NISM EQUITY RESEARCH ANALYST

I. Introduction to Research Analyst Profession

• Understand the Primary role of a Research Analyst
• Know the Primary responsibilities of a Research Analyst
• Know the Basic principles of interaction with Companies / Clients
• Understand the Important qualities of a Research Analyst

II. Introduction to Securities Market

• Know about “Securities” and “Securities Market”
• Understand Product Definitions / Terminology
• Know the Structure of Securities Market
• Know Various market participants and their activities
• Learn about the Kinds of transactions
• Know about Dematerialization and Rematerialization of securities

III. Terminology in Equity and Debt Markets

• Know about the Terminology in Equity Market
• Know about the Terminology in Debt Market
• Understand the Types of Bonds

IV. Fundamentals of Research

• Learn about investing
• Understand the Research on businesses or stocks
• Understand Fundamental Analysis – Top down approach and Bottom up approach
• Understand Technical Analysis
• Know about Behavioral Finance

V. Economic Analysis

• Understand the basic principles of microeconomics
• Know the basic principles of macroeconomics
• Know the Introduction to various macroeconomic variables
• Know about the Sources of information for economic analysis

VI. Industry Analysis

• Understand Dr. Michael Porter’s five force model for industry analysis
• Understand Political, Economic, Socio-cultural, Technological, Legal and Environmental (PESTLE) Analysis
• Understand Boston Consulting Group (BCG) Analysis
• Understand Structure Conduct Performance (SCP) Analysis
• Know the Key Industry Drivers
• Understand the Regulatory environment/framework
• Know about the Sources of information for industry analysis 

VII. Company Analysis – Qualitative Dimensions

• Understand Business and Business Models
• Know the Competitive Advantages/Points of differentiation over the competitors
• Understand Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis
• Know about Quality of management (including independent directors) and governance
• Understand Pricing power and sustainability of this power
• Know about the Organization structure
• Understand Critical business drivers/success factors
• Know about the Risks in the business
• Understand Compliance orientation of the company
• Know about the Documentation on Guidance v/s Actuals
• Know about the Sources of information for analysis

VIII. Company Analysis – Quantitative Dimensions

• Know the History of Business Vs. Future of Business
• Understand the Basics of Profit and Loss Account (P/L)
• Understand the Basics of Balance Sheet (B/S)
• Understand the Basics of Cash Flows
• Know about the Contingent Liabilities, Off-balance sheet items,
• Know the Basics of Taxation affecting to Companies
• Know about the Important points to keep in mind while looking at financials
• Know about the Quality of business in the past through quantitative lenses
• Peeping in to future with caution
• Understand Peer Comparison
• Know the History of Equity expansion
• Understand about Dividend and earnings history
• Know the History of corporate actions
• Know the Ownership and Insiders’ Sales and Purchase of stocks in the past

IX. Corporate Actions

• Understand the philosophy of corporate actions

X. Valuation Principles

• Know the difference between Price and Value
• Understand why Valuations are required
• Know the Sources of Value in a Business – Earnings and Assets
• Learn about the Discounted Cash Flows model for Business Valuation
• Learn about Absolute Valuations vs. Price-Value sense
• Know the Earnings based Valuation Matrices
• Know the Assets based Valuation Matrices
• Understand the Relative Valuations – Trading Multiples and Transaction Multiples
• Know the Sum-Of-The-Parts (SOTP) Valuation
• Know the other Valuation Parameters in new age economy and businesses
• Understand the Capital Asset Pricing Model
• Understand the Objectivity of Valuations
• Know some important considerations in the context of Business Valuation

XI. Fundamentals of Risk and Return

• Understand the Concept of return of investment and return on investment
• Know the Calculation of simple, annualized and compounded returns
• Learn about the Risks in investments
• Know the Concepts of market risk (Beta)
• Understand Sensitivity analysis to assumptions
• Know the Concept of Margin of Safety
• Know the Comparison of equity returns with bond returns
• Know the Basic Behavioral Biases influencing investments
• Know about some pearls of wisdom from Investment Gurus across the world

XII. Qualities of a good Research Report

• Learn about the Qualities of a good Research Report
• Know about the Checklist based approach to the Research Reports
• Know about the sample checklist for Investment Research Reports

XIII. Legal and Regulatory Environment

• Understand the Regulatory infrastructure in Financial Markets
• Understand the Important regulations in Indian Securities Market
• Know the Code of Conduct/Ethics for Research Analysts
• Know the Disclosure Requirements for Research Analysts 

Annexure:

• Case Studies (Some cases from history on market events)
• Suggested Readings
• Reference websites