Industry Classification

INDUSTRY CLASSIFICATION

1. Classification by reporting Agencies

¸       Under Reserve bank of India-industries- 32 groups

¸    Under SEBI- 10 groups

¸       Under Economic times-10 groups

¸    Under financial express- 19 groups

2.Classification by Business cycle

a.     Cyclic industries : Related to business cycle and changes

b.     Defensive industries: Products of having relatively inelastic demand eg., food processing industry

c.      Cyclical growth industries: Based on technical and economical changes eg., Airlines industry

3. Industry groups:

a.     Small size units: Small scale industries with a capital of 30 Lac will be listed in OTCEI

b.     Medium size units: Industry with a capital of 5 crores will be listed in the regional stock exchanges like cochin, Coimbatore etc.,

c.      Large scale units: Industry with a capital of 10 crores will be listed in BSE & NSE.

4. Input based Classification

¸ Chemical based products

¸ Agro based products

¸ Forest based products

¸ Metal based products

¸ Marine based products

INDUSTRY OR SECTOR ANALYSIS

The second step in the fundamental analysis of securities is Industry analysis. An industry or sector is a group of firms that have similar technological structure of production and produce similar products. These industries are classified according to their reactions to the different phases of the business cycle. They are classified into growth, cyclical, defensive and cyclical growth industry. A market assessment tool designed to provide a business with an idea of the complexity of a particular industry. Industry analysis involves reviewing the economic, political and market factors that influence the way the industry develops. Major factors can include the power wielded by suppliers and buyers, the condition of competitors and the likelihood of new market entrants. The industry analysis should take into account the following factors.