Security Analysis

Course Code:   FIE611                                                                                           Credits: 03


Number of sessions: 45                                                                                          Marks: 100




Enable students to establish the valuable linkage between modern theories of finance and the analytical techniques used by investors for valuing securities and investment

Learning Objectives

This course is designed to provide the students with an understanding of the basic concepts and practices of investment, risk and return, and enable them to establish the valuable linkage between modern theories of finance and the analytical techniques used by investors for valuing securities.


Learning Outcome

·       Students will have the knowledge and skills to analyze companies for investment purposes.

·       Students will have the knowledge and skills to develop portfolio strategies for individual and institutional investors.

·       Students will be able to develop an appropriate portfolio for a given investor and market conditions.

·       Students will be able to open broker firm and become a good entrepreneurship


Unit 1: Investment Scenario, Sources of Financial Information, Stock Market in India

1.1  Concept of Investment,

1.2   Investment Objectives and Constraints,

1.3  Investment Classification

1.4  Financial Markets, Real Investment

1.5  Source of Economic data, market data, company data and International economic data

1.6  Markets and their Features, Development of Securities Markets in India

1.7  Regulation of Securities Markets,

1.8  Stock Issuing Market (Primary Market), Secondary Market

1.9 Trading and Settlement, Clearing and Settlement Procedure.

Unit2: Risk and Return

2.1   Concept of Risk and Return,

2.2   Reduction of Risk through Diversification

2.3   Quantifying Portfolio Returns and Risk

2.4   Measurement of Risk in Portfolio Context, Security Market Lines and its Application.


Unit 3: Fundamental Analysis, Efficient Market Hypothesis, Technical Analysis

3.1 Objectives and Beliefs of Fundamental Analysis, Framework for Fundamental Analysis,

3.2 Framework for Fundamental Analysis,

3.3 Concept of Intrinsic Value,

3.4 Economic Forecasting Methods, , Business Cycle Analysis,. Industry Analysis, Key Characteristics in an Industry Analysis, Industry Life Cycle Structural Analysis, Company Analysis

3.5 Economic analysis: Factors in Domestic and International economy – Economic forecasting,

3.6 Financial Statement Analysis and ration analysis

3.7 Concept of Efficiency of Stock Markets, Forms of EMH,

3.8 Empirical Tests of EMH in the Indian Market, Description of Tests of EMH.

3.9 Concept of Technical Analysis, The Dow Theory,

3.10 Types of Charts, Price Patterns, Trend lines, Candle Charts - The charts- Candlestick analysis - One candle pattern – Hammer - Hanging man -  Shooting star and inverted hammer -  Two candle pattern - Bullish engulfing - Bearish engulfing – Piercing - Bearish harami –Bullish harami - Three candle pattern - Evening star - Morning star – Doji

3.11 Advanced Technical Tools, Academic Perspective of Technical Analysis.

Unit4: Bond Valuation, Equity Stock Valuation Models

4.1 Strategic Role of Bonds: An Investor’s Point of View, Bond Terminology, Types of Bonds, Value of a Bond, Bond Returns, Assumptions underlying YTM,

4.2 Bond Price Theorems, Accrued Interest, Riskiness of Bonds,

4.3 Determining the Interest Rates, Forecasting Interest Rate Trends, Term Structure of Interest Rates, Interest Rate Risk and Duration,

4.4 Bond Price Volatility, Immunization, Analysis of Deep Discount Bonds,

4.5 Analysis of Convertible Bonds, Analysis of Tax–Sheltered Fixed Investment Avenues.

4.6 Valuation Methods, Measures of Relative Value, Free Cash Flow Model to Equity Model,

4.7 Quantitative Analysis–Value Added Concept.

4.8 Valuation through P/E ratio.

Unit 5:  Derivative market (Future, Option)

5.1 Forward Contracts, Futures Contract,

5.2 Interpretation of Futures Price Quotations, Trading Mechanism of Futures, Basis and Spread,

5.3 Trading Mechanism of Futures, Basis and Spread, Hedging with Futures, Clearing and Settlement of Futures, Interest Rate Derivatives in India.

5.4 What Options mean?, Options Terminology, Pay–off from Options,

5.5 Trading Process, Options Markets in India, Settlement of Options Contracts.





Reference Book


Security Analysis and Portfolio Management

Donald E Fischer and Ronald J Jordan / Prentice Hall of India

Investment Analysis and Management

Sharpe, Alexander, Bailey /Prentice Hall of India

Investment Analysis and Management

James Francis Clarke / Wiley & Sons

Fundamentals of Investment

Geoffrey A Hirt, Stanley B Block /Irwin/Mc Graw–Hill

Stock Market Analysis for Intelligent Investors

N J Yasaswy / Vision Books

Investment Management

V K Bhalla / S Chand & Sons

Security Analysis and Portfolio Management

S Kevin