A STUDY ON

SIMPLE MOVING AVERAGES ON AUTOMOBILE INDUSTRY

A PROJECT REPORT
SUBMITTED TO
KRISHNA UNIVERSITY-MACHILIPATNAM
In partial fulfillment of the requirement for the award of degree of
MASTER OF BUSINESS ADMISTRATION
BY
M. LAHARI
(Regd.No:Y19MBA101025)
Under the Guidance of
Dr. R. PADMAJA
Assistant Professor
Department of Business Management

DEPARTMENT OF BUSINESS MANAGEMENT

KRISHNA UNIVERSITY
MACHILIPATNAM-521001, A.P, INDIA
2019-2021
 CERTIFICATE

This is to certify that the project work entitled “A study on simple moving averages
on automobile industry” is submitted by M. LAHARI is partial fulfillment for the award of
M.B.A. degree is a bonafied work carried out by him under my guidance and supervision.

Date:

Place:
Project Guide
DR. R. PADMAJA, MBA, PHD
Assistant Professor
Department of Business Management
Krishna University
Machilipatnam-521001
 CERTIFICATE

This is to certify that the project work entitled “A study on simple moving
averages on automobile industry” is submitted by M. LAHARI under the guidance of
DR.R.PADMAJA, Ph. D Asst Professor, Dept of Business Management, Krishna University,
Machilipatnam in partial fulfillment of M.B.A. degree is a bonafied work carried out by him
under my guidance and supervision.

Date:

Place:
Dr. R. PADMAJA., M.B.A, PhD
Asst. Professor & HOD (I\c)
Department of Business Management
Krishna University
Machilipatnam-521001
 ACKNOWLEDGEMENT

I feel it is my duty and honor to acknowledge all those who have extended their
guidance and warm support in completing my Project Work. I also express my gratitude and
sincere thanks to our respected HOD. DR. R. PADMAJA, for her valuable guidance and
support.

I take this opportunity to express my profound gratitude to my project guide DR. R.

PADMAJA, for his valuable guidance and cooperation throughout the project work. I am
obliged to all other faculty members. Who helped me directly and indirectly for the
successful completion of my project work.

Last but not least, my heartful gratitude to my family and friends for their cooperation.

MUDIVARTHI LAHARI

(Y19MBA101025)
 DECLARATION

I M. LAHARI, declares that the project entitled “A STUDY ON SIMPLE MOVING

AVERAGES ON AUTOMOBILE INDUSTRY” is the project work done by me and
submitted to THE KRISHNA UNIVERSITY MBA, in the partial fulfillment of the
requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION
under the guidance of DR.R.PADMAJA, PHD, Assistant Professor, Dept of Business
Management, Krishna university, Machilipatnam, A.P., INDIA.

It is further stated that it is a bonafied work not submitted to any other university for
any purpose earlier.

Date:

Place:

MUDIVARTHI LAHARI

(Y19MBA101025)
 INDEX

CHAPTER TITLE PAGE NO

 INTRODUCTION 1-2
 NEED OF THE STUDY 3
 SCOPE OF STUDY 3
1  OBJECTIVES OF THE STUDY 4
 METHODOLOGY OF THE STUDY 5
 LIMITATIONS OF THE STUDY 5

2 INDUSRTY PROFILE 6-9

3 COMPANY PROFILE 10-20

4 CONCEPTUAL FRAMEWORK 21-52

5 DATA ANALYSIS & INTERPRETATION 53-91

6 FINDINGS AND SUGGESTIONS 92-94

BIBLIOGRAPHY 95
 TABLES

5.1 CALCULATION OF SMA15 FOR CLOSING PRICES OF

EICHER MOTORS LTD

5.2 CALCULATION OF SMA15 FOR CLOSING PRICES OF

MAHINDRA AND MAHINDRA LTD

5.3 CALCULATION OF SMA15 FOR CLOSING PRICES OF

MARUTI SUZUKI LTD

5.4 CALCULATION OF SMA15 FOR CLOSING PRICES OF

BAJAJ AUTO LTD
 INTRODUCTION

Decision making helps to utilize the available resources for achieving the objectives of the
organization, unless minimum financial performance levels are achieved. Financial
management provides both conceptual and analytical framework for financial decision
making. The key aspects of financial decision making relate to financing, investment,
dividends and working capital management.

Investment decision tells about total amount of assets to be held in the firm. Since, funds
involve cost are available in limited quantity proper utilization is required for achieving the
goal of wealth maximization. Financial decision is more concerned with the amount of
finance to be raised from various long term sources. In another way, it is a decision on the
capital structure (owner’s fund, borrowed fund) of the company. Risk of default on
repayment of interest on borrowed fund is called financial risk. Dividend decision is mainly
concerned with distribution of surplus funds. These surplus funds are either distributed to the
shareholders in the form dividends, or are kept aside in the form of retained earnings.

Finance manager will decide how to spend in dividends and how much to keep
aside. If more investment opportunities are available and company has growth plans, then
more amount is kept aside and less amount is given to shareholders. This decision is also
called residual decision.

Among these three financial decisions our study focus is mainly on investment
decisions. Investors while making a decision they consider various factors and use various
tools and techniques for predicting future trends so as to make viable investment decision.
Among those several ways that are used for predicting future trends in share prices such as
technical analysis. This technical analysis contains many tools. Moving averages is one of the
smoothing tool used for smoothening of price fluctuations so as to predict future price trends.

It is a classical method of time series decomposition originated in the 1920s

and was widely used until the 1950s. It still forms the basis of many time series
decomposition methods, so it is important to understand how it works. The first step in a
classical decomposition is to use a moving average method to estimate the trend-cycle, so
we begin by discussing moving averages.
The moving average (MA) is a simple technical analysis tool that smooths out
price data by creating a constantly updated average price. The average is taken over a specific

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period of time, like 10 days, 20 minutes, 30 weeks or any time period the trader chooses.
There are advantages to using a moving average in your trading, as well as options on what
type of moving average to use. Moving average strategies are also popular and can be tailored
to any time frame, suiting both long-term investors and short-term traders.
In statistics, a moving average (rolling average or running average) is a
calculation to analyze data points by creating a series of averages of different subsets of the
full data set. It is also called a moving mean or rolling mean.
A moving average is commonly used with time series of data to smooth out
short-term fluctuations and highlight longer-term trends or cycles. The threshold between
short-term and long-term depends on the application, and the parameters of the moving
average will be set accordingly.
A moving average helps cut down the amount of "noise" on a price chart.
Look at the direction of the moving average to get a basic idea of which way the price is
moving. If it is angled up, the price is moving up (or was recently) overall; angled down, and
the price is moving down overall; moving sideways, and the price is likely in a range.
A moving average can also act as support or resistance. In an uptrend, a 50-day, 100-day or
200-day moving average may act as a support level, as shown in the figure below. This is
because the average acts like a floor (support), so the price bounces up off of it. In
a downtrend, a moving average may act as resistance; like a ceiling, the price hits the level
and then starts to drop. The price won't always "respect" the moving average in this way. The
price may run through it slightly or stop and reverse prior to reaching it. 

As a general guideline, if the price is above a moving average, the trend is up. If the price is
below a moving average, the trend is down. However, moving averages can have different
lengths (discussed shortly), so one MA may indicate an uptrend while another MA indicates a
downtrend.

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Need of the study

 For basic understanding of how to analyze future price movements easily being a
new investor.
 For making a sensible, logical and technical decision regarding their investment
options i.e, either to invest in a particular security or not.
 For being able to know how do analysts, investors calculate the moving average of
stock.
 For knowing whether stock is moving upwards or downwards (upward
trend/downward trend).

Scope of the study

The scope of the study refers to parameters to which it is confined. The parameters of our
study are:
o The study is mainly focused on technical analysis of
- Bajaj auto ltd.
- Mahindra & Mahindra ltd.
- Maruti suzuki ltd.
- Eicher motors ltd.
o Tools and techniques for smoothening of data with main focus on simple moving
average.
o Determining upward trends and downward trends.
o Data analysis and interpretation of 4 companies in automobile industries with respect
to smoothening of data by using moving averages for analyzing future price trends.

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Objectives of the study

 For understanding the purpose of moving averages with reference to

 Bajaj auto ltd
 Mahindra & Mahindra ltd
 Maruti Suzuki ltd
 Eicher motors ltd
 To weed out the noise from day to day price movements with reference to
 Bajaj auto ltd
 Mahindra & Mahindra ltd
 Maruti Suzuki ltd
 Eicher motors ltd
 To smoothen price actions with reference to
 Bajaj auto ltd
 Mahindra & Mahindra ltd
 Maruti Suzuki ltd
 Eicher motors ltd
 For giving traders a clear view of price trends with reference to
 Bajaj auto ltd
 Mahindra & Mahindra ltd
 Maruti Suzuki ltd
 Eicher motors ltd
 To know the movements of stock prices of company in future using technical analysis
with reference to
 Bajaj auto ltd
 Mahindra & Mahindra ltd
 Maruti Suzuki ltd
 Eicher motors ltd

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Methodology of the study

There are mainly two sources for collecting data. That is

 Primary sources
 Secondary sources

But data related to this study is collected only from secondary sources. DUE TO COVID,
DATA COULD NOT BE COLLECTED THROUGH PRIMARY SOURCES.

For this study 5 companies are selected from NSE (national stock exchange) from automobile
industry. Their industry, company profiles and related topics are collected from social media
platforms and over the internet by browsing various websites such as Investopedia, NDTV,
etc... Closing price data is collected from finance.yahoo.com and based on collected data
simple moving averages are calculated. Then based on calculations moving average lines are
showed in the form of line charts and investment decisions are been made based on
interpretations done.

Limitations of the study

As every study has its use and advantages there are certain limitations to this study also. They
are:

 The analysis is focused on only 4 companies in automobile industry.

 The findings and recommendations been made in this study are not relevant to whole
industry.
 The study is only for academic purpose.
 Data collected is secondary data since it is not possible to collect primary data due to
covid pandemic situation.
 The recommendations made in this study may not be perfect predictions of future
stock prices and their trends

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6
 INDUSTRY PROFILE

Automotive industry, all those companies and activities involved in the manufacture of
motor vehicles, including most components, such as engines and bodies, but excluding tires,
batteries, and fuel. The industry’s principal products are passenger automobiles and light
trucks, including pickups, vans, and sport utility vehicles. Commercial vehicles (i.e., delivery
trucks and large transport trucks, often called semis), though important to the industry, are
secondary. 

History

In 1769, French inventor Nicholas-Joseph Cugnot built a three-wheeled steamer (see above
image) to help the French army haul artillery pieces. Although his contraption was considered
to be too slow and impractical, Cugnot is still regarded as the creator of the first motorized
road vehicle. In 1805, Oliver Evans, who built an incredibly slow machine designed to work
on both land and in water for the City of Philadelphia Department of Health, is considered to
be the first American to create a motorized road vehicle.

Commercial production of automobiles began in 1896 in the United States, ten years after
Karl Benz received a German patent for his invention of the first automobile powered by an
internal combustion engine. Along with his wife, Bertha, he founded the German automobile
manufacturer Mercedes-Benz.

The early 1900s boomed with various types of motorized vehicles being developed around
the world. In the United States Ransom E. Olds and his Olds Motor Vehicle Company (later
known as Oldsmobile) dominated this era of automobile production. As a result of superior
promotional and marketing efforts, sales of the Oldsmobile approached 5,000 in 1904 which,
at the time, was unheard of in the industry.  The Thomas B. Jeffrey Company developed the
world's second mass-produced automobile called the Rambler. In 1902, 1,500 Ramblers were
built and sold, and by 1904 production reached 2,342 units. 

Perhaps the most famous car of all time is Henry Ford's Model T. In order to keep costs low,
Ford focused efforts on improving production methods. His moving assembly line began
operation in 1913-1914 making it possible to lower the cost of the Model T and, as a result,
increase sales and potential customers. In response to consumer demands manufacturers have
reinvented the automobile numerous times over.

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From the development of  anti-lock braking systems, to hybrid vehicles, to the first highway-
capable all electric vehicle, the automobile industry continues to create, innovate and
transform the way we live. 

Analysis of Indian automobile industry

A brief analysis of past trend in automobile industry in India is discussed in the form of key
takeaways as follows:

 The automobile industry in India is the world’s fourth largest. India was the world's
fourth largest manufacturer of cars and seventh largest manufacturer of commercial
vehicles in 2019.
 Indian automotive industry (including component manufacturing) is expected to
reach Rs. 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026.
 The industry attracted Foreign Direct Investment (FDI) worth US$ 24.5 billion
between April 2000 and June 2020 accounting for ~5% of the total FDI during the
period according to the data released by Department for Promotion of Industry and
Internal Trade (DPIIT).
 Domestic automobile production increased at 2.36% CAGR between FY16-FY20
with 26.36 million vehicles being manufactured in the country in FY20.
 Overall, domestic automobiles sales increased at 1.29% CAGR between FY16-FY20
with 21.55 million vehicles being sold in FY20.
 Two wheelers and passenger vehicles dominate the domestic Indian auto market.
 Passenger car sales are dominated by small and mid-sized cars.
 Two wheelers and passenger cars accounted for 80.8% and 12.9% market share,
respectively, accounting for a combined sale of over 20.1 million vehicles in FY20.
 Overall, automobile export reached 4.77 million vehicles in FY20, growing at a
CAGR of 6.94% during FY16-FY20.
 Two wheelers made up 73.9% of the vehicles exported, followed by passenger
vehicles at 14.2%, three wheelers at 10.5% and commercial vehicles at 1.3%.
 The electric vehicle (EV) market is estimated to be a Rs. 50,000 crore (US$ 7.09
billion) opportunity in India by 2025. Several technology and automotive companies
have expressed interest and/or made investments into the India EV space.
 Auto companies such as Hyundai, MG Motors, Mercedes, and Tata Motors, have
launched EVs in the market.

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 A recent study conducted by Castrol found out, most of Indian consumers would
consider buying an electric vehicle by the year 2022. The study also highlighted for
an average Indian consumer, price point of Rs. 23 lakh (or US$ 31,000), a charge time
of 35 minutes and a range of 401 kilometers from a single charge will be the 'tipping
points' to get mainstream EV adoption
 The Government aims to develop India as a global manufacturing and research and
development (R&D) hub. It has set up National Automotive Testing and R&D
Infrastructure Project (NATRIP) centres as well as National Automotive Board to act
as facilitator between the Government and the industry.
 Under (NATRIP), five testing and research centres have been established in the
country since 2015.
 NATRIP’s proposal for “Grant-In-Aid for test facility infrastructure for Electric
Vehicle (EV) performance Certification from NATRIP Implementation Society”
under FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles
in India) scheme was approved by Project Implementation and Sanctioning
Committee (PISC) on January 03, 2019.
 The Indian Government has also set up an ambitious target of having only EVs being
sold in the country.
 The Ministry of Heavy Industries, Government of India, has shortlisted 11 cities in
the country for introduction of EVs in their public transport system under the FAME
scheme.
 The first phase of the scheme was extended to March 2019 while in February
2019, the Government approved FAME-II scheme with a fund requirement of
Rs. 10,000 crore (US$ 1.39 billion) for FY20-22.
 Under Union Budget 2019-20, Government announced to provide additional
income tax deduction of Rs. 1.5 lakh (US$ 2146) on the interest paid on the
loans taken to purchase EVs.
 EV sales, excluding e-rickshaws, in India witnessed a growth of 20% and
reached 1.56 lakh units in FY20 driven by two wheelers.
 The Government of India expects automobile sector to attract US$ 8-10 billion in
local and foreign investment by 2023.

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Key challenges in automotive sector

As the automotive world gears up to answer these questions, there are certain key
challenges that form the crux of these indispensable areas of concern in Indian
automotive world: 

 The ever-expanding Chinese market one of the biggest challenge of

automakers outside china, is the risk of competing with China.  In the last
fifteen years China has been the leading automotive market. The  volume
growth has helped the country to overcome other structural and competitive
challenges. The biggest challenge for the planners of the automotive
market is to plan a strategy keeping in mind China’s outlook.  
 The evolution of connected cars are the biggest transformational changes in
the automotive industry, but it is also  one of the biggest
unknowns. The concept of connected cars serve as a communication hub
that receives and transmits data from its surroundings. However, this
technology is still in such a nascent stage that it is creating uncertainties
and questions such as who will buy the car,  who will deliver these services,
whether the current automakers will be able to navigate through all these
uncertainties keep plaguing the automotive world.  
 Increased competition of all the myriad issues facing the automotive world,
one of the pressing problems  is the sales demand flattening in mature
markets like Europe and Japan and competition rising from other
manufacturers. The slowdown of sales is directly proportional to the
increasing competition.  
 The major global automotive markets have been facing stringent
legislations focusing on controlling carbon dioxide emission and other
exhaust gas emissions. This is done to improve fuel economy. One of the
key challenges in the industry is to make the right power trains and
technology choices to cater to changing social preferences in a changing
regulatory environment.  

