“FUNDAMENTAL AND TECHNICAL ANALYSIS

OF OIL & GAS AND SHIPPING SECTOR”

(Summer Internship Project Report)

Submitted to

MET COLLEGE OF COMPUTER SCIENCE

BANDRA, MUMBAI

Submitted by

RISHABH R. SINGHAL

Roll No.-PG14055

PGDM Finance 2014-16

Under the guidance of

Mr. Nikesh Ruparel

Done at

Aditya Birla Financial Services Group

1. EXECUTIVE SUMMARY

This project is about equity research in Oil & Gas and Shipping Sector. In this both sectors

are analysed through fundamental & technical analysis. This are the two tools used for

analysing both sector. Large cap companies of each sector are analysed & out of this few

companies are selected by Value Pick & Growth Pick. After analysing these companies,

stocks were purchased by creating portfolio of 10 Cr which is analysed over the period of two

months.

Technical analysis is used to study stock patterns of these companies. The movement of the

scrip price and its behavior can be explained in a more illustrative form by using the technical

analysis. The observed patterns are tested with various oscillators and decision about

particular stock is made.

The report will help the investors to know about the current growth prospects of Indian

Economy in relation with Oil Gas and Shipping sector. This report will help them in

comparing the stocks and their estimated future share prices, so that they can invest in better

option and get maximum returns.

OBJECTIVE

The main objective of this project is to understand that proper analysis of a company

minimizes the risk of losing money in stock market of any investor.

To provide overview of Indian Oil Gas and Shipping sector.

To identify top-line and bottom-line of the companies selected under the sector and

the factors that affect them.

The analysis of various stocks of both sector by calculating the value pick & growth

pick, and the technical analysis which would help us know which stock is

outperforming and which is underperforming.

SCOPE

The scope of the project is limited to understanding the basic of fundamental analysis and

technical analysis and apply it to take a decision of investing in both sector. Fundamental

analysis seeks to determine future stock prices by understanding and measuring the objective

“values” of the equity. Whereas the study of stock charts, known as the technical analysis

believes that the past action of the market itself will determine the future course of the prices

This report will help Wealth Management on their investment decision of the wealth

management team.

.

LIMITATIONS

The project has been limited to investment analysis of OIL GAS and SHIPPING sector only.

INTRODUCTION OF OIL & GAS SECTOR.

The oil and gas sector is one of the six core industries in India. It is of strategic importance

and plays a pivotal role in influencing decisions across other important spheres of the

economy. With India’s economic growth closely linked to energy demand, the need for oil

and gas is projected to grow further, rendering the sector a fertile ground for investment.

FOCUS ON OIL & GAS SECTOR

A country's economic growth is closely correlated to the energy demand. Consequently, the

demand for oil and gas, which is one of the main sources of meeting energy requirements, is

expected to increase further. Oil and gas account for 37 per cent of total energy consumption.

Oil consumption is estimated to reach four million barrels per day (MBPD) by FY16,

expanding at a compound annual growth rate (CAGR) of 3.2 per cent during FY08-16. The

Government of India is looking forward to promote a plan for the sustainable development of

the oil and gas sector, and investments in research and development (R&D) activities in

alternative fuels segment.

To cater to the increasing demand, the Government of India has adopted several policies;

including allowing 100 per cent foreign direct investment (FDI) in many segments of the

sector, such as natural gas, petroleum products, and refineries, among others. The

government’s participation has made the oil and gas sector in the country a better target of

investment. Today, it attracts both domestic and foreign investment, as attested by the

presence of Reliance Industries Ltd (RIL) and Cairn India.

The value of the Indian oil and gas sector is expected to grow to US$ 139,814.7 million by

2015.

According to data released by the Department of Industrial Policy and Promotion (DIPP), the

petroleum and natural gas sector attracted foreign direct investment (FDI) worth US$

6,519.53 million between April 2000 and January 2015.

India increasingly relies on imported LNG; the country was the fifth-largest LNG importer in

2013, accounting for 5.5 per cent of global imports. India’s LNG imports are forecasted to

increase at a CAGR of 33 per cent during 2012–17.

By 2015-16, India’s demand for gas is set to touch 124 MTPA against a domestic supply of

33 MTPA and higher imports of 47.2 MTPA, leaving a shortage of 44 MTPA, as per

projections by the Petroleum and Natural Gas Ministry of India. Moreover, Business Monitor

International (BMI) predicts that India will account for 12.4 per cent of Asia-Pacific regional

oil demand by 2015.

Primary factors considered

The two main factors that were considered which affect the profitability of the Oil and Gas

sector, and in this case shipping sector too are Million Barrels and Gross Refining Margin.

One way to represent the economics of a refinery is to calculate its Refinery Gross Margin.

GRM is the difference between crude oil price and total value of petroleum products

produced by the refinery.

Higher the GRM's higher the Profit Yields.

The factors that have contributed to high GRMs are

Cost of sourcing crude oil

Manufacturing reliability and efficiency

Ability to produce quality transportation fuels

Flexibility of crude oil receipt and product evacuation infrastructure.

Gross Refinery Margin

A key industry measure of Profitability at several refineries of Indian state-run firms are

lower than those of private firms as they are older and cannot handle cheaper tough grades.

State-refiners' operating costs are higher largely due to high energy costs, locational

disadvantages and inadequate port infrastructure for importing oil in bigger vessels and

saving on freight costs.

State-owned refineries in India have seen their gross refining margins, (GRMs) a key metric

of profitability, fall to a four-year low due the low prices of petrol and diesel which account

for the bulk of sales for these firms.

