Abstract: This paper is attempts to highlights the reviews collected from various national and

international journals to make the focus on the combining impact of the fundamental and
technical analysis for investment decisions. Only few studies have been published in last
decade exploring the combining impact of fundament and technical analysis on the
investment decision on foreign markets and there is no study evidenced in the context of
Indian stock market. However, there is a lack of research that consolidates the available
knowledge concerning the combining impact of fundamental and technical analysis. The
main goal of this paper is, by classifying and coding published papers, to summarize and
systematize the significant research that has contributed to the development of the concept.
The present study aims to be familiar with the effects of combining between fundamental and
technical analysis on the decisions of the investors at stock market in India. This paper
contributes to the existing literature on the fundamental and technical analysis by presenting
an overview of characteristics of the literature and potential knowledge gaps in the field of
stock market. The paper also discusses suggestions for future research in combing impact
of the fundamental and technical analysis

Introduction:
Technical analysis and fundamental analysis are two main schools of thoughts in stock
markets for analysing the securities for investment purpose. There are two main types
analysis that the investors need to know to succeed: technical analysis and fundamental
analysis.
Technical analysis is the use of past price behaviour and/or other market data, such as
volume, to guide trading decision in asset markets/Security market/ forex markets. These
decisions are taken by applying simple rules to historical price data. A technical trading rule
(TTR), for example, might suggest buying a currency if its price has risen more than 1% from
its value in five trading sessions earlier. Trader in stock, commodity and foreign exchange
markets use such rule widely (Neely and Weller 2011). Fundamental analysis for the market
studies the macroeconomic indicators, asset markets and political consideration of one
nation's currency as opposed to another. Macroeconomic indicators include things such as:
growth rates (Gross Domestic Product), interest rates, inflation, unemployment, money
supply, foreign exchange reserves, and productivity. Asset markets are made up of stocks,
bonds and real estate. Political considerations influence the level of confidence in a nation's
government, the climate of stability, and the level of certainty (McDonald, 2007)

Fundamental analysis
Fundamental analysis is a combination of economic, industry and company analysis to obtain
a stock’s current fair value and for predicting its future value. The fundamental analysis
approach to investment assumes that each security has an intrinsic value that can be
determined on the basis of such fundamental data as accounting earnings, dividends, growth
factors, and debt/equity ratios. An analyst determines the intrinsic value on the basis of these
fundamentals and compares this value with the current market price to determine if the
security is under-priced or overpriced. Generally, fundamental analysis is based on publicly
available information. Those who adopt the fundamental analysis approach tend to believe
that the adjustment of security prices lags behind the arrival of publicly available information.

How Fundamental analysis works:

Fundamental analysis is works on the basis of economic, industry and company analysis for
determining the prices of the securities for making buying and selling decisions. Fundamental
analysis believes that are economic indicators are like GDP , interest rates, investments and
savings and industry specific condition and specific company analysis best predict the prices
of shares for future investment decisions. If the fundamental of a company and industry under
which comes are strong in economy that means on the basis of that we can assume the prices
for making buying and selling decisions for the shareholders.
Fundamental analysis tools analyses the economy, strategy, management, product, financial
statements and all other relevant information will help to finalising the shares that will
outperform the market and provides the opportunity for getting consistent gains to the
investors.

Technical Analysis
Technical analysis is the study of stock prices movements in the security market .technical
analysis believes that the future prices of the securities can be predicted on the basis of past
prices .with the help of several indicators a technical analysts analyses the relationship
between the price volume and supply demand the overall market ,as well as for a individual
stock .The technical analysis is based on the concept that history repeats itself and it is also
true in case of stock markets. The share markets always moves in a trend except some minor
movements in the price of securities.

How Technical Analysis Works:

Technical analyst’s works on the basis of past price trends of securities for determining the
securities future prices for taking buying and selling decisions of the securities. Technical
analysts believe past trading activity and price changes of a security can be valuable
indicators of the security's future price movements. They may use technical analysis
independent of other research efforts or in combination with some concepts of intrinsic value
considerations but most often their convictions are based solely on the statistical charts of a
security. The Market Technicians Association (MTA) is one of the most popular groups
supporting technical analysts in their investments with the Chartered Market Technicians
(CMT) designation a popular certification for many advanced technical analysts.

Combining Technical Analysis and Fundamental Analysis delivers better results.

For many expert traders, combining these two approaches can deliver far better results than
by using one in isolation. By using both technical and fundamental analysis, the more
successful traders tend to first look at an asset’s fundamentals in order to understand whether
to buy or sell the asset. Then, a savvy trader can conduct technical analysis in order to
determine where exactly price entries and exits can be located. By using these analyses in
combination, a trader will have a more rational and better view of a security or currency
pair’s potential moves and overall price direction.

Objective of the paper: The objectives of this paper is to highlights the reviews done by
other authors collected from various journals regarding the combining impact of the
fundamental and technical analysis.

Data Collection: In this present paper the secondary data has been used for conducted the
study .The data has been collected from various websites, journals, and research papers and
previous studies done by other authors.

After collecting information regarding fundamental and technical analysis.

Review of literature is an essential part of any research problem. The review of earlier
studies is very essential and useful to give the right direction of any study. It explores the
developments in the subjects of the study. It helps the researcher in formulating the
methodology comprising establishing hypotheses and selecting the variables to be studied
and seeks to explore research gap. It describes what has actually been done and what remains
yet to be done on the specific subject/phenomenon.

