Summer Internship Project

To study Fundamental and Technical Analysis of

Nifty IT Sector

(A Project with FUTURE GENERALI INDIA LIFE INSURANCE

CO. LTD.)

Submitted in partial fulfillment of the requirements for

Master of Management Studies (MMS)
Academic Year: 2020-21

Submitted By

Saurabh Bawaner
Roll No. 04
MMS-II, Batch: 2019-21
Chetana’s R. K. Institute of Management and Research,

Bandra (E), Mumbai 400 051

 Declaration

I hereby declare that this report submitted in partial fulfillment of the requirement
of the award for the Master of Management Studies to Chetana’s R.K. Institute of
Management and Research, is my original work and not submitted for award of
any degree or diploma fellowship or for similar titles or prizes.

I further certify that I have no objection and grant the rights to Chetana’s R.K.
Institute of Management and Research to publish any chapter/ project if they deem
fit in Journals/Magazines and newspapers etc. without my permission.

Place : Mumbai

Date :

Name : Saurabh Bawaner

Class : M.M.S; Sem. – II

Roll No. : 04
 Certificate

This is to certify that the project submitted in partial fulfillment for the award of
Master of Management Studies of Chetana’s R.K. Institute of Management and
Research is a result of the bonafide research work carried out by Mr. Saurabh
Bawaner under my supervision and guidance, no part of this report has been
submitted for award of any other degree, diploma, fellowship or other similar titles
or prizes. The work has also not been published in any Journals/Magazines.

Date:

Place: Mumbai

Dr. Jayashree A. Bhakay Faculty Guide - Prof. Suhas Gharat

Director CRKIMR
 ACKNOWLEDGEMENT

The internship I got with Future Generali India Life Insurance Co. Ltd. was a
great opportunity for learning and professional development. I am grateful for
having given a chance to meet so many wonderful, talented and skilled
professionals who led me though this internship period.

I am using this opportunity to express my deepest gratitude and special thanks to

Mr. Aniket Chandanshive. In spite of being extremely busy with his duties and
responsibilities, he took time out to hear, guide, keep me on the correct path and
allowed me to carry out my project at his esteemed organization.

I would also like to express special thanks to our director, Dr. Jayashree Bhakay,
my faculty guide, Prof. Suhas Gharat, for her valuable guidance and support
throughout the project. I sincerely acknowledge her for extending her valuable
guidance and critical reviews on the project and above all, the moral support she
provided during all the stages of this project.

I extend my gratitude to Chetana’s R.K. institute of management and research for

giving me this excellent opportunity.

Saurabh Bawaner

Roll no. 04
Turnitin Report (Plagiarism Report)
 Executive Summary
The project Title “To study Fundamental and Technical Analysis of Nifty IT
Sector” which have been completed during this SIP at Future Generali India life
Insurance Co. Ltd. This report is based on the fundamental and technical analysis
of Nifty IT stocks. In fundamental analysis we can find the intrinsic value of stocks
which are come under Nifty IT sector. For the determination of analysis various
ratios such as EPS, P/E ratio, Dividend payout ratio and Return on equity are used.
Once we get the intrinsic value then we can compare it with the market value and
then we can take a decision i.e. can we buy or sell of stocks. Technical Analysis is
done by using technical indicators like RSI, VWAP, Bollinger Band, MACD. If
indicators gave a buy and sell signal, for sure we will see the support and
resistance of stocks and also side by side see the chart pattern like whether the
stock has formed a double bottom pattern, Cup and Handle pattern, rounding
bottom etc.

This project analyzes 9 IT stocks which will help investor to decide whether to
invest in it or not. It will give you a thorough image of the company and its
capability.

KEYWORDS: Intrinsic value, EPS, P/E ratio, Dividend payout ratio, RSI,
Bollinger Band, Double bottom pattern, Cup and Handle pattern
 TABLE OF CONTENTS

CHAPTERS PARTICULARS PAGE NO

1 INTRODUCTION 1-14
1.1 Introduction to the Task 1

1.2 Introduction to the Sector/Industry 2

1.3 Introduction to the Organization 4

1.4 Introduction to the Project 6

2 SUMMER INTERNSHIP TASK 15-17

DETAILS
2.1 Objective of the project 15

2.2 Literature Review 15

2.3 Research Methodology 16

2.4 Limitations 17

3 ANALYSIS & FINDINGS 18-44

3.1 Fundamental Analysis of Companies 18

3.2 Technical Analysis of Companies 25

4 CONCLUSIONS & 45-46

RECOMMENDATIONS
Conclusion 45

5 ANNEXURES 47
Bibliology/ Webliology 47
 CHAPTER 1

INTRODUCTION

1.1 Introduction to Task

I was assigned as a management trainee and following are the task
which i did throughout the Internship.
1. Did daily Intraday trading in nifty stocks.
2. Did fundamental and technical analysis of Nifty IT stocks.
3. They gave me one article and told that make a case study on
that. And three questions are expected.
4. Studied various life insurance and investment products and
acquiring client for the same.
5. Suppose company will give one lakh rupees to me and said that
find the options which are available for investment and write the
pros and cons about each options.
6. Gave a market intelligence article and asked to analyze report
and decode the every column like what does it means, what is
the use of it and how it is beneficial for analysis?
7. Make a one page file on how to pitch the customer about the
company. What was company do and what are the options and
benefits available for the customer.

