What is Fundamental Analysis in Stock Market ?
Fundamental analysis is based on the assumption that the share prices depend upon the future
dividends expected by the shareholders.
The present value of the future dividends can be calculated by discounting the cash flows at an appropriate discount rate and is known as the 'intrinsic value of the share'.
According to Fundamental Analysts, the intrinsic value of a share depicts the true value of a share. A share that is priced below the intrinsic value must be bought, while a share quoting above the intrinsic value must be sold.