Financial Market Research is defined as research and detailed analysis of the financial markets consisting of the capital markets, money markets, derivative markets and the insurance and the futures markets. Financial markets are one of the fundamental markets of any nation as they are interrelated with other markets in the country and changes in any part of the economy will be translated into changes in the financial market. It is important to note in this context that the development of a smooth and efficient financial market system is concomitant with the overall growth of the economy. In terms of microeconomic analysis, primary purpose of financial markets is to allocate available savings of the economy to its most productive use.
Financial markets are heavily dependent on the instabilities arising in the economy due to changes in the exchange rate for the respective country and high rates of inflation in the economy. Financial market research by an individual should take all these factors into consideration before investing in the financial markets such that maximum amount of capital gains are realized. Mutual Funds and Institutional Investors are volume buyers and sellers in the financial market that severely affect the movements in the financial market and affect in the bull or bear runs in the stock market indexes. Financial Market Research will also include research about the present policies of the monetary and regulatory authority of the country which affect the interest rates for the economy as a whole. High money supply in the economy will force the monetary authority of a nation to review its interest rate policy and take measures to reduce the money supply in the economy.
Financial market research can be summarized as the following:
Research on Securities
Research on Exchanges
Investment Services
Numerous financial market research firms have emerged over the past few years to provide excellent quality to prospective investors in the financial markets with the most up-to-date information on the stocks and other securities that would be most profitable for the investors in the long run.
With the separation of investment banking and trading, specialized financial market research firms have emerged which can provide a boon to speculators and investors in the financial market. Financial researchers and people dealing with quantitative techniques provide cross-technology research designed for financial investment community such as brokerage firms, money managers, investment banks and commercial banks. Some of the techniques used for this purpose are Fixed Income Macro Strategy, Fixed-Income Modelling, Index Maintenance, Risk Modelling and Derivative pricing.