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NISM Certifications Research Analysis and Fundamental Valuation Syllabus

The Research Analysis and Fundamental Valuation syllabus for NISM Certifications in full: 5 chapters, 15 topics and 36 sub-topics, every one listed below, plus 54 Research Analysis and Fundamental Valuation flashcards with answers.

5Chapters
15Topics
36Sub-topics
54Flashcards

Research Analysis and Fundamental Valuation syllabus: all 5 chapters

Expand any chapter to see its topics and sub-topics.

  1. Research Analyst Regulatory Framework

     3 topics
    • SEBI (Research Analysts) Regulations, 2014
      • Registration and qualification norms
      • Disclosure of interest and conflicts
      • Compliance and record-keeping
    • Ethics and Professional Standards
      • Independence and objectivity
      • Handling of material non-public information
    • Research Report Standards
      • Mandatory disclosures in reports
      • Rating definitions and target prices

  2. Economic and Industry Analysis

     3 topics
    • Macroeconomic Analysis
      • GDP, inflation, and interest rates
      • Fiscal and monetary policy
      • Business and economic cycles
    • Industry Analysis
      • Porter's five forces
      • Industry life cycle
      • Competitive positioning
    • Global and Sectoral Influences
      • Commodity and currency linkages
      • Regulatory and policy impacts

  3. Financial Statement Analysis

     3 topics
    • Understanding Financial Statements
      • Balance sheet, P&L, and cash flow
      • Notes to accounts and accounting policies
      • Consolidated versus standalone statements
    • Ratio Analysis
      • Profitability and efficiency ratios
      • Liquidity and solvency ratios
      • Valuation ratios
    • Quality of Earnings
      • Accounting red flags
      • Cash flow versus accrual analysis

  4. Valuation Approaches

     3 topics
    • Discounted Cash Flow Valuation
      • Free cash flow estimation
      • Cost of capital and WACC
      • Terminal value and sensitivity
    • Relative Valuation
      • P/E, P/B, EV/EBITDA multiples
      • Peer comparison
    • Other Valuation Methods
      • Dividend discount model
      • Sum-of-the-parts valuation

  5. Technical Analysis Basics

     3 topics
    • Chart Patterns and Trends
      • Support and resistance
      • Trendlines and chart formations
    • Technical Indicators
      • Moving averages and MACD
      • RSI and oscillators
    • Volume and Momentum Analysis
      • Volume confirmation
      • Momentum and trend strength

NISM Certifications Research Analysis and Fundamental Valuation flashcards — 54 questions with answers

  1. Under SEBI (Research Analysts) Regulations, 2014, who is defined as a 'research analyst'?

    A person responsible for preparing or publishing research reports, providing research reports, making buy/sell/hold recommendations, giving price targets, or offering opinions on public offers of securities.

  2. What is the minimum net worth requirement for a research analyst that is a body corporate or LLP under the SEBI RA Regulations (as amended)?

    A net worth of at least Rs. 1 crore (for body corporate/LLP). Individuals and partnership firms must maintain a deposit-based requirement instead of net worth (earlier Rs. 1 lakh net tangible assets).

  3. What minimum qualification does the SEBI RA Regulations require for a research analyst?

    A professional/postgraduate degree (or postgraduate diploma) in finance, accountancy, business management, commerce, economics, capital markets, banking, insurance or actuarial science, OR a graduate with 5 years of relevant experience, plus a valid NISM certification.

  4. How long must a research analyst maintain records of research reports, recommendations and supporting documents under SEBI RA Regulations?

    For a minimum period of 5 years.

  5. Under SEBI RA Regulations, what is the trading restriction (blackout) around publishing a research report?

    A research analyst (and their employees) cannot trade in the subject security for 30 days before and 5 days after the publication of a research report, and must not trade contrary to their own recommendations.

  6. What disclosures must a research analyst make regarding their financial interest in the subject company?

    They must disclose any actual/beneficial ownership of 1% or more in the securities, any other material conflict of interest, compensation received, and whether they or their relatives hold a financial interest or directorship in the subject company.

  7. What are the four key principles of ethics and professional standards for a research analyst?

    Integrity, independence and objectivity, avoidance of conflicts of interest, and fair disclosure/diligence. Analysts must act honestly, with reasonable care, and place clients' interests first.

  8. What is meant by 'independence and objectivity' for a research analyst?

    Research opinions must be based on the analyst's own honest assessment, free from undue influence by the issuer, investment banking, sales, or any compensation arrangement that could bias the recommendation.

  9. What is a 'Chinese Wall' in the context of research analysis?

    An information barrier separating the research function from investment banking and other departments to prevent conflicts of interest and the flow of material non-public information.

  10. What essential elements must a compliant research report contain?

    The basis/rationale of recommendation, valuation methods and risks, the price target with time horizon, the recommendation (buy/sell/hold), the date, the analyst's identity and certification, and all relevant disclosures and disclaimers.

  11. What is a 'research analyst certification' statement in a report?

    A statement that the views expressed accurately reflect the analyst's personal views and that no part of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views in the report.

