock bonus represents a distribution of additional shares to common stockholders (Higgins, 1995).On the other hand, Ross et al. (2005) divided earnings into two parts; either it is retained or paid as dividend. Whereas Wild et al. (2001), Johns (1998) and Kieso et al. (2004) argued that retained earnings are the primary source of dividend distribution to the stockholder. Dividends are only cash payments regularly made by corporations to their stockholders (Johns, 1998). GUPTA: has published in-house journals of the India Bulls on 2003 “Fundamental Sources of His Worries Concerning the Stock Market”: A sample comprise of middle-class household’s spread over 21 sates/union territories. The study reveals that the foremost cause of worry for 16

household investors is fraudulent company management and in the second place is too much volatility and in the third place is too much price manipulation in market.

RAVINDRA AND WANG: has published in-house journals of the India Bulls on 2006 “The Relationship of Trading Volume to Stock Indices in Asian Markets”: Stock market indices from six developing markets in Asia are analyzed over the 34 month period ending in October 2005. In the South Korean market, the connection extends from the stock indices to trading volume while the causality is the opposite in the Taiwanese market. KAVAJECZ AND ODDERS-WHITE (2004) show that support and resistance levels coincide with peaks in depth on the limit order book 1 and moving average estimates reveal information about the relative position of depth on the book. They also show that these relationships stem from technical rules locating complexity already in place on the limit order book. Practitioners’ reliance on technical analysis is well documented. Frankel and Froot (1990) noted that market professionals tend to include practical analysis in forecasting the market. The guiding principle of technical analysis is to identify and go along with the trend. When there is a trend, whether started by random or fundamental factors, technical methods will tend to produce signals in the same direction. This reinforces the original trend, especially when many investors rely on the technical pointers. Thus, even if the original trend were a random happening, the subsequent prediction made by the technical pointer could be self-fulfilling. This self-fulfilling nature leads to the formation of speculative bubbles (see, for example, Froot et al., 1992). BROCK, LAKONISHOK AND LEBARON: has given in his article on May, 1992 “Technical Analysis And The Abnormal Return”: They found that using trading instructions founded on technical analysis variables such as MACD, RSI, and moving regular outperform the buy and hold method significantly and they also have forecast power to the returns. Which determine the markettiming signal whether to buy or sell stocks at right time. This study is suggestive research. The descriptive method is used to study the price trend of fifteen stocks using MACD and RSI charting technique of technical analysis. The example method used in this research is simple random sampling. The fifteen companies are taken from the NSC quoted stocks where more than 9000

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companies were titled. This study has been complete for the calendar year Jan‟2013 to Feb‟2014. The Probability testing method is used by the researcher. FERNANDO FERNANDEZ –RODRIGUEZ: has given in his article on 1999 “Simple Forms of Technical Analysis Can Predict Stock Price Movement”: covering the market for a long period that outcomes provide strong support for profitability of those technical trading rules. By making use of bootstrap techniques, the returns obtained from these interchange rules are not consistent with several null models frequently used in finance. This paper analyses the profitability of moving average based trading rubrics in the Indian stock market using four stock index series. The study finds that most technical exchange rules are able to capture the direction of market movements reasonably well and give significant optimistic returns both in long and short positions. COOTER: has given in his article on July, 1962 “Stock Prices Not One Random Walk Model”: He found that the stock prices move at random when studied at one week interval. He tested forty five stocks from New York stock exchange chance of share by means of a mean square successive difference test. He concluded that there was not one random walk model on prediction of fourteenday interval. But in total the stock prices followed a random walk at weekly intervals. Forecasting is a difficult area of management. In this article, we deal with macro forecasting. The development and assessment of econometric methods for use in experiential finance and macroeconomics, with special emphasis on problems of prediction, is very important. Stock market analysis, also known as technical analysis, is the procedure of deriving patterns from price movement. In the literature, different methods have been applied in order to predict stock market returns. These methods can be grouped in four major categories: technical analysis methods, fundamental analysis methods, traditional time series forecasting, and machine studying methods. Technical analysts, known as chartists, attempt to forecast the market by tracing patterns that come from the study of charts that describe historic data of the market. This study examines the efficiency of technical analysis on US stocks for long range and shorter term. The use of technical tools: Preparation of the stock charts showing the value and volume of the stocks over the period of time and interpret charts.

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CHAPTER 2 INDUSTRY PROFILE

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HISTORY AND GROWTH OF STOCK MARKET: the trading list was wider in 1839, there were only half a dozen brokers standard by banks and merchants during 1840 and 1850. The 1850”s perceived a quick development of commercial enterprise and brokerage business interested many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton stock from United States of Europe was stopped; thus, the “Share Mania” in India begun. The number of brokers better to about 200 to 250. However, at the end of the American Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. By 1830’s business on corporate stocks and shares in Bank and Cotton reporters took place in Bombay. Though Civil War, in 1865, a calamitous slump began (for example, Bank of Bombay share which had shaded RS. 2850 could only be sold at RS 87). At the end of the American Civil War, the brokers who flourished out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the “Native Share and Stock Brokers’ Association” (which is alternatively known as “The Stock Exchange”). In 1895, the Stock Exchange got a premise in the same street and it was inaugurated in 1899. Thus the Stock Exchange at Bombay was united. The budgetary market in India at current is more cutting-edge than numerous different areas as it got to be sorted out as ahead of schedule as the nineteenth century with the securities occupations in Mumbai, Ahmadabad and Kolkata. In the Mid 1960s, the quantity of securities trades in India turned into eight - including Mumbai, Ahmadabad and Kolkata. Aside from these three trades, there was the Madras, Kanpur, Delhi, Bangalore and Pune trades also. Today there are 23 local securities trades in India. The Indian stock exchanges till date have

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stayed stagnant because of the unbending monetary controls. It was just in 1991, after the liberalization prepare that the India securities business sector saw a whirlwind of IPO's serially. The dispatch of the NSE (National Stock Exchange) and the OTCEI (Over the Counter Exchange of India) in the Mid 1990s aided in controlling a smooth and straightforward manifestation of securities exchanging. The administrative body for the Indian capital markets was the SEBI (Securities and Exchange Board of India). The capital markets in India experienced turbulence after which the SEBI became somewhat renowned. The business sector escape clauses must be connected by taking uncommon measures.

