Summer Internship Project

Fundamental and Technical Analysis of

FMCG Sector
Finoability Pvt Ltd

Submitted by - Ashwani Kumar

Corporate Mentor -

Mr. Piyush Agarwal

Co-Founder & Director

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 Declaration

I do hereby declare that this project entitled, “Fundamental & Technical Analysis on
FMCG Industry” with Finoability Pvt Ltd. at Kolkata (Live/Online) has been completed
by me and it is an original work.

It has never been submitted nor been published elsewhere.

Name of the student: Ashwani Kumar

Date: 05 June 2021

Place: Samastipur

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 Acknowledgement

Summer Internship is an integral part of Master Of Business Administration and I take

this opportunity to express my gratitude to Finoability Pvt Ltd, Kolkata which helped
me to accomplish this project. I am highly grateful to my industry mentor Mr. Piyush
Agarwal, (Co-Founder & Director) for providing me the opportunity to have such a
good experience of the Internship program. It was indeed very gracious of him to spare
his valuable time and to give an elaborate insight into the functioning of the
department.

I would like to thank my faculty mentor for their help and constant supervision
throughout the project. Their opinions and deep insight on the subject matter and
various parts of the SIP report helped in successful completion of this project.

At last I am also thankful to my friends, all known and unknown individuals who have
given me their constructive advice, encouragement, co-operation, and motivation
during this project and while preparing this report.

I thank Banaras Hindu University who gave me an opportunity to show my skills and
work with such big organization.

Thank You

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 Research Methodology

Type of Study – Secondary Research

Sources – moneycontrol.com

Sampling Unit – Stock of Information Technology

4
 ABOUT THE COMPANY

As an independent Finance company, we make all our recommendations based

solely on how it best serves your near and long-term goals. By teaching you about
the Financial Market and our principled approach, you can feel confident in your
ability to make sound decisions that will benefit you and your family in the long
run. That’s why our approach is fundamentally different. By combining emotional
and intelligence quotient – EQ and IQ – we can help you build a more secure
financial future.

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 Table of Contents

Title Page no.

❖ Executive Summary 07
❖ Fast-Moving Consumer Goods (FMCG) sector
▪ Introduction 08
▪ Types of FMCG 09
▪ Indian FMCG Industry analysis 10

❖ Fundamental Analysis
▪ Introduction 11
▪ Advantages & Disadvantages of Fundamental Analysis 13

❖ Fundamental Analysis of FMCG sector

▪ Valuation of stocks 15
▪ Selection of Socks 16
▪ Ranking of Selected Stocks 17

❖ Technical Analysis
▪ Introduction 18
▪ Long term Technical Analysis 19
▪ Short Term Technical Analysis 27

❖ Conclusion
❖ References

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 Executive Summary

This project report is about the “fundamental analysis in Fast Moving Consumer Goods (FMCG)
sector”. Fundamental and Technical Analysis have been adopted as the methodologies to
analyze the sector.

Valuation is done as a part of Fundamental Analysis and certain stocks are chosen as the “Value
Picks” and certain stocks as “Growth Picks”.

The Value Picks have been chosen as those stocks which are undervalued and have shown a
growth in Earnings per Share (EPS) on a Year on Year (YOY) basis.

Some overvalued stocks have been chosen as Growth Picks which have the P/E Growth ratio
(PEG Ratio) as positive and less than or equal to 1.

Further, using some financial ratios which are important to the oil and gas sector, the value
picks and growth picks have been ranked. According to the ranks, funds have been allocated to
these selected stocks.

Finally, a portfolio consisting of the selected FMCG sector stocks is created and the Net Asset
Value (NAV) of the portfolio is calculated. Performance of the entire portfolio is analysed with
respect to the NSE index (which acts as a benchmark) on daily basis to see if the portfolio of the
FMCG sector stocks beats the benchmark of NSE index.

It will be helpful for investors who are looking for an investment in FMCG sector companies.

As a part of Technical Analysis, two types of Technical Analysis namely Short-Term Technical
Analysis and Long-Term Technical Analysis have been performed on the selected FMCG sector
stocks (Growth Picks and Value Picks).

