Developed By: iNFOTYKE
Analysing market status
By Kaustov Kashyap
The economic growth and liberalisation in India has had a positive effect on the capital markets as well. As the stock markets boom, more and more people tend to invest in the capital markets. The investors may take their own decisions regarding which securities to buy or hold or sell, or they may consult their stockbrokers for advice.
The stockbroker utilises the expertise of the research department of his firm to provide this kind of information and the people involved in such research are called securities analysts or market analysts. The job of a securities analyst is to research and evaluate companies, find out their profitability, look for indications of growth and expansion, project the company’s future earnings and on the basis of their observations, make recommendations to clients on which securities to buy or sell.
The eligibility for entering this field is an MBA. The field is also open to candidates with a bachelor’s / master’s degree and experience in the financial services industry or statistical research. Trainee positions are available to candidates with bachelor’s degree in business administration, finance or economics or those with post graduate degree in commerce. Although there is no mandated training programme for analysts, it is often required that analysts earn an MBA if they do not possess one.
Knowledge of subjects like engineering, biotechnology and pharmacy in addition to subjects like accountancy, economics and statistics gives analysts an upper edge in their field as this gives them a better understanding of those fields.
Analysts should have computer, analytical, mathematical and problem solving skills. The job of an analyst is such that they are required to explain their findings and recommendations to others and thus, should have excellent presentation skills, self-confidence, maturity as well as the ability to work alone. An analyst should also possess skills like strong attention to detail, a drive for research, an understanding of tax laws, money markets and economy in general. In addition to this, people skills and salesmanship are also important.
Job Prospects and career options
A securities analyst’s job involves a lot of reading, research, meeting people, writing etc. An analyst has to study company history and its products and services. He or she may do so by referring to books and trade publications, financial reports, by studying the public records of the company, or by participating in public conference calls or using reference services like Standard and Poor’s Outlook. Based on this preliminary research, the analyst may shortlist companies in a particular industry he or she is dealing with and then proceeds to study the same thoroughly.
Analysts usually study an entire industry, observing and assessing the current trends in business practices and industry competition. They must keep abreast of new regulations and policies that may affect the industry as well as monitor the changes taking place in the economy; as such happenings affect the earnings of the companies. Once the analyst has short-listed companies which promise to be good investment opportunities, the next step is meeting the top management of the concerned companies and gathering detailed information about them. After having collected detailed information about companies the analyst has to prepare a report.
A major and important part of an analyst’s job is writing reports. The report should be lucid, concise and persuasive.
The report consists of a description of the business and the company’s investment potential and it may also project future earnings. The analyst may summarise the report with ratings such as ‘buy’, ‘sell’, ‘over perform’, ‘hold’ etc. Once the report is ready the analyst has to use his/ her marketing skills to sell his/ her services to traders, brokers and investors by making recommendations about investing opportunities and convincing them to buy or sell the concerned stocks and securities.
The job prospects of securities analysts are tied to the stock market with the bull market leading to an increase in hiring people and bear markets causing layoffs. Analysts find employment in brokerage firms, securities firms, mutual and pension funds, investment banks, merchant banks etc. They can also start their own consultancies. Securities analysts may be employed as sell-side analysts. Such analysts work for broker-dealers and indirectly for broker dealer trading customers, or as Buy Side Analysts- who work for institutional investors such as hedge funds, mutual funds, pension funds, proprietary trading operation of banks and brokers, endowments and insurance companies. Some also work as independent analysts, i.e. they sell research to buy side or sell side firms and they themselves do not engage in securities transactions.
MBA degree holders and post graduates with professional qualifications can earn Rs 12,000 and above at the entry level. Many employers may give bonuses which can be equal to or double the beginning analyst’s salary. This is actually the performance based commission given in addition to the salary. The earnings of top professionals can go up to lakhs and corers.
Institute of Company Secretaries of India, New Delhi
Indian Institute of Capital Markets, Navi Mumbai
International College Of Financial Planning (ICFP), New Delhi
The Institute of Capital Market
Development, New Delhi
Institute of Financial and Investment Planning,Mumbai
(The author is a career consultant)