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 COMPANY PROFILE

Here in this study we are going to see company profiles of only 5 companies in the
automobile industry. They are:

1) Eicher motors ltd

2) Mahindra & Mahindra ltd
3) Maruti Suzuki ltd
4) Bajaj auto ltd

Eicher motors ltd

Eicher Motors was incorporated in 1982, is engaged in manufacturing of commercial

vehicles, motorcycles and engineering components. In 1986, the company introduced its first
product ‘Canter’.
It is one of the leading manufacturers of commercial vehicle. It has manufacturing facilities
located in Madhya Pradesh, Tamil Nadu, Maharashtra, and Haryana.
Products
Motors – It manufactures several kinds of commercial vehicles. Its 50–50 joint venture with
the Volvo group, VE Commercial Vehicles Limited, designs, manufactures and markets
reliable, fuel–efficient commercial vehicles of high quality and modern technology,
engineering components and provides engineering design solutions. It has technical and
financial collaboration with Mitsubishi Motors Corporation of Japan which led to
manufacturing of CANTER range of vehicles. It manufactures around 20000 vehicles per
annum.
Motorcycles– It manufactures bullet motorcycles Royal Enfield. It manufactures six different
models ranging from 300cc to 600cc. The manufacturing plant has installed capacity of
39,000 motorcycles per annum.
Engineering Components– Company manufactures complete range of automotive gears.
The range of gears includes Spiral bevels (Crown wheel and pinions), Straight bevels and
Transmission gears.
Milestones
1948: Good earth Company set up to sell and service imported tractors
 1952–57: Good earth Company imported and sold about 1500 tractors in India
 1958: EICHER Tractor Corporation of India Ltd. incorporated

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 1959:First indigenous EICHER tractor built. EICHER came out with India’s first
indigenously built tractor from its Faridabad factory.
 1980: EICHER Good earth Ltd. name given to EICHER.
 1982: Collaboration agreement with Mitsubishi for the manufacture of Light
Commercial Vehicles signed in Tokyo. Incorporation of EICHER Motors Ltd.
 1985: Silver Jubilee Year for EICHER
 1986: EICHER Motors Ltd. springs into operation
 1987: EICHER Tractors went public
 1990: EICHER Good earth buys 26% equity stake in Enfield India Ltd.
 1991: ECS launched; EICHER takes over RAMON & DEMM.
 1992: EICHER Tractors Ltd. selected as ‘Company of the Year’ for 1990–91 in the
four–wheeler category comprising commercial vehicles, passenger cars, jeeps and tractors.
 1993: EICHER adopts new identifier. EICHER acquires majority stake in Enfield
India (60% equity shareholding)
 1994: EICHER Motors Ltd. ends the technical assistance agreement with Mitsubishi
after a successful transfer of technology. Enfield India Ltd. changed its name to Royal
Enfield Motors Ltd.
 1996: EICHER Tractors Ltd. amalgamated with Royal Enfield Motors to form
EICHER Ltd.
 2005: EICHER Motors Ltd. has disinvested the businesses of tractors and engines to
TAFE Motors & Tractors Ltd. (TMTL).
 2008: Volvo Group and EICHER Motors Ltd. established VE Commercial Vehicles
Limited (VECV).
 2010: The company launched the VE–series of Heavy Duty trucks
 2010 – EICHER Motors launched the VE–series of Heavy Duty trucks
Recognition
It has received ISO certification for its quality systems.
It has received IES excellence award as recognition of excellence in productivity, quality
innovation and management.
The company has received award from National Productivity Council for best performance in
production.
EICHER Motors, a company that manufactures iconic Royal Enfield motorcycles.

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MAHINDRA & MAHINDRA LTD.:

Mahindra & Mahindra Limited (M&M), founded in 1945 at Ludhiana, is an Indian

multinational automobile manufacturing company. M&M is the biggest tractor seller in the
world and is one of India’s largest vehicle manufacturers in terms of production. M&M is the
leading company of the Mahindra Group. They are market leaders with the vision to drive the
industry trends in the direction of technological creativity, social duty and constant
enhancement of customer contentment. For the past fifty years, Mahindra and Mahindra has
been the front runner in utility vehicles. At present, their portfolio consists of a
comprehensive gamut of vehicles ranging from two wheelers to heavy trucks, SUVs to school
buses. Currently, there competitors in the Indian market include Maruti Suzuki, Tata Motors,
Ashok Leyland, Toyota, Hyundai, Mercedes-Benz (Merc) and others.

History

Mahindra & Mahindra was founded as a steel trading company on 2 October 1945 in

Ludhiana as Mahindra & Muhammed by brothers Harikrishnan and Jayakrishnan and Jagdish
Chandra Mahindra along with Malik Ghulam Muhammad. Anand Mahindra, the present
Chairman of Mahindra Group, is the grandson of Jagdish Chandra Mahindra.

Industry: Automotive

Miles stones of Mahindra & Mahindra:

1948- Mahindra & Mahindra LTD associated with UK for Steel trading business.

1957 -Mahindra Owen established- a joint venture with Rubery Owen & Company LTD, UK.

1969- the Company entered the world market which exports utility vehicles and spare parts.

1975- Mahindra Engines developed an diesel engine for its vehicles.

1982 -the Mahindra brand tractors were launched.

1986- Tech Mahindra (formerly known as Mahindra British Telecom) is established.

1994 -Mahindra group created 6 Strategic Business Units they are: Automotive or
Automobiles, Trading, Farm Equipment, Infrastructure, Financial Services, Information
Technology (earlier it is Telecom and Software) and Systech (earlier it is MSAT).

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1999 -Mahindra group launched a 3-wheeler vehicle which is environmental friendly, a
battery-operated.

2007- Mahindra group focused on health and the environment. It launched Mahindra
Hariyali, which aims to add 1 million trees to India’s green cover and it also launched
Lifeline Express.

2007- Tech Mahindra LTD launched Tech Mahindra Foundation on June 13th 2007.

Achievements:

 Mahindra and Mahindra recognised as India’s 10th Most Trusted Brand by The Brand
Trust Report in its India Study 2014 survey.
 Keshub Mahindra, former chairman of the Mahindra Group, decorated with
ASSOCHAM Lifetime Achievement Award.
 Mahindra Reva presented with CII Design Excellence award.
 M&M rated as India’s 2nd Most Reputed Company by Bluebytes News in 2012.
 Mahindra and Mahindra placed among the top Ten Indian companies in 'Global 200:
The World's Best Corporate Reputations' list for 2008 by Reputation Institute.
 M&M’s farm equipment branch bagged the apan Quality Medal in 2007.
 For 2006-07, bagged the Bombay Chamber Good Corporate Citizen Award.

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Maruti Suzuki ltd

Maruti Suzuki India Limited (MSIL), formerly known as Maruti Udyog Limited, a subsidiary
of Suzuki Motor Corporation of Japan, is India's largest passenger car company, accounting
for over 50 per cent of the domestic car market. Maruti Udyog Limited was incorporated in
1981 under the provisions of Indian Companies Act 1956 and the government of India
selected Suzuki Motor Corporation as the joint venture partner for the company. In 1982 a JV
was signed between Government of India and Suzuki Motor Corporation.
It was in 1983 that the India’s first affordable car, Maruti 800, a 796 cc hatch back was
launched as the company went into production in a record time of 13 month.

More than half the number of cars sold in India wear a Maruti Suzuki badge. They are a
subsidiary of Suzuki Motor Corporation Japan.  The company offer full range of cars– from
entry level Maruti 800 & Alto to stylish hatchback Ritz, A star, Swift, Wagon R, Estillo and
sedans DZire, SX4 and Sports Utility vehicle Grand Vitara.

Since inception, the company has produced and sold over 7.5 million vehicles in India and
exported over 500,000 units to Europe and other countries.
They were born as a government company, with Suzuki as a minor partner, to make a
people's car for middle class India. Over the years, its product range has widened, ownership
has changed hands and the customer has evolved. What remains unchanged, then and now, is
their mission to motorise India.      MSIL’s parent company, Suzuki Motor Corporation, has
been a global leader in mini and compact cars for three decades. Suzuki's technical
superiority lies in its ability to pack power and performance into a compact, lightweight
engine that is clean and fuel efficient.   The same characteristics make their cars extremely
relevant to Indian customers and Indian conditions. Product quality, safety and cost
consciousness are embedded into their manufacturing process, which they have inherited
from their parent company.

Right from inception, Maruti brought to India, a very simple yet powerful Japanese
philosophy 'smaller, fewer, lighter, shorter and neater'
From the Japanese work culture they imbibed simple practices like an open office, a common
uniform and common canteen for everyone from the Managing Director to the workman,
daily morning exercise, and quality circle teams.

15
Maruti Suzuki exports entry–level models across the globe to over 100 countries and the
focus has been to identify new markets. Some important markets include Latin America,
Africa and South East Asia. Interestingly with a brand new offering A–star, Maruti Suzuki is
ready to take on European markets. Maruti Suzuki sold 53,024 units during 2007–08. This is
the highest ever export volume in a year for the company, and marked a growth of 35 per
cent over the previous year. Maruti Suzuki has exported over 552,000 units cumulatively
with about 280,000 units to Europe and Israel .

Maruti Suzuki has two state–of–the–art manufacturing facilities in India. The first facility is
at Gurgaon spread over 300 acres and the other facility is at Manesar, spread over 600 acres
in North India.        

The Gurgaon facility – Maruti Suzuki's facility in Gurgoan houses three fully integrated
plants. While the three plants have a total installed capacity of 350,000 cars per year, several
productivity improvements or shop floor Kaizens over the years have enabled the company to
manufacture nearly 700,000 cars/ annum at the Gurgaon facilities.

The Manesar facility – Its Manesar facility has been made to suit Suzuki Motor Corporation
(SMC) and Maruti Suzuki India Limited's (MSIL) global ambitions. The plant was
inaugurated in February 2007. At present the plant rolls out World Strategic Models Swift ,
A–star & SX4 and DZire.The plant has several in–built systems and mechanisms.

Diesel Engine Plant– Suzuki Powertrain India Limited – Suzuki Powertrain India Limited the
diesel engine plant at Manesar is SMC's & Maruti's first and perhaps the only plant designed
to produce world class diesel engine and transmissions for cars. The plant is under a joint
venture company, called Suzuki Powertrain India Limited (SPIL) in which SMC holds 70 per
cent equity the rest is held by MSIL. This facility has an initial capacity to manufacture
100,000 diesel engines a year. This will be scaled up to 300,000 engines/annum by 2010.

In 2012 Senior management members were injured as workers resort to violence at Maruti
Suzuki’s Manesar plant.

16
Product range of the company includes
It offer full range of cars– from entry level Maruti 800 & Alto to stylish hatchback Ritz, A
star, Swift, Wagon R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara.
Milestones
2014: Maruti Suzuki announces global debut of ‘Celerio’ with revolutionary Auto Gear Shift
2013: Maruti Suzuki introduces stylish Stingray
2012: India's favourite car Maruti Suzuki Alto crosses the 20 Lakh sales mark
2011: Maruti Suzuki India unveiled its much awaited sportier and stylish car, the all new
'Swift'.
2011: On march 15, Maruti Suzuki India rolled out its 1 Crore (ten millionth) car.The historic
1 Crore car, a Metallic Breeze Blue coloured WagonR VXi (Chassis No 243899) rolled out
from the Company's Gurgaon plant.
2010: Maruti Suzuki has been ranked India's most Trusted Brand in Automobile Sector by
India's leading Business newspaper The Economic Times.
2009 – MSIL adopts voluntary fuel disclosure.First shipment of A–star leaves Mundra Port–
jan 10.A–star bags,Zigwheels”car of the year award”A–star rated best small car of the year–
autocar–UTVi.
2008 – World Premiere of concept A–star at 9th Auto Expo, New Delhi.
2007 – Swift diesel launched.New car plant and the diesel engine facility commences
operations during 2006–07 at manesar,Haryana.SX4–Luxury Sedan Launched with the tag
line “Men are black”.Maruti launches Grand Vitara.
2006–J.D.Power Survey award for the sixth year.MSIL has changed its EMS from ISO
14001:1996 version to ISO 14001:2004 version w.e.f.1st july
2005– MSIL was re–certified in 2005 as per ISO 14001:2004 standards.
2004 – A new esteem launched –second successful facelift by maruti engineers.
2003 – Maruti gets listed on BSE and NSE. IPO (issue oversubscribed 11.2 times)New zen
launched–first facelift by maruti engineers.
2002 – Divestment –Suzuki Motor Corporation(SMC)acquires majority stake in MUL.
Maruti Finance & Insurance launched.
2001 – Turn around with profits Rs104.5crore. Four new business–True value, Insurance,
Finance. Maruti Versa launched. Maruti True Value launched.
2000 – Maruti alto launched. First car company in India to launch call centre. IDTR launched
jointly with the Delhi government to promote safe driving habits.

17
 Achievements/ recognition
 The company takes great pride in sharing that customers have rated Maruti Suzuki
first once again in Customer Satisfaction Survey conducted by independent body,
J.D.Power Asia Pacific. It is 9th time in a row.
 Maruti Suzuki wins 'Golden Peacock Eco–Innovation Award'
 Maruti Suzuki Ranks Highest in Automotive Customer Satisfaction in India For Ninth
Consecutive Year.
 Maruti Suzuki becomes the first Indian car company to export half a million cars
Other Accolades
During 2009–10, the company, its products and services received reputed awards and
accolades instituted by independent expert groups, media houses and research agencies.
These  Include
 Rated as No. 1 in J D Power Sales Satisfaction Index
 Hatchback of the year – Ritz by Autocar
 Car of the year – Ritz by Business Motoring
 Manufacturer of the year by CNBC Overdrive
 Ranked third amongst global car companies in the World's Most Reputed Company
Survey 2009
 National Award for Excellence in Corporate Governance by ICSI

18
 Bajaj auto ltd

Bajaj Auto is a $2.3 billion company founded in 1926. It is world’s fourth largest two– and
three–wheeler manufacturer. Bajaj Auto has three plants in all, two at Waluj and Chakan in
Maharashtra and one plant at Pant Nagar in Uttaranchal.

The company is into manufacturing of motorcycles, scooters and three–wheelers. In India,

Bajaj Auto has a distribution network of 485 dealers and over 1,600 authorised services
centres. It has 171 exclusive dealers for the three–wheeler segment .It has total 3750 rural
outlets in rural areas.
The Bajaj brand is well–known across several countries in Latin America, Africa, Middle
East, South and South East Asia. It has a distribution network in 50 countries with a dominant
presence in Sri Lanka, Colombia, Bangladesh, Mexico, Central America, Peru and Egypt.
It has technical tie up with Kawasaki Heavy Industries of Japan to manufacture latest models
in the two–wheeler space.
Bajaj Auto has launched brands like Boxer, Caliber, Wind125, Pulsar and many more. It has
also launched India's first real cruiser bike, Kawasaki Bajaj Eliminator.
Bajaj Auto's has in all three plants, two at Waluj and Chakan in Maharashtra and one plant at
Pant Nagar in Uttranchal, western India.
 Waluj – Bajaj range of motorcycles and three–wheelers
 Chakan – Bajaj range of motorcycles
 Pant Nagar – Bajaj range of motorcycles

Milestones
 1945– On November 29 Bajaj Auto came into existence as Bachraj Trading
Corporation Private Limited.
 1948– The company commenced sales in India by importing two– and three–
wheelers.
 1959– Bajaj Auto obtained the license from the Government of India to manufacture
two– and three–wheelers.
 1960– The company became a public limited company and conducted Bhoomi Poojan
of the Akurdi Plant.
 1970– Bajaj Auto rolled out its 100,000th vehicle.
 1971– The company introduced its three–wheeler goods carrier.

