CU-MCOM-SEM-III-Security Analysis and Portfolio Management

 Newness - Satisfying a formerly unseen need or need with no comparative contribution,  Performance – An organization fabricated something that is steadily quicker or better than whatever exists in the commercial center,  Customization - Tailoring the contributions to every individual client or client fragment,  Design – Offerings are particularly better planned or stands apart from the others,  Price – A specific organization in a given industry offers exactly the same thing as every other person at a lower cost,  Cost decrease – Through an organization procedure clients set aside cash,  Risk decrease – An organization help to diminish the danger of its clients take when buying its offers,  Accessibility - Tapping into a formerly underserved or never served market,  Convenience – An organization in a given industry made something a lot simpler to usethan whatever else is in the commercial center. Learning Opportunities Based on Industrial Analysis A contextual analysis-based administration exploration and showing teaching method are taken on by numerous business colleges with the conviction that it is a most remarkable approach to consider and learn new exercises needed to distinguish, comprehend, and tackle the issues during the time spent overseeing and driving the associations. Examining business instances of enterprises power understudies to wrestle with precisely the sorts of circumstances, choices, and situations directors defy each day. Industry investigation is a vital region in business the executives schooling where understudies and specialists can consider different parts of an industry and its parts to enhance their insight in the centre space of business including hierarchical administration, ecological administration, practical spaces of business, key administration, novel thought creation just as powerful dynamic. The issues or issues distinguished in a yielded. 4.4 COMPANY ANALYSIS Company analysis is the significant kind of contextual analysis strategy in Research Methodology and is usually utilized by both the novices just as prepared analysts in academic exploration. Organization investigation ought to be the mandatory task to be given to each understudy in each business colleges to make them to include in research exercises with the conviction that it is a most impressive approach to consider and learn new exercises needed to recognize, comprehend, and take care of the business issues during the time spent overseeing and driving the associations. 101 CU IDOL SELF LEARNING MATERIAL (SLM)

By making the organization examination on public or global organizations during various semesters of business the board program both at the undergrad and postgraduate level and distribution of such investigation as a contextual analysis in diaries, the business colleges can include understudy local area in exploration and distributions. Through organization examination, the specialist can contemplate different overseeing parts of an organization with precisely the sorts of circumstances, choices, and difficulties supervisors go up against consistently. Company analysis is an incredible asset in creating both exploration contextual investigation and showing contextual investigation in business the board subjects. Aside from the plans of action and procedures to accomplish its destinations, a successful organization investigation can consider the job of the top managerial staff, the board, and investors in accomplishing financial backer worth boost, office hypothesis, data lop-sidedness, and the goal of irreconcilable circumstance among the executives and investors. This additionally can incorporate investigating the job of the top managerial staff in deciding the ideal blend of financing, venture, and profit choices. It additionally contains the commitment of different partners in accomplishing the targets Company investigation might be likewise be founded on its Product/Service examination, innovation examination, market request examination, contender examination, securities exchange venture investigation, present and future interest examination, organization execution with time examination, country based topographical area examination, administration investigation, asset use examination, investigation of industry area of the organization, organization business advancement examination, development and development possibilities examination, monetary execution examination and correlation with different players in a similar industry, difficulties and openings, speculation allure, natural investigation, Analysis on organization techniques to be followed for progress including cutthroat systems blue sea methodologies for restraining infrastructure green sea procedures for manageability and dark sea procedures for endurance and so on Such investigation gives the possibility of the supportability of the organization business for quite a while. The organization investigation can likewise include both central examination and specialized examination. The principal investigation incorporates the assessment of the characteristic worth of the stock by taking a gander at essential monetary components and the assets which would affect its worth. These components incorporate the development possibilities for the organization, serious factors, and anticipated profit from value or resources. Specialized examination is a speculation system that assesses ventures unquestionably available action encompassing them, with no looking to the genuine activities or worth of the actual organization. This incorporates the variables like authentic evaluating of the offers, exchanging volumes after some time, and industry exchanging patterns. The target of this investigation is to profit by estimating openings and patterns that can be distinguished in the market movement around each offer. 102 CU IDOL SELF LEARNING MATERIAL (SLM)

Company analysis gives an understanding into the noteworthy exhibition and battle of an organization as far as its development, achievement or disappointment, present business situations, and future methodologies dependent on inside and natural freedoms and difficulties. The scientists can find out about what choice and activity turned out badly in organization's inability to encash developing open doors in a serious climate for sure choice of leaders gave enormous achievement and forward leap in organization's accomplishment as far as understanding its business goals. The organization examination ought to likewise remember the forecasts for future business and monetary execution dependent on organization's ability on taking care of its partners and their assumptions, changes in the business serious climate, changes in innovation remotely or inside box organization's innovative work exercises and changes in individuals’ insight about quality items and administrations. The predefined condition for ABCD examination according to its system is ABCD posting. In this segment, the benefits, advantages, limitations, and detriments of organization investigation are recorded. How to Decide a Company for Analysis? Contingent upon the goal and interest of analyst, an organization can be picked in each industry or industry area. The target might be considering the recorded improvement of an organization in an industry area, concentrate on execution of a utilitarian space of the organization, concentrate on speculation arrangement of the organization, or study on the procedures of the organization in quality administration, item/administrations plan/conveyance, and the business development through upgrading request and encashing openings. An organization for investigation can be picked dependent on the length of life- cycle so specialist can get intriguing issues for examination. Organizations which have gone through more stages in their day-to-day existence cycle might be the wellspring of examination issues. The organizations which have battled forcefully for their development through item/business extension are additionally likely possibility to recognize the issues for investigation. The organizations which have gone through numerous changes through different heads of the diverse mentality and authority styles might be additionally the expected up-and-comer. Albeit the scientist centres around a specific issue which is of his advantage, or on request in the business local area, or may have future business interest, in some cases, the hot issues in the business climate might entice an analyst to take-up a particular organization to recognize and break down a specific issue/issues. Issues to be utilized in Company Analysis The different business issues of an organization or gathering of organizations can be broke down through inner and outside factors influenced the choices of the administrators identified with the issues, for example, to satisfy the targets, to successful use of assets, work on the 103 CU IDOL SELF LEARNING MATERIAL (SLM)

item/administration, further develop different business measures, further develop the business execution, business manageability, business extension, innovation angles, rivalry, joint effort, organizations monetary choices, enrolment and preparing choices, key arranging, strategic choices, control choices, tasks choices, research and advancement issues, new items/administrations, issues identified with partners such administration, representatives, providers, clients, colleagues, government, and the general public. The contextual investigation in organization examination may likewise zero in on different systems utilized by the organization for confronting fulfilment, to turn into an imposing business model, for endurance, and for maintainability for quite a while with benefit. The organization execution dependent on organization leader's choice can relate to different speculations of hierarchical conduct and execution. Now and again the organization's helpless business execution prompting insolvency can be dissected and the justification such disappointment can be distinguished. Advantages of Company Analysis  Studying all through the organization as far as its items and administrations.  Knowing contenders and their item/administrations highlights.  Knowing the interior elements and ecological components influencing the business.  Knowing the business methodologies.  Study of IT reception and computerization.  Possibility to compute the organization's future acquiring potential.  Studying the organization's goal and endeavours on keeping up with the clean and green climate.  Knowing organization's capacity and execution in keeping up with maintainability in the business.  Studying organization's readiness to oversee both business and natural arranged catastrophes.  Studying the partner's assumption and contribution in organization's business.  The basic investigation of organization's development dependent on dealing with different issues (ideal and ominous) gives the premise to additional critical thinking and dynamic by present supervisors. Benefits of Company Analysis  Understanding the organization business.  Help to recommend counter system for contest.  Helps to know monetary soundness of the organization. 104 CU IDOL SELF LEARNING MATERIAL (SLM)

 Will give new knowledge on the exhibition of the organization and to work on its presentation.  Learning new techniques assuming any.  Understanding the advantages of the IT reception and mechanization.  By realizing future procuring capability of the organization the financial backers might get drawn in with the goal that the offer cost might go up.  Experience sharing on significant choices made by supervisors in convoluted circumstances with growing chiefs who are considering business the board subjects.  Company examination gives inside and out information on different elements of the organization and henceforth utilized as instructional method in administration training for experiential learning. Characteristics of Company Analysis  An compelling organization examination recognizes significant issues identified with hierarchical, business, or industry issues and the director's choice on progress/disappointment in distinguishing an ideal answer for such issues.  An viable organization investigation can have ascribes like equivocalness, the contention between issues or individuals, leaves significant issues annoying, complex to permit different degrees of examination, presents a strain between elective game- plans, closes with a bigger number of inquiries than answers, powers a choice.  An compelling organization examination ought to contain foundation data about the organization, space of interest, investigation of explicit issue/issue, distinguishing ideal arrangement from options, or issues which have changed the destiny of the organization emphatically or adversely, and a portion of the show materials supporting the examination.  An compelling organization investigation ought to contain foundation data about the issue, examination of that recognized issue, clue to distinguish the issue, display materials to break down the issues, set of inquiries to fix the issue and apply different administration speculations while recommending ideal choices to tackle the issues.  Company investigation can be likewise done by undergrad, postgraduate and exploration understudies.  Company investigation can be utilized by educators to add experiential learning element to study hall instructing/learning.  A Company analysis ought to contain the organization name as focal with examination of distinguished issues. 105 CU IDOL SELF LEARNING MATERIAL (SLM)