Various Patterns have been observed as a part of Long-Term Technical Analysis and points at
which the investors can buy and sell the stocks have been spotted. Also, the current trend of
the stocks has been found out.

Various Candlesticks have been used as a part of Short-Term Analysis and also various
Candlesticks positions have also been observed. The Candlesticks give us an idea regarding
trends and trend reversals for the selected Oil and Gas sector stocks (Growth Picks and Value
Picks).

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 FAST - MOVING CONSUMER GOODS (FMCG) SECTOR

Introduction

The Fast-Moving Consumer Goods (FMCG) industry primarily deals with the
production, distribution and marketing of consumer packaged goods, i.e. those
categories of products that are consumed at regular intervals.
Examples include food & beverage, personal care, pharmaceuticals, plastic goods,
paper & stationery and household products etc.
The industry is vast and offers a wide range of job opportunities in functions such as
sales, supply chain, finance, marketing, operations, purchasing, human resources,
product development and general management.

FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks and
confections) or because they are perishable (e.g., meat, dairy products, and baked
goods). These goods are purchased frequently, are consumed rapidly, are priced low,
and are sold in large quantities. They also have a high turnover when they're on the
shelf at the store.

Consumer goods are products purchased for consumption by the average consumer.
They are divided into three different categories: durable, nondurable goods, and
services. Durable goods have a shelf life of three years or more while nondurable
goods have a shelf life of less than one year. Fast-moving consumer goods are the
largest segment of consumer goods. They fall into the nondurable category, as they
are consumed immediately and have a short shelf life.

Nearly everyone in the world uses fast-moving consumer goods (FMCG) every day.
They are the small-scale consumer purchases we make at the produce stand,
grocery store, supermarket, and warehouse outlet. Examples include milk, gum, fruit
and vegetables, toilet paper, soda, beer, and over-the-counter drugs like

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 Types of Fast - Moving Consumer Goods

FMCGs can be divided into several different categories including:

Processed foods :
Cheese products, cereals, and boxed pasta.
Prepared meals :
Ready-to-eat meals
Beverages :
Bottled water, energy drinks, and juices
Baked goods :
Cookies, croissants, and bagels
Fresh, frozen foods, and dry goods :
Fruits, vegetables, frozen peas and carrots, and raisins and nuts
Medicines :
Aspirin, pain relievers, and other medication that can be purchased without a
prescription
Cleaning products :
Baking soda, oven cleaner, and window and glass cleaner
Cosmetics and toiletries :
Hair care products, concealers, toothpaste, and soap
Office supplies :
Pens, pencils, and markers

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 Indian FMCG Industry Analysis

Fast moving consumer goods (FMCG) are the 4th largest sector in the Indian economy.
There are three main segments in the sector – food and beverages which accounts for
19 per cent of the sector, healthcare which accounts for 31 per cent and household and
personal care which accounts for the remaining 50 per cent.
The FMCG sector has grown from US$ 31.6 billion in 2011 to US$ 52.75 billion in 2017-
18. The sector is further expected to grow at a Compound Annual Growth Rate (CAGR)
of 27.86 per cent to reach US$ 103.7 billion by 2020. The sector is projected to grow 11-
12 per cent in 2019. It witnessed growth of 16.5 per cent in value terms between June–
September 2018; supported by moderate inflation, increase in private consumption and
rural income. It is forecasted to grow at 12-13 per cent between April– June 2019.
FMCG’s urban segment is expected to have a steady revenue growth at 8 per cent in
FY19 and the rural segment is forecasted to contribute 15-16 per cent of total income in
FY19.* Post GST and demonetization, modern trade share grew to 10 per cent of the
overall FMCG revenue, as of August 2018.
Accounting for a revenue share of around 45 per cent, rural segment is a large
contributor to the overall revenue generated by the FMCG sector in India. Demand for
quality goods and services have been going up in rural areas of India, on the back of
improved distribution channels of manufacturing and FMCG companies. Urban
segment accounted for a revenue share of 55 per cent in the overall revenues recorded
by FMCG sector in India.
FMCG Companies are looking to invest in energy efficient plants to benefit the society
and lower costs in the long term. Patanjali will spend US$ 743.72 million in various
food parks in Maharashtra, Madhya Pradesh, Assam, Andhra Pradesh and Uttar
Pradesh. Dabur is planning to invest Rs 250-300 crore (US$ 38.79-46.55 million) in
FY19 for capacity expansion and is also looking for acquisitions in the domestic market.

