NISM-Series-XV: Research Analyst · Fundamentals of Research

Research Process and Report Structure for NISM Research Analyst

Updated 11 October 2026 · Fact-checked

The equity research process is a sequence: select the company or sector, define the objective, gather data, analyse and build a model, value the company, then write a report with a recommendation, assumptions, risks and disclosures. A good report links every conclusion to evidence and the valuation.

Understand Research Process and Report Structure

Research is a process, not a single act. An analyst does not start with a rating. The analyst starts with a question: is this company or sector worth owning at today's price? Each step then reduces the uncertainty behind the answer.

The usual flow has these stages: selecting the company or sector, defining the scope (purpose, time horizon, audience), collecting data (financial statements, filings, industry data, management interaction), analysing the economy, industry and company, building a model of forecasts, valuing the company, and writing the report with a recommendation. After publication comes monitoring and updating as new information arrives.

A report turns this work into something a reader can check. It typically has a summary with the recommendation, a target price and time horizon, the investment thesis, business and industry overview, financial analysis and forecasts, valuation with the method and key assumptions, risks, and disclosures. Disclosures cover things like conflicts of interest and the analyst's holdings.

The recommendation must follow from the valuation. A rating such as buy, hold or sell compares the target value with the current market price over a stated horizon. The exact rating scale is set by the firm. What matters for the exam is that the rating is supported by reasoning, assumptions and risks, and that it is not a guess.

Key formulas to remember

Expected upside to target price: Upside (%) = (Target price − Current market price) ÷ Current market price × 100; Ratings usually reflect this gap over a stated horizon. The cut-offs for buy, hold or sell are set by each firm, not by a fixed rule.
Order of the research process: Select → Define scope → Gather data → Analyse → Model forecasts → Value → Write report and recommend → Monitor and update; Questions often ask which step comes before or after another. Valuation comes after the model, and the recommendation comes after valuation.
Core elements of a report: Summary and rating + Thesis + Business and industry + Financials and forecasts + Valuation + Assumptions + Risks + Disclosures; A report without valuation basis, risks or disclosures is incomplete.

How to solve Research Process and Report Structure questions

Use this method for any question on the research process or report structure.

11. Identify what is asked: a step in the process, a report component, or the link to the recommendation.
22. Place the item in the sequence: scope, data, analysis, model, valuation, report, monitoring.
33. Ask what the item depends on. A model needs data. A target price needs valuation. A rating needs a target price and market price.
44. For report questions, match the item to its component: thesis, valuation basis, risks or disclosures.
55. Eliminate options that reverse the order or recommend without supporting analysis.
66. Eliminate absolute words such as always or only, unless the rule truly is absolute.
77. For any numeric upside question, compute (target − price) ÷ price before choosing.

Quickest way: Sequence and support check

When to use it: Use when the options list steps or report parts and time is short.

Picture the chain: question, data, analysis, model, value, report, update.
Pick the option that fits the chain without skipping a link.
Reject any option where the rating comes before valuation or data.
If the question is about a report, choose the option that adds evidence, assumptions, risks or disclosures.

Common mistakes in Research Process and Report Structure

Placing valuation before building the financial model.
Students think of valuation as a standalone formula.
Fix: Valuation uses forecasts from the model. Model first, then value.
Treating the recommendation as the start of the research.
Real-world headlines show ratings first.
Fix: The rating is the output. It comes after analysis and valuation.
Leaving out assumptions and risks from the report components.
Students focus on the target price.
Fix: Remember that a target price needs stated assumptions, valuation method and risks that could change it.
Forgetting disclosures as a required part of the report.
Disclosures look like legal fine print, not analysis.
Fix: Treat disclosures, including conflicts of interest, as a standard component that protects the reader.
Assuming the process ends when the report is published.
Publication feels like the finish line.
Fix: Monitoring and updating the view as new information arrives is part of the process.

Worked examples

Example 1

A stock trades at ₹400. An analyst's target price is ₹460 over 12 months. What is the expected upside, and which part of the report must explain how ₹460 was reached?

Show the solution

Upside = (460 − 400) ÷ 400 × 100.
60 ÷ 400 = 0.15, so the upside is 15%.
The target price comes from valuation, so the valuation section with its method and assumptions must explain it.

Answer: The expected upside is 15%. The valuation section, with its method and assumptions, must explain the target price.

Example 2

Which sequence correctly orders these steps: (i) build forecast model, (ii) gather data, (iii) issue recommendation, (iv) value the company?

Show the solution

Data must be gathered before it can feed a model: (ii) first.
The model uses that data to forecast: (i) next.
Valuation uses the forecasts: (iv) next.
The recommendation compares value with market price: (iii) last.

Answer: (ii), (i), (iv), (iii)

Exam tips

Expect sequence questions. Memorise the chain from selection to monitoring.
When an option gives a rating without supporting analysis, treat it as a trap.
Know the report components: summary, thesis, financials, valuation, assumptions, risks, disclosures.
Do the upside calculation exactly; the denominator is the current market price, not the target.
Read negative marking carefully: NISM-Series-XV deducts 25% of the marks for a wrong answer, so skip only if you cannot narrow down to two options.

Practice questions from Fundamentals of Research

Research Process and Report Structure in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CFA Level IPurpose and Structure of Equity Research Reports

Research Process and Report Structure: frequently asked questions

What are the steps in the equity research process?

The usual steps are selecting the company or sector, defining scope, gathering data, analysing, building a model, valuing, writing the report with a recommendation, and monitoring. Exam questions test the order and dependencies between these steps.

What should an equity research report contain?

It should contain a summary with rating and target price, the investment thesis, business and industry overview, financial analysis and forecasts, valuation basis, assumptions, risks and disclosures. Each recommendation must be supported by this evidence.

How is a recommendation or rating decided?

It is based on the gap between the target price from valuation and the current market price over a stated horizon. The exact rating scale and cut-offs are set by the research firm.

Is there negative marking in NISM-Series-XV?

Yes. A wrong answer carries negative marking of 25% of the marks assigned to the question. The exam has 100 marks, lasts 2 hours and the pass mark is 60%.