 A Company analysis will likewise contain the issue/issue as focal alongside the name of the organization.  Good Company analysis gives critical data about the organization, its activity, technique, issues confronted and how it tackled issues through dynamic. It likewise talks about endeavors of the organization on progress or disappointment of accomplishing its destinations.  A great Company analysis empowers the scientists to place themselves in the shoes of real supervisors to find out with regards to dynamic. The scientists investigate circumstances, foster other options, pick strategies and execution, and impart and safeguard their discoveries.  Company examination can zero in on learning the organization business, items/administrations, procedure, battle, and climate deliberately to make new information, understanding, or intelligence.  Company analysis can be utilized in study halls to test understudies' comprehension of hypothesis, to interface hypothesis with application, and to foster pragmatic understanding, or astuteness.  Company examination prompts business investigation and henceforth multi-issues investigation.  Company examination can be explicit issue-based investigation and henceforth generally single issue investigation.  A orderly organization examination normally needs more hypotheses, models, and systems of business the executives subject including all utilitarian spaces of the organization business.  If the organization examination is explicit issue focussed, then, at that point it utilizes relative less hypotheses, models, and systems for issues recognizable proof and investigation.  The organization examination by and large finishes up with proposals.  In Company analysis, the analyst at first gathers the subjective data about the business where the organization is a section. Then, at that point he needs to gather organization data both inside and outside quantitatively through either through exploratory technique or experimental strategy to discover the connection between different choice factors and foster suggestions for ideal choices to distinguished issue or the hole between the current situation with undertaking and anticipated future situation. Strategy to be Followed in Company Analysis 106 CU IDOL SELF LEARNING MATERIAL (SLM)

An analyst who needs to foster an organization investigation in any predetermined industry or industry area needs to discover answers to following inquiries.  Step 1: How to pick an organization?  Step 2: What to concentrate in a picked organization and its business?  Step 3: How to fix issues/marvel for examination to get the arrangement?  Step 4: How to recognize the issues/circumstances?  Step 5: How to break down the issue/circumstance?  Step 6: How to apply different Business Management Theories and Concepts?  Step 7: What are the examination procedures reasonable?  Step 8: How to give ideas/suggestions to work on the exhibition or tackle the issues?  Step 9: How to show up end? Framework for Company Analysis The company analysis can have two areas as organization industry investigation and friends’ investigation. Generally, the organization business examination ought to contain more subjective conversations and the organization investigation ought to be more quantitative in nature. Organization examination incorporate the investigation of organizations business, its inside and outer climate, its adventure of accomplishment or disappointment, its development or decrease, its partners, their assumptions, rivals, teammates and their system, items/administration quality investigation, business climate, monetary execution examination, functional technique, business procedure, corporate methodology, innovation reception technique, development and extension procedure, promoting methodology, human asset the executives and maintenance procedure, plan of action, authority and dynamic adequacy, computerization and data innovation reception, battle for maintainability, income development rate, organization productivity, research and advancement, development, ecological obligation, corporate social obligation, tentative arrangement, and so forth Contingent upon the idea of the business, plan of action, and the size of the organization, a portion of the above factors pertinent ought to be concentrated to gather significant information for additional examination. The information identified with the above elements can be gathered by many sources which incorporate organization site, interviews led to organization work force, and a poll put together study led with respect to partners, articles distributed in various magazines and diaries, fiscal summaries, yearly reports, and some other wellsprings of data. The different parts of above factors are recorded beneath. Business Analysis Study on business parts of the organization which incorporates:  History of the organization 107 CU IDOL SELF LEARNING MATERIAL (SLM)

 Vision, mission, and targets and of the organization  Founder, his vision, qualities, and endeavors  Business as far as items and administrations  Growth related choices  Success adventure of the organization and its business  Failures and hazard taken as experience  Turnaround execution  Breakthroughs and so forth  List of CEO's and their commitment  Technology Adoption  SWOC and PEST Analysis on the Company and its current circumstance Stakeholder Analysis Study on the partners of the organization which incorporates:  Suppliers/Vendors  Customers  Investors/investors  Collaborators  After deals support  Customers appraisals  Employees assurance and responsibility  Government Policies and so forth Competitor Analysis Study on contenders for the organization including:  List of Major Competitors  Their Strategies  Their item and administrations  Five Competitive Force Model of Michel Porter Item/Services Quality/Performance Analysis 108 CU IDOL SELF LEARNING MATERIAL (SLM)

The nature of the items/administrations of the organization can be examined utilizing procedures like:  ABCD Analysis Framework  Six sigma quality investigation  Quality circle technique  Customer fulfillment and maintenance study Financial Performance Analysis Investigating budget report, Income articulation including incomes, cost of merchandise, cost of Selling, General and Administrative, gross edge. working edge, net edge and so forth are significant. The accounting report of the organization can be dissected dependent on deciding the vital figures in monetary examination the resources of the organization, Liabilities of the organization, value of the organization which is the contrast among resources and liabilities, obligation to value proportion, net obligation/value proportion to know the organization monetary danger, return on resources which is net benefit separated by absolute resources, and return on value which is net benefit partitioned by all out value. In view of budget report examination one can decide the accompanying monetary proportions:  Profit Ratios i. Gross net revenue. ii. Net revenue iii. Return on complete resources iv. Net pay v. Return on investors' value  Liquidity Ratios i. Current proportion ii. Quick proportion  Activity Ratios i. Inventory turnover ii. Cost of products sold iii. Days deals remarkable (DSO)  Leverage Ratios i. Debt-to-resources proportion. i. Total obligation 109 CU IDOL SELF LEARNING MATERIAL (SLM)

ii. Debt-to-value proportion. iii. Times-covered proportion.  Shareholder-Return Ratios i. Total investor returns ii. Price-income proportion iii. Market to book esteem iv. Dividend yield v. Market cost per share  Cash Flow Cash flow statements are generally isolated into three segments which show working, putting away and financing income. The working income is the money gotten or paid by an organization in a particular time span during its normal business. Working income things will be typically remembered for the organization's pay proclamation. Putting away incomes are controlled by the money got or cash paid out by the organization related with the speculation things. Financing incomes show the cash got or paid out by the organization related with its capitalization and can be identified with obligation instalments or new obligation. Another boundary called free income is a figure that is utilized to show the working money produced by an organization that is accessible to be utilized in an optional manner. Free income begins from working income and takes away those things fundamental for the business to be run as a continuous business element, called capital uses. A point by point and normalized estimation with the expectation of complimentary income would be overall gain in addition to amortization in addition to devaluation in addition to the adjustment of money because of working capital changes less capital use. Capital Mobilization for Expansion  Capital mobilization capacity of the organization is the capacity of the organization in orchestrating capital which can be cash, human resources (work), crude materials, and so on as an extension venture. Capital assembly procedures are regarding how to separate hindrances to moving capital. For instance, on the off chance that a nation has limitations about unfamiliar responsibility for, these limitations give a hindrance to preparation of capital into the country. It is likewise the capacity of the organization in collect the public cash venture for its development. Company future earnings potential To estimate an organization's profit in a definite way, we should construct a monetary model which gauges everything in its pay explanation. Anticipating each detail would permit us to ascertain a net benefit figure for future years and this figure would be the organization's 110 CU IDOL SELF LEARNING MATERIAL (SLM)

income estimate. One approach to do this is to not conjecture each detail. By nitty gritty examination it is feasible to gauge incomes, working edge and non-working things of an organization. Strategy Analysis The organization investigation contextual analysis might remember conversation for different techniques embraced and being taken on to satisfy the destinations, tackle the issues towards keeping up with maintainable benefit. Some of such strategies to be analysed are:  Various Corporate Strategies  Global Strategies  Porters Five Competitive Strategies etc.  Digital Strategy like usage of information communication technology  E-Commerce Strategy to decrease the cost and increase the business share  Research & Development Strategy to develop new products, processes, services, business models  Marketing Strategy to enhance the demand  Customer Retention & New Customer Strategy to expand business  Business Expansion Strategies  Acquisition & Managing of Human Resource Strategies Marketing Analysis Marketing analysesinclude:  Demand for Products & Services  Advertisement Strategies  Collaboration Strategies  Product/service innovation strategies HR Development & Retention Strategy:  The analysis should focus on the ability of the company to attract and retain optimum human resources including :  Identification of Human Resources,  Recruitment Strategies  Training Strategies : 111 CU IDOL SELF LEARNING MATERIAL (SLM)

 Productivity enhancement strategy  Employee motivational strategies  Employee replacement strategies New Technology adoption Strategy  The analysis should focus on  Inventory of existing technologies  Development of indigenous new technology or procurement of new technology  Technology adoption, automation and improving productivity: Leadership Analysis The company analysis can also include:  Leader/Decision Makers  Type of leader/leaders  Vision of leader  Qualities of Leader  Futuristic Strategies  Acceptance of leader by Organization etc.  Analysis of Implementation of IT and Automation Quality improvement based on implementation of advanced Information Technology includes:  Strategic planning for IT is fundamental to the ultimate effectiveness of IT implementation.  Interdepartmental coordination has proven to be a major factor in effective IT implementation.  The expertise levels of executives with regard to IT.  Innovation & Future Plan Analysis More importantly, the company analysis also focuses on the future business strategy of the company and ability of identification of future opportunities. This includes  Value added products/services.  New product/service development and commercialization. 112 CU IDOL SELF LEARNING MATERIAL (SLM)

 Efforts on customer satisfaction, delight, and retention.  Identifying new opportunities etc. The over thirteen investigation apparatuses give a scientist to do inside and out examination on any organization and its capacity to carry on its business. During the time spent such organization investigation, the scientist will get familiar with the organization issues, manages and techniques to tackle such issues to understand its targets. During such cycle, the specialist may likewise track down a particular region/issue where master proposals or suggestions dependent on different business/the board speculations or new models to be recommended. In organization case examination, the analyst can likewise talk about and discover the hole between the qualities of present business and the best conditions and attributes of such framework with the intension to recommend the upgrades in the business framework. Investigation of Company Business utilizing Six Thinking Hats approach For investigating a given issue or circumstance, as of late presented six reasoning caps method discovers significance because of its capacity to recognize the traits of a circumstance according to six alternate points of view. In six reasoning caps strategy, Dr. Edward de Bono laid out various reasoning styles needed by an individual while investigating a given issue in a deliberate manner. The method interrelate diverse reasoning styles utilized in a compelling critical thinking methodology with various hued caps [56]. This methodology directs the people to utilize a specific reasoning style addressed by singular hued cap. By conceptualizing each sort of cap, the individual spotlights on the way of intuition related with each tone. Appropriately, wearing the WHITE cap he embraces Neutral decisions dependent on statistical data points, wearing the RED cap he will take on humanistic deduction loaded up with feelings and sentiments, while wearing the YELLOW cap he contemplates the good parts of the circumstance, while wearing the BLACK cap he takes on sceptical or negative speculation dependent on remarks, analysis, alert and watchfulness, while wearing the GREEN cap he takes on innovative reasoning, while at the same time wearing the BLUE cap he takes on intuition dependent on arranging, coordinating and controlling.  Ideas/Recommendations Based on Company Analysis  Different proposals recommended by the scientist towards organization business improvements  through inside and out examination and conversations are recorded beneath:  Recommendations dependent on hierarchical destinations: Communication of authoritative targets to all partners, amending the goals dependent on inward and ecological changes, Effective method of understanding the targets utilizing ideal assets, innovation, and reasonable plans of action. 113 CU IDOL SELF LEARNING MATERIAL (SLM)

