Importance of Fundamental Analysis of Stocks in Share Market

Posted by Gauri Satpute on December 4th, 2019

There are millions of stock market investors in India, who trade frequently on the NSE and BSE, with the sole purpose of earning profits from their investment in the stock market. As known to all, the stock markets are unpredictable and can react differently to various news, global events, or unexpected happenings in some known companies. You invest your hard-earned money into equities – either by listening to your friends or that so-called expert advisor in your office, or by listening to experts on TV, or by reading the expert recommendations in newspapers. Have you ever wondered how do these sources pick up stocks for recommendation?

Whether you rely on others for stock recommendations or whether you pick your own stocks through detailed study, you simply cannot ignore appropriate fundamental analysis of stocks. This kind of analysis is required before you decide to buy or sell any equity in the stock market. Before you decide to invest in any stock, it is of paramount importance that you have a report to refer with regards to the fundamental analysis of a company whose stock is under discussion for investment.

If a company has a solid and proven business model, has been growing consistently over a long period of time, has been showing ever-improving results every year, and has a reliable management team and promoters team who have the long-term vision in place for their business – such a company can be considered to be fundamentally strong. As a layman, you may not be able to do the entire fundamental analysis on your own or may require a lot of time to do so. The advantage of such fundamental analysis of stocks or companies is that once you invest in such strong stocks, you can relax and think long term. Even if markets go bearish for a while, these stock prices may even fall, but, their strong fundamentals will ensure that in the long run, such stocks give you good profits if you buy at the right price.

You simply have to hold your fundamentally strong stocks for a long term, if the analysis suggested that your buy price was the right one. There are stock market expert professionals available with firms like JM Financial, who conduct detailed fundamental analysis of stocks and provide them as research reports to their clients. You can rely on the equity research capabilities of such a company that has been known to provide highly effective portfolio management and equity guidance services for several years now.