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 Fundamental Analysis

Introduction

It is a method used to evaluate a security on the basis of its intrinsic value by examining related
economic, financial and other qualitative and quantitative factors.

Fundamental analysis is about using real data to evaluate a security's value. Although most
analysts use fundamental analysis to value stocks, this method of valuation can be used for
just about any type of security. It assumes that over the long term, a stock price will reflect
the company's intrinsic value.

A Fundamental analyst attempts to study everything that can affect the security's value,
including macroeconomic factors (like the overall economy and industry conditions) and
company-specific factors (like financial condition and management).

An investor, for instance can perform fundamental analysis on a bond's value by looking at
economic factors, such as interest rates and the overall state of the economy, and information
about the bond issuer, such as potential changes in credit ratings. For assessing stocks, this
method uses revenues, earnings, future growth, return on equity, profit margins and other
data to determine a company's underlying value and potential for future growth.

It is critical for an investor to separate the daily short-term noise in the stock prices and
concentrate on the underlying business performance. Over the long term, the stock prices
of a fundamentally strong company tend to appreciate, thereby creating wealth for its
investors.

The end goal of performing fundamental analysis is to produce a value that an investor can
compare with the security's current price, with the aim of figuring out what sort of position
to take with that security (Undervalued = buy, Overvalued = sell).

Growth is also considered as an important factor in the fundamental analysis because if the
security does not grow or if there is a negative growth (loss making company) then
irrespective of whether it is an overvalued or undervalued security, there is no point in
analyzing it further for fundamental analysis.

In case of stocks, Undervalued stocks can be considered for further analysis only if they
grow Year on Year. The undervalued securities with positive Year on Year growth are
considered as ‘Value Picks’. Overvalued stocks can be considered for further analysis only if
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their PEG ratio (also known as Price to EPS growth ratio) lies between 0 and 1 including
those having PEG ratio near or equal to 1. Such overvalued stocks are known as ‘Growth
Picks’.

Fundamental analysts focus on the underlying business of the company being evaluated and
specifically look at quantitative measures such as:

• Revenues
• Earnings
• Assets
• Debts

These financial measures are often combined to produce fundamental or financial ratios that
analysts can use to compare the company they are analyzing to:

• Other companies in the same industry

• The overall market
• Previous periods result for the same company

Analysts use a variety of ratios to compare the two companies or the stocks of the two companies
like Net Income margin, ROE, Debt to Equity ratio, etc. The ratios used for comparison vary from
sector to sector.

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Advantages of Fundamental Analysis

• It uses sound mathematical and statistical principles to produce ratios so that there is no
room for personal bias.
• The markets are usually driven by fundamental factors over the long term. Fundamental
analysis can look at long-term economic, demographic, technologic or consumer trends.
• By determining an intrinsic value, fundamental analysts can determine appropriate buy prices
that represent 'good value'.
• Research into fundamentals provides the investor with a better understanding of the company
and its business.

Disadvantages of Fundamental Analysis :

• Fundamental analysis can be hard work and be overly complicated. Given the time and
difficulty constraints, it may be difficult to get an edge
• In the short term, markets will not always move in the same direction as fundamental value
meaning that often short-term momentum will override the fundamentals
• Six monthly issuing of financial information may mean a company's fundamentals have
• significantly changed and means a time lag for investment decisions. This applies especially to
a lack of opportunity to react quickly to exit stocks
• Fundamental analysis for future estimated value can only be based on assumptions so a best-
and worst-case valuation model may need to be considered.
• No valuation model can take into account any unexpected negative economic, political or
legislative changes.
• Another important point to consider is that most information considered in fundamental
analysis comes from the company itself and assumptions have to be made that the company
is providing accurate and true information.

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 Fundamental Analysis of FMCG Industry

For conducting fundamental analysis for the stocks in FMCG Sector, we have taken into
consideration of Top 10 performing stocks.
Table below shows the top FMCG companies stocks constituents on the basis of weightage. ( As
on 31 May 2021 ).