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 1.2 Introduction to Sector

In India, Insurance Sector has not only been playing an important

role within the financial system but also does a significant socio-economic
function, making inroads into the interiors of the economy. It has also been
facilitating economic development with an objective to make an effective, efficient
and a stable insurance business in India as well as a solid base to cater to the needs
of both the real economy and socio - economic objectives of the country.

The insurance industry of India has consisted of 57 insurance

companies of which 24 are life insurance business and 33 are non-life insurers.
Among the life insurers, Life Insurance Corporation is the only public sector
company. Apart from that, as well as the non-life insurers there are six public
sector insurers. Additionally, there is one national re-insurer, namely, General
Insurance Corporation of India. Other stakeholders in Indian Insurance market

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comprises of agents (individual and corporate), brokers, surveyors and third party
administrators servicing health insurance claims. Of total 33 non-life insurance
companies, five private sector insurers are registered to underwrite policies
exclusively in health, personal accident and travel insurance segments. They are
Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance
Company Ltd, Cigna TTK Health Insurance Company Ltd, Religare Health
Insurance Company Ltd and Max Bupa Health Insurance Company Ltd. There are
two more dedicated insurers belonging to public sector, namely, Export Credit,
Guarantee Corporation of India for Credit Insurance and Agriculture Insurance
Company Ltd for crop insurance.

• How does insurance work?

Insurance works by pooling risk. It means that a large group of people who need to
insure against a specific loss pay their premiums into what we will call the
insurance bucket, or pool. Because the number of insured individuals is so large,
insurance companies can use statistical analysis to project what their definite losses
will be within the particular class. They also know that not all insured individuals
will suffer losses at the same time. This allows the insurance companies to work
profitably and at the similar time pay for claims that may arise.

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 1.3 Introduction To Organization

Future Generali India Life Insurance Co. Ltd is a joint venture between 3
leading groups: Future Group – A leading retailer in India, Generali Group- A
global insurance group that features among top 50 cleverest companies in the
world and Industrial Investment Trust Limited (IITL) – A leading investment
company.

Company’s mission is to energetically protect and enrich peoples’ lives. With

operations spread across 117 branches and a whole range of simplified solutions
for the financial security of customers and enterprises, they wish to become the
first choice by delivering accessible and relevant insurance solutions.

• SWOT Analysis of Future Generali India Life Insurance Co. Ltd

➢ Strength:
1. It is Known for its prudent investment management
2. They have Wide range of policies
3. International expertise and reputation of Generali group
4. Aggressive Marketing
5. Generali group is existing in over 68 countries and having 85,000

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 employees
6. Future group runs over 12 million square feet of retail space in 71
cities and towns and 65 rural locations

➢ Weakness:
1. It has Small branch base
2. Low Marketing
3. Insurance companies have a bad image when it comes to payment of
dues

➢ Opportunities:
1. Growing rural market
2. Earning Urban Youth
3. Cross selling through financial services such as banking

➢ Threats:
1. Stringent Economic measures by RBI and Government
2. Entry of fresh NBFCs in the sector

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 2.4 Introduction To Project
2.4.1 Fundamental Analysis
It is a method of assessing the intrinsic value of an asset and
examining the factors that could influence its price in the future. This form of
analysis is based on external events and influences, as well as industry trends
and financial statements.
There are numerous tools and techniques that can be used for
fundamental analysis and this can be categorized into two types of fundamental
analysis: top-down analysis and bottom-up analysis. Top-down analysis takes a
broader sight of the economy, starting with the complete market before narrowing
down into a sector, industry and finally a specific company. On the other hand,
bottom-up analysis starts with an exact stock and widens out to consider all the
aspects that impact its price.

The investments made on the basis of fundamental analysis

involve less risk if the time horizon of the investment is long. The share should be
purchased if it is being traded in the market below its intrinsic value, it should be
short if it is traded in the market at a price above its intrinsic value. For example if
the intrinsic value of a share is Rs.300, the fundamental analyst advises buying it
if it is being traded in the market below Rs.300; sale is recommended if it is traded
above Rs.300.

Fundamental analysis is divided into two distinct categories: qualitative

and quantitative. Qualitative fundamental analysis is based on the quality of
something such as management, board, financial performance, products, brand
etc. Qualitative analysis is a subjective opinion. For example, if you feel that the

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products of Bajaj Auto are superior than those of TVS Motor Co. This is a
qualitative opinion.

