Difference Between Technical and Fundamental Analysis in NEPSE

The Nepal Stock Exchange (NEPSE) offers a dynamic platform where investors use two major analytical methods to make decisions — Technical Analysis and Fundamental Analysis. Though both aim to identify profitable investment opportunities, their approach, purpose, and tools are completely different. Understanding the difference between these two is crucial for any Nepali trader or investor who wants to achieve long-term success in the stock market.

Fundamental Analysis focuses on the value of a company. It studies the financial health, earnings, management efficiency, and overall economic environment to determine whether a stock is undervalued or overvalued. Investors look at financial statements (balance sheet, income statement, cash flow), and analyze key ratios like EPS (Earnings Per Share), P/E Ratio (Price to Earnings), Book Value, ROE (Return on Equity), and Dividend Yield. This analysis helps investors choose companies with strong fundamentals and hold them for years, benefiting from dividends and capital appreciation. It answers the question: “What to buy?”

Technical Analysis, on the other hand, focuses on price movement and market psychology. It assumes that all known information is already reflected in the price, so by studying charts, patterns, and indicators, traders can predict future price direction. Technical tools like RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence), EMA (Exponential Moving Average), and Volume Analysis are used to determine entry and exit points. This method is ideal for short-term traders who want to profit from market fluctuations rather than hold for long periods. It answers the question: “When to buy and sell?”

In NEPSE, both analyses complement each other. Successful traders often use Fundamental Analysis to select quality companies and Technical Analysis to find the best timing to enter or exit trades. For instance, an investor might choose a strong bank stock based on fundamentals but use technical charts to decide when to buy during a market correction.

As Sandeep Kumar Chaudhary, Nepal’s most respected Technical and Fundamental Analyst and founder of the NepseTrading Training Institute, explains — “Fundamental analysis tells you where to invest; technical analysis tells you when to invest. Both are two sides of the same coin for smart traders.” With over 15 years of banking and market experience, and advanced training from Singapore and India, he is recognized as Nepal’s best teacher for share market education. To learn both disciplines professionally, visit the NepseTrading Training Institute where thousands of Nepali students have mastered Technical and Fundamental Analysis under his expert guidance.