Fundamental vs Technical Screening on NSE: Pros & Cons
Introduction
When using the NSE Screener or any stock screener, one of the first questions traders face is: Should I use fundamental or technical filters? Both approaches offer unique advantages depending on your trading goals. This guide will help you understand the key differences, when to use each, and how to apply them effectively on the NSE.
What Is Fundamental Screening?
Fundamental screening involves filtering stocks based on financial health, company performance, and valuation metrics. It’s commonly used by long-term investors who want to buy solid businesses at reasonable prices.
Common Fundamental Filters on NSE:
- Price-to-Earnings (P/E) Ratio
- Earnings Per Share (EPS)
- Return on Equity (ROE)
- Debt-to-Equity Ratio
- Book Value & Market Cap
These filters can help you find undervalued or fundamentally strong companies.
What Is Technical Screening?
Technical screening focuses on stock price movements and volume patterns. It’s popular among traders who rely on chart patterns, momentum indicators, and market timing for short- to medium-term trades.
Common Technical Filters:
- RSI (Relative Strength Index)
- Moving Averages (50 SMA, 200 SMA)
- MACD (Moving Average Convergence Divergence)
- Breakout levels (Price > Resistance)
- Volume Surges
These tools help in identifying entry/exit points based on market behavior.
Key Differences Between Fundamental and Technical Screening
| Aspect | Fundamental Screening | Technical Screening |
|---|---|---|
| Time Frame | Long-term (months/years) | Short-term (days/weeks) |
| Data Used | Financial statements, ratios | Price, volume, indicators |
| Tools | Screener.in, NSE, Tickertape | Chartink, TradingView |
| Objective | Value investing, stable growth | Quick trades, momentum |
| Example Filter | P/E < 15, ROE > 20% | RSI < 30, Volume > 2x average |
Pros and Cons of Fundamental Screening
✅ Pros
- Ideal for long-term investing
- Helps avoid overvalued stocks
- Focuses on business quality
- Less prone to short-term volatility
❌ Cons
- Not useful for timing entries
- May miss short-term trends
- Limited for traders focused on price action
Pros and Cons of Technical Screening
✅ Pros
- Helps spot short-term trade opportunities
- Better for market timing
- Visual pattern recognition (charts)
- Useful for intraday/swing trades
❌ Cons
- May ignore company fundamentals
- Can give false signals in volatile markets
- Requires constant monitoring
When to Use Fundamental Screening on NSE
Use it when:
- You’re investing for the long-term
- You want to build a buy-and-hold portfolio
- You are evaluating the true value of a stock
- You’re looking at dividend-paying companies
Example use case:
Filter all NSE stocks with P/E < 20, ROE > 15%, and zero debt.
When to Use Technical Screening on NSE
Use it when:
- You’re into short-term trading
- You trade based on momentum or breakouts
- You rely on price trends or chart signals
- You need to time your entries and exits precisely
Example use case:
Filter stocks where 5 EMA crosses above 20 EMA with volume 2x average.
Can You Combine Both?
Absolutely. Some of the best strategies combine both methods:
- First, use fundamental filters to shortlist quality stocks.
- Then, use technical screening to time your entry based on breakout or support.
Example:
Find fundamentally strong stocks (P/E < 15, ROE > 20%) that are also showing a breakout from a consolidation pattern.
Tools That Support Each Method
| Tool | Fundamental | Technical | Free? |
|---|---|---|---|
| NSE Screener | ✅ Basic | ❌ | ✅ |
| Screener.in | ✅ Advanced | ❌ | ✅ |
| Chartink | ❌ | ✅ Advanced | ✅ |
| Tickertape | ✅ Moderate | ✅ (Pro only) | Partially |
| TradingView | ❌ | ✅ Charts/Alerts | Partially |
FAQs
Which screening type is better for beginners?
Fundamental screening is easier to understand initially. Technical screening requires practice and chart reading.
Can I use only one method?
Yes, but combining both often results in better outcomes.
Does NSE Screener support both?
The official NSE Screener supports basic fundamental filters. For technical screening, you’ll need tools like Chartink or TradingView.
Conclusion
Both fundamental and technical screening have their strengths. Long-term investors benefit more from fundamentals, while short-term traders rely on technicals. Ideally, using both gives you the best of both worlds—strong stock quality with perfect timing.
Explore more tutorials on how to apply filters inside the NSE Screener and optimize your trading process.
