All the above three dimensions will have to be weighed together and not in exclusion of each other. In this section we would give you a brief glimpse of each of these factors for an easy digestion
In the table below are some economic indicators and their possible impact on the stock market are given in a nut shell.
| Economic indicators | Impact on the stock market | |
| 1. | GNP -Growth -Decline | -Favourable -Unfavourable |
| 2. | Price Conditions - Stable - Inflation | -Favourable -Unfavourable |
| 3. | Economy - Boom - Recession | -Favourable -Unfavourable |
| 4. | Housing Construction Activity - Increase in activity - Decrease in Activity | -Favourable -Unfavourable |
| 5. | Employment - Increase - Decrease | -Favourable -Unfavourable |
| 6. | Accumulation of Inventories | - Favourable under inflation - Unfavourable under deflation |
| 7. | Personal Disposable Income - Increase - Decrease | -Favourable -Unfavourable |
| 8. | Personal Savings | - Favourable under inflation - Unfavourable under deflation |
| 9. | Interest Rates - low - high | -Favourable -Unfavourable |
| 10. | Balance of trade - Positive - Negative | -Favourable -Unfavourable |
| 11. | Strength of the Rupee in Forex market - Strong - Weak | -Favourable -Unfavourable |
| 12. | Corporate Taxation (Direct & Indirect - Low - High | -Favourable -Unfavourable |
The Industry Analysis
Every industry has to go through a life cycle with four distinct phases
i) Pioneering Stage
ii) Expansion (growth) Stage
iii) Stagnation (mature) Stage
iv) Decline Stage
These phases are dynamic for each industry. You as an investor is advised to invest in an industry that is either in a pioneering stage or in its expansion (growth) stage. Its advisable to quickly get out of industries which are in the stagnation stage prior to its lapse into the decline stage. The particular phase or stage of an industry can be determined in terms of sales, profitability and their growth rates amongst other factors.
The Company Analysis
There may be situations were the industry is very attractive but a few companies within it might not be doing all that well; similarly there may be one or two companies which may be doing exceedingly well while the rest of the companies in the industry might be in doldrums. You as an investor will have to consider both the financial and non-financial aspects so as to form a qualitative impression about a company. Some of the factors are
History of the company and line of business Product portfolio's strength Market Share Top Management Intrinsic Values like Patents and trademarks held Foreign Collaboration, its need and availability for future Quality of competition in the market, present and future Future business plans and projects Tags - Like Blue Chips, Market Cap - low, medium and big caps Level of trading of the company's listed scripts EPS, its growth and rating vis-à-vis other companies in the industry. P/E ratio Growth in sales, dividend and bottom line