Following is the table of gross refining margins of refiners in India since 2009/10.

Company/ Gross Refining Margins in $/Barrel .

Refinery 2009/10 2010/11 2011/12 2012/13 2013/14 2014

IOC

AVERAGE GRM 4.47 5.95 3.63 3.16 4.24 2.25

BPCL

AVERAGE GRMs 2.97 4.47 3.16 4.97 4.33 3.38

HPCL

AVERAGE GRMs 2.68 5.30 2.89 2.08 3.43 2.04

MRPL

AVERAG 5.46 5.96 5.60 2.45 2.67 0.66

NRL

AVERAGE GRMs 11.19 15.39 11.97 10.52 12.09 11.84

RIL

AVERAGE G 6.60 8.40 8.60 9.20 8.10 8.70

Essar Oil

AVERAGE GRMs 4.38 6.91 4.23 7.96 7.98 9.04

Source : Government data, companies' websites.

As one can see from the below graphical representation of the raw data from the bar diagram it can be seen that the prices have been dropping of most of the companies.

Barrels per day

Barrels per day refers to the daily output of an oil production company or oil well, or the

daily throughput of an oil transportation hub (such as a pipeline). The average daily

production of oil & liquids in barrels per day estimates the average daily production from oil

& gas wells of oil and liquids like natural gas liquids and condensates, measured by how

many Barrel of Oil Equivalents (BOE) they could fill.

Company/Refineries Barrels Per Day

IOC 1086000

BPCL 430000

HPCL 296000

CPCL 230000

MRPL 300000

NRL 60000

BORL 120000

RIL 1200000

ESSAR 400000

0 2 4 6 8 10 12 14 16 18

IOC

BPCL

HPCL

MRPL

NRL

RIL

ESSAR

GRMS

TREND

2014

2013/2014

2012/2013

2011/2012

2010/2011

2009/2010

PARAMETERS FOR SELECTION OF COMPANIES

The basic criteria behind selecting any company from either the Oil and Gas and Shipping

sector were primarily based on the market capitalisation of the respective companies. Since

the main aim was to have a sustained growth over long term with stability it was decided that

only large cap companies would be shortlisted in the first filtering process of narrowing down

of company names from each sector.

So as per the data available on the exchange the following companies in the illustration were

selected.

Illustration showing market capitalisation of oil gas and shipping companies in Rs.Cr

• ONGC

249,520.87

• GAIL

47,282.50

• Cairn India

31,666.26

• Oil India

26,756.56

• Petronet

LNG 14,448.75

• Guj State

Petro 7,508.27

• IGL

6,398.01

ESSAR OIL 14582

RELIANCE 286068

HPCL 23626

BPCL 61480

IOCL 84723

GUJARAT PIPAVAV 10249

GE SHIPPING 5277

ADANI PORT 66241

Value pick stocks

From the stocks that were shortlisted since I was looking for stocks that will grow at a faster rate

than the sector as a whole will grow. Further analysis was done based on the Price to Earnings ratio

of the companies

Below is the P/E calculated as on 11th June 2015, this table shows the P/E of all the companies that

were considered at the first stage

EPS CMP P/E

2015 11-06-2015

RELIANCE 71.5 884 12.59 12.59

ONGC 20.9 304 14.56 14.56

GAIL 24.15 395.4 16.31 16.31

CAIRN INDIA 7.2 177 24.52 24.52

OIL INDIA 40.9 470 11.15 PETRONET LNG 11.83 174.55 14.78 GUJ GAS 3.88 119 30.65 30.65

IGL 31.15 377 12.1 ESSAR 10.611 116.6 9.67 9.67

BPCL 69.9 849.35 12.09 12.09

HPCL 80.4 693.6 8.64 8.64

IOCL 21.7 349.1 16.07 GUJARAT PIPAVAV 6.63 212 28.2 28.27

ADANI PORT 10.55 308 30.33 30.33

Average Sector P/E 16.99

From the above chart one can determine that the green represent the companies whose P/E is

lower than the sector P/E.

From those only the following were shortlisted

Reliance

Gail

ONGC

ESSAR

HPCL

BPCL

These seven stocks have been shortlisted as the value pick stocks which will be chosen for

investment.

Growth pick stocks

On further analysis of the stocks which had a higher P/E than the sector average compared to

the growth in its earning per share compared to last year it was noticed that there were

companies whose higher pricing seemed attractive. This was because its EPS growth was

substantial and using the PEG ratio it was confirmed

The following analysis is shown in the table below

COMAPNIES EPS GROWTH P/E PEG RATIO

RELIANCE 3.2 12.59 3.943

CAIRN INDIA -12.3 24.52 -

GUJ GAS -14.51 30.65 -

BPCL 20.165 12.09 -

GUJARAT PIPAVAV 67 28.67 0.42

ADANI PORT 7.5 30.33 0.96

As one can see that for Adani port and Guj Pipavav there has been a massive growth on the

EPS side when compared to last year’s value, hence even though the stock is trading at a P/E

higher than the sector P/E its price is justified due to its rapid growth.

When the PEG ratio was calculated it came below 1 which indicates the same.

So this stock was selected as a growth pick stock in the oil gas and shipping sector

Gujarat Pipavav

Adani Port

Asset allocation Rational

Considering all the above given factors and the expectations that Oil and Gas sector in

general will perform well over the long term it was decided that 70% of the total funds

available should be allocated to this sector , i.e Rs. 7 crore out of the total Rs.10 crores and

remaining Rs. 3 crore to Shipping sector.

