How to Analyze a Stock? - All you need to do before Investing or Trading. Watch till the End.
Hello friend this is we wake Bajaj I'm the co-founder of stockage, in this, video, I am going to talk to you about how. To analyze, a stock, and the. Analysis, can be done for the purpose of short-term trading all the analysis can be done for the purpose of investing, now, in this video I'm not going to talk about intraday, trading because that's a very very different ballgame but, definitely, from a short-term perspective as well as from a long-term perspective how. Do you analyze the stock trends, up just. To make you understand. That you. Can analyze the, market in two, ways. Fundamentally. Or technically. Fundamentally. Essentially, means that you, try to find out the factors, that can influence a, business, in which, the company is and figure. Out in, future, what, is going to be the effect of those factors, on the performance. Of the business of that company, and technically. Is more, with respect to stock price you, try to find out what the crowd is thinking, with respect to the stock price and where, you think the crowd will take the stock price to so, that is more of sentiment. Driven, rather than the performance, driven now, considering, these two factors the fundamental, and the technical, analysis. Stockage. Helps, you to, do a 360-degree, understanding. Of a stock where, you can not, just get information, about the stock but also do value-added, research in both, the aspects, and technical, and fundamental so. That you can start making, a judgment on that, stock and the judgment can be based on your objective, whether you want it to be a medium, term or a short term judgment or you, want it to be a long, term judgment now let me show you the. Complete, database. Which. Is the relevant for you to make a judgment, on a company, using, this beautiful stockage. App now, a little search for any stock say I search for the stock call reliance. So. I can just when, I type reliance I can see there are various options available in, the name of Reliance, I select Reliance Industries now. This section, of stock edge is actually, a 360-degree. View, about. The stock everything, you probably would like to know about, the stock is available here the, first and the most primitive thing, you want to know about the stock is how, does the stock price moved, over, the period of time and, for us I think as a retail, investor, even. If we look at last five years perspective. That what has been the trend or how, the stock, price has moved or. The last five years I think we will have a fair idea about. The performance, of the stock price of that stock so if you see a simple. Price chart, can, give you a fair, understanding of, how. The stock. Has been moving over, a period of time and the time period can be two years five years depending. Upon your. Judgement you want to make about that company, this. Chart is a very simple, price chart, which is giving you a trend however, if you want if someone wants to do a deeper, analysis with. More technical, parameters then. Obviously you can subscribe to the detailed advanced, chart and you, can select the period which, may be relevant for your analysis, and these detail, period. These, did this detail charge you can draw various trend lines various. Other indicators. You can plug. In more indicators, to you, know to, to. See how. The stock has been performing. With, obvious those technical, indicators, but as I am NOT getting into understanding. Of technicals, and fundamentals, right now because we have lot of free videos in, our real and Marcus channel where you can watch and you can learn about these two studies but, all I'm trying to show you is that there are certain cutting edge features which is available in this app which, you can use as a learning person to make, a judgement about that company now as, you know there are technical indicators, which can be plotted as there, are other tools which are providing, you one, of the beautiful feature which we have added in stock hedges you can actually add, fundamental.
Indicators Also, as part, of the chart so, see for example in this I am plotting, say quarterly EPS, as part, of this chart and I'm saving this template, see, this chart now you, see how the reliance stock price has performed. At, the same time the, performance, is backed by the increase. Increment, in the, quarterly EPS, performance, of the company so this is a very unique thing where you can get, to understand, where the fundamentally, that company is doing as good, as the stock price has been doing before. You know I can I go into the further stock price understanding. Just. To give you an academic, understanding of a stock price so. A stock price is actually, a component, of two important. Characters, one, the, intrinsic, value of the stock which, is derived out of the business, which the company's into an intrinsic. Value also takes into account the. Past performance of the company which, is reflected, by profit and loss account and the balance sheet but, the second, and which is the most critical part of any, stock price movement, is the, speculative, value, in the stock price and that, speculative. Value is largely, driven by the liquidity. Phenomenon, that, means