A survey on how stock research is conducted in India revealed that analysts primarily use the P/E ratio approach for stock valuation. The most challenging aspect of stock research is considered to be the largely unpredictable nature of the P/E ratio. This book attempts to answer the question of whether excess returns can be achieved solely by predicting the P/E ratio. Using a logit-based forecasting model, Ou and Penman demonstrated that excess returns can be obtained by predicting the direction of EPS movements in the US capital market. A similar study conducted here for the Indian stock market shows that excess returns can be achieved by predicting the direction of EPS movements. In the second part of the book, an attempt was made to empirically test the APT in India. However, it was found that none of the factors seem to be priced in India. This may either mean that the sample size is too small to conduct a meaningful test of the APT, or that the APT does not work in the Indian context.