Published on April 15, 2014
A Journey into Stock Markets Prof. Mallikarjun Bali
An instrument- that signifies an ownership position (called equity) in a corporation, and represents a claim on its proportional share in the corporation’s assets and profits. For example, if a company has 1000 shares of stock outstanding and a person owns 50 of them, then he/she owns 5% of the company. Most stock also provides voting rights, which give shareholders a proportional vote in certain corporate decisions
A stock market is a market for the trading of publicly held company stock and associated financial instruments (including stock options, convertibles and stock index futures).
Primary market -Channel for creation of new securities Secondary market -The new securities issued in the primary market are traded the secondary market
1. Initial Public Offer; 2. Rights Issue (For existing Companies); and 3. Preferential Issue.
Formal organizations, approved and regulated by the Securities and Exchange Board of India (SEBI), that are made up of members who use the facilities to exchange certain common stocks.
Two National Level Exchanges are 1. National Stock Exchange (NSE) 2. Bombay Stock Exchange (BSE) Total 24 Exchanges are there in India National and Regional level, all exchanges conducts 100% computerized trading.
STOCK EXCHANGES IN INDIA BSE NSE
Established In 1875 As "The Native Share And Stock Brokers Association". Oldest Stock Exchange In Asia. Around 7000 Companies Are Listed. Around 935 Main Brokers And 5617 Sub Brokers. Non Corporate: 210 - Corporate : 710 Daily Traded Companies Are Around 3500 Average Daily Turnover Of Rs. 7500 Cr. 30 Companies scripts are taken to calculate index value SENSEX
Name of company Weightage RIL 13.10 Infosys Tech 9.37 L&T 8.44 ICICI Bank 7.67 HDFC 5.71 ITC 5.46 Bharti Airtel 4.87 HDFC Bank 4.64 SBI 4.13 ONGC 3.67 BHEL 3.26 HUL 2.50 TCS 2.25 Tata Steel 1.88 Tata Power 1.78 Name of Company Weightage Maruti Suzuki 1.75 Sterlite Industries 1.71 Grasim Industries 1.69 NTPC 1.69 RCOM 1.61 Jaiprakash Associates 1.60 M&M 1.56 Wipro 1.53 Reliance Infra 1.49 DLF 1.41 Hero Honda 1.25 Tata Motors 1.22 Hindalco 1.09 Sunpharma 0.82 ACC 0.75
Established In November 1992. Around 3500 Companies Are Listed Around 850 Main Brokers And 10000 Sub Brokers. Non Corporate : 35 - Corporate : 725 Daily Traded Companies Are Around 100% Average Daily Turnover Of Rs. 15000 cr. 50 Companies scripts are taken to calculate index value NIFTY
Name of company Weightage RIL 11.23 Infosys Tech 8.02 L&T 7.23 ICICI Bank 6.58 HDFC 4.89 ITC 4.67 Bharti Airtel 4.17 HDFC Bank 3.98 SBI 3.53 ONGC 3.15 BHEL 2.87 HUL 2.14 TCS 1.93 Tata Steel 1.61 Jindal Steel 1.58 Tata Power 1.53 Name of Company Weightage Maruti Suzuki 1.50 Axis Bank 1.48 Sterlite Industries 1.46 Grasim Industries 1.45 NTPC 1.45 RCOM 1.38 M&M 1.34 Wipro 1.31 Reliance Infra 1.27 DLF 1.21 Unitech 1.19 GAIL 1.19 Hero Honda 1.07 Tata Motors 1.04 Idea Cellular 1.01 Cipla 1.00
Name of company Weightage Hindalco 0.93 Cairn 0.90 Rel Capital 0.79 SAIL 0.75 PNB 0.71 Sun Pharma 0.70 ACC 0.64 Ambuja Cement 0.64 Siemens 0.61 ABB 0.61 BPCL 0.52 Name of Company Weightage HCL Techno 0.50 Power Grid 0.49 Reliance Pow 0.46 Suzlon Energy 0.44 Ranbaxy Lab 0.39 Tata Comm 0.27 NALCO 0.22
HOW THE INDICES ARE CALCULATED? 1. Find out the “free-float market cap” of all the 30 (BSE) and 50 (NSE) companies that make up the Sensex and Nifty 2. Add all the “free-float market cap’s” of all the companies!
Trading on the equities segment takes place on all days of the week (except Saturdays and Sundays and holidays declared by the exchange in advance) The market timings of the equities segment are: Normal market open : 9:00 am hours Normal market close : 3:30 pm hours The closing session is held between 15.50 hours and 16.00 hours in NSE and 15.40 hours and 16.00 hours in BSE
Types of Market Bull Bear
• D-Mat Account • Saving Bank Account • Permanent Account Number (PAN) • Trading Account with Recognized Stock Broker The Most Important is Transaction Process (How To Start Trading And Investing)
Rules for earning money in the market • Rule 1: Never lose your money in the market. • Rule 2: Never forget Rule 1.
Settlement Procedure For Cash Markets • Settlement is done on T+2 basis for cash markets. • Trades entered in to on a particular day are settled on third day. • E.g. If u purchase shares on Monday, the settlement day would be Wednesday.
Promotes the savings Provide liquidity to investors Profitable activities for companies Permits for the investor to have a political power in the companies Possibility of diversifying your portfolio
Economic Factors Market trends & rumors Global Market indicators Govt Policies and Regulations Company wide factors
Dematerialization in short called as 'demat' is the process by which an investor can get physical certificates converted into electronic form maintained in an account with the Depository Participant. The investors can dematerialize only those share certificates that are already registered in their name and belong to the list of securities admitted for dematerialization at the depositories.
A bank or company which holds funds or securities deposited by others, and where exchanges of these securities take place. National Securities Depository Limited Central Depository Services Limited
In India, a Depository Participant (DP) is described as an agent of the depository. They are the intermediaries between the depository and the investors.
Sectoral Indices • Realty • PSU • Auto • Power • Consumer Durables • Oil & gas • Bankex • FMCG • Capital Goods • Metal • Teck • IT
Capitalisation • Large Cap - Above 750 cr. • Mid Cap : Between Rs 75 cr. and Rs 750 cr. • Small Cap : Below Rs. 75 cr.
Intra-day Trading Delivery based Trading
• Buying and Selling on the same day. • Brokerage will be different for intra-day and delivery based trading, intra-day being lesser
Delivery Trading • Buying and Selling are on different days • Brokerage will be higher than intra-day • Delivery charges
Foreign Markets • Dowjones • Nasdaq • Nikkei • Shanghai
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