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INTRODUCTION TO FUNDAMENTAL ANALYSIS Presented by Sukhada Desai
INTRODUCTION TO
FUNDAMENTAL ANALYSIS
Presented by
Sukhada Desai
Fundamentals The qualitative and quantitative information that contributes to the economic well-being and the subsequent financial
Fundamentals
The
qualitative
and
quantitative
information
that
contributes
to
the
economic well-being and the
subsequent financial valuation
of
a
company, security or currency. Analysts
and investors analyze these fundamentals
to develop an estimate as to whether the
underlying
asset
is
considered
a
worthwhile
investment.
Fundamental Analysis A method of evaluating a stock by attempting to measure its intrinsic value by
Fundamental Analysis
A method of evaluating a stock by attempting to
measure its intrinsic value by examining related
economic, financial and other qualitative and
quantitative factors. Fundamental analysts
attempt to study everything that can affect
the security's value, including macroeconomic
factors (like the overall economy and industry
conditions) and individually specific factors
(like the financial condition and management of
companies).
Underpriced or Overpriced
Valuation The process of determining the current
Valuation
The process of determining the current
worth of an asset or company. Techniques -> subjective or objective.
worth of an asset or company.
Techniques -> subjective or objective.

For example company's management, (subjective) composition of its capital structure, Prospect of future earnings, (objective) market value of assets.

Valuation The process of determining the current worth of an asset or company. Techniques -> subjective
Valuation The process of determining the current worth of an asset or company. Techniques -> subjective
Valuation The process of determining the current worth of an asset or company. Techniques -> subjective
Valuation The process of determining the current worth of an asset or company. Techniques -> subjective
Valuation The process of determining the current worth of an asset or company. Techniques -> subjective
Valuation The process of determining the current worth of an asset or company. Techniques -> subjective
Intrinsic Value The actual value of a company or an asset based on an underlying perception
Intrinsic Value
The actual value of a company or an
asset based on an underlying
perception of its true value including
all aspects of the business, in
terms of both tangible and intangible
factors.
Macro Economic Factors • GDP •Savings & Investments •Inflation •Interest Rates •Budget •Tax Structure • Balance
Macro Economic Factors
• GDP
•Savings & Investments
•Inflation
•Interest Rates
•Budget
•Tax Structure
• Balance of Payment
•Monsoon & Agriculture
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators
•Leading (fiscal-monetary policies, rainfall, productivity,
fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy. )
• Coincidental (gap between budgeted & actual GDP)
•Lagging (Unemployment rate, consumer price index,
flow of foreign funds)
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
 
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
 
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
Economic Indicators •Leading (fiscal-monetary policies, rainfall, productivity, fiscal deficit/surplus, BSE Sensex / NSE Nifty, tax policy.
FUNDAMENTAL ANALYSIS The theory:- Depends on intrinsic value of the company.  Future profits are taken
FUNDAMENTAL ANALYSIS
The theory:-
Depends on intrinsic value of the company.
Future profits are taken into consideration.
The greater fool theory:-
One of the assumptions is that the people are
rational in stock market.
Stock price also depends on the speculation of
the trader (fool) which can hurt the stock price.
QUALITATIVE ANALYSIS MANAGEMENT Who?  Where?  What and when?  Why?  Know what the
QUALITATIVE ANALYSIS
MANAGEMENT
Who?
Where?
What and when?
Why?
Know what the company does and how it makes
money
INDUSTRY / COMPETITION
QUALITATIVE ANALYSIS MANAGEMENT Who?  Where?  What and when?  Why?  Know what the
QUALITATIVE ANALYSIS MANAGEMENT Who?  Where?  What and when?  Why?  Know what the
QUALITATIVE ANALYSIS MANAGEMENT Who?  Where?  What and when?  Why?  Know what the

Conclusion:- This strategy may be one of the simplest, but it is also one of the most effective ways to evaluate a potential investment.

QUALITATIVE ANALYSIS MANAGEMENT Who?  Where?  What and when?  Why?  Know what the
QUALITATIVE ANALYSIS MANAGEMENT Who?  Where?  What and when?  Why?  Know what the
QUALITATIVE ANALYSIS MANAGEMENT Who?  Where?  What and when?  Why?  Know what the
VALUE INVESTING
VALUE INVESTING
VALUE INVESTING The concept is actually very simple: find companies trading below their inherent worth. Value,
VALUE INVESTING The concept is actually very simple: find companies trading below their inherent worth. Value,

The concept is actually very simple: find companies

VALUE INVESTING The concept is actually very simple: find companies trading below their inherent worth. Value,
VALUE INVESTING The concept is actually very simple: find companies trading below their inherent worth. Value,
trading below their inherent worth. Value, not junk  value investing always compares current share price
trading below their inherent worth.
Value, not junk
value investing always compares current share price
to intrinsic value not to historic share prices.
Buying a Business, not a stock.
Doesn’t pay attention to external factors, daily
flctuations.
Screening for Value stocks.
MAJOR ASPECTS OF VALUE INVESTING Dividend. Historical earnings. P/E ratio : Price/Earnings ratio Growth Rate Sector
MAJOR ASPECTS OF VALUE
INVESTING
Dividend.
Historical earnings.
P/E ratio : Price/Earnings ratio
Growth Rate
Sector
Balance sheet
EPS: Earnings per share
THANK YOU
THANK YOU