INDIAN FINANCIAL SYSTEM:

Financial System is a set of institutional arrangements through which financial excesses in the economy are Equipped from surplus units and transferred to deficit spenders. The institutional arrangements include all conditions and instruments governing the production, distribution, exchange and holding of financial assets or instruments of all kinds and the group as well as the manner of operations of financial markets and institutions of all images.

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DEFINITION OF STOCK EXCHANGE: The securities regulation act of 1956 defined stock exchange as “an Association, Organization, or an individual which is established for the persistence of assisting, regulating, and controlling business in buying, selling and dealing in securities.”

“Stock exchange” - means anybody of individuals, whether assimilated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities.

This comes under treasury sector, which provides service to stock brokers & traders to trade stocks, bonds and securities. Stock exchanges helps the companies to raise their fund. Therefore the companies needs to list themselves in the Stock Exchange and the shares will be issued which is known as an equity or an ordinary share and these shareholders are the real owners of the company the Board of Directors of the Company are elected out of these Equity Shareholders only.

STOCK EXCHANGE:

A stock trade is an component which gives "exchanging" offices for stock dealers and brokers, to exchange stocks and different securities. Stock Exchanges are a composed commercial center, either enterprise or shared association, where individuals from the association assemble to exchange organization stocks or different securities. Stock trades additionally give offices to the issue and recovery of securities and in addition other budgetary tools and capital occasions including the installment of pay and profits.

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The securities exchanged on a stock trade include: shares issued by organizations, unit trusts, subordinates, pooled undertaking items and bonds. To have the capacity to exchange a security on a certain stock trade, it must be recorded there. Typically there is a pivotal area in any event for record keeping, yet exchange is less and less associated to such a physical spot, as current markets are electronic systems, which provides for them favorable environments of rate and expense of exchanges. Exchange on a trade is by individuals just. The beginning offering of stocks and securities to financial authorities is by definition done in the essential business sector and consequent exchanging is carried out in the optional business.

A stock trade is regularly the most vital segment of a securities exchange. Supply and request in stock exchanges is strongminded by different components which, as in all free markets, influence the cost of stocks. There is typically no instinct to issue stock through the stock trade itself, nor must stock be accordingly exchanged on the trade. Such exchanging is said to be off trade or overthe-counter. This is the typical way that assistants and bonds are exchanged. Progressively, stock trades are a piece of a worldwide business for securities.

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THE TOP TEN OF GLOBAL EXCHANGES:

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LIST OF STOCK EXCHANGES IN INDIA:

Bombay Stock Exchange (BSE):

Established in 1875, BSE (formerly known as Bombay Stock Exchange Ltd.), is Asia's first & quickest Stock Exchange with the speed of 200 micro seconds and one of India's important exchange groups. Over the past 140 years, BSE has enabled the advance of the Indian corporate sector by providing it an capable capital-raising platform. Popularly known as BSE, the bourse was recognized as "The Native Share & Stock Brokers' Connection" in 1875. BSE is a corporatized and demutualized entity, with a broad shareholder-base which comprises two leading global exchanges, Deutsche Bourse and Singapore Exchange as strategic partners. BSE affords an efficient and apparent market for interchange in equity, debt instruments, derivatives, mutual funds. It also has a platform for exchange in equities of small-and-medium businesses.

BSE has won several awards and credits that acknowledge the work done and progress made like India Innovation Award for the Big Data implementation , ICICI Lombard & ET Now Risk Management BFSI Company 2013, SKOCH Order of Merit Certificate was awarded to BSE for E -Boss for qualifying amongst India's Best 2013, The Golden Peacock Global CSR Award for its initiatives in Corporate Social Responsibility, NASSCOM - CNBC-TV18's IT User Awards, 2010 in Financial Services category, Skoch Virtual Corporation 2010 Award in the BSE Star MF category and Accountability Award (CSR) by the World Council of Corporate Governance. Its recent milestones include the launching of BRICSMART indices derivatives, BSE-SME Exchange platform, S&P BSE GREENEX to promote investments in Green India.

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BSE continues to undertake several initiatives to build on its strong brand, legacy and market position to create value for its stakeholders and the financial system. At par with international standards, BSE Ltd. has been a pioneer in several areas over the decades and has many firsts and key achievements to its credit. BSE is the first exchange in India to: 

Launch a special platform for trading in SME securities



Introduce Equity Derivatives



Launch a Free Float Index - S&P BSE SENSEX



Launch Exchange Enabled Internet Trading Platform



Obtain ISO certification for a stock exchange



Exclusive facility for financial training – BSE Institute Ltd.



