Technical analysis and fundamental analysis are two main schools of thought when it comes to analyzing the financial markets. Technical analysis looks at the price movement of a security and uses this data to attempt to predict future price movements. Fundamental analysis instead looks at economic and financial factors that influence a business. Let us take a deeper dive into the details of how these two approaches differ, the criticism against technical analysis, and how technical and fundamental analyses can be used together. These are the basis of stock analysis.

  • Stock prices change everyday by market forces.By this we mean that share prices change because of supply and demand. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.

  • Fundamental Analysis is a process of analyzing a security in order to determine its fair value (also known as intrinsic value), by evaluating relevant economic, financial, non-financial and other quantitative and qualitative factors.

  • Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities in price trends and patterns seen on charts. Technical analysts believe past trading activity and price changes of a security can be valuable indicators of the security's future price movements.

  • 1) Data required are not easily available.
    2) Data are accessible only to highly influential people.
    3) It is a lengthy and complex process.

  • Earnings, expenses, assets, and liabilities are all important characteristics to fundamental analysts. Technical analysis differs from fundamental analysis in that the stock's price and volume are the only inputs.

  • Earnings are crucial when assessing a company's profitability and are a major factor in determining a company's stock price.
    Nonetheless, chasing the news is not a good stock-picking strategy for the individual investor. In most cases, professional traders react in anticipation of an event, not when the event is reported.
    Stock prices tend to rise when earnings results exceed market expectations while disappointing earnings results tend to lower share prices. Stock prices move based on market expectations

  • Average turnover in NSE on daily basis is 20,000 crores. And the stronger hands can manipulate the stock price but it is illegal.

  • Technical analysis is really easy to do as compared to Fundamental analysis. Data for doing this analysis is readily available for anyone. Cons: Since it focuses only on the demand, supply & price movements, it is not completely reliable as compared to Fundamental analysis.

  • In case of penny stocks, the quantity of shares available may appear to be quite high. You are likely to face difficulty in buying such penny stocks. Due to non-availability of shares in the market, there may be no sellers at times when there is a huge demand.

  • Flowchart - Flowcharts help organize the steps, decisions or actions in a process from beginning to end.
    Pie chart - A pie chart presents the different parts of a whole. ...
    Gantt chart - Gantt charts illustrate project schedules
    Waterfall chart
    Gauge chart
    Funnel chart
    Bullet chart

  • Candlestick charts are used by traders to determine possible price movement based on past patterns. Candlesticks are useful when trading as they show four price points (open, close, high, and low) throughout the period of time the trader specifies.

1 Comment
  1. Naresh 1 year ago

    Hi sir,
    We really appreciate the time and effort you put into this practice session.

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