Fundamental Analysis - Role of Stock Exchanges

WHAT IS THE PART OF STOCK EXCHANGES FOR THE COUNTRIES ECONOMICAL GROWTH? 

Stock market is an important part of the economy of a country. The stock market plays a pivotal role in the growth of the industry and commerce of the country that eventually affects the economy of the country to a great extent. 

That is the reason why the government, industry and even the central banks of the country keep a close watch on the happenings of the stock market. The stock market is important from both the industry’s point of view as well as the investor’s point of view.

Whenever a company wants to raise funds for further expansion or settling up a new business venture, they have to either take a loan from a financial organization or they have to issue shares through the stock market. In fact the stock market is the primary source for any company to raise funds for business expansions. 

If a company wants to raise some capital for the business it can issue shares of the company that is basically part ownership of the company. To issue shares for the investors to invest in the stocks a company needs to get listed to a stocks exchange and through the primary market of the stock exchange they can issue the shares and get the funds for business requirements. 

There are certain rules and regulations for getting listed at a stock exchange and they need to fulfill some criteria to issue stocks and go public. The stock market is primarily the place where these companies get listed to issue the shares and raise the fund. In case of an already listed public company, they issue more shares to the market for collecting more funds for business expansion. 

For the companies which are going public for the first time, they need to start with the Initial Public Offering or the IPO. In both the cases these companies have to go through the stock market.

This is the primary function of the stock exchange and thus they play the most important role of supporting the growth of the industry and commerce in the country. That is the reason that a rising stock market is the sign of a developing industrial sector and a growing economy of the country.

Of course this is just the primary function of the stock market and just an half of the role that the stock market plays. The secondary function of the stock market is that the market plays the role of a common platform for the buyers and sellers of these stocks that are listed at the stock market. It is the secondary market of the stock exchange where retail investors and institutional investors buy and sell the stocks. In fact it is these stock market traders who raise the fund for the businesses by investing in the stocks.

For investing in the stocks or to trade in the stock the investors have to go through the brokers of the stock market. Brokers actually execute the buy and sell orders of the investors and settle the deals to keep the stock trading alive. The brokers basically act as a middle man between the buyers and sellers. Once the buyer places a buy order in the stock market the brokers finds a seller of the stock and thus the deal is closed. All these take place at the stock market and it is the demand and supply of the stock of a company that determines the price of the stock of that particular company.

So the stock market is not only providing the much required funds for boosting the business, but also providing a common place for stock trading. It is the stock market that makes the stocks a liquid asset unlike the real estate investment. It is the stock market that makes it possible to sell the stocks at any point of time and get back the investment along with the profit. This makes the stocks much more liquid in nature and thereby attracting investors to invest in the stock market.

a) To basically start a Company / Organization money is required. 
b) Apart from initial investment , for further development of the Company / Organization also       

     money is required. 
c) For their requirement of money can be collected from stock markets by the way of offering 

     I.P.O and ( INITIAL PUBLIC OFFER ) F.P.O ( FOLLOW ON PUBLIC OFFER ) from the      

     investors. 

d) By this I.P.O. several lakhs to crores of small and all type of people enter and invest their 

     money from their savings. 
e) Either through share capital or Debt capital funds collection is possible through Stock 

     market. 
f) An Organization can be well grown up, by collecting money from these ways. 
g) Being absence of Large companies, the countries Economy cannot grow speedy. 
h) Without the help of stock exchange, single persons can never be able to commission a large 

     Organization. 
i) In general for the countries overall growth, stock market considerably does its part, can never 

    be objected.

Fundamental Analysis - About Organization

HOW AN ORGANIZATION / COMPANY YIELDS GAIN ?

HOW MUCH DO ORGANIZATIONS STAND TO GAIN?
 

An Organization, may be manufacturing one or more products( productions ), Marketing, Exporting, one or some specific products ( with Quality) able to sell with gain in a marginal profit. Moreover it can expand its operations locally, nationally, or even internationally, limiting its expenses. The debts being able to maintaining within the limit or even Zero. 

Above all are possible only in a growing economy of a country especially India. Since the population is more the demand also is more for any product. By all these reasons , there are various possibilities for any certain organization to run profitably. Excellent marketing Techniques are followed to popular any Brand of product. Any product can be produced for the Indian people at very reasonable price,

a)      No people can say that some products are not available. It’s a positive point

         for the running Government. Lakhs of small, medium, and Large companies

          are present of those few are manufacturing a same product. 

b)      Due to these production / service they all are paying Direct / Indirect taxes to

          the government.

c)      Those taxes can be used for several Welfare schemes for the poverty people

          and for other purposes.

d)      Un-employment problem can be solved somehow.

e)      Due to Employment opportunities increasing , the life style of people increases.

