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Transactions on Engineering and Sciences
Vol.3, Issue 5, July-September 2015
ISSN: 2347-1964 (Online) 2347-1875 (Print)
A Study on the Technical Analysis of Share Price
Movements of Banking Sector with Special
Reference to NSE
Baggam Seshu Sailendra1
T.Subramanian2
1Research
2Professor,
Scholar, Bharathiar University, Coimbatore
Department of MBA, Vidyaa Vikas College of Engineering and Technology, Tiruchengode.
Abstract: In the recent years banking sector is attracting many investors of shares to have it as a primary
option in their investment portfolio. These investors are in search of the information about the right
share to be purchased and best time to invest. Through this study the investors can get to know what
tools are available to take a decision on shares trading. The research study is an analytical research,
secondary data has used for the study, the tools used are correlation, Trend lines and Market Indicators
such as EMA, ROC, RSI and MACD. This study is a technical analysis.
Key Words: Banking Sector, NSE, Support & Resistance, Moving average
I.
INTRODUCTION
The banking system is becoming the backbone of our nation’s economy. Banking is providing the
required funds to the growth and development of our nation. Banks have a major role for not just accepting
deposits from public and other organizations but also to leverage such funds through credit creation. State
banks have dominated the banking sector in India for several years. After Independence State banks have
played an important role in the development process of India’s economy. In the recent year’s lot of private
banks have emerged and are making major impact with the technology improvisation. Banking has become
more simplified and is at the doorstep of every account holder.
In such a situation the demand for banking sector share has also increased. Investors are willing to
invest in banks related shares in both National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
The investors need to properly analyze the market before investing. There are both fundamental analysis
and technical analysis.
A. S&P CNX Nifty
The CNX Nifty, also called as Nifty 50 or as Nifty, is a benchmark index for Indian equity market from
National Stock Exchange of India. NIFTY consists of top and well performing 50 companies from 24
different sectors. Based on many factors the companies forming a NIFTY index may vary from time to time.
NIFTY is for NSE similarly SENSEX is for BSE.
II. TECHNICAL ANALYSIS
Technical analysis is one of the best methodologies of security analysis for forecasting the direction
of share prices which takes into study of the past prices of the market. Behavioral
economics and quantitative analysis use the same tools of technical analysis. The usefulness of both the
technical and as well as fundamental analysis is disputed by the Efficient Market Hypothesis which states
that stock market prices are unpredictable.
III. CONCEPTS
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Chart pattern is a pattern created on the chart by the movement of security prices.
Resistance is a price level that prompts a net increase, the activity of selling takes place.
Support is a price level that prompts a net increase in activity of buying.
Trending is the phenomenon by which price movement tends to persist in one direction for an
extended period of time.
A. Types of charts


Candlestick chart is a type of chart which was introduced by Japanese, the points when plotted on
graph and interval between the open and close prices to emphasize the open/close relationship.
Line chart connects the closing price values with line segments.
B. Price-based indicators
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
MACD is moving average convergence/divergence.
Relative strength index (RSI) is an oscillator showing price strength.
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Techscripts
Transactions on Engineering and Sciences
Vol.3, Issue 5, July-September 2015
ISSN: 2347-1964 (Online) 2347-1875 (Print)
IV. STATEMENT OF THE PROBLEM
Now a day the Indian stock market is gradually gaining its momentum. Investors have started to invest
in the share market boldly. Some retail investors have not much of idea where and how to invest and also in
which sector to select. Banking sector is considered to be one of the best options to invest in. There are two
ways to analyze one is fundamental analysis and another is technical analysis, so an attempt is made to
analyze the share price movements of top five banks in the sector with that of the bank nifty and nifty
through technical analysis.
A. Scope of the Study
Technical analysis is a broader concept and the researcher has explored only with very few tools like
correlation, support and resistance, trend line, and with five banks share price movements only. This study
lays a foundation to the readers to explore what the researcher has missed.
B. Objectives of the Study
1.
2.
3.
4.
5.
To study the share price movements of banking sectors.
To compare the performance of private bank with nationalized bank in the stock market.
To study the behavior of share price movements before and after the budget.
To compare the performance of CNX Nifty and Bank Nifty for 5 yrs from 2011 to 2015.
To give suggestions to the investors preferring banking sector scripts.
C. Limitations of the Study
1.
2.
3.
4.
This study is mainly carried out based on the secondary data taken from stock exchanges so there
were a few variations in the data published by the major websites.
Finding is restricted to five banks and cannot be generalized to the industry as a whole.
