Y


„


 
Fundamental Analysis suggests that
 + ery stock has an intrinsic alue
 +stimation of real worth of a stock is
made by considering the earning
potential of a company, which
depends on in estment en ironment.
(


 

y mrowth Rate of m

y ndustrial mrowth Rate
y Agriculture and Monsoons
y Sa ings and n estment
y mo ernment Budget and eficit
y Money Supply
y
rice Le el and nflation
y nterest Rates
y Balance of
ayments
y nfrastructural facilities
y Sentiments
(
 
  

y t is a measure of the total production of

final goods and ser ices in the economy
during a specified period usually a year.

y The higher the growth rate of m
, the

more fa orable it is for stock market.
(


 
 

y The m
growth rte represents the a erage

of the growth rates of the three principal
sectors of the economy:
(a) The Ser ice Sector
(b) The ndustrial Sector
(c) The Agriculture Sector

y The higher the growth rate of the industrial

sector, the more fa orable it is for the stock
market.
(




 

y Agriculture accounts for about a quarter of

the ndian economy and has important
linkages, direct and indirect with the
industry.

y A spell of good monsoons fa ors stock

market, while a streak of bad monsoons
casts its shadow o er the industrial sector
and the stock market.
(

„
  

y The demand for corporate securities has an

important bearing on stock prices
mo ements.
y The le el of n estment in the economy =
omestic Sa ings
+ nflow of Foreign Capital
- n estment made abroad
 The higher the le el of sa ings and
in estment, the more fa orable it is for the
stock market.
(
    


 Y

A reasonably balanced A budget with a high

budget Surplus or eficit

A le el of debt which can A le el of debt which is

be ser iced comfortably difficult to ser ice

A Tax Structure which A Tax Structure which

pro ides for Stock Market pro ides disincenti e for
in estment Stock Market n estment
(

 „
V

   

    

 
V
V   
 

y V







V




V






(



  


y ndustries that enjoy a strong market for

their products and which do not come under
the pur iew of price control may benefit .

y While industries that ha e a weak market

and which come under the pur iew of price
control tend to lose.
(




    

y A rise in nterest rates depresses corporate

profitability and also leads to increase in the
discount rate applied by equity in estors;
Both of which ha e an ad erse effect on
stock prices.

y While, a fall in interest rates impro es

corporate profitability and also leads to a
decline in the discount rate applied by
equity in estors, both of which ha e a
fa orable impact on stock prices.
(


 

y Balance of
ayment (Bo
) =

Balance of Trade (+xport ± mport)
+ Balance on µin isibles¶
+ Balance on account of Capital
Account
 A Bo
deficit depletes the Forex Reser es
of the Country and has an ad erse impact
on the exchange rates and Vice- ersa.
(



 

y Adequate and Regular Supply of +lectronic

power at a reasonable tariff

y A well de eloped-maintained Transportation

and Communication System

y An assured supply of basic industrial raw

materials like steel, coal, petroleum
products and cement

Y„  „
„

y The objecti e of ndustry Analysis is to

assess the prospects of arious industrial
groupings.

y t suggests as to which industries ha e a

brighter future than others and which
industries are plagued with problems that
are likely to persist for a while.
(

 
 

 
 „
  „ 

isplay Caution
(1)
ioneering Stage
(Speculating Acti ities)
Respond Quickly &
() Rapid mrowth
+xpand n estments
Stage
() Maturity & Moderate n estment
Stabilization Stage

(V) ecline Stage Sensibly isin est

(
 „
„
 


 



() Structure of the ndustry and Nature of

Competition

() Nature and
rospects of emand

() Cost, +fficiency and
rofitability

(V) Technology and Research

(
 
  
(  

otential
Su liers
+ntrants

Substitutes Buyers



  „
„

Company Analysis is the last leg in the

+conomic-ndustry-Company Analysis.

This analysis is company-specific.

t may be organized into two parts:

(a) A Study of Financials
(b) A Study of other Factors
(
   

y 
+quity +arnings / +quity

y   „
 

aid-up +quity Capital + Reser e &
Surplus
Number of Outstanding +quity Shares

y   

+quity i idends / +quity +arnings
(
   

y  „
 
+quity +arning / Number of Outstanding
Shares

y   „

 
+quity i idend / Number of Outstanding
Shares
(
 
  

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