So considering all the above factors it was finally concluded that the Rs.7 crores be allocated

in the following manner to each stock

RELIANCE

Since the EPS growth was second highest and P/E ratio to be near the average p/e sector I

have allocated Rs. 1.5 crore to this stock.

ONGC

Topline and bottom line growth of the company looks very promising so I have allocated Rs.

1.5 crore to this scrip

Remaining Rs. 4 crore is allocated to each company in oil and gas sector, that is,

GAIL

ESSAR OIL

HPCL

BPCL

Thus a total of Rs.7 crores has been allocated to the Oil and Gas sector out of the total of Rs.10

crores.

INRODUCTION OF SHIPPING SECTOR

India has 13 major ports and about 200 non-major ports. Cargo traffic, which was 976 million

metric tonnes (MMT) in 2012 is expected to reach 1,758 MMT by 2017. The Indian ports and

shipping industry plays a vital role in sustaining growth in the country’s trade and commerce.

India currently ranks 16th among maritime countries, with a coastline of about 7,517 km.

Around 95 per cent of India's trade by volume and 70 per cent by value takes place through

maritime transport, according to the Ministry of Shipping.

The Indian government continues to support the ports sector. It has allowed foreign direct

investment (FDI) of up to 100 per cent under the automatic route for projects regarding

construction and maintenance of ports and harbours. It has also facilitated a 10-year tax

holiday to enterprises engaged in developing, maintaining and operating ports, inland

waterways and inland ports.

Market size

The handling capacity of the major ports in India is sufficient to match with the trade

demands. The capacity of all major ports as on March 31, 2014 was 800.52 MMT against

cargo traffic of 555.54 MMT handled in 2013-14. Thus the capacity utilisation is around 70

per cent and as per internationally-accepted norms the gap between the traffic and the

capacity is usually around 30 per cent. Moreover, Government has taken many measures to

improve the efficiency of operations through mechanisation, deepening the draft and speedy

evacuation.

Significantly, publicly owned major ports in India reported healthy levels of container

throughput growth during April 2014 to February 2015, the first 11 months of fiscal year

2014-15, compared to the volumes in the previous year. Container-handling in the 11-month

period expanded 7.15 percent year-over-year to 7.25 million 20-foot-equivalent units from

6.77 million TEUs in the same period of 2013-14. Containerised cargo tonnage grew 4.4

percent to 109 million tons from 104 million tons, the data showed.

In fiscal year 2013-14, which ended in March 2014, overall cargo volumes at major ports

grew 1.78 percent year-over-year to 555.5 million tonnes (MT).

The Indian ports sector received FDI worth US$ 1,637.30 million in the period April 2000–

February 2015, as per the Department of Industrial Policy and Promotion (DIPP), Ministry of

Commerce and Industry. The ports sector was also awarded 30 projects in FY14, investing

over Rs 20,000 crore (US$ 3.16 billion) which is a threefold increase over the preceding year.

In FY14, coal cargo traffic grew by 20.6 per cent to 104.5 MT from 86.7 MT in FY13. With

regard to commodities, there was a rise of 25 per cent in handling of fertilisers in April 2014

as against April 2013.

GOVERNMENT INITIATIVES The Union Cabinet had earlier approved a proposal for these ports to be set up at an

investment of about Rs 15,820 crore.

Gadkari said Sagarmala project was another initiative to propel the sector's growth as it not

only aims at "modernising the major ports along India's coastline, but also achieving rapid

expansion and development of inland and coastal navigation by optimising the use of existing

and future transport assets."

The Ministry has requested for Rs 692 crore for 2015-16 against which Rs 200 crore have

been allocated. The Cabinet last week had given nod for it.

To augment inland water transport, "Jal Marg Vikas Project" has been announced and aims at

strengthening of open river navigation technique and hardware, including dredging, night

navigation facilities, latest state of art terminal facility and modern channel-making methods,

he said.

The completion of the project would provide assured depth of 3 meter for plying 1500 to

2000 DWT vessels for commercial navigation between Haldia and Allahabad, he said, adding

that it is being "implemented with financial assistance from World Bank at an estimated Rs

4,200 crore cost".

Under it, Varanasi-Haldia segment will be completed by June, 2019 while Varanasi-

Allahabad stretch is slated for completion by December, 2020.

Gadkari said his Ministry is also considering relaxation of cabotage restriction for special

vessels such as RO-RO and car/truck carriers, in short supply in India, besides ferries.

The Ministry is also considering relaxation of cabotage restriction for movement of EXIM

containerised cargo for all ports in India located on the East Coast.

Cabotage is the transport of goods between two points in the same country. At present, the

cabotage policy in India allows first preference to Indian flagships over cargo and foreign

ships are allowed to carry it only when no suitable Indian flag vessel is available for the

same.

Gadkari said under other measures to boost the sector, include financial assistance scheme for

on-board ship training for merchant navy candidates, who can avail assistance to the tune of

30 per cent of the training cost or Rs 3 lakh, whichever is less, as grant-in-aid.

SELECTION OF COMPANIES

As stocks were found out earlier through growth pick and value pick. The shipping

companies are as follows:-

Gujarat Pipavav

Adani port.

Asset allocation Rational

Considering all the above given factors and the expectations that shipping sector in general

will perform well over the long term it was decided that the remaining 30%of the total funds

available should be allocated to this sector , i.e Rs. 3 crore out of the total Rs.10 crores.

Since PEG growth is almost similar of both the shipping companies, I have decided to invest

equally in both the companies.

RS. 1.5 crores to Gujarat pipavav and Rs. 1.5 crore to Adani ports.