1.3.1 Technical Analysis

Technical analysis is a means of predicting and examining price
movements in the financial markets, by using market statistics and historical
price charts. It is based on the idea that if a trader can identify earlier market
patterns, they can form a correct prediction of future price trajectories.
Technical Analysis is suitable to stocks, derivatives, commodities,
currency or any tradable instrument where the price is influenced by the market
forces i.e. demand and supply of product. Price here implies any mix of the
open, high, low, or close for a given security over a certain time period. The time
allotment can be set up on intraday (1-minute, 5-minutes, 10-minutes, 15-
minutes, 30-minutes or hourly), every day, week by week or month to month
data and last a couple of hours or several years. Also, some technical analysts
incorporate volume or open interest numbers with their analysis of price
movement.

• Support and resistance levels

Support and resistance levels can be recognized by trend lines. If a stock
price breaks past support level, that support level often becomes a new
resistance level. On the other hand if price breaks a resistance level, it will
often discover support at that level in the future. Several methods of
determining support and resistance exist. A price histogram is beneficial in
displaying at what price a market has spent more relative time.
Psychological levels near round numbers frequently serve as support and

7|Page
 resistance. More freshly, volatility has been used to compute potential
support and resistance.

If a stock price is moving between resistance and support levels, then a

basic investment strategy usually used by traders, is to buy a stock at
support and sell at resistance, then short at resistance and cover short at
support.
• Types of chart patterns
• Head and shoulders pattern
The Head and Shoulders pattern is one of the most well-known
reversal patterns. On the technical analysis chart, when a price trend
is in the process of reversal either from a bearish or bullish trend, a
characteristic pattern takes shape and is recognized as reversal
formation.

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 There are two sub- types of the head & shoulders chart pattern.
Head & shoulders top is a chart pattern that is created at the high of an
upward movement and indicate that the upward trend is about to end.
Head & shoulders bottom, also mentioned as inverse head & shoulders
is the lesser known of the two, but is used to illustrate a reversal in a
downtrend.

Two of these head & shoulders patterns are analogous as there are four
main divisions: two shoulders, a head and a neckline. The reaction
lows of each peaks & troughs can be linked to form support, or a
neckline. Also, each individual head & shoulder is consist of a high
and a low. Take into consideration that an upward trend is a time of
consecutive rising highs and rising lows. The head & shoulders chart
pattern, hence, shows a weakening in a trend by showing the decline in
the successive movements of the highs & lows.

9|Page
 • Double top and double bottom
Double top and double bottom are reversal chart patterns
noticed in the technical analysis of financial trading markets of stocks,
currencies and commodities etc.

Double Top: Double top is a most important reversal pattern that

is formed after a long uptrend. As the name implies, the pattern is
drawn up of two successive peaks that are nearly equal, with a average
trough in between. While there can be variations, the classic double top
shows at least a middle change, if not long-term adjustment, in trend
from bullish to bearish. Different double tops can form along the way
up, but until key support is broken, a reversal cannot be verified.

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 Double Bottom: Double bottom is a type of reversal pattern
that forms after an extended downtrend. As the name implies, this
pattern is made up of two consecutive troughs that are roughly
equal, with a moderate peak in between. Although there can be
variations, the classic double bottom usually marks an intermediate
or long-term change in trend. Many potential double bottoms can
form along the way down, but until key resistance is broken, a
reversal cannot be confirmed

• Cup and handle

The cup and handle formation is a bullish chart pattern that is well-
defined by a chart where a stock drops in value, then rises back up to
the original value, then drops a small amount in value and after that
rises a small amount in value.
Pattern of the price shows which looks like a cup, which is
led by an upward trend. The handle follows the cup formation and is
created by a commonly downward/sideways movement in the
security's price. After the price movement pushes above the resistance

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 lines created in the handle, the upward trend can maintain. For this
type of pattern we used a long term time frame chart, with the period
ranging from few months to more than a year.

• Rounding bottom: Rounding bottom is a long-term reversal

pattern that is typically used for weekly charts. It is also
acknowledged to as a saucer bottom, and depicts a long
consolidation period that shifts from a bearish bias to a bullish bias.
A rounding bottom could be considered as a head and shoulders
bottom without easily recognizable shoulders. The head illustrate
the low and is fairly central to the pattern. The patterns of volume
are same and validation comes with a resistance breakout. While
symmetry is desirable on the rounding bottom, the left and right
side do not have to be same in time or slope.

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 • Technical indicators
Technical indicators are chart analysis tools that can support traders better
understand and act on price movement. There is a enormous range of
technical analysis tools existing that analyzes trends, measure volatility,
provide price averages and more.

• RSI Indicator
The Relative Strength Index is possibly the most common oscillator to
use. It is the ratio between the average gain and average loss over the
last 14 periods. The RSI is bound between 0 – 100 and is considered
oversold when below 30 and overbought above 70 . Traders generally
buy if RSI will be below 30 on the other hand look for sell when RSI
cross 70.

