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Fundamental Analysis

Fundamental analysis is a scientific and value-oriented approach to making safe and profitable investment decisions by assessing the economy, industry, and company fundamentals. It involves three phases: economic analysis, industry analysis, and company analysis, focusing on both financial and non-financial aspects. This method can yield promising results when conducted impartially by knowledgeable analysts.

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22 views8 pages

Fundamental Analysis

Fundamental analysis is a scientific and value-oriented approach to making safe and profitable investment decisions by assessing the economy, industry, and company fundamentals. It involves three phases: economic analysis, industry analysis, and company analysis, focusing on both financial and non-financial aspects. This method can yield promising results when conducted impartially by knowledgeable analysts.

Uploaded by

gunjalhankare17
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FUNDAMENTAL ANALYSIS

MEANING OF FUNDAMENTAL ANALYSIS

• In order to make safe, secure and profitable investment in securities,


fundamental analysis is useful.

• It is more scientific as compared to technical analysis.

• Fundamental analysis is time-honoured, value-oriented and result


oriented approach based on a careful assessment of the fundamentals
of the economy, the industry and the company.
PHASES OF FUNDAMENTAL ANALYSIS

Fundamental analysis for investment decision-making is a


Three-phase analysis

• The economy :- To assess the general economic situation in the country.

• The industry :- To review prevailing conditions within a specific industry.

• The company :- To analyse financial and non-financial aspects of the


company for deciding to buy, to sell or to hold the shares of the company.
ECONOMIC ANALYSIS

• For taking decision relating to buying or selling a security, the analysis of overall economic
situation is necessary.
• Stock market operates as an integral part of the national and
even the global economy.
Economic factors affecting national economy are :-

• Economic growth.
• Agricultural production.
• Industrial production.
• Inflation.
• Progress in the infra-structure sector, etc.
INDUSTRY ANALYSIS

• It relates to the detailed analysis of a specific industry from which a specific company is to
be selected for investment purpose.
• While conducting industry analysis, attention should be given to
the following aspects :-
1) Life cycle of an industry and likely future prospects of the industry.
2) Analysis of a competitive conditions in the industry.
3) Classification and identification of profitable segments from the
investment point of view.
COMPANY ANALYSIS

• It is a detailed analysis of a company in which actual investment is to be made by


purchasing shares. In every industry, some companies show good performance while some
others face difficulties and incur losses.
• Financial analysis :- A company publishes its balance sheet every year. The accounts of the
company give useful financial data on various aspects of its operations. A good analyst first
looks at the overall quality of the balance sheet and accounts before attempting a detailed
financial analysis.
• Non-financial analysis :- Numerous non-financial aspects of a company
have to be evaluated while selecting a company for investment purpose.
Such analysis relates to promoters of the company, production activities,
technology used and product range, marketing and distribution, etc.
CONCLUSION

• It may be concluded that fundamental analysis is scientific and result-oriented as compared


to technical analysis for investment decisions. It gives certain benefits to an investor.
• Fundamental analysis can give promising results provided the analysis is made in a
scientific and impartial manner by a knowledgeable person/analyst.
THANK YOU

• Gunjal Hankare RN - 25
• Sonali Sharma RN - 54
• Riya Gupta RN - 24
• Dimple Borana RN - 10
• Shravani RN - 18

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