Lets now get through about where and how can we use Equity Research and on what does it depend on!
Equity research depends on the maturity of financial markets in an economy and the extent of market depth and breadth. Indian markets have developed over last two decades and its matured enough to research for. Maturity in developing countries such as India can be seen with Foreign Institutional investment in Equity markets. We could notice that number of registered Foreign Institution Investors have been rising as seen in the graph below which increases breadth of our markets
For the depth of markets we could notice in the graph below that we are receiving FII regularly though they have been in and out quite often depending on the market condition. But if we net it than inflows has been more than out flows in last 5 years
Domestic factor which could judge depth and breadth of the markets is the number of companies that are coming for Initial Public Offerings (IPO). Below graph is the funds raise in recent time by India Companies through IPO. We could see a constant offering which means that market depth is increasing from domestic side too
As our market’s depth and breadth is increasing, need of Equity research rises as we need to analysis our each investment call from different angles and in dept before taking a call. With such a growth in capital markets, brokerage houses and investment bankers have started carrying out research services for their clients. Though such research is more or less targeted towards large institutional investors but now even a small investors are demanding for research before taking investment call. Recently SEBI has also announced Research Analyst Regulations which allows independent firms to carry out research. This step by SEBI has given opportunity to many small start-ups like us (Luvkush Finserve) to carry out professional and verified services in vast field of Research.
Major Uses of Equity Research:
- Making investment decisions
- To determine IPO pricing
- To value mergers and Acquisitions
- For strategic investments in other firms
Now we could get an idea from the above information that Equity research is gaining importance in india and avenue for its uses are increasing. So its crucial for us to understand and learn Equity research for making crucial investment decisions.