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 • Bollinger Bands Indicator
Bollinger Bands shows 3 lines directly on top of the price
chart. The middle band is a 20-period simple moving average with an
upper and low band that are drawn two standard deviations above and
below the 20 MA. Traders generally look to sell when candle touches
upper band and on the other hand look to buy when touches lower
band.

• MACD Indicator
Moving Average Convergence Divergence is a trend
following momentum indicator which displays the relationship
between two moving averages of a security’s price. It is calculated by
subtracting the 26-period EMA from the 12-period EMA.
Traders can think to buy when the MACD line crosses above
the signal line and look to sell when the MACD line crosses below the
signal line.

• VWAP Indicator
The volume weighted average price is a trading benchmark used by
traders that provides the average price a security has traded at all over
the day, based on both price and volume . Trader look to buy when the
candle cross the vwap line upward side and look to sell when candle
cross the vwap line downward side.

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 CHAPTER 2

SUMMER INTERNSHIP TASK DETAILS

2.1 Objective of the Study

The following are the objective of the study:

• To study the performance and growth of IT sector in India.

• To forecast the future value and analyze the intrinsic value through
fundamental analysis.
• To analyze the price fluctuation in the IT stocks.

• To give a Buy, Hold or Sell call on the Nifty IT stock by doing technical
Analysis

2.2 Literature Review

Dr. AS AMBILY (2017) in his research paper titled, “A study on

Fundamental Analysis of Selected IT Companies Listed At NSE” explain
about the relevance of fundamental analysis along with the attempt to find
the Intrinsic value of shares. It also reveals the importance for the
investment decision which act as guidance and help them in decision
making and predicts the price of the scrip.

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 VALARMATHI A (2016) in his research paper titled, “A Study on the
Technical Analysis of NSE towards IT stocks with Reference t Indian
Stock Market” explain about the technical analysis as to how it plays an
important role in secondary market, analysis of stock and its usefulness
towards trading. Analysis is done based on the technical tools like
RSI&EMA.

2.3 Research Methodology

• In our study we focused on Fundamental analysis and technical analysis

of companies comes under Nifty IT sector.
• Technical Analysis is done on the basis of technical tools like relative
strength index (RSI), Bollinger band, Volume Weighted Average Price
(VWAP), MACD, and the chart pattern format.
• Fundamental analysis is dne by using various ratios such as EPS, P/E
ratio, Dividend payout ratio and Return on equity are used for getting
intrinsic value of stock.

• As because of covid-19 there is lot of volatility in the stock market

therefore our more focus to Invest in stock was on fundamental analysis
result rather than technical analysis.
• All the data are collected from secondary sources.

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2.4 Limitations

• Because of Covid-19 Pandemic it is not possible to collect the primary

data for our studies therefore our complete study is based on secondary
data.
• Because of uncertainty created by the pandemic there is a chance that the
stock selected on the basis of our study may not perform accordingly in
short term but will definitely give results in long-run.
• Technical analysis may not hold good always.
• As this situation brought high volatility in the stock market therefore our
technical analysis is based on technical chart which may or may not be
providing accurate result.

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 CHAPTER 3

ANALYSIS AND FINDINGS

3.1 FUNDAMENTAL ANALYSIS OF COMPANIES:

In analysis of company the financial performance of the companies which are

listed at NIFTY IT sector are analyzed in order to evaluate the profitability of the
firm. An investor should be conscious about the financial performance of the
company to know the return and risk related with specific share. For the
determination of analysis various ratios such as EPS, P/E ratio, Dividend payout
ratio and Return on equity are used.

• EARNING PER SHARE

Earnings per share (EPS) are a company's net profit divided by the number
of common shares it has outstanding. EPS shows the earning capability of
the company.

EPS = (Net Income − Preferred Dividends)/End of Period Common

Shares Outstanding

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 2015-16 2016-17 2017-18 2018-19 2019- CAGR
20
Wipro 12.45 12.59 12.80 12.62 15.19 4.05
Mindtree 33.20 25.12 34.77 45.92 38.32 2.90
Tech 32.81 31.30 40.78 44.54 46.95 7.43
Mahindra
L&T Infotech 50.36 54.83 67.45 84.78 89.22 12.11
TCS 54.79 60.03 66.07 80.17 88.69 10.11
Mphasis 21.75 29.70 38.28 41.32 64.60 24.32
NIIT Tech 30.13 26.86 36.78 48.38 67.60 17.54
Infosys 24.87 30.09 36.99 33.75 36.50 7.97
HCL Tech 20.20 21.72 26.48 30.20 33.34 10.54

CAGR = [EV/BV] (1/n) – 1

Where,

EV= Ending value

BV= Beginning value

n = No. of periods

Table shows that all the company having positive CAGR. Positive CAGR
discloses increase of EPS over years & Negative CAGR discloses decrease in EPS
over years.

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 • PRICE TO EARNING RATIO
It is the ratio for valuing a company that measures its current share
price comparative to its per-share earnings. By comparing P/E ratio of
particular company with sector P/E we get an idea whether the stock is
undervalued or overvalued.

