Stock market analysis plays a pivotal role in making crucial investment decisions or revising investment strategies. It is imperative to analyze stocks on a timely basis, to utilize your finances in the most judicious way and minimize the risks.

An investor has multiple ways of conducting research, be it watching news on the stock market, referring to a newspaper or using the Internet to analyze stocks. He just needs to act on the news swiftly to expand his portfolio, protecting it from uncertainties and losses, hence maximizing the returns on his investments.

Indian Stock Market Analysis

The techniques used to analyze the stock market

There are several efficient ways of analyzing stocks that are used by financial experts and the investors. It depends on the investor to choose a technique that is suitable for his investing objective.

Fundamental Analysis Of Stocks

In fundamental analysis, an investor tries to measure the value of a company. This is done by looking into the financial details of the company like how the company has performed in the last few years, has it taken steps for new innovations, its balance sheets, the cash flow statements, etc. An investor may be drawn towards the result of the analysis, but may choose not to invest looking at the temporary market trends and the long-term growth sustainability of the company.

Technical Analysis of Stocks In the Stock Market

This type of analysis deals with charts and numerical methods in determining the price trend of a stock, and an investor depending on the technical analysis will not worry too much on going through the financial statements of a company. Technical analysts like to use the advance-decline technique, as it’s focus is not limited to the performance of index stocks, but the overall performance of the market.

The advance-decline numbers may be represented as ratio or percentage in newspapers or T.V. sources. And even if the SENSEX and Nifty report gain at the end of the, the numbers of advance-decline numbers should be given due weightage for its ability to project the overall market performance better.

Index Method

This type of analysis is about finding the most appropriate strategies to make different investments, weigh market capitalization of companies, and safeguard the portfolio by minimizing risks. This method of analysis helps the investor to make several profitable investments minimizing taxes and to make the most of the overall market trends.

Comparative Analysis of Stocks

A comparative analysis allows the investors to determine the value of a stock in terms of its profitability in the future. The advantage of this type of analysis is that the investors understand which of their actions are really effective and which are not. This makes the decision of buying and selling stocks easier. However, the analysis does not take into account the market conditions in general, and can be counter-productive because of its inaccuracy.

Analysis Using Inside Information

Some investors try to analyze the stock market using information obtained from sources inside an enterprise. This type of investment analysis and training is called the insider trading and is illegal in most places.

Stock Analysis Software

There are software programs available to analyze the stock market, determining the trends of their parameters. These programs are an excellent way to begin the analysis, as is the inventory information easily accessible even to those who know little about the securities markets. So they offer even the novice investors a way of analyzing the actions from your own home, without a thorough investigation. These programs often promise to make several types of value analysis to determine the long-term and short-term options of investments in shares.