Page 156 - DCOM507_STOCK_MARKET_OPERATIONS

Mahesh Kumar Sarva, Lovely Professional University
Unit 8: Fundamental Analysis 2: Industry Analysis

Unit 8: Fundamental Analysis 2: Industry Analysis Notes

CONTENTS
Objectives

Introduction
8.1 Industry Analysis
8.2 Importance of Industry Analysis
8.2.1 Classification of Industries

8.2.2 Key Indicators in Analysis
8.3 Analytical Frameworks
8.4 Forecasting Methods
8.4.1 Conditions and Profitability

8.4.2 Industry Analysis Factors
8.5 Summary
8.6 Keywords
8.7 Review Questions

8.8 Further Readings

Objectives

After studying this unit, you will be able to:
Explain the concept of industry analysis
Discuss the importance of industry analysis
Elaborate the analytical framework
Discuss the forecasting methods

Introduction

After conducting an analysis of the economy and identifying the direction it is likely to take in
the short, interim and long-term, the analyst must look into various sectors of the economy in
terms of various industries. An industry is a homogenous group of companies. That is, companies
with similar characteristic can be divided into one industrial group. There are many bases on
which grouping of companies can be done. For example, traditional classification is generally
done product-wise like pharmaceuticals, cotton textile, synthetic fibre etc. Such a classification,
through useful, does not help much in investment decision-making.

8.1 Industry Analysis

Some of the useful bases for classifying industries from the investment decision-point of view
are as follows:
Growth Industry: This is an industry that is expected to grow consistently and its growth
may exceed the average growth of the economy.

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