The data pertains to the share prices of A Ltd. is as follows: Days Date Open Price (₹) High Price (₹) Low Price (₹) Close Price (₹) 1 14-12-20xx…

CA Final · Advanced Financial Management · RTP · November 2026
The data pertains to the share prices of A Ltd. is as follows: Days Date Open Price (₹) High Price (₹) Low Price (₹) Close Price (₹) 1 14-12-20xx 334.71 335.14 334.38 334.54 2 15-12-20xx 334.54 334.78 334.28 334.35 3 16-12-20xx 334.14 334.40 333.98 334.32 4 17-12-20xx 334.35 334.46 333.78 333.83 5 18-12-20xx 333.73 333.80 333.52 333.71 6 21-12-20xx 333.76 333.89 333.31 333.41 7 22-12-20xx 333.41 333.41 333.11 333.31 8 23-12-20xx 333.27 333.41 333.06 333.35 9 24-12-20xx 333.07 333.28 332.96 333.02 10 28-12-20xx 332.99 333.19 332.54 332.59 11 29-12-20xx 332.60 332.29 332.42 332.52 12 30-12-20xx 332.56 332.89 332.49 332.86 13 31-12-20xx 332.89 335.36 332.56 333.29 14 04-01-20x1 333.35 333.46 332.77 332.84 15 05-01-20x1 332.94 333.11 332.79 332.99 16 06-01-20x1 333.00 333.38 333.00 333.25 17 07-01-20x1 333.23 333.56 333.22 333.30 18 08-01-20x1 333.23 333.46 333.17 333.20 19 11-01-20x1 333.18 333.21 332.94 333.02 20 14-12-20x1 332.91 333.25 332.80 333.20 Evaluate whether the Relative Strength Index (RSI) of A Ltd.'s stock indicates a bullish or bearish trend using the 14-day RSI. Note: Round off calculations upto 2 decimal points.

Suggested Answer and Working Notes:

11. To calculate the RSI, we shall use the closing prices of A Ltd.'s stock. For the 14-day RSI, we shall first calculate the moving averages of gains and losses for the initial 14-day period and subsequently update these moving averages for each succeeding day, as shown in the table below. The RSI for the 14th day onwards shall then be calculated using the following formula: RSI = 100 - 100 (1 + RS) Where RS = Average Gain Per Day Average Loss Per Day Further this updation in Avg Gain and Avg Gain columns for subsequent days shall be computed using following formula: Previous Day Avg Gain/Loss × 13 14 Date Closing Price Change Gain Loss Avg Gain Avg Loss RS 14-day RSI 1 14-12-20xx 334.54 2 15-12-20xx 334.35 -0.19 0.00 0.19 3 16-12-20xx 334.32 -0.03 0.00 0.03 4 17-12-20xx 333.83 -0.49 0.00 0.49 5 18-12-20xx 333.71 -0.12 0.00 0.12 6 21-12-20xx 333.41 -0.30 0.00 0.30 7 22-12-20xx 333.31 -0.10 0.00 0.10 8 23-12-20xx 333.35 0.04 0.04 0.00 9 24-12-20xx 333.02 -0.33 0.00 0.33 10 28-12-20xx 332.59 -0.43 0.00 0.43 11 29-12-20xx 332.52 -0.07 0.00 0.07 12 30-12-20xx 332.86 0.34 0.34 0.00 13 31-12-20xx 333.29 0.43 0.43 0.00 14 04-01-20x1 332.84 -0.45 0.00 0.45 15 05-01-20x1 332.99 0.15 0.15 0.00 0.07 0.18 0.39 28.06 16 06-01-20x1 333.25 0.26 0.26 0.00 0.08 0.17 0.47 31.97 17 07-01-20x1 333.30 0.05 0.05 0.00 0.08 0.16 0.50 34.21 18 08-01-20x1 333.20 -0.10 0.00 0.10 0.07 0.16 0.44 30.55 19 11-01-20x1 333.02 -0.18 0.00 0.18 0.07 0.16 0.44 30.50 20 12-01-20x1 333.20 0.18 0.18 0.00 0.08 0.15 0.53 34.64 Interpretation The 14-day RSI on Day 20 is 34.64. The conventional interpretation of RSI is: Above 70: Overbought 50-70: Bullish/positive momentum 30-50: Bearish/weak momentum Below 30: Oversold Conclusion – Since the RSI is 34.64, it is below 50, indicating that the stock is experiencing bearish momentum. Although the RSI has recovered from 28.06 on Day 15 to 34.64 on Day 20, it remains below 50 and therefore does not yet provide confirmation of a bullish trend i.e. stock is still in bearish zone.

Topics: Security Analysis

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