You have probably heard both sides.
“Look at the company’s fundamentals before you buy.”
“Forget all that. Just read the chart.”
If you’re new to the stock market, it can get confusing pretty quickly. One person is talking about profits, debt, and P/E ratios. Another is looking at candlesticks, support and resistance.
So, who is right?
Both can be. They are simply looking at a stock from different angles.
Fundamental analysis looks at the business behind the stock — how the company makes money, how fast it is growing, and whether its financial position is healthy.
Technical analysis looks at the stock price — how it has been moving, where buyers and sellers have stepped in, and what the chart may be signalling.
Which one should you use? That depends largely on whether you’re investing for years or trading for a shorter period.
Fundamental analysis is mainly used to understand a company’s business, financial health, and valuation. Technical analysis focuses on price, volume, and charts to study market trends and possible trading opportunities. Fundamental analysis is generally more relevant for long-term investing, while technical analysis is commonly used for short- and medium-term trading. You can also use both: one to understand the business and the other to study the price.
Imagine you’re buying a small business from someone.
Would you hand over your money just because the shop’s signboard looks good?
Probably not.
You’d want to know how much the business earns, whether it has loans, whether sales are growing, and whether there is enough money left after paying its expenses.
Fundamental analysis works in much the same way with a listed company.
You are trying to understand the business before deciding what the share may be worth.
For an Indian company, you might look at:
Take a company such as TCS.
If you were researching TCS as a long-term investment, you might look at how its revenue and profits have changed over the years, how much cash the business generates, its margins, the demand for IT services, and the price investors are currently paying for its earnings.
That’s fundamental analysis.
It doesn’t mean the share price will definitely go up.
It simply gives you a better idea of what you’re actually buying.
EPS (Earnings Per Share): The company’s profit attributable to each share.
P/E ratio: Compares the share price with earnings per share. If a stock is trading at ₹500 and its EPS is ₹25, its P/E is 20.
ROE (Return on Equity): Shows how much profit a company generates from the money shareholders have invested in it.
Debt-to-equity ratio: Compares the company’s debt with shareholders’ equity and gives an indication of how much the business relies on borrowed money.
You don’t need to memorise every ratio on day one. Start by understanding what the business does and whether its financial performance makes sense.
Now take the same stock and forget the annual report for a moment.
Open its price chart.
You might notice that the stock has been rising for several months. Or perhaps it has been stuck between ₹900 and ₹1,000. Maybe it has fallen sharply and is now showing signs of recovery.
Technical analysis is about studying this price behaviour.
A trader may look at:
Let’s take support and resistance.
Suppose a stock has fallen close to ₹900 several times but has managed to recover each time.
A trader may mark ₹900 as a support level.
Now suppose the stock has repeatedly struggled around ₹1,000.
That area may be called resistance.
These levels aren’t guarantees. The stock can fall below ₹900 or move above ₹1,000. They simply give the trader price levels worth watching.
Technical analysis can then be used to build a trading plan around what the price does next.
Here’s the simplest way to look at it.
Fundamental analysis asks:
“Is this business worth owning?”
Technical analysis asks:
“What is the price doing?”
That’s why the two approaches can lead to very different decisions even when two people are looking at the same stock.
A long-term investor may spend hours understanding a company’s business and barely look at its daily price movement.
A swing trader may care much more about the chart because their position may last only a few days or weeks.
Neither person is necessarily ignoring the other side.
They simply have different time horizons and different questions.
There is no single formula for analysing a company. But a beginner can start with a simple process.
Start with the business, not the ratios.
What does the company sell?
Who buys it?
Where does its revenue come from?
Who are its competitors?
If you cannot explain the business in a couple of sentences, spend some more time researching it.
Revenue tells you how much the company is bringing in.
Profit tells you what remains after its expenses.
Don’t look at just one year’s number. Check the trend over several years.
A company whose sales are growing but whose profits are shrinking deserves a closer look.
Debt isn’t automatically bad.
A company may borrow money to expand its business. The question is whether it can comfortably handle that debt.
Cash flow matters too. A company may show accounting profits, but you also want to know whether cash is actually coming into the business.
This is where beginners often make a mistake.
A great company isn’t automatically a great investment at any price.
For example, suppose:
Then:
P/E = ₹500 ÷ ₹25 = 20
So the stock trades at a P/E of 20.
Does that mean it’s cheap?
Not necessarily.
You would want to compare that number with the company’s past valuation, similar companies, and its expected growth.
A company’s numbers make more sense when you have something to compare them with.
If you’re studying an IT company, compare relevant measures with other IT companies.
Look at things such as:
This can help you understand where the company stands within its industry.