Name Price market cap (in crore)

Hindustan Unilever Ltd. 2340.05 549810.62
ITC Ltd. 216.60 266609.56
Nestle India Ltd. 17695.55 170612.91
Britannia Industries Ltd. 3447.85 83047.78
Tata Consumer Products Ltd. 663.85 61177.21
Dabur India Ltd. 540.45 95520.50
Godrej Consumer Products Ltd. 856.55 87581.06
Jubilant Foodworks Ltd. 3111.20 41058.21
Marico Ltd. 475.20 61364.95
Colgate Palmolive (India) Ltd. 1720.45 46793.77

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 Valuation Of Stocks

The P/E ratio of each stock is then compared with the sectorial P/E ratio to determine
whether the stock is Undervalued or Overvalued.
For instance, if P/E ratio of a stock is lesser than the sectorial P/E ratio then that stock is
considered as an Undervalued stock on the other hand if the P/E ratio of a stock is greater
than the sectorial P/E ratio then that stock is considered as an Overvalued stock. (As
shown in Table below).
The Long-Term Price Target (LTPT) is then determined by multiplying the average sector
P/E with the stock EPS. All the Undervalued stocks are considered as ‘Value Picks’.

Stock Name P/E ratio

Hindustan Unilever Ltd. 74.9
ITC Ltd. 19.8
Nestle India Ltd. 81.9
Britannia Industries Ltd. 49
Tata Conumer Products Ltd. 73.2
Dabur India Ltd. 61.6
Godrej Consumer Products Ltd. 46.7
Jubilant Foodworks Ltd. 226
Marico Ltd. 47.4
Colgate Palmolive (India) Ltd. 46.8

AVERAGE P/E 72.73

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 Selection Of Stocks

After the selection of Undervalued and overvalued stock, the next step is to analyze
the Overvalued and undervalued stocks and derive determine the Growth and value
Picks.
For determining the Growth Picks, P/E Growth value (PEG value) is calculated for
each Overvalued stock by dividing P/E ratio of each of these stocks by the percentage
change in earnings per share Year on Year and the stocks with positive PEG values
and less than or equal to 1 are selected as Growth Picks. The Overvalued stocks with
negative PEG values or with PEG values greater than 1 are rejected. For determining
the value pick first identifying top line and bottom line of the stock, ones for with both
are decreasing for two consecutive years are rejected and the remaining ones are
further analyzed.

Growth Picks and Value pick have been determined as shown in the Table below.

Overvalued Stocks :

PEG
Overvalued Stocks P/E ratio ratio Select / Reject
Hindustan Unilever Ltd. 74.9 5.55 Reject
Nestle India Ltd. 81.9 4.02 Reject
Tata Consumer Products Ltd. 73.2 5.25 Reject
Jubilant Foodworks Ltd. 226 10.5 Reject

Undervalued Stocks :

Undervalued Stocks P/E ratio Revenue / Sales profit after tax Select / Reject
ITC Ltd. 19.8 increasing increasing Select
Britannia Industries Ltd. 49 increasing increasing Select
Dabur India Ltd. 61.6 increasing increasing Select
Godrej Consumer Products Ltd. 46.7 increasing increasing Select
Marico Ltd. 47.4 increasing increasing Select
Colgate Palmolive (India) Ltd. 46.8 increasing increasing Select

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 Ranking of Selected Stocks

The selected stocks are to be ranked on the basis of different ratios and by comparing
the stocks on the basis of ratios.
The ratios are :
1. Current Ratio (high to low) rank 1

2. Quick Ratio (high to low) rank 2

rank 3
3. Debt to Equity Ratio (low to high)
rank 4
4. Interest Coverage Ratio (high to low)
rank 5
5. Net Profit Margin (high to low) rank 6
6. Return on Equity (high to low)