 Recommendations dependent on working on hierarchical productivity: Improvements in different cycles, robotization to further develop proficiency, decline the wastage and cost, joint effort and revaluating of non-centre exercises, worldwide tasks, worldwide promoting, and so on  Recommendations dependent on execution of proposed arrangements: By method for ideal usage of assets and time.  Recommendations dependent on plans of action: Suitability and enhancement of plan of action to satisfy the destinations and to give consumer loyalty.  Recommendations dependent on business system: Suggestion to utilize reasonable procedures at the functional level, strategic level, and chief level just as at various useful levels. Business methodology may likewise incorporate countering the contender's procedure, the syndication business system, supportability business technique, or endurance business technique.  Recommendations dependent on the aggregation of assets for manageability: Researching new business measures, exploring new items and administrations, development of business to different nations, procedures to make esteems in every single interaction for supportability.  Recommendations dependent on organization business extension:new items, new administrations, globalization of business by picking different methods of worldwide systematic sending out, the board contract, permitting, Franchising, Contract Manufacturing or International subcontracting, joint endeavour, Wholly Owned Subsidiary Operations, Strategic Alliance, Cross - Border Acquisitions, and so on  Recommendations dependent on organization social obligations: How organization can spend its benefit on satisfying its social commitment, what are available corporate social obligation exercises, how to  improve their viability and reachability to the general population, what are the new CSR exercises conceivable to deal with natural debasement.  Recommendations dependent on innovation execution examining organization's moral plan of action and exercises and so on  Recommendations dependent on monetary execution: Suggestion on upgrades in monetary execution including asset portion, cost arranging, estimating technique, supportable benefit, enhancements in investors return, further ventures and so forth  Recommendations dependent on coordinated efforts and rethinking: How to distinguish and further develop the centre capabilities, idea on recognizing partners, re-evaluating openings for different business measure, advantages of re-appropriating and so forth 114 CU IDOL SELF LEARNING MATERIAL (SLM)

 Recommendations dependent on robotization: Suggestions dependent on changes in innovation, in-house innovation up-degree, regions/cycles to be computerized further, advantages of mechanization, and so forth  Recommendations identified with HR arrangements: Suggestions identified with HR arranging, enrolment, preparing, maintenance, and further developing execution and proficiency.  Recommendations identified with showcasing procedure: Suggestions on working on the intensity of items and administrations, marking, ads, market extension, restraining infrastructure items, green items/administrations, utilization of online media and so on  Recommendations identified with internationalization of creation and markets: Suggestions on  globalization of business, including trading, the executive’s contract, permitting, diversifying, contract assembling or global subcontracting, joint endeavour, completely claimed auxiliary tasks, vital coalition, cross - line acquisitions, and so on, ID of unfamiliar business sectors, reasonable teammates/accomplices in far off nations for creation and advertising, and some other appropriate ideas to internationalization of organization items/administrations. 4.5 WEAKNESSES OF FUNDAMENTAL ANALYSIS No Guarantee of Profit The greatest disservice of key examination is that there is no certain shot assurance that if a financial backer has distinguished an underestimated stock that the individual in question will make a benefit on the grounds that there are numerous models where an underestimated stock continues to perform inadequately for an extremely significant stretch of time furthermore not all data is accessible in the public space which brings about the basic investigation being fragmented and hence mistaken. Time Consuming Major investigation is certainly not a stroll in the recreation centre as it includes significant exertion and time with respect to the individual doing the examination and subsequently it is a compromise between time spent on doing basic investigation and benefit because of principal investigation which for some isn't practical choice and henceforth individuals will in general try not to get a lot into the essential investigation. Long Time Frame Because of essential investigation in case one can recognize an underestimated stock and buy that stock with the expectation that it will rise then it's anything but a guarantee that stock will find inborn worth rapidly. Because of securities exchanges, there are various models 115 CU IDOL SELF LEARNING MATERIAL (SLM)

where stocks exchanged underneath their natural incentive for quite a while and henceforth in case you are placing cash into the stock for an extremely long haul that is 10 to 20 years than basic investigation can be of acceptable assistance in any case chances of you getting disappointed with non-development of stock cost are high. 4.6 SUMMARY  We have seen that the major and specialized investigation are distinctive in numerous perspectives, beginning from the suppositions on which they are based, to the techniques utilized and the capacity they have. These distinctions show that the basic and specialized investigation are basically various systems for settling on venture choices. Notwithstanding, the noticed contrasts don't really show that key and specialized investigation lead to various speculation choices. Indeed, the two examinations enjoy their benefits and disservices that can be joined to give ideal outcomes.  Economics is the investigation of how social orders decide to utilize scant useful assets that have elective uses, to deliver wares of different sorts, and to circulate them among various gatherings. We study financial aspects to comprehend the world we live in as well as the numerous potential universes that reformers are continually proposing to us. Merchandise are scant in light of the fact that individuals want significantly more than the economy can deliver.  Economic products are scant, not free, and society should pick among the restricted merchandise that can be delivered with its accessible assets. Microeconomics is worried about the conduct of individual elements like business sectors, firms, and families. Macroeconomics sees the exhibition of the economy in general. Through all financial aspects, be careful with the paradox of piece and the post hoc deception, and make sure to keep different things consistent. The main types of monetary association today are order and market.  The order economy is coordinated by concentrated government control; a market economy is directed by a casual arrangement of costs and benefits in which most choices are made by private people and firms. All social orders have various blends of order market; all social orders are blended economies. Monetary thinking is somewhat simple to parody. One should know, for example, what the impact of an arrangement change – an administration program to teach jobless laborers, an expansion in military spending, or an upgraded natural guideline – will be on individuals and their capacity to buy the labor and products they want.  Business case composing and distribution dependent on industry investigation is one of the methodologies of the analysts in numerous business colleges to make new information about enterprises. Adding industry examination in the educational plan 116 CU IDOL SELF LEARNING MATERIAL (SLM)

for offering credit will upgrade the scholarly inclusion of the exploration understudy in industry issues and subsequently will work on the measure of industry-organization association. In this paper, we have examined how to make industry investigation as examination based contextual analyses in business the board to distribute them in peer-checked on diaries.  The nitty gritty investigation on Industry Analysis as Business Research Methodology, and different potential outcomes of Types of Industry Analysis including Industry Sector Analysis, Industry Trend Analysis, Environmental Analysis, Competitor Analysis, Alternative Product/administration Analysis, Financial Performance Analysis, Industry ABCD Analysis, Industry SWOC Analysis, Product/Service Analysis, Investment Analysis, Automation and Labor Requirement Analysis, People insight Analysis, Size of the Industry and Total Contribution to the Economy, Market Demand Analysis, Opportunity Analysis, Government Policy Analysis, Industry Contribution and Employment Generation Analysis, Top Leading Companies in an Industry and their Strategies, Latest Industrial Developments, Cross- industry Analysis, and Market Size, Information Technology Implementation, and Analysis of potential advancements in an industry utilizing six reasoning caps are talked about. Issues like how to foster business contextual investigation utilizing industry examination and distribution of such industry investigation as contextual analyses are additionally talked about.  The significance of examination based organization investigation in business the board subject alongside different issues to be talked about during an organization examination. The benefits a lot of organization examination during the time spent learning the organization business are talked about. The method of ID and investigating different significant issues or issues dealt with by the supervisors of the association are is additionally talked about. Further, a structure for research contextual investigation dependent on organization examination is proposed.  The methodical technique of dissecting different issues dependent on different administration levels just as in view of different practical levels of the organization are talked about exhaustively. At last, the proposals to be recommended to the organization dependent on organization examination by the scientist are additionally laid out.  A definite organization examination will illuminate understudies, professionals, and specialists on explicit issues like (1) Starting new business dependent on creative thought, (2) Organizational and business techniques, (3) Issues and issues in practical regions, (4) Effective administration of innovation, (5) Handling any administration issues at any authoritative level, (6) Managing and extending independent venture and so forth The model contains the means of creating, drafting, and distributing organization examination in a straightforward, orderly way. We additionally suggest 117 CU IDOL SELF LEARNING MATERIAL (SLM)

the Company investigation as a class of contextual analysis strategy in administration research for the fledglings and sprouting analysts as a starting advance in insightful exploration. 4.7 KEYWORDS  Fundamental analysis:Fundamental analysis is a technique for deciding a stock's genuine or \"reasonable market\" esteem.  Company analysis:Company Analysis is the most common way of assessing an organization's productivity, profile, item and administrations.  Economic Analysis:A economic analysis is a cycle wherein entrepreneurs acquire an unmistakable image of the current monetary environment, as it identifies with their organization's capacity to flourish.  Industrial Analysis:Industry analysis is a market appraisal device utilized by organizations and investigators to comprehend the cutthroat elements of an industry.  Financial Analysis:Financial analysis is the most common way of assessing organizations, tasks, spending plans, and other money related exchanges to decide their exhibition. 4.8 LEARNING ACTIVITY 1. Identify the economic problems by analysing the economic analysis for a company. ___________________________________________________________________________ ___________________________________________________________________________ 2. Identify the business issues to be used while doing company analysis for any company. ___________________________________________________________________________ ___________________________________________________________________________ 4.9 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Define fundamental analysis? 2. Define economic analysis? 3. Define company analysis? 4. Define industry analysis? 118 CU IDOL SELF LEARNING MATERIAL (SLM)