  12. In a typical buy/sell/hold rating scale, what does each rating signify?

    Buy = expected to outperform/return above a threshold; Hold = expected to perform in line with the market; Sell = expected to underperform/decline relative to a threshold over the stated time horizon.

  13. What is the difference between 'top-down' and 'bottom-up' approaches in security analysis?

    Top-down starts with macroeconomy, then industry, then the individual company (EIC framework). Bottom-up starts by analyzing individual companies first, giving less weight to macro/industry conditions.

  14. What does the EIC framework in fundamental analysis stand for?

    Economy - Industry - Company: a top-down sequence where you first analyze the macroeconomy, then the industry, then the specific company.

  15. What is GDP and why is it important in macroeconomic analysis?

    Gross Domestic Product is the total monetary value of all final goods and services produced within a country in a period. It measures overall economic activity; rising GDP generally supports corporate earnings and equity markets.

  16. What are the main phases of a business cycle?

    Expansion (recovery), Peak (boom), Contraction (recession/slowdown), and Trough. Equity, bonds, and sectors perform differently across these phases.

  17. How do interest rate changes affect equity valuations?

    Rising interest rates raise the discount rate and borrowing costs, generally lowering present values and equity prices; falling rates do the opposite. Rate-sensitive sectors (banks, real estate, autos) are most affected.

  18. What is the difference between fiscal policy and monetary policy?

    Fiscal policy is the government's use of taxation and spending to influence the economy. Monetary policy is the central bank's (RBI's) control of money supply and interest rates.

  19. What is inflation and which indices commonly measure it in India?

    Inflation is the sustained rise in the general price level, eroding purchasing power. In India it is measured by the Consumer Price Index (CPI) and the Wholesale Price Index (WPI).

  20. In industry analysis, what are Porter's Five Forces?

    Threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and rivalry among existing competitors.

Show the other 34 Research Analysis and Fundamental Valuation flashcards

  1. What are the stages of an industry life cycle?

    Pioneering/Introduction, Growth (rapid expansion), Maturity (stabilization), and Decline. Growth rates, margins, and competition differ at each stage.

  2. What distinguishes a cyclical industry from a defensive (non-cyclical) industry?

    Cyclical industries (autos, steel, capital goods) move closely with the business cycle. Defensive industries (FMCG, pharma, utilities) have relatively stable demand regardless of the cycle.

  3. How do global factors and commodity prices influence sectoral performance?

    Global growth, crude oil prices, exchange rates, and commodity cycles affect input costs and exports. E.g., rising crude hurts oil-importing/aviation sectors but helps oil producers; a weaker rupee aids exporters like IT and pharma.

  4. What are the three primary financial statements a research analyst examines?

    The Balance Sheet (statement of financial position), the Income Statement (Profit & Loss / statement of operations), and the Cash Flow Statement.

  5. What is the fundamental accounting equation reflected in a balance sheet?

    Assets = Liabilities + Shareholders' Equity (Owners' Equity).

  6. What are the three sections of a cash flow statement?

    Cash flow from Operating activities, cash flow from Investing activities, and cash flow from Financing activities.

  7. What is the difference between accrual accounting and cash accounting?

    Accrual accounting records revenues and expenses when earned/incurred regardless of cash movement; cash accounting records them only when cash is actually received or paid.

  8. What is the formula for the Current Ratio and what does it measure?

    Current Ratio = Current Assets / Current Liabilities. It measures short-term liquidity, i.e., the ability to meet short-term obligations.

  9. What is the Quick (Acid-Test) Ratio formula?

    Quick Ratio = (Current Assets - Inventory) / Current Liabilities. It measures liquidity excluding less-liquid inventory.

  10. What is the Debt-to-Equity ratio and what does it indicate?

    Debt-to-Equity = Total Debt / Shareholders' Equity. It is a leverage/solvency ratio showing how much debt is used relative to equity financing.

  11. What is the DuPont decomposition of Return on Equity (ROE)?

    ROE = Net Profit Margin x Asset Turnover x Financial Leverage = (Net Income/Sales) x (Sales/Assets) x (Assets/Equity).

  12. What is the formula for Return on Capital Employed (ROCE)?

    ROCE = EBIT / Capital Employed, where Capital Employed = Total Assets - Current Liabilities (or Equity + Long-term Debt). It measures efficiency of total capital use.

  13. What is the Interest Coverage Ratio and what does it show?

    Interest Coverage Ratio = EBIT / Interest Expense. It shows how many times a company can cover its interest obligations from operating earnings; higher is safer.

  14. What is the Inventory Turnover ratio formula?

    Inventory Turnover = Cost of Goods Sold / Average Inventory. It measures how efficiently inventory is converted into sales.

  15. What does 'quality of earnings' refer to?

    The degree to which reported earnings reflect true, sustainable, cash-backed operating performance rather than one-time items, aggressive accounting, or accruals. High-quality earnings are stable, recurring, and cash-supported.

  16. Name common red flags indicating low quality of earnings.

    Growing gap between net income and operating cash flow, rising receivables/inventory faster than sales, frequent one-off gains, aggressive revenue recognition, capitalizing expenses, related-party transactions, and frequent changes in accounting policies.

