Starting off as an investor requires a lot of research and understanding about the financial markets.
This is very much central to your success here since it'll help to cut down on all the outside noise and let you to believe in yourself while making financial decisions.
Definition – Financial market analysis
Financial market analysis refers to the yield of a specific financial market/s.
This is usually dependent on the performance of the overall number of securities that are traded in any given market.
On a particular day, the prices of a lot of securities end with appreciated value when the market closes.
This type of data refers to good performance of that financial market.
All these data influence the market indicator known as Index.
Its main function is to track the yield provided by some of the leading securities that have a steady past market performance record.
These securities are bought by the traders/investors from that particular financial market.
Leading securities markets in the world
Here are some of the most popular securities market indices of the world:
- Dow Jones – New York financial market
- FTSE (also called as “footsie”) – London financial market
- BSE SENSEX – Mumbai financial market
- Hang Seng – Hong Kong financial market
- Nifty – Indian national financial market
- Nikkei – Tokyo financial market
Financial market indices – Their importance
All the financial market indices are gradually taking up center stage in the current market economy.
There is a rapid integration of these market indices across the globe.
Basically, traders have started to take up more risks and so, they don't just trade in the market of their origin but also at foreign markets as well.
In addition, increasing number of investment companies are now developing global plans to incorporate as many financial markets as possible in their portfolio.
This is why all these markets are getting integrated on such a scale that was thought to be impossible even one or two decades back.
Financial market analysis – The outcome of its use
Nowadays, financial market analysis has become one of the most important activities of traders or investors.
These analytical reports of the financial markets cover a wide variety of topics that lie both within the market as well as outside to it.
Say for example, the local administration of a particular financial market issues a new policy to deregulate its market where a segment of an industry has been excessively regulated, then such a policy measure will have a positive effect on that financial market.
However, financial market analysts can't predict the movements of such factors and thus, they may not be able to provide with an actual analysis of their impact on the financial markets.
This is why these factors aren't considered as part of the financial market analysis.
It must be noted that there are some analysts who do consider some of the external economic factors while studying a particular market.
Nevertheless, they do that without any bias and therefore, they give equal weightage to both positive as well as negative factors.
Suggested: Read more about Finance Basics
Technical analysts – The custodian of financial market analysis
Technical analysts are an elite group of highly skilled professionals.
They are specialized in the job of making a financial market analysis.
They are acquainted with all the tools required to make a sound financial analytical report.
A lot of times, these analysts are either senior economists or veteran investors.
And they have a knack for the job of conducting research on the financial markets and Econometrics.
These analysts conduct some of the following analysis about the financial markets:
- Securities Market Technical Analysis
- Securities Market Analysis
- Fundamental Analysis
- Index Momentum Analysis
- Market Trend Indicators
- Market Analysis, etc.
The more analysts are getting deeper to unravel the factors that affect the performance of the financial market, the more number of factors are coming up with each passing day.
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