5. What are the characteristics of company analysis? 119 Long Questions 1. What are the major problems in economy? 2. Explain the types of industry analysis. 3. What are the advantages of company analysis? 4. Explain Industry SWOC analysis. 5. What are the financial ratios based on financial statements? B. Multiple Choice Questions 1. What is the last step in fundamental analysis? a. Economic Analysis b. Industry Analysis c. Company Analysis d. Technical Analysis 2. Which is NOT a factor used in Fundamental Analysis? a. Company information b. Industry standards c. Expert opinions d. Economic factors 3. Which step is industry analysis in fundamental analysis, a. First step b. Second step c. Third step d. Fourth step 4. How a company situated relative to its competitors is referred to as? a. Market share b. Position c. Competitive advantage d. Brand leadership 5. What information is in the industry analysis? CU IDOL SELF LEARNING MATERIAL (SLM)

a. The industry analysis provides specific information on your industry as a whole and discusses your competitors, your ability to make money, and the barriers to entering the industry. b. The industry analysis focuses on the financial cost of starting your business, and it provides a detailed outline of the budget you will need to start. c. The industry analysis focuses on how you will market and sell your products. d. The industry analysis focuses on your organization and how you plan to operate. It gives details on your daily procedures and how your staff will perform their duties. Answers 1-d, 2-c, 3-b, 4-c, 5-a 4.10 REFERENCES References  Kumar,R. (2014): How technical and fundamental analysis can help your trading decisions, RKSV  Arora, R. (2002). Implementing KM–a balanced score card approach. Journal of knowledge management, 6(3), 240-249.  Beaumaster, S. (1999). Information Technology Implementation Issues: An Analysis. Textbooks  De Bono, E. (1999) Six Thinking Hats, Back Bay Books, New York .  Drake, P. P., & Fabozzi, F. J. (2010). Cash‐Flow Analysis. Handbook of Finance.  Porter, M. E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance. New York: The Free Press. Websites  http://dx.doi.org/10.5281/zenodo.584105  http://hbr.org/2008/01/the-five-competitive-forces-that-shape strategy  http://dx.doi.org/10.5281/ZENODO.198724. 120 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT – 5: TECHNICAL ANALYSIS STRUCTURE 5.0 Learning Objectives 5.1 Introduction 5.2 Tools of Technical Analysis 5.2.1 On-Balance Volume 5.2.2 Accumulation/Distribution Line 5.2.3 Average Directional Index 5.2.4 Aroon Indicator 5.2.5 MACD 5.2.6 Relative Strength Index 5.2.7 Stochastic Oscillator 5.3 Important Chart Formations or Price Patterns 5.4 Technical Indicators 5.5 Summary 5.6 Keywords 5.7 Learning Activity 5.8 Unit End Questions 5.9 References 5.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Explain the Tools of Technical Analysis.  Describe Important Chart Formations or Price Patterns.  Identify Technical Indicators. 5.1 INTRODUCTION Technical analysis is perhaps the main apparatuses in any broker's armoury and can assist with foreseeing the bearing and surprisingly level at which a cost will move, pattern changes, and considerably more. It’s a discipline that includes utilizing an assortment of 121 CU IDOL SELF LEARNING MATERIAL (SLM)

measurements, designs, trendlines, pointers and that's just the beginning, to settle on instructed and viable choices prior to entering or leaving a position or making a speculation. After that exchange has been made, specialized investigation can guarantee a broker is ready for any unexpected market turns and permit them to benefit however the market is moving. Technical analysis can be performed on a resource, customary, like wares, forex, stock lists, and the sky is the limit from there, just as computerized resources like Bitcoin and other digital forms of money. Technical analysis was first presented by Charles Dow during the 1800s, and the most conspicuous stock file, the Dow Jones Industrial, is named after the one who promoted the discipline. Since Dow, a few significant figures have since added to the examination and planned various apparatuses, markers, speculations, and practices. Other renowned specialized experts and dealers incorporate Jesse Livermore, who advocated the Livermore Accumulation Cylinder, very rich person financial backer George Soros, Steven Cohen, Ray Dalio, or the amazing merchant William Delbert Gann, who utilized crystal gazing to broadly and precisely time the tops and bottoms of market cycles. Here are the main realities about specialized examination. Brokers should zero in on these vital regions to figure out how to do specialized examination all alone and foster the insightful eye important to estimate value developments early. Utilizing a couple of essential standards and apparatuses, anybody can learn specialized investigation and instantly become a specialist themselves. Looking into the significance of the underneath terms will be a significant initial step. Pattern lines will be lines drawn on a value diagram of a resource, simply under or over the resource's nearby turn highs or lows, to demonstrate that cost is following a specific heading. These lines exist dependent on the normal situation of purchase or sell orders by market members, and the raising or bringing down of stop misfortune levels, or where regular benefit taking might happen. A pattern line regularly is needed to have various contacts to be considered legitimate, and merchants are prescribed to look for a break and close above or beneath pattern lines, prior to making any move. Notwithstanding, trendlines can likewise be utilized to help a dealer settle on a choice even before the trendline has been penetrated and is as of now not legitimate. These trendlines additionally address accommodating aides for where a merchant or financial backer might be keen on opening or leaving a situation to expand acquire and limit hazard. Perhaps the most supportive apparatuses a broker can utilize when performing specialized investigation is to look for specific examples to show up on value diagrams prior to taking a position. Utilizing pattern lines, specialized investigation can draw triangles and other mathematical shapes on value outlines. 122 CU IDOL SELF LEARNING MATERIAL (SLM)

Notwithstanding volume, other supportive markers have been created to add to a broker's arms stockpile and deal much more changes to decide future value developments before they happen. Regularly utilized markers incorporate the Stochastic Oscillator, Bollinger Bands, the Acceleration Deceleration pointer, and the MACD – the Moving Average Convergence Divergence marker. Technical analysis fluctuates enormously from major investigation;however, both are critical and accommodating apparatuses for brokers to utilize when considering putting or taking an exchange position any monetary resource. While Technical analysis includes diagrams, trendlines, and time spans, major examination ordinarily begins with a budget report and adopts a drawn-out strategy to dissecting a resource's possible exhibition. 5.2 TOOLS OF TECHNICAL ANALYSIS Technical analysis is an exchanging discipline utilized to assess ventures and recognize exchanging openings by examining factual patterns accumulated from exchanging action, for example, value development and volume. Technical analysis is an exchanging discipline utilized to assess ventures and recognize exchanging openings value patterns a lot seen on diagrams. Technical analysis accepts past exchanging action and value changes of a security can be significant markers of the security's future value developments. Technical analysis might be appeared differently in relation to key examination, which centres around an organization's financials as opposed to verifiable value examples or stock patterns. In contrast to basic examination, which endeavours to assess a security's worth dependent on business results like deals and profit, specialized investigation centres around the investigation of cost and volume. Specialized investigation apparatuses are utilized to examine the manners in which market interest for a security will influence changes in value, volume, and suggested unpredictability. Specialized examination is frequently used to create momentary exchanging signals from different diagramming instruments, however, can likewise assist with working on the assessment of a security's solidarity or shortcoming comparative with the more extensive market or one of its areas. This data assists examiners with further developing their general valuation gauge. Technical analysis can be utilized on any security with chronicled exchanging information. This incorporates stocks, fates, items, fixed-pay, monetary standards, and different protections. In this instructional exercise, we'll typically investigate stocks in our models, however, remember that these ideas can be applied to a security. Indeed, specialized 123 CU IDOL SELF LEARNING MATERIAL (SLM)

investigation is undeniably more pervasive in items and forex markets where merchants centre around momentary value developments. 5.2.1 On-Balance Volume First up, utilize the on-balance volume pointer (OBV) to quantify the positive and negative progression of volume in a security after some time. The pointer is a running absolute of up volume short down volume. Up volume is how much volume there is on a day when the cost revitalized. Down volume is the volume on a day when the value falls. Every day volume is added or deducted from the marker dependent on whether the cost went sequential. At the point when OBV is rising, it shows that purchasers will step in and push the cost higher. At the point when OBV is falling, the selling volume is dominating purchasing volume, which demonstrates lower costs. Along these lines, it behaves like a pattern affirmation device. On the off chance that cost and OBV are rising, that shows a continuation of the pattern. Merchants who use OBV likewise watch for disparity. This happens when the pointer and cost are veering off. On the off chance that the cost is rising however OBV is falling, that could demonstrate that the pattern isn't upheld by solid purchasers and could before long converse. 5.2.2 Accumulation/Distribution Line Quite possibly the most generally utilized markers to decide the cash stream all through a security is the aggregation/conveyance line (A/D line). It is like the on-balance volume pointer (OBV), however rather than thinking about just the end cost of the security for the period, it additionally considers the exchanging range for the period and where the nearby is corresponding to that reach. If a stock completioncloses to its high, the pointer gives volume more weight than if it closes close to the midpoint of its reach. The various computations implies that OBV will work better at times and A/D will work better in others. On the off chance that the pointer line is moving up, it shows purchasing interest, since the stock is shutting over the midpoint of the reach. This affirms an upswing. Then again, if A/D is falling, that implies the cost is completing in the lower part of its every day reach, and accordingly volume is viewed as negative. This affirms a downtrend. Brokers utilizing the A/D line likewise watch for difference. If the A/D beginnings falling while the cost is rising, this signals that the pattern is in a tough situation and could invert. Likewise, if the cost is moving lower and A/D beginnings rising, that could flag more exorbitant costs to come. 5.2.3 Average Directional Index 124 CU IDOL SELF LEARNING MATERIAL (SLM)