Launch its website in Hindi and regional languages



Host the popular opening-bell ceremony in Indian capital markets

Vision: "Emerge as the premier Indian stock exchange by establishing global benchmarks" The Bombay Stock Exchange Limited is the eldest stock exchange not only in the country, but also in Asia with a rich heritage of over 133 years of existence. In the early days, BSE was established as "The Native Share & Stock Brokers Association." It was recognized in the year 1875 and became the first stock exchange in the country to be acknowledged by the government. In 1956, BSE obtained a permanent recognition from the Government of India under the Securities Contracts (Regulation) Act, 1956.

The BSE On-line trading (BOLT): BSE On-line Trading (BOLT) facilitates on-line screen created trading in securities. BOLT is currently operating in 25,000 Trader Workstations located across over 359 cities in India.

26

National Stock Exchange (NSE):

The National Stock Exchange (NSE) is India's prominent stock exchange casing various cities and towns across the country. NSE was set up by leading institutions to offer a modern, fully programmed screen-based trading system with national reach. The Exchange has brought about supreme transparency, speed & efficiency, safety and market truth. It has set up facilities that assist as a model for the securities industry in terms of schemes, practices and procedures.

NSE has played a catalytic role in remodeling the Indian securities market in terms of microstructure, market performs and trading volumes. The market today uses state-of-art information technology to offer an efficient and transparent trading, clearing and settlement mechanism, and has observed several innovations in products & services viz. demutualization of stock exchange governance, screen based trading, compression of payment cycles, 27

dematerialization and electronic transfer of securities, securities lending and borrowing, professionalization of trading members, fine-tuned risk management systems, emergence of clearing corporations to assume counterparty risks, market of debt and derivative instruments and intensive use of information technology.

Purpose Committed to improve the financial well-being of people.

Vision: To continue to be a leader, establish global presence, facilitate the financial well-being of people.

Values NSE is committed to the following core values: 

Integrity



Customer focused culture



Trust, respect and care for the individual



Passion for excellence



Teamwork

28

STOCK MARKET TIMINGS: Trading on the parities segment takes place on all days of the week (except Saturdays and Sundays and holidays confirmed by the exchange in advance) The market timings of the equities segment are: market open : 9:00 am hours market close : 3:30 pm hours The closing session is held between 15.50 hours and 16.00 hours in NSE and 15.40 hours and 16.00 hours in BSE

Security Measures and Operational Features of BSE and NSE: The leading stock exchanges in India have developed itself to a large amount since its emergence. These stock exchanges aim at offering the investors and traders better transparency, genuine settlement cycle, honest deals and to reduce and solve investor grievances if any. Please Note: The researcher has not covered all the operational features of both the stock exchanges, but has taken into consideration only the ones which are significant to understand the thesis. The aim to describe these operational features is for better understanding of the working of stock exchanges. This is done for the purpose of easy understanding from the reader‘s point of view.

Rolling Settlement In a rolling settlement, each trading day is considered as a trading period and trades performed during the day are settled based on the net obligations for the day. At NSE, trades in rolling clearance are settled on a T+2 basis i.e. on the 2nd working day. For arriving at the settlement day all superseding holidays, which include bank holidays, NSE holidays, Saturdays and Sundays are excluded. Typically trades taking place on Monday are settled on Wednesday, Tuesday's craft settled on Thursday and so on.

29

Limited Physical Market Pursuant to the directive of SEBI to deliver an exit route for small investors holding physical shares in securities mandated for compulsory dematerialized settlement, the Exchange has afforded a facility for such trading in physical shares not exceeding 500 shares.

Commodity Exchanges: Multi Commodity Exchange of India Limited (MCX) National Commodity & Derivatives Exchange Limited (NCDEX) National Multi Commodity Exchange of India Limited (NMCE) Indian Commodity Exchange Limited (ICEX) ACE Derivatives & Commodity Exchange Limited (ACE) Universal Commodity Exchange Limited (UCX)

30

Settlement Cycle Settlement for trades is ended on a trade-for-trade basis and delivery obligations arise out of each trade. The settlement rotation for this segment is same as for the rolling settlement viz:

Activity

Day

Trading

Rolling Settlement Trading

T

Clearing

Custodial Confirmation

T+1 working days

Delivery Generation

T+1 working days

Securities and Funds pay in

T+2 working days

Securities and Funds pay out

T+2 working days

Assigning of shortages for close out

T+3 working days

Reporting and pick-up of bad delivery

T+4 working days

Close out of shortages

T+5 working days

Replacement of bad delivery

T+6 working days

Reporting of re-bad and pick-up

T+8 working days

Close out of re-bad delivery

T+9 working days

Settlement

Post Settlement

31

Brokerage and Other Transaction Costs Brokerage is negotiable. The Exchange has not arranged any minimum brokerage. The maximum brokerage is subject to a ceiling of 2.5 percent of the contract value. However, the average brokerage charged by the members to the clients is much lower.Typically there are different balances of brokerages for delivery transaction, trading transaction, etc.

The Stamp Duty on transfer of securities in carnal form is to be paid by the seller but in practice it is paid by the buyer while registering the shares in his name. In case of transfer of shares, the rate is 50 paisa for every Rs.100/- or part thereof on the basis of the amount of deliberation and that for transfer of debentures the rate of stamp duty varies from State to State, where the registered office of a Company allotting the debentures is located

Transfer of ownership Transfer of ownership of securities, if the same is not transported in demand form by the seller, is effected through a date printed transfer-deed which is signed by the buyer and seller. The duly executed transfer-deed along with the share certificate has to be lodged with the company for change in the ownership. A nominal duty becomes payable in the form of stamps to be affixed on the transfer-deeds. Transfer-deed remains valid for twelve months or the next book closure subsequent the stamped date whichever occurs later for transfer of stocks in the name of buyer. However, for delivery of shares in the market, transfer action is valid till book closure date of the company. Trading Time – MCX will open at 10 AM and will close at 11.30 PM. Within these times you can trade.



