Stock Market Analysis: Introduction to Data Science

STOCK MARKET ANALYSIS
SPECIAL TOPIC - INTRODUCTION TO DATA SCIENCE
ISCG 8026
SUBMITTED BY
Rajavarman Ariyaputhiran Ponnumani : 1500059

Table of Contents
Introduction.................................................................................................................................................2
Research objectives.....................................................................................................................................3
Significance of the research.........................................................................................................................4
Literature review.........................................................................................................................................5
Interval........................................................................................................................................................6
Tick prices....................................................................................................................................................6
High price................................................................................................................................................6
Low price.................................................................................................................................................6
Open price...............................................................................................................................................7
Close price...............................................................................................................................................7
Trend.......................................................................................................................................................7
Research methodology................................................................................................................................9
The simple moving average (SMA)..........................................................................................................9
Relative Strength Index (RSI).................................................................................................................10
Rate of Change (ROC)............................................................................................................................10
Correlation coefficient...........................................................................................................................11
Regression analysis................................................................................................................................12
Data presentation..................................................................................................................................12
Data analysis..........................................................................................................................................12
Results.......................................................................................................................................................13
Univariate analysis on stock market for SBI...........................................................................................13
Findings from simple moving average...............................................................................................14
Bivariate analysis...................................................................................................................................14
Correlation.........................................................................................................................................14
Regression.........................................................................................................................................14
Limitations.................................................................................................................................................15
Conclusion.................................................................................................................................................16
References.................................................................................................................................................17

Introduction
The stock market has become a major source of great economic investment. The stock market
has become a vital part of the free market economy [1]. Several indicators are used to assess
stock market performance. Millions of investors make decisions every day that impact on the
stock market.
Returns from such equity investments are subject to vary thanks to the movement of share costs,
that rely on varied factors that might be internal or firm specific like earnings per share,
dividends and value or external factors like rate, Gross Domestic Product (GDP), inflation,
government rules and exchange Rate (FOREX).
The indicators of performance of a stock market include capitalization, liquidity and stock prices.
Capitalization indicates the total market value of all shares that are registered as well as traded at
the stock exchange. It is a product of the prevailing stock prices and number of shares issued by
quoted companies. The capitalization therefore moves with changes in share prices. Liquidity
refers to the extent to which the stock market allows trading of securities at stable prices whereas
stock prices refer to the prevailing market prices for securities driven by the forces of supply and
demand [2].
Stock analysis is an important aspect for informing decisions on stock market investments. Stock
analysis as defined by Roberts H.V. [3] refers to the evaluation of a particular trading instrument.
Stock analysis attempts to determine the future trends of stock market instruments like share
price. Investors depend on stock market analysis in order to make informed judgments on
whether and/or what amounts of their income to invest in the stock market [4].

Transitions between rising and falling trends in stock markets are normally represented by price
patterns [5]. It is important to understand price movements in the stock market. Stock market
investments are determined by future price movements based on past and present price
movements.
The study sought to establish the determinants of stock market performance and used stock
prices as the indicator to be examined.
For cases of this research, we studied the trends of the State Bank of India (SBI) share price.
Trends in the share price movements were observed and recorded for purposes of making future
price forecasts.
Research objectives
The main aim of this research was to identify trends in stock share prices in order to provide
informed advice to stock markets.
The performance of the securities market in any country could be a robust indicator of general
economic performance and is an important part of the economy. With the introduction of free
and open economic policies and advanced technologies, investors are obtaining easy accessibility
to security markets round the world. The very fact that securities market indices became a sign of
the wellbeing of the economy of a rustic indicates the importance of stock markets. This
increasing significance of the securities market has actuated the formulation of the many theories
to explain the operating of the stock markets.
For purposes of this research, we shall therefore aim to analyze the effect of past and current
share prices on future stock share prices. Price analysis will help depict the overall stock market