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Created by : deepan , Sr.Research Analyst, Beroe  | 03 29 2010 10:09:08 +0000
Industry : Equity Research/AnalyticsFunctional Area : Valuation(Corporate Finance)
Activity:  295 views;  last activity : 07 06 2010 20:18:09 +0000
 
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Fundamental Analysis Vs Technical Analysis
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If we are talking about India then i always prefer long term view for retail investors and for long term return we consider always fundamentals because Indian market is very volatile market. Technical analysis provide us the short term view & retail investor always book losses due to panic on the basis of technical charts. And usually we have observed that investors earn more in long term rather than short term.. & it is less risky also..


By Vipin Bhasin, Private Equity/Hedge Fund/VC-Manager, Indian Investment Co.  06 06 2010 15:07:13 +0000
 
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Deepan, I think in the present scenario technical analysis is more important than fundamental analysis. Because technical analysis employs models and trading rules based on price and volume transformations. It is based solely on the charts, that is to say price and volume information, whereas fundamental analysis does look at the actual facts of the company, market, currency or commodity. 

:)  


By Esha Johar, Risk Analyst, Irevna  03 30 2010 10:20:39 +0000
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Its very tough to define because F.A. is related to T.A and the vice-versa. Though very few people believe this but i have strong reason for this. If given me a chance to chose F.A or T.A i would go with Fundamental Ananlysis.
By Mithu Deb, Analyst, Northern Trust  | 06 06 2010 20:58:05 +0000
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If somebody takes the India stocks in consideration, it must be of long term.

Further any fundamental analysis in any market will give better proven returns for long term.

Technical analysis or charting in only short term or day trading, Further in technicals it cannot be assured since the charts does`nt takes must time to tun oppsite views. One may have to book losses on technicals analysis.


By Jyoti CHETANI, Freelancer, Equity Research/Analytics  | 06 06 2010 17:16:51 +0000
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I have to say fundamental analysis brcause TA take into purvey only short term movements of the market while FA looks long term. Trading short term is not optimal return strategy globaly due to increase in trqnsaction costs due to volume trading.


By Mathew Cherian, Research Associate/Analyst, Western Michigan University  | 03 31 2010 09:25:41 +0000
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Nothing beats the power of compounding and the only way to take advantage of compounding is through fundamental analysis. None of the top investors look at daily price movements. Fundamental analysis invests on the company, not on the price movement. Moreover, in technical analysis, stock market volatility is your friend - which is seasonal. Take the last 4 - 5 months for example. Volatility has reached all time lows....few technical players have made money since Jan in our markets. In fundamental analysis, the power of compounding is your friend. Technical analysis may yield a get rich quickly scheme, when you work using rapid reflexes, but you can go broke just as quickly if you don’t know what you’re doing. Market timing rules your methods. Fundamental analysis is the path taken to grow rich more slowly, relatively speaking, but depending on how your portfolio is set up, it can actually be quicker than you think. It often involves longer term investing strategies. Ultimately, what’s important is that you know yourself well enough to figure out what you’re comfortable with. I don’t believe that there are any wrong investment approaches in the absolute sense, just dangerous ones. A strategy becomes dangerous if you decide to apply it without sufficient planning, knowledge or study, causing you to make reckless moves or generate heavy losses. So the key is to go with what works for you, realizing your limitations while capitalizing on your strengths.


By venky , Freelancer, Freelancer  | 03 30 2010 18:57:51 +0000
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It's like two sides of the coin, together they can fulfill the word called trusted research. But practically fundamental analysis is for taking some asset for a long term. Atleast more than 1 day. While technical is for the range of 5 minuts to 5 days. This is a wide usage of the fundamental and technical analysis.


By Mohan Vasiyani, Treasury & Forex Management, Anagram Capital Ltd  | 03 30 2010 10:44:58 +0000
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The returns in the stock market is always associated with risk. Fundamental Analysis is a better tool in reducing the risk to return ratio when compared to technical analysis. The inherit nature of the stock market which developed with the view of the growth of the industries or companies will always provide an better tool to generate profits in the trade.
Also with out strong fundamental the stocks of the company cannot perform well in the market. Hence even for technical analysis to take place the stock should have a strong fundamental.
And fundamental analysis will give a better returns as compared to technical analysis when we consider the negative signals the stocks may show during secondary reactions and oversold positions when the stock is falling.
Hence to earn a better returns "Fundamental Analysis" is a better option.

What is your take on this?


By deepan , Sr.Research Analyst, Beroe  | 03 29 2010 10:09:08 +0000
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Don't try to link analysis with return only, because both will give you not the same picture, as the parameters are diffrent, base is diffrent. Use them with your own objective. i.e. long term return or short term, equity market or debt market etc.


By Mohan Vasiyani, Treasury & Forex Management, Anagram Capital Ltd  | 03 31 2010 05:46:53 +0000
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i believe thattechnical analysys provide beeter results just because technical analysis gives u the levels where u can exit ur posstions. And now the kind the market we have from the past 3 years, we have seen market change its trend very sharply. Thats where technical analysis benefits over fundamental analysis...

If u r a long term investor then fundamental analysis is a good choice but if u have invested for less then 1-2 years then technical analysis is much better .Because it give u when to exit. Fundamental analysis did not tell u this......

thanks esha 4 sending this interesting ques....

 


By vikash vardhman, Relationship Manager, Security/ Equity Research Analyst, SPA Securities Ltd.  | 03 30 2010 14:11:06 +0000
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Deepan

In my opinion though both the analysis are required ,i believe technical analysis has an upper hand.

See a company's share price volatility is the result of the 2 reasons :First News about the company and second news about the economy.It is the latter which dominates though for long term perspective ,one should definitely look at fundamental anaylsis,but for speculation and short term gains ,technical analysis is undoubtedly better.


By Vikas Bhatnagar, Manager Finance, Tata Motors Ltd  | 03 30 2010 11:18:39 +0000
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