NATIONAL INSTITUTE OF SECURITIES MARKETS

Established by the Securities and Exchange Board of India

AnnexureIITestObjectives
NISMSeriesXV:ResearchAnalystCertificationExamination
Chapter1:IntroductiontoResearchAnalystProfession
1.1 PrimaryroleofaResearchAnalyst
1.2 PrimaryresponsibilitiesofaResearchAnalyst
1.3 BasicprinciplesofinteractionwithCompanies/Clients
1.4 ImportantqualitiesofaResearchAnalyst

Chapter2:IntroductiontoSecuritiesMarket
2.1 IntroductiontoSecuritiesandSecuritiesMarket
2.2 ProductDefinitions/Terminology
2.2.1 EquityShares
2.2.2 Debentures/Bonds/Notes
2.2.3 WarrantsandConvertibleWarrants
2.2.4 Indices
2.2.5 MutualFundUnits
2.2.6 ExchangeTradedFunds
2.2.7 Hybrids/StructuredProducts
2.2.7.1 PreferenceShares
2.2.7.2 ConvertibleDebenture&Bonds
2.2.7.3 Indian Depository Receipts (IDRs), Global Depository Receipts (GDRs) and
AmericanDepositoryReceipts(ADRs)
2.2.7.4 ForeignCurrencyConvertibleBonds(FCCB)
2.2.7.5 EquityLinkedDebentures
2.2.7.6 CommodityLinkedDebentures
2.2.7.7 MortgagedBackedSecurities(MBS)andAssetBackedSecurities(ABS)
2.3 StructureofSecuritiesMarket
2.3.1 PrimarymarketExplainvariouswaystoissueSecuritiesInitialPublicOffer(IPO),
FollowonPublicOffer(FPO),PrivatePlacement,QualifiedInstitutionalPlacements
(QIPs),Preferentialissue,RightsandBonusissue,Onshoreandoffshoreofferings,
OfferforSale(OFS)
2.3.2 Secondary market Overthecounter Market and Exchange Traded Markets,
Trading,ClearingandSettlementandRiskManagement
2.4 Variousmarketparticipantsandtheiractivities

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NATIONAL INSTITUTE OF SECURITIES MARKETS

Established by the Securities and Exchange Board of India

2.4.1 Market Intermediaries Stock Exchanges, Depositories, Depository Participant,

Trading Member/Stock Brokers & SubBrokers, Authorised Person, Custodians,
ClearingCorporation,ClearingBanks,MerchantBankersandUnderwriters
2.4.2 InstitutionalparticipantsForeignInstitutionalInvestors(FIIs),PNoteParticipants,
MutualFunds,InsuranceCompanies,PensionFunds,VentureCapitalFunds,Private
EquityFirms,HedgeFunds,AlternativeInvestmentFunds,InvestmentAdvisers
2.4.3 Retailparticipants
2.5 Kindsoftransactions
2.5.1 Cash,TomandSpottrades/transactions
2.5.2 Forwardtransactions
2.5.3 Futures
2.5.4 Options
2.5.5 Swaps
2.5.6 Trading,Hedging,Arbitrage,PledgingofShares
2.6 DematerializationandRematerializationofsecurities

Chapter3:TerminologyinEquityandDebtMarkets
3.1 TerminologyinEquityMarket
3.1.1 FaceValue
3.1.2 BookValue
3.1.3 MarketValue
3.1.4 ReplacementValue
3.1.5 IntrinsicValue
3.1.6 MarketCapitalization
3.1.7 EnterprisingValue
3.1.8 EarningsHistorical,TrailingandForward
3.1.9 EarningsPerShare
3.1.10 DividendPerShare
3.1.11 PricetoEarningsRatio
3.1.12 PricetoSalesRatio
3.1.13 PricetoBookValueRatio
3.1.14 DifferentialVotingRights(DVRs)
3.2 TerminologyinDebtMarket
3.2.1 FaceValue
3.2.2 CouponRate
3.2.3 Maturity
3.2.4 Principal
3.2.5 RedemptionofaBond
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NATIONAL INSTITUTE OF SECURITIES MARKETS

