Navigating the complexities of share markets can be intimidating for new investors. However, the right techniques and tools for investment analysis can help you invest in share markets with confidence. Opening a Free Demat account from the best share broker is important to get the best research call & other services.
Today, we’ll take a look at various share market analysis tools and techniques that make investment processes easy for beginners.
Share Market Analysis Techniques and Tools-
It is crucial for new investors to understand share market analysis to make informed investment decisions. Analysing financial markets involves assessing various factors to evaluate the value and potential performance of shares and stocks. Two primary techniques of share market analysis are –
a. Technical analysis
b. Fundamental analysis
a. Technical analysis:
Technical analysis involves evaluating shares/securities and forecasting future price movements depending on historical market data. It primarily focuses on price and volume patterns. Evaluation of technical analysis is based on the premise of historical price movements, reflecting all available information and market psychology. Some of the best technical analysis tools used in India include:
1. TradingView:
TradingView is a robust charting platform that equips investors with technical analysis tools. It provides a comprehensive range of charting tools, analysis features, and technical indicators. The platform helps investors identify market trends and simplify complex market data.
The key features of this platform include market screeners, strategy testers, in-depth market analysis, and so on. Also, the platform has its own coding language – Pine Script that enables investors to design their indicators and strategies.
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Tickertape:
Tickertape works as a real-time information display system, offering investors the latest stock prices, financial news, trading volumes, etc. This platform’s primary function is to provide a constant flow of information to help investors make informed decisions.
The important aspects of Tickertape are the volume of trades, price information, directional arrows indicating movement in prices, and more. The user-friendly interface and technical indicators enable investors to do in-depth analysis.
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MoneyWorks4Me:
MoneyWorks4Me is another essential technical analysis tool used by investors in India. It provides a user-friendly interface and data-driven analysis tools to make informed investment decisions. The platform also facilitates research guidance on top equity stocks.
With MoneyWorks4Me, you can leverage stock screener, portfolio trackers, detailed analysis reports, etc. It is popular for focusing on long-term value investment strategies.
b. Fundamental Analysis:
Fundamental analysis involves evaluating and assessing the intrinsic value of the shares. It includes analysing aspects like the company’s financial health, sector position, business operations, and economic conditions. By understanding a company’s fundamentals, investors can assess the investment potential. Let’s take a look at some of the fundamental analysis tools:
- Earnings per share (EPS):
Earnings per share represents the profit allocated to each stock of a company. EPS is calculated by dividing the net income earned by the company after tax by the total number of outstanding shares. A higher EPS value means greater returns for shareholders.
EPS can be basic or diluted. Diluted EPS considers high potential future shares. Trail, current, and forward insights into past, present, and projected earnings. Investors can gauge profitability by comparing EPD among companies in the same industry.
- Price-to-earnings (P/E) ratio:
The price-to-earnings ratio is one of the key fundamental analysis tools that compares the company’s payout to its stocks. It is calculated by dividing the share price by the EPS.
Here also, trailing P/E indicates past earnings, and forward P/E predicts the next. A higher forward P/E as compared to trailing showcases decreased earnings. A lower P/E ratio indicates potential undervaluation and growth, hinting at higher earnings relative to stock price.
- Return on Equity (RoE):
Return on equity evaluates a company’s efficiency in yielding profits from shareholders’ investments. RoE is calculated by dividing the net dividend earnings after tax by the equity of shareholders.
Increased RoE indicates high efficiency, showcasing that the company can boost profit earnings without needing more capital. You can evaluate a company’s performance by comparing RoE among industry peers, with a RoE between 13% and 15% seen as positive.
Concluding –
Thus, mastering advanced tools and techniques for share market analysis equips new investors with the necessary information and data to navigate the complexities of investments. It can also help to benefit from valuable insights into market dynamics and trends.
Also, if you are seeking comprehensive trading guidance, you could consider choosing a reliable full-service stock broker in India, like Choice. Choice is a reputed stock broker with more than 30+ years of experience providing valuable financial services at the lowest brokerage charges in India. Their expert team provides personalised support to help you achieve your financial goals. Their robust platform also offers access to advanced analytic tools, empowering investors to make well-informed decisions.
Get in touch with Choice and take your trading experience to the next level today!
Disclaimer: Please note that while this article aims to provide accurate and up-to-date information, it should not be considered official financial advice. It is advisable to always consult a financial advisor before making investment decisions.
