Kumar Naveen B. - The Use of Technical and Fundamental Analysis in the Stock Market in Emerging and Developed Economies

The Use of Technical and Fundamental Analysis in the Stock Market in Emerging and Developed Economies

The Use of Technical and Fundamental Analysis in the Stock Market in Emerging and Developed Economies

By

Naveen B. Kumar

Indian School of Business, Hyderabad, India

Sanjay Mohapatra

Xavier Institute of Management, Bhubaneswar, India

Emerald Group Publishing Limited

Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2015

Copyright 2015 Emerald Group Publishing Limited

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ISBN: 978-1-78560-405-8

A s in all financial markets, the primary question in the stock market is how market participants and stock traders forecast future market prices. The two general techniques for predicting stock market prices used by market professionals are chartist or technical analysis and fundamental or intrinsic value analysis. This study aims at finding out the usage of technical and fundamental analysis in the Indian stock market (emerging market) by brokers and the perceived importance attached to them by brokers.

How we value the stock market now and in the future influences major economic and social policy decisions that affect not only investors but also society at large, even the world. If we exaggerate the present value of the stock market, then as a society we may invest too much in business startups and expansions, and too little in infrastructure, education and other forms of human capital. If we think the market is worth more than it really is, we become complacent in funding our pension plans, in maintaining our savings rate, in legislating an improved social security system.