The total fund of Rs.10 crores is split into two parts in 70:30 ratio, 70% to the Oil and Gas

sector and 30% of the fund to the Shipping sector.

Rs.10 Crores Oil gas and Shipping fund

15%

15%

10%

10% 10%

10%

15%

15%

ALLOCATION

ONGC

RELIANCE

HPCL

BPCL

ESSAR OIL

GAIL

GUJ PIAVAV

ADANI PORT

TECHNICAL ANALYSIS

INTRODUCTION

“Technical analysis refers to the study of market generated data like prices & volume to

determine the future direction of prices movements.”

Technical analysis mainly seeks to predict the short term price travels. It is important criteria

for selecting the company to invest. It also provides the base for decision-making in

investment. The one of the most frequently used yardstick to check & analyze underlying

price progress. For that matter a verity of tools was consider.

This Technical analysis is helpful to general investor in many ways. It provides important &

vital information regarding the current price position of the company.

Technical analysis involves the use of various methods for charting, calculating &

interpreting graph & chart to assess the performances & status of the price. It is the tool of

financial analysis, which not only studies but also reflecting the numerical & graphical

relationship between the important financial factors.

The focus of technical analysis is mainly on the internal market data, i.e. prices & volume

data. It appeals mainly to short term traders. It is the oldest approach to equity investment

dating back to the late 19th century.It uses charts and computer programs to study the stock’s

trading volume and price movements in the hope of identifying a trend . In fact the decision

made on the basis of technical analysis is done only after inferring a trend and judging the

future movement of the stock on the basis of the trend. Technical Analysis assumes that the

market is efficient andthe price has already taken into consideration the other factors related

to the company and the industry. It is because of this assumption that many think technical

analysis is a tool, which is effective for short-term investing.

Basic premises of technical analysis:

1.Market prices are determined by the interaction of supply & demand forces.

2. Supply & demand are influenced by variety of supply & demand affiliated

factors both rational & irrational.

3. These include fundamental factors as well as psychological factors.

4. Barring minor deviations stock prices tend to move in fairly persistent trends.

5. Shifts in demand & supply bring about change in trends.

6. The persistence of trends & patterns analysis of past market data can be used to predict

future prices behavior.

Drawbacks / limitations of technical analysis:

1. Technical analysis does not able to explain the rezones behind the employment or selection

of specific tool of Technical analysis.

2. The technical analysis failed to signal an uptrend or downtrend in time.

3. The technical analysis must be a self defeating proposition. As more & more people use,

employ it the value of such analysis trends to reduce.

Fundamental vs. Technical Analysis

Technical analysis and fundamental analysis are the two main schools of thought in

the financial markets. As we've mentioned, technical analysis looks at the price movement of

a security and uses this data to predict its future price movements. Fundamental analysis, on

the other hand, looks at economic factors, known as fundamentals.

Fundamental analysis takes a relatively long-term approach to analyzing the

market compared to technical analysis. While technical analysis can be used on a

timeframe of weeks, days or even minutes, fundamental analysis often looks at data

over a number of years.

Why we use TECHNICAL ANALYSIS? 1) Technical analysis provides information on the best entry and exit points for a trade.

2) On a chart, the trader can see where momentum is rising, a trend is forming, a price is

dipping or other events are developing that show the best entry point and time for the

most profitable trade. With the constant movement of various currencies against each

other in the Forex market, most traders will focus on using technical indicators to find

and place their trades.

IS TECHNICAL ANALYSIS DIFFICULT?

1) Technical analysis is not difficult, but it requires studying different types of charts

such as the hourly or daily charts, knowing which technical indicators to use and

how to use them.

2) Computers and the Internet have made this process much easier. Most brokers

provide basic charts and technical indicators for free or at a very low cost.

One way to avoid getting frustrated by all the lines, colors, and graphics is to focus on using

only a few indicators that will provide you with the information needed.

Usually the following tools & instruments are used to do the

technical analysis:

Price Fields

Technical analysis is based almost entirely on the analysis of price and volume. The fields

which define a security's price and volume are explained below.

Open -

This is the price of the first trade for the period (e.g., the first trade of the day). When

analyzing daily data, the Open is especially important as it is the consensus price after all

interested parties were able to "sleep on it."

High –

This is the highest price that the security traded during the period. It is the point at which

there were more sellers than buyers (i.e., there are always sellers willing to sell at higher

prices, but the High represents the highest price buyers were willing to pay).

Low –

This is the lowest price that the security traded during the period. It is the point at which

there were more buyers than sellers (i.e., there are always buyers willing to buy at lower

prices, but the Low represents the lowest price sellers were willing to accept).

Close –

This is the last price that the security traded during the period. Due to its availability, the

Close is the most often used price for analysis. The relationship between the Open (the first

price) and the Close (the last price) are considered significant by most technicians. This

relationship is emphasized in candlestick charts.

Volume –

This is the number of shares (or contracts) that were traded during the period. The

relationship between prices and volume (e.g., increasing prices accompanied with increasing

volume) is important.

Open Interest –

This is the total number of outstanding contracts (i.e., those that have not been exercised,

closed, or expired) of a future or option. Open interest is often used as an indicator.

Bid –

This is the price a market maker is willing to pay for a security (i.e., the price you will

receive if you sell).

Ask –

This is the price a market maker is willing to accept (i.e., the price you will pay to buy the

security).

