Question

A report: please choose a stock in the international capital market by yourself,and analysize it using the top-down approach

Answer 1

The stock, I want to analyse through top down approach would be Asian paints and it is the largest paint manufacturer in the Indian industry and it also caters to a small portion of Asia.

Since we know that the top down approach is majorly focus with the macro factors which are associated with the fundamentals of the stocks like change in the business cycle or inflation or interest rate or regulations change.

Asian paints is going to lead the the paint industry in the near future and it is able to maintain its dominance in the coming future because it has the pricing power available with it as it caters to all the sectors and it is the largest market size holder of the industry.

There has been a change in the business cycle because the cost of the raw material associated with paint industry has gone down due to change in the process of the oil which are significantly crashed and are the major cost-cutting factor because oil is used as a raw material in the paints industry.

it is also expected to lead because it has been provided various incentives by the Indian Government and it is catering to the rural areas and since India is a highly underpenetrated market there is a scope for high growth and wide capture of market share and stock is also trading at a very low price to multiple in comparison to the international peers so according to the top down approach this company is going to lead the the Asian paints industry and this is a cost advantage as well as an underpenetrated market to explore into.