The average directional index (ADX) is a pattern pointer used to gauge the strength and force of a pattern. At the point when the ADX is over 40, the pattern is considered to have a ton of directional strength, either up or down, contingent upon the heading the cost is moving. At the point when the ADX pointer is under 20, the pattern is viewed as feeble or non- moving. The ADX is the fundamental line on the marker, normally hued dark. There are two extra lines that can be alternatively shown. These are DI+ and DI-. These lines are frequently hued red and green, individually. Each of the three lines cooperate to show the heading of the pattern just as the force of the pattern.  ADX over 20 and DI+ above DI-: That's an upswing.  ADX over 20 and DI-above DI+: That's a downtrend.  ADX under 20 is a frail pattern or going period, regularly connected with the DI-and DI+ quickly befuddling one another. 5.2.4 Aroon Indicator The Aroon oscillator is a specialized marker used to quantify whether a security is in a pattern, and more explicitly if the cost is hitting new highs or lows over the computation time frame (ordinarily 25). The marker can likewise be utilized to recognize when a recent fad is set to start. The Aroon marker contains two lines: an Aroon-up line and an Aroon-down line. At the point when the Aroon-up crosses over the Aroon-down, that is the primary indication of a potential pattern change. If the Aroon-up hits 100 and remains nearby that level while the Aroon-down stays almost zero, that is positive affirmation of an upswing. The opposite is additionally obvious. On the off chance that Aroon-down crosses above Aroon-up and stays close to 100, this demonstrates that the downtrend is in power. 5.2.5 MACD The moving average convergence divergence (MACD) pointer assists brokers with seeing the pattern bearing, just as the energy of that pattern. It likewise gives various exchange signals. At the point when the MACD is over nothing, the cost is in a vertical stage. If the MACD is under nothing, it has entered a negative period. The pointer is made from two lines: the MACD line and a sign line, which moves slower. At the point when MACD crosses beneath the sign line, it shows that the cost is falling. At the point when the MACD line crosses over the sign line, the cost is rising. Seeing which side of zero the pointer is on helps with figuring out which signs to follow. For instance, if the marker is over nothing, watch for the MACD to cross over the sign line to 125 CU IDOL SELF LEARNING MATERIAL (SLM)

purchase. If the MACD is under nothing, the MACD crossing beneath the sign line might give the sign to a potential short exchange. Figure 5.1: MACD 5.2.6 Relative Strength Index The relative strength index (RSI) has somewhere around three significant employments. The pointer moves somewhere in the range of nothing and 100, plotting late value gains versus ongoing value misfortunes. The RSI levels thusly help in measuring force and pattern strength. The most fundamental utilization of an RSI is as an overbought and oversold pointer. At the point when RSI moves over 70, the resource is considered overbought and could decrease. At the point when the RSI is under 30, the resource is oversold and could energize. Notwithstanding, making this supposition that is risky; subsequently, a few dealers trust that the marker will transcend 70 and afterward dip under prior to selling, or dip under 30 and afterward transcend prior to purchasing. Uniqueness is one more utilization of the RSI. At the point when the pointer is moving an unexpected way in comparison to the value, it shows that the current value pattern is debilitating and could before long converse. A third use for the RSI is backing and opposition levels. During upturn's, a stock will regularly hold over the 30 level and oftentimes arrive at 70 or above. At the point when a 126 CU IDOL SELF LEARNING MATERIAL (SLM)

stock is in a downtrend, the RSI will regularly hold under 70 and often arrive at 30 or beneath. 5.2.7 Stochastic Oscillator The stochastic oscillator is a pointer that actions the current value comparative with the value range over various periods. Plotted somewhere in the range of nothing and 100, the thought is that, when the pattern is up, the cost ought to make new highs. In a downtrend, the value tends to make new lows. The stochastic tracks whether this is occurring. The stochastic goes here and there moderately rapidly as it is uncommon at the cost to make constant highs, keeping the stochastic close to, 100 or consistent lows, keeping the stochastic almost zero. Consequently, the stochastic is regularly utilized as an overbought and oversold marker. Qualities over 80 are considered overbought, while levels under 20 are considered oversold. Consider the general value pattern when utilizing overbought and oversold levels. For instance, during an upturn, when the pointer dips under 20 and transcends it, that is conceivable purchase signal. Be that as it may, rallies over 80 are less weighty on the grounds that we hope to see the pointer to move to 80 or more routinely during an upswing. During a downtrend, search for the marker to move over 80 and afterward drop back underneath to flag a potential short exchange. The 20 level is less critical in a downtrend. 5.3 IMPORTANT CHART FORMATIONS OR PRICE PATTERNS The idea is like help and obstruction: At any one-time market members have one of three options - ‐ to purchase sell or stand to the side. As this proportion between the three gatherings change over the long run, so does the market interest for some random market. As this power changes, price does as well. This is completely founded on members (and gatherings of) assessments of where cost 'ought to' be. As the fight towards the 'right' market cost unfurls we see patterns a nd motions create which when consolidated structure recognizable examples. Specialized investigators endeavour to remove the feeling from contributing by exclusively depending on the examples found inside diagrams to exchange stocks, possibly giving them an edge over financial backers who are helpless to settling on exchange choices driven by dread and ravenousness. While these examples can be unsurprising, they aren't impenetrable. Head fakes, bull traps, and bombed breakdowns happen frequently and will in general shake merchants out of their positions just before the large move. Having an arrangement prior to entering a position can assist merchants with enduring rough cost developments, expanding their odds of riding an upturn and staying away from a downtrend. 127 CU IDOL SELF LEARNING MATERIAL (SLM)

An arrangement prior to entering an exchange incorporates characterizing a \"stop misfortune\" level where if the stock tumbles to a specific value point, you naturally sell, assume a little misfortune, and continue to the following exchanging opportunity. An arrangement would likewise incorporate a value target where the broker would hope to dump a few if not the entirety of the situation to take benefits. Here are seven of the top bullish graph designs that specialized experts use to purchase stocks. Double Bottom A Double Bottom is a bullish inversion design that depicts the fall, then, at that point bounce back, then, at that point fall, and afterward second bounce back of a stock. An effective twofold base example resembles a W. The example ordinarily denotes the finish of a downtrend, and the start of an upturn. It's by and large acknowledged that the first and second base ought to be inside a couple percent close to one another, if not at a similar level. A Double Bottom normally takes a few months to frame, and the farther separated the two bottoms, the almost certain the example will be effective. Figure 5.2: Double bottom Ascending Triangle An ascending triangle is a bullish continuation example and one of three triangle designs utilized in specialized investigation. 128 CU IDOL SELF LEARNING MATERIAL (SLM)

The exchanging arrangement is normally found in an upswing, shaped when a stock makes higher lows, and meets obstruction at a similar value level. Rising help and flat obstruction at last meet at the breakout level. This example makes a clear-cut arrangement for dealers. If the stock breaks above flat obstruction, dealers will purchase the stock, and set a stop misfortune request generally underneath the earlier opposition level. In any case, if the stock breaks beneath the rising help level, a short exchange sign would be produced. An ascending triangle is a high likelihood arrangement if the breakout happens on high volume and is more dependable than an even triangle design. Figure 5.3: Ascending triangle Cup and Handle A cup and handle are a bullish example that takes after a cup, framed by a basing design that commonly resembles a \"U,\" trailed by a handle that is shaped by a present moment down pattern. When a stock breaks out over the handle, a specialized investigator would purchase the stock. A merchant could create a deliberate move value focus by estimating the profundity of the cup in cost and add that add up to the cover of the cup. This example ordinarily broadens an upturn that is as of now set up. A U-formed cup is a higher likelihood set up than a V-moulded cup, however both can work. 129 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 5.4: Cup &handle Bull Flag A bullish flag example happens when a stock is in a solid upturn and looks like a banner with two primary parts: the shaft and the banner. This example is a bullish continuation design. Normally merchants would purchase the stock after it breaks over the present moment downtrend, or banner. A deliberate move value target can be gotten by estimating the distance of the post and adding it to the upper right corner of the banner. Bullish banners are transient examples that preferably last one to about a month, normally don't last more than about two months, and typically follow a sharp upturn. 130 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 5.5: Bullish flag Bull Pennant Like a bull banner, a bullish flag is a continuation design that comprises of a shaft and a balanced triangle, normally following an upswing in cost. Maybe than a time of sideways combination looking like a square shape, cost solidifies looking like a balanced triangle, making a progression of higher lows and lower highs. The upturn in the security will probably progress forward if the stock breaks out over the flag. In the outline model over, an illustration of a bombed breakdown, or a bear trap is shown. From the outset, the security breaks underneath the flag, flagging a breakdown and possibly lower costs ahead. However, at that point, it rapidly recuperates, breaks over the flag, and the upturn proceeds. A deliberate move target can be gotten by estimating the distance of the shaft and adding it to the summit of the flag triangle. Bullish Engulfing Candle A candle is a diagramming style that shows a security's initial value, shutting cost, intraday high, and intraday low. The \"body\" is addressed by the opening and shutting cost of a stock, and the \"tails\" are addressed by the intraday high and low. 131 CU IDOL SELF LEARNING MATERIAL (SLM)

A bullish immersing candle happens when the assortment of one exchanging meeting totally inundates the past meeting. This happens when the day's open is lower than the earlier day, and its nearby is higher than the earlier day. At the point when the body of a candle \"immerses\" earlier exchanging meetings, it flags those bulls are beginning to take control from the bears, and an inversion in pattern is plausible. The additional exchanging meetings that are immersed by a solitary candle, the more grounded the sign. In the diagram over, the bullish immersing candle inundates the past five exchanging meetings, implying the probability that stocks are on target to move higher. Figure 5.6: Bullish engulfing candle Inverse Head & Shoulders An inverse head-and-shoulders design is a lining design that regularly flags an inversion in a stock pursuing a negative direction. The backwards head and shoulders are identified with the negative head-and-shoulders design, which is a fixing design. The example takes its shape from a progression of three bottoms, with the subsequent base being the most profound. A neck area addresses opposition and is shaped by interfacing the three recuperation tops related with the three bottoms. At the point when the stock breaks over its neck area, that triggers a purchase signal for brokers, with a stop misfortune level being set close to the neck area breakout level. 132 CU IDOL SELF LEARNING MATERIAL (SLM)

