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30.06.2019

AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 14 

Fundamental v/s technical analysis

Fundamental v/s technical analysis are the two different basic ways to analyze a  stock.

ü  Fundamental analysis believe that market price of the stock doesn’t always  match with its true value of that represent. It may be overvalued or  undervalued by studding fundamentals we can come to conclusion that we  will bye it or to avoid it.if it is undervalue then we will buy (after discountling  time value and inflection) and if overvalue in market then avoid it. here we are  in a right track on investment decision.
ü  Technical analysis believe that the fundamental elements of the stock value  the (true value) of that stock are already reflected or accounted for in stock  market trading price that prices are move in trends and their historical patterns  in the market and it’s stock prices tends to repeat. here we will get more clear  idea about at what market price this stock should by at any period of time  (after premiering time value and inflection from issue date and price)
ü  So mixture of this two valuation and if u find such stock which will give give u  in both a positive outflow u are in a win win point.

To Conclude I will tell u a brief story of TOM and JOE which will be  easily understandable for all group of community with a sensible meaning and  picture in there mind. To understand the difference, imagine fundamental analyst TOM ,and the technical  analyst JOE they goes in the shopping mall to buy one companies shares. they use  their analysis to which company they buy from the bundle of companies listed in the  mall(stock market) TOM, goes in to each selected stock studies the product being sold, layout,  companies financial statements overall economic condition, industry growth and  decide weather to buy that companies stock. Tom looking for a stock with best  fundamentals. He looks in to good product, responsible management & so on. JOE sits on the bench of the mall opens his laptop & check out the selected stocks  charts of various companies. He looks to see which company is performing in the  past base on the price of the stock & see the historical patterns which stock is  reflected of strong upward trends years on year. In this case JOE does not consider  the stock product or it’s financial situation but believed that fundamental factor are  already factor in current market price. In fact JOE doesn’t need to be mall to make his choice. Tom basic his decision on  the company itself & his believe that it is true price will be more that it stock price  suggest.JOE will buy a stock because of its historical trends suggest the price likely  to up not because of anything he sees in the company itself. At the end TOM & JOE may closely choose the same company stock but their  reasons for investing in the stock are different. TOM reasons are store layout,  financial statements, products.JOE reasons are historical trends, stock prices.

To Conclude Fundamental & Technical analysis are two different wing’s for  investments in shares and both are useful to different different type of investors.from  this studies I will give you my points of view recommendation to different type of  investors.

RECOMMANDATION:

              INVESTOR TYPE
FUNDAMENTAL
TECHINICAL
Retail
Short term
ü
Long term
ü
Mid term
ü
ü
Iintra day trader
N.A
ü
Mutual funds
ü
FII
ü
ü
Hedge funds
N.A.
N.A*
Corporate companies
ü
NBFCS
ü
ü
Banks and financial  intuitions’
ü


*partial hedge required technical support


for more such type of education joint our online series and batches and be a pro trader contact on 7028 421 786.

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