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Fundamental Analysis In

Portfolio management

Presented By

Dr Rajanikant Verma

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Fundamental Analysis in portfolio

management

Economy Industry Company

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Fundamental analysis

The analysis of deteminants of fair value

of securities .

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Need of fundamental analysis:

It compares the true value of share with market price.

If true value>>market price,it denotes undervaluation of share and

vice versa.

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Economy

Industry

Company

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Economic Analysis:-

It plays important role in investment decision. It helps to decide if economic condition is conducive or not.

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Important indicators:-

GDP Inflation Interest rate Fiscal policy Monetary policy

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Industry Analysis:-

It requires the insight into :

key Sectors

Strength and weakness of particular sector

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Sensitivity of a particular industry to a business cycle is determined : Sensitivity of sales Operating leverage Financial leverage

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Key factors of industry analysis are

Past performance of industry

Role of Govt. in industry

Labour conditions

Competitive conditions

Product life cycle(PLC)

Company Analysis:

Basic objective of is to idenitify expected companies or shares which are expected to perform well in the market i.e Earning capacity.

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The earning capacity of company depends on:

EBIT

PBT

PAT

ROE(Return on equity)

EPS

DPS(Dividend per share)

Yield

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Thanks