An investor conducts fundamental analysis and technical analysis to predict the future price movements of securities by analyzing the Economic factors, Industrial factors and Company specific factors.
Various economic, industrial and company specific factors can have a direct bearing on prices of securities. A fundamental analysis helps an investor to understand the general behaviour of the market, industry or a company and prepare a buying and selling strategy.
Also Read: Technical Analysis – Dow Theory
Various factors studied under Fundamental Analysis
| Economic Analysis | Industrial Analysis | Company Analysis |
| GDP of the country | Growth rate of Industry | Competitive Advantage |
| Level of Savings & Investment | Nature of Product | Market Share |
| Inflation Rate | Nature of Competition | Growth Rate/Sales |
| Interest Rate | Government programs and projects | Corporate Image |
| Government Budget | Subsidies, incentives, concessions
|
Financial Leverage and Borrowing Capacity |
| Tax Structure | Tax framework | Previous track record |
| Balance of Payment Situation | Import and export policies
|
Profits of the company |
| Infrastructural Facilities | Financing norms | Financial Stability & Performance |
| Demographic Factors | State of technology | Future estimates of sales, profits |
| Climatic Conditions | Industrial Policies | Management |
| State of Economy | Socio-Demographic Trends | Operating Efficiency |
| Overall rate of growth | Supply Sector | |
| Growth in Primary, Secondary and tertiary Sectors | Type of Industry – Growth, cyclical, defensive, cyclical growth | |
| Linkage with World Economy | Industry Life cycle | |
| Economic Forecasts | SWOT Analysis |
Also Read: Technical Analysis – Dow Theory
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