SUMMER INTERNSHIP PROJECT ON TECHNICAL ANALYSIS WITH THE HELP OF CANDLESTICK CHART IN EQUITY MARKET. FOR PDF

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A SUMMER INTERNSHIP PROJECT ON TECHNICAL ANALYSIS WITH THE HELP OF CANDLESTICK CHART IN EQUITY MARKET. FOR SHARE KHAN LTD. BULDANA. DEPARTMENT OF BUSINESS ADMINISTRATION & RESEARCH, SHRI SANT GAJANAN MAHARAJ COLLEGE OF ENGINEERING, SHEGAON. UNDER THE GUIDANCE OF- PROF. S. M. MISHRA SUBMITTED BY-...

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SUMMER INTERNSHIP PROJECT ON TECHNICAL ANALYSIS WITH THE HELP OF CANDLESTICK CHART IN EQUITY MARKET. FOR SHARE KHAN LTD. BULDANA.

DEPARTMENT OF BUSINESS ADMINISTRATION & RESEARCH, SHRI SANT GAJANAN MAHARAJ COLLEGE OF ENGINEERING, SHEGAON. UNDER THE GUIDANCE OFPROF. S. M. MISHRA SUBMITTED BYVINOD G. KOLHE MBA-II (Batch 2012-14) SUBMITTED TO AMRAVATI UNIVERSITY IN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE MANAGEMENT OF BUSINESS ADMINISTRATION (MBA)

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DEDICATED TO

In The Lotus Feet Of !! SHREE SANT GAJANAN MAHARAJ!! & My Dearest Parents

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ACKNOWLEDGEMENT It is great pleasure for me to acknowledge the kind of help and guidance received to me during my project work. I was fortunate enough to get support from a large number of people to whom I shall always remain grateful. I would like to express my sincere gratitude to Dr. Durgesh Anorkar and Mrs. Ratna Gore for giving me this opportunity to undergo this lucrative project with Share khan Ltd. Buldana and also for their great guidance and advice on this project, without which I will not be able to complete this project. I am very thankful to Prof. . S. M. Mishra for him inspiration and for initiating diligent efforts and expert guidance in course of my study and completion of the project and I am very thankful to my project guide for giving me timely and concrete guidance for making this project successful. I would like to thankful to customers and staff members Sherkhan Ltd. Buldana For helped me during the project report and providing me more and more valuable information for my project report. I would thanks to God for their blessing and my Parents also for their valuable suggestion and support in my project report. I would also like to express my deep sense of gratitude towards managers, staff, & to all those who directly or indirectly helped me in successfully execution of my work.

Vinod G. kolhe

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TO WHOM SO EVER IT MAY CONCERN

This is to certify that Mr Vinod G. Kolhe is a bonafide student of our institute. He has successfully carried out his summer project “Technical analysis with the help of candlestick chart in Equity .” titled at Share khan Ltd. Buldana.. This is the original study of Mr Vinod G. Kolhe and important sources of data used by him have been acknowledged in his report . The report is submitted in partial fulfilment of two years full time course of Masters in Business Administration 2012-14

___________________ Prof. S. M. Mishra (Project Guide)

___________________ Dr. H. M. Jha “Bidyarthi” Head of the Department DB&R, SSGMCE, Shegaon.

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CERTIFICATE This is to certify that Mr. Vinod Ganeshrao Kolhe is student of DBAR, Shri Sant Gajanan Maharaj College of Engineering, Shegaon had completed his project with the project of our company on “ The duration of the training was from 8th June 2013 to 22th July 2013. During the project period in our organization his performance was found to be GOOD. He is hard working , better co-ordination & friendly in nature.

