A Study on Analysis of Equity Share Price Behavior of the Selected Industries

[24886] ABSTRACT A STUDY ON ANALYSIS OF EQUITY SHARE PRICE BEHAVIOR OF THE SELECTED INDUSTRIES The Indian capital Market has witnessed a tremendous growth. There was an explosion of investor interest during the nineties and an Equity Guilt emerged in statutory legislations has helped the capital market. Foreign Exchange regulation act is one such legislation in this direction. An important recent development has been the Entry of Foreign Institutional investors are participants to the primary and secondary markets for the securities. In the past several years, investments in developing countries have increased remarkably. Among the developing countries India has received considerable capital inflows in recent years. The liberalization policy of the government of India has now started fielding results and the country is poised for a big leap in the industrial and economic growth. The Economy of the country is mainly based on the development of the corporate sectors. A better understanding of the stock market trend will facilitate allocation of financial sources to the most profitable investment opportunity. The behavior of stock returns will enable the investors to make appropriate investment decisions. The fluctuations of stock returns are due to several economic and non-economic factors. The study is aimed at ascertaining the behavior of share returns. This projects analyses the equity share fluctuations in India Selected Industry. It also measures the strength of the trend and the money involved in investing in the stocks. Simple moving average model is applied for selected companies which would give the investor a sell signal or buy signal. In India most of the industries require huge amount of investments. Funds are raised mostly through the issue of share. An investor is satisfied from the reasonable return from investment in shares. Speculation involves higher risks to get return on the other hand investment involves no such risks and returns will be fair. An investor can succeed in his investment only when he is able to select the right shares. The investors should keenly watch the situations like market price, economy, company progress, returns, and the risk involved in a share before taking decision on a particular share. This study made will help the investors know the behaviour of share prices and thus can succeed. A STUDY ON ANALYSIS OF EQUITY SHARE PRICE BEHAVIOR OF THE SELECTED INDUSTRIES INTRODUCTION The Indian capital Market has witnessed a tremendous growth. There was an explosion of investor interest during the nineties and an Equity Guilt emerged in statutory legislations has helped the capital market. Foreign Exchange regulation act is one such legislation in this direction. An important recent development has been the Entry of Foreign Institutional investors are participants to the primary and secondary markets for the securities. In the past several years, investments in developing countries have increased remarkably. Among the developing countries India has received considerable capital inflows in recent years. The liberalization policy of the government of India has now started fielding results and the country is poised for a big leap in the industrial and economic growth. The Economy of the country is mainly based on the development of the corporate sectors. FACTORS AFFECTED FOR THE SHARE PRICES Share prices are affected by the following factors. The major factors are

* Inflation * Deflation * Interest Rates * Exchange Rates INFLATION An increase in the cost of goods and services over a period of time. Decreases the purchasing power of the dollar. It is usually measured by the consumer price index. INTEREST RATES The fee paid to a leader to borrow its money or a penalty charged for late payments usually shown as annual percentage rate. DEFLATION: The drop in the cost of goods and services over a period of time. Usually caused by a shrinking supply of money or credit, or reduced spending by consumers or government. Boosts Purchasing power of the dollar. EXCHANGE RATES: The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another. REVIEW OF LITERATURE Bennet, James A.et.al (2001) have conducted a study on "can money flow predict is defined as the difference between up stick and down stick dollar trading volume. The study says that despite little published research regarding its usefulness, the measure has become an increasingly popular technical indicator because of its own means. The study summarizes its most important finding that money flow appears to predict across- sectional variation in future returns. Their predictive ability is sensitive, however, to the method of money flow measurement (eg. The exclusion or inclusion of block trades) and the Forecast horizon. Daigler Robert T.et.Al., (1981)2 have conducted a study on the development and testing of trading rules on the New York stock Exchange which are based on the discriminant Function. The study analysis the ability of daily technical indicators to predict future changes in the "standard and poor's 500 index". The study also signifies that the Technical indicators possess predictive ability to the extent that investor's possess predictive ability to the extent that investors believe they contain information on Future Market developments, and/or to the extent that the indicators reflect changing expectations among market participants. The study summarizes that the initial analysis of the relationship between daily technical data and future market movements is accomplished by examining the statistical difference between the group means (computed via the usual F test applied to the group means estimated from the discriminant function) of predicted "up days" versus predicted "down days" ("Up" and "down" days are define shortly). The statistical analysis is extended by classifying the observations into groups. Micko Tanaka Yamawaki et. Al., (2007) 7 have conducted a study on the Adaptive use of Technical Indicators for predicting the Intra-Day price movements. The researcher has proposed a system to select the best combination of technical indicators and their parameter values adaptively by learning the patterns from the tick-wise financial data. In this paper, the researcher has shown that this system gives good predictions on the directors of motion with the hitting rate at 10 ticks ahead of the decision point as high as 70% for foreign exchange rates (FX) in five years from kl1996 to 2000 and 8 different stock prices in NYSE market in 1993 The study concludes that the tick-wise price time series carry a long memory of the order of at least a few minutes, which is equivalent to 10 ticks.

