When it comes to analyzing a stock, fundamental and technical analysis are the most preferred methods to do so. To analyze a stock, the analyzer has to possess awareness of the market trends, the company profile, the economy of the country, the various economic and statistical indicators, the industry, the historical valuations and many more. Fundamental analysis and technical analysis consider all these parameters and helps the investor in decision making. Fundamental analysis is a method to identify the intrinsic value of a stock. Intrinsic value is the fair value or the actual value at which the stock should be valued in reality. If the fair value is less than the market value of a stock, the stock is overvalued and vice versa. Fundamental analysis studies the historical valuations, the economy, the various parameters used in an economy to study its trade cycle and conditions. Fundamental analysis also studies the financial statements and reports of the company, it’s current position and future forecasts. Technical analysis is a method where the market trends are studied to analyze the market sentiments attached to the stock and how it affects the performance of that particular stock. The technical analysis relies on trends and various indicators that are calculated using the patterns shown in the charts. The
core assumption of this method is that the historical fluctuations in the stock prices reflects the factors associated with the stock and that the past trends are adequate to predict the future trends.