Price Styles Price in a chart can be displayed in four styles:

1. Bar Chart- The highs and lows of a foreign currency are plotted in a diagram and the

points are joined with vertical lines (bars). A small horizontal tick to the left denotes

the opening level while a small horizontal tick to the right represents the closing price

of each interval.

2) Line Chart- It gives the detailed information about every aspect. The exchange rates

for each time period are plotted in a diagram and the points are joined. Prices on the y-

axis, time on the x-axis. The line chart chooses for example the closing price of

consecutive time periods, but can also work with daily, official fixings.

The relatively easy handling of line charts is a great advantage. Line chart sdo not show price

movements within a time period. This can be a problem because important information for

exchange rate analysis can be lost. This problem was remedied with the development of bar

charts that represent amore sophisticated form of line chart

3) Candlestick Chart- A candlestick is black if the closing price is lower than the opening

price. A candlestick is white if the closing price is higher than the opening price. In the

1600s, the Japanese developed a method of technical analysis to analyze the price of rice

contracts. This technique is called candlestick charting. Steven Nison is credited with

popularizing candlestick charting and has become recognized as the leading expert on their

interpretation. Candlestick charts display the open, high, low, and closing prices in a format

similar to a modern-day bar chart, but in a manner that extenuates the relationship between

the opening and closing prices. Candle stick charts are simply a new way of looking at prices,

they don't involve any calculations. Because candlesticks display the relationship between the

open, high, low, and closing prices, they cannot be displayed on securities that only have

closing prices, nor were they intended to be displayed on securities that lack opening prices

.

4)Point And Figure Charts

The point and figure chart is not well known or used by the average investor but it has had a

long history of use dating back to the first technical traders. This type of chart reflects price

movements and is not as concerned about time and volume in the formulation of the points.

The point and figure chart removes the noise, or insignificant price movements, in the stock,

which can distort traders' views of the price trends. These types of charts also try to

neutralize the skewing effect that time has on chart analysis.

When first looking at a point and figure chart, you will notice a series of Xs and Os. The Xs

represent upward price trends and the Os represent downward price trends. There are also

numbers and letters in the chart; these represent months, and give investors an idea of the

date.

Each box on the chart represents the price scale, which adjusts depending on the price of the

stock: the higher the stock's price the more each box represents. On most charts where the

price is between $20 and $100, a box represents $1, or 1 point for the stock.

The other critical point of a point and figure chart is the reversal criteria. This is usually set at

three but it can also be set according to the chartist's discretion.

The reversal criteria set how much the price has to move away from the high or low in the

price trend to create a new trend or, in other words, how much the price has to move in order

for a column of Xs to become a column of Os, or vice versa.

When the price trend has moved from one trend to another, it shifts to the right, signaling a

trend change.

TRENDS IN TECHNICAL ANALYSIS

The Use of Trends

One of the most important concepts in technical analysis is that of trend. The meaning

in finance isn't all that different from the general definition of the term - a trend is

really nothing more than the general direction in which a security or market is

headed. Take a look at the chart below:

Isn’t it hard to see that the trend is up. However, it's not always this easy to see a

trend:

There are lots of ups and downs in this chart, but there isn't a clear indication of

which direction this security is headed.

A More Formal Definition

Unfortunately, trends are not always easy to see. In other words, defining a

trend goes well beyond the obvious. In any given chart, you will probably notice that

prices do not tend to move in a straight line in any direction, but rather in a series of

highs and lows. In technical analysis, it is the movement of the highs and lows that

constitutes a trend. For example, an uptrend is classified as a series of higher highs

and higher lows, while a downtrend is one of lower lows and lower highs.

It is an example of an uptrend. Point 2 in the chart is the first high, which is determined after

the price falls from this point. Point 3 is the low that is established as the price falls from the

high. For this to remain an uptrend each successive low must not fall below the previous

lowest point or the trend is deemed a reversal.

Types of Trend

There are three types of trend:

1 .Up trend

2. Down trend

3. Sideways/Horizontal Trends

As the names imply, when each successive peak and trough is higher, it's referred to

as an upward trend. If the peaks and troughs are getting lower, it's a downtrend. When there

is little movement up or down in the peaks and troughs, it's a sideways or horizontal trend. If

you want to get really technical, you might even say that a sideways trend is actually not a

trend on its own, but a lack of a well-defined trend in either direction.

Trend Lengths

Along with these three trend directions, there are three trend classifications. A trend

of any direction can be classified as a long-term trend, intermediate trend or a short-

term trend. In terms of the stock market, a major trend is generally categorized as one

lasting longer than a year. An intermediate trend is considered to last between one

and three months and a near-term trend is anything less than a month. A long-term

trend is composed of several intermediate trends, which often move against the

direction of the major trend. If the major trend is upward and there is a downward

correction in price movement followed by a continuation of the uptrend, the

correction is considered to be an intermediate trend. The short-term trends are

components of both major and intermediate trends. Take a look a Figure 4 to get a

sense of how these three trend lengths might look.

When analyzing trends, it is important that the chart is constructed to best reflect the

type of trend being analyzed. To help identify long-term trends, weekly charts or

daily charts spanning a five-year period are used by chartists to get a better idea of the

long-term trend. Daily data charts are best used when analyzing both intermediate and

short-term trends. It is also important to remember that the longer the trend, the more

important it is; for example, a one-month trend is not as significant as a five-year

trend.

Trend Lines

A trend line is a simple charting technique that adds a line to a chart to

represent the trend in the market or a stock. Drawing a trend line is as simple as

drawing a straight line that follows a general trend. These lines are used to clearly

show the trend and are also used in the identification of trend reversals.