OBJECTIVES OF THE STUDY * To analyze the share price behavior of the selected industries. * To predict the day to day Fluctuations in the stock market using Technical Analysis * To study the price movements in the stock exchange * To study the current trend and strength of the trend of selected industry * To recapitulate the key findings and offer suggestions to investors. SCOPE OF THE STUDY A better understanding of the stock market trend will facilitate allocation of financial sources to the most profitable investment opportunity. The behavior of stock returns will enable the investors to make appropriate investment decisions. The fluctuations of stock returns are due to several economic and noneconomic factors. The study is aimed at ascertaining the behavior of share returns. The study on fluctuations in equity market helps in understanding the behavior of equity market. It helps the investors to be aware about deviations in the returns of the stocks. The simple moving average model indicates the buy and sell signal to the investors. This helps the investors is taking good decisions when investing in equity shares. The study also helps the customers to ascertain the risk and return of the stocks. This will help the investors viz, individuals, Files in identifying the stocks which would yield them higher return and lesser risk.

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A STUDY ON COMPARITIVE ANALYSIS OF SHARE PRICES IN VARIOUS SECTORS SUCH AS BANKING

[20381] INTRODUCTION TO THE STUDY In the past several years, investments in developing countries have increased remarkably. Among the developing countries India has received considerable capital inflows in recent years. the liberalization policy of the government of India has now started yielding results and the country is poised for a big leap in the industrial and economic growth. the Economy of the country is mainly based on the developing of the corporate sectors. Funds may be raised through securities market for financing corporate growth In the present project, I am attempted to test the equity price movements taking Banking, petroleum, Software, Telecom, Textile, Logistics as sample sectors. Title of the study My study explains about the share price fluctuations and risk in investing in share. In this time period, Banking, petroleum, Software,Telecom,Textile,Logistics sectors have remarkable blooming over the period and has the interest to attract the customers for investing, so I had chosen these sectors for my study. Statement of problem The basic need for this study is to know fluctuation in shares and to find the profitable stock to invest. I had chosen this topic because in this modern competitive world, the investor may have a difficulty to a profitable stock and he does not knows the fluctuations in the stock market. Thus this study brings out a

detailed view on the stock market.

Objectives of study Primary objective To study an analysis in share prices between six sectors such as Banking, petroleum, Software, Telecom, Textile, Logistics. Secondary objective A study on share price moments. To analyze the reasons for fluctuations in the market. To find the profitable stock in a sector for investment. To give guidelines to investors in market. Scope of study This study helps the investors to ascertain the fluctuation in the market and gives the reasons for fluctuation. The study also helps and gives suggestions to the investors to find a profitable company for investment and gives suggestions and decisions to invest in a worthy stock in a sector. Limitations of study The main limitations of the study are as follows: The study is confined to 45 days only and hence the changes taken place before and after these periods have not been taken into considerations. The study considers only six sectors namely Banking, petroleum, Software, Telecom, , Textile ,Logistics