          Due to those, further more products / services are purchased.

         Taxes are continuously redempted by the companies. Gains to the government. 

f)       If the production increases , then the exports also increases. Foreign Exchange reserves            increases in Hand. In turn essential products Imports are also increasing.       

Apart from these,

The popularity of CRM is due to its fundamental and increased focus on customers. CRM benefits include its ability to help to ensure excellent customer service as it is aware of customer needs and is able to react to them effectively. It enables an organization to anticipate and respond to its customers needs in the right way.

A LOOK AT SOME OF THE BENEFITS OF CRM

( CUSTOMER RELATIONS MANAGEMENT ) :

• It is a business strategy that applies to almost every organization; therefore almost all organizations stand to gain from its use.
• Customers are motivated to return again and again as they receive good customer service and continue to do business
• Since acquiring a new customer is far more costly than retaining an existing customer more and more companies are turning to CRM as it is able to achieve this. Companies need this in order to stay competitive.
• Many forms of advertising are not as effective as they need to be. CRM enables a company to target their audience more precisely and gain customer retention, all at a lesser cost. CRM helps your business as it lets you do more for your customer and gain more from them.
• Since every organization needs to understand the importance of cross-selling and since CRM does that they are able retain their customers for longer periods.
• CRM delivers company-wide access to customer information.
• Using CRM applications can lead to increases in revenue from almost all areas.
• Reductions in operating costs is a by product of CRM implementation.
• Simplification of marketing and sales processes is achieved in organizations implementing CRM by their understanding of customer needs
• Better customer service is achieved through improved responsiveness and understanding. This builds customer loyalty and decreases customer loss.
• CRM enables a company to build a database about its customers so that management, salespeople etc could access information, match customer needs with plans and offerings, render better customer service etc.
• It enables an organization to create detailed profiles such as customer likes/dislikes etc.
• CRM gains the trust of customers by meeting their needs in a more personalized way.
• CRM delivers personalized, informed service that customers expect. This is because of a system that contains and provides a complete profile of the customer, including all past and present behavior patterns.
• A higher percentage of cross-selling is possible in companies opting for CRM
• With globalization CRM offers companies a chance at increased customer loyalty, higher margins and customer retention 
• Companies achieve more success in attracting new customer on account of their quicker and more efficient responses to customer leads and customer information.
• CRM helps an organization to develop better communication channels
• CRM helps an organization to collect vital data, like customer details etc. This data can be used for customer interaction.
• Companies opting for CRM find it easy to identify new selling opportunities.
• The traditional systems used by Customer Service, Sales and Marketing can now be done away with and the gaps filled with CRM implementation

Customer relationship management is gaining importance as a management tool globally and is ranked as the second most important management tool. On account of CRM benefits, its position as the customer centric strategy of the decade is slowly gaining ground. Despite the huge costs involved companies prefer to opt for it on account of the tremendous benefits of CRM.

Fundamental Analysis - About Index

HERE A QUESTION MAY ARISE FOR EVERYONE? 
HOW THE STOCK MARKET INDEX RISES? 

Stock market traders are always concerned about which way the market is moving. A strong movement to buy is a good indicator that stocks price will continue to rise, while a strong movement to sell suggests a downturn is coming.

But how do you know which way the overall market is moving ?
One to the tools traders use is called market internals. These indicators can be early warning systems for the whole market.


One of the most common of the market internals is the TICK or TICK index.


This tool compares the number of stocks on the New York Stock Exchange that are rising to the number of stocks that are falling.


Also a stock price is mainly based upon Supply and Demand. If the supply is low and the demand is more then the stock prices rises. If the supply is more and the demand is low then the stock prices lowers. 


Similarly, depending upon the Weightage of the sector / stock ( also by the various news upcoming throughout the world, the price varies ) the stock prices are valued by the investors. 

The calculation is very simple. You take the upticking (or rising) stocks and subtract the downticking (or falling stocks).


If the number is positive, that means more stocks are rising than falling. If the number is negative, that means more stocks are falling than rising.


When the TICK approaches +1,000 or -1,000, watch out. These extremes indicate a severely overbought or oversold condition.


In either case, expect the market to abruptly reverse itself.


Understanding the TICK can help you decide when to buy or sell.