Dr.Durgesh N.Anokar Project Guide

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Content 1. Executive summary………………………………………………………………. 9 2. Objective and scope of the project………………………………………… ……. 10 3. Research methodology…………………………………………………………….11 4. Company profile…………………………………………………………………...12 5. Introduction………………………………………………………………………..15 6. Data analysis……………………………………………………………… ………15

a) Technical analysis � Assumption…………………………………………………………………16 � Importance ………………………………………………………………….17 � Limitation …………………………………………………………………..18 � Tools & techniques …………………………………………………............19

b) Trend ……………………………………………………………………………...21 � Uptrend……………………………………………………………………...21 � Downtrend ………………………………………………………………….21 � Support……………………………………………………………………...22 � Resistance…………………………………………………………………...22 � Breakout…………………………………………………………………….23 � Trader remorse……………………………………………………………...24 � Dow theory………………………………………………………………….24

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c) Some important point for new investor....................................................................25 d) Pattern of chart……………………………………………………………………29 � Line chart…………………………………………………………………...29 � Bar chart……………………………………………………………………29 � Candle chart………………………………………………………………..30 e) Candlestick……………………………………………………………………….30

� History……………………………………………………………………….31 � Drawing candle line………………………………………………………….31 1) Reversal pattern…………………………………………………………….32 I. Single candle reversal …………………………………………………...32 1) Hammer………………………………………………………………….32 2) Hanging man……………………………………………………………..34 3) Towers……………………………………………………………………34

II. Multiple candle reversal……………………………………………….....36 1) Harami……………………………………………………………………39 2) Harami cross……………………………………………………………...41 3) Head & shoulder………………………………………………………….41 4) Inverted head & shoulder…………………………………………………42 5) Tweezer top & bottom……………………………………………………43 6) Triple bottom & star………………………………………………………44 7) Shooting star………………………………………………………………45

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III. Star………………………………………………………………………...46 1) Morning star………………………………………………………………46 2) Evening star……………………………………………………………….47

IV. Some other pattern………………………………………………………...49 1) Cup & handle pattern……………………………………………………...49 2) Rounding bottom pattern………………………………………………….49 3) Triangle…………………………………………………………………....50 4) Flag………………………………………………………………………..51 5) Short term trading………………………………………………………....52 7. Questionnaire …………………………………………………………………………54 8. Conclusion…………………………………………………………………………….55 9. Findings……………………………………………………………………….. ……..56 10. Bibliography…………………………………………………………………………..57

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Executive summary EQUITY ANALYSIS is the systematic study of the performance of companies in stock market with help of fundamental analysis and technical analysis. Equity analysis consists of fundamental analysis & technical analysis. While decision in investment of shares should be base on actual movement of shares price measured more in money & percentage term & nothing else. Equity is a share in the ownership of a company. Equity represents a claim on the company's assets and earnings. As you acquire more equity, your ownership stake in the company becomes greater. Whether you say shares, equity, it all means the same thing. A stock is represented by a stock certificate. This is a piece of paper that is proof of your ownership. Today its in dematerialized form i.e. in electronic form shares have been kept safe. This is done to make the shares easier to trade. In the past, when a person wanted to sell his or her shares, that person physically took the certificates down to the brokerage. Now, trading with a click of the mouse or a phone call makes life easier for everybody. Technical analysis really just studies supply and demand in a market in an attempt to determine what direction, or trend, will continue in the future. In other words, technical analysis attempts to understand the emotions in the market by studying the market itself, as opposed to its components. If you understand the benefits and limitations of technical analysis, it can give you a new set of tools or skills that will enable you to be a better trader or investor. Technical analysis is a method of evaluating securities by analysing the statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity The Technical Approach to investment is essentially a reflection of the idea that prices moves in a trend that are determined by the changing attitude of investor’s toward a variety of economic, monetary, political and psychological forces. The art of technical analysis, for it is an art, is to identify a trend reversal at a relatively early stage and ride on that trend until the weight of the evidence shows or proves the trend has reversed. The present market scenario has shown us the Boom in Share Market. Even some of the research firms showed that Share Market is the fastest growing in India. From last two years share market is in boom. Now it is possible for the investors to trade from their own place. As compare to last two years there is a growth in the number of share brokers and market analysts. Media is playing an important role in these regards. Now the common man is also thinking of some investment in share market. Too many investors invest their money for the short span, the intention is speculative.

