Nifty Technical analysts track the price movements of the market and make forecasts about future price movements.
Nifty Technical analysts track the price movements At a most basic level, this school of analysis studies the supply and demand in the markets to determine the future trend.
Nifty Technical analysts track the price movements This form of Nifty analysis doesn’t set much confidence in the financial health of a company but analyses the market trends instead.
When learning about how to trade in stock markets, it is essential to know that there are 2 broad categories of stock market analysis used for making investment decisions. These are Technical analysis and Fundamental analysis.
Nifty Technical analysts track the price movements of the market and make forecasts about future price movements.
At a most basic level, this school of analysis studies the supply and demand in the markets to determine the future trend.
This form of analysis doesn’t set much confidence in the financial health of a company but analyses the market trends instead.
Technical analysis helps investors in anticipating what is likely to happen to prices over time. This form of Nifty analysis can be used in forecasting price movements in stocks, indices, commodities and futures.
The time frame is based on intra-day, daily, weekly and monthly price data. While mutual fund holders use monthly charts that plot a single month’s activity, day traders use 1 minute and 5 minutes charts to make spur of the moment buy and sell decisions.
Technical analysis also considers volume or open interest figures when interpreting price movements.
Origin of Technical analysis
The analysis of stock charts gained popularity and mass appeal in the latter half of the 19th century through the works of Charles H. Dow in the Wall Street Journal. According to ‘Dow theory’, the markets move in measurable trends and these trends can be scrutinized and predicted through the informed study of Nifty charts.
Nifty investors’ views
Nifty investors, who swear by Technical analysis, analyze the price movements and study the price actions in order to take a call on the choice of stock. Conclusions are reached through the study of candlestick graphs, bar graphs and point and figure charting. The main objective when trading in stock markets is to find out who has the greater edge, the buyer or the seller. Traders championing the use of Technical analysis largely feel that Fundamental analysis plays second fiddle in the game of numbers.
The other side of the coin
Fundamental analysis in Nifty is on the other hand, is all about the detailed study of reports, balance sheets, ratio analysis and the profit and loss ratio to evaluate the intrinsic value of a stock. Documents like the Balance sheet, the Cash Flow statement and the Income statement become the main determinants for the ultimate result.
Correlation of the 2 schools in Nifty
Thus it can safely be assumed that while Technical analysis in Nifty decides on WHEN to buy based on price fluctuations, Fundamental analysis determines WHAT to buy based on financial statements. While the former predicts the future price movements, the latter predicts the future health of the stock.
A technical analyst can use fundamentals to strengthen his technical hunch while a fundamental analyst can avail of technical data to determine the best time to purchase an undervalued Nifty stock. Contrary to popular belief, the two schools of analysis are not polar opposites, but can in fact be used in tandem for profitable trading.
Area of focus of Nifty technical analysis
Some traders rely on chart patterns
Some traders rely on technical indicators and oscillators
Some investors use a combination of the two to take calls on Nifty trading.
The exclusive use of historical price and volume data is what sets technical analysis apart from fundamental analysis.
This type of Nifty analysis is based on the understanding that the past action of the market itself holds the clue to the future behavior of the trend.
History repeats itself and Nifty prices move in trends
When learning how to trade in stock markets, every trader should understand technical and fundamental analysis as these 2 forms of Nifty analysis form the crux of every successful trade.