BASICS OF FUNDAMENTAL ANALYSIS | WHAT IS FUNDAMENTAL ANALYSIS? | EXPLAINED IN HINDI AND ENGLISH.

INTRODUCTION OF FUNDAMENTAL ANALYSIS.

The fundamental analysis focuses on calculating a security’s fair value and compares it to the market price to determine if the security is overvalued, undervalued, or fairly valued. By taking into account the economic variables that influence the investment decision-making, this analysis can estimate future trends based on a firm’s or the market’s real potential. By carefully monitoring and studying the prospect of a particular firm based on its financial results, analysis can estimate the future corporate earnings, cash flow and return on capital,

among other ratios. Furthermore, during periods when the market is not efficient, basic analysis can identify the securities with a potential to outperform the market with a risk-return relationship above the market average.

(FUNDAMENTAL ANALYSIS IN HINDI)

FUNDAMENTAL ANALYSIS INCLUDES:

• COMPANY ANALYSIS.

Company analysis is collecting information related to the company's profile, products, services and profitability.

• INDUSTRY ANALYSIS.

Industry analysis is a tool that facilitates a company's understanding of its position relative to other companies that produce similar products and services.

• ECONOMIC CONDITIONS ANALYSIS.

The economy is studied to determine if overall conditions are good for the stock market. Is inflation a concern? Are interest rates likely to rise or fall? Are consumers spending? Is the trade balance favorable? Is the money supply expanding or contracting? These are just some of the questions that the fundamental analyst would ask to determine if economic conditions are right for the stock market.

• FUTURE PROFIT OUTLOOK.

TOOLS OF FUNDAMENTAL ANALYSIS.

• Earnings Per Share (EPS): How much of a company's profit is assigned to each share of stock? Earnings per share is calculated as net income fewer dividends on preferred stock divided by the number of outstanding shares.

• Price to earning ratio (P/E): This ratio compares the current sales price of a company's stock to its per-share earnings.

• Projected Earning Growth (PEG): PEG anticipates the one-year earnings growth rate of the stock.

• Price to Sales Ratio (P/S): The price to sales ratio values a company's stock price as
  compared to its revenues. It's also sometimes called the PSR, revenue multiple, or sales multiple. 

• Price to Book Ratio (P/B): This ratio, also known as the price to equity ratio, compares a stock's book value to its market value. You can arrive at it by dividing the stock's most recent closing price by last quarter's book value per share. Book value is the value of an asset as it appears in the company's books. It's equal to the cost of each asset less cumulative depreciation.

• Dividend Payout Ratio: This compares dividends paid out to the stockholders to the
  company's total net income. It accounts for retained earnings, income that is not paid
  out, but rather retained for potential growth.

• Dividend Yield: This, too, is a ratio: yearly dividends compared to share price. It's
  expressed as a percentage. Divide dividends paid in a one-year period per share by the
  value of a share.
• Return on Equity: Divide the company's net income by shareholders equity to find its return on equity. You might also hear this expressed as the company's return on net worth.

ALWAYS ANALYSE THE MARKET AND STOCKS BEFORE YOU INVEST.

HAPPY INVESTING.