1 of 25

2 of 25

Submitted by:-

Amandeep kaur

M.com-3rd sem

8910

Submitted By

Mrs. Kajal Puri

Asst.Prof in

Commerce and Management

3 of 25

4 of 25

Meaning of Fundamental Analysis

​

Fundamental analysis is analysis of critical

factors that affect the value of stock. When

talking about stocks,

fundamental analysis

is a technique that

attempts to determine

a security’s

value.

​

​

​

5 of 25

Intrinsic value:-

Intrinsic value is the true value of the

security. It is then compared with the

current market price of the security.

Fundamental analyst calculates the range

of intrinsic values.

​

​

6 of 25

Cases:-

Normal range is ($570-$1040)

Then:-

  • If market price is $490 then means

underpriced.

  • If the market price is $890 then means

normalpriced.

  • If the market price is $1170 then means

overpriced.

7 of 25

Types of fundamental analysis

Quantitative

Qualitative

8 of 25

  • Identify overpriced or underpriced.
  • See long term positions.
  • Beat the market.

9 of 25

10 of 25

Fundamental analysis framework:-

Top-down approach

Bottom-up approach

11 of 25

Economic analysis

Industry

analysis

Company

analysis

Top-down

approach

12 of 25

Economic analysis

Industry analysis

Company analysis

Bottom-up

approach

13 of 25

  • Economic analysis is a study of economic trends in the economy.
  • Economic analysis is study of economic policies of government.
  • Economic analysis is study of world economic trends and their impact on share price.

14 of 25

Economic

Forces

15 of 25

Gross domestic product

Savings and investment

16 of 25

inflation

Interest rates

17 of 25

Bugdet policy

Tax structure

18 of 25

Balance of payment

Foreign direct investment

19 of 25

Investment by FII

International economic condition

20 of 25

Business cycles

Monsoon and agriculture

21 of 25

Infrastructure facility

Demographic factors

22 of 25

Technical analysis

Fundamental analysis

  • To predict short term price

movement

  • Internal market data
  • Simple
  • Based on charting

techniques

  • Less volume of data
  • Speculators use it

​

  • Long term
  • External data
  • Complex
  • Based on accounting techni-

ques of ratios etc

  • Large volume of data
  • Invest on long term basis

​

23 of 25

  • Time constraints
  • Industry/company specific
  • Subjectivity
  • Analyst bias.
  • long term trends
  • Value spotting
  • Business acument
  • Value drivers
  • Knowing who’s who.

24 of 25

Books:-

  • Pandian Punithavathy, security analysis

and portfolio management.

(second edition)

- Gupta, Joshi, security analysis and

portfolio management

(kalyani publishers)

Internet:-http://www.investopedia.com/university/fundamentalanalysis/

25 of 25