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Objective & scope of the project 1 Objective of the project :� To study technical analysis with the help of Equity market. � To Study the present behaviour & predicting the future behaviour of equity in stock market. � Obtain the knowledge about how to select the companies for investment. � To Study the equity analysis and obtain the knowledge of equity market.

2 Scope of the project:� To study technical analysis online under the guidance of expertise.

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Research methodology-

During my project , I have collected information from primary & secondary source. 1 Primary source includes � Discussion with branch manager � Discussion with experts � Questionnaires for investors � Live trading in the market. 2 Secondary source includes � Various books related to stock market � Books related to Financial Management � Web sites were used as the vital information source. Sherkhan felt need to analyse stock every time before the investment. This analysis done with the help of candle chart. Sherkhan prepare a software named as “ trade tiger” which helps the analyst.

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Company profile:Name of the company

: Share khan Ltd.

Year of establishment

: 1925

Headquarter

: Share Khan SSKI 10th floor, Beta Building, Opp. Conjurmarg railway station, Canjurmarg, Mumbai-Maharashtra, INDIA- 400042

Logo of the company-

Vision of the company company-“To be the best retail brokering Brand in the retail business of market.”

stock

MissionMission-““To educate and empower the individual investor to make better investment decisions through quality advice and superior service.” Nature of Business

: Service Provider

Services

: Depository Services, Online Services And Technical Research

Number of Employees

: Over 3500

Website

: www.sharekhan.com

Slogan

: You’re Guide to The Financial Jungle

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ACHIEVEMENTS OF SHAREKHAN: � A Rated among the top 20 wired companies along with Reliance, HUJl, Infosys, etc by ‘Business Today’, January 2004 edition. � Awarded ‘Top Domestic Brokerage House’ four times by Euro money and Asia money. � Pioneers of online trading in India amongst the top 3 online trading websites from India. Most preferred financial destination amongst online broking customers. � Winners of “Best Financial Website” award. � India’s most preferred brokers within 5 years. “Awaaz customers Award 2005”. � Among the top 3 branded retail service provider. � No. 1 player in the online business. � Largest network of branded broking outlets in the country serving more than 7, 00,000 clients. Features :•

Free access to investment advice from share khan’s Research team.

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Share khan value line (a monthly publication with reviews of recommendations stocks to watch out for etc.)

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Daily research reports and market review (High Noon & Eagle Eye)

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Pre-market Report

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Daily trading calls based on Technical Analysis

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Personalized Advice

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Live Market Information

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Depository Services: Demat Transactions

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Derivatives Trading (Futures and Options)

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Commodities Trading

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Internet-based Online Trading: Speed Trade.

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Product & services:-

� Equity & Derivatives: Can look for an easy and convenient way to invest in equity and take positions in the futures and options market using their research and tools. To start trading in Equity, all you need to do is open an online trading account. You can call them and they will have their representative meet you. You can get help opening the account and get guidance on how to trade in Equity. � Commodity: You can enter the whole new world of commodity futures. Investors looking for a fast-paced dynamic market with excellent liquidity can trade now in Commodity Futures Market. The Commodity Exchange is a Public Market forum and anyone can play in these vital Commodity Markets. Share khan Ltd. can certainly be your point of entry to the Commodity Markets. Share khan is a registered trading-cum-clearing member of NCDEX and MCX. � Internet Trading: Making the right trade at the right time! E-Broking service, which brings you experience of online buying and selling of shares with just a click. A detail resource like live quotes, charts, research and advice helps you take proper decisions. Their robust risk management system and 128 bit encryption gives you a complete security about money, shares, and transaction documents.