A deliberate move value target can be acquired by estimating the separation from the head to the neck area and adding that to the neck area breakout level. A right shoulder that is higher than the left shoulder is a decent sign that an opposite head- and-shoulders example will bring about a reasonable breakout and inversion in pattern. Figure 5.7: Head &shoulder 5.4 TECHNICAL INDICATORS Technical indicators are heuristic or example-based signs created by the value, volume, as well as open interest of a security or agreement utilized by merchants who follow specialized investigation. By dissecting authentic information, specialized examiners use markers to anticipate future value developments. Instances of normal specialized pointers incorporate the Relative Strength Index (RSI), Money Flow Index (MFI), stochastics, moving normal combination uniqueness (MACD), and Bollinger Bands. Technical analysis is an exchanging discipline utilized to assess speculations and distinguish exchanging openings by examining measurable patterns accumulated from exchanging action, for example, value development and volume. In contrast to essential investigators, who endeavour to assess a security's inborn worth dependent on monetary or financial information, specialized experts centre around examples of value developments, exchanging signals, and different other scientific diagramming instruments to assess a security's solidarity or shortcoming. Technical indicators can be utilized on any security with chronicled exchanging information. This incorporates stocks, prospects, items, fixed-pay, monetary forms, and different protections. In this instructional exercise, we'll as a rule investigate stocks in our models, yet remember that these ideas can be applied to a security. Truth be told, specialized investigation is undeniably more predominant in products and forex markets, where brokers centre around momentary value developments. 133 CU IDOL SELF LEARNING MATERIAL (SLM)

Technical indicators, otherwise called \"specialized,\" are centred around authentic exchanging information, like value, volume, and open revenue, as opposed to the basics of a business, like income, income, or net revenues. Specialized markers are usually utilized by dynamic merchants, since they're intended to examine momentary value developments, yet long haul financial backers may likewise utilize specialized markers to recognize passage and leave focuses. Kinds of Technical indicators There are two basic types of technical indicators:  Overlays: Technical pointers that utilization similar scale as costs are plotted over the highest point of the costs on a stock graph. Models incorporate moving midpoints and Bollinger Bands  Oscillators: Technical markers that sway between a neighborhood least and most extreme are plotted above or under a value diagram. Models incorporate the stochastic oscillator, MACD, or RSI. Brokers regularly utilize a wide range of specialized markers while dissecting a security. With a great many various choices, merchants should pick the pointers that turn out best for them and really get to know how they work. Merchants may likewise consolidate specialized markers with more abstract types of specialized investigation, like seeing graph designs, to concoct exchange thoughts. Specialized pointers can likewise be fused into mechanized exchanging frameworks, given their quantitative nature. Common Technical Indicators Accumulation/Distribution Line (A/D Line) The Accumulation/Distribution Line is generally used to decide a security's cash stream. The A/D line centres just around the security's end cost and exchanging range for the period. A purchasing interest is shown when the marker line is moving up, while a falling pointer line shows a downtrend. On-Balance-Volume (OBV) On-Balance-Volume (OBV) applies to protections after some time, where it estimates the progression of exchanging volume. A rising OBV recommends the purchasers' ability to enter the market. On the other hand, a falling OBV proposes lower costs when selling volume outperforms purchasing volume. OBV is, along these lines, an affirmation pointer for a consistent pattern. Normal Direction pointer (ADX) Merchants and financial backers utilize the Average Direction marker (ADX) to gauge a pattern's solidarity and energy. A hearty heading strength, either up or down, is in the offing 134 CU IDOL SELF LEARNING MATERIAL (SLM)

when the ADX is over 40. A frail pattern or non-moving is interesting when the pointer is under 20. Moving Average Convergence Divergence (MACD) Merchants utilize Moving Average Convergence Divergence (MACD) to see the heading and energy of a pattern that gives diverse exchange signals. At the point when the cost is on a vertical stage, the MACD is over nothing, while a beneath zero MACD is reminiscent of negative period. Combining Multiple Technical Indicators Specialized investigators examine specialized markers freely to see potential changes in the conduct of every pointer. The underlying changes inside the different monetary business sectors render the conduct of some specialized pointers considerable. Consequently, there are overpowering blends of specialized markers. A few blends are perplexing to comprehend and work with, while different mixes demonstrate simple, particularly when loads are allocated to every pointer. An illustration of a specialized marker mix is the Commodex Trend Index. The Commodex Trend Index fuses other emotional types of specialized investigation, like hybrids of a quick and sluggish normal, liquidation, open revenue, and volume force. 5.5 SUMMARY  Unlike fundamental analysis, which endeavors to assess a security's worth dependent on business results like deals and income, specialized examination centers around the investigation of cost and volume. Specialized investigation instruments are utilized to examine the manners in which organic market for a security will influence changes in value, volume, and inferred unpredictability.  Technical analysis is regularly used to produce transient exchanging signals from different diagramming instruments, yet can likewise assist with working on the assessment of a security's solidarity or shortcoming comparative with the more extensive market or one of its areas. This data assists experts with further developing their general valuation gauge.  All of the examples clarified in this article are valuable specialized markers which can assist you with seeing how or why a resource's cost moved with a particular goal in mind – and what direction it may move later on. This is on the grounds that outline designs are fit for featuring spaces of help and opposition, which can assist a dealer with choosing whether they should open a long or short position; or regardless of whether they should finish off their open situations in case of a potential pattern inversion. 135 CU IDOL SELF LEARNING MATERIAL (SLM)

 Trading instances of graph designs (counting those above and on different sites and books) are typically common cases. The design is to show the ideal type of graph designs working adequately. This is the reason the objective goals appear to be mystically accomplished each time.  Technical analysis examine specialized pointers freely to see potential changes in the conduct of every marker. The primary changes inside the different monetary business sectors render the conduct of some specialized pointers considerable.  For this explanation, there are overpowering mixes of specialized pointers. A few mixes are complicated to comprehend and work with, while different mixes demonstrate simple, particularly when loads are appointed to every pointer.  An illustration of a specialized marker blend is the Commodex Trend Index. The Commodex Trend Index consolidates other abstract types of specialized investigation, like hybrids of a quick and sluggish normal, liquidation, open revenue, and volume energy.  The objective of each momentary merchant is to decide the heading of a given resource's force and to endeavor to benefit from it. There have been many specialized markers and oscillators produced for this particular reason, and this slideshow has given a modest bunch that you can begin testing. Utilize the markers to foster new methodologies or consider consolidating them into your present systems. To figure out which ones to utilize, give them a shot in a demo account. Pick the ones you like the most, and leave the rest. 5.6 KEYWORDS  Technical Analysis:technical analysis is an examination system for estimating the bearing of costs through the investigation of past market information, basically cost and volume.  Trade:Trade includes the exchange of labor and products starting with one individual or substance then onto the next, frequently in return for cash.  Pattern:An pattern is a consistency on the planet, in human-made plan, or in theoretical thoughts. Thusly, the components of an example rehash in an anticipated way.  Technical indicators:technical analysisis an examination strategy for anticipating the bearing of costs through the investigation of past market information, principally cost and volume.  Stochastic Oscillator:A stochastic oscillator is a famous specialized pointer for creating overbought and oversold signals. 136 CU IDOL SELF LEARNING MATERIAL (SLM)

5.7 LEARNING ACTIVITY 1. Identify the tools of technical analysis of any financial company. ___________________________________________________________________________ ___________________________________________________________________________ 2. Prepare the price patterns for technical analysis for any company by collecting data. ___________________________________________________________________________ _________________________________________________________________________ __ 5.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Which is the best technical analysis tool? 2. What are the methods of technical analysis? 3. What are the 4 types of indicators? 4. What are the most reliable technical indicators? 5. What are the most profitable chart patterns? Long Questions 1. What are technical indicators strategies? 2. What are the different technical indicators? 3. Which candlestick pattern is most reliable? 4. How many types of chart patterns are there? 5. How are technical indicators used? B. Multiple Choice Questions 1. Which is the oldest approach to common stock selection? a. fundamental analysis b. technical analysis c. random walk analysis d. value analysis 2. What happened when technical analysis reflects the idea that stock prices? 137 a. move upward over time. CU IDOL SELF LEARNING MATERIAL (SLM)

b. move inversely over time. c. move in trends. d. move randomly. 3. Which is market data includingall the following except: a. number of shares traded. b. Earnings c. level of market indices. d. stock price. 4. What are the two primary tools of a technical analyst? a. level of the market index and volume. b. economic indicators and level of the market index. c. price and volume. d. price and technical indicators. 5. What does Conventional technical analysis emphasize? a. only the aggregate stock market. b. either the aggregate stock market or individual stocks. c. only individual stocks. d. only corporate securities. Answers 1-b, 2-c, 3-b, 4-c, 5-b 5.9 REFERENCES References  Aby, Carroll D. J. (1996). Point & Figure Charting: The Complete Guide. Greenville, SC: Traders Press, Inc.  Achelis, Steven B. (2001). Technical Analysis from A to Z. New York, NY: McGraw-Hill.  Ahamed, Liaquat. (2009). Lords of Finance: The Bankers Who Broke the World. New York, NY: Penguin. Textbooks 138 CU IDOL SELF LEARNING MATERIAL (SLM)

