roc technical indicator

8/13/2019 ROC Technical indicator

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MATHEMETICAL INDICATORS-EFFECTIVE TOOL FOR SECURITY ANALYSIS

*K.MAHENDER REDDY

(HOD, MBA DEPT, SREE CHAITANYA INSTITUTE OF TECHNOLOGICAL SCIENCES, KARIMNAGAR)

**MD ASIF UR RAHMAN,

(ASST.PROF. SREE CHAITANYA INSTITUTE OF TECHNOLOGIAL SCIECES, KARIMNAGAR).

India is a developing country. Now a days many people are interested to invest in financial

markets especially on equities to get high returns. Equities are playing a major role in

contribution of capital to the business from the beginning. Since the introduction of sharesconcept large numbers of investors are showing interest to invest in the capital market but the

investor has some confusion that when to buy the stock and when to sell the stock for this the

security analysis developed to concepts i.e. fundamental analysis and technical analysisfundamental analysis will consider the ground reality of the particular company by studying

economicindustrycompany factors but coming to the technical analysis by using several

indicators they analyses the relationship between price!volume and supply"demand for theoverall market and the individual stock. It is a process of identifying trend reversals at an earlier

stage to formulate the buying and selling strategy

OBJECTIVES OF THE STUDY

#he study in detail the concept of mathematical indicators.

#o benefit the investor by e$plaining when to buy when to sell

METHODOLOGY

Secondary data:

Security analysis and portfolio management te$t book

%ournals and maga&ines

News papers

'ebsites

.

TECHNICAL ANALYSIS

(rice of securities in the stock market fluctuate daily on account of continuous buying and

selling stock prices move In trends and cycles and are never stable an investor in the stockmarket is interested in buying securities at low price and selling then at high price so as to get a

good return on his investment he therefore tries to analy&e the movement of share prices in the

market two approaches are commonly used for this purpose one of these is the fundamentalanalysis where in the analyst tries to determine the true worth or intrinsic value of a share based

on the current and future earning capacity of the company he would buy the share when its

market price is below its intrinsic value the second approach to security analysis is calledtechnical analysis it is an intrinsic value the second approach to security analysis is called

technical analysis is called technical analysis it is an alternative approach to the study of stock

price behavior


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) technical analyst believes that share price are determined by the demand *supply forces

operating in the market these demand and supply forces in turn are influenced by a no of

fundamental factors as well as certain psychological or emotional factors many of these factorscannot be quantified the combined impact of all these factors as reflected in the share price

movement a technical analyst therefore concentrates on the movement of share prices he claims

that by e$amining past share price movements future share prices can be accurately predictedtechnical analysis is the name given to forecasting technique that utili&e historical share price

data the rationale behind technical analysis is that share price behavior repeats itself over timeand analysts attempt to derive method to predict this repetition a technical analyst looks at thepast share price data to see if they can establish any pattern he then looks at current price data to

see if any of the established patterns are applicable and if so e$trapolations can be made to

predict the future price movements although past share price are the major data used by technical

analysiss other statics such as volume of trading and stock market indicates are also utili&edto

soe e!tent

T"e #as$cs %&r%ose o' tec"n$ca( ana(ys$s $s t"at %r$ce o)e $n trends o' *a)es *"$c" ay #e

&%*ard or do*n *ord $t $s #e($e)ed t"at t"e %resent trends are $n'(&enced #y t"e %ast

trends and t"at t"e %ro+ect$on o' '&t&re trends $s %oss$#(e #y on ana(ysts o' %ast %r$ce

trends a tec"n$ca( ana(yst ,t"ere'ore , ana(ys$s t"e %r$ce and )o(&e o)eents o'

$nd$)$d&a( sec&r$t$es as *e(( as t"e ar-et $nde! t"&s tec"n$ca( ana(ys$s $s rea((y a st&dy o'

%ast or "$stor$ca( %r$ce and )o(&e o)eents so as to %red$ct t"e '&t&re stoc- %r$ce

#e"a)$or

MATHEMATICAL INDICATO.S

Share price do not rise or fall in straight lines the movements are errat$c, t"$s a-es $t d$''$c&(t

'or t"e ana(yst to /a&/e t"e &nder(y$n/ trend "e can &se t"e at"eat$ca( too( o' o)$n/

a)era/e to soot"en o&t t"e a%%arent errat$c o)eents o' s"are %r$ce and "$/"($/"t t"e

&nder(y$n/ trend

MOVING AVE.AGES

+oving averages are mathematical indicators of the underlying trend of the price movements ,

types of moving averages -+)are coon(y &sed #y ana(ysts t"e s$%(e o)$n/ a)era/e

and t"e e!%onent$a( o)$n/ a)era/e t"e c(os$n/ %r$ces o' s"ares are /enera((y &sed 'or t"e

ca(c&(at$on o' o)$n/ a)era/es

SIM0LE MOVING AVE.AGE

)n average ist"e s& o' t"e %r$ce o' a s"are 'or s%ec$'$c no o' days d$)$ded #y t"e no o'

days $n a s$%(e o)$n/ a)era/e a set o' a)era/es are ca(c&(ated 'or a s%ec$'$c ner o'

days eac" a)era/e #e$n/ ca(c&(ated #y $nc(&d$n/ a ne* %r$ce and e!c(&d$n/ on o(d %r$ce

