Stock Exchange Market Analysis

Chapter – I

Prologue

The Stock Exchange is the oldest exchange in Asia. It dates back to the close of 18th century when the East India Company used to transact loan securities. In the 1830s, trading on corporate stocks and shares in Bank and Cotton presses took place in Bombay. 13 Though the trading was broad but the brokers were hardly half dozen during 1840 and 1850.

Share price movement is analyzed broadly with two approaches, namely fundamental analysis and technical analysis. Fundamental approach analyses the share price movement on the basis of economic, industry and company statistics. If the share price value is lower than intrinsic value, investors to buy the share and higher than the intrinsic value, investor to sell and gets profits.

The qualitative role interprets that geometric pattern such as double bottoms, head and shoulder and support and resistance level. The quantitative try to create indicators such as Moving average (MV), Relative Strength Indicators (RSI) etc. It is a process of identify trend reversals at an earlier stage to formulate the buying and selling strategy. It help of several indicators they analyses the relationship between price, volume and supply, demand for the overall market and the individual stock. To study the predictive price movement of securities in future market. If the investors able to take decision of his traits and investment. The stock market decision is very important and most of the people make investment advices of brokers. Technical analysis easy way to take decision on his own manner. It is very important since investing in securities. Technical analysts believe that the historical performance of stocks and markets are indications of future performance.

Origin of Technical Analysis Charles H.Dow in 1984 is a Father of Technical Analysis in the wall street journal. A.J.Nelson, a close friend of Charles Dow formalized the Dow Theory of economic forecasting.

Technical

The above mentioned tools are analyzed.

Dow Theory: Dow developed his theory to explain the movement of market indices. He developed the theory on the basis of certain hypothesis. First hypothesis, no single individual or buyer can influence the major trend of the market. An individual investor can affect the daily price movement by buying or selling huge quantum of particular scrip. Second hypothesis is that the market discounts everything. Even natural calamities such as earthquake, plague and fire also get quickly discount in the market. Third hypothesis is that the theory is not infallible.

Theory: Dow Theory divided into primary, intermediate and short term trend. The primary trend may be the broad upward and downward movement that may last for a year or two. The intermediate trends are corrective movements, which may last for three weeks to three months. The primary trend may be interrupted by the intermediate trend. The short term trends refer to the day to day price movement and also know as oscillations or fluctuations. These types of trends are compared to tide, waves and ripples of the sea.

Capital