Blume, Easley, and Ohara (1994) study focused on the information role of volume and its
applicability for technical analysis and developed a new equilibrium model in which
aggregate supply is fixed and traders receive signals with differing quality. The result shows
that volume provides information on information quality that cannot be deducted from the
prices statistic. The study concluded that how volume, information precision, and price
movements relate, and demonstrate how sequences of volume and price can be informative.
The study further concluded that traders who use information contained in market statistics
for making their investment decision do better than traders, who do not. Technical analysis
thus arises as a natural component agents learning process. As the analysis suggests,
introducing volume unrelated to the underlying information structure would survey weakly
the ability of uninformed traders to interpret market information accurately.

Thom as Oberlechner (2001) conducted a survey through a questionnaire and an interview

method on the perceived importance of Technical and Fundamental analysis among foreign
exchange traders and financial journalists in Frankfurt, London, Vienna and Zurich. Foreign
Exchange traders confirm that, out of the both forecasting approaches, technical analysis is
more prominent as compared to fundamental analysis .Whereas the financial journalists rely
more on fundamental analysis than foreign exchange traders.

Piotroski (2004) analysed the trade generating activities of three major market participants-
financial analysts, institutional investors and insiders influenced the relative amount of
market level information impounded into stock prices. They ground out that stock return
synchronicity was positively associated with analysts forecasting activities, consistent with
analysts increasing the quantity of industry level information in prices through intra-industry
information transfers. The found results suggest that all three parties influence the firm’s
information environment but the price relevant information conveyed by their activities
depends upon the each party relevant information gathered.

Saggar (2005) concluded that the financing and investment pattern of non-financial, non-
government, public limited firms over the period 1971-72 to 1999-2000 at an aggregate and
disaggregates level of major industry groups. The study found that the financing pattern of
Indian firms was debt based but their share of internal sources increased markedly in the
latter half of the 1990’s, which had an impact on share prices.

Jiali(jasmine) fang (2014) conducted a study in that the time series and cross –sectional
level was used to lighten on the efficiency of technical analysis in international stock
markets. The study was divided into four parts and the first part covered the importance of
data snooping analysis, and the second part covered the available literature provided more
conclusive evidence when assessed the efficiency of technical analysis. The third part
Ballinger bands was used to show how investors can gradually eliminate any possible
profitability of technical analysis over time and explained how the return predictability
anomalies can be disappeared over time, and lastly the paper concluded that the technical
analysis possesses significant practical values dependent on investors cultural individualism,
market development and integrity and information uncertainty .the study finally concluded
that usefulness of the technical analysis and while investing always keep in mind the data of
data snooping and investors overuse or the practitioner never given ups on the technical
analysis.
Chen and Li (2006) examined the problems of thin trading and inefficiency, use unadjusted
and adjusted returns, considered past volume in- conjunction with past returns, tried absolute
and relative variable, in order to bring out the value, if any, of technical analysis. This paper
uses daily stock prices and the trading volume of 39 constituent companies in SZSE
component. A- Share index on the Shenzhen stock exchange examine the usefulness of
technical analysis. It was found that the very weak evidence to support the view that traders
and/or technical analysts can learn more about the future pattern of returns by actively using
volume in conjunction with returns than those who only watch price movements. The authors
did not find reasonably strong evidence supporting either spurious or genuine predictability
of returns, or that volume contains additional information omitted by prices, for the majority
of the 39 companies listed of the SZSE component A- share index and its constituent stocks
are considered, the value of technical analysis might have been exaggerated or overstated.
Yousef atef Ahmed (May 2016) recognized that the effects of combining between
fundamental and technical analysis on the decision of the investors at forex markets. The
study also says that the respondents “experts” use technical analysis when they make the
investment because the technical analysis is considered bases for trading in currency markets
simultaneously from another side experts don’t use it alone without considering the
fundamental analysis that will lead to earn return. And the result shows that the most loosing
transaction occurred as a result of trading with depending on one type of analysis and
negligence of another and also because of random trading.

Scope for the future research:

The paper discussed the literature review of the combining impact of the fundamental and
technical analysis on the investment decisions of investors. One of the major limitations
observed in the literature is that most of the studies on the combining impact of fundamental
and technical analysis evidences concentrated mainly in separate analysis of fundamental and
technical analysis only very few focused on the combing impact of fundamental and technical
analysis. Further, the evidence of combining impact of fundamental and technical analysis are
helpful in generating the higher returns as compare to individual analysis .Hence, there exist a
huge gap in the existing literature. We need to more empirical research to re- examine and
robustness the combining impact of fundamental and technical analysis in stock markets
while investing in stock market. Moreover the combining impact of fundamental and
technical analysis on the investment decision in the forex markets and commodities markets
and futures markets as well in India. Also a comparative study on the strength of fundamental
and technical analysis in stock markets and forex and future markets could be undertaken as
future course of research to understand the significant difference exist, in the investing
behaviour of the investors in the two different types of analysis on different markets. This all
provides great oppourinities to the researchers to look into the area with new outlook and
other perspectives as well.

Conclusion: The study concludes that both fundamentals and technical analysis have their
own importance in investment decisions. The fundamental analysis advice about the long
term investment alternatives with the proper application of fundamental analysis the investors
choose the securities for investment in the long run whereas the technical analysis tells about
the short term trend of the market and the securities. Investors can trade for short term on the
basis of trends and can predict the prices for short run and also they can earn good amount of
profits with the help of proper implementation of technical analysis. but if we combined the
both the analysis then investors can get best results they can select the securities with the help
of fundamental analysis and choose the time to enter and exit in trades with the help of
technical analysis. This literature review highlights the work of various authors and provides
the proper understanding to the researchers in the respective field. Till date the studies on
combining impact on fundamental and technical analysis are mainly from the foreign markets
or in the field of forex markets. However, there is a need of studying the concept of
combining impact of fundamental and technical analysis on Indian stock market .