Chapter 10: NISM-XV Exam Prep
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Day 43: NISM-XV Module 2 — The Research Process
How professional analysts think, investigate, and write research reports
2 min read
📖 Priya's Working Day as a Research Analyst
6:30 AM: Reads overnight US market movements and global news. 8:00 AM: Reviews Infosys's quarterly results released last night. Numbers beat estimates. She needs a "Flash Note" by 9 AM.
She analyses the numbers, checks her financial model, updates her target price, and writes a 2-page note with her revised recommendation. By 9:15 AM, it's on every institutional client's desk.
That's what a Research Analyst does — and what the NISM exam tests you on. 📋
6:30 AM: Reads overnight US market movements and global news. 8:00 AM: Reviews Infosys's quarterly results released last night. Numbers beat estimates. She needs a "Flash Note" by 9 AM.
She analyses the numbers, checks her financial model, updates her target price, and writes a 2-page note with her revised recommendation. By 9:15 AM, it's on every institutional client's desk.
That's what a Research Analyst does — and what the NISM exam tests you on. 📋
The Research Process — Step by Step
Step 1: Universe Selection — Which companies to cover? Based on sector focus, market cap, client interest.
Step 2: Industry Analysis — Sector outlook: competition, regulatory environment, macro trends, growth drivers.
Step 3: Company Analysis — Fundamentals: revenue, margins, debt, management quality, competitive moat.
Step 4: Valuation — DCF, P/E comparison, EV/EBITDA. Calculate fair value vs current market price.
Step 5: Write Research Report — BUY/SELL/HOLD recommendation, target price, risk factors, mandatory disclosures.
Types of Research Reports
| Report Type | When Published | Length |
|---|---|---|
| Initiating Coverage | First time covering a stock | 15–30 pages (detailed!) |
| Quarterly Update | After Q results | 5–10 pages |
| Flash Note | Immediate reaction to news event | 1–2 pages (fast!) |
| Sector Report | Thematic/periodic industry analysis | 20–50 pages |
Mandatory Disclosures — SEBI Requirement!
Every research report MUST include:
✅ Analyst's SEBI registration number
✅ Date of report
✅ Conflict of interest disclosure (does analyst/firm own the stock?)
✅ Rating methodology
✅ Historical recommendation performance
✅ Risk factors
Missing any of these → SEBI action. Exam loves testing this! 📋
✅ Analyst's SEBI registration number
✅ Date of report
✅ Conflict of interest disclosure (does analyst/firm own the stock?)
✅ Rating methodology
✅ Historical recommendation performance
✅ Risk factors
Missing any of these → SEBI action. Exam loves testing this! 📋
DCF Valuation — Basics
DCF = Future Cash Flows discounted to Present Value
Core concept: ₹100 today > ₹100 next year (time value of money).
Steps: Estimate FCF for next 10 years → Apply discount rate (WACC ~10–15%) → Add terminal value → Sum = Intrinsic Value.
If Intrinsic Value > Market Price → Stock undervalued → BUY signal!
Core concept: ₹100 today > ₹100 next year (time value of money).
Steps: Estimate FCF for next 10 years → Apply discount rate (WACC ~10–15%) → Add terminal value → Sum = Intrinsic Value.
If Intrinsic Value > Market Price → Stock undervalued → BUY signal!
🎯 Takeaway:
Research process: Universe → Industry → Company → Valuation → Report. Types: Initiating Coverage, Quarterly, Flash Note, Sector. Mandatory disclosures: registration number, conflicts, risks. DCF = future cash flows discounted to today. Tomorrow: Financial Statements deep dive!
Research process: Universe → Industry → Company → Valuation → Report. Types: Initiating Coverage, Quarterly, Flash Note, Sector. Mandatory disclosures: registration number, conflicts, risks. DCF = future cash flows discounted to today. Tomorrow: Financial Statements deep dive!