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1
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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