abcd airtel.ppt

7/28/2019 abcd airtel.ppt

1/12

Group

Ajit Daniel

Akkapeddi Srinivas

Kapil Edke

Mihir Shah

Nikhil Moharir

Yogesh Gupta


2/12


3/12

A simple moving average is formed by computing theaverage (mean) price of a security over a specifiednumber of periods

Like all moving averages, it is also a lagging indicator

It is a visual aid to determine trend which works wellwhen prices are trending can be misleading when pricesare not trending

Eliminates periodic variations that make it harder to seetrends

When price crosses above or below the moving averageit is an indication of a reversal of existing trend


4/12

SMA for Bharti (1 month) : 20day and 50day


5/12

Currently price is above the 20 day and 50 day

moving averages which shows a reversal of the trend

on the stock

For past 10 days, stock price was consistently below

the SMA line for 20/50 days which shows that stock

remained weak during that period


6/12

A trend following indicator which shows relationship between twomoving averages of prices : MACD = 12 day EMA 26 day EMA

9 day EMA also referred to a signal line is plotted

3 common methods used to interpret MACD

Crossovers When the MACD falls below the signal line, it is a bearish signal,

which indicates that it may be time to sell. Conversely, when the MACD rises above thesignal line, the indicator gives a bullish signal, which suggests that the price of the asset islikely to experience upward momentum

Divergence When the security price moves away from the MACD, it signals the end ofcurrent trend

Dramatic rise A dramatic rise in MACD means that the shorter moving average pulls away

from the longer moving average, indicates that the stock was over-bought


7/12

MACD = 4.66

EMA = 3.02

Divergence = 1.65

Since the MACD line has crossed the EMA i.e. Signal line upward, it indicates

a BUY for this stock.


8/12

RS = Average Gain / Average Loss

Generally, if the RSI rises above 30 it is considered bullish for the underlying stock and

conversely, if the RSI falls below 70, it is a bearish signal

The average period is generally 14 days. For long term charts the average period may

be up to 30 days period

When the RSI crosses the 80% line, many technicians consider the stock to be

overbought , and a candidate for a "pullback. Conversely, when the RSI crosses belowthe 20% line, the stock is considered oversold and a candidate for a "bounce" upward

The RSI compares the magnitude of a stock's recent gains to the magnitude of its

recent losses and turns that information into a number that ranges from 0 to 100


9/12

If we see the data for the past 3

months then the recent trough was at

9.46 and has risen to 38.91

This again is a bullish indicator for this

stock in the short term

In the last 3 trading days the RSI for

Bharti has increased from 3.33 to

86.97. We are bullish on this stock for

short term. The corresponding news at

the turnaround point was that Bharti

may increase its offer for a stake in

MTN by between 5 and 10 percent


10/12

Bollinger bands were introduced by a technical trader,

John Bollinger. It is plotted m standard deviations away

from simple moving average, where m is generally 2.

Upper and lower Bollinger Bands act as strong areas of

support and resistance.

The Bollinger Bands contract and widen as per the market

volatility.Traders use the Bollinger bands to determine overbought

and oversold levels of the stocks


11/12

Bollinger Band for Bharti Airtel for the 5 days period

Aug 6-12, 2009 with period = 15


12/12

As the diagram shows, Upper and Lower Bollinger

bands convey sell and buy signals only in range bound

markets. Eg. Between Aug 06 BOD to Aug 07 13:30.

Traders who continuously sell at the top and buy at

the bottom can face losses. Eg. Sudden price drop on

Aug 10 morning, price jump on Aug 12 morning etc.

When price channels between +1 SD & +2 SD

Bollinger Bands the trend is up. (Eg. Aug 12 morning) When price channels between -1 SD & -2 SD Bollinger

Bands the trend is down. (Eg. Aug 10 morning)

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