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

Types of Securities Research and Analysis for NISM Research Analyst

Updated 11 October 2026 · Fact-checked

Securities research is grouped by the instrument studied (equity, debt, derivatives) and by the method used (fundamental, technical, quantitative). Fundamental analysis estimates intrinsic value from business and economic data. Technical analysis studies price and volume. Quantitative analysis uses statistical models. In the exam, match the question's clue to the right type.

Understand Types of Securities Research and Analysis

Research on securities can be sorted in two ways. The first is by instrument: what are you studying? The second is by method: how are you studying it? Exam questions test whether you can tell these apart.

By instrument, you have equity research, debt research and derivatives research. Equity research looks at a company's shares: business, earnings, growth, valuation. Debt research looks at bonds and similar instruments: the issuer's ability to pay interest and principal, credit rating, yield and interest rate risk. Derivatives research looks at contracts whose value depends on an underlying, such as futures and options: pricing, the link to the underlying, and risk.

By method, fundamental analysis asks what a security is worth. It uses the economy, the industry and the company's financials and management to estimate intrinsic value, then compares it with the market price. Technical analysis asks what the price is doing. It studies past prices, volumes and chart patterns to judge trends and likely turning points. It does not depend on the company's financials. Quantitative analysis uses mathematical and statistical models, large datasets and rules to find patterns, price securities or build portfolios.

Within fundamental analysis, there are two directions of travel. In the top-down approach, you start with the economy, then pick industries, then pick companies. In the bottom-up approach, you start with the company and its own strengths, and give less weight to the wider economy. Both aim at the same thing, a view on value.

The methods are not rivals in practice. Many analysts combine them, for example fundamentals to choose a stock and technicals to time entry. The exam usually asks you to identify the method from a description.

Key formulas to remember

Fundamental analysis idea: Intrinsic value vs market price; If intrinsic value > market price, the security looks undervalued. If lower, it looks overvalued.
Top-down sequence: Economy → Industry → Company; Starts broad and narrows down.
Bottom-up sequence: Company → (then industry and economy as context); Starts with company-specific factors.
Technical analysis inputs: Price + Volume (historical); Uses market data, not financial statements.
Classification: By instrument: equity, debt, derivatives | By method: fundamental, technical, quantitative; Keep the two axes separate.

How to solve Types of Securities Research and Analysis questions

Use this method for any question on types of research and analysis.

1Read the question and decide whether it asks about the instrument or the method.
2Underline the clue words: earnings, ratios, management, economy point to fundamental; charts, trends, volume, support point to technical; models, statistics, algorithms point to quantitative.
3For debt, look for credit rating, yield, default risk. For derivatives, look for underlying, expiry, pricing.
4For direction, check where the analysis starts: economy first means top-down; company first means bottom-up.
5Eliminate options that mix the methods, such as saying technical analysis uses financial statements.
6Watch absolute words like 'only' and 'always'. They are usually wrong.
7Choose the option that matches the primary input of the method.

Quickest way: Clue-word matching

When to use it: When you have under a minute per question and the stem describes an analyst's activity.

Spot the input: financials and economy = fundamental; price and volume = technical; statistical models = quantitative.
Spot the starting point: economy = top-down; company = bottom-up.
Spot the instrument: bond/credit = debt; futures/options = derivatives; shares = equity.
Pick the option that fits all clues and drop any that contradict one.

Common mistakes in Types of Securities Research and Analysis

Treating technical analysis as based on company financials.
Students blur it with fundamental analysis because both aim to guide investment decisions.
Fix: Remember technical uses price and volume history. Financial statements belong to fundamental analysis.
Mixing up top-down and bottom-up.
The names sound like they refer to company size or rank.
Fix: Top-down starts at the top of the chain, the economy. Bottom-up starts at the company.
Saying quantitative analysis is the same as technical analysis.
Both use numbers and data.
Fix: Technical reads chart patterns and indicators from price and volume. Quantitative builds statistical or mathematical models and can use many kinds of data.
Thinking fundamental analysis only applies to equity.
Intrinsic value is mostly taught with shares.
Fix: Debt research is also fundamental in nature: it studies issuer strength and repayment ability.
Assuming the types are mutually exclusive.
Textbooks present them one by one.
Fix: Analysts can combine methods. Pick answers that say they can be used together when the stem allows.

Worked examples

Example 1

An analyst begins by assessing GDP growth and interest rate outlook, then selects the banking sector, and finally picks one bank for investment. Which approach is this?
A. Bottom-up approach
B. Top-down approach
C. Technical approach
D. Derivatives approach

Show the solution

Identify the starting point: GDP and interest rates, which are economy-level factors.
Note the sequence: economy, then sector, then company.
This sequence is the definition of top-down.
Bottom-up would start with the bank itself. Technical would use price charts. Derivatives is an instrument type, not a direction.

Answer: B. Top-down approach

Example 2

Which statement about technical analysis is correct?
A. It estimates intrinsic value from a company's balance sheet
B. It studies past price and volume data to identify trends
C. It relies on the quality of management
D. It is used only for debt securities

Show the solution

Recall that technical analysis focuses on market data: price and volume.
A describes fundamental analysis.
C also describes fundamental analysis.
D is wrong because technical analysis is not limited to debt, and is most commonly used with equity.
B matches the definition.

Answer: B. It studies past price and volume data to identify trends

Exam tips

Expect definition-style MCQs. Learn one-line definitions of each type and match clue words.
Negative marking applies at 25% of the marks of the question, so eliminate wrong options first and guess only when two remain.
Beware options with 'only', 'never' or 'always'. They are often traps.
Keep the two axes separate: instrument (equity, debt, derivatives) and method (fundamental, technical, quantitative).
Case-based questions may describe an analyst's workflow. Find the starting point to decide top-down or bottom-up.

Practice questions from Fundamentals of Research

Types of Securities Research and Analysis in other exams

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

Types of Securities Research and Analysis: frequently asked questions

What is the difference between fundamental and technical analysis?

Fundamental analysis estimates intrinsic value using economic, industry and company information. Technical analysis studies past price and volume to read trends. One asks what a security is worth, the other asks what the price is doing.

What is the difference between top-down and bottom-up approach?

Top-down starts with the economy, moves to industries and then picks companies. Bottom-up starts with the company's own strengths and gives less weight to the broader economy at the start.

What is quantitative analysis in research?

It uses mathematical and statistical models and datasets to value securities, find patterns or build portfolios. It is more model-driven than chart-reading.

Can an analyst use more than one type of analysis?

Yes. Many analysts combine methods, for example using fundamentals to select a security and technicals to decide timing. The exam may test that the methods are complementary.