19
 1972– The company introduced Bajaj Chetak.
 1975– Bajaj Auto & Maharashtra Scooters entered into a joint venture.
 1976– The company introduced Bajaj Super.
 1977– Bajaj Auto introduced rear engine autorickshaw and achieved production and
sales of 100,000 vehicles in a single financial year.
 1981– Bajaj Auto launched Bajaj M–50.
 1984– On January 19, the foundation stone laid for the new plant at Waluj,
Aurangabad.
 1985– On November 5, the Waluj plant inaugurated by the erstwhile President of
India, Giani Zail Singh. The company commenced production at Waluj, Aurangabad in a
record time of 16 months.
 1986– The Bajaj M–80 and the Kawasaki Bajaj KB100 motorcycles were introduced.
The company produced and sold 500,000 vehicles in a single financial year.
 1990– The Bajaj Sunny was introduced.
 1991– The company introduced Kawasaki Bajaj 4S Champion.
 1994– It launched Bajaj Classic.
 1995– On November 29, Bajaj Auto turned into a 50–year old company. It signed
agreements with Kubota of Japan for the development of diesel engines for three–wheelers
and with Tokyo R&D for ungeared scooter and moped development. The Bajaj Super
Excel is introduced while Bajaj celebrated its ten millionth vehicle. The same year one
million vehicles were produced and sold by company in that financial year.
 1997– The Kawasaki Bajaj Boxer and the RE diesel Autorickshaw are introduced.
 1998– The company commenced production at Chakan plant. It rolled out Kawasaki
Bajaj Caliber from its Waluj plant. Bajaj Auto launched Legend, India's first four–stroke
scooter from Akurdi plant. The same year Spirit was launched.
 1999– Caliber motorcycle notched up 100,000 sales in record time of 12 months.
 2000– The company launched Bajaj Saffire.
 2001– Bajaj Auto launched its latest offering in the premium bike segment 'Pulsar'.
The same year Eliminator was launched.
 2003– Bajaj Pulsar DTS–i was launched. The company sold 107,115 motorcycles in a
month. The company launched Bajaj Wind 125, The World Bike in India. It launched its
Caliber115 'Hoodibabaa!' in the executive motorcycle segment.

20
 2004– Bajaj Discover DTS–I, new Bajaj Chetak 4–stroke with wonder gear and Bajaj
CT100 were launched. Bajaj unveiled new brand identity, new symbol, logo and brandline.
 2005– Bajaj Discover, Bajaj Avenger DTS–I and Bajaj Wave DTS–I were introduced.
 2006– Bajaj Platina was launched.
 2007– RE GDi autorickshaw, Bajaj XCD 125 DTS–Si, Bajaj Pulsar 220 DTS–Fi, 200
cc Pulsar DTS–I and Bajaj Kristal DTS–i were launched. The company also underwent
through revamping of its organisational structure.
 2008– Bajaj Platina 125 DTS–Si was launched.
 2009– Bajaj Pulsar 150 & 180 upgrade and Bajaj XCD 135 DTS–Si were launched
 2010 – Bajaj Auto launched a 135 cc Pulsar, priced at Rs 51,000, pushing the Pulsar
brand into the mass segment.
 2011– April, Bajaj Records its best year ever of 2010.
 2011–Bajaj Auto ties–up with SBI for inventory finance to dealers
2012 –Bajaj Auto tied up with Japan’s Kawasaki in Indonesia

Awards
 Bajaj Auto was awarded the NDTV Profit Business Leadership Award 2010 at the
hands of the honarable Finance Minister Shri Pranab Mukherjee on 1st September 2010.
 Bajaj Auto’s Bajaj Pulsar DTS–Fi won bike of the year in 2007 by CNBC–TV18
Autocar Auto Awards.
 Bajaj Platina 100 cc won bike of the year 2007 by NDTV Profit Bike India.
 Bajaj Auto’s Chakan Plant won Super Platinum Award For manufacturing Excellence
in 2006–07 by Frost and Sullivan.
 Bajaj CT 100 bagged Motorcycle Total Customer Satisfaction Study in 2005 by TNS
Autom

21
 CONCEPTUAL FRAMEWORK

Stock market operations are often compared to operations in gambling dens, and winning
strategies are all supposed to be backed by Lady Luck. Investors are most often guided by the
sentiments of faith and phobia. There are plenty of soothsayers/financial wizards offering
advice and strategies to investors. However, rational investors like to play safe and manage
their funds optimally. They need organized information, logical reasoning backed by
scientific methods and techniques. Several practitioners have contributed new knowledge,
enhancing our understanding of stock market behavior.

Stock markets in India gained prominence after the liberalization of economic policies.
Regional stock markets are replaced by national stock markets. SEBI has been established to
regulate the capital market. New intermediaries such as merchant bankers, new institutions
such as depositaries have come into operation. Indian companies accessing global markets,
multi-national companies and FIIs entering the domestic market and large-scale mergers and
acquisitions have become a reality.

Openness of the economy led to growth of capital market, and

stock markets have become active and dynamic with new issues and brisk trading in listed
securities. Besides bringing in opportunities for progress and prosperity this has also led to
misuse and exploitation by greedy and shoddy characters leading to mega scams, financial
frauds and loss of investor confidence. This has brought into focus the corporate governance,
transparency, audit and accountability issue and efficacy of regulation.

Consequently, risk management, investor’s education and

protection of their interests and new regulations and guidelines have emerged. Derivative
markets offering opportunities to hedge risk have been established. This scenario of
complexities in the market made investment and portfolio management a professional
activity. The knowledge of tools and techniques, skill in reading and interpreting the market
developments and forecasting future trends are the basic requirements to operate efficiently

22
and effectively in the stock market. In short, a systematic and scientific approach to
managing investments in the need of the hour.

The mobility and usage of assets determine the economy of a

nation. A conducive economic environment attracts investment, which in turn influences the
development of the economy. One of the essential criteria for the assessment of economic
development is the quality and quantity of assets available in a nation at a specific time. Real
assets comprise the physical and intangible items available to a society. Besides real assets,
the economy is supported by another group of assets called financial assets.

Before going to the study we need to know certain terms so as

to understand the study clearly such as:

Financial assets:

A financial asset is a non-physical asset whose value is derived from

a contractual claim, such as bank deposits, bonds, and stocks. Financial assets are usually
more liquid than other tangible assets, such as commodities or real estate, and may be traded
on financial markets.

Properties of financial assets:

Financial assets have specific properties that distinguish them

from physical and intangible assets. These properties are:

 Monetary value
 Divisibility
 Reversibility
 Liquidity
 Cash flow

Financial markets

Financial markets refer broadly to any marketplace where the trading of securities occurs,
including the stock market, bond market, FOREX market, and derivatives market, among
others. Financial markets are vital to the smooth operation of capitalist economies.

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  Financial markets refer broadly to any marketplace where the trading of securities
occurs.
 There are many kinds of financial markets, including (but not limited to) FOREX,
money, stock, and bond markets.
 These markets may include assets or securities that are either listed on regulated
exchanges or else trade over-the-counter (OTC).
 Financial markets trade in all types of securities and are critical to the smooth
operation of a capitalist society.
 When financial markets fail, economic disruption including recession and
unemployment can result.

Understanding the Financial Markets

Financial markets play a vital role in facilitating the smooth operation

of capitalist economies by allocating resources and creating liquidity for businesses and
entrepreneurs. The markets make it easy for buyers and sellers to trade their financial
holdings. Financial markets create securities products that provide a return for those who
have excess funds (Investors/lenders) and make these funds available to those who need
additional money (borrowers). 

The stock market is just one type of financial market. Financial markets are made by buying
and selling numerous types of financial instruments including equities, bonds, currencies, and
derivatives. Financial markets rely heavily on informational transparency to ensure that the
markets set prices that are efficient and appropriate. The market prices of securities may not
be indicative of their intrinsic value because of macroeconomic forces like taxes.

Some financial markets are small with little activity, and others, like the New York Stock
Exchange (NYSE), trade trillions of dollars of securities daily. The equities (stock) market is
a financial market that enables investors to buy and sell shares of publicly traded companies.
The primary stock market is where new issues of stocks, called initial public offerings (IPOs),
are sold. Any subsequent trading of stocks occurs in the secondary market, where investors
buy and sell securities that they already own.

Prices of securities traded in the financial markets may not necessarily reflect their true
intrinsic value.

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Investment

An investment is an  asset or item acquired with the goal of generating

income or appreciation. Appreciation refers to an increase in the value of an asset over time.
When an individual purchases a good as an investment, the intent is not to consume the good
but rather to use it in the future to create wealth. An investment always concerns the outlay of
some asset today—time, money, or effort—in hopes of a greater payoff in the future than
what was originally put in.

For example, an investor may purchase a monetary asset now with the idea that the asset will
provide income in the future or will later be sold at a higher price for a profit.

 An investment is an asset or item that is purchased with the hope that it will generate
income or appreciate in value at some point in the future.
 An investment always concerns the outlay of some asset today (time, money, effort,
etc.) in hopes of a greater payoff in the future than what was originally put in.
 An investment can refer to any mechanism used for generating future income,
including bonds, stocks, real estate property, or a business, among other examples.

How an Investment Works

The act of investing has the goal of generating income and

increasing value over time. An investment can refer to any mechanism used for generating
future income. This includes the purchase of bonds, stocks, or real estate property, among
other examples. Additionally, purchasing a property that can be used to produce goods can be
considered an investment.

In general, any action that is taken in the hopes of raising future

revenue can also be considered an investment. For example, when choosing to pursue

25
additional education, the goal is often to increase knowledge and improve skills (in the hopes
of ultimately producing more income).

Because investing is oriented toward the potential for future

growth or income, there is always a certain level of risk associated with an investment. An
investment may not generate any income, or may actually lose value over time. For example,
it's also a possibility that you will invest in a company that ends up going bankrupt or a
project that fails to materialize. This is the primary way that saving can be differentiated from
investing: saving is accumulating money for future use and entails no risk, whereas
investment is the act of leveraging money for a potential future gain and it entails some risk.

Investing vs. Speculation

Speculation is a distinct activity from investing.  Investing involves the purchase
of assets with the intent of holding them for the long-term, while speculation involves
attempting to capitalize on market inefficiencies for short-term profit. Ownership is generally
not a goal of speculators, while investors often look to build the number of assets in their
portfolios over time.

Although speculators are often making informed decisions, speculation cannot

usually be categorized as traditional investing. Speculation is generally considered a higher
risk activity than traditional investing (although this can vary depending on the type of
investment involved). Some experts compare speculation to gambling, but the veracity of this
analogy may be a matter of personal opinion.

Savings vs. Investment

Investing is also sometimes mixed up with saving and speculation. An

investment is generally different from savings as an investment is a more active way of
deploying your wealth while saving is generally understood as storing a part of your income
without worrying about where you are deploying your surplus funds.

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Importance of investment

1. Higher investment returns

Investing funds in an asset involves a tradeoff as the investor foregoes the utility of using the
funds for his investment in the present for some higher utility in the future.

 Investment in stock can lead to returns through two ways – one could be through
dividends while the other could be from capital gains.
 Investing in a bond can benefit the investor in the form of regular payouts or coupons
which are given during predetermined time periods.
 Investing in real estate can also benefit an investor through rental income and capital
gains.
2. Retirement plan or fire

The majority of people invest for retirement purposes. As most people rely on their salary
income for meeting their needs, it becomes difficult to sustain their lifestyles after retirement
when one does not have a job.

This means that everyone needs to invest a part of his income during working years to ensure
a nest egg during his retirement years. While the government and companies used to give a
defined benefit pension plan for employees earlier, now one has to mostly rely on defined
contribution plans.

A lot of young people also want to retire early so they need to invest a larger portion of their
income in order to meet their goals. The “FIRE” movement has become a major movement
amongst millennials. “Financial Independence, Retire Early (FIRE)” is a goal that many are
striving for these days.

Saving a major proportion of income from a young age (as high as 70% of your income) can
allow one to retire at the age of 40-45 years, instead of the 60-65 years. The FIRE movement
advocates a frugal lifestyle both at the time of investing as well as during early retirement.

27
3. Tax efficiency

Investing can also help in saving taxes as there are accounts such as the RRSP, TFSA, 401k,
Roth IRA and others where the taxes on your investments is lower or non-existent.

As governments reduce their responsibility towards funding their citizens’ retirement years,
they have created these types of accounts so that citizens can contribute and fund their own
retirement.

4. Beat inflation

Investing is also important to beat inflation. If you don’t invest your money but just leave it in
your checking or savings account, the money will decline in purchasing power as inflation
will eat away the value of your money.

While the reported inflation is quite low nowadays, the actual inflation is quite high as
education and healthcare expenses are increasing much faster than reported
inflation. Canadian banks are not even paying 2% on your savings deposit which means that
if you do not invest, your money will lose value over time.

Even this 2% return may not sustain for long as other foreign central banks have cut close to
0% or even lower. This means that you could face a day when your bank deposits earn 0%
return or even negative returns sometime in the future when inflation is taken into account.

To insure yourself against such a situation, it might make sense to start investing in a mix of
assets which can beat inflation.

5. Reach your financial goals

Investing is one of the key ways in achieving the financial goals for oneself. As an individual
grows through life, there are new financial requirements that come up.

It usually starts with buying a house. Even if one funds a house through a loan, there is the
requirement of a substantial down payment. By investing through a mix of assets, an
individual can build up the corpus required for the down payment.

28
Another major investment goal can be the college education of children. With the steep
college tuitions required these days, a parent can start investing for college tuitions even
when the children are still very young. Besides these financial goals, retirement is always an
omnipresent financial goal for people during their working lives.

Downside of investing

While investing has many advantages, there are some disadvantages to investing as well.

1. Losses

There is no such thing as a total risk-free investment and there is always the risk of a loss of
your investment. Even government securities which are considered as the safest type of
investment are not totally risk-free. Governments can default on their debt and there are
numerous instances of such defaults in modern history.

2. Require investing knowledge

Investing requires specialized knowledge about finance and different types of asset classes.
Experience is also very important in investing, as an investor who has seen a number of
economic cycles can, in general, navigate different types of situations better than a novice
investor.

Since most individuals do not have training in finance, they may require the help of a
financial advisor. Choosing the right financial advisor is a difficult task due to the potential.

Characteristics of investment

Risk factor
Risk is an inherent characteristic of every investment. Risk refers to loss of principal amount,
delay or non-payment of capital or interest, variability of return etc. Every investment differs

29
in terms of risk associated with them. However, less risky investments are the most preferred
ones by investors.

Return
Return refers to the income expected from investment done. It is the key objective for doing
investment by investors. Investment provides benefits to peoples either in the form of regular
yields or through capital appreciation.

Safety
It refers to the surety of return or protection of principal amount without any loss. Safety is an
important feature of every investment tool that is analyzed before allocating any fund in it. 

Income stability
Income stability refers to the regularity of income without any fluctuations. Every investor
wants to invest in such assets which provide return consistently. 

Liquidity
Liquidity refers to how quickly an investment can be sold or converted into cash. It simply
means easiness with which investment can be sold in the market without any loss. Most of
the investors want to invest in liquid assets.

Return on investment

Return on Investment (ROI) is a  performance measure used to

evaluate the efficiency or profitability of an investment or compare the efficiency of a
number of different investments. ROI tries to directly measure the amount of return on a
particular investment, relative to the investment’s cost.

To calculate ROI, the benefit (or return) of an investment is divided by the cost of the
investment. The result is expressed as a percentage or a ratio.

 Return on Investment (ROI) is a popular profitability metric used to evaluate how

well an investment has performed.
 ROI is expressed as a percentage, and is calculated by dividing an investment's net
profit (or loss) by its initial cost or outlay.

30
  ROI can be used to make apples-to-apples comparisons and rank investments in
different projects or assets.
 While ROI is a simple and straightforward measure, it does not take into account the
holding period or passage of time, and so it can miss opportunity costs of investing
elsewhere.

How to calculate ROI

The return on investment formula is as follows:

ROI = (Current Value of Investment − Cost of Investment) ÷ Cost of Investment

"Current Value of Investment” refers to the proceeds obtained from the sale of the investment
of interest. Because ROI is measured as a percentage, it can be easily compared with returns
from other investments, allowing one to measure a variety of types of investments against
one another.

Understanding return on investment

ROI is a popular metric because of its versatility and simplicity. Essentially, ROI
can be used as a rudimentary gauge of an investment’s profitability. This could be the ROI on
a stock investment, the ROI a company expects on expanding a factory, or the ROI generated
in a real estate transaction. The calculation itself is not too complicated, and it is relatively
easy to interpret for its wide range of applications. If an investment’s ROI is net positive, it is
probably worthwhile. But if other opportunities with higher ROIs are available, these signals
can help investors eliminate or select the best options. Likewise, investors should
avoid negative ROIs, which imply a net loss.

For example, suppose Jo invested RS.1,000 in Slice Pizza Corp. in 2017 and sold
the shares for a total of RS.1,200 one year later. To calculate the return on this investment,
divide the net profits (RS.1,200 – RS.1,000 = $200) by the investment cost (RS.1,000), for a
ROI of RS.200/RS.1,000, or 20 percent.

With this information, one could compare the investment in Slice Pizza with any other
projects. Suppose Jo also invested RS.2,000 in Big-Sale Stores Inc. in 2014 and sold the

31
shares for a total of RS.2,800 in 2017. The ROI on Jo’s holdings in Big-Sale would be
RS.800/RS.2,000, or 40 percent.

Limitations of ROI
ROI can be used in conjunction with  rate of return, which takes into
account a project’s time frame. One may also use net present value (NPV), which accounts
for differences in the value of money over time, due to inflation. The application of NPV
when calculating the rate of return is often called the real rate of return.

