FA vs Technical Analysis

Two Ways to Look at a Stock

Imagine you're deciding whether to buy a house. One person says — "Look at the structure, location, neighborhood quality, and rental yield. That's what decides long-term value." Another says — "Look at recent sale prices in the area, how fast similar houses are being sold, and what the price trend looks like." Both are valid approaches — but they answer different questions.

In stock markets, Fundamental Analysis (FA) is the first person — focused on the quality and value of the business. Technical Analysis (TA) is the second — focused on price behavior and market timing.

Head-to-Head Comparison

Factor	Fundamental Analysis	Technical Analysis
What it studies	Business, financials, management	Price charts, volume, patterns
Key question	What is this company worth?	Where will this price go next?
Time horizon	Months to years	Minutes to weeks
Data used	Balance sheets, P&L, ratios	Candlesticks, moving averages, RSI
Best suited for	Long-term investors	Traders & swing traders
Ignores	Short-term price noise	Company fundamentals
Famous practitioners	Warren Buffett, Rakesh Jhunjhunwala	Jesse Livermore, Paul Tudor Jones

When to Use Each Approach

Use FA When...

✓ You're building a long-term portfolio (1 year+)
✓ You want to invest in a company's growth story
✓ You're doing SIP in direct stocks or evaluating MF holdings
✓ You want to understand if a stock is genuinely cheap or a trap
✓ You're comparing two companies in the same sector

Use TA When...

✓ You're doing intraday or swing trading (days to weeks)
✓ You want to time your entry into a fundamentally good stock
✓ You're trading indices like Nifty or Bank Nifty via F&O
✓ You want to set stop-losses and profit targets
✓ You're reading market momentum and sentiment

The Best Investors Use Both

The smartest approach isn't FA vs TA — it's FA and TA together. Use FA to answer "what to buy" and TA to answer "when to buy".

FA first — Screen the universe

Use FA to shortlist high-quality companies with strong financials, low debt, consistent profits, and good management. This narrows 5,000+ listed stocks to 20-30 candidates.

TA next — Find the right entry

Once you've identified a great company, use TA to wait for a good price entry — a support zone, a breakout after consolidation, or a pullback to a moving average. Don't just buy blindly.

FA again — Decide when to exit

Exit when the fundamentals deteriorate — profits falling for 3+ consecutive quarters, management issues, or rising debt. Not just because the price fell 10%.

Real Indian Examples

📈 Titan Company

FA said: Strong brand, consistent profit growth for 15+ years, low debt, promoter (Tata Group) trustworthy.

TA said: Long-term investors used pullbacks to ₹900 levels in 2020 (COVID crash) as entry points based on support zones.

Result: Stock went from ₹900 → ₹3,500+ within 3 years.

📈 Yes Bank

FA said: Rising NPAs, promoter pledging shares, poor capital allocation — FA screamed avoid.

TA said: TA traders saw a "cheap stock at ₹50" after falling from ₹400 — but FA said the fundamentals were broken.

Result: Stock fell further to ₹12. FA saved long-term investors from a disaster.

Frequently Asked Questions

Can a complete beginner start with FA instead of TA?

Absolutely — and honestly, FA is a better starting point for most people. TA requires you to monitor charts daily, which is time-consuming. FA lets you research companies at your own pace, make decisions, and then step back and let time do the work.

Is FA useful for mutual fund investors?

Yes. Even if you invest via mutual funds, understanding FA helps you evaluate which funds hold quality companies, compare fund portfolios, and make sense of why a fund is performing well or poorly.

Which is more reliable — FA or TA?

Neither is 100% reliable. FA can misjudge a company's future growth or miss fraud (like Satyam). TA can produce false signals in low-volume or manipulated stocks. The key is using both together and not relying on one signal alone.

Rakesh Jhunjhunwala used TA too — is that true?

Yes. Rakesh Jhunjhunwala was primarily an FA investor who understood business quality deeply, but he also understood charts and market timing. He famously used technical levels to size his positions and identify entry points in fundamentally strong stocks.