If you have been thinking about selling a particular stock and notice the TICK is approaching +750 or more, it may be time to sell since conditions are ripe for the market to reverse itself and begin falling.


That could bring down the price of your stock.


Always use the TICK in connection with other factors to make your decision. However, as a quick read on market sentiment, the TICK is a valuable tool.

Fundamental Analysis - Economy

The stock market does not work the way most people think. A commonly held belief — on Main Street as well as on Wall Street — is that a stock-market boom is the reflection of a progressing economy: as the economy improves, companies make more money, and their stock value rises in accordance with the increase in their intrinsic value. A major assumption underlying this belief is that consumer confidence and consequent consumer spending are drivers of economic growth.

A stock-market bust, on the other hand, is held to result from a drop in consumer and business confidence and spending — due to inflation, rising oil prices, high interest rates, etc., or for no reason at all — that leads to declining business profits and rising unemployment. Whatever the supposed cause, in the common view a weakening economy results in falling company revenues and lower-than-expected future earnings, resulting in falling intrinsic values and falling stock prices.

This understanding of bull and bear markets, while held by academics, investment professionals, and individual investors alike, is technically correct if viewed superficially but is substantially misconceived because it is based on faulty finance and economic theory.

In fact, the only real force that ultimately makes the stock market or any market rise (and, to a large extent, fall) over the longer term is simply changes in the quantity of money and the volume of spending in the economy. Stocks rise when there is inflation of the money supply (i.e., more money in the economy and in the markets). This truth has many consequences that should be considered.

Since stock markets can fall — and fall often — to various degrees for numerous reasons (including a decline in the quantity of money and spending), our focus here will be only on why they are able to rise in a sustained fashion over the longer term.

The following factors are considered as necessary points of Fundamental Analysis ! There are two types of stock:

 Common stock

 Preferred stock

Most of the stock held by individuals is common stock.

Common Stock

Common stock represents the majority of stock held by the public. It has voting rights, along with the right to share in dividends.

When you hear or read about “stocks” being up or down, it always refers to common stock.

Preferred Stock

Despite its name, preferred stock has fewer rights than common stock, except in one important area – dividends. Companies that issue preferred stocks usually pay consistent dividends and preferred stock has first call on dividends over common stock.

Investors buy preferred stock for its current income from dividends, so look for companies that make big profits to use preferred stock to return some of those profits via dividends.

Liquidity

Another benefit of common stocks is that they are highly liquid for the most part. Small and/or obscure companies may not trade frequently, but most of the larger companies trade daily creating an opportunity to buy or sell shares.

Thanks to the stock markets, you can buy or sell shares of most publicly traded companies almost any day the markets are open.

ECONOMIC FORECAST:-

First and foremost in a top-down approach would be an overall evaluation of the general economy. The economy is like the tide and the various industry groups and individual companies are like boats. When the economy expands, most industry groups and companies benefit and grow. When the economy declines, most sectors and companies usually suffer. Many economists link economic expansion and contraction to the level of interest rates. Interest rates are seen as a leading indicator for the stock market as well.  

Below is a chart of the S&P 500 and the yield on the 10-year note over the last 30 years. Although not exact, a correlation between stock prices and interest rates can be seen. Once a scenario for the overall economy has been developed, an investor can break down the economy into its various industry groups.

Generally if the stock market index rises, stock market is functioning well. And if the index goes down then the stock market position is not better. Considering from the past years the index is going on rising. It means that the companies stocks of say NSE – 50 Stocks, BSE – 30 Stocks, performs better or moderate (not lower than the average) 

Here if the sensex or Nifty rises or lowers then the stock market varies! But an another point is to be noted that only 50 and 30 stocks alone are not present, and more than several thousands of stocks are present both in NSE and BSE. 

So that the Index is not an actual Replica of the entire stock market.

     

The primary link between the stock market and the economy — in the aggregate — is that an increase in money and credit pushes up both GDP and the stock market simultaneously.

A progressing economy is one in which more goods are being produced over time. It is real "stuff," not money per se, which represents real wealth. The more cars, refrigerators, food, clothes, medicines, and hammocks we have, the better off our lives. We saw above that, if goods are produced at a faster rate than money, prices will fall. With a constant supply of money, wages would remain the same while prices fell, because the supply of goods would increase while the supply of workers would not. But even when prices rise due to money being created faster than goods, prices still fall in real terms, because wages rise faster than prices. In either scenario, if productivity and output are increasing, goods get cheaper in real terms.
Obviously, then, a growing economy consists of prices falling, not rising. No matter how many goods are produced, if the quantity of money remains constant, the only money that can be spent in an economy is the particular amount of money existing in it (and velocity, or the number of times each dollar is spent, could not change very much if the money supply remained unchanged).