 Alexander, S. (1961). “Price Movements in Speculative Markets: Trends or Random Walks.” Industrial Management Review 2: 7–26.  Allen, Fredrick Lewis. (2000). Only Yesterday. New York, NY: First Perennial Classics.  Nison, Steve. (1994). Beyond Candlesticks. New York, NY:John Wiley & Sons. Websites  https://corporatefinanceinstitute.com/resources/knowledge/trading- investing/technical-indicator/  https://www.businessinsider.in/stock-market/news/here-are-7-of-the-top-chart- patterns-used-by-technical-analysts-to-buy- stocks/slidelist/76092987.cms#slideid=76093113  https://www.tradingsetupsreview.com/10-chart-patterns-price-action-trading/ 139 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT – 6: EFFICIENT MARKET HYPOTHESIS STRUCTURE 6.0 Learning Objectives 6.1 Introduction 6.2 Concept of Efficient Market 6.3 Implications for Security Analysis and Portfolio Management 6.3.1 Weak Form of Efficiency 6.3.2 Semi Strong Form of Efficiency 6.3.3 Strong Form of Efficiency 6.4 Summary 6.5 Keywords 6.6 Learning Activity 6.7 Unit End Questions 6.8 References 6.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe the Concept of Efficient Market.  Explain Implications for Security Analysis and Portfolio Management.  Define Security Analysis and Portfolio Management. 6.1 INTRODUCTION The efficient market hypothesis (EMH) has been under scholarly and proficient con- sideration for a long time. Its wide examination has been driven by numerous reasons. As a matter of first importance, a danger weighted return is relied upon to be higher in wasteful business sectors. Hence, research in the field of financial exchange effectiveness is significant for both private and institutional financial backers. Exhaustive comprehension of market proficiency is likewise urgent for corporate chiefs whose choices and activities decide apparent worth of companies. The EMH may likewise be utilized to demonstrate the advancement of the financial exchange being significant for securities exchange administrators and bosses. At long last, the EMH is a basic suspicion in different monetary 140 CU IDOL SELF LEARNING MATERIAL (SLM)

models. Lately, the scholarly and expert centre has moved to the conduct finance hypothesis, yet it doesn't dispense with the usefulness of the EMH. The point of this article is to survey the situation with the EMH with the accentuation on the Baltic securities exchange. The issue of worldwide exploration on securities exchange proficiency has been tended to by a lot of researchers. The absolute first thoughts and discoveries in the field date back to the nineteenth century. Those thoughts were later steadily evolved and acquired fame until they arrived at a top in the eighties. Notwithstanding, the Baltic financial exchange and its effectiveness have a lot more limited history. The market comes up short on a thorough exploration as a great deal of past works were based on deluding presumptions. Efficient market hypothesis as the name proposes is a hypothesis which says that financial exchanges are proficient, and the protections costs completely mirror all the data that is accessible. This hypothesis was created by Eugene Fama because of his Ph.D. postulation in the year 1960.This hypothesis says that the market members will respond to all the accessible data when it opens to them. The data about a stock that is accessible to one financial backer will be accessible to other people and in this manner every one of the financial backers respond appropriately. As indicated by this hypothesis all the accessible data about a stock is reflected in that stock's cost thusly nobody gets the opportunity to beat the market. In this market each financial backer has the admittance to same data, and they contend effectively. As indicated by Fama (1970), productive business sectors are those business sectors where \"there are enormous quantities of reasonable benefit augments effectively contending, with each attempting to anticipate future market upsides of individual protections, and where significant current data is unreservedly accessible to all members\". The Efficient market theory underscores that it would be hard for a financial backer to routinely beat the market which uncovers the consolidated choice of bunches of members in an environment viewed as by many fighting financial backers who have comparative destinations and admittance to a similar data. A proficient market is the market which can do quickly taking mindless sort of new data or any reality or information identifying with the economy, an industry or it very well might be identifying with the organization and afterward such data is correctly seized in the cost of the protections. In this kind of business sectors members can't anticipate acquiring anything else than a reasonable return for the dangers embraced. In a productive market it is expected that as and when any data goes to the information on financial backers it will be rapidly and precisely evaluated by the joined activities of millions of financial backers and subsequently will be promptly reflected in the cost of the stock. For instance, guess an organization declares an expansion in their yearly benefit. Presently this data will be immediately surveyed by the financial backers. A definitive impact of this productivity is that whether a financial backer purchases this specific organization's offers previously, after or during when such declaration regarding organization's benefit were made or regardless of whether another stock is bought, just a 141 CU IDOL SELF LEARNING MATERIAL (SLM)

reasonable market pace of return can be anticipated on these offers which will be sufficient to coordinate with the danger of purchasing or holding such organization's security. Likewise for instance if a shared asset organizations chief can expand the asset's return after exchange cost, then Efficient market theory states that the expense of exchange will become equivalent to the benefit acquired by such exchange and examination cost. Hence nobody in the market can outflank or acquire preferred aftereffects of contributing over others. 6.2 CONCEPT OF EFFICIENT MARKET An efficient market is where the market costs of monetary instruments like stocks mirror all data that is accessible. It additionally changes quickly to any new data that might be unveiled. If this hypothesis remains constant, it is unthinkable for dealers to reliably beat a market, as the value developments of the resources can't be anticipated effectively. An effective market hypothesis is yet a significant piece of present-day finance. Its exact evidence is equivocal;however, the actual idea is sound. The EMH might be applied to capital business sectors. The current capital market proficiency is fundamentally connected with the expense productivity, while different business sectors are regularly examined according to the viewpoint of the designation effectiveness. By and large, an effective securities exchange is a market where stock costs reflect central data about organizations. In such a case, the market worth of the organization changes in a manner basically the same as that of the inherent worth of an organization. These progressions are not consistent with the esteem and don't limit from exchanging monetary resources. The distinctions in financial backer mindfulness and lopsided exchange costs forestall central changes in worth to be totally and promptly reflected in market costs. Be that as it may, in case advertises are proficient, changes in resource costs can't be reflected in calculations, while overabundance return is acquired as a triumph instead of a result of a right forecast. Allen, Brealey and Myers characterized a market as productive when it was impractical to procure a return higher than the market return. At the end of the day, the worth of offers mirrors the reasonable worth of the organization and is equivalent to the future incomes limited by an elective expense of capital. For the most part, the embodiment of a productive market is based on two columns: 1) in effective business sectors, accessible data is as of now consolidated in stock costs; 2) in proficient business sectors, financial backers cannot acquire a danger weighted abundance return. Considering the data reflected in market costs, market productivity is normally separated into three levels. Frail, semi-solid, and solid types of market proficiency are recognized. In pitifully effective financial exchanges, the current stock cost mirrors all data identified with the stock value changes before. Such data remembers information for past costs, exchanging volume, and so on in view of the previously mentioned data, it turns out to be then difficult to make abundance benefit in a securities exchange. Subsequently, if the market is feebly, 142 CU IDOL SELF LEARNING MATERIAL (SLM)

productive, specialized examination yields no abundance return. In semi-unequivocally effective business sectors, current stock costs reflect data about authentic costs as well as all current freely accessible data, e. g., declarations of acquisitions, profit pay-outs, changes in bookkeeping strategy, and so forth at last, in unequivocally effective business sectors, current stock costs mirror all conceivable data which doesn't really need to be public. The effective market speculation is firmly identified with other monetary models and assumptions. As a matter of first importance, total or fractional sanity of market members is fundamental for its productivity. It is normal concurred that not all market members are judicious, bringing about piece of exchanges being not founded on a reasonable examination. Then again, the exchanges of irrational financial backers are irregular, which ought not impact the stock cost. For example, if an offer cost is emphatically influenced by an irregular buy, it will unfavourably be contrarily influenced by an arbitrary deal, because the likelihood of arbitrary buy and irregular deal is something similar. As far as exchanging strategies, financial backers can be gathered into educated financial backers and clamour dealers. Educated financial backers depend on key examination while clamour dealers don't consider all accessible data when exchanging. The inborn worth financial backers ground their exchanging choices on an essential examination, while brokers utilize specialized investigation, and mechanical merchants exercise exchanges as per rules. Features of an Efficient Market The features of an efficient market are as follows –  In a genuinely efficient market, the costs of protections mirror all applicable data about the resource, including chronicled information like value, volume, and that's only the tip of the iceberg.  An effective market permits financial backers a chance to outflank.  With the divulgence of new data, the productivity of the market increments, lessening the chances for abundance returns and exchange.  It's critical to take note of that market proficiency doesn't propose that the cost of safety is its actual inborn worth. It just expresses that market members can't anticipate the future cost of a resource on a predictable premise. 6.3 IMPLICATIONS FOR SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT  The effective market theory depends on specific suppositions. Coming up next are the principal presumptions for a market to be productive:  There are enormous quantities of purchasers or financial backers for the security 143 CU IDOL SELF LEARNING MATERIAL (SLM)