Risk:

Definition: Investment risk can be defined as the probability or likelihood of occurrence of

losses relative to the expected return on any particular investment.
Description: Stating simply, it is a measure of the level of uncertainty of achieving the
returns as per the expectations of the investor. It is the extent of unexpected results to be
realized.
Risk is an important component in assessment of the prospects of an investment. Most
investors while making an investment consider less risk as favorable. The lesser the
investment risk, more lucrative is the investment. However, the thumb rule is the higher the
risk, the better the return.

Risk is defined in financial terms as the chance that an outcome or investment's actual gains
will differ from an expected outcome or return. Risk includes the possibility of losing some
or all of an original investment.

Quantifiably, risk is usually assessed by considering historical behaviors and outcomes. In

finance, standard deviation is a common metric associated with risk. Standard
deviation provides a measure of the volatility of asset prices in comparison to their historical
averages in a given time frame.

Overall, it is possible and prudent to manage investing risks by understanding the basics of

risk and how it is measured. Learning the risks that can apply to different scenarios and some
of the ways to manage them holistically will help all types of investors and business
managers to avoid unnecessary and costly losses

The basics of risk

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 Everyone is exposed to some type of risk every day – whether it’s from driving,
walking down the street, investing, capital planning, or something else. An investor’s
personality, lifestyle, and age are some of the top factors to consider for individual
investment management and risk purposes. Each investor has a unique risk profile that
determines their willingness and ability to withstand risk. In general, as investment risks rise,
investors expect higher returns to compensate for taking those risks.

A fundamental idea in finance is the relationship between risk and return.

The greater the amount of risk an investor is willing to take, the greater the potential return.
Risks can come in various ways and investors need to be compensated for taking on
additional risk. For example, a U.S. Treasury bond is considered one of the safest investments
and when compared to a corporate bond, provides a lower rate of return. A corporation is
much more likely to go bankrupt than the U.S. government. Because the default risk of
investing in a corporate bond is higher, investors are offered a higher rate of return.

Quantifiably, risk is usually assessed by considering historical behaviors

and outcomes. In finance, standard deviation is a common metric associated with
risk. Standard deviation provides a measure of the volatility of a value in comparison to its
historical average. A high standard deviation indicates a lot of value volatility and therefore a
high degree of risk.

Individuals, financial advisors, and companies can all develop  risk

management strategies to help manage risks associated with their investments and business
activities. Academically, there are several theories, metrics, and strategies that have been
identified to measure, analyze, and manage risks. Some of these include: standard deviation,
beta, Value at Risk (VaR), and the Capital Asset Pricing Model (CAPM). Measuring and
quantifying risk often allows investors, traders, and business managers to hedge some risks
away by using various strategies including diversification and derivative positions.

 Risk takes on many forms but is broadly categorized as the chance an outcome or
investment's actual gain will differ from the expected outcome or return.
 Risk includes the possibility of losing some or all of an investment.
 There are several types of risk and several ways to quantify risk for analytical
assessments.
 Risk can be reduced using diversification and hedging strategies.

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Types of financial risk
Every saving and investment action involves different risks and returns. In general, financial
theory classifies investment risks affecting asset values into two categories: systematic
risk and unsystematic risk. Broadly speaking, investors are exposed to both systematic and
unsystematic risks. 

Systematic risks, also known as market risks, are risks that can affect an entire economic
market overall or a large percentage of the total market. Market risk is the risk of losing
investments due to factors, such as political risk and macroeconomic risk, that affect the
performance of the overall market. Market risk cannot be easily mitigated through portfolio
diversification. Other common types of systematic risk can include interest rate risk, inflation
risk, currency risk, liquidity risk, country risk, and sociopolitical risk.

Unsystematic risk, also known as specific risk or idiosyncratic risk, is a category of risk that
only affects an industry or a particular company. Unsystematic risk is the risk of losing an
investment due to company or industry-specific hazard. Examples include a change in
management, a product recall, a regulatory change that could drive down company sales, and
a new competitor in the marketplace with the potential to take away market share from a
company. Investors often use diversification to manage unsystematic risk by investing in a
variety of assets.

In addition to the broad systematic and unsystematic risks, there are several specific types of
risk, including:

Technical analysis

Technical analysis is a means of examining and predicting price movements in the financial
markets, by using historical price charts and market statistics. It is based on the idea that if a
trader can identify previous market patterns, they can form a fairly accurate prediction of
future price trajectories.

It is one of the two major schools of market analysis, the other being fundamental analysis.
Whereas fundamental analysis focuses on an asset’s ‘true value’, with the meaning of
external factors and intrinsic value both considered, technical analysis is based purely on the

34
price charts of an asset. It is solely the identification of patterns on a chart that is used to
predict future movements.

Examples of technical analysis tools

Technical analysts have a wide range of tools that they can use to find trends and patterns on
charts. These include moving averages, support and resistance levels, Bollinger bands, and
more. All of the tools have the same purpose: to make understanding chart movements and
identifying trends easier for technical traders.

Pros and cons of technical analysis

Pros of technical analysis

Being able to identify the signals for price trends in a market is a key component of any
trading strategy. All traders need to work out a methodology for locating the best entry and
exit points in a market, and using technical analysis tools is a very popular way of doing so.

In fact, technical analysis tools are so commonly used, that many believe they have created
self-fulfilling trading rules: As more and more traders use the same indicators to find support
and resistance levels, there will be more buyers and sellers congregated around the same
price points, and the patterns will inevitably be repeated.

Cons of technical analysis

There will always be an element of market behaviour that is unpredictable. There is no

definitive guarantee that any form of analysis – technical or fundamental – will be 100%
accurate. Although historical price patterns give us an insight into an asset’s likely price
trajectory, that is no promise of success.

Traders should use a range of indicators and analysis tools to get the highest level of
assurance possible, and have a risk management strategy in place to protect against adverse
movements

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Technical analysis is a trading discipline employed to evaluate investments and identify
trading opportunities by analyzing statistical trends gathered from trading activity, such as
price movement and volume.

Unlike fundamental analysis, which attempts to evaluate a security's value based on business
results such as sales and earnings, technical analysis focuses on the study of price and
volume. Technical analysis tools are used to scrutinize the ways supply and demand for a
security will affect changes in price, volume and implied volatility. Technical analysis is
often used to generate short-term trading signals from various charting tools, but can also
help improve the evaluation of a security's strength or weakness relative to the broader
market or one of its sectors. This information helps analysts improve there overall valuation
estimate.

Technical analysis can be used on any security with historical trading data. This includes
stocks, futures, commodities, fixed-income, currencies, and other securities. In this tutorial,
we’ll usually analyze stocks in our examples, but keep in mind that these concepts can be
applied to any type of security. In fact, technical analysis is far more prevalent in
commodities and FOREX markets where traders focus on short-term price movements.

 Technical analysis is a trading discipline employed to evaluate investments

and identify trading opportunities in price trends and patterns seen on charts.
 Technical analysts believe past trading activity and price changes of a security can be
valuable indicators of the security's future price movements.
 Technical analysis may be contrasted with fundamental analysis, which focuses on a
company's financials rather than historical price patterns or stock trends.

Understanding fundamental vs. technical analysis

The basics of technical analysis
Technical analysis as we know it today was first introduced by Charles Dow and the Dow
Theory in the late 1800s. Several noteworthy researchers including William P. Hamilton,
Robert Rhea, Edson Gould, and John Magee further contributed to Dow Theory concepts
helping to form its basis. In modern day, technical analysis has evolved to included hundreds
of patterns and signals developed through years of research.

36
Technical analysis operates from the assumption that past trading activity and price changes
of a security can be valuable indicators of the security's future price movements when paired
with appropriate investing or trading rules. Professional analysts often use technical analysis
in conjunction with other forms of research. Retail traders may make decisions based solely
on the price charts of a security and similar statistics, but practicing equity analysts rarely
limit their research to fundamental or technical analysis alone.

Among professional analysts, the CMT Association supports the largest collection of
chartered or certified analysts using technical analysis professionally around the world. The
association's Chartered Market Technician (CMT) designation can be obtained after three
levels of exams that cover both a broad and deep look at technical analysis tools. Nearly one
third of CMT charter holders are also Certified Financial Analyst (CFA) charter holders. This
demonstrates how well the two disciplines reinforce each other.

The underlying assumptions of technical analysis

There are two primary methods used to analyze securities and make investment
decisions fundamental analysis and technical analysis. Fundamental analysis involves
analyzing a company’s financial statements to determine the fair value of the business, while
technical analysis assumes that a security's price already reflects all publicly-available
information and instead focuses on the statistical analysis of price movements. Technical
analysis attempts to understand the market sentiment behind price trends by looking for
patterns and trends rather than analyzing a security's fundamental attributes.

Charles Dow released a series of editorials discussing technical analysis theory. His writings
included two basic assumptions that have continued to form the framework for technical
analysis trading.

1. Markets are efficient with values representing factors that influence a security's price,
but
2. Even random market price movements appear to move in identifiable patterns and
trends that tend to repeat over time.

Today the field of technical analysis builds on Dow's work. Professional analysts typically
accept three general assumptions for the discipline:

37
1: The market discounts everything
Technical analysts believe that everything from a company's fundamentals to broad market
factors to market psychology are already priced into the stock. This point of view is
congruent with the Efficient Markets Hypothesis (EMH) which assumes a similar conclusion
about prices. The only thing remaining is the analysis of price movements, which technical
analysts view as the product of supply and demand for a particular stock in the market.

2: Price moves in trends

Technical analysts expect that prices, even in random market movements, will exhibit trends
regardless of the time frame being observed. In other words, a stock price is more likely to
continue a past trend than move erratically. Most technical trading strategies are based on this
assumption.

3: History tends to repeat itself

Technical analysts believe that history tends to repeat itself. The repetitive nature of price
movements is often attributed to market psychology, which tends to be very predictable based
on emotions like fear or excitement. Technical analysis uses chart patterns to analyze these
emotions and subsequent market movements to understand trends. While many forms of
technical analysis have been used for more than 100 years, they are still believed to be
relevant because they illustrate patterns in price movements that often repeat themselves.

How technical analysis is used

Technical analysis attempts to forecast the price movement of virtually any tradable
instrument that is generally subject to forces of supply and demand, including stocks, bonds,
futures and currency pairs. In fact, some view technical analysis as simply the study of supply
and demand forces as reflected in the market price movements of a security. Technical
analysis most commonly applies to price changes, but some analysts track numbers other than
just price, such as trading volume or open interest figures.

Across the industry there are hundreds of patterns and signals that have been developed by
researchers to support technical analysis trading. Technical analysts have also developed
numerous types of trading systems to help them forecast and trade on price movements.
Some indicators are focused primarily on identifying the current market trend, including
support and resistance areas, while others are focused on determining the strength of a trend

38
and the likelihood of its continuation. Commonly used technical indicators and charting
patterns include trend lines, channels, moving averages and momentum indicators.

In general, technical analysts look at the following broad types of indicators:

 Price trends
 Chart patterns
 Volume and momentum indicators
 Oscillators
 Moving averages
 Support and resistance levels

Difference between technical analysis and fundamental analysis

Fundamental analysis and technical analysis, the major schools of thought when it comes to
approaching the markets, are at opposite ends of the spectrum. Both methods are used for
researching and forecasting future trends in stock prices, and like any investment strategy or
philosophy, both have their advocates and adversaries.

Fundamental analysis is a method of evaluating securities by attempting to measure

the intrinsic value of a stock. Fundamental analysts study everything from the overall
economy and industry conditions to the financial condition and management of
companies. Earnings, expenses, assets and liabilities are all important characteristics to
fundamental analysts.

Technical analysis differs from fundamental analysis in that the stock's price and volume are
the only inputs. The core assumption is that all known fundamentals are factored into price;
thus, there is no need to pay close attention to them. Technical analysts do not attempt to
measure a security's intrinsic value, but instead use stock charts to identify patterns and trends
that suggest what a stock will do in the future.

Limitations of technical analysis

Some analysts and academic researchers expect that the EMH demonstrates why they
shouldn't expect any actionable information to be contained in historical price and volume

39
data. However, by the same reasoning, neither should business fundamentals provide any
actionable information. These points of view are known as the weak form and semi-strong
form of the EMH.

Another criticism of technical analysis is that history does not repeat itself exactly, so price
pattern study is of dubious importance and can be ignored. Prices seem to be better modeled
by assuming a random walk.

A third criticism of technical analysis is that it works in some cases but only because it
constitutes a self-fulfilling prophesy. For example, many technical traders will place a stop-
loss order below the 200-day moving average of a certain company. If a large number of
traders have done so and the stock reaches this price, there will be a large number of sell
orders, which will push the stock down, confirming the movement traders anticipated.

Then, other traders will see the price decrease and also sell their positions, reinforcing the
strength of the trend. This short-term selling pressure can be considered self-fulfilling, but it
will have little bearing on where the asset's price will be weeks or months from now. In sum,
if enough people use the same signals, they could cause the movement foretold by the signal,
but over the long run this sole group of traders cannot drive price.

Dow Theory

It was formulated by CHARLES.H.DOW who was the editor of the wall street journal in
U.S.A. Charles Dow formulated a hypothesis that the stock market does not move on random
basis but is influenced by three distinct cyclical trends that guide its direction. According to
Dow theory, the market has three movements and these movements are simultaneous in
nature. These movements are:

 The primary movements

 Secondary reactions (corrections)

 Minor movements( day to day fluctuations in the market )

Bullish trend

There are three phases in bullish trend:-

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Phase1: prices advance with revival of confidence of buyer in the future.

Phase2: prices advance due to improvement in corporate earnings.

Phase3: prices advance due to inflation speculations

During bull market the line chart would exhibit the formation of three peaks.

According to DOW Theory, the formation of higher bottoms and higher tops indicates a
bullish trend.

Bearish trend

The bear market is also characterized by three phases:

Phase1: prices begin to fall due to abandonment of hopes. Investors begin to sell their
shares.

Phase2: companies start reporting lower profits and lower dividends. This causes further
fall in prices due to increased selling price

Phase3: In this final phase, prices fall still further due to distress selling.

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A bearish market would be indicated by the formation of lower tops and lower bottoms.

In the investing world, the terms "bull" and "bear" are frequently used to refer to market
conditions. These terms describe how stock markets are doing in general—that I, whether
they are appreciating or depreciating in value. And as an investor, the direction of the market
is a major force that has a huge impact on your portfolio. So, it's important to understand how
each of these market conditions may impact your investments.

 A bull market is a market that is on the rise and where the economy is sound; while a
bear market exists in an economy that is receding, where most stocks are declining in
value.
 Although some investors can be "bearish," the majority of investors are typically
"bullish." The stock market, as a whole, has tended to post positive returns over long
time horizons.
 A bear market can be more dangerous to invest in, as many equities lose value and
prices become volatile.
 Since it is hard to time a market bottom, investors may withdraw their money from a
bear market and sit on cash until the trend reverses, further sending prices lower.
Technical analysis charts

Technical analysis of charts aims to identify  patterns and

market trends by utilizing differing forms of technical chart types and other chart functions.
Interpreting charts can be intimidating for novice traders, so understanding basic technical
analysis is essential. This article reveals popular types of technical analysis charts used in
FOREX trading, outlining the foundations and uses of these chart types.

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Top 3 types of technical analysis charts for trading

Line Charts

 Best for trading: Stocks

 Trading experience: Beginner
 Technical analysis technique: Holistic market overview which eliminates shifting data
 Advantages: Supports trading without the influence of emotions

A line chart typically displays closing prices and nothing else. Each closing price is linked to
the previous closing price to make a continuous line that is easy to follow.

This type of chart is often used for television, newspapers and many web articles because it is
simple and easy to digest. It provides less information than candlestick or bar charts but it is
better for viewing at a glance for a simplistic market view.

Another advantage of the line chart is that it can assist in managing the emotions of
trading by selecting a neutral color, like the blue chart depicted above. This is because the
line chart eliminates ‘choppy’ movements in different colours as seen in the bar and
candlestick charts.

Bar (HLOC) Charts

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  Best for trading: FOREX, stocks, indices and commodities
 Trading experience: Intermediate
 Technical analysis technique: Use price data (HLOC) to identify
trends, support/resistance and entry points
 Advantages: Provides the trader with more detail which helps to identify key levels
and in-depth data

A bar chart displays the high, low, open and closing (HLOC) prices for each period
designated for the bar. The vertical line is created by the high and low price for the bar. The
dash to the left of the bar was the opening price and the dash to the right signals the closing
price.

Being able to identify whether a bar closes up (green) or down (red), indicates to the trader
the market sentiment (bullish/bearish) for that period.

The similarities between this chart type and a candlestick chart are visible when they are
viewed side by side, but a bar chart is better for a cleaner market view. By removing the
bolded colour from the chart, traders can view market trends with an uncomplicated outlook.

