Comprehensive Analysis of Fundamental and Technical Analysis

Previously, obtaining shares required contacting your broker via phone to place an order or making a request by mail. There was a constant chance of fraud, forgery, or impersonation, shares were kept in tangible form, and clearing took several days. When online Demat accounts were introduced to the Indian market, everything changed. Continue reading to discover the many advantages of the best application for demat account.

The Indian stock markets underwent a transformation in 1996 with the introduction of Demat accounts. The problems associated with physical shares, such as loss, theft, forging, stamp duty costs, etc., were removed by switching to an electronic trading system.

Before dwelling into the benefits of demat account one should know about technical and fundamental analysis.

  • Fundamental analysis: what is it?

The process of analyzing a security’s underlying financial and economic aspects that influence its value is known as fundamental analysis. The company’s financial standing, movements in the industry, and other macroeconomic variables are the main topics of this kind of study.

Finding a company’s inherent worth and the value of its shares based on its financial performance, potential for development, and general health is the aim of fundamental research.

The income statement, balance sheet, and cash flow statement of a corporation are among the financial statements that fundamental analysts examine first. These statements support the analysis of several non-financial variables as well as important financial measures including sales, profits, profit margins, and debt levels.

As previously said, in addition to looking at macroeconomic variables like interest rates, GDP growth, inflation, and consumer confidence, fundamental research also evaluates the state of the economy as a whole and how it can impact the prospects for the firm going forward as well as the price of its shares.

  • Technical analysis: What is it?

The process of analyzing various data produced by changes in the price and volume of stocks is known as technical analysis, and it is used to evaluate securities. It ignores the company’s fundamental financial condition in favor of concentrating on the broad trends and patterns shown in a stock’s price chart. Using historical market data and technical analysis, traders try to forecast future price changes.

Technical analysis is based on the fundamental idea that stock prices follow patterns, and that these trends often recur over time. It is possible to forecast future price fluctuations by recognizing these trends and patterns. Technical analysis also presupposes that the current stock price takes into account available information and fundamentals.

Analysts that use this method don’t try to calculate a stock’s intrinsic worth. Rather, they use historical data and trends to predict future prices and, in the end, pinpoint the best times to enter and leave the market. Here, critical price points, such support and resistance levels, are shown on the chart using a variety of technical indicators. These levels are essential for spotting trading opportunities.

The Top Benefits of a Demat Account

  • Safety and security: No chance of shares being lost or stolen

The safety and security that a Demat account provides is its greatest benefit. The actual possession of financial assets included the constant danger of share certificates being misplaced or stolen. An investor would have a great deal of paperwork to complete and operational difficulties to deal with in the event of theft or loss before they could attempt to get their assets back. There would be no assurance of recovery even in such case. It is safer and more secure to own shares in demat form. When assets are kept in Demat form, the likelihood of theft or loss is quite low.

  • Quicker and more seamless settlements

Due to the actual physical transfer of paper shares from the seller to the buyer via the RTA, transaction settlement used to take 14 days prior to dematerialization. However, the settlement period has shortened from 14 to 2 working days with a Demat account, saving the investors’ time, energy, and effort. As they say, “time is money.”

  • Decrease in mistakes

Because so much human labor was required in the realm of physical and offline settlements, there were also a lot of manual mistakes. These were sometimes called mistake trades or “Vanda” transactions. The fact that there are fewer mistaken transactions is one of the main benefits of having a Demat account.

  • Simple transfer

The ownership of assets kept in a Demat account may be swiftly transferred to the next of kin in the terrible event of the account holder’s death thanks to dematerialization. Either a joint Demat account may be opened, or the next of kin can be added to the Demat account as a nominee. When shares were kept physically, this was not feasible since it would have required the legal heirs to do excessive effort in order to be entitled to the dead Demat account holder’s financial assets. One of the main benefits of Demat accounts has been the ease of asset transference (transfer).

  • More monetization and liquidity

Demat accounts have the added benefit of making asset liquidation simple, in addition to facilitating seamless transfers. If you have dematerialized financial assets, such as shares or mutual funds, you may quickly liquidate them by selling them or by taking out a loan against them. When assets are retained in physical form, easy liquidation and monetization are not achievable.

  • Removal of Odd-lot issues

The odd-lot issue has been resolved, which is the biggest benefit of a Demat account. Before the advent of Demat accounts, actual shares could only be purchased and sold in lots. Now, you may purchase and sell a single share.

  • Keep several instruments in one account

You may invest in equities, commodities, Equity Linked Savings Schemes (ELSS), Unit Linked Insurance Plans (ULIPs), and Futures & Options (F&O) using your online Demat account or stock analysis app. Additionally, you may use your online Demat account to follow and compare the performance of all of your assets on a single screen.

In summary

Online Demat accounts come with a number of advantages. They prevent against Demat Account fraud and forgeries, facilitate speedier settlements, facilitate smoother transactions, secure your assets from loss or damage, and provide you access to loans. Demat accounts have almost entirely replaced paper-based trading in India because of these benefits. It is advised that you thoroughly investigate the dangers involved in investing in stocks and that you only create an online Demat account with a reputable broker if you decide to do so.

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