the, more liquidity in the system the, more people are willing to buy that stock, that, speculative. Value will be more prominent. In the stock price and the stock price will move beyond. The, intrinsic value you, must have seen, understood. The concept of price earning multiple so, there are a lot of companies, where P multiple, is very very high how, do you justify that the justification, is very simple, when, P is high that means there is no speculative, value in the stock price that, means people are expecting, more money. To, be there pumped, into the stock market to. Bring that to, buy that particular stock and people. People. Want to be always, a net buyer in the stock that's why the speculative, value is more, than the intrinsic value all right now. Let's go to the other data. Point which may be relevant for you that. You, can also if you're a short-term, trader and, if you probably trade for a swing. Of four five six days you. Would like to know whether. These talk there. Is any significant. Buying or selling is, happening in that stock and the. Buying and the selling is, symbolic. From, two important, parameter. One is a volume, that means how many people, are buying selling on accumulative business, and the, second, which is the, critical, is the delivery, that was at the 8th of the day how, many people, are taking delivery, of that stock and going, home the, more people take delivery of that stock there, is a higher possibility, that, the momentum towards, price increase, will, sustain because, if, they are taking delivery, that means they're putting they're willing to put more, money that, means they're willing, to take more risk and the, higher people, are willing to take less the, chances, that the momentum will be higher is extremely. High so, through this chart which, is a beautiful, chart which gives the, combination, of both the exchanges, delivery, as well as volume data you, get to see if at and in particular, day there, has been significant, delivery, we service volume and that, day becomes a very very important, day as far as the stock price support, and resistance is concerned then. You have various technical, parameters friends, we, have designed, this in such a beautiful manner that. You, don't need a technical. Analyst, to, give you guidance about the support and resistance of the stock all you, need to do is. To. Create, a ladder of technical, analysis parameters. And, see. At which price point there are more parameter, which is getting certified if there are more parameters, which is getting satisfied, in a particular. Price range the, chances, of that stock taking support, and resistance at those parameters, becomes, extremely, extremely high see, in this in this module we. Have previously open, high low close weekly, open a high low close monthly, open high low close 52-week, high low close, simple.
Moving Average, which is five-day, 20-day 1,500. 200 exponential. Moving average, and then you have pivot points, Bullinger burns and parabolic. SAR friends. I'm a deeply. Deeply followers, of a, follower of these technicals, I don't, do I don't get into a modern, very, complex, technique and I actually believe, in these technical, parameters and. If you select, a, few. These depending, upon your objective, so if you are a short-term, trader, and wanted to. They three two or five days swing probably. You would like to select previous day weekly. High low close and probably. Simple moving average, for, your judgment, about where the stock can take support. But if you are, trading. For the purpose of say a month or a two month position, then probably you like to see 52-week high low close simple. Moving average, and probably. Parabolic, SAR to look at the trend, in the stock price at this moment so, this ladder, is actually, pretty much a, sum, up of the various support and resistance, levels which, can help that stock to take to. Take immediate support, or to go to the next level one, more concept I want to discuss in this is a 52-week high so. 52-week, high zone the, buyer zone is essentially, 52-week high minus. 15% so that's the top range where, the buyer is always available to buy that stock and, similarly, 52-week. Low zone, is 52-week. Low plus, 15% so that's a seller zone so, what, is all the, stocks who are at a bias zone typically. Will always be going will will always go up and typically. Stocks which are in a seller's zone they, are the one which will always see selling pressure so, one should always buy the 52-week high stocks and sell. Later, and, vice, versa, in case of a 52-week, low stock, its classic cases reliance, right now which, is near its 52-week, high zone so if you two-week high is 1329. If you calculate, a minus. 15% it would be around say 1100, and the stock price is 1292. Till the, stock is trading near 52-week, high zone this is a good stock to buy so. When I say it's a good stock to buy that, means as a trader you, should always look, at the position, to initiate, a buy by. First, and then square up you, should never go short in these stocks because, there is a huge huge momentum, to buy this stock because of their inherent, characteristics. Of bener in a bullish zone, or in a bias zone. So apart from this technical, level ladder you also can.
