Question 1 Answer: A: in a graph I will short sell at 180, 177 and 175 because after this price, graph is going down. Moreover, I will set up limit order at 140 which above the line of support. Moreover I will use Stop limited order to reduce risk. B: Fundament analysis defined as the analysis of financial report to analyze the health and performance of company to take any decision like investing in company. Here is the list of some basic factors, which I will include, in my trading strategy based on this fundament analysis. Price to earning ratio: This is the ratio of price of stock to its earning per share, used to value company and compare with peer companies. Debt to equity ratio: this ratio is used to see whether company is leveraged or not. In simple word, how much company has taken loan relative to equity. Net debt to EBIIDA: this ratio measure the ability of company to pay its debt. Debt to asset ratio: this ratio tell us about how much assets are financed with debt. To make Quantitative strategy, I will evaluate the company against its peers and then its evaluation of past performance. All above ratio are inputs for me to evaluate company with its peer. I will compere all there ratio with peer’s ratio to coma to know which company is performing better. Then I will see the performance of company by comparing its growth rate, dividend payout, profit margin, revenue growth and earning per share. Question 3 Answer: Economic Sector Sorting There are 36 sector in stock market of Pakistan. Here is the list of some sectors of according to ascending order with respect to their contribution to economy. On the top of list, Commercial Bank sector is largest contributor in our economy with market capitalization of 962 billion worth according to PSX on 05-June-2023. Along with this, the second largest contributor in economy is Oil and gas exploration companies sector, which contribute approximately 828 billion worth. On the third position is Fertilizer, which contributes 488 billion worth to our economy. On the forth and fifth position are Cement and Food and Personal Care Product, which contributes 442 billion and 424 billion in our economy. Capitalization indirectly tell us about the contribution to economy because the more there is capitalization of company the more it has used amount to expand and run a company and this amount is an investment for our country therefore rationale behind to rank company according to market capitalization is as same as contribution to economy. I have choose Oil and Gas exploration companies sector, Fertilizer and Cement sector for my portfolio. First of all these are the largest contributor to our economy as well as their companies’ stock are actively trading today. Moreover, stocks of these companies are showing bullish trend, and it is expected to see upward movement in these stocks due “Budget”, increase in prices of oil and increasing demand of fertilizer in summer and increasing demand of cement that is why I have chosen these sector to trade. In these sectors, I have chosen the following share as the technical analysis of these companies suggests to buy these stocks. Fauji Fertilizer Company In the graph, we can see that price is moving upwared after hitting the support and SMA 20 and SMA 50 has been cross over each other to indicate the upward movement to be continued in near future. Overall trend is also showing right trigle. Next is Mari Petroleum Company In technical analysis of graphs show right triangle trend line and up-down movement which indicate the most of its chances to move straight within this right triangle trend line. However, it is also be noted that as price reaches at the end of right triangle it is highly expected to move upward. As prices of petrol is expected to increase due to Budget, IFM and oil price increase in international market. From sector Cement, I have chosen DG cement as its all SMAs (20, 50 and 100) are moving in upward direction. These SMAs are strongly suggesting that price will keep its upward movement in their near future. Moreover, it is also showing that trend pattern of this stock mostly make movement between support and resistance and currently it is moving toward resistance after touching support line. I bought these stocks in my portfolio and this is showing negative return as fee has been deducted. The graph below shows the execution of stock buying. Portfolio Returns Summary After execution of stocks, I have return from Mari Petroleum of -0.07%, which is due to brokerage fee, and most of my brokerage fee has been covered. Then the return of DG Cement, which is also negative 0.17%. Similarly, Fauji Fertilizer contributes 0.12% negative returns. Overall, 880 rupee is the loss of my portfolio, which is very negligible because I have paid approximately 1800 rupee brokerage fee, and recovered most of my fee. Moreover, during the execution of time market was about to close so investor waited for tomorrow and does not continued to keep bullish trend in market. Next morning is very important as stocks are expected to continue their trend according to Technical analysis.