 There are huge quantities of merchants for the security  These huge number of financial backer’s exchange protections for benefit.  All financial backers act soundly.  If a few financial backers are not level-headed then they drop the silly conduct of one another.  New data goes to the market haphazardly. This data is costless and accessible to all the market members.  Prices of protections change rapidly to the recently accessible data.  Stock costs ought to mirror all the accessible data. Forms of efficient market hypothesis It just expresses that the profits to a financial backer from putting resources into a protection in a market which is exceptionally aggressive will be reasonable on a normal. Eugene Fama arranged the market into three classes based on the sort of data that is accessible to the financial backers in a market. There can be three arrangements of data that can be accessible to financial backers and market members. These are as per the following:  Information about past costs of the protections.  Information that is made accessible to public everywhere enjoys declarations by organization about its monetary outcome and so forth  Information that isn't accessible to public everywhere for example. insider data. Based on the accessibility of this data or the premise of retention of such data in the market the business sectors can be grouped into three types of productivity. Coming up next are the three types of proficiency given by productive market speculation:  Weak type of efficiency  Semi solid type of efficiency  Strong type of efficiency. 6.3.1 Weak Form of Efficiency One of the types of efficiency is the frail type of effectiveness. In this type of market just one bunch of data that is data about verifiable costs of offers is freely accessible. It is affirmed that in this type of market it is accepted that any development in future costs of offers can't be anticipated from the past costs of offers. Any turn of events or changes in cost is alluded as irregular walk. In short, this frail type of proficiency says that future costs of offers can't be anticipated from the past costs of offers. In other this type of market thoroughly dismisses the job of the investigation of past costs and their conduct as the device for anticipating the future worth of offer costs. Assuming a market has powerless structure productivity, it infers that 144 CU IDOL SELF LEARNING MATERIAL (SLM)

there is no relationship between succeeding costs. So, overabundance gets back from putting resources into any offer can't continually be accomplished through the investigation of the past value developments of that offer. This implies that there is no job of specialized investigation and investigation of value volume diagram to know the example of conduct of costs as it is developed on the investigation of past value designs regardless of any further foundation data. So feeble type of productive market theory this speculation accepts that the paces of return available ought to be free and the previous paces of return have no impact on the future rates. The exact proof for these types of market productivity, and accordingly against the worth of specialized investigation, is very impressive and very consistent. In the wake of considering exchange expenses of exploring and of exchanging protections it is truly challenging to assemble cash on uninhibitedly and freely accessible data like the previous movement of stock costs. 6.3.2 Semi Strong Form of Efficiency The following type of efficiency is the semi-solid structure. In this type of proficient market speculation, it is accepted that a market is effective if all the significant and transparently or openly accessible data is quickly reflected in the market cost of the protections. This is known as the semi-solid type of the productive market speculation. In semi solid type of market protections costs are thought to be completely mirroring the all the freely accessible data. In this type of market costs of protections not just mirror the data identifying with past value conduct or information yet additionally the data identifying with the benefits made by the organization, any declaration identifying with the profits paid or to be paid by the organization, any data identifying with the issue of extra offers or the right offers by the organization, any data in regards to the consolidation of the organization, procurement or mixture of the organization, the monetary circumstance of organization's rivals, assumption about different financial factors, for example, swelling work and so on In this type of market a couple of financial backers may acquire benefit in the short run because of accessibility of insider data to them. Semi solid type of productivity of a market is very straightforward and decipher. It says that the market will rapidly process the distribution of all the pertinent new data by making the costs of an offer move to another balance level. At whatever point any new data arrives at the public they respond to it causing an adjustment of interest and supply of offers. This new degree of harmony will mirror the adjustment of organic market of a security because of accessibility or the rise of that data. This type of market productivity has been demonstrated with experimental confirmations moreover. This semi solid type of productivity has been tried and it has been demonstrated my numerous investigators. One issue with the semi-solid structure lies with the distinguishing proof of 'pertinent openly accessible data’. 6.3.3 Strong Form of Efficiency The solid type of market efficiency expresses that the stock costs incorporate all kind of data that is realistic with regards to the stock including general society just as private data. Along 145 CU IDOL SELF LEARNING MATERIAL (SLM)

these lines, on the off chance that a market is solid structure productive, even the brokers with insider data can't exploit their data to make a greater number of benefits than different financial backers with no private data in the securities exchange. As in this type of productive portion of the overall industry costs a wide range of data whether public or private or some insider data so no financial backer gets an opportunity to procure any sort of abundance returns. In such a type of market there are no lawful hindrances for the private data becoming public news. A wide range of insider data are reflected rapidly in the offer costs. To test for solid structure efficiency, a market needs to exist where financial backers can't over and over acquire excess returns throughout a drawn-out timeframe. however,if a few assets administrators are on numerous occasions seen to beat the market, no refusal even of solid structure effectiveness follows–with countless asset chiefs around the world, even an ordinary conveyance of profits (as productivity predicts) ought to be normal to create a couple dozen \"star\" entertainers on the lookout. Figure 6.1: Efficient market hypothesis Implications  The efficient market theory has a lot of verifiable help that is in its acceptable turn and supports it, yet it is additionally not past questions.  Stock picking takes, in awesome of cases, a great deal of work to be simply unconvincingly productive. So, there are better things that should be possible with our accessible assets. 146 CU IDOL SELF LEARNING MATERIAL (SLM)

 If somebody takes the administrations of experts to pick great protections for them then likewise there will be no advantage as gains will be counterbalanced by the measure of expense to be paid for such administrations of the experts.  It is preposterous to expect to discover a 'definite win' system simply by taking a gander at data about past costs of protections or any diagrams identifying with past value examples of safety.  In the efficient market speculation, we take a gander at monetary benefit instead of bookkeeping benefit. Financial benefit implies net benefit less freedom cost. Along these lines cost incorporates the expense of get-together data and any remaining sorts of cost identified with it.  It invalidates the utilization of specialized examination and crucial investigation to create speculation returns.  No Investor of a proficient market can make returns pretty much than to the market returns 6.4 SUMMARY  The idea of effective market could be parted into two sections. To start with, stock returns are ran¬dom in an effective market. Second, market members can't acquire overabundance benefit in such a market. Since its origin, the EMH had gotten a lot of consideration and was viewed as the practically essential truth in the eighties. Be that as it may, from that point forward, many examinations have closed market shortcoming, and the EMH is currently seen as truth on relative terms all things considered. The EMH neglects to clarify abundance unpredictability in stock costs, financial backer overcompensation, irregularity in returns, resource bubbles, and so on Then again, stock returns are regularly discovered arbitrary, and financial backers are not prepared to do continually acquiring an overabundance return.  Research work on market effectiveness in the Baltic nations has not yet been compre- hensive. Studies for the most part affirm market shortcoming to be reliant upon market size and development. Strangely, a few creators decided to investigate the semi-solid type of market productivity without having a solid proof on powerless structure effectiveness. This was a mis¬leading shift in the investigation, which ought not be continued in future examination.  Studies on the frail type of market productivity in creating markets may initially con- sider the liquidity investigation as it assists with separating the market into unmistakable portions. Also, measurable techniques to test haphazardness in stock returns might be applied and freedoms to acquire overabundance benefit might be investigated by running backtesting of specialized examination procedures. 147 CU IDOL SELF LEARNING MATERIAL (SLM)

 The intention of the multitude of financial backers in the market is to procure the most extreme returns conceivable from the market. Everybody attempts to beat the market and make gains for himself. In any case, as per productive market theory all the \"venture masters\", methodologies neglect to proceed as determined. The solid rivalry among financial backers makes a productive market where costs can change hurriedly to any sort of new data that is accessible. Consequently on a normal, each financial backer gets a reasonable get that give once again to them the time worth of cash and the dangers that they bear for holding such protections.  No one gets any sum more and any sum not exactly other. As such, in the wake of bearing danger and exchange costs into account, dynamic security the executives are a losing suggestion. This hypothesis of productive market speculation is likewise upheld by numerous exact confirmations too.  Many of individuals from the market additionally accept that the business sectors are exceptionally proficient. This productive market theory tells around three types of proficient market. There are the powerless type of market, semi solid type of market and solid type of market. These types of market are separated based on the kind of data reflected in the offer costs.  The powerless type of market mirrors the previous costs. In semi solid market , the stock costs reflect past costs just as publically accessible data and the solid from of market is the one where offer costs reflects data identifying with past costs , publically accessible data just as insider data. Subsequently eventually this hypothesis attests that no financial backer can acquire extra than another financial backer in the securities exchange .However this hypothesis has been gone against by numerous other financial exchange investigators moreover. Yet it is a significant hypothesis to be examined. 6.5 KEYWORDS  Market Efficiency:Market efficiency alludes to how much market costs mirror all accessible, significant data.  Random Walk:an irregular walk is a numerical item, known as a stochastic or arbitrary interaction, that depicts a way that comprises of a progression of irregular strides on some numerical space like the whole numbers.  Stock Returns:Stock Return is the computation of percent pace of return over an estimation period.  Investor Rationality:An rational investorl backer, or judicious conduct, alludes to the activity or dynamic standards of an individual so the ideal degree of advantage is reached. 148 CU IDOL SELF LEARNING MATERIAL (SLM)

 Capital Market:A capital market is a monetary market wherein long haul obligation or value sponsored protections are purchased and sold, rather than a currency market where momentary obligation is purchased and sold. 6.6 LEARNING ACTIVITY 1. Explain the Implications for Security Analysis for any company by collecting data. ___________________________________________________________________________ ___________________________________________________________________________ 2. Analyse the portfolio management of any banking firm. ___________________________________________________________________________ ___________________________________________________________________________ 6.7 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is the concept of market efficiency? 2. What are the features of an efficient market? 3. How do you achieve market efficiency? 4. What is portfolio management in security analysis? 5. What is portfolio management and its objectives? Long Questions 1. What are the four steps in the portfolio management process? 2. What are the 7 steps of portfolio process? 3. What are the effects of combining securities in portfolio analysis? 4. What are the types of market efficiency? 5. What is a violation of market efficiency? B. Multiple Choice Questions 1. Which concerns the central issue of efficient markets? a. Regulations b. Information c. Participants d. Structure 149 CU IDOL SELF LEARNING MATERIAL (SLM)

2. Which new information is received about a security if a market is inefficient? a. Nothing will happen. b. The stock price will fall at first and then later rise. c. There will be a lag in the adjustment of the stock price d. There will be negative demand for the stock. 3. What happened if the weak form of efficient markets holds? a. Technical analysis is useless. b. Stock prices reflect all information contained in past prices. c. Stock prices follow a random walk. d. All of these 4. Which is putting money at risk by betting on an uncertain outcome with the hope that you might win money? a. Investment b. Gambling c. Financing d. Portfolio 5. Which is a method used to evaluate the worth of security by studying the financial data of the issues? a. Security Analysis b. Fundamental analysis c. Performance Analysis d. None of these Answers 1-b, 2-c, 3-d, 4-b, 5-b 6.8 REFERENCES References  Lo, A., MacKinlay, A. (1988). Stock market prices do not follow random walks: evidence from a simple specification test. Review of Financial Studies, Vol. 1, issue. 1, p. 41–66. 150 CU IDOL SELF LEARNING MATERIAL (SLM)