5 Ways to Evaluate Stocks Before You Invest

Investing in the stock market can be rewarding, but making the right choices requires thorough analysis. Whether you’re a beginner or an experienced investor, understanding how to evaluate stocks is crucial for building a strong portfolio.

In this blog, we’ll explore five powerful methods to analyze stocks, helping you make informed investment decisions

Technical Analysis
Fundamental Analysis
Market Sentiment & External Factors
Open Interest
Volume

1.Technical Analysis

1.1 Bullish Signal

Hammer
Bullish Engulfing
Morning Star
Inverted Hammer
Bullish Harami
Bullish Kicker

1.2 Bearish Signal

Shotting Star
hanging Man
Bearish Engulfing
Evening Star
Bearish Harami
Bearish Kicker

Technical Analysis Very strong Near support and resistance

1.3 Trend Analysis

Uptrend: A market condition where the price consistently makes higher highs and higher lows, indicating bullish momentum.
Downtrend: A market condition where the price consistently makes lower highs and lower lows, indicating bearish momentum.

1.4 Support and Resistance Levels

if a stock is near a strong resistance ,it may be reverse down .
if a stock is near strong support, it may be bounce up .

1.5 RSI(Relative Strength Index) Indicator

Rsi above 70% overbought , chances to reverse down the market .
Rsi below 30% overbought , chances to reverse bounce up the market .

2.Fundamental Analysis

Stock fundamental analysis involves evaluating a company’s financial health and performance using key parameters. These parameters are divided into quantitative and qualitative factors.

2.1 Financial Statements Analysis

Income Statement (Profit & Loss Statement)
Balance Sheet
Cash Flow Statement
Growth Metrics
Dividend Analysis
Global Market Sentiment
Economic Data

3.Market Sentiment

Corporate News
FII/DII Activity
Geopolitical Events

Corporate News : Earning reports ,Management Commentary or policy announcements from major nifty companies can affect sentiment .

FII/DII Activity : Check if foreign Institutional Investors are net Buyers or Sellers. Heavy FII Buying is a Bullish Signal .

Geopolitical Events : News about global tensions, wars or Sanctions can way down markets .

4.Option Chain Analysis

Analyze open interest in nifty options

Highest Call OI : Indicates resistance levels .
Highest Put OI : Indicates support levels .

5. Volume

High Volume : Strong Interest in the stock
Low Volume : Weak Interest in the Stock its indicate reversal .
Volume Spike : unusual Activity (news, earnings , breakout)