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A STUDY ON STOCK PRICE BEHAVIOR OF DIVIDEND YIELDING STOCKS DURING ANNOUNCEMENT PERIOD
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Investors determine stock price on the basis of the expected cash flows to be received from a stock and the risk involved. Rational investors should use all the information available with them or can easily obtain through other sources. This information set consists of both known information and beliefs about the future prospects. An efficient market is defined as one in which the prices of all securities quickly and

fully reflects the available information about the assets. This concept postulates that investors will assimilate all relevant information into prices in making their buy or sell decisions. Therefore, the current price of stock reflects: i. All known information including: (a) Past information (e.g. last years quarterly results.) (b) Current information as well as events that have been announced but are still forthcoming. ii. Information that can reasonably be inferred. The present study is conducted to know the dividend yield stocks behavior using quarterly results and dividend announcement because it helps to update and adjust projections of future performance. Moreover, these are the key sources of information to determine the stock price. NEED OF THE STUDY The present study on the dividend yielding stocks behavior helps us for the following purposes: i. Helps to assess the performance of the dividend yielding stocks during results and dividend announcement periods. ii. Helps the investors to select the stocks which would give good returns. iii. Helps to build strong portfolio.

INTRODUCTION TO THE VARIABLES STOCKS In finance, a stock represents a share in the ownership of an incorporated company. In industrial societies wealth used in production is owned in the aggregate mostly by corporations rather than by individuals because of the huge investments required. This trend began in 17th-century England when merchants formed JOINT-STOCK COMPANIES, pooling capital to be used jointly in trading and manufacturing. Participants then received dividends, shares of the common PROFIT proportionate to their original investments The wealth of individuals includes claims against, or investments in, corporations. These are called securities, the two most common being bonds and stocks. Corporate bonds are evidences of corporate debt to the bondholder. Stocks are evidences of ownership, or equity. Investors buy stock in the hope that it will yield income from dividends and appreciate, or grow, in value.

DIVIDEND STOCKS Dividend stocks are less volatile due to the fact that companies that pay out cash result in investors more willing to hold dividend stocks through bear markets. Dividend stocks tend not to rise as quickly as non-dividend stocks during roaring bull markets. Dividend stocks also do not fall as far as rapidly as non-dividend stocks. Investors are now looking for downside protection due to slow economic growth. Dividends are paid on earnings per share meaning the more shares of a particular stock that we have the more we will receive when dividends are paid. This normally occurs quarterly, during earnings season, and when businesses report earnings and profits or

losses on dividend stocks. Some dividends are paid on certain bonds or other investment options that are done through a money market account. These dividends are a form of interest for the investment. In most cases, dividends are paid into a money market account so that they can withdraw them reinvest them.

DIVIDEND YIELD The dividend yield on a company stock is the company's annual dividend payments divided by its market cap, or the dividend per share divided by the price per share. It is often expressed as a percentage. Historically, a higher dividend yield has been considered to be desirable among investors. A high dividend yield can be considered to be evidence that a stock is under priced or that the company has fallen on hard times and future dividends will not be as high as previous ones. Similarly a low dividend yield can be considered evidence that the stock is overpriced or that future dividends might be higher. Dividend yield fell out of favor somewhat during the 1990s because of an increasing emphasis on price appreciation over dividends as the main form of return on investments. The importance of the dividend yield in determining investment strength is still a debated topic. The persistent historic low in the Dow Jones dividend yield during the early 21st century is considered by some bearish investors as indicative that the market is still overvalued. SHARE PRICE/ STOCK PRICE A Share Price is the price of a share. These are usually quoted with two prices the Buy and Sell price. The Buy price is the first, and lower, price and represents the amount that we would receive if we sold the share. It is the price that someone else is prepared to pay to buy our share. The Sell price is the amount that we would need to pay to obtain the share. It is the amount someone is asking to sell the share to us. There is also a Mid Price, which is the middle amount between the Buy and Sell prices. This is usually used to quote the current value of the share. For example a price of 110/120p would generally have a Mid price of 115p. It is this price that is generally quoted in newspapers and used for calculating the Indexes. TECHNICAL ANALYSIS Technical analysis of the market is based on some basic tenets, namely, that all fundamental factors are discounted by the market and are reflected in prices. Secondly, these prices move in trends or waves which can be both upward and downward depending on the sentiment, psychology and emotions of operations or traders. Thirdly, the present trends are influenced by the past trends, and the projection of future trends is possible by an analysis of past price trends. Analysis of historical trends confirmed the above principles and the Random Walk Theory explaining the randomness of price changes has been found to be not applicable by the technical analysts in practice.

