FAQ Features

Most Common Questions


Ratings

‘Technical Rating’ is done for each company whose market capitalization is above Rs. 30 Crores. This is calculated by comparing most of the technical parameters and the stock’s price change over the past 12 months to that of all other stocks in the tables. Results are rated on a scale from 1 to 99, with 99 being the best.

A Technical Rating of 99 is the highest possible rating and means that the stock has outperformed 99 percent of all stocks. A Technical Rating of 1 means nearly all other stocks have done better. Market leaders usually rate at 70 or higher.

‘Fundamental Rating’ is done for each company whose market capitalization is above Rs. 30 Crores. Fundamental Rating includes various financial data from the income statement, balance sheet, and Cash Flow statement items such as Sales, Profit, All Important Ratios, Cash Flows, Working Capital, Cash Conversion Cycle, etc. over the past quarters and years.

A Fundamental Rating of ‘99’ is the highest possible rating and means that the stock has outperformed 99 percent of all stocks. Fundamental factors considered in the rating include sales growth rate over the last three years, pre-tax profit margins, after-tax profit margins; return on equity (ROE), etc.

The Final Rating combines both Technical and Fundamental Ratings into one easy-to-use rating. Each of these ratings consists of several parameters with different weightages assigned to each parameter. The results are then compared to the results of all other companies on every parameter. Each company is then assigned a rating from 1-99 with 99 being the best.

This rating is designed to help you get a quick feel for how is a company compare to all other stocks in our database.

The fact that your stock has gone up while its Technical Rating has fallen does not automatically mean you need to sell it. What it means is that other stocks are performing better relative to this particular stock. As a general rule, you may start thinking about selling a stock if its Technical Rating falls below 50. However, it would be more of a concern if the stock were falling or going nowhere.

A stock's Technical Rating may dip as the stock works its way through a base, or price consolidation. This is normal because the price declines required to form a base will weigh on the Technical Rating. But as the stock climbs back toward its old high, the rating should rebound as well. So, while a stock may have a lower Technical Rating as it builds its base, the important thing is for it to have a rating of 80 or higher (meaning it is among the top 20 percent of all stocks in terms of price performance) as it finishes its base. If most stocks drop 20 percent and yours falls 10 percent, it's still stronger than most other stocks even though it fell in price. Historically, the best stocks have had Technical Ratings of 80 or higher at their breakouts.

All of the Ratings are updated daily. Technical Ratings change more often than Fundamental Ratings because they reflect the market's daily activity. Fundamental Ratings reflect companies' fundamentals and change less frequently because companies report results on a quarterly basis. You shouldn't automatically sell a stock just because a Technical Rating drops. But any time you see such a drop, it serves as a signal to watch the stock for signs of weakness.

You would naturally want to buy the best merchandise available. A Technical Rating of 90 or higher will generally show that the stock is a leader and has been outperforming nearly all the other stocks in the market. E.g. Companies such as TTK Prestige Ltd, Titan, etc. had Technical Ratings of 98 throughout most of 2010-11, yet continued to make new highs.

No, you should not be concerned if a stock's Technical Rating hits a new high when the actual stock price is not at a new high. In fact, it is generally a positive sign when a stock's relative strength goes into new high ground prior to the stock breaking out of its base. A high relative strength indicates that the stock is performing relatively well in the current market environment, which is an indication of demand.

Not necessarily. A 99 indicates tremendous leadership. Our studies show that the strongest companies continue their advances because they have superior earnings, strong management and are in leading industries.

Yes, the Final Rating can be used as a filter to identify stocks for potential purchase. In fact, this rating was designed as a quick and easy way for StockAxis.com visitors to compose a list of potential ‘buy’ candidates. Focusing on those stocks with a Final Rating of 70 or higher will yield a large number of stocks for further research. But remember, checking a stock's Rating is just the first step of your research. It's also important to really understand a company's fundamentals, including its sales and earnings, return on equity, profit margins, products, etc. Much of this information can be researched at a company's web site.

Trend

New highs in lower volume, especially when other stocks in a group have rolled over, always raise a red flag. You might consider taking partial profits and see how the remaining shares hold up.

You can try to buy a leading stock after its Long Term Trend turns from Down to UP with final rating above 70.

It is essential that you wait for a correct buy point, regardless of the Rating. The Trend is designed to help you quickly find the strengths and weaknesses in a stock. The Overall Rating gives you a comprehensive look at where the stock ranks vs. all other stocks in our entire database. Even if a stock has a top score for all its ratings, you still need to analyze the Trend. The key is to buy the stock as its Trend turns from Down to Up. Using the Trend and rating will help you select and analyze stocks in a shorter time, but you still need to do your homework. Don't forget that it is necessary to the have the general market behind you. Even the highest-rated stocks will give you trouble if the general market is working against you. The best thing to do during a bear market is to create a watch list of good stocks for the time when the market does turn, and it always does. When the next bull market comes, you want to be ready! If you are scrambling to get a watch list together once the bull market starts, you might miss the next big winner. Use the StockAxis Top 50 to help you create and monitor this watch list; it will save you a lot of time.

StockAxis Top 50

The StockAxis Top 50 is a computer-generated ranking of leading companies trading in the Indian Markets. Rankings are based on a combination of both Fundamental and Technical Ratings. Fundamental Rating includes many key measures such as return on equity, sales growth, profit margins etc. and Technical Rating includes many technical parameters such as price-volume action, moving averages, relative strength etc.

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