Investor Insights with Mr. Sunil Daga

Ralph Seger once said, “One way to end up with $1 million is to start with $2 million and use technical analysis.” For a very long time, this statement seemed like a nebulous, dark chasm to me, all shrouded in mystery. The penny finally dropped when I recently attended a talk by Mr. Sunil Daga, a man known for his successful implementation of technical analysis for sustained superior performance. This talk, conducted on 23rd September 2016, was aimed to explain the two modes of analysis of the stock market — Fundamental Analysis and Technical Analysis — sort the differences between the two and finally, use this knowledge to answer one simple question: “How to identify the next Infosys?”

Mr. Sunil explained that 'Fundamental analysis' is a strategy of analyzing a stock investment or any security by determining its ‘intrinsic value’ and potential for future growth, by examining related economic, financial and other qualitative and quantitative factors. The end goal is to produce a quantitative value that an investor can compare with a security's current price, thus indicating whether the security is undervalued or overvalued. The sole purpose is to identify fundamentally strong companies or industries and fundamentally weak companies or industries. He then talked about the various drawbacks of Fundamental Analysis, how it can provide only a long-term picture and cannot predict the reaction of the market participants.

The talk progressed with Sunil explaining how 'Technical Analysis' does not look into the value of a stock as a primary motive for buying or selling it. It entails studying the past as well as the current trends and momentum in a stock’s price and volume and then forecasting the future financial price movements. Based on these forecasts, traders can determine the right time to enter or exit, when to buy or when to sell shares of that stock.

Further, he discussed the concepts of Technical Analysis such as Dow Theory, Elliott Wave Theory, support and resistance and Technical Indicators like the Moving Average Convergence Divergence (or MACD), the Relative Strength Index (or RSI), Stochastics and Bollinger Bands.

In his closing comments, he gave some useful tips for both short-term as well as long-term investments and advised everyone to go for a long-term investment as it dwindles the chances of loss.

The talk ended with an interactive session wherein Mr. Sunil encouraged questions from the audience and answered them patiently in the best possible manner. All in all, it was a great success!

We extend a sincere thanks to Mr. Sunil Daga for sharing his words of wisdom with us.

-Shreeya Jain