1. FUNDAMENTAL ANALYSIS:-BY, M.HIMABINDU

2. FUNDAMENTAL ANALYSIS:- Introduction:-Fundamental analysis examines the economic environment ,industry performance and company performance before making an investment decision. The three components of fundamental analysis are:1.Economic analysis2.Industry analysis3.Company analysis 3. Economic analysis:- Influence of economy: companies are a part of the industrial and businesssector, which in turn is a part of the overall economy. In the Indian economy ,the first place are consideredare the behavior of monsoon and the performance ofagriculture. Secondly , India has a mixed economy, where the publicsector plays a vital role. Thirdly , the monetary policy and trends in money supplywhich mainly depend on governments budget policy. 4. Economic analysis:- Fourthly , the general business conditions in the form ofbusiness cycles or the level of business activity. Fifthly , the economic and political stability in the form ofstable and long term economic policies and a stablepolitical system with no uncertainty would also necessary. All of the above factors of the economy influence thecorporate performance and in forecasting the growth of theeconomy and of industry. 5. Economic analysis:- Economic analysis aims at determining if theeconomic climate is conductive and is capable ofencouraging the growth of business sector, especiallythe capital market. When the company expands ,most industry groups andcompanies are expected to benefit and grow. When the company declines most sectors andcompanies usually face survival problems. 6. Tools for economic analysis:- The most used tools for economic analysis are:1. Gross domestic product2. Monetary policy and liquidity3. Inflation4. Interest rates5. International influence6. Consumer sentiment7. Fiscal policy8. Influences on long term expectations9. Influences on short term expectations 7. Gross domestic product:- Gross domestic product is one measure of economicactivity. Major components of GDP are; Consumer spending Investment spending Government expenditure Goods and services produced domestically for export Consumption in the process of import distribution 8. Monetary policy and liquidity:-A good monetary policy and liquidity isessential for the economy ,excess liquidity can beharmful. Excess money supply can lead to inflation,higher interest rates and higher risk premiums leadingto costly sources of capital and slow growth. Inflation:- Inflation can be defined as a trend of rising pricescaused by demand exceeding supply. 9. Interest rates:- Interest rate is the price of credit. It is thepercentage of fee received or paid by individuals ororganizations when they lend or borrow money. thereare many kinds of interest rates bank primary lendingrate ,treasury bill rate and so on. International influence:- One of the important measure of influence is theexchange rate. The PPP derives from the assumptionthat identical goods should be sold at identical prices. 10. Consumer sentiment:- consumer sentiment is usually expressed interms of future expenditures planed and the feelingabout future economy. Fiscal policy:- The fiscal policy of the government involves thecollection and spending of revenue. In particular, fiscalpolicy refers to efforts by the government to stimulatethe economy directly, through spending. 11. Long term growth expectations:-The long term growth path of the economy isdetermined by supply factors.The rate of growth of output can be seperated in to twodistinct categories1. Growth from an increase in the factor inputs toproduction2. Growth in output relative to the growth of all factorinputsCobb-Douglas production function isY=T*L*K*E 12. Influences on short termexpectations: Short terms expectations are mainly caused by demandfactors. Fluctuations in demand relative to long term supplyconstraints create fluctuations in real GDP which areknown as business cycles. Short term economic forecasting focuses on sources ofdemand as a means to predict future trends in economicvariable. 13. THANK YOU