P/E Ratio=Earnings per share/Market value per share

NAME OF COMPANY P/E RATIO CONCLUSION

Wipro 17.9 UNDERVALUED
Mindtree 25.25 OVERVALUED
Tech Mahindra 14.02 UNDERVALUED
L&T Infotech 27.45 OVERVALUED
TCS 28.11 OVERVALUED
Mphasis 18.11 UNDERVALUED
NIIT Tech 28.73 OVERVALUED
Infosys 25.34 OVERVALUED
HCL Tech 19.64 UNDERVALUED

Industry P/E=23.57

From table we can conclude that Wipro, Tech Mahindra, Mphasis, HCL Tech are
undervalued stocks. For investment we can think about these stocks.

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 • DIVIDEND PAYOUT RATIO

It is the ratio of the total amount of dividends paid out to

shareholders relative to the net income of the company. The Dividend
Payout Ratio shows what a company‘s pay out to investors in the form of
dividends.

Dividend Payout Ratio= (Dividends Paid/Net Income)*100

2015-16 2016-17 2017-18 2018-19 2019- CAGR

20
Wipro 18 6 6 8 7 -17.21
Mindtree 46 38 32 72 34 -5.86
Tech 37 29 34 31 32 -2.86
Mahindra
L&T Infotech 70 30 32 33 31 -15.03
TCS 37 39 38 37 82 17.25
Mphasis 92 57 52 65 54 -10.10
NIIT Tech 32 47 41 0 46 7.52
Infosys 44 43 59 64 48 1.75
HCL Tech 48 50 23 13 0 -100

Table shows the dividend payout ratio of last 5 years. TCS, NIIT Tech,
Infosys is providing high dividend to shareholder whereas Wipro, Mindtree,
Tech Mahindra, L&T Infotech, Mphasis&HCL Tech declined in their
dividend payout ratio.

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 • RETURN ON EQUITY

The return on equity ratio is a profitability ratio that measures the

capability of a firm to make profits from its shareholders investments in the
company.
It is calculated by,

RETURN ON EQUITY = Net Income/Shareholder’s Equity

2015-16 2016-17 2017-18 2018-19 2019- CAGR

20
Wipro 21.82 18.77 17.47 16.69 18.19 -3.57
Mindtree 26.07 17.60 21.36 25.09 19.60 -5.54
Tech 25.10 19.80 22.52 22.24 21.53 -3.02
Mahindra
L&T Infotech 44.50 39.21 36.12 36.08 32.00 -6.38
TCS 41.81 33.21 32.92 38.91 43.73 0.90
Mphasis 10.72 13.64 17.30 21.71 35.27 26.89
NIIT Tech 17.17 12.96 16.26 19.04 23.13 6.14
Infosys 23.26 21.43 24.61 23.36 24.98 1.43
HCL Tech 23.43 29.14 27.52 28.23 24.04 0.51

Table shows that Return on equity of TCS, Mphasis, NIIT Tech,

Infosys& HCLTech is moving in positive trend. On the other hand
Wipro,Mindtree, Tech Mahindra, L&T Infotech indicates a downward trend.

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 VALUATION OF SHARE:

Average Average Average Growt Normalized Projected Intrinsic Market

DPR Retention ROE h in Average EPS Value Value(as
Ratio Equity P/E ratio on 21-8-
2020)
Wipro 0.09 0.91 0.186 0.169 15.7 17.75 278.68 273.35
Mindtree 0.45 0.55 0.22 0.121 21.3 42.95 914.84 1162.55
Tech 0.33 0.67 0.23 0.155 14.8 54.22 802.46 732.60
Mahindra
L&T 0.39 0.61 0.38 0.232 19.4 109.91 2132.25 2367.55
Infotech
TCS 0.47 0.53 0.38 0.202 23 106.60 2451.80 2248.60
Mphasis 0.64 0.36 0.20 0.072 15.8 69.25 1094.15 1199
NIIT Tech 0.33 0.67 0.18 0.121 16.1 75.78 1220.05 1986.05
Infosys 0.52 0.48 0.24 0.116 19.7 40.74 802.58 948.80
HCL Tech 0.27 0.73 0.26 0.189 14.9 39.64 590.64 705.90

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DECISION

• WIPRO: Market Value < Intrinsic value so it is undervalued stock & it is

suggested to buy the stock as price of share may increase in future.
• MINDTREE: Intrinsic value < Market Value so it is overvalued stock &
recommended not to buy.
• TECH MAHINDRA: Market Value < Intrinsic value so it is undervalued
stock & it is suggested to buy the stock as price of share may increase in
future.
• L&T INFOTECH: Intrinsic value < Market Value so it is overvalued stock
& recommended not to buy.
• TCS: Market Value < Intrinsic value so it is undervalued stock & it is
suggested to buy the stock as price of share may increase in future.
• MPHASIS: Intrinsic value < Market Value so it is overvalued stock &
recommended not to buy.
• NIIT TECH: Intrinsic value < Market Value so it is overvalued stock &
recommended not to buy.
• INFOSYS: Intrinsic value < Market Value so it is overvalued stock &
recommended not to buy.
• HCL TECH: Intrinsic value < Market Value so it is overvalued stock &
recommended not to buy.