This alone reveals that GDP does not necessarily tell us much about the number of actual goods and services being produced; it only tells us that if (even real) GDP is rising, the money supply must be increasing, since a rise in GDP is mathematically possible only if the money price of individual goods produced is increasing to some degree.[5] Otherwise, with a constant supply of money and spending, the total amount of money companies earn — the total selling prices of all goods produced — and thus GDP itself would all necessarily remain constant year after year.

"Consider that if our rate of inflation were high enough, used cars would rise in price just like new cars, only at a slower rate."

The same concept would apply to the stock market: if there were a constant amount of money in the economy, the sum total of all shares of all stocks taken together (or a stock index) could not increase. Plus, if company profits, in the aggregate, were not increasing, there would be no aggregate increase in earnings per share to be imputed into stock prices.
In an economy where the quantity of money was static, the levels of stock indexes, year by year, would stay approximately even, or drift slightly lower[6] — depending on the rate of increase in the number of new shares issued. And, overall, businesses (in the aggregate) would be selling a greater volume of goods at lower prices, and total revenues would remain the same. In the same way, businesses, overall, would purchase more goods at lower prices each year, keeping the spread between costs and revenues about the same, which would keep aggregate profits about the same.

Under these circumstances, capital gains (the profiting from the buying low and selling high of assets) could be made only by stock picking — by investing in companies that are expanding market share, bringing to market new products, etc., thus truly gaining proportionately more revenues and profits at the expense of those companies that are less innovative and efficient.
The stock prices of the gaining companies would rise while others fell. Since the average stock would not actually increase in value, most of the gains made by investors from stocks would be in the form of dividend payments. By contrast, in our world today, most stocks — good and bad ones — rise during inflationary bull markets and decline during bear markets. The good companies simply rise faster than the bad.

Similarly, housing prices under static money would actually fall slowly — unless their value was significantly increased by renovations and remodeling. Older houses would sell for much less than newer houses. To put this in perspective, consider that if our rate of inflation were high enough, used cars would rise in price just like new cars, only at a slower rate — but just about everything would increase in price, as it does in countries with hyperinflation The amount by which a home "increases in value" over 30 years really just represents the amount of purchasing power that the dollars we hold have lost: while the dollars lost purchasing power, the house — and other assets more limited in supply growth — kept its purchasing power.
Since we have seen that neither the stock market nor GDP can rise on a sustained basis without more money pushing them higher, we can now clearly understand that an improving economy neither consists of an increasing GDP nor does it cause the overall stock market to rise.

This is not to say that a link does not exist between the money that companies earn and their value on the stock exchange in our inflationary world today, but that the parameters of that link — valuation relationships such as earnings ratios and stock-market capitalization as a percent of GDP — are rather flexible, and as we will see below, change over time. Money sometimes flows more into stocks and at other times more into the underlying companies, changing the balance of the valuation relationships.

Fundamental Analysis Of Stocks - Introduction

WHAT IS FUNDAMENTAL ANALYSIS ?

Fundamental analysis is the cornerstone and the foundation of solid investing . In fact, some would say that you aren't really investing if you aren't performing fundamental analysis. Because the subject is so broad, however, it's tough to know where to start. There are an endless number of investment strategies that are very different from each other, yet almost all use the fundamentals. 

Fundamental analysis is the process of looking at a business at the basic or fundamental financial level. This type of analysis examines key ratios of a business to determine its financial health and gives you an idea of the value of the stock. 

It helps you determine the underlying health of a company by examining the business’ core numbers: its income statements, its earnings releases, its balance sheet, and other indicators of economic health. From these “fundamentals” investors evaluate if a stock is under- or overvalued.

Fundamental analysis is the examination of the underlying forces that affect the well being of the economy, industry groups, and companies. As with most analysis, the goal is to derive a forecast and profit from future price movements.  

At the company level, fundamental analysis may involve examination of financial data, management, business concept and competition.  

At the industry level, there might be an examination of supply and demand forces for the products offered. For the national economy, fundamental analysis might focus on economic data to assess the present and future growth of the economy.

To forecast future stock prices, fundamental analysis combines economic, industry, and company analysis to derive a stock's current fair value and forecast future value. If fair value is not equal to the current stock price, fundamental analysts believe that the stock is either over or under valued and the market price will ultimately gravitate towards fair value.