. 32

CHAPTER 3 COMPANY PROFILE

33

3.1 AXIS BANK LTD. AXIS Bank is one of the speediest growing banks in private sector. The Bank operates in four segments, namely treasury, retail banking, corporate/ wholesale banking and other banking business. The treasury operations include investments in independent and corporate debt, equity and mutual funds, trading operations, derivative trading and foreign exchange operations on the account, and for customers and central funding. Retail banking contains lending to individuals/ small businesses subject to the orientation, product and granularity criterion. It also contains liability products, card services, Internet banking, automated teller machines (ATM) services, depository, financial advisory services, and non resident Indian (NRI) services. The corporate/ wholesale banking section includes corporate relationships not included under retail banking, corporate advisory services, placements and syndication, management of publics issue, project appraisals, capital market related services, and cash management services. The Banks registered office is situated at Ahmedabad and their Central Office is located at Mumbai. The Bank has a very wide-ranging network of more than 1042 branches (including 56 Service Branches/ CPCs as on June 30, 2010). The Bank has a network of over 4,474 ATMs providing 24 hrs a day banking suitability to their customers. This is one of the largest ATM networks in the country. The Bank has five wholly-owned companies namely Axis Securities and Sales Ltd, Axis Private Equity Ltd, Axis Trustee Services Ltd, Axis Asset Management Company Ltd and Axis Mutual Fund Trustee Ltd. Axis Bank was incorporated in the year 1993 with the name UTI Bank Ltd. The Bank was the first private banks to have started operations after the Government of India allowable new private banks to be established. The Bank was promoted jointly by the Administrator of the stated undertaking of the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd, The New India Declaration Company Ltd, The Oriental Insurance Company Ltd and United India Insurance Company Ltd. In the year 2001, the bank along with Global Trust Bank (GTB) had a merger proposal to create the largest private sector bank, but due to medias problems both the banks withdraw the merger proposal. In the year 2003, the Bank was given the official to handle Government transactions such as collection of Government taxes, to handle the spending related payments of Central Government Ministries and Departments and income payments on behalf of Civil and Non-civil Ministries such as defense, posts, telecom and railways. In December 20003, the Bank launched their merchant acquiring business. In the year 2005, the Bank raised $239.3 million through Global Depositary Receipts. They won the award Outstanding Achievement Award for the year 2005 from Indian Banks Association for IT Infrastructure, delivery competences and innovative solutions. In December 2005, the Bank set up Axis Securities and Sales Ltd (originally incorporated as UBL Sales Ltd) to market credit cards and retail asset products. In October 2006, they set up Axis Private Equity Ltd, primarily to carry on the happenings of managing equity investments and provide venture capital support to businesses.

34

3.2 HDFC BANK LTD. HDFC Bank Ltd is a major Indian financial services company based in Mumbai. The Bank is a publicly held banking company engaged in providing a wide range of banking and financial services counting commercial banking and treasury operations. The Bank at present has an enviable network of 2201 branches and 7110 ATMs feast in 996 cities across India. They also have one overseas wholesale banking branch in Bahrain, a branch in Hong Kong and two illustrative offices in UAE and Kenya. The Bank has two subsidiary companies, specifically HDFC Securities Ltd and HDB Financial Services Ltd. The Bank has three primary business segments, namely banking, wholesale banking and treasury. The retail banking segment assists retail customers through a branch network and other delivery channels. This segment raises deposits from customers and makes loans and provides other services with the help of professional product groups to such customers. The wholesale banking segment provides loans, non-fund facilities and transaction services to corporate, public sector units, government bodies, financial institutions and medium-scale enterprises. The treasury segment includes net interest earnings on investments portfolio of the Bank. The Banks ATM network can be retrieved by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders. The Banks shares are upper-class on the Bombay Stock Exchange Limited and The National Stock Exchange of India Ltd. The Banks American Depository Shares (ADS) are titled on the New York Stock Exchange (NYSE) and the Banks Global Depository Receipts (GDRs) are titled on Luxembourg Stock Exchange. HDFC Bank Ltd Was incorporated on August 30, 1994 by Housing Development Finance Corporation Ltd. In the year 1994, Housing Development Finance Corporation Ltd was between the first to receive an in principle approval from the Reserve Bank of India to set up a bank in the private sector, as part of the RBIs liberalization of the Indian Banking Industry. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. In the year 1996, the Bank was appointed as the payment bank by the NSCCL. In the year 1997, the launched retail investment advisory services. In the year 1998, they launched their first retail lending product, Loans against Shares. In the year 1999, the Bank launched online, real-time Net Banking. In February 2000, Times Bank Ltd, owned by Bennett, Coleman & Co. / Times Group amalgamated with the Bank Ltd. This was the first merger of two private banks in India. The Bank was the first Bank to launch an International Debit Card in association with VISA (Visa Electron). In the year 2001, they started their Credit Card business. Also, they became the first private sector bank to be official by the Central Board of Direct Taxes (CBDT) as well as the RBI to accept direct taxes. During the year, the Bank made a strategic tie-up with a Bangalore-based business solutions software designer, Tally Solutions Pvt Ltd for developing and offering products and services facilitating on-line accounting and banking services to SMEs. During the year 2001-02 the bank was titled on the New York Stock Exchange. Also, they made the association with LIC for providing online payment of insurance premium to the customers.

