Fundamentals of Research
7 questions. Each answer is explained.
Question 1 of 7Practice · Series XV — Research Analyst
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Learn these topics
More units in NISM Series XV
- Introduction to Research Analyst Profession2
- Introduction to Securities Market3
- Terminology in Equity and Debt Markets3
- Economic Analysis7
- Industry Analysis12
- Company Analysis – Business and Governance9
- Company Analysis – Financial Analysis16
- Corporate Actions7
- Valuation Principles13
- Fundamental analysis of commodities9
- Fundamentals of Risk and Return10
- Qualities of a Good Research Report7
- Legal and Regulatory Environment15
- Technical Analysis22
- Case Study - Valuation8
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 25% · 0.25 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
| Marks for this unit | Not published by NISM |
NISM Series XV Research Analyst
Exam rules read on NISM's site on 3 October 2026. Exam pattern revised on 20 January 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 3 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
All 7 questions on Fundamentals of Research, with answers
Q1An analyst begins by studying GDP growth, inflation and interest rates, then selects attractive industries, and only afterward chooses companies within those industries. This is best described as:
Option A. Top-down E-I-C analysis — Correct answer
Option B. Bottom-up analysis
Why it is wrong: The stated sequence begins with the economy rather than the company.
Option C. Pure technical analysis
Why it is wrong: The inputs are fundamental economic and business variables, not chart patterns.
Option D. Passive indexing
Why it is wrong: Passive indexing does not describe the stated research process.
Answer: A. Top-down fundamental analysis typically progresses from Economy to Industry to Company (E-I-C). Bottom-up analysis begins more directly with company-specific opportunities and may give less priority to the macro sequence. Remember: Top-down analysis narrows the opportunity set from macro conditions to industries and then companies.
Hint, shown before you answer in practice mode: Common mistake: Calling any fundamental analysis “bottom-up” regardless of where the process begins.
XV-071mediumconceptual
Q2Which research process is most consistent with legitimate mosaic analysis?
Option A. Trading after a senior executive privately reveals an unpublished merger decision
Why it is wrong: An unpublished merger decision can be price-sensitive inside information.
Option B. Building a view from public data and minor checks, with no inside information — Correct answer
Option C. Paying a company employee for confidential quarterly results before their release
Why it is wrong: Confidential unreleased results are not a legitimate research input.
Option D. Publishing a rumour known to be false in order to move the share price
Why it is wrong: Knowingly false market-moving information is not research.
Answer: B. Mosaic analysis builds an investment view by combining pieces of information that are individually public or not material/non-price-sensitive, together with analysis. It is different from using unpublished price-sensitive information. Remember: Mosaic analysis is about lawful synthesis, not a label for using confidential material information.
Hint, shown before you answer in practice mode: Common mistake: Assuming any non-public observation is automatically permissible regardless of materiality or confidentiality.
XV-072hardconceptual
Q3An analyst estimates a statistical model relating sales growth to industry volumes, prices and macro variables using historical data. Which research approach is being used most directly?
Option A. Only technical chart analysis
Why it is wrong: No price chart pattern is being analysed here.
Option B. Only corporate-action analysis
Why it is wrong: The question is not about dividends, splits or other corporate actions.
Option C. Quantitative/econometric analysis — Correct answer
Option D. Passive fund replication
Why it is wrong: Replicating an index is an investment implementation approach, not the described research method.
Answer: C. Quantitative or econometric analysis uses mathematical and statistical techniques to study relationships in data. A model can help structure evidence, but a historical statistical relationship does not automatically prove causation or guarantee future forecasts. Remember: Quantitative models organise evidence but should not be mistaken for certainty or causation.
Hint, shown before you answer in practice mode: Common mistake: Assuming a high historical statistical fit guarantees future predictive accuracy.
XV-073mediumconceptual
Q4Which investor is following a passive investment approach?
Option A. A fund that frequently changes its sector weights to try to outperform its benchmark index
Why it is wrong: Deliberate sector tilts to outperform are active decisions.
