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Market Analysis Equity Research Part - II

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Click Here >Market Analyst Equity Research Part - I

The nature of work

Two basic approaches to equity research are the "fundamental analysis" and the "technical analysis." As a Fundamental analyst you would study the various factors that affect the stock prices. The analysis is done in the EIC (Economy-Industry-Company) format. First you study the economic factors like interest rates, inflation, national income, political factors etc. Then you study the particular industry to which the company belongs. It could be steel, cement, information technology, pharmaceuticals etc. Ultimately, the financial and other aspects of the particular company are studied. 

As a technical analyst, you will study the price movements of the particular company's stock in the market. Technical analysts strongly believe that the price movements follow a trend and by identifying the trend, one can accurately predict the price that might occur in future. Technical analysts use financial tools with software support. One can be overawed by the terms and studies of a technical analyst when he/she explains the rationale behind the prediction. 

General abilities

To become a successful analyst, one has to possess remarkable analytical, logical and interpretative skills; number crunching abilities; creativity in identifying the appropriate factors of study and high presence of mind. One should also be meticulous and hard working with high concentration powers. The work also involves hours of gazing at numbers, graphs and other figures, apart from the narrative information like corporate releases, CEO's talks and other sources of market data. 

One should also possess skills to discriminate relevant information from the irrelevant and apply the relevant ones accordingly. Working long hours and an attitude for relentless search is  essential. This also calls for high determination and perseverance. 

Educational qualifications

To work as a market analyst, you would be required to do an MBA in Finance. Other qualifications include MA in Economics (Ivy League preferred). An ideal option would be to do the CFA (Chartered Financial Analyst) done from the ICFAI (Institute of Chartered Financial Analysts of India). Mathematical abilities and a background in accountancy are significant requirements. All these would come as effective complementary skills to a strong foundation in financial concepts.

As you can expect, the MBAs from the premier league enjoy high demand from the industry. They include the various branches of IIM; XLRI; XIM; Jamnalal Bajaj Institute of Management; NMIMS; FMS; BIM and Symbiosis Institute of Management. 

Remuneration and Career Prospects

At the entry level the salary can range from Rs.1 lakah to Rs.5 lakhs per annum, depending upon the organization you are going to work for. It is quite common for the research analysts to get a huge performance linked bonus upon good analysis and research results. In due course, you might be handling funds worth several hundreds of crores of rupees and nominated as an asset manager, fund manager, portfolio manager or simply money manager. 

For the more entrepreneurial among you, there is also a scope for starting your own investment advisory services firm or wealth management consultancy for High Networth Individuals. It is not uncommon for senior professionals of this field to earn anywhere between Rs.60 lakhs to Rs.5 crores per annum.

Click Here >Market Analyst Equity Research Part - I


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