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3.2.6 HoldingPeriodReturns
3.2.7 CurrentYield,YieldtoMaturity(YTM)
3.2.8 DurationandModifiedDuration
3.2.9 Convexity
3.3 TypesofBonds
3.3.1 ZeroCouponBonds
3.3.2 FloatingRateBonds
3.3.3 ConvertibleBonds
3.3.4 AmortizationBonds
3.3.5 CallableBonds
3.3.6 PuttableBonds
3.3.7 PaymentinKindBonds
3.3.8 PrincipalProtectedNote
3.3.9 InflationProtectionSecurities

Chapter4:FundamentalsofResearch
4.1 Whatisinvesting
4.2 Researchonbusinessesorstocks
4.3 FundamentalAnalysisTopdownapproachandBottomupapproach
4.4 TechnicalAnalysis
4.5 BehavioralFinance

Chapter5:EconomicAnalysis
5.1 Basicprinciplesofmicroeconomics
5.2 Basicprinciplesofmacroeconomics
5.3 Introductiontovariousmacroeconomicvariables
5.3.1 Nationalincome
5.3.2 SavingsandInvestments
5.3.3 Inflation(Consumer/WholesalePriceIndices)andinterestrate
5.3.4 Unemploymentrate
5.3.5 FlowsfromForeignDirectInvestment(FDI)andForeignInstitutionalInvestors(FIIs)
5.3.6 FiscalpoliciesandtheirimpactonEconomy
5.3.7 GeneralAntiAvoidanceRules(GAAR)
5.3.8 MonetarypoliciesandtheirimpactonEconomy
5.3.9 Internationaltrade,ExchangerateandTradeDeficit
5.3.10 GlobalizationPositivesandNegatives
5.4 Sourcesofinformationforeconomicanalysis

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NATIONAL INSTITUTE OF SECURITIES MARKETS

Established by the Securities and Exchange Board of India

Chapter6:IndustryAnalysis
6.1 Dr.MichaelPortersfiveforcemodelforindustryanalysis
6.1.1 Industryrivalry
6.1.2 Threatofsubstitutes
6.1.3 Bargainingpowerofbuyers
6.1.4 Bargainingpowerofsuppliers
6.1.5 Barrierstoentry
6.2 Political, Economic, Sociocultural, Technological, Legal and Environmental (PESTLE)
Analysis
6.3 BostonConsultingGroup(BCG)Analysis
6.4 StructureConductPerformance(SCP)Analysis
6.5 KeyIndustryDrivers
6.6 Regulatoryenvironment/framework
6.7 Sourcesofinformationforindustryanalysis

Chapter7:CompanyAnalysisQualitativeDimensions
7.1 UnderstandBusinessandBusinessModels
7.2 CompetitiveAdvantages/Pointsofdifferentiationoverthecompetitors
7.3 Strengths,Weaknesses,OpportunitiesandThreats(SWOT)Analysis
7.4 Qualityofmanagement(includingindependentdirectors)andgovernance
7.5 Pricingpowerandsustainabilityofthispower
7.6 Organizationstructure
7.7 Criticalbusinessdrivers/successfactors
7.8 Risksinthebusiness
7.9 Complianceorientationofthecompany
7.10 DocumentationonGuidancev/sActuals
7.11 Sourcesofinformationforanalysis

Chapter8:CompanyAnalysisQuantitativeDimensions
8.1 HistoryofBusinessVs.FutureofBusiness
8.2 BasicsofProfitandLossAccount(P/L)
8.3 BasicsofBalanceSheet(B/S)
8.4 BasicsofCashFlows
8.5 ContingentLiabilities,Offbalancesheetitems,AccountingPolicies,NotestoAccounts
8.6 BasicsofTaxationaffectingtoCompanies
8.7 Importantpointstokeepinmindwhilelookingatfinancials
8.8 Qualityofbusinessinthepastthroughquantitativelenses
8.8.1 Profitabilityratios

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NATIONAL INSTITUTE OF SECURITIES MARKETS

Established by the Securities and Exchange Board of India

8.8.2 Returnratios
8.8.3 Leverageratios
8.8.4 Liquidityratios
8.8.5 Efficiencyratios
8.9 Peepingintofuturewithcaution
8.10 PeerComparison
8.11 HistoryofEquityexpansion
8.12 Dividendandearningshistory
8.13 Historyofcorporateactions
8.14 OwnershipandInsidersSalesandPurchaseofstocksinthepast