Candlestick:

 Best for trading: FOREX, stocks, indices and commodities

 Trading experience: Intermediate
 Technical analysis technique: Equivalent to the bar chart technique (dependant on
trader preference)

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  Advantages: Candlesticks are easier on the eye for traders as opposed to bar charts,
due to the fuller nature of the candlestick

A candlestick chart displays the high, low, open and closing (HLOC) prices for each period
designated for the candle. The “body” of each candlestick represents the opening and closing
prices while the candle “wicks” display the high and low prices for each period.

The colour of each candle depends on the applied settings, but most charting packages will
use green and red as the default colours. The green candles reflect that price closed higher
than where it opened (often called a bullish candle), and every candle that is red means the
price closed lower than where it opened (often called a bearish candle).

The candlestick chart is by far the most popular type of chart used in forex technical analysis
as it provides the trader with more information while remaining easy to view at a glance.

Data smoothing
Data smoothing is done by using an algorithm to remove noise from a data set. This allows
important patterns to more clearly stand out.

Data smoothing can be used to help predict trends, such as those found in securities prices, as
well in economic analysis that can take into account the effects of seasonality or which can
ignore one-time outliers.

 Data smoothing uses an algorithm to remove noise from a data set, allowing important
patterns to stand out, and can be used to predict trends such as those found in
securities prices.
 Different data smoothing models include the random method the use of moving
averages.
 While data smoothing can help predict certain trends, it will inherently lead to less
information in the sample that may lead to certain data points being ignored.

When data is compiled, it can be manipulated to remove or reduce any volatility, or any other
type of noise. This is called data smoothing.
The idea behind data smoothing is that it can identify simplified changes in order to help
predict different trends and patterns. It acts as an aid for statisticians or traders who need to

45
look at a lot of data—that can often be complicated to digest—to find patterns they would not
otherwise see.

To explain with a visual representation, imagine a one-year chart for Company X's stock.
Each individual high point on the chart for the stock can be reduced while raising all the
lower points. This would make a smoother curve, thus helping an investor make predictions
about how the stock may perform in the future.

 Smoothed data is generally preferred by economists because it better identifies changes in

trend compared to unsmoothed data, which may appear more erratic and create false signals.

Data Smoothing Methods

There are different methods in which data smoothing can be done. Some of these include the
randomization method, using a random walk, calculating a moving average, or conducting
one of several exponential smoothing techniques.

A simple moving average (SMA) places equal weight on both recent prices and historical
ones, while an exponential moving average (EMA) puts more weight on recent price data.
The random walk model is commonly used to describe the behavior of financial instruments
such as stocks. Some investors believe that there is no relationship between past movement in
a security's price and its future movement. Random walk smoothing assumes that future data
points will equal the last available data point plus a random variable. Technical and
fundamental analysts disagree with this idea; they believe future movements can be
extrapolated by examining past trends.

Often used in technical analysis, the moving average smooths out price action while it filters
out volatility from random price movements. This process is based on past prices, making it a
trend-following or lagging indicator. As can be seen in the price chart below, the moving
average (EMA) has the general shape and trend of the underlying daily price data, depicted
by the candlesticks. The more days incorporated into the moving average, the more smoothed
the line becomes.

Pros and Cons of Data Smoothing

46
 Data smoothing can be used to help identify trends in the economy, securities such as stocks,
consumer sentiment, or for other business purposes. For example, an economist can smooth
out data to make seasonal adjustments for certain indicators like retail sales by reducing the
variations that may occur each month like holidays or gas prices. There are downfalls to
using this tool, however. Data smoothing doesn't always provide an explanation of the trends
or patterns it helps identify.

Pros

 Helps identify real trends by eliminating noise from the data

 Allows for seasonal adjustments of economic data

 Easily achieved through several techniques including moving averages

Cons

 Removing data always comes with less information to analyze, increasing the risk of
errors in analysis

 Smoothing may emphasize analysts' biases and ignore outliers that may be
meaningful

Technical analysis tools

By examining the historical pattern of the two most important measures,
namely, the market price trend and vote of trading an investor tries to estimate the future
market price of a share. In the narrowest sense, technical analysis is based on the assumption
that market price fluctuations reflect the logical and emotional forces prevailing in the
secondary market.
Technical analysis can be broken down into three essential parts: sentiment,
flow of funds and market structure indicators. Sentiment or expectation indicators monitor
the actions of different market participants, i.e, brokers mutual funds, institutional investors,
odd lot dealers, etc. The basis for examining these groups is that different groups of investors
are consistent in their actions at major market turning points. For instance, insiders tend to be
correct at market turning points while financial analysts are often wrong at market turning

47
points. Thus, to gain from the market in these situations, investors are expected to take a
stand opposite that of financial analysts.
Market indicators
All the technical analysis charts discussed earlier were analysed using a share data (eg high,
low, close prices, volume, etc.). There is another group of technical tools designed to help an
investor gauge changes in all shares within a specific market. These indicators are usually
referred to as market indicators because they gauge an entire market, not just an individual
share. Market indicators typically analyse the stock market, although they can be used
markets (eg. futures and commodities).
While the data fields available for an individual share are limited to its open,
high, low, close prices, volume and published financial reports, there are numerous data
items available for the overall stock market. For example, the number of shares that made
new high for the day, the number of shares that increased in price, the volume associated with
the shares that increased in price, etc. Market indicators cannot be calculated for an individual
shares because the required data may not be available.

Market indicators add significant depth to technical analysis, because they

contain much more information than price and volume. A typical approach is to use market
indicators to determine where the overall market is headed and then use price/ volume
indicators to determine when to buy or sell an individual share

Categories of Market Indicators

Market indicators fall into three categories: monetary, sentiment and momentum.
 The external monetary conditions affecting share prices tell us how share prices could
behave.
 The sentiment of various sectors of the investment community tells us how investors
expect prices to behave.
 The current momentum of the market tells us how prices are actually behaving

Monetary indicators concentrate on economic data such as interest rates, They help an
investor to determine the environment in which businesses operate. These external forces
directly affect a business profitability and share price.

48
Certain market indicators are Moving averages, Line studies, Bollinger bands, Absolute
breadth index, Arms index, Relative strength index, Accumulation swing index,
Commodity channel index, Chaikin oscillator, Detrended prices oscillator, Stochastic
oscillator, McClellan oscillator, Dynamic momentum oscillator, Williams, %R,
Performance indicator, R-squared indicator, Momentum oscillator, Parabolic stop and
reverse, Volume oscillator, Triple exponential average

Moving average

Moving averages smooth the price data to form a trend following indicator. They do not
predict price direction, but rather define the current direction, though they lag due to being
based on past prices. Despite this, moving averages help smooth price action and filter out the
noise. They also form the building blocks for many other technical indicators and overlays,
such as Bollinger Bands, MACD and the McClellan Oscillator. The two most popular types
of moving averages are the Simple Moving Average (SMA) and the Exponential Moving
Average.

Simple moving average calculation

A simple moving average is formed by computing the average price of a security over a
specific number of periods. Most moving averages are based on closing prices; for example, a
5-day simple moving average is the five-day sum of closing prices divided by five. As its
name implies, a moving average is an average that moves. Old data is dropped as new data
becomes available, causing the average to move along the time scale. The example below
shows a 5-day moving average evolving over three days.

Example

Daily closing prices: 11, 12, 13, 14, 15

First day 5-day moving average: (11+12+13+14+15)/5

Second day 5-day moving average: (12+13+14+15+16)/5

Third day 5-day moving average: (13+14+15+16+17)/5

49
The first day of the moving average simply covers the last five days. The second day of the
moving average drops the first data point (11) and adds the new data point (16). The third day
of the moving average continues by dropping the first data point (12) and adding the new data
point (17). In the example above, prices gradually increase from 11 to 17 over a total of seven
days. Notice that the moving average also rises from 13 to 15 over a three-day calculation
period. Also, notice that each moving average value is just below the last price. For example,
the moving average for day one equals 13 and the last price is 15. Prices the prior four days
were lower and this causes the moving average to lag.

Exponential moving average calculation

Exponential moving averages (EMAs) reduce the lag by applying more weight to
recent prices. The weighting applied to the most recent price depends on the number of
periods in the moving average. EMAs differ from simple moving averages in that a given
day's EMA calculation depends on the EMA calculations for all the days prior to that day.
You need far more than 10 days of data to calculate a reasonably accurate 10-day EMA.

There are three steps to calculating an exponential moving average (EMA). First, calculate
the simple moving average for the initial EMA value. An exponential moving average (EMA)
has to start somewhere, so a simple moving average is used as the previous period's EMA in
the first calculation. Second, calculate the weighting multiplier. Third, calculate the
exponential moving average for each day between the initial EMA value and today, using the
price, the multiplier, and the previous period's EMA value. The formula below is for a 10-day
EMA.

Simple vs. exponential moving averages

Even though there are clear differences between simple moving averages
and exponential moving averages, one is not necessarily better than the other. Exponential
moving averages have less lag and are therefore more sensitive to recent prices - and recent
price changes. Exponential moving averages will turn before simple moving averages.
Simple moving averages, on the other hand, represent a true average of prices for the entire
time period. As such, simple moving averages may be better suited to identify support or
resistance levels.

Moving average preference depends on objectives, analytical style, and

time horizon. Chartists should experiment with both types of moving averages as well as

50
different timeframes to find the best fit. The chart below shows IBM with the 50-day SMA in
red and the 50-day EMA in green. Both peaked in late January, but the decline in the EMA
was sharper than the decline in the SMA. The EMA turned up in mid-February, but the SMA
continued lower until the end of March. Notice that the SMA turned up over a month after the
EMA.

Lengths and timeframes

The length of the moving average depends on the analytical objectives. Short moving
averages (5-20 periods) are best suited for short-term trends and trading. Chartists interested
in medium-term trends would opt for longer moving averages that might extend 20-60
periods. Long-term investors will prefer moving averages with 100 or more periods.

Some moving average lengths are more popular than others. The 200-day moving average is
perhaps the most popular. Because of its length, this is clearly a long-term moving average.
Next, the 50-day moving average is quite popular for the medium-term trend. Many chartists
use the 50-day and 200-day moving averages together. Short-term, a 10-day moving average
was quite popular in the past because it was easy to calculate. One simply added the numbers
and moved the decimal point.

Trend identification

The direction of the moving average conveys important information about prices,
whether that average is simple or exponential. A rising moving average shows that prices are
generally increasing. A falling moving average indicates that prices, on average, are falling.
A rising long-term moving average reflects a long-term uptrend. A falling long-term moving
average reflects a long-term downtrend.

Double crossovers

Two moving averages can be used together to generate crossover signals. In Technical
Analysis of the Financial Markets, John Murphy calls this the “double crossover method”.
Double crossovers involve one relatively short moving average and one relatively long
moving average. As with all moving averages, the general length of the moving average
defines the timeframe for the system. A system using a 5-day EMA and 35-day EMA would
be deemed short-term. A system using a 50-day SMA and 200-day SMA would be deemed
medium-term, perhaps even long-term.

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A bullish crossover occurs when the shorter moving average crosses above the longer moving
average. This is also known as a golden cross. A bearish crossover occurs when the shorter
moving average crosses below the longer moving average. This is known as a dead cross.

Moving average crossovers produce relatively late signals. After all, the system employs two
lagging indicators. The longer the moving average periods, the greater the lag in the signals.
These signals work great when a good trend takes hold. However, a moving average
crossover system will produce lots of whipsaws in the absence of a strong trend.

There is also a triple crossover method that involves three moving averages. Again, a signal
is generated when the shortest moving average crosses the two longer moving averages. A
simple triple crossover system might involve 5-day, 10-day, and 20-day moving averages.

Price crossovers

Moving averages can also be used to generate signals with simple

price crossovers. A bullish signal is generated when prices move above the moving average.
A bearish signal is generated when prices move below the moving average. Price crossovers
can be combined to trade within the bigger trend. The longer moving average sets the tone for
the bigger trend and the shorter moving average is used to generate the signals. One would
look for bullish price crosses only when prices are already above the longer moving average.
This would be trading in harmony with the bigger trend. For example, if price is above the
200-day moving average, chartists would only focus on signals when price moves above the
50-day moving average. Obviously, a move below the 50-day moving average would precede
such a signal, but such bearish crosses would be ignored because the bigger trend is up. A
bearish cross would simply suggest a pullback within a bigger uptrend. A cross back above
the 50-day moving average would signal an upturn in prices and continuation of the bigger
uptrend.

Support and resistance

Moving averages can also act as support in an uptrend and resistance in a downtrend. A

short-term uptrend might find support near the 20-day simple moving average, which is also
used in Bollinger Bands. A long-term uptrend might find support near the 200-day simple
moving average, which is the most popular long-term moving average. In fact, the 200-day
moving average may offer support or resistance simply because it is so widely used. It is
almost like a self-fulfilling prophecy.

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Do not expect exact support and resistance levels from moving averages, especially longer
moving averages. Markets are driven by emotion, which makes them prone to overshoots.
Instead of exact levels, moving averages can be used to identify support or resistance zones.

Moving average ribbons

Several moving averages with different look-back periods can be plotted on the same chart.
The moving average lines resemble a ribbon moving across the chart.In addition to analyzing
individual moving average lines on the ribbon, chartists can glean information from the
ribbon itself. If the lines are running in parallel, this indicates a strong trend. If the ribbon is
expanding (the lines are moving further apart over time), this indicates the trend is coming to
an end. If the ribbon is contracting (the lines are moving closer together or even crossing),
this can indicate the start of a new trend.

Conclusion

The advantages of using moving averages need to be weighed against the disadvantages.
Moving averages are trend following, or lagging, indicators that will always be a step behind.
This is not necessarily a bad thing though. After all, the trend is your friend and it is best to
trade in the direction of the trend. Moving averages ensure that a trader is in line with the
current trend. Even though the trend is your friend, securities spend a great deal of time in
trading ranges, which render moving averages ineffective. Once in a trend, moving averages
will keep you in, but also give late signals. Don't expect to sell at the top and buy at the
bottom using moving averages. As with most technical analysis tools, moving averages
should not be used on their own, but in conjunction with other complementary tools. Chartists
can use moving averages to define the overall trend and then use RSI to define overbought or
oversold levels.

Using with sharp charts

Moving averages are available in Sharp Charts as a price overlay. Using the Overlays
drop-down menu, users can choose either a simple moving average or an exponential moving
average. The first parameter is used to set the number of time periods. An optional parameter
can be added to specify which price field should be used in the calculations - “O” for the
Open, “H” for the High, “L” for the Low, and “C” for the Close. A comma is used to separate
parameters. Another optional parameter can be added to shift the moving averages to the left

53
(past) or right (future). A negative number (-10) would shift the moving average to the left 10
periods. A positive number (10) would shift the moving average to the right 10 periods.

DATA ANALYSIS AND INTERPRETATION

 I have taken 5 companies data for interpreting price trends in the future.
 All these companies are from automobile industry.
 This data analysis is done only for a period of one year.
 Only simple moving average technique is been used to analyze future price trends.
 Simple moving average is calculated based on closing prices.
 15- day moving average is used for analysis.