This is your investment thesis, simply, your reason for buying the stock.
For example:
“I think this company can grow its profits over the next few years because its business is expanding and its financial position is healthy.”
Now ask the uncomfortable question:
What could prove me wrong?
That question is just as important.
Technical analysis is more chart-focused, but you don’t need a screen full of indicators to get started.
First ask what the stock has been doing.
Is it generally moving higher?
Lower?
Or going sideways?
A trend is simply the broad direction of the price.
Look for areas where the price has reacted before.
For example:
Support: ₹900
Resistance: ₹1,000
If the stock approaches ₹900 again, a trader may watch how buyers and sellers react.
If it moves above ₹1,000, the trader may look for signs that the move is genuine rather than immediately assuming it will continue.
Volume tells you how many shares changed hands during a period.
Imagine a stock suddenly moves above a resistance level while trading much more volume than usual.
A trader may pay more attention to that move than if the price crossed the same level on very little activity.
Again, it is a clue, not a promise.
For beginners, one or two indicators are enough to start.
Moving average: The average price over a selected period. Traders use it to get a clearer view of the trend.
RSI: A number between 0 and 100 that helps traders study recent price momentum.
That’s enough to begin with.
You don’t need six indicators on your screen before placing your first trade.
Before buying, know:
A stop-loss is a pre-decided exit level used to limit a loss if the trade moves against you.
This part has nothing to do with predicting the market perfectly. It’s about knowing what you’ll do when the market doesn’t agree with you.
Let’s make the difference even simpler.
Suppose you’re looking at TCS.
Same company.
Same share price.
Completely different questions.
That’s really what the fundamental vs technical analysis debate comes down to.
Suppose TCS or any other large listed company is trading at ₹500.
For this example, assume its EPS is ₹25.
So:
P/E = ₹500 ÷ ₹25 = 20
A fundamental investor won’t stop there.
They may check whether a P/E of 20 is reasonable compared with the company’s historical valuation, its peers, and its expected earnings growth.
Now look at the chart.
Suppose the stock has:
A trader may wait to see how the price behaves near these levels.
If the stock moves above ₹530 with strong volume, that may form part of a trading setup.
If it falls below ₹470, the trader may reassess the setup.
Notice what happened.
The fundamental analysis didn’t tell us where the stock would trade tomorrow.
The technical analysis didn’t tell us whether the company was a good business.
They answered different questions.
Fundamental analysis is useful when you want to understand the business you’re putting your money into.
It can help you:
But it isn’t foolproof.
A company can have good financials and still deliver poor stock returns if you pay too much for it. Business conditions can also change.
Technical analysis is useful when the price itself is the main thing you’re trading.
It can help you:
But charts can give false signals.
A breakout can fail. A trend can reverse. An indicator can suggest one thing while the market does another.
That’s why a technical setup should never be treated as a guarantee.
Absolutely.
In fact, there’s no rule saying you have to choose one.
You could use fundamental analysis to shortlist companies and technical analysis to decide how you want to enter.
For example:
Fundamentals:
“This looks like a business I would be comfortable owning.”
Technical analysis:
“The current chart doesn’t give me an entry I like yet.”
You wait.
The price reaches a level that fits your plan.
Now you have both pieces of information.
This doesn’t make the trade or investment risk-free. It simply means you’re looking at the company and the price rather than relying entirely on one.
For long-term investing, fundamental analysis usually deserves more attention.
If you’re planning to own a stock for five years, what the business earns and how it grows will matter far more than what its price did on a particular Tuesday.
That doesn’t make the chart useless.
Some long-term investors also use technical analysis to avoid buying after a sharp run-up or to identify a price level they prefer.
But the business remains the main focus.
For intraday trading, technical analysis is generally more relevant.
An intraday trader is dealing with price movements that may last minutes or hours. A company’s five-year revenue growth isn’t likely to tell the trader whether the stock will move from ₹1,000 to ₹1,015 in the next 30 minutes.
Charts, price levels and volume become much more important.
That said, major company announcements, earnings, and other news can still cause sharp price movements.
So even traders should know what’s happening around the stock they’re trading.
Don’t try to become a fundamental analyst and a technical trader in a weekend.
Pick one use case first.
Start with:
Start with:
And one rule works for both:
Don’t buy or sell something just because someone else is confident about it.