Option B. An analyst who selects a concentrated portfolio of undervalued stocks based on detailed company research
Why it is wrong: Concentrated security selection is active investing.
Option C. A trader who changes positions every few days based on short-term price patterns and chart signals
Why it is wrong: Short-term tactical trading is active.
Option D. A fund that seeks to replicate a broad-market index with minimal discretionary security selection — Correct answer
Answer: D. Passive investing generally seeks to track or replicate a benchmark rather than outperform it through continuous discretionary security selection. Active approaches attempt to add value through selection, timing or allocation decisions. Remember: Passive investing focuses on benchmark exposure. Active investing relies on discretionary decisions intended to outperform or achieve a differentiated outcome.
Hint, shown before you answer in practice mode: Common mistake: Equating low trading frequency with passive investing even when security selection is discretionary.
XV-074easyconceptual
Q5An analyst begins with a detailed study of a company's products, unit economics, management, financial statements and competitive position, and only then considers the broader economy. Which research approach is this?
Option A. Top-down analysis
Why it is wrong: Top-down analysis normally begins with the economy and industry before selecting companies.
Option B. Technical analysis
Why it is wrong: Technical analysis focuses primarily on market-generated data such as price and volume.
Option C. Bottom-up fundamental analysis — Correct answer
Option D. Passive index replication
Why it is wrong: Passive index replication is an investment implementation approach, not this research sequence.
Answer: C. Bottom-up fundamental analysis starts with the company and its business economics rather than beginning with macroeconomic and industry views. Remember: Top-down starts broad and narrows. Bottom-up starts with the company.
Hint, shown before you answer in practice mode: Common mistake: Assuming every fundamental-analysis process must begin with macroeconomic analysis.
XV-101mediumconceptual
Q6An analyst notices that investors are buying a stock mainly because 'everyone else in the market is buying it', with little independent analysis of value. Which behavioral tendency is most directly illustrated?
Option A. Herd mentality — Correct answer
Option B. Duration risk
Why it is wrong: Duration risk concerns sensitivity of fixed-income prices to interest rates.
Option C. Basis risk
Why it is wrong: Basis risk arises when a hedge and the exposure do not move together perfectly.
Option D. Credit migration
Why it is wrong: Credit migration refers to changes in credit quality or rating.
Answer: A. Herd mentality describes the tendency to follow the actions of a larger group rather than rely on independent analysis. Remember: Behavioral finance examines how psychological tendencies can influence investment decisions.
Hint, shown before you answer in practice mode: Common mistake: Treating crowd participation as evidence that the underlying valuation must be correct.
XV-102mediumconceptual
Q7Crude-oil prices rise sharply and remain high. Assuming selling prices and hedges are unchanged, which listed business is most likely to receive a direct operating benefit from the move?
Option A. An airline whose jet fuel is one of its largest operating costs
Why it is wrong: Higher aviation fuel costs are generally a headwind if not offset.
Option B. A paint manufacturer whose key raw materials are derived from petrochemicals
Why it is wrong: Petrochemical-linked input costs may rise.
Option C. A road transport company whose large truck fleet depends heavily on diesel
Why it is wrong: Higher diesel costs can pressure margins.
Option D. An upstream crude-oil producer whose realised price rises with crude — Correct answer
Answer: D. A sustained increase in crude prices can raise realised revenue for an upstream producer, while fuel- or petrochemical-intensive users may face higher input costs if they cannot pass them through or hedge them. Remember: Commodity moves can affect equity sectors differently depending on whether the company is a producer or consumer of the commodity.
Hint, shown before you answer in practice mode: Common mistake: Assuming one commodity price move has the same impact on every company.
XV-103mediumconceptual
Fundamentals of Research: common questions
How many practice questions are there on Fundamentals of Research?
7 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 16 practice topics for NISM Series XV, which has 150 questions in total.
Are these real NISM Series XV questions on Fundamentals of Research?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
Does negative marking apply to NISM Series XV?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. Timed practice here uses the same rule.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
Economic Analysis
7 questions on Economic Analysis. Its quiz opens on that unit.
Open Economic Analysis