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Click on Names below to join Telegram LinkedIn Facebook Instagram Clubhouse Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Invested 10000 | 100 Units Let’s assume we invested similar amount to this company in Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Thank you ! Click on Names below to join Thank you ! Telegram LinkedIn Facebook Instagram Clubhouse Day 2 Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Stock market Analysis Types of Analysis Fundamental Technical Analysis Analysis Quantitative Qualitative If we generalize, Fundamental analysis is just this much But the more we dive deeper, the more we get, Say it’s a well ❖The technique of identifying mispriced securities by determining their intrinsic or fair value and comparing against the market price. ❖If price < intrinsic value = underpriced : buy ❖If price > intrinsic value = over-priced: avoid, sell ❖If price equals intrinsic value = fairly-priced : no action Three Steps of Top-Down Fundamental Analysis Macroeconomic analysis: evaluates economic environment and its effect on industry and company fundamentals. • Global Economy • Domestic Macro-economy • Industry analysis: evaluates outlook for particular industries • Company analysis: evaluates company's strengths and weaknesses within industry Join with me : Telegram Facebook LinkedIn Instagram Clubhouse ✓ Global Economy :Global Economic growth , from IMF, World Bank, Globalization leads to increase in global demand , Globally product selling companies sales increment ,Profit increment , Increase in Dividend. ✓ Currency exchange rate: Other Sector Remaining Constant, Currency devalue , Hotel sector may flourish , Tourist affordability may increase :Example Twin tower Crash September 11, Doller became weak, advantage to world Disney company , local tourist visit Disney park as Doller became weak. ✓ Political Risk: Wars , Terrorism , Equity(D) , Bonds (U) ✓ Protectionism: Protection to domestic companies in manufacturing sector ,Cement and other It companies ,Examples China put restriction on foreign IT companies , Budget gov projects Nepalese made Cements. ✓ Export Prospect : Global economy(U) advantages to Exporting Companies For Example : Harshad Mehta Tata Tea Case ✓ Free flow of capital: Easy Policy FDI , FII, FPI on real sector , leading Stock Market to Boom Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Domestic Macro Economy : Economy (U) Market (U) there might be some exceptions too • Factors to consider for analyzing domestic macro economy: • Macro economic indicators • Government Policies • Business Cycles Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Macro Economic Indicator's Indicators Favorable Impacts GDP Growth High Growth Rate Domestic Saving Rate High Interest Rates/Liquidity Low/High Inflation Low Balance of Trade Positive Balance of Payment Positive Employment Rate High Producer and Consumer Sentiment Strong Government Policies • Fiscal Policy : Related to government Expenditure and Income • Expansionary policy is favorable • Increase in capital expenditure and tax cut are good. • Monetary Policy • Expansionary policy is favourable • Increase in money supply (liquidity) and reduction in interest rate are good. • Other Policies Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Industry Analysis Industry Analysis • Industry Classification and Sensitivity • Sector rotation • Industry life cycles • Regulatory Changes • Qualitative issues Industry Analysis • Classifying industries • Defensive industries Insensitive to change in business cycles like pharmaceuticals, basic food manufacturing, public utilities. • Cyclical industries More sensitive to the change in business cycles like entertainment, travel and tourism, automobiles, ornaments, etc. • Growth industries Grow rapidly irrespective of the business cycles like mobile applications, social networking sites, smart phones and other smart devices, online shopping, other online services, etc. Industry Analysis Sector Rotation • Shifting Funds from one industry to another with the change in business cycle leads to more return than placing funds in the same industry during a complete cycle . • So, sector rotation is an important investment strategy to maximize investment return Industry Analysis Legal/Regulatory Changes a) Legal/regulatory changes can pose both challenges and threats to the industry b) Participants within the industry who can properly predict such changes can standout of the crowd and maximize return/minimize loss. E.g- NRB's directives governing lending of BFIs, paid-up capital requirements, licensing policies, etc. Industry Analysis • Industry Life Cycles (Four stages): • Start-up Stage • Growth Stage • Maturity Stage • Relative Decline Stage Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Industry Analysis • Qualitative Issues • Threat of entry and competition • Threat of substitute product • Permanence (probability of product obsolescence) • Vulnerability to external shocks (foreign competition) • Labor conditions • Bargaining power of suppliers • Bargaining power of buyers Company Analysis: Qualitative Issues • Corporate Governance Board and Management Analysis • Experience, qualification, age, ethics • Efficiency and effectiveness in utilizing resources and conducting of Management • BOD report and Management commentary • Output rate of new products • Product innovation strategies • R&D budgets • Pricing Strategy • Patents and technology • Employee/union relations Quantitative Analysis of Sector Indexes of NEPSE • Commercial bank • Development bank • Finance companies • Micro finance • Life insurance • Non life insurance • Hydro power • Hotels • Trading • Manufacturing and Processing • Mutual funds • Others Track the index most relevant to you Company Analysis: Quantitative Issues These indicators must the observed before investing on Commercial bank, Development bank, Finance companies, Micro finance ❖ Paid UP Capital ❖ Non performing loans ( NPL ) ❖ Reserve ❖ Past three year dividend history ❖ Eps ❖ Capital adequacy ratio ❖ Book value / Net worth ❖ Capital structure (Promoter to Public holding) ❖ PE ratio ❖ Return on Equity (ROE) ❖ Lending and deposits ❖ Dividend yield ❖ Price to book value ratio ❖ Net profit ❖ Debt to equity Ratio ❖ Distributable profit / Distributable EPS Quantitative Analysis of insurance companies ❖ Insurance fund ❖ Catastrophy Fund Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Quantitative Analysis of Hydropower companies ▪ Power Purchase Agreements ▪ Per mega-watt cost ▪ Payback Period ▪ Loans ▪ Debt to equity Ratios ▪ Project feasibility ▪ other sister Projects Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Quantitative Analysis of Hotels ▪ Occupancy rate ▪ Backup Plans ( defense mechanism in crisis example restaurants in airports ) Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Quantitative Analysis of Mutual Funds ▪ NAV ( Net asset value ) ▪ Percentage of investment in Equity fund , Debt Fund , money market fund, Government securities. … Join with me : Telegram Facebook LinkedIn Instagram Clubhouse Thank you ! 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