35

3.3 ICICI BANK LTD. ICICI Bank Ltd is a major banking and financial services organization in India. The Bank is the second largest bank in India and the largest private sector bank in India by market capitalization. They are a publicly held banking company betrothed in providing a wide range of banking and financial services including commercial banking and treasury operations. The Bank and their subsidiaries offers a wide range of banking and financial services including commercial banking, retail banking, project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, and treasury products and services. They offer through is a variety of delivery channels and through their specialised subsidiaries in the area of investment banking, life and non-life insurance, venture capital and asset management. The Bank has a network of 2,035 branches and about 5,518 ATMs in India and attendance in 18 countries. They have subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established divisions in Belgium and Germany. The Banks equity shares are titled in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and their American Depositary Receipts (ADRs) are titled on the New York Stock Exchange. The Banks is the first Indian Bank titled on New York Stock Exchange. ICICI Bank Ltd was combined in the year 1994 as a part of the ICICI group with the name ICICI Banking Corporation Ltd. The initial equity capital was 75.0% by ICICI and 25.0% by SCICI Ltd, a diversified finance and shipping finance lender of which ICICI owned 19.9% at December 1996. Pursuant to the merger of SCICI into ICICI, ICICI Bank became a wholly-owned subsidiary of ICICI. In September 10, 1999, the name of the Bank was changed from ICICI Banking Corporation Ltd to ICICI Bank Ltd In March 10, 2001, ICICI Bank acquired Bank of Madura, an old private sector bank, in an allstock merger. ICICI Ltd along with their wholly owned retail finance companies, namely ICICI Capital Services Ltd and ICICI Personal Financial Services Ltd amalgamated with the Bank with effect from May 3, 2002. In May 2003, the bank acquired the entire paid-up capital of Transamerica Apple Distribution Finance Pvt Ltd (now known as ICICI Distribution Finance Pvt Ltd) which principally engaged in financing in the two-wheeler segment. In September 12, 2003, the Bank incorporated ICICI Bank Canada as a 100% subsidiary company. In May 2005, the Bank obtained the entire paid-up capital of Investitsionno-Kreditny Bank, a Russian bank with their registered office in Balabanovo in the Kaluga region and a branch in Moscow. Thus, IKB became a subsidiary of Bank with effect from May 19, 2005. In August 2005, the Bank obtained additional 6% of the equity share capital of Prudential ICICI Asset Management Company Ltd and Prudential ICICI Trust Ltd from Prudential Corporation Holdings Ltd and thus these two businesses became the subsidiaries of the Bank. During the year 2006-07, ICICI Bank Canada incorporated ICICI Health Management Inc as a subsidiary company.

36

In April 2007, Sangli Bank Ltd merged with the Bank with effect from April 19, 2007. In 2007 June, the Bank entered into an agreement with networking solutions provider GTL Ltd to lease out their call centre facility at Mahape worth of around Rs 100 crore for a period of 25 years.

3.4 KOTAK MAHINDRA BANK Kotak Mahindra Bank Ltd is one of the fastest growing bank and among the most admired financial institutions in India. The Bank offers transaction banking, operates lending verticals, manages IPOs and provides working capital loans. They have one of the largest and most appreciated Wealth Management teams in India, providing the widest range of solutions to high net worth individuals, entrepreneurs, business families and employed professionals. The Bank has over 245 branches, a customer base of over 8 lakh and has spread all over India. The Bank offers complete financial solutions for immeasurable needs of all individual & nonindividual customers depending on the customers need - delivered through a state of the art technology platform. They also offer asset products like Mutual Funds, Life Insurance, retailing of gold coins and bars etc. Apart from Phone banking and Internet banking, they offer expedient banking facility through Mobile banking, SMS services, Nectar, Home banking and Bill Pay facility among others. The Depository services offered by the Bank allows the customers to hold equity shares, government securities, bonds and other securities in electronic or Demit forms. Their Salary 2 Wealth offering provides comprehensive administrative solutions for Corporates with features such as easy and automated web based salary upload process thereby eliminating the paper work involved in the process, a dedicated relationship manager to service the corporate account, customized promotions and tie - ups and many such unique features. The Bank offers wide-ranging business solutions for the business community that includes the Current Account, Trade Services, Cash Management Service and Credit Facilities. Their Extensive banking products offer business banking solutions for long-term savings and working capital needs, advice on mergers and acquisitions and equipment financing. The Bank addresses the entire range of financial needs of Non-Resident Indians. Their tie-up with the Overseas Indian Facilitation Centre (OIFC) as a strategic partner gives them a platform to share their comprehensive range of banking & investment products and services for Non Occupant Indians (NRIs) and Persons of Indian Origin (PIOs). The bank has overseas affiliates with offices in Mauritius, London, Dubai, Singapore, New York & San Francisco. The overseas subsidiaries are mainly involved in investment advisory and investment management of funds, Equity & Debt Trading, management of GDR/ FCCB issuances, broker & broker dealer activities and investments. Kotak Mahindra Bank Ltd was integrated in the year 1985 with the name Kotak Capital Management Finance Ltd. In April 8, 1986, the companys name was changed Kotak Mahindra Finance Ltd. They started bill disregarding activity. In the year 1987, they entered into let and hire purchase market. In the year 1990, they started car finance division and during next year, they started speculation banking division. Alsom they took over FICOM, one of Indias largest financial retail marketing networks. In the year 1994, the company created Kotak Mahindra International in Mauritius and opened an office in Dubai. They formed Kotak Mahindra (UK) formed with office in London. In the year 1996, the car finance business was hived off into a isolated company, namely Kotak Mahindra Primus Ltd and Ford Credit took a 40% stake in Kotak Mahindra Primus. In the year1998, they 37

made Kotak Mahindra Inc with office in New York. In the year 2001, Kotak Securities Ltd became a subsidiary company.