An upward trend line is drawn at the lows of an upward trend. This line

represents the support the stock has every time it moves from a high to a low. Notice

how the price is propped up by this support. This type of trend line helps traders to

anticipate the point at which a stock's price will begin moving upwards again.

Similarly, a downward trend line is drawn at the highs of the downward trend. This

line represents the resistance level that a stock faces every time the price moves from

a low to a high.

Channels

A channel, or channel lines, is the addition of two parallel trend lines that act as

strong areas of support and resistance. The upper trend line connects a series of highs,

while the lower trend line connects a series of lows. A channel can slope upward,

downward or sideways but, regardless of the direction, the interpretation remains the

same. Traders will expect a given security to trade between the two levels of support

and resistance until it breaks beyond one of the levels, in which case traders can

expect a sharp move in the direction of the break. Along with clearly displaying the

trend, channels are mainly used to illustrate important areas of support and resistance.

A descending channel on a stock chart; the upper trend line has been placed on the

highs and the lower trend line is on the lows. The price has bounced off of these lines

several times, and has remained range-bound for several months. As long as the price

does not fall below the lower line or move beyond the upper resistance, the range-

bound downtrend is expected to continue.

The Importance Of Trend

It is important to be able to understand and identify trends so that you can trade with

rather than against them. Two important sayings in technical analysis are "the trend is your

friend" and "don't buck the trend," illustrating how important trend analysis is for technical

traders.

In this part of the report the stocks that were shortlisted earlier the technical analysis of these

stocks has been covered

Various price patterns have been covered in this section such as

Head and Shoulders

This is one of the most popular and reliable chart patterns in technical analysis. Head

and shoulders is a reversal chart pattern that when formed, signals that the security is

likely to move against the previous trend. There are two versions of the head and

shoulders chart pattern. Head and shoulders top is a chart pattern that is formed at the

high of an upward movement and signals that the upward trend is about to end. Head

and shoulders bottom, also known as inverse head and shoulder is the lesser known of

the two, but is used to signal a reversal in a downtrend.

Cup and Handle

A cup and handle chart is a bullish continuation pattern in which the upward trend has paused

but will continue in an upward direction once the pattern is confirmed.

Price pattern forms what looks like a cup, which is preceded by an upward trend. The handle

follows the cup formation and is formed by a generally downward/sideways movement in the

security's price. Once the price movement pushes above the resistance lines formed in the

handle, the upward trend can continue. There is a wide ranging time frame for this type of

pattern, with the span ranging from several months to more than a year.

Double Tops And Bottoms

This chart pattern is another well-known pattern that signals a trend reversal - it is considered

to be one of the most reliable and is commonly used. These patterns are formed after a

sustained trend and signal to chartists that the trend is about to reverse. The pattern is created

when a price movement tests support or resistance levels twice and is unable to break

through. This pattern is often used to signal intermediate and long-term trend reversals.

Triple Tops and Bottoms

Triple tops and triple bottoms are another type of reversal chart pattern in chart analysis.

These are not as prevalent in charts as head and shoulders and double tops and bottoms, but

they act in a similar fashion. These two chart patterns are formed when the price movement

tests a level of support or resistance three times and is unable to break through; this signals a

reversal of the prior trend. Confusion can form with triple tops and bottoms during the

formation of the pattern because they can look similar to other chart patterns. After the first

two support/resistance tests are formed in the price movement, the pattern will look like a

double top or bottom, which could lead a chartist to enter a reversal position too soon.

Technical Analysis: Moving Averages

Most chart patterns show a lot of variation in price movement. This can make it difficult for

traders to get an idea of a security's overall trend. One simple method traders use to combat

this is to apply moving averages. A moving average is the average price of a security over a

set amount of time. By plotting a security's average price, the price movement is smoothed

out. Once the day-to-day fluctuations are removed, traders are better able to identify the true

trend and increase the probability that it will work in their favour.

Types of Moving Averages

There are a number of different types of moving averages that vary in the way they are

calculated, but how each average is interpreted remains the same. The calculations only differ

in regards to the weighting that they place on the price data, shifting from equal weighting of

each price point to more weight being placed on recent data. The three most common types of

moving averages are simple, linear and exponential.

Simple Moving Average (SMA)

This is the most common method used to calculate the moving average of prices. It simply

takes the sum of all of the past closing prices over the time period and divides the result by

the number of prices used in the calculation. For example, in a 10-day moving average, the

last 10 closing prices are added together and then divided by 10. A trader is able to make the

average less responsive to changing prices by increasing the number of periods used in the

calculation. Increasing the number of time periods in the calculation is one of the best ways

to gauge the strength of the long-term trend and the likelihood that it will reverse.

Many individuals argue that the usefulness of this type of average is limited because each

point in the data series has the same impact on the result regardless of where it occurs in the

sequence. The critics argue that the most recent data is more important and, therefore, it

should also have a higher weighting. This type of criticism has been one of the main factors

leading to the invention of other forms of moving averages.

Exponential Moving Average (EMA)

This moving average calculation uses a smoothing factor to place a higher weight on recent data

points and is regarded as much more efficient than the linear weighted average. Having an

understanding of the calculation is not generally required for most traders because most charting

packages do the calculation for you. The most important thing to remember about the exponential

moving average is that it is more responsive to new information relative to the simple moving

average. This responsiveness is one of the key factors of why this is the moving average of choice

among many technical traders.