Debt Equity Interest Net Profit Return on

Sum of Ranks Final Rank
Ratio Analysis current ratio Quick Ratio Ratio Coverage Margin Equity
Ratio
ITC Ltd. 3.08 2.12 0.00 314.04 28.39 24.83 9 1
Britannia Industries Ltd. 0.93 0.56 0.92 22.71 14.59 32.70 32 5
Dabur India Ltd. 1.58 1.09 0.06 64.91 17.60 24.81 19 4
Godrej Consumer Products Ltd. 0.94 0.57 0.15 13.39 15.16 20.51 32 5
Marico Ltd. 1.88 1.24 0.09 40.78 15.22 34.44 18 3
Colgate Palmolive (India) Ltd. 1.21 0.88 0.06 157.67 19.98 53.70 15 2
order high to low high to low low to high high to low high to low high to low

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 Technical Analysis

Introduction

Technical analysis is the examination of past price movements to forecast future price movements
where the price is influenced by the forces of supply and demand.
The objective of analysis is to forecast the direction of the future price. By focusing on price and
only price, technical analysis represents a direct approach while Fundamentalists are concerned
with why the price is what it is.

Based on the duration of analysis, technical analysis can be categorized into two types:
1. Long term technical analysis (2-5 years)
2. Short term technical analysis (<1 year)

There are various patterns to analysis whether the movement of a particular stock is in
upward trend or downward trend.

Upward trend signifies when demand is greater than supply resulting in increase in prices. An
uptrend line has a positive slope and is formed by connecting two of more low points. The
second low must be higher than the first for the line to have a positive slope.

Downward trend signifies when supply exceeds the demand resulting in decrease
in prices. A down trend line has a negative slope and is formed by connecting two
or more high points. The second high must be lower than the first for the line to
have a negative slope.

Support is the price level at which demand is thought to be strong enough to prevent the price
from declining further. The logic dictates that as the price declines towards support and gets
cheaper, buyers become more inclined to buy and sellers become less inclined to sell. By the
time the price reaches the support level, it is believed that demand will overcome supply and
prevent the price from falling below support. A decline below support indicates a new
willingness to sell and/or a lack of incentive to buy.

Resistance is the price level at which selling is thought to be strong enough to prevent the
price from rising further. The logic dictates that as the price advances towards resistance,
sellers become more inclined to sell and buyers become less inclined to buy. By the time the
price reaches the resistance level, it is believed that supply will overcome demand and
prevent the price from rising above resistance.
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 Long term Technical Analysis

1. Rounding Bottom

The rounding bottom is a long-term reversal pattern that is best suited for weekly charts. It is
also referred to as a saucer bottom, and represents a long consolidation period that turns from
a bearish bias to a bullish bias.

2. Cup with Handle

The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed
by a breakout. It was developed by William O'Neil and introduced in his 1988 book, How to Make
Money in Stocks.
As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms
after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading
range develops on the right-hand side and the handle is formed. A subsequent breakout from the
handle's trading range signals a continuation of the prior advance.

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 3. Bump and Run Reversal

A Rising trendline is drawn which connects at least 3 lows of a price series (troughs) of 3 different
periods respectively as shown in the below Figure 5.3. Then a Bump is seen which can be observed as a
bullish pattern and finally the point where the trendline is broken, the pattern enters into a Run phase.
This point is called as a sell point i.e. Investor is supposed to sell the stock at this point.

4. Double Top

The double top is a major reversal pattern that forms after an extended uptrend. As its name implies, the
pattern is made up of two consecutive peaks that are roughly equal, with a moderate trough in between
as shown in Figure 5.4. At least an intermediate change, if not long-term change, in trend from bullish to
bearish as soon as the support is broken. Many potential double tops can form along the way up, but
until key support is broken, a reversal cannot be confirmed.

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 Key Points regarding Double Top Chart Pattern :

o Resistance break: Even after trading down to support, the double top and trend reversal
are still not complete. Breaking support from the lowest point between the peaks
completes the double top.

o Resistance turned support: Broken support becomes potential resistance and there is
sometimes a test of this newfound resistance level with a reaction rally. Such a test can
offer a second chance to exit a position or initiate a short.

o Price Target: The distance from support break to peak can be subtracted from the support
break for a price target. This would infer that the bigger the formation is, the larger the
potential decline

5. Double Bottom

The double bottom is a major reversal pattern that forms after an extended downtrend. As its name
implies, the pattern is made up of two consecutive troughs that are roughly equal, with a moderate peak
in between.
Although there can be variations, the classic double bottom usually marks an intermediate or long-term
change in trend when the resistance is broken. Many potential double bottoms can form along the way
down, but until key resistance is broken, a reversal cannot be confirmed.

