Professional Documents
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Fundamental Analysis
Fundamental Analysis
Fundamental Analysis
Geographical Analysis
Economy Analysis
Industry Analysis
Company Analysis
APPROACHES USED:
Top-down Approach
Bottom-up Approach
1. GEOGRAPHICAL ANALYSIS
Based on:
Topography
Size EMEA
NAR
Location APAC
Climate LAC
Natural resources
Cost effectiveness
2. ECONOMY ANALYSIS
The stock market does not operate in a vacuum. To get an
insight into the complexities of the stock market , one needs to
develop a sound economic understanding and be able to
interpret the impact of important economic indicators on stock
markets.
Inflation
Exchange Rate
Interest Rates
Unemployment Rate
Consumer Sentiment
ECONOMIC INDICATORS
Economists use three types of indicators that provide data on the
movement of the economy as the business cycle enters different
phases.
Forecasting Techniques:
1. Anticipatory surveys
2. Barometric or Indicator Approach
3. Economic Model Building Approach
1. Anticipatory Surveys
1. Leading indicators
2. Coincident indicators
3. Lagging indicators
3. Economic Model Building Approach
Economies of Scale
Product Differentiation
Entry Capital Requirements
Barriers
Switching Costs
Government Policy
2. BARGAINING POWER OF SUPPLIERS
Threatening to
raise prices or
reduce quality
Rivalry
among
o Price competition often leaves the
competitors entire industry worse off
Lack of differentiation
Diverse competitors
Peak
Contraction
Trough
STAGES IN BUSINESS CYCLE
Expansion Contraction
• Production up • Production down
• Employment up • Employment down
Peak Recession
• Production highest • Trough
• Employment highest • Production lowest
• Inflationary pressures • Employment lowest
(demand more than supply)
The direction in which an economy is heading has a significant
impact on companies’ performance and ability to deliver earnings.
SENSITIVITY OF INDUSTRIES TO BUSINESS CYCLE
Introduction
Growth
Maturity
Decline
Technical analysis
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