Have A look at the various technical indicators, so these are in one-step, advanced. Indicators which. Are giving you some indication about, the momentum, associated in that stock and if you don't know about these indicators, the beauty of stockage is that, we have embedded learning, as part of analytics, so just press I and, you will get an understanding of what the Cindy is all about and then, you can also click on the video which, is available in each tab and this video is a five minute video which will teach you what RSI. Is or what are what are the indicators is and maybe, you can make a judgement on the momentum associated, with that stock based, on the indicators, which is available now, moving on from technical, now technical, is more relevant for people who are looking for a short, term trading approach it is in a stock now, from a fundamental, perspective if, you are an investor, you'd, like to see how the company, has been performing, right and fundamentally. You can look, at various parameters, to arrive at a judgement about the company first, in the foremost you, should know what the company is doing so, we have something called show profile, which, gives you a complete, understanding, a brief background about the company and the kind of product they have been developing, the time and associated, with that company know, it, apart. From that you can go to a sector, you click on the sector so, you can do a peer, group a comparison. Of other companies, associated. In that particular sector based, on market cap PE price, by book that equity return on equity return, on capital employed so, this is a beautiful, section where you can see whether, this company is, looking expensive. Or cheap from, a peer group comparison, perspective. Or you can also do a industry, wise so, there will be a sector, and there will be multiple industries, inside that sector. Quickly. If you want to go to the company website and. Do a detailed, research and company website you don't have to really go to any desktop. For that you just click here and you can directly, go to the company website which will help you to get an understanding about the company in a larger depth if you at all intend, to do that, there. Are some data points which are commonly, used data points, in our every day's market, life like, EPS, like price any multiple, industry, PE book value per share these. Are live data points, as one yesterday, so, these are actually updated, data points, which. Takes into account the, latest annual, for latest, filing by the company, so when I am talking about EPS. I am talking about EPS, for, last four quarters. Cumulatively. Here right, so there is a difference between trailing. EPS. And annual, EPS 20, PSS, last, four quarters summation, annually. PSS, last, reported. EPS, as per the annual submission, that will be available in the other section, then, you have exhaustive. Research. Result. Tab where, you can click, on any graph and you can see how the company, has been performing, on a quarterly. Basis, half ele whistles or on, an annual, basis based on these profit, and loss account, statement. And then, you can, actually. Do a ratio analysis. You. Know in when we were studying in our academy 3 we, did ratio based on various criteria like, return ratio efficiency. Ratio growth ratio solvency. Ratio and each, category, of ratio was talking, about certain ratios which, are trying to talk about something, about the company for, example return, ratio return, on equity so this company on a consolidated. Basis, see this is on a consolidated, basis, generates. And return, on capital, equity, of twelve point nine five percent, right now there, is a lot of subjectivity, involved, in this for your calculation, of rahu ye my, calculation, of ROI can be different as, well as you. Would like to know where the numerator is, contributing.
To Higher RV, or the, denominator, is contributing, to the higher our OE what, we did very nicely was, we, actually gave you both, the numerator and, the denominator trend. This, is helping, you to really. Understand, whether the, performance increase, in the company has been contributed, because, of numerator or the denominator of, the company apart, from these, ratios, we, are some really really nice ratio for example efficiency. Ratio which, talks about, the. Working capital cycle look at the working capital cycle of this company it's minus 42 that, is so impressive so literally company, is actually not, requiring. Fund, to do business, they have enough money getting. Generated because of their working capital efficiency, apart. From the, fundamental. Data points, you have annual report, here presented, in a fantastic. Manner in a very very interactive manner look at all three balance sheet P R and cash flows so let's go to cash flow and this is one of my most, the important financial statement, if I want to make a judgment on any company so in cash flow you go inside the cash flow so you click here you, can go inside the cash flow and you. Could you go inside the next change so this will give you a clearly, an idea that, how, the company, is generating cash, inside the business so, his cash flow operation, is so much cash from investing, is so, much down and cash from financing, is so much down this, clearly means that company, is generating enough, cash to, be redeployed, for investment, purpose let's go inside the cash flow operation, and let's press all ears you will see the trend, associated. In this company as far as cash flow operation is concerned this is phenomenal. The company, is not just making profit but the company, is also generating, cash from its profit that, means the company is and rating profit. And not parking, its profit in debtors or inventory eventually. The profit is getting into cash which, is the most critical because, the cash helps, you to do follow-on capex and for, your following.
