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TECHNICAL VS. FUNDAMENTAL

Guided by:

Prof.Gayatri Mohanty

Prepared by:

Kinnari Patel(43) Mehul Dudhat(44)

Parul institute of management and research

  • Definition:

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  • “Technical analysis is the art of identifying market turning points at a relatively early stage

  • Technical analysis is a security analysis technique that

  • claims the ability to forecast the future direction of prices through the study of past market data, primarily price and volume

  • Factors promoting technical analysis:

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  • Information does not flow within the

  • market at the same speed

  • Individuals process information in different

  • ways

  • People tend to follow the herd

 Factors promoting technical analysis: 3  Information does not flow within the  market at

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  • Technical Analysis assumptions:

    • Investor pools are relatively stable

    • Investors follow the herd Perception is “reality”

    • History tends to rhyme Chart is the market

in action

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  • Definition :

    • Definition Fundamental Analysis is mainly focuses on valuation and estimation of intrinsic value of security.

    • Steps of Fundamental Analysis:

    • Economic analysis

    • Industry analysis

    • Company analysis

  • Steps of Fundamental Analysis:

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Economic Analysis::

  • Economic Analysis: GDP Growth rate Changes in natural resources Performance of agriculture Economic and political stability Inflation Corruption Industry Analysis:

  • Industry Analysis Product line Raw material Nature of demand Permanence Labor Government Policies related to that industry

Company Analysis:

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  • Company Analysis Marketing policies Accounting policies Profitability Dividend policy Capital structure Management Financial statement analysis

 Technical vs. fundamenta <a href=l analysis  Technical analysis and fundamental analysis are the two main schools of thought in the financial markets.  As we've mentioned, technical analysis looks at the price movement of a security and uses this data to predict its future price movements.  Fundamental analysis, on the other hand, looks at economic factors, known as fundamentals. " id="pdf-obj-7-2" src="pdf-obj-7-2.jpg">

Technical vs. fundamental analysis

  • Technical analysis and fundamental analysis are the two main schools of thought in the financial markets.

  • As we've mentioned, technical analysis looks at

the price movement of a security and uses this

data to predict its future price movements.

  • Fundamental analysis, on the other hand, looks at economic factors, known as fundamentals.

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Time Horizon

Fundamental analysis takes a relatively long-term approach to analyzing the market compared to technical analysis.

While technical analysis can be used on a timeframe of weeks, days or even minutes, fundamental analysis often looks at data over a number of years.

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  • Trading Versus Investing

In general, technical analysis is used for a trade, whereas fundamental analysis is used to make an investment.

Investors buy assets they believe can increase in value, while traders buy assets they believe they can sell to somebody else at a greater price.

The line between a trade and an investment can be

blurry, but it does characterize a difference between

the two schools.

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  • Demand and supply:

    • In technical analysis demand and supply of shares can be forecasted by studying the price and volume of data

    • In fundamental analysis demand and supply are based on the fundamental factors.

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  • Buy and hold policy:

    • The technical analysts considered only short term price movement of the shares. They don’t believe in a buy and hold policy.

    • The fundamental analysts considered intrinsic value of the shares. Long term price movement are considered for a buy and hold policy.

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