  17. What is the formula for Free Cash Flow to Firm (FCFF)?

    FCFF = EBIT x (1 - Tax Rate) + Depreciation & Amortization - Capital Expenditure - Increase in Working Capital.

  18. What is Free Cash Flow to Equity (FCFE)?

    FCFE = FCFF - Interest Expense x (1 - Tax Rate) + Net Borrowing. It is the cash available to equity shareholders after debt obligations.

  19. What discount rate is used to value FCFF versus FCFE?

    FCFF is discounted at the Weighted Average Cost of Capital (WACC); FCFE is discounted at the cost of equity (Ke).

  20. What is the formula for the Weighted Average Cost of Capital (WACC)?

    WACC = (E/V) x Ke + (D/V) x Kd x (1 - Tax Rate), where E = equity, D = debt, V = E+D, Ke = cost of equity, Kd = cost of debt.

  21. How is the cost of equity estimated using the Capital Asset Pricing Model (CAPM)?

    Ke = Rf + Beta x (Rm - Rf), where Rf = risk-free rate, Beta = systematic risk, and (Rm - Rf) = the equity market risk premium.

  22. What is the Gordon Growth (constant growth) Dividend Discount Model formula?

    Value = D1 / (Ke - g), where D1 = next year's expected dividend, Ke = cost of equity, and g = constant dividend growth rate (must be less than Ke).

  23. How is the terminal value calculated in a DCF using the perpetuity growth method?

    Terminal Value = FCF in final year x (1 + g) / (WACC - g), then discounted back to present value. It captures the value of cash flows beyond the explicit forecast period.

  24. What is relative valuation and how does it differ from DCF?

    Relative valuation values a company by comparing its multiples (P/E, EV/EBITDA, P/B) to peers or industry averages. DCF (intrinsic/absolute) values a company based on its own projected discounted cash flows.

  25. What is the Price-to-Earnings (P/E) ratio and how is it interpreted?

    P/E = Market Price per Share / Earnings per Share. It shows how much investors pay per rupee of earnings; a high P/E may signal growth expectations or overvaluation.

  26. What is the EV/EBITDA multiple and why is it useful?

    EV/EBITDA = Enterprise Value / EBITDA. It is capital-structure neutral and ignores depreciation/tax differences, making it useful for comparing companies with different leverage and across borders.

  27. How is Enterprise Value (EV) calculated?

    EV = Market Capitalization + Total Debt + Minority Interest + Preferred Equity - Cash & Cash Equivalents.

  28. What is the PEG ratio and what does it adjust for?

    PEG = P/E Ratio / Annual EPS Growth Rate (%). It adjusts the P/E for growth; a PEG around 1 is often considered fairly valued.

  29. Name some 'other' valuation methods beyond DCF and relative valuation.

    Sum-of-the-parts (SOTP) valuation, asset-based/net asset value (NAV) valuation, replacement cost, liquidation value, and price-to-book for asset-heavy or financial firms.

  30. In technical analysis, what is the difference between support and resistance?

    Support is a price level where buying interest tends to halt a decline; resistance is a level where selling pressure tends to halt an advance. Broken support can become resistance and vice versa.

  31. What does the Relative Strength Index (RSI) measure and what are its standard thresholds?

    RSI is a momentum oscillator (0-100) measuring the speed and magnitude of price moves. Above 70 is typically overbought; below 30 is typically oversold. The standard period is 14.

  32. What is a 'head and shoulders' chart pattern and what does it signal?

    A reversal pattern with three peaks - a higher central peak (head) between two lower peaks (shoulders). It signals a likely trend reversal from bullish to bearish once the neckline breaks.

  33. What is a moving average crossover (golden cross vs death cross)?

    A golden cross occurs when a short-term moving average crosses above a long-term one (bullish signal); a death cross occurs when the short-term crosses below the long-term (bearish signal).

  34. How is trading volume used to confirm price trends?

    Rising volume confirms the strength of a price move (uptrend or breakout), while a price move on low/declining volume is considered weak and prone to reversal. Volume should expand in the direction of the trend.

NISM Certifications Research Analysis and Fundamental Valuation FAQ

What is in the NISM Certifications Research Analysis and Fundamental Valuation syllabus?

NISM Certifications Research Analysis and Fundamental Valuation is split into 5 chapters: Research Analyst Regulatory Framework, Economic and Industry Analysis, Financial Statement Analysis, Valuation Approaches and Technical Analysis Basics. Together they contain 15 topics and 36 sub-topics.

How many chapters are in NISM Certifications Research Analysis and Fundamental Valuation?

5 chapters, containing 15 topics and 36 sub-topics. The largest chapter is Research Analyst Regulatory Framework, with 3 topics.

Are there flashcards for NISM Certifications Research Analysis and Fundamental Valuation?

Yes — a 54-card Research Analysis and Fundamental Valuation deck, printed in full in the flashcards section of this page and available in the Examius app with spaced repetition. The free plan covers one exam of your choice, including its flashcards; Examius Pro, a one-time purchase, unlocks every other exam and deck.