In the past few decades, India's financial system has undergone significant changes. As quality information is more readily available, so have small investors. Quality information has become a sign of quality for common investors. Equity research reports are now synonymous with high-quality information. Professional equity analysts create research reports that offer recommendations to investors on actions such as buy, sell or hold. Research reports can also include additional information such as an overview of the company, the industry, financial metrics and target price. There are two main types of equity research reports: fundamental and Technical.
Technical analysis is based upon the historical price movements of a security. Analysts attempt to spot a pattern in the movement of a security and recommend actions in technical reports.
The fundamental analysis relies on qualitative factors like the management quality, expected growth, and business strategy. Analysts use these factors to project future earnings and make recommendations in fundamental reports.
Technical reports are best suited for day traders while fundamental reports can be used for long-term investors.
Access to research reports is a time-consuming and expert task. Previously, only paid customers had access. Now, you can access research reports at most brokerage firms. Look for brokerage reports on the site of the brokerage firm.
Research reports can vary in structure from brokerage to brokerage. As they are more widely read by investors, we will only discuss fundamental research reports. For the sake of understanding, we will use an Angel One Report. This report analyzes UltraTech Cement's performance during the Oct-Dec quarter. Here is the link to the report.
Research reports can be formatted in many ways. However, most have the sections listed above. The chronology of research reports can vary and sections can be added or deleted depending on the context. Angel One's report, for example, is based upon quarterly earnings. It therefore includes a section about con call highlights. Analysts are invited to join companies for discussions about financial results.
Although it's easy to get a research report, investors must bear the risk of losing their investment. You should establish your own check-and-balances system. Relying solely on a report can lead to unproductive results. Verify the credibility of any brokerage before you read a report. Only use reports from credible and well-established brokerages.
Another important factor to consider is the report's date. Research reports include a time frame and the target price. Major brokerage reports are widely distributed and it is important that you act quickly. The stock price may react if a lot of investors adopt the same recommendation as you. You might not reap all the benefits. You should always verify the date and not act on old reports.
Follow the research reports of the same brokerage for a while to benefit from their advice. You will be able judge the quality of the recommendations by following them over time. Only after you have read the reports for a while, can you learn about the strengths and weaknesses of each brokerage or analyst.
1. All research reports are free of charge
You will not have the ability to access all reports for free. The best reports are generally only available to paying customers of a brokerage company.
2. Is a brokerage company liable for any loss that is incurred from acting on a report?
The brokerage firm is not liable for any losses incurred by investors who act on research reports. The disclaimer at end of research reports clearly states that investors should do their own evaluations before investing.
3. Is a research report considered to be an official source for financial information?
Although the information in a research report has been thoroughly reviewed at different levels, it is not considered to be an official source of financial data for companies. The stock exchanges allow companies to upload their financial results.
4. Do research reports only apply to a single company?
There are many types of research reports. There are many types of research reports. Some focus on a specific company while others cover the entire sector. Sectoral research reports provide recommendations on the top companies in a particular sector.