Table – 5.1 Calculation of sma15 for closing prices of Eicher motors ltd

EICHER MOTORS LTD-NSE

Date Close SMA15
2/25/2020 1753.23  
2/26/2020 1715.695  
2/27/2020 1705.34  

2/28/2020 1660.235  
3/2/2020 1701.34  
3/3/2020 1788.845  
3/4/2020 1725.42  

54
3/5/2020 1777.535  
3/6/2020 1774.355  
3/9/2020 1788.58  
3/11/2020 1775.36  
3/12/2020 1687.775  
3/13/2020 1767.215  
3/16/2020 1649.37  
3/17/2020 1706.11 1731.76
3/18/2020 1595.415 1721.239
3/19/2020 1504.645 1707.169
3/20/2020 1567.845 1698.003
3/23/2020 1370.59 1678.693
3/24/2020 1420.85 1659.994
3/25/2020 1451.66 1637.515
3/26/2020 1475.795 1620.873
3/27/2020 1431.98 1597.836
3/30/2020 1333.31 1568.433
3/31/2020 1309.59 1536.501
4/1/2020 1300.16 1504.821
4/3/2020 1268.005 1476.836
4/7/2020 1309.605 1446.329
4/8/2020 1315.85 1424.094
4/9/2020 1374.23 1401.969
4/13/2020 1340.055 1384.945
4/15/2020 1331.49 1373.401
4/16/2020 1337.135 1358.02
4/17/2020 1477.035 1365.117
4/20/2020 1421.445 1365.156
4/21/2020 1349.5 1358.346
4/22/2020 1370.33 1351.315
4/23/2020 1406.835 1349.638
4/24/2020 1358.92 1351.346
4/27/2020 1399.95 1357.37
4/28/2020 1432.685 1366.205
4/29/2020 1431.575 1377.109
4/30/2020 1470.795 1387.855
5/4/2020 1374.88 1391.791
5/5/2020 1381.095 1392.248
5/6/2020 1385.995 1395.311
5/7/2020 1401.05 1399.948
5/8/2020 1385.885 1403.198
5/11/2020 1428.895 1399.989
5/12/2020 1416.705 1399.673
5/13/2020 1427.165 1404.851
5/14/2020 1403.185 1407.041
5/15/2020 1409.96 1407.249

55
5/18/2020 1298.82 1403.243
5/19/2020 1296.62 1396.354
5/20/2020 1367.51 1392.009
5/21/2020 1408.76 1390.488
5/22/2020 1392.24 1385.251
5/26/2020 1480.51 1392.293
5/27/2020 1496.695 1400
5/28/2020 1623.65 1415.843
5/29/2020 1654.845 1432.763
6/1/2020 1698.575 1453.609
6/2/2020 1739.625 1474.324
6/3/2020 1754.285 1496.83
6/4/2020 1727.295 1516.838
6/5/2020 1749.535 1539.928
6/8/2020 1689.485 1558.563
6/9/2020 1702.685 1585.488
6/10/2020 1709.005 1612.98
6/11/2020 1644.28 1631.431
6/12/2020 1685.73 1649.896
6/15/2020 1648.195 1666.96
6/16/2020 1670.905 1679.653
6/17/2020 1679.685 1691.852
6/18/2020 1711.605 1697.716
6/19/2020 1734.935 1703.055
6/22/2020 1758.895 1707.076
6/23/2020 1789.115 1710.376
6/24/2020 1843.685 1716.336
6/25/2020 1809.07 1721.787
6/26/2020 1847.34 1728.308
6/29/2020 1811.35 1736.432
6/30/2020 1833.43 1745.148
7/1/2020 1840.195 1753.894
7/2/2020 1835.36 1766.633
7/3/2020 1898.35 1780.808
7/6/2020 1925.095 1799.268
7/7/2020 1993.065 1820.745
7/8/2020 1939.17 1838.044
7/9/2020 1948.325 1853.825
7/10/2020 1944.785 1867.815
7/13/2020 1965.5 1881.589
7/14/2020 1885.015 1887.982
7/15/2020 1856.255 1888.82
7/16/2020 1863.955 1892.479
7/17/2020 1881.08 1894.729
7/20/2020 1918.765 1901.89
7/21/2020 2011.665 1913.772

56
7/22/2020 1989.055 1923.696
7/23/2020 2088.245 1940.555
7/24/2020 2080.035 1952.667
7/27/2020 2053.77 1961.246
7/28/2020 2105.325 1968.73
7/29/2020 2140.095 1982.125
7/30/2020 2120.135 1993.579
7/31/2020 2063.87 2001.518
8/3/2020 2078.215 2009.032
8/4/2020 2101.565 2023.469
8/5/2020 2195.875 2046.11
8/6/2020 2168.13 2066.388
8/7/2020 2180.735 2086.365
8/10/2020 2135.31 2100.802
8/11/2020 2144.265 2109.642
8/12/2020 2211.665 2124.482
8/13/2020 2167.295 2129.752
8/14/2020 2014.415 2125.378
8/+17/2020 2113.47 2129.358
8/18/2020 2140.47 2131.701
8/19/2020 2126.135 2130.77
8/20/2020 2137.135 2131.903
8/21/2020 2170.24 2138.995
8/24/2020 2176.45 2145.544
8/25/2020 2217.25 2153.256
8/26/2020 2248.85 2156.788
8/27/2020 2236.35 2161.336
8/28/2020 2213.6 2163.527
8/31/2020 2092 2160.639
9/1/2020 2131.1 2159.762
9/2/2020 2169.85 2156.974
9/3/2020 2231.15 2161.231
9/4/2020 2180.85 2172.327
9/7/2020 2192.9 2177.622
9/8/2020 2161.5 2179.024
9/9/2020 2176.95 2182.412
9/10/2020 2175.6 2184.976
9/11/2020 2160.3 2184.313
9/14/2020 2159.4 2183.177
9/15/2020 2140.6 2178.067
9/16/2020 2163.75 2172.393
9/17/2020 2145.45 2166.333
9/18/2020 2152.95 2162.29
9/21/2020 2102.95 2163.02
9/22/2020 2064.35 2158.57
9/23/2020 2076.8 2152.367

57
9/24/2020 2034.45 2139.253
9/25/2020 2117.5 2135.03
9/28/2020 2180.95 2134.233
9/29/2020 2198.5 2136.7
9/30/2020 2202.8 2138.423
10/1/2020 2197.65 2139.893
10/5/2020 2210.15 2143.217
10/6/2020 2197.6 2145.763
10/7/2020 2238 2152.257
10/8/2020 2208.8 2155.26
10/9/2020 2217.95 2160.093
10/12/2020 2181.35 2161.987
10/13/2020 2219.55 2169.76
10/14/2020 2253.9 2182.397
10/15/2020 2248.6 2193.85
10/16/2020 2269.9 2209.547
10/19/2020 2198.15 2214.923
10/20/2020 2194.45 2215.823
10/21/2020 2181.35 2214.68
10/22/2020 2159.45 2211.79
10/23/2020 2181.9 2210.74
10/26/2020 2108.1 2203.937
10/27/2020 2118.25 2198.647
10/28/2020 2135 2191.78
10/29/2020 2136.85 2186.983
10/30/2020 2085.6 2178.16
11/2/2020 2029.65 2168.047
11/3/2020 2095 2159.743
11/4/2020 2097.4 2149.31
11/5/2020 2119.8 2140.723
11/6/2020 2139.05 2132
11/9/2020 2192.85 2131.647
11/10/2020 2234.85 2134.34
11/11/2020 2326.7 2144.03
11/12/2020 2350.75 2156.783
11/13/2020 2514.6 2178.963
11/14/2020 Null 2184.025
11/17/2020 2541.7 2214.271
11/18/2020 2614.15 2248.496
11/19/2020 2551.25 2278.096
11/20/2020 2590.65 2314.171
11/23/2020 2597.35 2354.721
11/24/2020 2693.3 2397.457
11/25/2020 2595.1 2433.007
11/26/2020 2549.2 2463.679
11/27/2020 2534.65 2491.936

58
12/1/2020 2532.7 2516.211
12/2/2020 2532.5 2537.471
12/3/2020 2549.5 2553.386
12/4/2020 2553.5 2567.868
12/7/2020 2561.15 2571.193
12/8/2020 2548.2 2569.66
12/9/2020 2547.25 2570.03
12/10/2020 2492.65 2561.93
12/11/2020 2470.8 2556.567
12/14/2020 2400.45 2543.887
12/15/2020 2475.2 2535.743
12/16/2020 2470.1 2520.863
12/17/2020 2466.6 2512.297
12/18/2020 2480.95 2507.747
12/21/2020 2396.4 2498.53
12/22/2020 2446.7 2492.797
12/23/2020 2446.7 2487.077
12/24/2020 2436.75 2479.56
12/28/2020 2451.35 2472.75
12/29/2020 2460.55 2466.043
12/30/2020 2517.35 2463.987
12/31/2020 2530.9 2462.897
1/1/2021 2542.7 2466.233
1/4/2021 2655.7 2478.56
1/5/2021 2674.9 2496.857
1/6/2021 2645.35 2508.2
1/7/2021 2649.8 2520.18
1/8/2021 2760.85 2539.797
1/11/2021 2777.15 2559.543
1/12/2021 2881.65 2591.893
1/13/2021 2868.65 2620.023
1/14/2021 2886.6 2649.35
1/15/2021 2857.3 2677.387
1/18/2021 2873 2705.497
1/19/2021 2883.5 2733.693
1/20/2021 2881.55 2757.973
1/21/2021 2926.6 2784.353
1/22/2021 2972.6 2813.013
1/25/2021 2869.55 2827.27
1/27/2021 2789.9 2834.937
1/28/2021 2798.45 2845.143
1/29/2021 2744.3 2851.443
2/1/2021 2842.85 2856.91
2/2/2021 2904.85 2865.423
2/3/2021 2916.9 2867.773
2/4/2021 2963.45 2874.093

59
2/5/2021 2932.15 2877.13
2/8/2021 2970.4 2884.67
2/9/2021 2947.65 2889.647
2/10/2021 2901.3 2890.833
2/11/2021 2818.15 2886.607
2/12/2021 2781.25 2876.917
2/15/2021 2770.05 2863.413
2/16/2021 2726.95 2853.907
2/17/2021 2695.5 2847.613
2/18/2021 2650.2 2837.73
2/19/2021 2584.65 2827.087
2/22/2021 2482.35 2803.053
2/23/2021 2514.7 2777.043
2/24/2021 2535.8 2751.637

EICHER MOTORS LTD-NSE

3500

3000

2500

2000

1500

1000

500

0
11/19/2020

11/27/2020
12/2/2020
12/4/2020
12/8/2020
12/10/2020
12/14/2020

12/18/2020
12/22/2020

12/31/2020
1/4/2021
1/6/2021

1/12/2021
1/14/2021
1/18/2021
1/20/2021
1/22/2021
1/27/2021
1/29/2021

2/4/2021

2/10/2021
2/12/2021
2/16/2021
2/18/2021
2/22/2021
2/24/2021
11/17/2020

11/23/2020
11/25/2020

12/16/2020

12/24/2020
12/29/2020

1/8/2021

2/2/2021

2/8/2021

60
INTERPRETATION:

The profitability of Eicher for Q1 2020-21 is impacted due to countrywide lockdown. In

the months of April 2020, May 2020 and June 2020, the Company had sold only 91 units,
19,113 units and 38,065 units, respectively. Eicher does not have long-term borrowings or
loans. The working capital facilities of the Company are running smooth and are backed
with adequate assets. These working capital facilities are sufficient to meet the financial
requirements of the Company. There is no impact on internal financial reporting and
controls existing in the Company, due to COVID-19. The Supply Chain of Eicher was
affected due to lockdown of operations during April 2020 and May 2020. With the ease in
restrictions and staggered resumption of the operations, the supply chain is getting
restored. It is witnessed from the June 2020 month sales numbers. Demand for the
Company’s motorcycle is expected to recover further in the forthcoming quarters of the
financial year 2020-21.

Here in this chart also you can observe an increase in share price and also moving average
line has been increasing but however it is moderate at this point of time. So, there may not be
a huge increase or a great downfall in the prices in the future. The investors seeking for
abnormal returns may better not opt to buying these shares as they are moving consistently
moderate and there may not be much scope for earning higher abnormal returns.

But, this may be a great investment for the investors who are not seeking for higher
profits and expecting minimum moderate returns from the investment .

61
 Table 5.2 – Calculation of sma15 for closing prices of Mahindra &Mahindra ltd

MAHINDRA & MAHINDRA LTD-NSE

Date Close SMA15
2/25/2020 509
2/26/2020 503
2/27/2020 493.5
2/28/2020 457
3/2/2020 458.3
3/3/2020 466.3
3/4/2020 474.6
3/5/2020 479.3
3/6/2020 471
3/9/2020 463.2
3/11/2020 451.6
3/12/2020 423.4
3/13/2020 428.9
3/16/2020 391.8
3/17/2020 373.4 456.28
3/18/2020 346.4 445.44
3/19/2020 314.2 432.86
3/20/2020 322.6 421.46
3/23/2020 293.4 410.55
3/24/2020 269 397.93
3/25/2020 277.9 385.37
3/26/2020 285.5 372.76
3/27/2020 294.5 360.44
3/30/2020 274.4 347.34
#REF! 285 335.45
4/1/2020 272.9 323.54
4/3/2020 280.7 314.03
4/7/2020 321 306.84
4/8/2020 326.4 302.48
4/9/2020 381.4 303.01
4/13/2020 362.9 304.11
4/15/2020 353.1 306.7
4/16/2020 356.7 308.98
4/17/2020 363.2 313.63
4/20/2020 355.9 319.42
4/21/2020 332 323.03
4/22/2020 340.2 326.68

62
4/23/2020 347.5 330.21
4/24/2020 334.3 334.21
4/27/2020 330.3 337.23
4/28/2020 336 341.44
4/29/2020 348 345.92
4/30/2020 366.6 348.97
5/4/2020 357 351.01
5/5/2020 368.1 350.13
5/6/2020 387.1 351.75
5/7/2020 400.6 354.91
5/8/2020 386.7 356.91
5/11/2020 390.1 358.71
5/12/2020 393 361.19
5/13/2020 413 366.59
5/14/2020 400.5 370.6
5/15/2020 381.3 372.86
5/18/2020 377.2 375.72
5/19/2020 382.9 379.22
5/20/2020 405 383.83
5/21/2020 408.3 387.85
5/22/2020 426.4 391.83
5/26/2020 429.1 396.64
5/27/2020 432.5 400.93
5/28/2020 440.4 404.48
5/29/2020 436.4 406.86
6/1/2020 461.1 411.82
6/2/2020 462.9 416.67
6/3/2020 485.1 422.8
6/4/2020 478.5 427.16
6/5/2020 484.2 432.75
6/8/2020 470.9 438.72
6/9/2020 478.8 445.49
6/10/2020 472 451.43
6/11/2020 474.5 456.06
6/12/2020 508.5 462.74
6/15/2020 508.1 468.19
6/16/2020 506.8 473.37
6/17/2020 497.6 477.71
6/18/2020 506.6 482.12
6/19/2020 500 486.37
6/22/2020 498.8 488.88
6/23/2020 516.4 492.45
6/24/2020 515.3 494.46
6/25/2020 507.3 496.38
6/26/2020 501.4 497.53
6/29/2020 507.5 499.97

63
6/30/2020 510.7 502.1
7/1/2020 499 503.89
7/2/2020 529.7 507.57
7/3/2020 530.5 509.04
7/6/2020 570.5 513.2
7/7/2020 560 516.75
7/8/2020 551.3 520.33
7/9/2020 560.3 523.91
7/10/2020 554.8 527.56
7/13/2020 555.8 531.37
7/14/2020 545.2 533.29
7/15/2020 550.2 535.61
7/16/2020 570.9 539.85
7/17/2020 588.8 545.68
7/20/2020 594 551.45
7/21/2020 588.3 556.62
7/22/2020 592 562.82
7/23/2020 603.3 567.73
7/24/2020 598.7 572.28
7/27/2020 594.4 573.87
7/28/2020 620.3 577.89
7/29/2020 604.8 581.47
7/30/2020 598.3 584
7/31/2020 606.5 587.44
8/3/2020 597.2 590.2
8/4/2020 602.6 594.02
8/5/2020 614.3 598.3
8/6/2020 609.7 600.88
8/7/2020 600.5 601.66
8/10/2020 628.9 603.98
8/11/2020 629.5 606.73
8/12/2020 635 609.6
8/13/2020 631.5 611.47
8/14/2020 614.5 612.52
8/17/2020 623.6 614.47
8/18/2020 622.7 614.62
8/19/2020 623.9 615.89
8/20/2020 612 616.8
8/21/2020 609.8 617.03
8/24/2020 602 617.35
8/25/2020 609.3 617.8
8/26/2020 613.3 617.74
8/27/2020 636.8 619.54
8/28/2020 631.4 621.61
8/31/2020 606.9 620.14
9/1/2020 607.5 618.67

64
9/2/2020 642.8 619.19
9/3/2020 644.7 620.07
9/4/2020 632 621.24
9/7/2020 610.5 620.37
9/8/2020 608.6 619.43
9/9/2020 613.9 618.76
9/10/2020 615.5 618.99
9/11/2020 614.3 619.29
9/14/2020 615.3 620.18
9/15/2020 613.5 620.45
9/16/2020 639.5 622.19
9/17/2020 636.8 622.19
9/18/2020 654.2 623.71
9/21/2020 622.5 624.75
9/22/2020 615.8 625.3
9/23/2020 612.6 623.29
9/24/2020 575.1 618.65
9/25/2020 592.3 616
9/28/2020 615.3 616.32
9/29/2020 613.2 616.63
9/30/2020 607.9 616.23
10/1/2020 610.2 615.88
10/5/2020 607 615.39
10/6/2020 627.4 616.2
10/7/2020 631.6 617.41
10/8/2020 634.2 617.06
10/9/2020 633.2 616.82
10/12/2020 634.4 615.5
10/13/2020 627.9 615.86
10/14/2020 623.8 616.4
10/15/2020 617.3 616.71
10/16/2020 606.7 618.82
10/19/2020 597.5 619.16
10/20/2020 602.3 618.29
10/21/2020 600.8 617.47
10/22/2020 604.3 617.23
10/23/2020 625.2 618.23
10/26/2020 597.2 617.58
10/27/2020 597.2 615.56
10/28/2020 604.2 613.73
10/29/2020 592 610.92
10/30/2020 594 608.3
11/2/2020 596 605.75
11/3/2020 595.8 603.61
11/4/2020 596.8 601.8
11/5/2020 602.1 600.79

