Stock market fundamental analysis

Fundamental Analysis of Indian Stocks

Stock Market Study

There are two ways to find out where the market is headed in the future – Fundamental analysis and Technical analysis. Now, if someone asks which one of these is better,  the answer would be both, as they complement each other. Using this combination, one should conduct a study of the share market if they want to be profitable in the market in the long term.

 

Let’s do a technical and fundamental analysis of the market for the current time to figure out where the market is headed.

 

  • Fundamental analysis – Let’s discuss FII selling data. FIIs had been selling tremendously during the previous months, but their short-selling has gradually decreased. This is a positive sign for the markets as some of them have started buying too. Also, the global situation was adverse due to high inflation and interest rates. The fall in the value of the dollar has affected Indian stock markets too. The situation has indeed improved a bit, but there is not much positivity in this uptrend and a slight pullback(not a correction) can be seen in the upcoming time.

 

  • Technical analysis – If we analyse the data for the past two quarters, the Nifty 50 has fallen by about 8-9%. Many broking houses have predicted that the market has bottomed out and shortly we can see the bull run resume and markets turning upside. Let’s have a look at some technical indicators to figure out the short-term trend.
  1. 200-day moving average(DMA) – Nifty is currently near 200 DMA and is expected to rise above it and resume its uptrend. Dow Theory has also given a buy signal in Nifty 50 this week, signalling that people can start index investing now.

 

  1. Relative strength index(RSI) –
  2. RSI is also moving between the range of 60-70, which means that market is entering an overbought situation. Hence, a little pullback is expected this week, just like the past two days.

So overall, the situation is gradually improving, but we need to remain cautious while investing or trading.

 Having an SL will be a relief to you, where you can have a peaceful night’s sleep.

 

Bonus – ROE means in share market

Return on equity (ROE) is a measure of the profitability of a business concerning its equity. Higher the ROE, the better it is for the company. A high ROE means a company’s management team is more efficient in utilizing the investments and borrowings to grow their business to the next level. For investors, it helps to understand whether they can track the returns on their investment.

 

Usually, a stock with strong fundamentals has an ROE of 15% or more. Index in stock markets gives an annual return of about 12-15% is a noteworthy point. So investing in an index with minimal study could also prove to be a great opportunity as the returns from the market over the long run will help you beat inflation.