NISM Research Analyst Exam Preparation

NISM does not guarantee that all exam questions will be from the workbook.

The School for Certification of Intermediaries (SCI) at NISM develops and administers certification exams and CPE programs for securities market professionals.

NISM certifications are mandated by SEBI regulations for associated persons in the securities markets.

NISM certifications help ensure minimum knowledge standards for market intermediaries.

NISM certifications are designed to enhance investor confidence in the market systems and processes.

NISM offers certifications in various areas like Mutual Funds, Derivatives, Compliance, and Research Analysis.

NISM certifications offer structured career paths for professionals and job aspirants in the securities markets.

This workbook is designed to help candidates prepare for the NISM Certification Exam for Research Analyst.

The core responsibility of a Research Analyst is to gather relevant information and analyze it to help clients make informed investment decisions.

Research Analysts (RAs) gather information from a variety of sources, including economic data, industry trends, and company-specific details.

Research Analysts use the gathered data and information to analyze investments and provide insights to their clients.

Research Analysts need information relevant to the investments being evaluated, such as macro and microeconomic factors, industry-specific information, and company-specific information.

Research Analysts analyze economic information obtained from government statistics and data provided by the central bank (e.g., the Reserve Bank of India).

Research Analysts conduct thorough research, analyze the data, and communicate their findings and recommendations to clients.

Research Analysts contribute to informed investment decisions by providing valuable insights based on their research and analysis.

Research Analysts require strong analytical skills, market knowledge, and effective communication skills to perform their role effectively.

A research analyst's recommendation should be based on factual information and avoid personal bias or opinions.

Research reports should be written in a simple and clear manner, avoiding complex jargon or abbreviations.

A research analyst must disclose any conflicts of interest, such as owning shares in the company being analyzed.

Research analysts must be able to understand and interpret financial data, identify trends, and analyze relationships between different factors.

A research analyst needs to be curious, analytical, and capable of discerning relevant information from various sources.

Before meeting with management, analysts should thoroughly research the company's products, industry, competitors, and financial information. They should also review past annual reports to understand the company's direction and progress towards its goals.

Analysts must maintain an objective perspective and avoid personal bias in their research. They must rely on factual data and make it clear to management that they will not disclose any confidential information that is not publicly available.

Analysts can leverage their network to connect with individuals who can provide valuable insights into a company's performance and plans. These contacts should be people who have a deep understanding of the company's activities and operations.

Analysts should gather information from a variety of sources, including competitors, suppliers, distributors, retailers, and customers. These stakeholders can provide valuable insights into the company's overall business environment.

To make the most of their time with management, analysts should prepare a clear and specific set of questions that will help them gain a better understanding of the company's operations and future plans.

Once analysts complete their research and prepare a report, they need to communicate their findings effectively to their clients. This communication process involves following certain guidelines and best practices.

Analysts must ensure their recommendations are based on thorough research and independent analysis. They should cross-verify management claims to ensure accuracy and avoid relying solely on information provided by the company.

Analysts must be skilled communicators with clear thinking and effective listening skills. They need to effectively convey their research insights to both management and clients.

Precious metals like gold and silver are considered a safe haven investment, protecting money's real value. They have a long lifespan and low storage costs compared to their worth, making them a suitable investment choice.

A commodity ETF is an exchange-traded fund that invests in various physical commodities. Investors buy units of the fund, and the value of these units fluctuates with the fund's net asset value, which is tied to commodity prices. Investors are relieved of storage responsibilities as the fund handles it.

A futures contract is an agreement to buy or sell an asset at a predetermined price on a specific future date. The buyer benefits if the asset's price rises in the future, and vice-versa, allowing for potential gains without physically owning the asset. A managed futures contract involves a portfolio of futures contracts actively managed by experts.

A warehouse receipt is a document that proves ownership of goods stored in a warehouse. These receipts are often transferable, enabling the transfer of ownership simply by transferring the receipt.

The securities market encompasses the activities of issuing, buying, and trading securities among investors. It's where investors acquire securities like stocks and bonds, and subsequent transactions occur.

These are debt instruments whose interest payments are linked to the performance of an underlying equity asset, such as the Nifty 50 index, S&P Sensex, individual stocks, or a customized basket of stocks. They offer potential for equity participation while providing capital protection through investment in fixed-income securities.

These are floating rate debt instruments, similar to ELDs, but their interest payments are tied to the returns of a particular commodity asset. While they can be linked to any commodity, globally, they are most commonly linked to precious metals like gold and silver. Like ELDs, they provide investors with the opportunity to earn returns from commodity markets while protecting their initial investment.

These are debt instruments issued by financial institutions backed by the receivables and cash flows generated by financial assets, like home loans (Mortgage-Backed Securities) or other types of loans, such as auto loans, credit card receivables, or even rent receivable.

Foreign Currency Convertible Bonds (FCCBs) are debt instruments issued by Indian companies in a foreign currency and are convertible into equity shares of the issuer company after a specified time period. These bonds are typically issued offshore to raise capital from international investors.

FCCBs are generally structured in a way that allows investors to convert the bond into shares of the issuing company at a pre-determined price. This conversion feature provides potential upside if the company's share price appreciates.

FCCBs offer a potential advantage for investors as the interest and principal repayments are made in foreign currency, which can potentially provide a hedge against currency fluctuations. However, investors must consider the currency risk involved in the conversion of the bond into equity shares.

FCCBs are regulated by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA). The guidelines for issuing FCCBs are outlined in the "Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism), 1993."

FCCBs are similar to convertible bonds but offer a specific feature: they are optionally convertible. This means that investors can choose to convert their bonds into equity shares, but they are not obligated to do so. The decision to convert depends on the investor's expectations and the performance of the issuer's shares.