Fundamentalists do not heed the advice of the random walkers and believe that markets are weak-form efficient. By believing that prices do not accurately reflect all available information, fundamental analysts look to capitalize on perceived price discrepancies.

Fundamental analysis begins with an individual stock, but it also extends to that company’s larger context. It explores questions like these: Is the company competitive within its industry? Is that industry growing or shrinking, compared to other sectors? 

Shares of companies with strong fundamentals will tend to go up over time, while fundamentally weak companies will see their stock prices fall. This makes fundamental analysis especially valuable to long-term investors.  

Fundamental analysis is one school of investing research. It contrasts with another popular approach, technical analysis, which focuses not on business fundamentals but on stock-price action as reflected in charts. Technical analysts look for recognizable patterns in price charts that will help them estimate the stock’s future price movement. 

BASICS FIRST STEP :                                                                                                          

When talking about stocks, fundamental analysis is a technique that attempts to determine a security's value by focusing on underlying factors that affect a company's actual business and its future prospects. On a broader scope, you can perform fundamental analysis on industries or the economy as a whole. The term simply refers to the analysis of the economic well-being of a financial entity as opposed to only its price movements. 

Of course, these are very involved questions, and there are literally hundreds of others you might have about a company. It all really boils down to one question: Is the company's stock a good investment? Think of fundamental analysis as a toolbox to help you answer this question. 

WHY TO CONDUCT FUNDAMENTAL ANALYSIS ?

 

Fundamental analysis serves to answer questions, such as: Fundamental analysis helps you determine if a company is a good or poor investment choice. Imagine you’re a venture capitalist or a bank, who must decide if that company is worthy of a loan or equity investment. How can you evaluate whether this particular company deserves your investable capital?

Fundamental analysts consider the following in making their decision to invest (or not):

• Is the company's sector better one ?   
• Is the company's product worthable?  
• Is the company's revenue growing?
• Is the company making a profit consistently? (While this is naturally the most important question for investors, it’s important to consider the answer in a bigger context. A single profitable quarter for a new company might be a fluke. In the same regard, a drop in profitability for an established blue-chip company might just be a temporary setback.)
• Is that profit growing or declining over time?
• Is it actually making a profit?
• Is the company holding its own relative to the competition? Is it a leader in its sector? Is that sector growing or declining in importance to the overall economy?
• Can the company pay its bills adequately? If you were to dismantle the company’s operations today, what would be the intrinsic value of its assets versus the value of its debts?
• Is it in a strong-enough position to beat out its competitors in the future?
• Is it able to repay its debts?
• Is the Management trying to "cook the books"?

WHAT INFORMATION DO YOU NEED TO PERFORM FUNDAMENTAL ANALYSIS?

 

You can think of fundamental analysis as “investing by the numbers,” since much of the work involves evaluating financial statements issued by the company. Here are a few key statements you should learn to read and understand. 

All publicly traded companies in the United States are required to file statements of financial condition on a regular basis. These include the 10-Q, a quarterly statement, and the 10-K, an annual statement. Each statement follows a prescribed form to include certain basic information. 

Publicly traded companies are also subject to audits by government agencies that oversee their given industry. Those audits may be either scheduled or random events. The results of a regulatory audit may also be published--interesting reading for a would-be investor. 

The 10-Q and 10-K are good places to start your fundamental research, but you’ll likely want to dig deeper into the specifics. For that you’ll need to understand three interrelated types of statements: the balance sheet, the income statement and the cash flow statement.

GENERAL STEPS TO FUNDAMENTAL EVALUATION

Even though there is no one clear-cut method, a breakdown is presented below in the order an investor might proceed. This method employs a top-down approach that starts with the overall economy and then works down from industry groups to specific companies.  

As part of the analysis process, it is important to remember that all information is relative. Industry groups are compared against other industry groups and companies against other companies. Usually, companies are compared with others in the same group. For example, a telecom operator (Verizon) would be compared to another telecom operator (SBC Corp), not to an oil company (ChevronTexaco).

ABOUT FUNDAMENTAL ANALYSIS : 

Many investors use fundamental analysis alone or in combination with other tools to evaluate stocks for investment purposes. The goal is to determine the current worth and, more importantly, how the market values the stock.

From the Investment techniques a truth must be felt, that all the Techniques are not applicable to all. Some may workout for some people. Some may not be suitable for all. Each and everyone should analyze themselves and discover their own favorable investment techniques which may best suits them.    

