STOCK MARKET ANALYSIS
The stock market is a complex and dynamic system influenced by multiple factors. To succeed in it, traders and investors must understand how to analyze stocks from various perspectives. Traditionally, there are three main types of analysis used in the stock market: Each plays a different role in your decision-making process. Some market experts, like Mallinath Mulage ,CEO of The Safe Trader Academy Hyderabad, believe that while all three are essential, their weight and importance vary depending on the trading style. According to him: 1. Fundamental Analysis: Laying the Foundation Fundamental analysis focuses on evaluating the intrinsic value of a company. It answers the question: “Is this a good business to invest in?” This would help long-term investors who are not concerned about daily price movements but are concerned about whether the company is financially sound and will be able to grow in the long run. What Does It Include? Example: Suppose, for instance, you are evaluating ITC Ltd. Through fundamental analysis, “Fundamentals help you select the right stock, but they won’t tell you the right time to buy it.” Tip: Use fundamentals to shortlist strong companies in booming sectors like banking, IT, or energy before digging into technical charts. 2. Technical Analysis: Timing the Market Once you’ve got a fundamentally sound stock, the question is—when to buy it and when to let go of it? That’s where Technical Analysis comes in. Technical analysis considers price action, volume, and market patterns to decide the best entry price or the best time to exit a trade. According to Mallinath Mulage, 90% of the stock market decisions are pegged on technicals, especially in the case of traders and short-term investors. What Does It Focus On? Technical analysis reads in the minds of the market. It does not care about a company’s profits- it cares about what the market thinks will happen next. Example: Say you have identified Reliance Industries as a fundamentally strong stock. Should you buy it today, next week, or wait for a cheaper price? Technical analysis will help you determine: “An excellent stock could still make you lose money if your timing is wrong.” Tip: Always trade with the trend; minimize your risk by trading close to S/R zones and moving averages for better profit realization. 3. Sentimental Analysis: Reading the Market’s Mood At times, even seemingly robust stocks plummet with a single negative headline. And this is where Sentimental Analysis comes into the picture. Sentimental analysis seeks to gauge how traders and investors feel about the general market or individual stocks. They are often influenced by factors external to the companies and thus may not always reflect fundamentals. Market behavior is ruled by emotion. What Influences Market Sentiment? It’s many times that we see the markets moving on feelings and not on facts. For instance, the announcement of a much better earnings report can still result in a decline of the stock price if the investor was expecting an even bigger profit. Tip: Tools like the Fear & Greed Index, news aggregators, or economic calendars come in handy to keep sentiments in check. An early shift in sentiment will always prove to be an early indication for reversals. Mallinath Mulage, CEO of The Safe Trader Academy, an experienced stock market mentor, said, “Fundamental Analysis plays 10% role while Technical Analysis plays 90% role in trading success.” When combined wisely, these three create a powerful strategy for anyone trading the markets. Why You Need All Three While each analysis serves a purpose, using them together provides a well-rounded strategy: Type of Analysis Role It Plays Best For Fundamental Analysis Stock and sector selection Long-term investing Technical Analysis Timing entry and exit Short- to medium-term Sentimental Analysis Understanding market mood and volatility News-based movement ✅ Successful traders know when to mix logic, emotion, and timing. Practical Tips to Apply These Analyses Conclusion: Successful trading and investing is not about predicting the future—it’s about preparing for it using every tool available. Each type of analysis is a piece of the puzzle, and when combined, they provide clarity in the often-chaotic world of trading. FAQs: 1. Can I rely only on Technical Analysis? A: For intraday and short-term trades, technicals are crucial. But combining them with sentiment increases your edge. Q2. Is Fundamental Analysis only for long-term investors? A: Primarily yes, but even short-term traders use fundamentals to avoid weak or scammy stocks. Q3. How often should I do Sentiment Analysis? A: Daily. Market mood can change overnight based on global events or economic data. Q4. Which one should beginners focus on first? A: Start with basic fundamental concepts, then dive into technical. Learn sentiment as you gain experience. 👉 Join The Safe Trader Academy today and start trading like a pro.