History of Technical Analysis

The technical analysis is based on the doctrine given by Charles. H. Dow in 1984, in the Wall Street Journal. He wrote a series of articles in the Wall Street Journal. A. J. Nelson, a close friend of Charles Dow formalized the Dow Theory for economic forecasting. The analysts used charts of individual stocks and moving average in the early 1920s. Later on, with the aid of calculators and computers, sophisticated techniques came into vogue. CANDLESTICK Introduction to Candlesticks A candlestick chart is a style of bar-chart used primarily to describe price movements of equity over time. It is a combination of a line-chart and a bar-chart, in that each bar represents the range of price movement over a given time interval. It is most often used in technical analysis of equity and currency price patterns. They appear superficially similar to error bars, but are unrelated. Reference: http://seminarprojects.com/Thread-a-study-on-stock-pricebehavior#ixzz2aEXlj7tk

Article by Expert
Stock Price Analysis
How do you determine the price of a stock? There are two basic approaches, Fundamental Analysis and Technical Analysis. Fundamental Analysis determines intrinsic stock prices by projecting future earnings and then applying an acceptable return on investment to calculate the stock price. This approach is used by most traditional investment analysts and is the basis of their stock performance recommendations. In a stable economic and business environment applying Fundamental Analysis should provide a solid pricing mechanism however all businesses operate in dynamic environments and future earnings are never guaranteed. This results in varying estimates of earnings. Dynamic business environments result in less reliable earnings estimates and a greater possible range of future earnings. The rate of return component of Fundamental Analysis is also variable and is influenced by the the return from alternative investments and the perceived risk of the stock investment. As risk increases the required rate of return increases to compensate for the risk. Fundamental Analysis essentially tells us what price a stock should be. This can be considered as its intrinsic or Fair Value based on it future earnings and return on investment. However the actual price of a stock is determined by the stock market and the

stock market is driven by human emotion. So what we really want to know is what price a stock will be on the stock market within a future time window . Analyzing past stock prices can provide some insight into future movements, this is the realm of Technical Analysis Technical Analysis or Charting applies statistical techniques to historical stock prices and volumes to identify likely future stock price movements. It does not consider the fundamentals of the stock, the business, or economic environment as the influence of these factors is deemed to be already reflected in the stock price. Because Technical Analysis is based on actual past stock price data (which was influenced by human emotion) it incorporates a component of human emotion in its calculations. This can provide valuable indicators and insight into future stock price movements that can not be identified using Fundamental Analysis. At any point in time actual stock prices consist of two components. The Fair Value price (fundamental) and a variance from the Fair Value due to dynamic environments and human emotion. The more volatile the environment and emotion the greater the variance. This results in cyclic boom (bull) and bust (bear) markets. Achieving the best possible return for our investment requires both an appreciation of the fundamental Fair Value of a stock and the future variance indicated by technical analysis. To help us do this there is an extensive range of stock pricing software and "stock experts" available. All we need do is buy their software or subscribe to their research newsletters, and follow their recommendations. The problem with using an expert or a system developed by an expert is how can we judge their expertise. Perhaps the best way is to gain as much knowledge as possible ourselves so we have the ability to make informed decisions. How do we do gain knowledge? We read, listen and think. The internet provides easy access to a wide range of market and stock information, most of it free, and if it is not free it is usually provided with free trial period. So sign up for free newsletters, accept trail offers, and use sites like StockPriceAnalysis.com to increase your knowledge so you can make informed decisions. StockPriceAnalysis.com has no stock experts we simply provide some basic tools and information to assist investors determine when and at what price a stock might provide the best investment return. We do not provide financial advice or expert opinion, just information and tools that may assist stock investment decisions. The goal is to provide investors with increased knowledge of stock market dynamics and access to the wealth of stock market information available on the Internet. To achieve this we have developed a free web Module incorporating Fundamental Analysis to calculate: a Fair Value stock price; the comparative Value offered by a stock; a profit Target sell price based Stock Price Analysis

a Stop Loss sell price; Price Earnings Ratios (PE) for Fair Value and Buy prices; stock Return on Investment;

and provide access to Technical Analysis charts to evaluate stock movements and buy/sell signals. Trading to a Plan provides an overall guide to using the Stock Price Analysis Module to facilitate a trading plan.

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