3.5 YES BANK LTD. Yes Bank Ltd is employed in providing a range of banking and financial services. The Bank operates in four segments: Treasury, Corporate / Wholesale Banking, Retail Banking and Other Banking Operations. The Treasury segment includes investments, all financial markets activities undertaken on behalf of the Banks customers, trading, preservation of reserve requirements and resource mobilization from other Banks and financial institutions. The Corporate / Wholesale Banking segment includes lending, deposit taking and other services offered to corporate customers. The Retail Banking segment includes lending, deposit taking and other services offered to retail customers. The Other Banking Operations segment includes para banking activities, such as third-party product circulation and merchant banking. Yes Bank Ltd was incorporated on November 21, 2003. The company was founded by Rana Kapoor. The Bank attained their certificate of commencement of business on January 21, 2004. In the year 2005, they forayed into retail banking with promotion of International Gold and Silver debit card in partnership with MasterCard International. In June 2005, they came out with the public issue and their shares were titled on the stock exchanges. In December 2005, the Bank bagged Corporate Dossier award from Economic Times. In the year 2006, the Bank expected Financial Express Awards for Indias Best Banks. In April 2007, they made a tie-up with the Agriculture Insurance Company of India (AIC). The Bank was ranked as the No 1 Emerging Markets Sustainable Bank of the Year-Asia at the FT/IFC Washington Maintainable Banking Awards, 2008 in London. The Bank was ranked as the No 1 Bank in the Business Today-KPMG Best Banks Annual Survey, 2008. During the year 2008-09, the Bank opened 50 new branches and 18 new off-site ATMs. During the year 2009-10, the Bank opened 33 new branches. They opened 64 Branches during the year 2010-11. As of March 31, 2011, they operated 214 branches across 164 cities in India, and approximately 250 automated teller machines (ATMs). At the beginning of Financial Year 2010-11, the Bank embarked on an ambitious journey into the next phase of growth and launched YES BANK - VERSION 2.0, Constructing the Best Quality Bank of the World in India. Version 2.0 is clearly the most stimulating phase in the life cycle of YES BANK with a vision of founding 750 branches, 3000 ATMs, 12,000 employees, Rs 125,000 Cr. Deposit base, Rs 100,000 Cr. Loan book and a Rs 150,000 Cr. Balance Sheet size by 2015.

38

CHAPTER 4 DATA ANALYSIS AND INTERPRETATION

39

4.1 AXIS BANK LTD. 4.1.1 BOLLINGER BAND WIDTH: It indicates Axis Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: Here the price touches the upper band in the month of October 2016 indicating the security over bought implying the sell signal. It touches the lower band in the month of November, December 2016 and January 2017 indicating buy signal.

40

4.1.2 MOVING AVERAGE CONVERGENCE AND DIVERGENCE: It indicates Axis Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: The Bull line crosses 0 in the month of July 2016 and October 2016, it indicates the selling signal to the investors. It shows the Buying signal in the month of October and November 2016.

41

4.1.3 RATE OF CHANGE : It indicates Axis Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: When the ROC line is above the ZERO line, the price is rising and when it is below the zero line the price is falling. During the month of September 2016, January and February 2017 we have the buy signal and during the month of October 2016 and November 2016 we have sell signal.

42

4.1.4 RELATIVE STRENGTH INDEX: It indicates Axis Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: When the RSI has crossed the 30 line from below to above and is rising, a buying signal is indicated. When it is crossed the 70 line from above to below and is falling, a sell signal is indicated. In the month of October 2016 and November 2016 it indicates the buying signal. In the month of August 2016, January and February 2017 it shows the sell signal.

43

4.2 HDFC BANK LTD. 4.2.1 BOLLINGER BAND WIDTH: It indicates HDFC Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: Here the price touches the upper band in the month of December 2016 and March 2017 indicating the security over bought implying the sell signal. It touches the lower band in the month of September, November 2016 and January 2017 and indicating buy signal.

44

4.2.2 MOVING AVERAGE CONVERGENCE AND DIVERGENCE: It indicates HDFC Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: The Bull line crosses 0 in the month of July, October and December 2016, it indicates the selling signal to the investors. It shows the Buying signal in the month of December 2016 and January 2017.

45

4.2.3 RATE OF CHANGE: It indicates HDFC Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: When the ROC line is above the ZERO line, the price is rising and when it is below the zero line the price is falling. During the month of February 2017and March 2017 we have the buy signal and during the month of December 2016 we have sell signal.

46

4.2.4 RELATIVE STRENGTH INDEX: It indicates HDFC Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: When the RSI has crossed the 30 line from below to above and is rising, a buying signal is indicated. When it is crossed the 70 line from above to below and is falling, a sell signal is indicated. In the month of October 2016 and December 2016 it indicates the buying signal. In the month of August 2016 and February 2017 it shows the sell signal.