65
11/6/2020 613.6 601.25
11/9/2020 616.3 602.51
11/10/2020 620 603.69
11/11/2020 633.2 605.85
11/12/2020 632.7 607.74
11/13/2020 629.8 608.05
11/14/2020 Null 608.83
11/17/2020 637.3 611.7
11/18/2020 705.8 618.95
11/19/2020 703.9 626.95
11/20/2020 715.6 635.64
11/23/2020 705.5 643.45
11/24/2020 729.3 652.99
11/25/2020 720 661.79
11/26/2020 728.5 670.81
11/27/2020 722 678.56
12/1/2020 734.5 687
12/2/2020 753.6 696.55
12/3/2020 745.8 704.59
12/4/2020 750.5 713.01
12/7/2020 752.3 721.76
12/8/2020 754 723.91
12/9/2020 755 731.76
12/10/2020 736.2 733.78
12/11/2020 727.5 735.36
12/14/2020 711.7 735.1
12/15/2020 718 735.93
12/16/2020 732 736.11
12/17/2020 730.7 736.82
12/18/2020 733.6 737.16
12/21/2020 686 734.76
12/22/2020 695 732.12
12/23/2020 711.5 729.32
12/24/2020 710.9 726.99
12/28/2020 711 724.35
12/29/2020 707 721.33
12/30/2020 720.7 719.11
12/31/2020 720.6 716.82
1/1/2021 732.5 716.57
1/4/2021 749.1 718.01
1/5/2021 740.1 719.9
1/6/2021 736.1 721.11
1/7/2021 744.4 721.94
1/8/2021 770.5 724.6
1/11/2021 789.1 728.3
1/12/2021 779.8 734.56

66
1/13/2021 828.3 743.44
1/14/2021 829.9 751.34
1/15/2021 819.7 758.59
1/18/2021 809 765.12
1/19/2021 808 771.86
1/20/2021 824.5 778.78
1/21/2021 808.3 784.62
1/22/2021 798.4 789.02
1/25/2021 794.5 792.05
1/27/2021 770 794.04
1/28/2021 765 795.96
1/29/2021 749.6 796.31
2/1/2021 795.2 797.95
2/2/2021 816.8 799.8
2/3/2021 833.2 803.36
2/4/2021 866.5 805.9
2/5/2021 865.5 808.28
2/8/2021 928.4 815.53
2/9/2021 895 821.26
2/10/2021 914.2 828.33
2/11/2021 914.2 834.31
2/12/2021 908.5 841
2/15/2021 911.8 848.56
2/16/2021 912.2 856.41
2/17/2021 915 866.07
2/18/2021 894.5 874.7
2/19/2021 879.3 883.35
2/22/2021 837.1 886.14
2/23/2021 841 887.75
2/24/2021 849.6 888.84

67
 MAHINDRA & MAHINDRA LTD-NSE
1000

900

800

700

600

500

400

300

200

100

0
11/17/2020

11/23/2020
11/25/2020
11/27/2020
12/2/2020
12/4/2020
12/8/2020

12/16/2020

12/29/2020
12/31/2020

1/6/2021
1/8/2021
1/12/2021
1/14/2021
1/18/2021
1/20/2021
1/22/2021
1/27/2021
1/29/2021
2/2/2021

2/8/2021
2/10/2021
2/12/2021
2/16/2021
2/18/2021
2/22/2021
2/24/2021
11/19/2020

12/10/2020
12/14/2020

12/18/2020
12/22/2020
12/24/2020

1/4/2021

2/4/2021
INTERPRETATION

The company’s operating margin (OPM) improved 370 basis points to 17.8 per cent in
Q2FY21 against 14.1 per cent in Q2FY20. The margin performance was attributable to lower
other expenses and employee costs. Revenues grew 6 per cent year-on-year to Rs 11,590
crore from Rs 10,935 crore in the corresponding quarter of previous year. Profit after tax
(PAT) after extra-ordinary items declined 88 per cent to Rs 162 crore from Rs 1,355 crore.

Its strong performance in tractors combined with its ruthless focus on cost has helped it
achieve a very high OPM and the Profit after Tax (before EI) in Q2F2021 is just 3 per cent
lower than Q2FY2020, despite a substantial fall in other income in the current quarter as
compared to the previous year quarter. It is expected that tractor demand will remain robust
during the upcoming festive season, on back of the positive factors including reforms in the
agriculture sector.

In Q2 F2021, the Indian tractor industry reported a growth of 41.4 per cent which is the
highest ever Q2 quarter growth for tractor industry. Timely relaxation of the COVID
lockdown restrictions for the Agricultural sector supported by healthy reservoir levels, good

68
increase in MSP for Kharif crops and important reforms in the agri sector announced by the
government focused on improving the state of agriculture in India in the mid to long term
have helped tractor demand to bounce back after April 2020.

In this above chart we can identify that Mahindra and Mahindra ltd’s moving average line is
moving upwards from the last one year while undergoing only a minimum fluctuations. Even
though there are fluctuations in the stock prices of Mahindra and Mahindra ltd you can see
that the trend of these stocks is supposedly to increase further in the future.

So, based on this analysis made by using moving average market indicator you can say that
the market for this company is likely to increase. But however there are various other
indicators which an investor might consider before investing for more clarity and assurance
since it is only a basic indicator for estimating market trends.

69
 Table5.3 – Calculation of SMA 15 for closing prices of Maruti Suzuki ltd.

MARUTHI SUZUKHI LTD-NSE

Date Close SMA15
2/25/2020 6414.5  
2/26/2020 6234.9  
2/27/2020 6289.8  
2/28/2020 6283.1  
3/2/2020 6285.1  
3/3/2020 6386  
3/4/2020 6384.4  
3/5/2020 6366  
3/6/2020 6446  
3/9/2020 6201.1  
3/11/2020 6146.3  
3/12/2020 5643.1  
3/13/2020 5838.6  
3/16/2020 5480.3  
3/17/2020 5604 6133.5
3/18/2020 5352.6 6062.7
3/19/2020 4819.5 5968.4
3/20/2020 5079.2 5887.7
3/23/2020 4220.4 5750.2
3/24/2020 4486.5 5630.3
3/25/2020 5006 5538.3
3/26/2020 4878 5437.8
3/27/2020 4646.1 5323.2
3/30/2020 4328.5 5182
3/31/2020 4288.3 5054.5
4/1/2020 4246.4 4927.8
4/3/2020 4011.5 4819
4/7/2020 4553.6 4733.4
4/8/2020 4698.1 4681.2
4/9/2020 5326.6 4662.8
4/13/2020 5283.1 4658.1
4/15/2020 5094.3 4676.4
4/16/2020 5130.8 4679.9
4/17/2020 5505 4765.5
4/20/2020 5331.4 4821.8
4/21/2020 5001.1 4821.5
4/22/2020 5180.9 4841.7
4/23/2020 5156.4 4875.7
4/24/2020 5045.6 4923.5
4/27/2020 5056.4 4974.7
4/28/2020 5052.7 5028.5
4/29/2020 5068.5 5099

70
4/30/2020 5358.8 5152.6
5/4/2020 4886.3 5165.2
5/5/2020 4829.9 5132.1
5/6/2020 4843.3 5102.7
5/7/2020 4749.3 5079.7
5/8/2020 4654.1 5048
5/11/2020 4937.8 5010.2
5/12/2020 4951.3 4984.8
5/13/2020 5036.1 4987.1
5/14/2020 5114 4982.7
5/15/2020 5100.4 4979
5/18/2020 4721 4957.3
5/19/2020 4805.3 4940.6
5/20/2020 4892 4929.9
5/21/2020 5050.1 4928.6
5/22/2020 5134.3 4913.7
5/26/2020 5246.1 4937.7
5/27/2020 5244.4 4965.3
5/28/2020 5468.4 5007
5/29/2020 5610.8 5064.4
6/1/2020 5793.6 5140.4
6/2/2020 5690.1 5190.5
6/3/2020 5624 5235.4
6/4/2020 5690.2 5279
6/5/2020 5746.2 5321.1
6/8/2020 5734.8 5363.4
6/9/2020 5662.3 5426.2
6/10/2020 5675.6 5484.2
6/11/2020 5426.1 5519.8
6/12/2020 5561.8 5553.9
6/15/2020 5475.8 5576.7
6/16/2020 5502.2 5593.7
6/17/2020 5726.2 5625.9
6/18/2020 5714.4 5642.3
6/19/2020 5897.4 5661.4
6/22/2020 5896 5668.2
6/23/2020 5886.5 5681.3
6/24/2020 5755.4 5690.1
6/25/2020 5762.3 5694.9
6/26/2020 5754.9 5695.4
6/29/2020 5678.7 5691.7
6/30/2020 5838.3 5703.4
7/1/2020 5803.1 5711.9
7/2/2020 5948.5 5746.8
7/3/2020 5932.1 5771.4
7/6/2020 6123.6 5814.6

71
7/7/2020 6226.8 5862.9
7/8/2020 6044.4 5884.1
7/9/2020 6002.4 5903.3
7/10/2020 5955.6 5907.2
7/13/2020 5988.9 5913.4
7/14/2020 5771.8 5905.8
7/15/2020 5801.3 5908.8
7/16/2020 5875.4 5916.4
7/17/2020 5919.5 5927.3
7/20/2020 5867.5 5939.9
7/21/2020 6130.9 5959.4
7/22/2020 6003.4 5972.8
7/23/2020 6066 5980.6
7/24/2020 6000.7 5985.2
7/27/2020 6043.3 5979.8
7/28/2020 6282.8 5983.6
7/29/2020 6185.1 5993
7/30/2020 6265.4 6010.5
7/31/2020 6262.8 6031
8/3/2020 6165.2 6042.7
8/4/2020 6359 6081.9
8/5/2020 6526.3 6130.2
8/6/2020 6555.8 6175.6
8/7/2020 6679 6226.2
8/10/2020 6608.9 6275.6
8/11/2020 6649.2 6310.2
8/12/2020 6730.3 6358.6
8/13/2020 6731.6 6403
8/14/2020 6588.2 6442.2
8/17/2020 6768.4 6490.5
8/18/2020 6893.1 6531.2
8/19/2020 6990.3 6584.9
8/20/2020 6974.7 6632.2
8/21/2020 6973 6679.5
8/24/2020 7082.5 6740.7
8/25/2020 7110 6790.7
8/26/2020 7008.6 6822.9
8/27/2020 7098 6859.1
8/28/2020 7104.1 6887.4
8/31/2020 6840 6902.8
9/1/2020 6905.6 6919.9
9/2/2020 6920.8 6932.6
9/3/2020 7072.6 6955.3
9/4/2020 7190.1 6995.5
9/7/2020 7209.1 7024.8
9/8/2020 7224 7046.9

72
9/9/2020 7215.3 7061.9
9/10/2020 7231.6 7079
9/11/2020 7193.6 7093.7
9/14/2020 7128.9 7096.8
9/15/2020 7052.8 7093
9/16/2020 7058 7096.3
9/17/2020 7085.9 7095.5
9/18/2020 6964.8 7086.2
9/21/2020 6627 7072
9/22/2020 6440.5 7041
9/23/2020 6501.3 7013
9/24/2020 6297.7 6961.4
9/25/2020 6497.7 6915.2
9/28/2020 6703 6881.5
9/29/2020 6742.8 6849.4
9/30/2020 6743.5 6817.9
10/1/2020 6796.3 6788.9
10/5/2020 6818.9 6763.9
10/6/2020 6892.4 6748.2
10/7/2020 7046.9 6747.8
10/8/2020 7079.9 6749.2
10/9/2020 7062.4 6747.7
10/12/2020 7136.6 6759.1
10/13/2020 7032.9 6786.2
10/14/2020 7002.4 6823.6
10/15/2020 6892.6 6849.7
10/16/2020 6894.9 6889.5
10/19/2020 6852 6913.1
10/20/2020 6844.6 6922.6
10/21/2020 6861.9 6930.5
10/22/2020 6811.5 6935.1
10/23/2020 7103.3 6955.5
10/26/2020 7054.8 6971.3
10/27/2020 7158.4 6989
10/28/2020 7186 6998.3
10/29/2020 7117.7 7000.8
10/30/2020 6965.1 6994.3
11/2/2020 6868.4 6976.4
11/3/2020 6913.4 6968.5
11/4/2020 6954 6965.2
11/5/2020 7092.8 6978.6
11/6/2020 6907.6 6979.4
11/9/2020 6872.1 6980.8
11/10/2020 6793.5 6977.4
11/11/2020 6857.4 6977.1
11/12/2020 6836.9 6978.8

73
11/13/2020 6809.3 6959.2
11/14/2020 null 6952.3
11/17/2020 6981.5 6939.7
11/18/2020 7054.3 6930.3
11/19/2020 6963.3 6919.2
11/20/2020 6965.9 6919.3
11/23/2020 6987.8 6927.8
11/24/2020 7158.4 6945.3
11/25/2020 7055.7 6952.6
11/26/2020 6994.3 6945.5
11/27/2020 7035.8 6954.7
12/1/2020 7101.7 6971.1
12/2/2020 7206.5 7000.6
12/3/2020 7739.1 7063.6
12/4/2020 7803.1 7132.6
12/7/2020 7743.4 7199.3
12/8/2020 7762.7 7236.9
12/9/2020 7709.3 7285.4
12/10/2020 7736 7330.9
12/11/2020 7733.5 7382.2
12/14/2020 7696.8 7430.9
12/15/2020 7765.3 7482.8
12/16/2020 7796.4 7525.3
12/17/2020 7694 7567.9
12/18/2020 7559.8 7605.6
12/21/2020 7376.1 7628.2
12/22/2020 7395.4 7647.8
12/23/2020 7450 7664.1
12/24/2020 7446 7644.5
12/28/2020 7483 7623.2
12/29/2020 7452.4 7603.8
12/30/2020 7612.9 7593.8
12/31/2020 7649.6 7589.8
1/1/2021 7691.3 7586.8
1/4/2021 7702.3 7584.7
1/5/2021 7655.5 7582
1/6/2021 7628.6 7572.9
1/7/2021 7566 7557.5
1/8/2021 8014.9 7578.9
1/11/2021 8232.8 7623.8
1/12/2021 8188 7677.9
1/13/2021 8139.9 7727.5
1/14/2021 8149.5 7774.2
1/15/2021 8024.8 7812.8
1/18/2021 7830.6 7835.9
1/19/2021 7922.6 7867.3

74
1/20/2021 8145 7902.8
1/21/2021 8076.8 7931.2
1/22/2021 8048.9 7955.1
1/25/2021 7981.5 7973.7
1/27/2021 7870.9 7988
1/28/2021 7588.5 7985.4
1/29/2021 7206.6 7961.4
2/1/2021 7399.8 7920.4
2/2/2021 7654.7 7881.9
2/3/2021 7589.2 7841.9
2/4/2021 7640 7808.6
2/5/2021 7494.1 7764.9
2/8/2021 7574.6 7734.9
2/9/2021 7627 7721.3
2/10/2021 7621.7 7701.3
2/11/2021 7667.4 7669.4
2/12/2021 7568.5 7635.6
2/15/2021 7596.6 7605.4
2/16/2021 7697 7586.5
2/17/2021 7503.2 7561.9
2/18/2021 7497.5 7555.9
2/19/2021 7323 7563.6
2/22/2021 7086.5 7542.7
2/23/2021 6970.5 7497.1
2/24/2021 6953 7454.7

75
 MARUTHI SUZUKHI LTD-NSE
8500

8000

7500

7000

6500

6000
11/19/2020

11/27/2020
12/2/2020
12/4/2020
12/8/2020
12/10/2020
12/14/2020

12/18/2020
12/22/2020

12/31/2020
1/4/2021
1/6/2021

1/12/2021
1/14/2021
1/18/2021
1/20/2021
1/22/2021
1/27/2021
1/29/2021

2/4/2021

2/10/2021
2/12/2021
2/16/2021
2/18/2021
2/22/2021
2/24/2021
11/17/2020

11/23/2020
11/25/2020

12/16/2020

12/24/2020
12/29/2020

1/8/2021

2/2/2021

2/8/2021
INRERPRETATION:

During the past one year output is likely to be much lower than the optimum level as
unavailability of labor and social distancing norms inside plants will impact production.
The company tied up with Mahindra Finance, one of the leading non-banking
financial companies (NBFCs), to ease finance availability for customers. Under the tie
up, Maruti Suzuki customers can avail a wide range of options for getting their car financed
from Mahindra Finance, including a buy now and pay later scheme. Under this, the company
is offering a moratorium of 2 months to help customers manage their cash flows. Mahindra
Finance is a very well networked NBFC present even in semi-rural and rural areas. More than
one-third of Maruti Suzuki’s retail sales come from rural India. So, it can be seen that they
are confident in their alliance with one of India’s largest NBFCs. Maruti Suzuki reported
percent decline in total sales in june.
Here in this chart you can observe that there are various fluctuations that can be found during
the past one year. These fluctuations may be due to above mentioned reasons during the last
year. However you can see that even though the moving average line started to rise in the
beginning of the year after undergoing many fluctuations you can see that it is decreasing at

76
the end of the year. So, it is showing a downward trend at the end of the year. So, it is better
for investors who seek safer returns to not invest in maruti Suzuki shares since it is
undergoing various fluctuations and it is hard to predict its prices in the future accurately.

