A journey into stock market

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

What is a Stock?

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).

What is Stock Market ?

Market Segments Primary market

-Channel for creation of new securities

Secondary market -The new securities issued in the primary

market are traded the secondary market

Methods of issuing securities in the Primary 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.

What is Indian Stock Exchange ?

INDIAN STOCK EXCHANGES

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

STOCK MARKET

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

BSE – Bombay Stock Exchange

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

NSE – National Stock Exchange

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 hoursNormal 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

Market Timings

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.

Functions of Stock Exchange

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

FACTORS AFFECTING STOCK MARKET

Economic Factors

Market trends & rumors

Global Market indicators

Govt Policies and Regulations

Company wide factors

Dematerialization

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.

Depository

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

Depository Participant

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

Kinds of Trading

• Buying and Selling on the same day.

• Brokerage will be different for intra-day and

delivery based trading, intra-day being lesser

Intraday Trading

Delivery Trading

• Buying and Selling are on different days

• Brokerage will be higher than intra-day

• Delivery charges

Foreign Markets

• Dowjones

• Nasdaq

• Nikkei

• Shanghai

Derivatives

Derivatives

Futures

SwapsOptions

Forward

THANK YOU