Agreement in Stock Selection by Following Fundamental and Technical Analysis on Nifty Stocks

Abstract

Merits of using fundamental research and technical research are different and these two different investment styles of investing in the stock market have its own following. The stock selection for investment portfolio which relies on the Fundamental Analysis have higher success rate than the models relying on Technical Analysis is the common view. Fundamental research focuses on identifying and analyzing the factors that influence security prices whereas technical analysis is concerned with analyzing market behavior. Given the sharp differences, it is often seen independent of each other and practitioners tend to favor one over the other but small group applies both. This research investigates the agreement in Stock selection following both styles on universe of Nifty Stocks. Fifty Investor participants took part in personal/group discussions, of their Stock selection style; for their portfolio in the cities of Vapi, Valsad, Vadodara and Ahmedabad. Stock pickers reported Fundamental and Technical style as independent of each other, with only moderate measure of agreement.

Keywords: Behavioural Finance, Psychology

JEL Classification: D31, D70, D80, E20, E30, G10, P36, R20