Table5.4 – Calculation of sma15 for closing prices of Bajaj auto ltd

BAJAJ AUTO LTD-NSE

Date Close SMA15
2/25/2020 2947.4  
2/26/2020 2946.6  
2/27/2020 2936.6  
2/28/2020 2890  
3/2/2020 2792.2  
3/3/2020 2692.3  
3/4/2020 2711.5  
3/5/2020 2703.6  
3/6/2020 2735.1  
3/9/2020 2573.4  
3/11/2020 2591.6  
3/12/2020 2338.9  
3/13/2020 2357.1  
3/16/2020 2339.6  
3/17/2020 2270.4 2655.1
3/18/2020 2169 2603.2
3/19/2020 2166.6 2551.2
3/20/2020 2242.3 2504.9
3/23/2020 1935.6 2441.3
3/24/2020 1937.2 2384.3
3/25/2020 1946.8 2334.6
3/26/2020 2106.9 2294.3
3/27/2020 2053.4 2250.9
3/30/2020 1986.7 2201
3/31/2020 2022.3 2164.3
4/1/2020 2051.1 2128.3
4/3/2020 2033.8 2107.9
4/7/2020 2280.1 2102.8
4/8/2020 2241.7 2096.3
4/9/2020 2435.9 2107.3
4/13/2020 2397.6 2122.5
4/15/2020 2335.1 2133.8
4/16/2020 2333.6 2139.8
4/17/2020 2379.1 2169.4
4/20/2020 2378.3 2198.8
4/21/2020 2323.3 2223.9
4/22/2020 2379.7 2242.1

77
4/23/2020 2430.6 2267.3
4/24/2020 2445.4 2297.8
4/27/2020 2505.8 2330.1
4/28/2020 2463.7 2357.6
4/29/2020 2499.1 2388.6
4/30/2020 2623.3 2411.5
5/4/2020 2442.1 2424.8
5/5/2020 2422.8 2424
5/6/2020 2471.9 2428.9
5/7/2020 2406.6 2433.7
5/8/2020 2419.1 2439.4
5/11/2020 2566.3 2451.9
5/12/2020 2628.9 2468.6
5/13/2020 2696 2493.4
5/14/2020 2702.6 2514.9
5/15/2020 2663.6 2530.5
5/18/2020 2477.4 2532.6
5/19/2020 2509.3 2532.8
5/20/2020 2557.8 2539.1
5/21/2020 2640.4 2548.5
5/22/2020 2553.8 2543.9
5/26/2020 2564.9 2552.1
5/27/2020 2580.6 2562.6
5/28/2020 2600 2571.1
5/29/2020 2710.5 2591.4
6/1/2020 2758.3 2614
6/2/2020 2796.1 2629.3
6/3/2020 2783.4 2639.6
6/4/2020 2817.3 2647.7
6/5/2020 2776.3 2652.6
6/8/2020 2801.1 2661.8
6/9/2020 2791.1 2682.7
6/10/2020 2717.2 2696.6
6/11/2020 2718.6 2707.3
6/12/2020 2782.1 2716.7
6/15/2020 2728.6 2728.4
6/16/2020 2718.4 2738.6
6/17/2020 2689.4 2745.9
6/18/2020 2678.4 2751.1
6/19/2020 2674.4 2748.7
6/22/2020 2855.8 2755.2
6/23/2020 2862.1 2759.6
6/24/2020 2817.3 2761.9
6/25/2020 2820.4 2762.1
6/26/2020 2867.6 2768.2
6/29/2020 2859.5 2772.1

78
6/30/2020 2826.1 2774.4
7/1/2020 2842.1 2782.7
7/2/2020 2879.4 2793.4
7/3/2020 2932.4 2803.4
7/6/2020 2897.1 2814.7
7/7/2020 2847.1 2823.3
7/8/2020 2852.4 2834.1
7/9/2020 2882 2847.7
7/10/2020 2894.7 2862.4
7/13/2020 2900 2865.3
7/14/2020 2899.5 2867.8
7/15/2020 2942.1 2876.2
7/16/2020 2942.3 2884.3
7/17/2020 2995 2892.8
7/20/2020 3002.6 2902.3
7/21/2020 3004.3 2914.2
7/22/2020 2985.4 2923.8
7/23/2020 3032.1 2933.9
7/24/2020 2985.5 2937.5
7/27/2020 3020.5 2945.7
7/28/2020 3119.4 2963.8
7/29/2020 3099.3 2980.3
7/30/2020 3048.9 2991.4
7/31/2020 3004.9 2998.8
8/3/2020 2917.4 2999.9
8/4/2020 2969.9 3004.6
8/5/2020 3009 3009.1
8/6/2020 2991.8 3012.4
8/7/2020 3001.7 3012.9
8/10/2020 2993.8 3012.3
8/11/2020 3007.4 3012.5
8/12/2020 3023 3015
8/13/2020 3017.9 3014
8/14/2020 2987.6 3014.2
8/17/2020 3115.6 3020.5
8/18/2020 3104.8 3019.6
8/19/2020 3059.8 3016.9
8/20/2020 3036.9 3016.1
8/21/2020 3053.1 3019.3
8/24/2020 3039.4 3027.5
8/25/2020 3009.4 3030.1
8/26/2020 3082.2 3035
8/27/2020 3043 3038.4
8/28/2020 3014.1 3039.2
8/31/2020 2967 3037.4
9/1/2020 2958.4 3034.2

79
9/2/2020 2880.6 3024.7
9/3/2020 2896.4 3016.6
9/4/2020 2883.2 3009.6
9/7/2020 2898.2 2995.1
9/8/2020 2901.8 2981.6
9/9/2020 2910.1 2971.6
9/10/2020 2914.7 2963.4
9/11/2020 2916.4 2954.3
9/14/2020 2957.7 2948.9
9/15/2020 2937.4 2944.1
9/16/2020 3037.9 2941.1
9/17/2020 3019.2 2939.5
9/18/2020 3050.9 2942
9/21/2020 2986.7 2943.3
9/22/2020 2985.9 2945.1
9/23/2020 2986.2 2952.2
9/24/2020 2931.9 2954.5
9/25/2020 2957.4 2959.5
9/28/2020 2966.4 2964
9/29/2020 2897.5 2963.7
9/30/2020 2881.1 2961.8
10/1/2020 2985.4 2966.5
10/5/2020 2952.3 2968.9
10/6/2020 2972.3 2969.9
10/7/2020 3077.4 2979.2
10/8/2020 3074.6 2981.7
10/9/2020 3059.8 2984.4
10/12/2020 3022.8 2982.5
10/13/2020 3034.4 2985.7
10/14/2020 3054.1 2990.2
10/15/2020 3027.4 2993
10/16/2020 3044.8 3000.5
10/19/2020 2980 3002
10/20/2020 3004.2 3004.5
10/21/2020 3018 3012.6
10/22/2020 3006.2 3020.9
10/23/2020 3082.3 3027.4
10/26/2020 2895.1 3023.6
10/27/2020 2947.4 3021.9
10/28/2020 2944.1 3013
10/29/2020 2925.4 3003.1
10/30/2020 2886.9 2991.5
11/2/2020 2843.7 2979.6
11/3/2020 2914.9 2971.6
11/4/2020 2926.1 2963.1
11/5/2020 2949.3 2957.9

80
11/6/2020 2977.4 2953.4
11/9/2020 3001.9 2954.9
11/10/2020 2997.5 2954.4
11/11/2020 3023.1 2954.7
11/12/2020 3017.4 2955.5
11/13/2020 3040.8 2952.7
11/14/2020 Null 2956.8
11/17/2020 3045.1 2963.8
11/18/2020 3037.9 2970.5
11/19/2020 3034.3 2978.3
11/20/2020 3058.6 2990.6
11/23/2020 3077.8 3007.3
11/24/2020 3095.7 3020.2
11/25/2020 3051.3 3029.1
11/26/2020 3129.2 3042
11/27/2020 3173.6 3056
12/1/2020 3243.6 3073.3
12/2/2020 3338.1 3097.6
12/3/2020 3294.4 3117
12/4/2020 3311.4 3138
12/7/2020 3319.6 3157.9
12/8/2020 3326.2 3169.1
12/9/2020 3306.6 3186.5
12/10/2020 3290.9 3203.4
12/11/2020 3327.6 3223
12/14/2020 3289 3238.3
12/15/2020 3271.6 3251.2
12/16/2020 3303.5 3265.1
12/17/2020 3270.4 3279.7
12/18/2020 3347.6 3294.3
12/21/2020 3238.3 3298.6
12/22/2020 3265.3 3300
12/23/2020 3309.6 3298.1
12/24/2020 3374.8 3303.5
12/28/2020 3414.7 3310.4
12/29/2020 3431.6 3317.8
12/30/2020 3448.1 3326
12/31/2020 3444.1 3335.1
1/1/2021 3481.3 3347.8
1/4/2021 3522.4 3360.8
1/5/2021 3492.6 3374.4
1/6/2021 3462.7 3387.1
1/7/2021 3437.9 3396.1
1/8/2021 3529.1 3413.3
1/11/2021 3617.4 3431.3
1/12/2021 3624.3 3457.1

81
1/13/2021 3600.9 3479.4
1/14/2021 3576.1 3497.2
1/15/2021 3580.3 3510.9
1/18/2021 3563.8 3520.8
1/19/2021 3641 3534.8
1/20/2021 3643.9 3547.8
1/21/2021 3703.3 3565.1
1/22/2021 4089.5 3605.7
1/25/2021 4169 3648.8
1/27/2021 4146.4 3692.4
1/28/2021 4135.8 3737.2
1/29/2021 4005.8 3775.1
2/1/2021 4114.7 3814.1
2/2/2021 4201.5 3853.1
2/3/2021 4236.4 3893.9
2/4/2021 4223.5 3935.4
2/5/2021 4231.3 3979.1
2/8/2021 4237.5 4022.9
2/9/2021 4154.9 4062.3
2/10/2021 4151.5 4096.3
2/11/2021 4181.9 4132.2
2/12/2021 4136 4161
2/15/2021 4122.3 4163.2
2/16/2021 4132.9 4160.8
2/17/2021 4165.7 4162.1
2/18/2021 4115.5 4160.7
2/19/2021 4001.1 4160.4
2/22/2021 3971.6 4150.9
2/23/2021 3912.3 4131.6
2/24/2021 3931.9 4111.3

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 BAJAJ AUTO LTD-NSE
4500

4000

3500

3000

2500

2000

1500

1000

500

0
11/17/2020
11/19/2020

12/2/2020
12/4/2020
12/8/2020

1/6/2021
1/8/2021
1/12/2021
1/14/2021
1/18/2021
1/20/2021
1/22/2021
1/27/2021
1/29/2021
2/2/2021
2/4/2021
2/8/2021
2/10/2021
2/12/2021
2/16/2021
2/18/2021
2/22/2021
2/24/2021
11/23/2020
11/25/2020
11/27/2020

12/10/2020
12/14/2020
12/16/2020
12/18/2020
12/22/2020
12/24/2020
12/29/2020
12/31/2020
1/4/2021

INTERPRETATION

Both exports and domestic sales were impacted due to restrictions on production due to
pandemic. Bajaj auto pointed out that, the company could gradually improve the
operations from ~25% when plants were gradually opened in April / May 2020 and have
now been able to ramp-up production to almost 70% of normal levels.Given its strong
brand and financial stability coupled with committed suppliers and dealers, they are
confident to get back to doing business and adjust to the new normal. Bajaj Auto has
adequate capital and financial resources to manage its business and continues to remain
debt-free. With large surplus cash and cash equivalents, liquidity position continues to be
strong. Bajaj Auto's net profit more than halved to Rs528cr in June 2020 (Q1FY21)
quarter, compared to a profit of Rs1,126cr in the corresponding period of the previous
year.

Here you can observe that, the moving average line is moving upward during the whole year.
So, the investors can invest in the shares of bajaj auto as it is likely to show increase in share
prices further in the future.

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84
Summary

Introduction

For maintaining finances it is important that the decision they take regarding their income and
expenses is very important. Investment decisions play a vital role in making a viable decision
regarding their investments. For making such decision estimation of future price trends
becomes necessary. For that purpose moving average tool is being used. Need, scope,
objectives, methodology and limitations of the study are explained.

Industry profile

Automotive industry consists of all those companies and activities involved in the
manufacture of motor vehicles, including most components, such as engines and bodies, but
excluding tires, batteries, and fuel. French inventor Nicholas-Joseph Cugnot built a three-
wheeled steamer which is considered as first motorized road vehicle. Commercial production
of automobiles began in 1896 in the United States. A detailed analysis of automotive industry
and its key challenges have been explained.

Company profile

History, origin, products, milestones and rewards and recognitions of the companies

- Eicher motors ltd

- Maruti Suzuki ltd
- Mahindra & Mahindra ltd
- Bajaj auto ltd

have been explained in the company profile. It is only a brief explanation of each company
stated above.

Conceptual framework

The concepts that are necessary for understanding the project such as what is an investment,
importance of investment, return, risk, technical analysis, and how a moving average tool is
used to predict future prices are explained. All this theory acts as a base for doing data
analysis and making interpretations further.

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Data analysis and interpretations

The data required for creating analytical insight are being collected from various sources such
as closing price data is collected from yahoo finance website. 15 days moving average is
calculated by taking average of last 15 days closing prices. Based on that simple moving
average calculated charts are been prepared where future price trends can be noticed based on
which interpretations are made.

Findings

Following are the findings of this study:

 It can be identified that moving average line of Eicher motors ltd has been increasing
over the past one year. But now you can see that it is moderate at the end of the year.
 Mahindra and Mahindra company is showing an upward trend.
 Maruthi Suzuki ltd’s moving average line is moving downward that means it is
disclosing a downward trend.
 Bajaj auto ltd is showing a upward trend.
 There are more fluctuations in the prices of maruti Suzuki when compared to other
stocks that are considered in this project.
 There is a 25% increase in share price over the year of bajaj auto ltd.
 There is a 7.74% increase in share price of maruti Suzuki over the last one year.
 There is a 42.73% rise in share prices of Mahindra & Mahindra ltd in the last year.
 There is a 36% rise in share prices of eicher motors ltd in the last year.
 Bajaj auto ltd has performed well in the past one year with minimum number of
fluctuations undergone and 36% increase in share prices when compared to maruti
Suzuki ltd, Mahindra & Mahindra ltd, and eicher motors ltd.

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Suggestions

Following are the suggestions of this study:

 Since EICHER motors is showing an upward trend, you can suggest investors to
invest in its shares as you can see an increasing demand for motor cycles in coming
quarters.
 Investors can be suggested to invest in the shares of Mahindra and Mahindra.
 Maruti Suzuki price trend has shown various fluctuations during the year we have
selected for analysis. Based on that investors are suggested not to invest in the shares
of Maruti Suzuki.
 Maruti Suzuki shall try to minimize its fluctuations in prices by maintaining
consistency in its operations.
 Maruti Suzuki shall try to minimize its losses and maximize profits
 Maruti suzuki shall try to find opportunities that are appropriate for its current
situation by analyzing its strengths and weaknesses through conducting SWOT
analysis and by studying both internal and external environment so as to maintain its
competitive position and gain sustainable development.
 Bajaj auto is in increasing trend so, investors are recommended to invest in the shares.
 Bajaj auto shall be recommended to the investors for investment so as to gain more
profits or more return when compared to maruti Suzuki, Mahindra & Mahindra,
eicher motors

Conclusion

Automobile industry have adversely affected during the past one year due to covid-19. But
however some companies tried hard to sustain their existing place in the market and keep up
with extreme conditions around them. Whereas other companies couldn’t give their best. All
the companies in the industry are striving hard to keep up with the situation and come back to
normal.

Considering their efforts and the available demand in the market the investors interested in
investments in automobile industry are encouraged to invest seeing that the situation is going
back to normal.

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BIBLIOGRAPHY

WEB LINKS

www.investopedia.com

www.corporatefinanceinstitute.com

www.yahoo.finance.com

www.economictimes.indiatimes.com

www.ndtv.com

BOOKS

INVESTMENT AND PORTFOLIO MANAGEMENT-YOGESH MAHESWARI

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