E10ONENTIAL MOVING AVE.AGE

E$ponential moving average E+) is calculated by using the following formula

E+)2 3c&rrent c(os$n/ %r$ce 4%re)$o&s EMA56'actor 7previous E+)

'here Factor289n7


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And n2 ner o' days 'or *"$c" t"e a)era/e $s to #e ca(c&(ated

.ATE OF CHANGE

It is a very popular oscillator which measures the rate of change of the current price as compared

to the price a certain number of days or weeks back to calculate a / day rate of change each days

prices is divided by then its subtracted from this price ratio

0122 c&rrent %r$ce ;

0r$ce


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9:!)pr!9, 99:.> 8>?..> 99:.;;

9=!)pr!9, 99, 888.88 999.99

9

9/!)pr!9, 99=.< 8=.> 9:;.>.8.; 9:?.9.;8 9:;.?/

/!+ay!9, 9:8.; 8>,.:8 9:;.>9

;!+ay!9, 9:8./8 8=.,8 8=9., 9:

9:!+ay!9, 9:,.8 8,8.:8 9:8.:9

99!+ay!9, 9:9.=8 89?.!+ay!9, 9:9.,8 898.9 9:=.:,

98!+ay!9, 9:,.? 89,.,8 9:,.>8

9.88 89,.88 9:,.89

9/!+ay!9, 9:>./8 89>.; 9:,.?.,8

,,!+ay!9, 9:=./ 8,,.:8 9:>.>9

,=!+ay!9, 9:=.< 8,9.9 9:>.,,

,>!+ay!9, 9:8.=8 8,9./ 9:>.=>

,8!+ay!9, 9:>.9 8,:./ 9:>.9>

,;!+ay!9, 9: 8,=.98 9:>.;!%un!9, 9:/ 8=>./ 9:

99!%un!9, 9:/.,8 8=/.? 9:/.8;

9,!%un!9, 9:/.


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9>!%un!9, 9:8./ 8=8., 9:/.:>

98!%un!9, 9:.,8 9:.:8 9: 8=8.?8 9:/.9?

,9!%un!9, 9:?./8 8>: 9:;

,,!%un!9, 99:.:8 8>> 9:;.;

,8!%un!9, 9:/.;8 8>>.; 9:;.?/.= 9:?.>/.,8 9:?.>8

,?!%un!9, 99=.88 88:./8 99:.98

Inter%retat$on: t"e a)era/e %r$ce o' stfive days 110 it has reached 15th day theaverage price is 114 better to sold it Then after 29 th day it has reached102 price better to buy it . It has the reached short time high price thenafter fall down again push the stoc! it has volatility and minimum

return.

E!%onent$a( o)$n/ a)era/e

EMA2 3c&rrent c(os$n/ %r$ce 4%re)$o&s EMA56'actor 7%re)$o&s EMA

'here

Factor289n7

And n2 ner o' days 'or *"$c" t"e a)era/e $s to #e ca(c&(ated

Ca(c&(at$ons:

@actor2 8 2 892?>

7

#he E+) for the 9stday is taken as the closing price of that as the closing price of that day

itself .the E+) for the second day is calculated as below.


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E+)2 3c&rrent c(os$n/ %r$ce 4%re)$o&s EMA56'actor 7%re)$o&s EMA

6 -99:.9!9:;.


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0OE. G.ID MONTHS DATA


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Datec(os$n/

%r$cee!%onent

E10ONENTIAL

MA

,!)pr!9, 9:;.< :.========= 9:;.!)pr!9, 99:.;8 :.========= 9:?.

9,!)pr!9, 999./8 :.========= 99:.?,;9;?=

9=!)pr!9, 99, :.========= 999.,;8>8?8

9/=,=

9?!)pr!9, 99>.

,/!)pr!9, 9:;.,8 :.========= 9:?.,/?8=;>

,;!)pr!9, 9:;.< :.========= 9:?.:8=:,8

,!+ay!9, 9:?.< :.========= 9:?./,=8


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Inter%retat$on: It started at 10" it reached 114 in short period then after fall

down 102 again push the price it reached 110 it has observing fall down

more and it reached same place


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.ATE OF CHANGE 3.OC5:

#he 012 value we can identifying C: point above line is overbought below the line is over sold

0126 current price ;

0r$ce !)pr!9, 99:.;8 !!! !!! !!!

?!)pr!9, 9:?./ !!! !!! !!!9:!)pr!9, 99:.> !!! !!! !!!

99!)pr!9, 999./ !!! !!! !!!

9,!)pr!9, 999./8 !!! !!! !!!

