Foreword I-3 Acknowledgement I-5 About NISM Certifications I-7 About the Certification Examination for Research Analyst I-9

Transcription

1 Foreword I-3 Acknowledgement I-5 About NISM Certifications I-7 About the Certification Examination for Research Analyst I-9 CHAPTER 1 INTRODUCTION TO RESEARCH ANALYST PROFESSION 1.1 Primary Role of a Research Analyst Primary Responsibilities of a Research Analyst Basic Principles of Interaction with Companies/Clients Important Qualities of a Research Analyst 6 CHAPTER 2 INTRODUCTION TO SECURITIES MARKET 2.1 Introduction to Securities and Securities Market Product Definitions/Terminology Structure of Securities Market Various Market Participants and Their Activities Kinds of Transactions Dematerialization and Rematerialization of securities 35 I-11

2 CHAPTER 3 TERMINOLOGY IN EQUITY AND DEBT MARKETS 3.1 Terminology in Equity Market Terminology in Debt Market Types of Bonds 53 CHAPTER 4 FUNDAMENTALS OF RESEARCH 4.1 What is Investing? Research on Businesses or Stocks Fundamental Analysis Technical Analysis Behavioural Finance 66 CHAPTER 5 ECONOMIC ANALYSIS 5.1 Basic Principles of Microeconomics Basic Principles of Macroeconomics Introduction to Various Macroeconomic Variables Sources of Information for Economic Analysis 81 CHAPTER 6 INDUSTRY ANALYSIS 6.1 Michael Porter s Five Force Model for Industry Analysis Political, Economic, Socio-cultural, Technological, Legal and 89 Environmental (PESTLE) Analysis 6.3 Boston Consulting Group (BCG) Analysis 91 I-12

3 6.4 Structure Conduct Performance (SCP) Analysis Key Industry Drivers Regulatory environment/framework Sources of information for industry analysis 96 CHAPTER 7 COMPANY ANALYSIS - QUALITATIVE DIMENSIONS 7.1 Understand Business and Business Models Competitive Advantages/Points of differentiation over the 102 Competitors 7.3 Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis Quality of Management (Including Independent Directors) and 103 Governance 7.5 Pricing Power and Sustainability of This Power Organization Structure Critical Business Drivers/Success Factors Risks in the Business Compliance Orientation of the Company Documentation on Guidance v/s Actuals Sources of Information for Analysis 107 CHAPTER 8 COMPANY ANALYSIS - QUANTITATIVE DIMENSIONS 8.1 History of Business vs. Future of Business Basics of Profit and Loss Account (P/L) Basics of Balance Sheet (B/S) Basics of Cash Flows Contingent Liabilities Basics of Taxation Affecting To Companies 123 I-13

4 8.7 Important Points to Keep in Mind While Looking at Financials Quality of Business in the Past through Quantitative Lenses Peeping in to future with caution Peer Comparison History of Equity Expansion Dividend and Earnings History History of Corporate Actions Ownership and Insiders Sales and Purchase of Stocks in The Past 132 CHAPTER 9 CORPORATE ACTIONS 9.1 Philosophy of Corporate Actions 135 CHAPTER 10 VALUATION PRINCIPLES 10.1 Difference Between Price and Value Why Valuations are required Sources of Value in a Business - Earnings and Assets Discounted Cash Flows Model for Business Valuation Absolute Valuations vs. Price-Value Sense Earnings Based Valuation Matrices Assets based Valuation Matrices Relative Valuations - Trading and Transaction Multiples Sum-Of-The-Parts (SOTP) Valuation Other Valuation Parameters in New Age Economy and Businesses Capital Asset Pricing Model Objectivity of Valuations Some Important Considerations in the Context of Business Valuation 163 I-14

5 CHAPTER 11 FUNDAMENTALS OF RISK AND RETURN 11.1 Concept of Return of Investment and Return on Investment Calculation of Simple, Annualized and Compounded Returns Risks in Investments Concepts of Market Risk (Beta) Sensitivity Analysis to Assumptions Concept of Margin of Safety Comparison of Equity Returns with Bond Returns Basic Behavioural Biases Influencing Investments Some Pearls of Wisdom from Investment Gurus across the World 179 CHAPTER 12 QUALITIES OF A GOOD RESEARCH REPORT 12.1 Qualities of a Good Research Report Checklist Based Approach to the Research Reports A Sample Checklist for Investment Research Reports 187 CHAPTER 13 LEGAL AND REGULATORY ENVIRONMENT 13.1 Regulatory infrastructure in Financial Markets Important regulations in Indian Securities Market Code of Conduct for Research Analysts Management of Conflicts of Interest and Disclosure Requirements for Research Analysts 211 ANNEXURE 1 : Case Studies (Some cases from history on market events) 223 ANNEXURE 2 : Suggested Readings 231 ANNEXURE 3 : Reference Reports, Databases and Websites 233 I-15