TECHNICAL ANALYSIS OF SELECTED PHARMACEUTICAL COMPANIES OF INDIA

Technical analysis is the study of forecasting stock prices for future and is aimed to generate returns. Financial analyst decides the time of entry and exit in the security market. Technical analysis relates to factors affecting the supply and demand of stocks. It helps us in understanding the true value of shares and in knowing whether the shares are undervalued or overvalued. Technical analysis market indicators would help the investor to identify major market turning points. Although the academicians were uncertain about the practicality of technical analysis, this method was widely used by practitioners in the industry owing to the increasing applicability in forecasting price trends. Many researchers point towards the importance of technical analysis coupled with fundamental analysis for the industry and the company in predicting price trends effectively. The current research study was carried out on the top 6 pharmaceutical companies stock prices (based on market capitalization) taken on a daily basis for the last five years (April 2010 to March 2015). Moving Average Convergence and Divergence (MACD), Rate of Change (ROC) and Relative Strength Index (RSI) were some of the technical tools used for analyzing daily closing price and Sensex (BSE 100). Mix trends were obtained from the study. Results suggest that investing in the current period for long-term purpose requires fundamental analysis along with technical analysis.