9=!)pr!9, 99, 9:;.< 9.:=9=:; :.:=9=:/889

99

9/!)pr!9, 99=.< 99:.;8 9.:,>;:; :.:,>;:;=

9;!)pr!9, 99=.;8 9:?./ 9.:=/;= :.:=/;=:>>/

9?!)pr!9, 99>. 9.:=;>?< :.:=;>?; :.:9?,>/?;;8>

,>!)pr!9, 99: 99, :.?;,9>= !:.:9/;8/9>=,8!)pr!9, 9:;.>8 999.;8 :.?


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9;!+ay!9, 9:8.9 9:>.,8 9.::;98= :.::;98=>//

,9!+ay!9, 9:=.?8 9:,.8 9.:9>9>< :.:9>9>9

,,!+ay!9, 9:=./ 9:9.=8 9.:,=9;/ :.:,=9;

9,!%un!9, 9:/..:8 9.:=>99; :.:=>99;,9,

9>!%un!9, 9:8./ 9:8.?8 :.??/ !:.::,=8?

98!%un!9, 9:


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.SI 3re(at$)e stren/t" $nde!5:#he Dalue we can calculate the value above line of value we can

consider the over bought it indicates buying and below the line considered the oversold. )

sell signal indicated

.SI2??;@??937.S5

'here

.SI 2 A)era/e /a$n %er day

A)era/e (oss %er dayCa(c&(at$ons: T"e days a)era/e /a$n $s2 ?>?88,

T"e days a)era/e (oss $s2 ;?>?

.S2?>?88 2?>?

;?>?

.SI2??;@??937?>?5

2??;3??9>?5

2??;8>

2>

0OE.G.ID MONTHS .SI

change over previous day

7ate closing price ain loss

,!)pr!9, 9:;.!)pr!9, 99:.;8 :./8

?!)pr!9, 9:?./ !9.98

9:!)pr!9, 99:.> :./

99!)pr!9, 999./ 9.=

9,!)pr!9, 999./8 :.:8

9=!)pr!9, 99, :.,8

9

9/!)pr!9, 99=.< 9./8

9;!)pr!9, 99=.;8 :.,8

9?!)pr!9, 99>.!)pr!9, 99: !:./8

,8!)pr!9, 9:;.>8 !9.88

,

,/!)pr!9, 9:;.,8 :.98

,;!)pr!9, 9:;.< :.=8

=:!)pr!9, 999.,8 ,.


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=!+ay!9, 9:;.!+ay!9, 9:.,8 !9.8

9:!+ay!9, 9:,.8 !9./8

99!+ay!9, 9:9.=8 !9.98

9>!+ay!9, 9:9.,8 !:.998!+ay!9, 9:,.? 9.

9/!+ay!9, 9:>./8 :.,

9;!+ay!9, 9:8.9 :.=8

,9!+ay!9, 9:=.?8 !9.98

,,!+ay!9, 9:=./ !:.,8

,=!+ay!9, 9:=.< !:.9

,>!+ay!9, 9:8.=8 9./8

,8!+ay!9, 9:>.9 !9.,8

,;!+ay!9, 9: ,.=

,?!+ay!9, 9:/.=8 :.?8

=:!+ay!9, 9:

8!%un!9, 9:8.?8 9.?

/!%un!9, 9:;.:8 !9.!%un!9, 9:8./ !9.?

98!%un!9, 9: !:.=8

,9!%un!9, 9:?./8 9.=8

,,!%un!9, 99:.:8 :.=

,8!%un!9, 9:/.;8 !,.,

,

,/!%un!9, 9:?.; !:.:8,;!%un!9, 9:?./ !:.9

,?!%un!9, 99=.88 =.;8

=


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Inter%retat$on: the duration of the period of the 0SI value is /.== the above line / is consideredthe overbought below the line it considered the over sold

FINDINGS:

It is useful to compares to the overbought -buying and over sold -selling positions.

It helps the investor is right time to investor right time to hold and right time to sell. If

the prices are high than we can sell * then after may fall down price we can invest so

that the risk is minimi&ed

'e can identify the bullish and bearish trend movement

'e can find the average gain per day *loss per day

'e can find the average price of last days

SUGESSTIONSCONCLUSIONS:

)s investment belongs to long term and short term it needs careful analysis.

Investment type depends upon the type of investor.

Fong term investment needs the analysis of fundamentals and shot term need technicalanalysis.

#he tool or the indicators of the technical analysis are very useful

BIBLIOG.A0HY

Security )nalysis and (ortfolio +anagement bS.GeivnSecurity analysis and portfolio management bD.). )vadhani

Economic times

Husiness line www.nseindia.com

www.bseindia.com

www.investopedia.com www.moneycontrol.com

www.sebi.gov.in
http://www.nseindia.com/http://www.bseindia.com/http://www.investopedia.com/http://www.moneycontrol.com/http://www.nseindia.com/http://www.bseindia.com/http://www.investopedia.com/http://www.moneycontrol.com/

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