There has been volatility in the Indian stock market for many years. It is difficult to predict the rise and fall in the prices. Before investing an amount in stocks, fundamental analysis is a must. You should get knowledge of the value creation and prices of the stocks in the coming time. There is always the risk of investing in stocks.
Fundamental analysis is the foundation for investing money in stocks and plays a major role in long-term investments. Long-term investments require proper planning and understanding the business from various perspectives.
Tools Needed To Do Fundamental Analysis
- Annual Report of the company
All the details needed for Fundamental Analysis is available in the annual report of the company.
- Data related to the industry
Data which tells about the performance of the company with respect to the industry
Generally, It is available for free online on the respective website
- Access to news
The daily news keeps one updated on the latest developments happening in the industry and the company. A good Newspaper of Business domain and features like Google alert helps you to gain information
- MS excel helps you to do Fundamental Analysis.
This helps one to do fundamental calculations
Fundamental Analysis helps you to invest in good companies and have a huge amount of returns. There are various examples for the stock market in India, like few of them are Infosys limited, TCS limited, Bosch India. These companies have shown around an average over 20% compounded annual growth return in over 10 years.
The four basic Strengths of fundamental analysis are
- Long-term Trends
Fundamental analysis is good for long-term investors based on long-term trends. It helps to identify and predict consumer trends like economic, demographic and technological trends that makes easy for one to pick good Company.
- Value Spotting
Some fundamental Analysis helps to identify companies having great value.
- Business Acumen
Helps to get knowledge about the various opportunities.
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