Chapter 8 - Industry Analysis : Introduction

Hanumant Dhokle


In the previous chapter we have discussed about economic analysis as part of fundamental analysis. We are now going to analyse industries in general because market practitioners stress the importance of industry analysis and maintain that however good the quality of a stock is, it is highly unlikely to out-perform if the industry is performing poorly.

What Is Industry Analysis?

Industry analysis is the analysis made in a specific sector or industry. Industry analysis investigates the general fundamentals of the equities within the industry but more importantly, investigates the state of external factors and how they affect the particular industry or sub-sector. Different macro-economic data and other statistics have a particular bearing on certain industries and analysts gauge how these data will affect them. Furthermore, industry analysts also investigate the level of demand such as consumer tastes and supply and competition within the industry and how stock prices get affected by them.

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