Expansion. Into the business now. Let's move on from annual report to shareholders because, shareholders, are the very very critical, audience, who would give you an understanding of the, character, of the promoter or the character of the people who have invested in this company if, you see the promoter, shareholding, it has been pretty much static, it has gone up in the middle and now again it has gone into the flat is own that means promoter is very, very confident about the company and then you have institutions, and retail shareholding, as well here which is giving you an idea of what, kind of interest, this company has generated over a period of time we. Also have given you name of all the shareholders including, the promoter in the company and by. This name you can. Actually see, what, kind of people have invested in this company and not just today if, you have actually given you last five years data now. You can actually compare, that in 2011, who were the investors, and as on today were. The investors, in this company and one, of the most beautiful, feature of packages, that if you click on any, of this investor, you, can actually see the list of all the companies, in India where, this investors, are also invested, and their shareholding, in that company in a passing thumps that's a phenomenal. Value addition, which we are giving to all of you then, we have board of doctor named all the people, who are board of directors the company and and. Also it will give you an idea about the kind of people who are associated with that company because ultimately a company, is run by, the board obviously. There is an entrepreneur, he is leading the board but still the board composition becomes, a very very important, thing the, latest addition for us in this app is the conch all details, unfortunately, this company doesn't give Khan calls and, also the investor, presentation, so you can click right there and you can go through the investor, presentation, mr.. Presentation. Gives you an understanding of what this company is trying to do whether, this company is trying to, expand. In the right way or the wrong way, lot. Of corporate, governance aspects, lot of software aspects, related to the company can, actually be, gauged from the investor, performance, report which the company gives on a quarterly basis, then. The company if the company is into or derivatives, then there is a open. Interest which we have been we have shown here if you see what. A beautiful presentation if, we see in November, open. Interest was around, say. Four. Zero seven contracts. Approximately. Once everyone who and if for corrodes contracts, right and if. You see open in 2000 today is almost five growth that, means more, open interest has build up from, 1150, price to. 1310. That means there have been significant, long position, in this stock more, people are betting on this talk on derivatives for, a long position now, this gives you a different level of comfort that yes overall, market also believes that this talk is long so I should also be long. In this talk or rather I should say I should try to figure out an opportunity, to always go long in this talk first, and then square up later. Do, not go short in this talk because that can be counterproductive, then. For people who want, to take some judgment from options we have options chain also I don't. Want to cover options in detail because that's a separate video which I will be recording in future but, this chain also gives you a fair understanding of, what people are expecting from this company. We. Have developed some incredible. Tools which is giving you and, immediate impression, about a company so look at this presentation, which talks about what.
Are The various parameters, which is getting satisfying, the company so as on yesterday, these were the parameters which. Were satisfying, the company so this is all mostly. Green parameters, that means this is a clear indication of this talk doing, good over a shorter, period and, also the fundamental parameters. That what. Are the performances. Parameter, of the company fundamentally, which, can help you to make a judgement about this company right. That. For. A short term medium trader you would like to know the various, deals blood, boil deal block, deal and insider, deal which is happening in that company because ultimately insider, activity, gives, a first-hand impression, about, what the management or what the core people inside the company are thinking, about the pricing, of the stock if there are more insider buying happening, there, is a high chance that stock price will outperform, if there, is more insider selling happening there, is a high chance that possibly, the stock will stop performing now. Towards. The end I, know there are a lot of things which you have covered so they, just like to moment it's towards. The end we give you all the news for last 5 years related, to this company all the, corporate announcement, from the company which has been given to both the exchanges, I all. The corporate actions like dividend, split, anything, which, has material impact on the price has, been mentioned, therefore last five years and if suppose we forgot, anything and we, have not presented you, which is a seldom, thing, I don't think so we have done it but, if we suppose forget anything then. Google will not forget and we have given the complete. News. Track, which, Google, feed is has. Been able to give to all of us when with Google of all realized industries, and the, last is you as a prudent investor, you will not like to buy at every, price you would like to wait when the right prices. Release. So you can give an alert say, I give an alert that you, add you. Only, inform, me if the stock actually. Move. Beyond, a, certain certain price and, the. You can add the alert, accordingly. This alert will sorry, there's a problem here, yeah. So the alert is this whenever the stock will cross 1300, the alert will be there more, than the active, alert, wherever. The stock price actually, reached. The earlier alert it is shown as a hiss particle so you know last time this. Alert was released to me when when. 1200, price was breached and then I acted accordingly, so, this is the trend this is a pretty long video but this is pretty much summing. Up the, complete, 360-degree, understanding. Of a stock if you want to do trading, you. Can focus on parameters, which are relevant for trading if you want to do investing, you can focus on parameters which, are relevant from an investment decision perspective, after, this probably, you will have to just take a call, on the company or based, on your objective if it's a very short-term objective. You. Focus on price and if it's a long-term medium, to long term objective, you probably would like to add more parameters, for the decision making and largely, most, of the parameters is covered in stock attack so, I hope this video was useful, you, got an understanding, of what. Are the parameters, necessary to invest, or trade in a stock and I'm. Going to record more videos and get deep inside those parameters, so that you can understand, these parameters, in totality, and become. More learning. And independent, person to invest or trade in the market thank you. You.