Importance of Equity Research in Today’s Equity Markets
Talk of equity shares or investing in the equity market and most laymen would shy away considering it to be a very risky domain and associate it with gambling of sorts and high risk associated while investing in it. Let’s delve a bit further to understand the actual reasons why investing in equity shares or in equity markets is perceived as risky business by the common man. The financial meaning of the word equity signifies a stock or any other security representing an ownership of interest. Equity markets are in general volatile due to its direct relation with many other local and global dynamics involved. Thus a better understanding by means of equity research will allow us to have better insight over the fluctuations of the equity market and aid in the process of achieving desired financial objectives.Thus equity research bears paramount importance and findings by equity research analysts is carefully followed up by all stake holders right from large companies to individual investors who invest a part of their capital in the equity market.
Equity research involves carrying out critical analysis to evaluate the fair value of stocks owned by a particular company. On a broader role it is also used to signify the possibility of growth or decline in share price of the company. It is a known fact that growth or decline in the share price is driven by the probable operational and financial performance of the company in a few years and this forms the analytical backbone on which research analysts take decisions. Also since equity analysts meet the management of companies they know the real picture of affairs in the company and they are also in regular informal briefings with other research analysts which helps them to be in a position to prudently recommend a position of the company. These findings by them is what would enable them to observe patterns regarding growth and decline of a particular company and their recommendations would be sought after by investors at large to ensure their investment objectives are met.
With growing volatility in equity markets, decision makers depend upon equity research analysts who excel at preparing premium equity research reports to estimate value of equity shares of a particular company, as well as try & decipher the probable future course of its fair price after studying trailing equity research report patterns. Along with the demand of quality equity research reports there has also been a growing demand of equity analysts who are skilled to evaluate company fundamentals thereby guiding the investor on his position with the stock of the company.
Hence using the tools of premium equity research reports and skills of a competent research analyst the investor is much better armed to make more prudent and informed investment decisions in the equity market. Equity Investment when done in a systematic manner along with research recommendations can be considered as good calculated risk which has proven to return many fold for a good number of investors.