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3.2 TECHNICAL ANALYSIS OF COMPANIES:

This is basically a systematic study of secondary data gathered from

NSE India of different IT stocks. The data is collected by the means of actual price
of IT company stocks from the last five months which is given on the NSE
website. The purpose of study is how investors use technical analysis in share
trading, price fluctuations and usage of it. Analysis is done on the basis of
technical tools like relative strength index (RSI), Bollinger band, Volume
Weighted Average Price (VWAP), Moving Average (MA), and the chart pattern
format.

• Relative strength Index (RSI)

The Relative Strength Index is a technical tool which is used by the

investors to identify the technical strength or weakness in particular tenure. When
the RSI goes above 70 then the stock is to be considered as it will go downturn,
similarly when the RSI goes below 30 it’s time to pick up the stock. When RSI
crosses 80 then stock is to be considered as in overbought zone and the downfall
will going to happen. On the other hand when stock goes below 20, then the stock
is considered as it is in oversold zone and will retrace back in some time.

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 Jan Feb March April May
Wipro 41.3 26.5 36.1 54.5 68
L&T Infotech 68.4 58.5 42.7 54.3 68.3
TCS 44 35.2 35.3 52.4 61.9
Infosys 54.5 44.3 39.7 48.2 57.2
NIIT Tech 38.5 31 37.5 47.5 59.5
HCL Tech 51.7 36.1 69.7 49 64.9
Tech Mahindra 52 39.5 30.6 40.3 53.4
Mphasis 60.3 48.1 45 47.7 55.8
Mindtree 60.5 52.8 44.8 49.2 61.3
Table 1: Showing RSI for the month of Jan 2020 to May 2020

Figure: Showing RSI of wipro form the month of Jan 2020-May 2020

INTERPRETATION:

The above chart shows the 14 day moving RSI chart of WIPRO for five months
from Jan 2020 to May 2020. In Jan starting RSI shows above 60 then it fall till Jan
end. In march RSI fall below 20 which indicates that stock is in oversold zone and
will retrace back in upcoming time which happened exactly till May end and RSI
touched almost 79.

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Figure: Showing RSI of L&T Infotech from the month of Jan 2020- May 2020.

INTERPRETATION:

The above chart shows the 14 day moving RSI chart of L&T Infotech for five
months from Jan 2020 to May 2020. In Jan the RSI touched almost 80 and
consolidate between 70 to 80. In March RSI goes below 20 and in that month
stock was in oversold zone and after that he stock recover and till May end it
touches 68.

Figure: Showing RSI of TCS From the month of Jan 2020- May 2020.

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INTERPRETATION:

The above chart shows the 14 day moving RSI chart of TCS for five months from
Jan 2020 to May 2020. In the month of Jan at start the stock was above 60 and at
the end of the month it was around 22. In mid-March the stock touches 20 and then
it retrace back and till April end it touches 70. And in the month of may it
consolidate in between 60 to 70.

Figure: Showing RSI of Infosys From the month of Jan 2020- May2020.

INTERPRETATION:

The above chart shows the 14 day moving RSI chart of Infosys for five months
from Jan 2020 to May 2020. In the month of Feb the RSI falls from 65 to 22 and in
the month of March the stock falls below 20 which shows that the stock is in
oversold zone form some time shown in shaded portion. After that stock retrace
back to 70 at the end of April.

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 Figure 5: Showing RSI of NIIT From the month of Jan 2020- May2020.

INTERPRETATION:

The above chart shows the 14 day moving RSI chart of NIIT for five months from
Jan 2020 to May 2020. In the month of Jan the RSI of the stock touches almost 80
the it falls down at the end of the month. Again it touches 80 which indicates that
buying is happened in these two month and stock is in stronger side. In the month
of March RSI falls below 20 and stock is in oversold zone for some period and
after that it consolidate in between 50 to 60.

Figure 6: Showing RSI of HCL Tech From the month of Jan 2020- May2020.

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INTERPRETATION:

The above chart shows the 14 day moving RSI chart of HCL tech for five months
from Jan 2020 to May 2020. In the month of Jan the RSI lies in between 75 to 60.
At the end of Feb RSI touches 20 and then it starts going to upward direction and
at the end of May it touches 80. After than down fall will going to happen due to
overbought condition.

Figure 7: Showing RSI of Tech Mahindra From the month of Jan 2020- May2020.

INTERPRETATION:

The above chart shows the 14 day moving RSI chart of Tech Mahindra for five
months from Jan 2020 to May 2020. In the month of Jan RSI consolidate in
between 40 to 60. At the end of Feb it came down to 20 at in the month of March
RSI Fall below 20 and comes under oversold zone as shown in above chart and
after that it came back and consolidate in between 50 to 60 till May end.