The biggest part of fundamental analysis involves delving into the financial statements. Also known as quantitative analysis, this involves looking at revenue, expenses, assets, liabilities  and all the other financial aspects of a company. Fundamental analysts look at this information to gain insight on a company's future performance. A good part of this tutorial will be spent learning about the balance sheet, income statement, cash flow statement and how they all fit together. 

But there is more than just number crunching when it comes to analyzing a company. This is where qualitative analysis comes in - the breakdown of all the intangible, difficult-to-measure aspects of a company. Finally, we'll wrap up the tutorial with an intro on valuation and point you in the direction of additional tutorials you might be interested in.   

The Investment patterns so far seen are Long Term Investment patterns. For short term traders there are Mechanical Trading, Momentum Trading, and Swing Trading, alike several trading techniques are there. Those for Long term investors these type of Trading Techniques are considered as much more. Able to value properly is enough for a person ! If it is possible then you may be able to gain money ! How we can value a Stock? There are two types in valuing a stock. They are,

1) Fundamental Analysis,

2) Technical Analysis.

This article focuses on the key tools of fundamental analysis and what they tell you. Even if you don’t plan to do in-depth fundamental analysis yourself, it will help you follow stocks more closely if you understand the key ratios and terms. It's geared primarily at new investors who don't know a balance sheet from an income statement. While you may not be a "stock-picker extraordinaire" by the end of this tutorial, you will have a much more solid grasp of the language and concepts behind security analysis and be able to use this to further your knowledge in other areas without feeling totally lost.

EARNINGS

It’s all about earnings. When you come to the bottom line, that’s what investors want to know. How much money is the company making and how much is it going to make in the future.

Earnings are profits. It may be complicated to calculate, but that’s what buying a company is about. Increasing earnings generally leads to a higher stock price and, in some cases, a regular dividend.

When earnings fall short, the market may hammer the stock. Every quarter, companies report earnings. Analysts follow major companies closely and if they fall short of projected earnings, sound the alarm.

While earnings are important, by themselves they don’t tell you anything about how the market values the stock. To begin building a picture of how the stock is valued you need to use some fundamental analysis tools. These ratios are easy to calculate, but you can find most of them already done on sites like cnn.money.com or MSN MoneyCentral.com.

We build a home for our family. Even though swallowing lakhs or even Crores of money required for construction, of the new house, entirely, with Quality products like 

1. Steel Bars,

2. Jolly,

3. Cement,

4. Bricks,

5. Sand etc….   

the basement of that specified building should be properly planned with

1. Appropriate plan

2. Total floor of the building,

3. Total height of the building,

4. Total length and breadth of the building

5. No: of rooms involved, 

6. Gross weight of the building

7. No: of Pillars to be involved   etc…

considering all these basical factors only and with the help of those materials from the bottom to the Top portion of the building will be designed and built, lasting for several years. 

                            

Similarly while Appointing a person either Male / Female for a new job in a company the following criteria’s may be selected namely, 

1. His / Her Qualification,  

2. Work experience,

3. Present Age

4. Fluency in Languages one or more,

5. Optional skills,

6. Communication skills,

7. Height,

8. Weight

9. Eye- sight etc….

A stock market may contain thousands of Organizations with various                       

1. Market Capitalizations, 

2. Different Sectors,

3. Production oriented,

4. Service oriented,

5. Lasting for years,

6. Newly entered,

7. Running in fair gain / profits 

8. Moderate gains 

9. Losses etc….   

Generally looking all the companies seems to be performing well. But in practice we can realize that many companies are not functioning like that. Some sectors may be functioning good, some moderate, and some worst, etc…If a stock being purchased without analysis what may happen ? It may lead to a loss. Is there any way to safeguard our investments by basically selecting the stocks ! Yes it is called as Fundamental Analysis.

Fundamental means --  Basic characteristics present (required ) 

Analysis                    --   To analyze the nature of stocks and so on,    

Many newly entering investors, after assuming that with the help of Technical Analysis,( knowing by way of Newspapers, Journals) taken unknown risk and after a Huge drawback, with lamenting totally leave the market. Afterwards they never enter the stock market. Some may confuse themselves, either the Fundamental nor the Technical which one may be the apt in selecting a stock. Like the basement of a Building, Fundamental analysis must be strong, and Technical Analysis reflects the future prospects and etc…… Without fundamental there is no Technical can be understood by Long term investors. But for short term investors or for Traders, Fundamental is not a must should be borne in mind.