Parameter | Fundamental Analysis | Technical Analysis |
Looks at | Business and financials | Price and volume |
Main question | Is the business worth owning? | What is the price doing? |
Common use | Investing | Trading |
Typical time horizon | Long term | Short to medium term |
Common tools | EPS, P/E, ROE, debt ratios | Charts, support, resistance, RSI, moving averages |
Main focus | Business performance and valuation | Price trends and market behaviour |
Entry timing | Less focused on exact timing | Often a major focus |
Main risk | Business or valuation assumptions may be wrong | Signals can fail |
There is some overlap. Neither method belongs exclusively to one type of market participant, and investors can combine the two depending on their strategy. Indian-market educational material from HDFC Mutual Fund and Zerodha also presents them as complementary approaches rather than mutually exclusive ones.
A low P/E doesn’t automatically mean a stock is cheap.
The company’s growth, business quality, and the reason behind the low valuation matter too.
More indicators don’t automatically mean better analysis.
Start small and learn what each tool is actually telling you.
A great business can still be overpriced.
The price you pay matters.
A breakout can fail.
A support level can break.
Keep a stop-loss and manage your position size.
You buy a stock because you like its five-year story.
Two days later, it falls 5%.
You panic and sell.
That isn’t necessarily a problem with the company. It may simply be a mismatch between your investment thesis and your expectations.
This is called confirmation bias.
You decide you want to buy a stock and then notice every bullish article while ignoring the warning signs.
Try doing the opposite occasionally.
Ask:
“What would make this investment or trade a bad idea?”
If you’re planning to invest for years, start with fundamental analysis.
Learn how a company makes money, how its revenue and profits are changing, how much debt it carries, and whether its valuation makes sense.
If you’re more interested in trading over days or weeks, start with technical analysis.
Learn charts, trends, support, resistance, and basic risk management before moving on to complicated indicators.
And if you eventually learn both, that’s perfectly fine.
You don’t have to pick a side.
Fundamental analysis and technical analysis are two different ways of looking at the same market.
Fundamental analysis takes you inside the company, its business, financials, growth, and valuation. Technical analysis keeps the focus on the market price, its trend, volume, and possible trading levels.
For a long-term investor, fundamentals will usually be the starting point. For a short-term trader, the chart may matter more.
But the better question isn’t “Which one is best?”
It’s “What am I trying to figure out?”
If you’re trying to understand the business, start with fundamentals. If you’re trying to understand the price, study the chart. And if you want both pieces of the puzzle, nothing is stopping you from using both.
Attention Investors!
Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from the depository on your email id and/or mobile number to create a pledge. Pay 20% upfront margin of the transaction early to trade in the cash market segment. Investors may please refer to the Exchange’s Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020, and NSE/INSP/45534 dated August 31, 2020, and other guidelines issued from time to time in this regard. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.
Corporate Office: No. 153/2, 3rd Floor, M.R.B.Arcade, Bagalur Main Road, Dwaraka Nagar, Yelahanka, Bengaluru – 560 063, Karnataka.
Registered Office: Old No.56/2 ,New No.58, LIC Nagar, Vinayagar Kovil Street, Erode -8,Tamil Nadu– 638002.
Alice Blue Financial Services (P) Ltd : NSE EQ | NSE FO | NSE CDS-90112 SEBI REG : INZ000156038
Alice Blue Financial Services (P) Ltd : BSE EQ | BSE FO | BSE CD-6670 SEBI REG : INZ000156038
Alice Blue Financial Services (P) Ltd : CDSL DP ID 12085300 DP SEBI REG : IN-DP-364-2018
Alice Blue Financial Services (P) Ltd : MCX-56710 SEBI REG : INZ000156038
We hereby declare that we are doing PRO trading
Procedure to file a complaint on SEBI SCORES : Register on SEBI SCORES 2.0. Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID. Benefits: Effective Communication, Speedy redressal of the grievances
Click on the provided link to learn about the process for submitting a complaint on the ODR platform for resolving investor grievances.
Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI prescribed limit.
For queries regarding account opening or activation, email to [email protected] and for fund updates, email to [email protected]
Disclaimer : Prevent unauthorized transactions in your account. Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day. Issued in the interest of investors. All clients have to update their email id and mobile number with Member : Investor Grievance [email protected]
KYC is a one time exercise while dealing in securities markets – once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
No need to issue cheques by investors while subscribing to an IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in the investor’s account.
Investors are requested to note that Alice Blue Financial Services Private Limited is permitted to receive money from investor through designated bank accounts only named as Up streaming Client Nodal Bank Account (USCNBA). Alice Blue Financial Services Private Limited is also required to disclose these USCNB accounts to Stock Exchange. Hence, you are requested to use following USCNB accounts only for the purpose of dealings in your trading account with us. The details of these USCNB accounts are also displayed by Stock Exchanges on their website under “Know/ Locate your Stock Broker. Bank Details (Valid UPI FAQ).