Technical Indicators

Moving Average Convergence

The moving average convergence divergence (MACD) is one of the most well known and

used indicators in technical analysis. This indicator is comprised of two exponential moving

averages, which help to measure momentum in the security. The MACD is simply the

difference between these two moving averages plotted against a centre line. The centreline is

the point at which the two moving averages are equal. Along with the MACD and the

centreline, an exponential moving average of the MACD itself is plotted on the chart. The

idea behind this momentum indicator is to measure short-term momentum compared to

longer term momentum to help signal the current direction of momentum.

MACD= shorter term moving average - longer

term moving average

When the MACD is positive, it signals that the shorter term moving average is above the

longer term moving average and suggests upward momentum. The opposite holds true when

the MACD is negative - this signals that the shorter term is below the longer and suggest

downward momentum. When the MACD line crosses over the centreline, it signals a crossing

in the moving averages. The most common moving average values used in the calculation are

the 26-day and 12-day exponential moving averages. The signal line is commonly created by

using a nine-day exponential moving average of the MACD values. These values can be

adjusted to meet the needs of the technician and the security. For more volatile securities,

shorter term averages are used while less volatile securities should have longer averages.

Another aspect to the MACD indicator that is often found on charts is the MACD histogram.

The histogram is plotted on the centreline and represented by bars. Each bar is the difference

between the MACD and the signal line or, in most cases, the nine-day exponential moving

average. The higher the bars are in either direction, the more momentum behind the direction

in which the bars point.

Relative Strength Index

The relative strength index (RSI) is another one of the most used and well-known momentum

indicators in technical analysis. RSI helps to signal overbought and oversold conditions in a

security. The indicator is plotted in a range between zero and 100. A reading above 70 is used

to suggest that a security is overbought, while a reading below 30 is used to suggest that it is

oversold. This indicator helps traders to identify whether a security's price has been

unreasonably pushed to current levels and whether a reversal may be on the way.

Support and Resistance

Support is the price level through which a stock or market seldom falls. Resistance, on the

other hand, is the price level that a stock or market seldom surpasses. These support and

resistance levels are seen as important in terms of market psychology and supply and

demand.

Support and resistance levels are the levels at which a lot of traders are willing to buy the

stock (in the case of a support) or sell it (in the case of resistance). When these trend lines are

broken, the supply and demand and the psychology behind the stock's movements is thought

to have shifted, in which case new levels of support and resistance likely be established.

The Importance of Support and Resistance

Support and resistance analysis is an important part of trends because it can be used to make

trading decisions and identify when a trend is reversing. For example, if a trader identifies an

important level of resistance that has been tested several times but never broken, he or she

may decide to take profits as the security moves toward this point because it is unlikely that it

will move past this level.

Support and resistance levels both test and confirm trends and need to be monitored by

anyone who uses technical analysis. As long as the price of the share remains between these

levels of support and resistance, the trend is likely to continue. It is important to note,

however, that a break beyond a level of support or resistance does not always have to be a

reversal. For example, if prices moved above the resistance levels of an upward trending

channel, the trend has accelerated, not reversed. This means that the price appreciation is

expected to be faster than it was in the channel.

Being aware of these important support and resistance points should affect the way that you

trade a stock. Traders should avoid placing orders at these major points, as the area around

them is usually marked by a lot of volatility. If you feel confident about making a trade near a

support or resistance level, it is important that you follow this simple rule: do not place orders

directly at the support or resistance level. This is because in many cases, the price never

actually reaches the whole number, but flirts with it instead. So if you're bullish on a stock

that is moving toward an important support level, do not place the trade at the support level.

Instead, place it above the support level, but within a few points. On the other hand, if you are

placing stops or short selling, set up your trade price at or below the level of support.

Following are the stocks whose Technical Analysis has been

carried Forward.

1) ONGC

2) RELIANCE

3) GAIL

4) ESSAR OIL

5) HPCL

6) BPCL

7) ADANI PORT

8) GUJARAT PIPAVAV

ONGC

As you can see in the above chart tripple bottom is being formed.

As of now the stock still seems be in a downtrend moment.

ONGC

After a continuous rally the stock seems to be facing strong resistance around Rs.340, a double top

patter seems to have formed

According to the pattern forms there seems to be a strong support at Rs.255

The stock seemed to be trading in a sideways pattern for a considerable amount of time, testing

support again before making an up move

And only recently breaking the resistance fractionally and maintaining an uptrend.

Reliance

In the above chart head and shoulder is formed. the sideways moment the price has

bottomed out three times

Thus a triple bottom pattern has been created

The highest point in the triple bottom acts as a resistance

As of now the stock still seems be in a sideways moment, when it cuts the upper band it moves

upward.

Reliance

GAIL

In the above chart there is Cup and Handle reversal pattern followed with Head and Shoulder

pattern.

This pattern inicates that there will be fall in prices for a period of time.

GAIL

From the above chart it can seen that the stock is in a downtrend that is confirmed by a valid

trend line

Although the stock has faced strong resistance at Rs.490 and Testing its support at Rs.64.98

twice

There is a double top pattern being formed and the From the trend line it can be observed that

the stock is still in an downward trend.

ESSAR OIL

Price pattern forms looks like a cup, which is preceded by an upward trend. The handle

follows the cup formation and is formed by a sideways movement in the security's price.

Once the price movement pushes above the resistance lines formed in the handle, the upward

trend continues.

ESSAR OIL

Where as in the short term one can see that there a double bottom pattern, the highest point in

the pattern acts as a resistance

On 12th June 2015 Rs.116 was breached which indicates a uptrend

The same is confirmed by the Parabolic SAR overlay and the MACD Oscillator

Infact both the Overlay and Oscillator had given a buy signal well in advance.

