TWO DAY PROGRAMME ON FUNDAMENTAL ANALYSIS
ORGANISED JOINTLY BY ICSI AND BSE
(L to R Shri N.K.Jain, Secretary & CEO,The ICSI, Shri Rajnikant Patel,
MD & CEO, BSE Ltd., Ms Preeti Malhotra, President, The ICSI, Dr
K.P.Krishnan, Join Secretary, Capital Market Division, Ministry of
Finance, Shri Sanjay Grover, Programme Director and Council
Member, The ICSI )
The Institute organized a two-day training programme on Fundamental
Analysis on December 07-08, 2007 jointly with Bombay Stock
Exchange Limited at India Habitat Centre, New Delhi. The programme
was attended by more than 60 participants representing brokers,
merchant banker, mutual funds and other professional organizations.
Dr.K.P.Krishnan, Joint Secretary, Ministry of Finance and Shri
Rajnikant Patel, Managing Director & CEO, BSE Limited addressed the
Special Session.
Dr. K P Krishnan while delivering his special address at the programme
stated that ‘An area of capital market, which needs serious attention
today, is – ‘building of knowledge backbone’. This is necessitated by a
philosophical shift from merit to disclosure based and the investor is
expected to make informed decisions.
He stated that the major factors that have made impact in the
securities market in the last fifteen years are legislative reforms
through SEBI Act, amendments in SCRA, Depositories Act and various
such regulations and legislations; establishment of related market
infrastructure and development of information technology, which
ensure outreach of the market and reduction of transaction cost.
He further stated that as market risk is borne by the investor, it is
important that knowledge support should be provided by professionals
like company secretaries who are experts in this field. He stated in the
combination of ICSI and BSE, he saw unique cross junction of law and
commerce towards healthy growth of capital market. He assured full
support of the Ministry of Finance to ICSI in its future endeavours.
Shri Rajnikant Patel, at the outset mentioned that in the disclosure
based regime, the onus shifts from regulator and issuer to investor for
the investment. He stated that the need of the hour is the capacity
enhancement of all the players of financial and capital market.
Abroad 25% of investment flows into capital market whereas in India
it is not even 2% which indicates huge opportunity for capital market
growth in India, informed Rajnikant Patel. He opined that the visual
and optical barometer of growth of the economy is the capital market.
However, the human urge blinds rationality and this extends to the
human behaviour in the capital markets. Company Secretaries are
seen as an agent of change in the present disclosure regime. He urged
that BSE and ICSI should take this initiative to the next level and use
technology to reach out across the nation.
He further urged that each of us should act as Self Regulatory
Organisations (SROs) and be the regulator of our own acts and should
use knowledge and technology as tools to make informed decision.
Ms. Preeti Malhotra, President, ICSI in her address emphasised on the
fact that investing funds is not an adhoc activity or a random decision.
One has to know and imbibe the right analysis, the appropriate
analysis and well-timed analysis. One should not be crippled by
‘analysis-paralysis.’ Challenges of the market are meant to discover
one’s true value as an investor. That is why Training in fundamental
analysis is important.
She also informed that such training programmes are likely to be
organized regularly for the benefit of professionals covering crucial
aspects such as Industry & Company Analysis, Interpretation of
Financial Statements, Ratio Analysis, Interpretation of Cash Flow
Statements, Funds Flow Statements, Economic Value Added & Market
Value Added, Time Value of Money, Valuation of Equity, Market
Dynamics etc., which are required for exercising fundamental analysis
efficiently.
Fundamental Analysis is an inevitable tool used by investors, capital
market intermediaries, mutual funds etc for managing their portfolio,
informed Shri Sanjay Grover, Council Member and Programme Director
while introducing the theme of the programme.
Most individual
investors use fundamental analysis in some way to pick stocks for their
portfolios. If one is looking for a way to build a “buy and hold”
portfolio of stocks, made up of companies that one can purchase and
then own for years without losing too much sleep at night, one should
probably use the methods of Fundamental Analysis, he emphasised.
Shri N.K. Jain, Secretary and CEO, ICSI in his vote of thanks stated
that factors such as positive movement of stock index, increased
number of IPOs, multiple choices of financial products, increased
number of global players, increased growth of GDP etc amplify the
confidence of investors, both domestic and international in our
economy. A considered investment decision is therefore called and for
this requires proper analysis about the internal and external factors
affecting a particular company/industry, financial health of the
company through analyzing the financial statements of the company
through various techniques such as ratio analysis, analysis of fund flow
cash flow statements etc. The Institute has always been championing
the cause of investors and towards this end, it has conducted about
100 investor awareness programmes till date. Towards providing the
professionals the desired capabilities and expertise in various aspects
of capital market activities including fundamental analysis, the
Institute now entered into an MOU with BSE Training Institute (BTI).
Shri T Ramji, Ex-Director, Strategic Capital Group, Shri Vijay Paradkar,
Executive Director, SICOM Ltd., and Shri Anil Kumar, Reader,
Department of Commerce, Sri Ram College of Commerce were the
speakers.
Shri Ramji spoke on “Economic and Industry Analysis” and “ Economic
Value Added and Market Value Added”. He stated that in the current
scenario people started giving more importance to Macro Analysis and
not to tipping situation. This has really increased the importance of
fundamental analysis. He spoke at length as to how monetary and
fiscal policy plays a role in the economic growth of the company. He
spoke on aspects such as business cycle, market reaction in different
situations, industry analysis etc. He made the session an interactive
one and the lecture was well appreciated by the participants.
Mr.Vijay Paradkar spoke on Intrepretation of Financial Statement,
Ratio Analysis, Fund Flow Analysis and portfolio management and
explained some case studies also. He explained the concept of riskreturn analysis. He explained that the ‘a good company’ does not
mean ‘good share’. He said other factors like growth rate are to be
considered while analyzing the financial statements of a good company
in order to identify a good share. He also spoke about country
identification, sector identification, company identification and reading
of financial statements. While talking about company analysis he gave
importance to transparency, simplicity, Consistency and sustainability.
He quoted live examples in this regard. The session was very
interactive and well appreciated by the participants.
Shri Anil Kumar, Reader, Department of Commerce, Sriram College of
Commerce spoke on Valuation Equity. He spoke on time value of
money, present value, discounted value, approaches to valuation, and
different models in valuation. He explained the fundamental concepts
on valuation and the session was interactive.
The two day training programme was well appreciated by the
participants and Institute received positive feed-back from many
participants.