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Introduction
To pick up the right stock in the market, it is essential to estimate the intrinsic value (fundamental value) of a stock. Intrinsic value is based primarily on fundamental analysis of a company that includes both qualitative & quantitative factors. However, the fundamentals that need to be considered will depend on the analyst’s approach to valuation.
There are various methods to analyse investment decisions, fundamental analysis being one of them. Two most important methodologies that can be used by analyst while selecting stocks are: -
- Top-Down Approach
- Bottom-Up Approach
The decision between the two approaches is largely a matter of personal interest. Let’s understand each of the two approaches in detail.