But with the trend confirming the reversal the over all probability of a uptrend strengthens.

HPCL

The upward trendline in the above diagram indicates how much bullish is the stock.

Cup and Handle is formed and thus upward trend continues from Rs. 675.

HPCL

The MACD oscillator and the Parabolic overlay both have given a sell signal

As indicated by the red dotted line. The signal line has had a upward crossover confirming a sell

signal at that given price.

Although since this was not a perfect head and shoulder pattern the trend reversal was short lived

And after a momentary fall the upward trend further continued.

BPCL

From the above chart it can be seen that the stock is in a uptrend.

Although the stock has faced strong resistance and has not been able to sustain the rally above this

price

There is a triple top pattern being formed.

From the trend line it can be observed that the stock is still in an uptrend move.

BPCL

The above chart indicates double bottom as support and resistance at Rs. 823 and the trend

line cutting resistance at Rs. 840 indicating buy price.

Hence there will be an upward trend.

Gujarat Pipavav

As you can see from the above chart there is a double bottom pattern.

Trend line cuts Resistance from the above and hence shows a upward trend.

ADANI PORT

The stocks after a good rally, the stock entered a UP trend and forming Double top pattern and then

drastically falling down with tripple top pattern.

The stock is in a sideways movement and breakout on either side will decide the trend of the stock

Depending on which market forces the prevail the direction of this stock will be decided.

MET Large Cap Fund

Objective: This fund seeks to invest in large, profitable and well-known companies, and

aims to benefit from the long term investments that the market has to offer in the large-cap

space. The investments are spread across sectors to ensure risk diversification, and stocks are

selected through fundamental analysis

Key Benefits

It allows you to invest in a portfolio targeted at large-cap stocks which are the

preferred picks in their respective sectors.

It offers a mitigated risk through diversification across sectors.

Scheme Name Latest NAV (Rs.)

MET Large Cap Fund 10.73

Particulars June 11, 2015 to Since Inception

July 15, 2015 July 15th, 2015

Absolute Returns (%)

Current Value of Investment of Rs. 10,00,000

Scheme 7.32% ₹ 10,73,200.00

Benchmark* 7.18% ₹ 10,71,800.00

S&P BSE Sensex 6.93% ₹ 10,69,300.00

*S&P BSE 100

Portfolio as on July 15, 2015

Company Name % to

NAV

Company Name % to

NAV

Infrastructure Companies 8.85% Banking Companies 5.82%

EngineersInd 3.27% Karur Vysya 2.12%

Larsen 2.60% Yes Bank 1.66%

NBCC 2.45% ICICI Bank 1.02%

Siemens 0.53% City Union Bank 0.49%

IndusInd Bank 0.54%

Automobile Companies 2.02%

Hero Motocorp 1.38% NBFC Companies 4.20%

Ashok Leyland 0.63% L&T Finance 0.87%

Reliance Capital 0.84%

Pharma Companies 10.47% IDFC 0.76%

Aurobindo Pharma 1.00% Sks Microfinance 0.68%

Piramal Enterprises 2.17% Cholamandalam 0.43%

Wockhardt 0.78% Dewan housing 0.32%

Strides Acrolab 4.60% India Bulls Housing 0.30%

Glenmark 1.07%

Biocon 0.86% FMCG 8.61%

ITC 1.39%

Oil And Shipping 10.40% HUL 0.74%

ONGC 1.34% Colgate Palmolive 0.50%

RELIANCE 1.60% Jyothi Laboratories 1.05%

GAIL 0.88% GlaxoSmithKline Consumer

Healthcare

0.48%

Essar Oil 1.51% Tata Global Beverage 1.01%

HPCL 1.14% Relaxo Footwear 1.18%

BPCL 1.01% Britannia Industries 1.06%

Gujarat Pipavav 1.46% Bajaj Corp 1.19%

Adani Port 1.45%

Retail 1.63%

Capital Goods Companies 4.79% Bata India 0.45%

Larsen 0.82% Arvind 0.47%

Crompton Greaves 1.62% Raymond 0.31%

AIA Engineering 0.59% Trent 0.19%

Bharat Elect 0.55% V-mart 0.21%

BHEL 0.60%

Thermax 0.61% IT Companies 6.14%

Persistent Systems 0.80%

Power Sector Companies 4.71% Cyient 0.99%

NTPC 0.30% HCL Tech 2.42%

Neyveli Lignite 0.30% Infosys 0.46%

SJVN 0.83% Wipro 1.48%

Reliance Infra 0.58%

CESC 0.26% Media and Entertainment 3.94%

Torrent Power 0.53% Jagranprakashan 0.55%

JSW Energy 1.04% Shemaroo 0.55%

Tata Power 0.62% INOX Leisure 0.58%

Inox Wind 0.24% TV Today Network 1.14%

Entertainment Network India 1.12%

Steel and Aluminium 8.70%

TATA Steel 2.61% Telecommunication 5.24%

JSW Steel 0.87% Bharti Airtel 2.33%

Ratnamani Metal 0.97% Idea Cellular 1.97%

NALCO 4.26% Tata Communication 0.94%

Cement 10.08% Paints 4.41%

KCP 1.07% Kansai Nerolac paints 0.45%

Birla Corp 2.08% Akzo Nobel India 3.96%

Orient Cement 2.52%

JK Lakshmi Cement 3.42%

ACC 0.98%

Fund Performance VS S&P BSE 100

Fund Performance VS S&P BSE 100

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0.00%

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MET FUND

S&P BSE 100

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MET FUND

S&P BSE SENSEX