Analysing a Sector

I am a regular subscriber of the DSIJ magazine. I enjoyed reading your cover story in the latest issue. In recent years, I have been conducting thorough research and due diligence on my own before investing in a stock. It helps me build conviction for the long-run. Can you elucidate on how to carry out indepth analysis of any given sector? - Ria

Editor Responds: We appreciate your kind words of encouragement. To answer your query, there are several high-quality resources easily available for sectoral research that a retail investor can tap into. These include annual reports, IPO filings such as red herring prospectus (RHP) and initiating coverage reports of brokerage houses. Take heed of expected growth outlook along with trends in products and technology at play in international and domestic markets. Make use of models such as Porter’s Five Forces and SWOT analysis to gain a better understanding of the external factors influencing the sector as well as the competitive environment and potential risks. Keep writing to us