Fundamental Analysis In

Portfolio management

Presented By
Dr Rajanikant Verma

Fundamental Analysis in portfolio

management

Economy

Industry

Company

Fundamental analysis
The analysis of deteminants of fair value
of securities .

Need of fundamental analysis:

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It compares the true value of share

with market price.
If true value>>market price,it
denotes undervaluation of share and
vice versa.

Economy
Industry

Company

Economic Analysis: It plays important role in investment

decision.
It helps to decide if economic
condition is conducive or not.

Important indicators:

GDP
Inflation
Interest rate
Fiscal policy
Monetary policy

Industry Analysis:It requires the insight into :

key Sectors
Strength and weakness of particular
sector

Sensitivity of a particular industry to

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

Key factors of industry analysis are

Past performance of industry

Role of Govt. in industry
Labour conditions
Competitive conditions
Product life cycle(PLC)

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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

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