NISM Series-XV: Research Analyst Practice Exam
The NISM Series-XV: Research Analyst Certification Exam, administered by the National Institute of Securities Markets (NISM), is a prestigious program designed to assess and validate the knowledge and competency of individuals working as research analysts in the Indian securities market. Earning this certification demonstrates your proficiency in core principles and practices essential for effective research analysis within the financial services sector.
Who Should Take This Exam?
This certification caters to a wide range of professionals seeking to excel in financial research, including:
- Research Analysts: Employed by brokerage houses, investment advisory firms, or independent research firms.
- Investment Professionals: Individuals involved in making investment decisions, such as portfolio managers and financial advisors.
- Finance Graduates and Aspirants: Those seeking to enter the financial research field and establish a strong foundation.
Prerequisites for Exam Eligibility
The NISM mandates specific requirements for participation in the Series-XV program:
- Education: A bachelor's degree in any discipline from a recognized Indian university is mandatory.
- Experience: While not required to sit for the exams, having at least two years of experience in financial research or related fields is recommended for gaining practical knowledge.
- Ethics: Abiding by NISM's Code of Ethics is a core program requirement.
Roles and Responsibilities
- Conduct Comprehensive Research: Effectively analyze financial data, interpret market trends, and generate insightful research reports to inform investment decisions.
- Adhere to Regulatory Compliance: Demonstrate a strong understanding of the Securities and Exchange Board of India (SEBI) regulations governing research analysts.
- Maintain Ethical Standards: Uphold ethical principles and avoid conflicts of interest in research practices.
- Communicate Research Findings Clearly: Effectively communicate complex financial information to various audiences, including investors and portfolio managers.
Exam Details
- Exam Duration 120 mins
- Number of Questions 100 Questions
- Exam Language English
- Pass Score 60% and above
Examination Objectives
Upon successful completion of the examination, candidates will be able to:
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Understand the fundamentals of the Indian securities markets and familiarize themselves with key terminologies used in equity and debt markets.
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Grasp the concepts behind both top-down and bottom-up approaches in fundamental analysis.
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Comprehend the core principles of microeconomic and macroeconomic analysis, identify reliable information sources, and evaluate the impact of various macroeconomic indicators.
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Recognize major industry drivers and effectively gather information for conducting industry-level analysis.
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Develop an understanding of both qualitative and quantitative aspects involved in company analysis.
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Gain insights into the fundamentals of risk and return, valuation methodologies, and the implications of different corporate actions.
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Identify the essential components and characteristics of a well-structured research report.
Course Outline
I. INTRODUCTION TO RESEARCH ANALYST PROFESSION
A. Primary Role of a Research Analyst
B. Primary Responsibilities of a Research Analyst
C. Basic Principles of Interaction with Companies/Clients
D. Important Qualities of a Research Analyst
II. INTRODUCTION TO SECURITIES MARKET
A. Introduction to Securities and Securities Market
B. Product Definitions / Terminology
C. Structure of Securities Market
D. Various Market Participants and Their Activities
E. Kinds of Transactions
F. Dematerialization and Rematerialization of securities
III. TERMINOLOGY IN EQUITY AND DEBT MARKETS
A. Terminology in Equity Market
B. Terminology in Debt Market
C. Types of Bonds
IV. FUNDAMENTALS OF RESEARCH
A. What is Investing?
B. The role of research in investment activity
C. Technical Analysis
D. Fundamental Analysis
E. Quantitative Research
F. Behavioral Approach to Equity Investing
V. ECONOMIC ANALYSIS
A. Basic Principles of Microeconomics
B. Basic Principles of Macroeconomics
C. Introduction to Various Macroeconomic Variables
D. Role of economic analysis in fundamental analysis
E. Secular, cyclical and seasonal trends
F. Sources of Information for Economic Analysis
VI. INDUSTRY ANALYSIS
A. Role of industry analysis in fundamental analysis
B. Defining the industry
C. Understanding industry cyclicality
D. Market sizing and trend analysis
E. Secular trends, value migration and business life cycle
F. Understanding the industry landscape
G. Key Industry Drivers and Industry KPIs
H. Regulatory environment/framework
I. Taxation
J. Sources of information for industry analysis
VII. COMPANY ANALYSIS – BUSINESS AND GOVERNANCE
A. Role of company analysis in fundamental research
B. Understand Business and Business Models
C. Pricing Power and Sustainability of This Power
D. Competitive Advantages/Points of differentiation over the Competitors
E. Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis
F. Quality of Management and Governance Structure
G. Risks in the Business
H. History of credit rating
I. ESG framework for company analysis
J. Sources of Information for Analysis
VIII. COMPANY ANALYSIS – FINANCIAL ANALYSIS
A. Introduction to financial statement
B. Stand-alone financial statement and consolidated financial statement
C. Balance Sheet
D. Basics of Profit and Loss Account (P/L)
E. Statement of changes in shareholder’s equity
F. Basics of Cash Flows
G. Notes to accounts
H. Important Points to Keep In Mind While Looking At Financials
I. Reading audit report to understand the quality of accounting
J. Financial statement analysis using ratios
K. Commonly used ratios
L. Dupont analysis
M. Forecasting using ratio analysis
N. Peer Comparison
O. Other aspects to study from financial reports
IX. CORPORATE ACTIONS
A. Philosophy of Corporate Actions
B. Dividend
C. Rights Issue
D. Bonus Issue
E. Stock Split
F. Share Consolidation
G. Merger and Acquisition
H. Demerger / Spin-off
I. Scheme of arrangement
J. Loan Restructuring
K. Buyback of Shares
L. Delisting and relisting of Shares
M. Share Swap
X. VALUATION PRINCIPLES
A. Difference Between Price and Value
B. Why Valuations are required
C. Sources of Value in a Business – Earnings and Assets
D. Approaches to valuation
E. Discounted Cash Flows Model for Business Valuation
F. Relative valuation
G. Earnings Based Valuation Matrices
H. Assets based Valuation Matrices
I. Relative Valuations – Trading and Transaction Multiples
J. Sum-Of-The-Parts (SOTP) Valuation
K. Other Valuation Parameters in New Age Economy and Businesses
L. Capital Asset Pricing Model
M. Objectivity of Valuations
N. Some Important Considerations in the Context of Business Valuation
XI. FUNDAMENTALS OF RISK AND RETURN
A. Concept of Return of Investment and Return on Investment
B. Calculation of Simple, Annualized and Compounded Returns
C. Risks in Investments
D. Measuring risk
E. Concepts of Market Risk (Beta)
F. Sensitivity Analysis to Assumptions
G. Concept of Margin of Safety
H. Comparison of Equity Returns with Bond Returns
I. Calculating risk adjusted returns
J. Basic Behavioral Biases Influencing Investments
K. Some Pearls of Wisdom from Investment Gurus across the World
L. Measuring liquidity of equity shares
XII. QUALITIES OF A GOOD RESEARCH REPORT
A. Qualities of a Good Research Report
B. Checklist Based Approach to the Research Reports
C. A Sample Checklist for Investment Research Reports
XIII. LEGAL AND REGULATORY ENVIRONMENT
A. Regulatory infrastructure in Financial Markets
B. Important regulations in Indian Securities Market
C. Code of Conduct for Research Analysts
D. Management of Conflicts of Interest and Disclosure Requirements for Research Analysts
E. Exchange surveillance mechanisms: GSM and ASM
XIV. ANNEXURE – 1
XV. ANNEXURE – 2
XVI. ANNEXURE – 3
XVII. ANNEXURE – 4