The study is conducted based only on technical analysis and fundamental analysis is not taken for
analysis.
The data was restricted to only five financial years from 2010-11 to 2014-15 of 6 months each which
might be not sufficient to predict the future trend of market.
V. METHODS
A. Trend Lines
A Trend line is a line that shows the prevailing direction of price which is drawn over pivot highs or
under pivot lows. Trend lines are a visual representation of support and resistance in any time frame. Trend
lines are easily recognizable lines that traders draw on charts to connect a series of prices together. The
resulting line is then used to give the trader a good idea of the direction in which an investment's value
might move.
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The more times a stock touches a trend line, the more significant it becomes.
It takes two touches to draw a trend line, but 3 to confirm it as being a valid one.
In a down trend, draw the line along the highs of prices.
The steeper the trend line, the less reliable it will be.
A trend line break does not mean that the trend will change.
B. Correlation
Correlation is the study of relation between two or more variables.
C. Trend Analysis
An aspect of technical analysis that tries to predict the future movement of a stock based on past data.
Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will
happen in the future. There are three main types of trends: short-, intermediate- and long-term.
VI. RESULTS AND DISCUSSIONS
A. Findings
1.
2.
3.
4.
The Private Banks share prices have more fluctuations in end of the March 2015 when compared to
Public Banks.
When compared to the Public Banks, the Private Banks share prices are totally going downward
trend in Jan 2015 to Mar 2015.
In Jan 2015 to Mar 2015 the share price movements of Axis, SBI and ICICI bank are closely in
tandem with Bank Nifty compared to other banks IOB and HDFC. There is not much of price
change in both IOB and HDFC during the study period.
NIFTY has a downward trend. SBI has a quick recover from the fall when compared to other 4
banks in Jan 2015 to Mar 2015.
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Transactions on Engineering and Sciences
Vol.3, Issue 5, July-September 2015
5.
6.
7.
8.
9.
ISSN: 2347-1964 (Online) 2347-1875 (Print)
Whenever there is a fall in the market the most affected is private banks and whenever there is an
increase in market the private banks have regained quickly and have been aggressive than public
banks.
When compared to Nifty, the Correlation of ICICI bank is highly correlated in Jan 2015 to Mar 2015.
In trend Forecasting using Straight line method, the SBI and AXIS bank has the same prices as
future trend.
Through trend Forecasting analysis, the IOB has lowest share prices as future trend.
In 2011, 2013 and 2015 the share price movements have fallen down before one month of
announcing the budget and have not recovered in the next three months, and in 2012 and 2014 the
market have increased after the announcement of the budget.
B. Suggestions
a.
Over all Public Banks have performed well in the year 2015 and Especially SBI performed very well
compared to other banks.
b. If the investor is a conservative investor, investing in Public Banks is a good choice because it will
reduce risk. The other case if the investor is an aggressive investor he can invest in private banks
like ICICI and HDFC Bank.
c. SBI share prices have been increasing and also meet out the fluctuations in various ways so
investing in SBI is always earning profit.
d. The investors have to be very careful at the time of investing in any sector during the budget
announcing time.
e. The investor can always go for the Bank Nifty to compare the performance of the banking sector
shares as Bank Nifty has always represented the banking sector shares
VII.
CONCLUSION
Banking sector is always a Booming sector. Investing in a banking sector helps to gain better profit.
During the period of the project, I have learnt about how to invest and ways in which the investments made
in various sectors and its products. This project helped me to involve in trading business and also provide
me the opportunity to choose better investment pattern in future. I have assessed the share price movements
of various banking companies with Nifty. The investors looking for banking sector shares can use this study
to analyse the shares.
REFERENCES
[1] Gupta and Sehgal 1999, “Relationship between Accounting Variables and Systematic Risk: The Indian
Experience”, Indian Accounting Review, June, Vol.3, No.1.
[2] HasanDinçer; UmitHacioglu (2013), Global Strategies in Banking and Finance, Published by IGI Global,
Pub. Date:October 31, 2013.
[3] Daigler Robert T.et.Al. and testing of trading rules on the New York stock Exchange, 1981.
[4] Micko Tanaka Yamawakiet. Al., “a study on the Adaptive use of Technical Indicators for predicting the
Intra-Day price movements”. 2007
[5] Kasarlashanthan/Ramesh Gavva (2012), An overview of Indian Banking sector, issue September 20,
2012.
[6] RohanKachalia, Technical analysis to predict share price movements - August 17th, 2007, VP- Utkristh
Share & Stock Brokers. 2007.
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