| What is the meaning of Research ? |
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Stock market research is a scientific way of gathering and analyzing information to determine market conditions and identify stocks to buy or sell at a given time. |
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| What are the various types of research work undertaken in the stock market industry? |
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| There are two types of research activities done in the stock market industry: |
- Fundamental analysis
- Technical analysis
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| What is fundamental analysis? |
Fundamental analysis pertains to analyzing a company's business prospects and future earnings. It analyses historical financial data and interactions with the company's management to estimate the future performance of the company. It undertakes not only a quantitative analysis but also a qualitative one, i.e. corporate governance, the quality of the management, their past business track record, strategic/core competencies et al. It is done by analyzing the country's economy, the industry the company operates in and the company's performance to derive its stock's current fair value as well as to forecast its future value. |
| What is technical analysis ? |
| Technical analysis is the examination of historical price movements of a security, index or a sector to forecast its future price movements. |
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It is a graphical representation of prices through bars, candle sticks etc. It incorporates the past trends into its analysis. It also studies sentiments and mass psychology. The tools of the technical analyst are indicators and systems, which are used on price charts. Moving averages, support and resistance lines, envelopes, Bollinger bands, momentum...are all examples of indicators.
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