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 Figure 8: Showing RSI of Mphasis From the month of Jan 2020- May2020.

INTERPRETATION:

The above chart shows the 14 day moving RSI chart of Mphasis ltd for five months
from Jan 2020 to May 2020. In starting of Jan the RSI of the stock touches it’s
high which is 75 as far as five months data is concern. From Jan to March it is
consolidate in between 60 to 70. And in April and May the RSI lies in between 40
to 50 which is neutral neither in overbought zone nor in oversold zone.

Figure 9: Showing RSI of Mindtree From the month of Jan 2020- May2020.

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INTERPRETATION:

The above chart shows the 14 day moving RSI chart of Mindtree for five months
from Jan 2020 to May 2020. In the month of Jan RSI of this stock touches 80. In
Feb. it crosses 80 which indicates that stock is in overbought zone and will retrace
back which exactly happened in the month of March. And then RSI consolidate in
between 55 to 60 till May ended.

• MOVING AVERAGE CONVERGENCE DIVERGENCE

Moving average convergence divergence is an trend following

momentum which explains the relationship between two moving averages of
Security’s price. MACD can be calculated by substituting short cycle 12, long
cycle 26 and signal period 9. Basically MACD is made up of 3 parameters first is
signal line second is MACD line and third is histogram.

Signal line is simple and slow line which shows 9 days simple moving average.
MACD line is nothing but the average difference of 26 and 12 days moving
average. And histogram is nothing but the numbers which shows in MACD graph.
Actually it has two type of values positive and negative, if value is positive then it
shows positive strength and if the value is negative then the strength is negative.

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 INTERPRETATION:

The above graph shows the MACD chart of Mindtree on 20 Aug 2020. The
above blue line is MACD Line and red line represents signal line. On this
day there is no clear Signal about selling and buying. At last moment macd
line crosses signal line which is an clear buying signal which indicates that
the price of the stock will goes up which happened actually.

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 INTERPRETATION:

The above graph shows the MACD chart of Mphasis on 20 Aug 2020. The
above blue line is MACD Line and red line represents signal line. On this
day during first hour of market MACD line crosses and goes above signal
line which is an clear signal of buying and the price of stock will go up. And
after 12 o’clock it shows mixed signals and at last it shows one spick.

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 INTERPRETATION:

The above graph shows the MACD chart of TCS on 20 Aug

2020. The above blue line is MACD Line and red line represents signal line. As
shown in above graph there is mix signals. After 12 MACD line goes above signal
line which indicates buying signal and price of the stock will supposed to go up.

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INTERPRETATION:

The above graph shows the MACD chart of Tech Mahindra on 20 Aug 2020. The
above blue line is MACD Line and red line represents signal line. As shown in the
above graph the market is kind of volatile and the price of share is fluctuating as
shown in above graph. Some time it shows buying signal and some time it shows
selling signal.

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INTERPRETATION:

The above graph shows the MACD chart of Infosys on 20 Aug 2020. The above
blue line is MACD Line and red line represents signal line. On this day the MACD
chart is giving mix signal and the price os share is consolidating in between.

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INTERPRETATION:

The above graph shows the MACD chart of WIPRO on 20 Aug 2020. The above
blue line is MACD Line and red line represents signal line. As shown in above
figure the overall trend of market is positive i.e., bullish. Three time the MACD
Line crosses signal line which is an clear “bullish signal. But the angle betwwen

the two lines is not that sharp.

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INTERPRETATION:

The above graph shows the MACD chart of NIIT LTD on 20 Aug 2020. The above
blue line is MACD Line and red line represents signal line. During first hour the
trend is bullish and after that around 11o’clock the trend reversal happened. When
MACD Line crosses signal line the price of shares starts falling. After that it starts
consolidating.

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INTERPRETATION:

The above graph shows the MACD chart of HCL Tech on 20 Aug 2020. The
above blue line is MACD Line and red line represents signal line. During first hour
of market MACD line crosses signal line which shows sell Signals. After that there
is consolidation in the price of stock. In the whole day there is no clear angle
between the two.

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INTERPRETATION:

The above graph shows the MACD chart of L&T ltd on 20 Aug 2020. The above
blue line is MACD Line and red line represents signal line. After 12 o’clock
MACD line crosses signal line which shows sell signal And after that the price of
the stock suddenly fall down. And after 2o’clock again MACD Line crosses signal
Line and there is buy signal and price of the stock goes up.

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 • BOLLINGER BAND AND VWAP:

As we discuss above with the help of RSI and MACD we can conclude
that we can buy HCL tech and L&T ltd. But for more clarification we can take help
of bollinger band and vwap. With the help of these two indicators we will get Clear
signal that which stock is better for buying.

In bollinger band for best results we needs to take close field, with the period of 20
days and standard deviation is 2. Basically there are three bands in bollinger band.
The top and bottom band shows the standard deviation it is nothing but the average
movement of share between the median. And the middle line represents the median
which shows the average price of share.