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Key Points regarding Double Bottom Chart Pattern :
o Resistance break: Even after trading up to resistance, the double top and trend reversal are still
not complete. Breaking resistance from the highest point between the troughs completes the
double bottom. This too should occur with an increase in volume and/or an accelerated ascent.

o Resistance turned support: Broken resistance becomes potential support and there is sometimes
a test of this newfound support level with the first correction. Such a test can offer a second
chance to close a short position or initiate a long.

o Price Target: The distance from the resistance breakout to trough lows can be added on top of
the resistance break to estimate a target. This would imply that the bigger the formation is, the
larger the potential advance.

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 6. Head & Shoulders Top

A head and shoulders reversal pattern forms after an uptrend, and its completion marks a trend reversal.
The pattern contains three successive peaks with the middle peak (head) being the highest and the two
outside peaks (shoulders) being low and roughly equal. The reaction lows of each peak can be connected
to form support, or a neckline.

As its name implies, the head and shoulders reversal pattern are made up of a left shoulder, head, right
shoulder and neckline. Other parts playing a role in the pattern are volume, the breakout, price target and
support turned resistance.

Key Points regarding Head & Shoulders Top Pattern :

o Neckline: The neckline forms by connecting low points 1 and 2. Low point 1 marks the end of the left
shoulder and the beginning of the head. Low point 2 marks the end of the head and the beginning
of the right shoulder. Depending on the relationship between the two low points, the neckline can
slope up, slope down or be horizontal. The slope of the neckline will affect the pattern's degree of
bearishness: a downward slope is more bearish than an upward slope. Sometimes more than one
low point can be used to form the neckline.

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 o Neckline Break: The head and shoulders pattern are not complete and uptrend is not
reversed until neckline support is broken.
o Support turned resistance: Once support is broken; it is common for this same support level to
turn into resistance. Sometimes, but certainly not always, the price will return to the support break
and offer a second chance to sell.
o Price Target: After breaking neckline support, the projected price decline is found by measuring
the distance from the neckline to the top of the head. This distance is then subtracted from the
neckline to reach a price target.

7. Head & Shoulders Bottom

The head and shoulders bottom are sometimes referred to as an inverse head and shoulders. The
pattern shares many common characteristics with its comparable partner, but relies more on volume
patterns for confirmation.
As a major reversal pattern, the head and shoulders bottom forms after a downtrend, and its
completion marks a change in trend. The pattern contains three successive troughs with the middle
trough (head) being the deepest and the two outside troughs (shoulders) being shallower. Ideally, the
two shoulders would be equal in height and width. The reaction highs in the middle of the pattern can
be connected to form resistance, or a neckline.
The price action forming both head and shoulders top and head and shoulders bottom patterns
remains roughly the same, but reversed.

Key Points regarding Head & Shoulders Bottom :

o Neckline: The neckline forms by connecting reaction highs 1 and 2. Reaction high 1 mark the end of
the left shoulder and the beginning of the head. Reaction high 2 marks the end of the head and the
beginning of the right shoulder.
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Depending on the relationship between the two reaction highs, the neckline can slope up, slope down or
be horizontal. The slope of the neckline will affect the pattern's degree of bullishness: an upward slope is
more bullish than downward slope.
o Neckline Break: The head and shoulders pattern is not complete and the downtrend is not
reversed until neckline resistance is broken.
o Resistance turned support: Once resistance is broken; it is common for this same resistance level
to turn into support. Often, the price will return to the resistance break and offer a second chance
to buy.
o Price Target: After breaking neckline resistance, the projected advance is found by measuring the
distance from the neckline to the bottom of the head. This distance is then added to the neckline to
reach a price target.

8. Triple Top

The triple top is a reversal pattern made up of three equal highs followed by a break below support.
In contrast to the triple bottom, triple tops usually form over a shorter time frame and typically range
from 3 to 6 months. Generally speaking, bottoms take longer to form than tops.