47

4.3 ICICI BANK LTD. 4.3.1 BOLLINGER BAND WIDTH: It indicates ICICI Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: Here the price touches the upper band in the month of November 2016 and February 2017 indicating the security over bought implying the sell signal. It touches the lower band in the month of September and December 2016 and indicating buy signal.

48

4.3.2 MOVING AVERAGE CONVERGENCE AND DIVERGENCE: It indicates ICICI Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: The Bull line crosses 0 in the month of October, November 2016 and January 2017 it indicates the selling signal to the investors. It shows the Buying signal in the month of November 2016 and February 2017.

49

4.3.3 RATE OF CHANGE: It indicates ICICI Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: When the ROC line is above the ZERO line, the price is rising and when it is below the zero line the price is falling. During the month of July, October 2016 and February 2017 we have the buy signal and during the month of August and December 2016 we have sell signal.

50

4.3.4 RELATIVE STRENGTH INDEX: It indicates ICICI Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: When the RSI has crossed the 30 line from below to above and is rising, a buying signal is indicated. When it is crossed the 70 line from above to below and is falling, a sell signal is indicated. In the month of September, November 2016 and February 2017 it indicates the buying signal. In the month of October 2016, December 2016 and March 2017 it shows the sell signal.

51

4.4 KOTAK MAHINDRA BANK. 4.4.1 BOLLINGER BAND WIDTH: It indicates Kotak Mahindra Bank for the period July 2016 to March 2017.

INTERPRETATION: Here the price touches the upper band in the month of December 2016 and February 2017 indicating the security over bought implying the sell signal. It touches the lower band in the month of October 2016 and January 2017 and indicating buy signal.

52

4.4.2 MOVING AVERAGE CONVERGENCE AND DIVERGENCE: It indicates Kotak Mahindra Bank for the period July 2016 to March 2017.

INTERPRETATION: The Bull line crosses 0 in the month of July 2016, November 2016 and February 2017 it indicates the selling signal to the investors. It shows the Buying signal in the month of December 2016 and January 2017.

53

4.4.3 RATE OF CHANGE: It indicates Kotak Mahindra Bank for the period July 2016 to March 2017.

INTERPRETATION: When the ROC line is above the ZERO line, the price is rising and when it is below the zero line the price is falling. During the month of September, November 2016 and February 2017 we have the buy signal and during the month of December 2016 we have sell signal.

54

4.4.4 RELATIVE STRENGTH INDEX: It indicates Kotak Mahindra Bank for the period July 2016 to March 2017.

INTERPRETATION: When the RSI has crossed the 30 line from below to above and is rising, a buying signal is indicated. When it is crossed the 70 line from above to below and is falling, a sell signal is indicated. In the month of December 2016 and January 2017 it indicates the buying signal. In the month of September, November 2016 and March 2017 it shows the sell signal.

55

4.5 YES BANK LTD. 4.5.1 BOLLINGER BAND WIDTH: It indicates Yes Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: Here the price touches the upper band in the month of September 2016 and January 2017 indicating the security over bought implying the sell signal. It touches the lower band in the month of November 2016 and March 2017 and indicating buy signal.

56

4.5.2 MOVING AVERAGE CONVERGENCE AND DIVERGENCE: It indicates Yes Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: The Bull line crosses 0 in the month of September 2016 and January 2017 it indicates the selling signal to the investors. It shows the Buying signal in the month of December 2016.

57

4.5.3 RATE OF CHANGE: It indicates Yes Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: When the ROC line is above the ZERO line, the price is rising and when it is below the zero line the price is falling. During the month of August 2016 and January 2017 we have the buy signal and during the month of September 2016 we have sell signal.

58

4.5.4 RELATIVE STRENGTH INDEX: It indicates Yes Bank Ltd for the period July 2016 to March 2017.

INTERPRETATION: When the RSI has crossed the 30 line from below to above and is rising, a buying signal is indicated. When it is crossed the 70 line from above to below and is falling, a sell signal is indicated. In the month of September, December 2016 it indicates the buying signal. In the month of August 2016, January and March 2017 it shows the sell signal.

59

4.6 HYPOTHESIS TESTING: 

H0: Stock prices given by technical pointers are independent of the price based on performance.



H1: Stock prices given by technical pointers are dependent of the price based on performance.

Chi-Square Tests Value

df

Asymp. Sig. (2-sided)

Pearson Chi-Square

27.337a

16

.038

Likelihood Ratio

28.537

16

.027

2.897

1

.089

Linear-by-Linear Association N of Valid Cases

30

The above table suggests that the chi-square test value is 27.337, p value 0.038 with the sample size 30. The level of significance is 0.05. The Chi-Square value is greater than the level of significance and the p value is less than the level of significance.

INTERPRETATION: From the above table we can conclude that as the p value (0.038) is less than the level of significance (0.05) we reject null hypothesis (Ho) and accept the alternative hypothesis (H1).

60

CHAPTER 5 FINDINGS, CONCLUSION AND SUGGESTIONS

61

FINDINGS AND SUGGESTIONS The study focused on top 5 companies that are chosen by market capitalization. Even though many different charting methods are available, one method is not necessarily better than the other. The data may be the same, but each method will provide its own unique interpretation, with its own benefits and drawbacks. The choice of charting methods, how to use will depend on personal preference and trading or investing styles. Once you have chosen a particular charting methodology, it is probably best to stick with it and learn how best to read the signals. Switching back and forth may source confusion and undermine the focus of your analysis.