VWAP is nothing but the volume weighted average price which means the price in
which volume of the stock is taken into consideration. It is sum of the price
multiplied by volume and divided by total volume. VWAP is specially made for
intraday.

We need to use less than 1day candle for vwap . We need to wait for the candle
which will cross vwap.

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INTERPRETATION

The above chart shows the bollingwr band and vwap of L&T ltd as on date 20 Aug
2020. The top and bottom black line represents two standard deviations. Middle
black line represents median which shows the average price of stock. And the blue
line shows the VWAP to crosscheck. When the candle touches upper standard
deviation line then it is an sell signal and to cross check it we can take help of
vwap, if the candle is closing below vwap line then we can sell the stock. As
shown in above around 12o’clock candle touches upper standard deviation line and

after that stock starts falling down.

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INTERPRETATION:

The above chart shows the bollingwr band and vwap of HCL tech as on date 20
Aug 2020. The top and bottom black line represents two standard deviations.
Middle black line represents median which shows the average price of stock. And
the blue line shows the VWAP to crosscheck. As shown in above chart at the
starting of the day the candle touches upper standard deviation line which is a
signal of selling and after that the stock falls down.

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 CHAPTER 4

CONCLUSION AND RECOMMENDATION

• In Fundamental analysis we have calculated various ratios such as EPS, P/E

ratio, Dividend payout ratio and Return on equity which help in valuation of
share and after that compare the Intrinsic value with the current market value
and on the basis of that take a decision whether we can buy or sell the share.
• After comparing the intrinsic value with the current market value of nifty IT
stock we have seen that Market value of Wipro, Tech Mahindra & TCS are
less than the Intrinsic value of the same so it is undervalued stocks and
recommended to buy this stocks. On the other hand Market value of
MINDTREE, L&T Infotech, MPHASIS, NIIT Tech and Infosys is greater
than the Intrinsic value of the same so they are overvalued stocks and this is
not a right time to buy these stocks.
• Technical analysis is one of the most important tool, with the help of which
we can analyse the stock whether we can buy or sell it. In this project we
have used different indicators like RSI, Bollinger band, VWAP and MACD.
In this project we consider 9 different stocks of IT sector. From the RSI
analysis we conclude that the RSI wipro, L&T and HCL tech are in the
range 60 to 70 in the month of May 2020, which means these stock are in
overbought zone and it’s not a good time to consider this stock for buying
because the price of these stock will going to fall down. And the other stocks
are in neutral condition neither in overbought nor in oversold zone.

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 • Another important most important indicator in technical analysis MACD
i.e., moving average convergence divergence. With the help of MACD we
can conclude the exact time to enter or exit the stock. When MACD line
crosses signal line in upward direction and the angle making between the
two is sharp then we can buy the stock on the other side when MACD line
crosses signal line in downward direction with sharp angle then that is the
time when the price of stock will fall and need to exit the stock at that time.
The stocks we have analyzed above from which mindtree, tech mahindra
and HCL tech gave the buy signal at the end of the day. On the other hand
NIIT ltd gave the sell signal at the end of the day.
• Bollinger band and VWAP helps to confirm and crosscheck with the RSI
and MACD indicators, with the help of bollinger band which has three bands
i.e., two standard deviation and one Median band which helps to identify the
price range of the stock and right time to enter or exit the stock. In the above
analysis we can conclude we can shortlist L&T and HCL tech.
• VWAP is also an important tool to identify the whether we can buy the stock
or sell the stock. This indicator is purposely made for the intraday trade
trading and we have considered L&T and HCL tech. And in these two stocks
there are 2-3 opportunities to buy the stock when candle stick give closing
above the VWAP line which means it is good time to consider the stock and
can buy the stock. On the other hand when candle give closing below
VWAP line then we can sell the stock.

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 BIBLIOLOGY/ WEBLIOLOGY

• AMBILY, AS and SILPA K.S (2017), “A study on Fundamental Analysis of

Selected IT companies Listed at NSE”, Jour of Adv. Research in Dynamical
and Control Systems, Vol: 9 SI: 5,2017,10.
• VALARMATHI A and KOWSALYA P* (2016), “A Study on the Technical
Analysis of NSE towards IT stocks with Reference t Indian Stock Market”,
International Journal of Advances in Management and Economics,Vol:5,
Issue 4, 22-29.
• “Insurance sector in India” available at
https://www.ibef.org/industry/insurance-sector-india.aspx (accessed on 13th
July 2020)
• “IT sector share last five year movement” available at
https://www.moneycontrol.com/ (accessed on 20th July 2020).
• “IT sector last five year data” available at https://stockedge.com/ (accessed
on 5th August 2020).
• “Technical analysis chart pattern” available at
https://www.investopedia.com/terms/c/cupandhandle.asp (accessed on 7th
August 2020).
• “Technical analysis indicators chart nifty IT stocks” available at
https://kite.zerodha.com/ accessed on 8th August 2020).

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