Key Points regarding Triple Top :

o Support break: As with many other reversal patterns, the triple top is not complete until a support
break. The lowest point of the formation, which would be the lowest of the intermittent lows, marks
this key support level.
o Support turns resistance: Broken support becomes potential resistance, and there is sometimes
a test of this newfound resistance level with a subsequent reaction rally.
o Price Target: The distance from the support break to highs can be measured and subtracted
from the support break for a price target.

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 9. Triple Bottom

The triple bottom is a reversal pattern made up of three equal lows followed by a breakout above
resistance. While this pattern can form over just a few months, it is usually a long- term pattern that
covers many months.

Key Points regarding Triple bottom :

o Resistance break: As with many other reversal patterns, the triple bottom is not complete
until a resistance breakout. The highest point of the formation, which would be the
highest of the intermittent highs, marks resistance.
o Resistance turns support: Broken resistance becomes potential support, and there is
sometimes a test of this newfound support level with the first correction. Because the
triple bottom is a long-term pattern, the test of newfound support may occur many
months later.

o Price Target: The distance from the resistance breakout to lows can be measured
and added to the resistance break for a price target.

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 Short term Technical Analysis

Candlestick Chart: Originating in Japan over 300 years ago, candlestick chart requires all the open, high,
low and close prices. A daily candlestick is based on the open price, the intraday high and low, and the
close. A weekly candlestick is based on Monday's open, the weekly high-low range and Friday's close.

Candlestick Patterns for Reversal of trend:

1. Doji: The relevance of a Doji depends on the preceding trend or preceding candlesticks. Doji indicate
that the forces of supply and demand are becoming more evenly matched and a change in trend
may be near.

2. Hammer: The hammer is a bullish reversal pattern that forms after a decline. After a decline,
hammers signal a bullish revival. The low of the long lower shadow implies that sellers drove
prices lower during the session.

3. Hanging Man: The hanging man is a bearish reversal pattern that can also mark a top or resistance
level. Forming after an advance, a hanging man signals that selling pressure is starting to
increase. The low of the long lower shadow confirms that sellers pushed prices lower during the
session.
4. Shooting Star: The shooting star is a bearish reversal pattern that forms after an advance and
in the star position, hence its name. A shooting star can mark a potential trend reversal or
resistance level.

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5. Inverted Hammer: The inverted hammer looks exactly like a shooting star,
but forms after a decline or downtrend. Inverted hammers represent a
potential trend reversal or support levels. After a decline, the long upper
shadow indicates buying pressure during the session.

Candlestick Position

1. Star Position :

A candlestick that gaps away from the previous candlestick is said to be in star
position. The first candlestick usually has a large real body, but not always, and the
second candlestick in star position has a small real body. Depending on the previous
candlestick, the star position candlestick gaps up or down and appears isolated from
previous price action. The two candlesticks can be any combination of white and black.
Doji, hammers, shooting stars and spinning tops have small real bodies and can form
in the star position. Later we will examine 2- and 3-candlestick patterns that utilize
the star position.

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2. Harami Position :

A candlestick that forms within the real body of the previous candlestick is in
Harami position. Harami means pregnant in Japanese and the second candlestick is
nestled inside the first. The first candlestick usually has a large real body and the
second a smaller real body than the first. The shadows (high/low) of the second
candlestick do not have to be contained within the first, though it's preferable if they
are. Doji and spinning tops have small real bodies and can form in the harami position
as well. Later we will examine candlestick patterns that utilize the harami position.

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 Conclusion

Equity research plays a very crucial role in order to make wise investment decisions.
After having accessed your risk capacity and tolerance followed by time horizon and
intention of investment, the individual portfolio can fetch your systematic returns.

Relative valuation model is one such method for value analysis. One can use long term
and short-term technical analysis along with fundamental analysis to determine a
confirm trade signal. By calculating long term target price investor one can achieve
maximum profit and also get an idea for how much period they should hold the stock.

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 References

1. www.equitymaster.com
2. www.investopedia.com
3. www.ibef.org
4. www.stockschart.com
5. www.wikipedia.com
6. www.oilandgasiq.com

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