5.1 AXIS BANK LTD. Technical Pointer

Buy Signal

Sell Signal

Bollinger Band Width

November, December 2016 and January 2017 October and November 2016

October 2016

MACD ROC

July and October 2016

September 2016, January and February 2017 October and November 2016

October and November 2016

Technical Pointer

Buy Signal

Sell Signal

Bollinger Band Width

September, November 2016 and January 2017 December 2016 and January 2017 October and November 2016

December 2016 and March 2017 October and December 2016

RSI

August 2016, January and February 2017

5.2 HDFC BANK LTD.

MACD ROC RSI

October 2016 and December 2016

62

September 2016, February 2017 and March 2017 September 2016 and January 2017

5.3 ICICI BANK LTD. Technical Pointer Bollinger Band Width MACD ROC RSI

Buy Signal

Sell Signal

September and December November 2016 and February 2016 2017 November 2016 and February October, November 2016 and 2017 January 2017 July, October 2016 and August and December 2016 February 2017 September, November 2016 October 2016, December and February 2017 2016 and March 2017

5.4 KOTAK MAHINDRA BANK. Technical Pointer

Buy Signal

Sell Signal

Bollinger Band Width

October 2016 and January 2017 December 2016 and January 2017 September, November 2016 and February 2017 December 2016 and January 2017

December 2016 and February 2017 July, November 2016 and February 2017 December 2016

Technical Pointer

Buy Signal

Sell Signal

Bollinger Band Width

November 2016 and March 2017 December 2016

September 2016 and January 2017 September 2016 and January 2017 September 2016

MACD ROC RSI

September, November 2016 and March 2017

5.5 YES BANK LTD.

MACD ROC RSI

August 2016 and January 2017 September, December 2016

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August 2016, January and March 2017

INTERPRETATION: The above table helps to know the Buy signal and sell signal of various stocks by using various technical pointers.

SUGGESTIONS Technical analysis will improve the investment decision. 

Technical analysis is simple and more reliable because the information required for technical analysis is easily available.



Investor should have knowledge concerning the market terms so that they can take maximum return from maximum investment.



A trader who is willing to enter into a new industry, has to buy stocks after doing careful study of projections and charts of the stock.



Even though technical analysis is enough for making decision in stock market, simultaneous usage of both fundamental and technical analysis will reduce errors in forecasting future prices.

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CONCLUSION 

Technical analysis is a useful methods in guiding investment decisions. In light of our study on five companies, we have seen how technical analysis can be used to forecast the possible futures swings of stock prices. After examining the companies, the following conclusion was drawn.



According to RSI as the Gain increases, there is increase in the RSI value, which signifies that there is increase in the share price. This states to the investor that it is a strong sell signal. Whenever there is decrease in the share price value, RSI value decreases which indicates the investor that it is a strong buy signal. In general, we can complete from the result that technical pointers can play useful role in the timing stock market entry and exit. By applying technical pointers brokers or investors enjoy substantial profit. Technical analysis cannot be answer for the questions faced by analyst. It has to be in combination with fundamental analysis to have maximum effect.



By studying 5 private banking sectors, it can be specified that technical analysis does not provide 100% accuracy to the investor. As the stock prices are dynamic in nature, combination of Fundamental analysis and technical analysis will increases the percentage of accuracy and thus giving an hint to the investor to invest in that stock which will yield him good returns.

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REFERENCES  Basaltoa N, Bellottib R, De Carlob F, Facchib P, Pascazio S (2005). Clustering stock market companies via chaotic map synchronization, Physica A. 

Chi-Lin L, Ta-Cheng C (2009). A study of applying data mining approach to the information disclosure for Taiwan’s stock market investors, Expert Systems with Applications.

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David E, Suraphan T (2005). The use of data mining and neural networks for forecasting stock market returns, Expert Systems with Applications.

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Hsiao-Fan W, Ching-Yi K (2004). Factor Analysis in Data Mining, Computers and Mathematics with Applications.

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Jar-Long W, Shu-Hui C (2006). Stock market trading rule discovery using two-layer bias decision tree, Expert Systems with Applications.

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Akbani, R., Kwek, S. & Japkowicz, N., 2004. Applying support vector machines to imbalanced datasets. s.l., Springer, pp. 39-50.

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Barsky, R. B. & De Long, J. B., 1992. Why does the stock market fluctuate?, s.l.: National Bureau of Economic Research. Financial Times, 2014.

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Financial Times Lexicon. [Online] Available at: http://lexicon.ft.com/Term?term=marketcapitalisation [Accessed 16 2 2016].

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Ganganwar, V., 2012. An overview of classification algorithms for imbalanced datasets. International Journal of Emerging Technology and Advanced Engineering, 2(4), pp. 42-47. Graham, B., 1949. Intelligent Investor. s.l.:Harper.

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Hall, M. et al., 2009. The WEKA data mining software: an update. ACM SIGKDD explorations newsletter, 11(1), pp. 10-18.

 Hendershott, T. & Moulton, P. C., 2011. Automation, speed, and stock market quality: The NYSE's hybrid. Journal of Financial Markets, 14(4), pp. 568--604

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BIBLIOGRAPHY BOOKS: 

Prasanna Chandra, Investment Analysis & Portfolio Management. 3rd edition, 2008



Bodie & Kane, Securities Analysis & Portfolio Management. 6th edition, 2004



Donald E Fischer, Securities Analysis & Portfolio Management, 6th edition, 2001

JOURNALS, MAGAZINES AND NEWSPAPERS: 

Economics Times



Business Standard

WEBSITES 

www.moneycontrol.com



www.icharts.com

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www.nseindia.com



www.Stockcharts.com



www.rsec.com

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