In technical and fundamental analysis, the future prospects are estimated on the basis of past and present performance of any stock or company. For this, many types of tools and necessary aspects are studied.
Share market details: Before investing in the stock market, one should have adequate understanding of it. To buy any stock, one has to study it thoroughly and this is done through two methods – Technical and Fundamental Analysis. But, the common investor does not have much understanding about it. But investors and market experts working actively in the market have a deep understanding of it. However, developing an understanding of technical and fundamental analysis is not very difficult.
Let us know what is technical and fundamental analysis and how one can work as an active investor in the stock market by developing an understanding about it. With both these methods, you can get an accurate estimate of the share price and find out about the future prospects, It will also help you in deciding when to buy and sell stocks.
What is Technical Analysis?
In technical analysis, by looking at the chart of any stock, information about its daily, weekly and monthly movement and price is obtained. The support and resistance of most stocks are seen through the chart. Here support means how many times the stock has moved up from a particular price. Most analysts recommend buying only at the support level.
Important indicator in technical analysis:. Indicators are important tools in technical analysis. Actually, they give important indications about the movement of the stock.These include many indicators including Moving Average, RSI, MACD, Super Trend and Bollinger Bands. Each indicator has its own importance but most of the investors active in the stock market consider MACD and RSI indicators as important.
Why fundamental analysis is necessary?
Fundamental analysis studies the business model and growth story of any company. In this, mainly the financials of the company are looked at. Ratios like P/E Ratio and P/B Ratio are seen in these. If the value to price earning ratio is low, it means that it has a lot of room for growth. On the other hand, if the price to book value ratio is low, it means that the stock is undervalued.
In Fundamental Analysis, the net worth of the company is determined by studying the assets and liabilities of the company. Based on this, the stock price of the company is estimated. In this the dividend policy of the company is also seen.
This type of study can be used to find out about undervalued companies which are likely to perform better in the future.
How to learn Technical and Fundamental Analysis?
After knowing about the technical and fundamental analysis, now the question arises that from where this knowledge should be taken or learned. There are many books and online content available on the Internet for technical and fundamental analysis.
Apart from this, you can join several courses through the National Institute of Security Markets (NISM) to work as a Registered Investment Adviser in the stock market. These cover topics related to technical and fundamental analysis.