Chapter9:CorporateActions
9.1 Philosophyofcorporateactions
9.1.1 Dividend
9.1.2 RightsIssue
9.1.3 BonusIssue
9.1.4 StockSplit
9.1.5 ShareConsolidation
9.1.6 MergerandAcquisition
9.1.7 LoanRestructuring
9.1.8 Buybackofshares
9.1.9 Delistingofshares
9.1.10 ShareSwap

Chapter10:ValuationPrinciples
10.1 DifferencebetweenPriceandValue
10.2 WhyValuationsarerequired
10.3 SourcesofValueinaBusinessEarningsandAssets
10.4 DiscountedCashFlowsmodelforBusinessValuation
10.5 AbsoluteValuationsvs.PriceValuesense
10.6 EarningsbasedValuationMatrices
10.6.1 DividendYieldPricetoDividendRatio
10.6.2 EarningYieldPricetoEarningsRatio
10.6.3 GrowthadjustedPricetoEarningsRatio(PEGRatio)
10.6.4 EnterpriseValuetoEBDITARatio
10.6.5 EnterpriseValue(EV)toSalesRatio
10.7 AssetsbasedValuationMatrices
10.7.1 ReturnonEquity(ROE)basedvaluationPricetoEquityBookValueRatio

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NATIONAL INSTITUTE OF SECURITIES MARKETS

Established by the Securities and Exchange Board of India

10.7.2 Return on Capital Employed (ROCE) based valuation Enterprise Value (EV) to
CapitalEmployedRatio
10.7.3 NetAssetValueapproach
10.8 RelativeValuationsTradingMultiplesandTransactionMultiples
10.9 SumOfTheParts(SOTP)Valuation
10.10 OtherValuationParametersinnewageeconomyandbusinesses
10.11 CapitalAssetPricingModel
10.12 ObjectivityofValuations
10.13 SomeimportantconsiderationsinthecontextofBusinessValuation

Chapter11:FundamentalsofRiskandReturn
11.1 Conceptofreturnofinvestmentandreturnoninvestment
11.2 Calculationofsimple,annualizedandcompoundedreturns
11.3 Risksininvestments
11.4 Conceptsofmarketrisk(Beta)
11.5 Sensitivityanalysistoassumptions
11.6 ConceptofMarginofSafety
11.7 Comparisonofequityreturnswithbondreturns
11.8 BasicBehavioralBiasesinfluencinginvestments
11.9 SomepearlsofwisdomfromInvestmentGurusacrosstheworld

Chapter12:QualitiesofagoodResearchReport
12.1 QualitiesofagoodResearchReport
12.1.1 Rating Conventions Overweight, Underweight, Buy, Sell and Hold
recommendations
12.2 ChecklistbasedapproachtotheResearchReports
12.3 AsamplechecklistforInvestmentResearchReports

Chapter13:LegalandRegulatoryEnvironment
13.1 RegulatoryinfrastructureinFinancialMarketss
13.1.1 MinistryofFinance(MoF)
13.1.2 MinistryofCorporateAffairs(MCA)
13.1.3 ReserveBankofIndia(RBI)
13.1.4 SecuritiesandExchangeBoardofIndia(SEBI)
13.1.5 InsuranceRegulatoryandDevelopmentAuthority(IRDA)
13.1.6 PensionFundRegulatoryandDevelopmentAuthority(PFRDA)
13.1.7 ForwardMarketsCommission(FMC)etc.
13.2 ImportantregulationsinIndianSecuritiesMarket

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NATIONAL INSTITUTE OF SECURITIES MARKETS

Established by the Securities and Exchange Board of India

13.2.1 SecuritiesContract(Regulation)Act,1956
13.2.2 SecuritiesandExchangeBoardofIndia(SEBI)Act,1992
13.2.3 Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations,2015
13.2.4 SEBI(ProhibitionofFraudulentandUnfairTradePracticesrelatingtoSecurities
Markets)Regulation,2003
13.2.5 SecuritiesandExchangeBoardofIndia(ResearchAnalyst)Regulations,2014
13.3 CodeofConduct/EthicsforResearchAnalysts
13.4 DisclosureRequirementsforResearchAnalysts

Annexure:
1.CaseStudies(Somecasesfromhistoryonmarketevents)
2.SuggestedReadings
3.Referencewebsites

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