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Data analysis: Introduction Technical analysis is the study of how past and present price action in a given financial market may help determine its future direction. At the same time, however, technical analysis should not be considered a crystal ball. Rather, the skills of a technical analyst are used primarily to help determine the highest-probability reactions to past and current price movement, as well as likely future price movement. Therefore, technical analysis is less about actually predicting the future and more about finding high-probability potential opportunities to trade in the financial markets. Technical analysis is a broad collection of methods and strategies which attempt to forecast future prices on the basis of past prices or other observable market statistics, such as volume or open interest. Different analysts/ traders may choose to use different types of charts at different times, whether it is a line chart, a bar chart, a candlestick chart, a pointand-figure chart, or any of a number of other chart types. Technical analysis involve putting stock information like prices, volumes and open interest on a chart and applying various patterns and indicators to it in order to assess the future price movements. The time frame in which technical analysis is applied may range from intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly), daily, weekly or monthly price data to many years. Technical analysis really just studies supply and demand in a market in an attempt to determine what direction, or trend, will continue in the future. In other words, technical analysis attempts to understand the emotions in the market by studying the market itself, as opposed to its components. If you understand the benefits and limitations of technical analysis, it can give you a new set of tools or skills that will enable you to be a better trader or investor. Definition:� According to technical analysis, the price of stock depends on demand and supply in the market place. � Technical analysis is the study of investor behaviour and its effect on the subsequent price action of financial instruments. The main data that we need to perform our studies are the price histories of the instruments, together with time and volume information. These enable us to form our views, based on objective fact. � Technical analysis is the study of investor behaviour & its effect on the subsequent price action of financial instrument. It is the process of trying to interpret that supply & demand. � It is the method of evaluating securities by analysing the statistics generated by market activity, such as past prices & volume.

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ASSUMPTIONS OF TECHNICAL ANALYSIS 1. The Market Discounts Everything A major criticism of technical analysis is that it only considers price movement, ignoring the fundamental factors of the company. However, technical analysis assumes that, at any given a time, a stocks price reflects everything that has or could affect the companyincluding Fundamental Factors Factors. Technical analysts believe that the company’s fundamentals, along with broader economic factors and market market\ psychology psychology, are all priced into the stock, removing the need to actually consider these factors separately. This only leaves the analysis of price movement, which technical theory views as a product of supply and demand for a particular stock in the market. 2. Price Moves In Trends In technical analysis, price movements are believed to follow trends. This means that after a trend has been established, the future price movement is more likely to be in the same direction as the trend that to be against it. Most technical trading strategies are based on this assumption. 3. History Tends To Repeat Itself Another important idea in technical analysis is that history tends to repeat itself, mainly in terms of price movement. The repetitive nature of price movement is attributed to market psychology; in other words, market participants tend to provide a consistent reaction to similar market stimuli over time. Technical analysis uses chats patterns to analyze market movements and understand trends. Although many of\these charts have been use for more than 100 years they are still believed to be relevant because they illustrate patterns in price movements that often repeat themselves.

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Importance of Technical Analysis

� Not Just for stocks Technical analysis has universal applicability. It can be applied to any fi nancial instrument - stocks, futures and commodities, fi xed-income securities, forex, etc

� Focus on price Fundamental developments are followed by price movements. By focusing only on price action, technicians focus on the future. The price pattern is considered as a leading indicator and generally leads the economy by 6 to 9 months. To track the market, it makes sense to look directly at the price movements. More often than not, change is a subtle beast. Even though the market is prone to sudden unexpected reactions, hints usually develop before significant movements. You should refer to periods of accumulation as evidence of an impending advance and periods of distribution as evidence of an impending decline.

� Supply, demand, and price action Technicians make use of high, low and closing prices to analyze the price action of a stock. A good analysis can be made only when all the above information is present Separately, these will not be able to tell much. However, taken together, the open, high, low and close reflect forces of supply and demand.

� Support and resistance Charting is a technique used in analysis of support and resistance level. These are trading range in which the prices move for an extended period of time, saying that forces of demand and supply are deadlocked. When prices move out of the trading range, it signals that either supply or demand has started to get the upper hand. If prices move above the upper band of the trading range, then demand is winning. If prices move below the lower band, then supply is winning.

� Pictorial price history history:A price chart offers most valuable information that facilitates reading historical amount of security’s price movement over period of time charts are much easier to read than table of numbers.It is easy to identify following-

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Past & present volatility Historical volume or trading volume Relative strength of stock Vs index

� Assist with entry point:It helps in tracking a proper entry point. Fundamental used to decide what to buy & technical analysis is used to when to ...