13486221 basics of stock market

8/22/2019 13486221 Basics of Stock Market

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A,B,C,D OF STOCK MARKET

Presented byMr. Nilesh Karhade

1st Year MBA++

Dept. of Management Sciences

University of PUNE

Year 2008-09


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Agenda

The Stock Market is a very

broad term which involves

trading of variety of entities.

This presentation providesbasics of some of the terms

& understanding of stock

market at macro level.

In this we will focus on onlyshares in BSE

Introduction to stock

Types of Share

About Stock Market

Types of Market

Major Stock Exchanges

The role of Stock ExchangesBombay Stock Exchange


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A stock is a small share that represents a partial ownership of a

company.

Stocks are issued by companies in order to raise capital.

Stock is also referred to as equity, & it is limited to particularnumber of shares.

Introduction to Stock
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Defensive Shares These are the shares of stabilized &

mature companies. Over the years these companies have

standard practices for dividend payments.

Cyclical Shares These are the shares of companies engagedin trade cycle. During boom they do extremely well & during

recessionary phase, they hit the bottom.

Discount Shares These are the shares whose market price is

lower than the par value or book value.

Growth Shares These are the shares of those companies

whose assets, sales turnover & profits are growing rapidly.

Types of Share


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How capital is raised through

shares/stocks?

Issued Capital Reserved Capital

Paid up capital

1. Registration for Authorized Capital.

2. Amount divided into number of smallunits/shares.

3. The units which are issued for sale out of

authorized capital are called Issued Capital

or Initial Public Offering.


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shares?


Paid up capital4. Out of Issued Capital, units which are

actually sold are called Paid-up Capital.

5. Shareholders


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shares?


Paid up capitalExample

Authorized Capital Rs. 1 Crore

Issued Capital Rs. 50 Lakhs

Paid-up Capital Rs. 35 Lakhs


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About Stock Market

Stock market is a term used to describe the physical location

where the buying and selling of stocks take place.

The correct term to be used in pertaining to the physical

location for trading stocks is stock exchange.

The Stock market in India consists of about approx. twenty two

stock exchanges.

The stock exchanges constitute a market where securitiesissued by the Central & State Govt., Public bodies & Joint Stock

companies are traded.
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Types of Market

Primary Market In this new issues of equity & debt are

arranged either publicly or privately.

Secondary Market The market where existing securities are

traded.

Future Market It is a market of contracts where goods are

bought & sold at specified prices & times.

Options Market It is similar to future market i.e. it is a contractthat gives the right, & not the obligation, to trade a stock at a

certain price before the specified date.
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What is Bulls & Bears Market?

Bulls Market - Bull markets occur when a particular nation experiences

high economic production, low unemployment level, and low inflation

rates.


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What is Bulls & Bears Market?

Bears Market It follow the down trends in the economy. Such indicators

of economic downfall are increased unemployment and inflation. These

causes the fall of stock prices.


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Major Stock Exchanges

Region Stock Exchange

Market Value Total Share Turnover

(trillions of USdollars) (trillions of US dollars)

Africa JSE Securities Exchange 0.94 0.349

Americas NASDAQ 4.39 12.4

Americas So Paulo Stock Exchange 1.4 0.476

Americas Toronto Stock Exchange 2.29 1.36

Americas/Europe NYSE Euronext 20.7 28.7

Asia-Pacific Australian Securities Exchange 1.453 1.003

South Asia Bombay Stock Exchange 1.61 0.263

Asia-Pacific Hong Kong Stock Exchange 2.97 1.7

Asia-Pacific Korea Exchange 1.26 1.66

South Asia National Stock Exchange of India 1.46 0.564

Asia-Pacific Shanghai Stock Exchange 3.02 3.56

Asia-Pacific Shenzhen Stock Exchange 0.741 1.86

Asia-Pacific Tokyo Stock Exchange 4.63 5.45

Europe Frankfurt Stock Exchange (Deutsche Brse) 2.12 3.64

Europe London Stock Exchange 4.21 9.14

Europe Madrid Stock Exchange (Bolsas y Mercados Espaoles) 1.83 2.49

Europe Milan Stock Exchange (Borsa Italiana) 1.13 1.98

Europe Moscow Interbank Currency Exchange (MICEX) 0.9652 0.4882

Europe Nordic Stock Exchange Group OMX1 1.38 1.6

Europe Swiss Exchange 1.33 1.58

Ref. www.wikipedia.org


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The Role of Stock Exchanges

Raising Capital for Business It facilitates companies to raise

capital through selling of shares to the investing public.

Mobilizing savings for investment When people invest in

shares it leads to most rational allocation (agriculture,commerce, industry), as otherwise it remains idle in deposits

with banks.

Bombay Stock Exchange Frankfurt Stock Exchange Hong Kong Stock Exchange London Stock Exchange
http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Frankfurt_Stock_Exchangehttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/Image:Paternoster_Square.jpghttp://en.wikipedia.org/wiki/Image:Three_Exchange_Square.JPGhttp://en.wikipedia.org/wiki/Image:Boerse_Frankfurt_front.JPGhttp://en.wikipedia.org/wiki/Image:BSE.jpghttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/Frankfurt_Stock_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchange


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Facilitating company growth Companies views acquisition as

an opportunity to expand their horizon. Stock market is one of

the simplest and most common ways for a company to grow by

acquisition or fusion.Creating investment opportunities for small investors It

enables small investor to invest in shares as per their

affordability.

Madrid Stock Exchange Mexican Stock Exchange Osaka Securities Exchange Philippine Stock Exchange
http://en.wikipedia.org/wiki/Madrid_Stock_Exchangehttp://en.wikipedia.org/wiki/Bolsa_Mexicana_de_Valoreshttp://en.wikipedia.org/wiki/Osaka_Securities_Exchangehttp://en.wikipedia.org/wiki/Philippine_Stock_Exchangehttp://en.wikipedia.org/wiki/Philippine_Stock_Exchangehttp://en.wikipedia.org/wiki/Image:Monument_To_Immortality.jpghttp://en.wikipedia.org/wiki/Osaka_Securities_Exchangehttp://en.wikipedia.org/wiki/Image:Osaka-Securities-Exchange-01.jpghttp://en.wikipedia.org/wiki/Bolsa_Mexicana_de_Valoreshttp://en.wikipedia.org/wiki/Image:Bolsa_Mexicana_de_Valores.jpghttp://en.wikipedia.org/wiki/Madrid_Stock_Exchangehttp://en.wikipedia.org/wiki/Image:BolsaMadrid.jpg


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Government capital-raising for development projects It may

decide to borrow money for several projects (sewage & water

treatment, housing) by selling securities known as bonds.

Barometer of the economy - Movement of share prices and ingeneral of the stock indexes can be an indicator of the general

trend in the economy.

Shanghai Stock Exchange SWX Swiss Exchange Tokyo Stock Exchange Toronto Stock Exchange
http://en.wikipedia.org/wiki/Shanghai_Stock_Exchangehttp://en.wikipedia.org/wiki/SWX_Swiss_Exchangehttp://en.wikipedia.org/wiki/Tokyo_Stock_Exchangehttp://en.wikipedia.org/wiki/Toronto_Stock_Exchangehttp://en.wikipedia.org/wiki/Toronto_Stock_Exchangehttp://en.wikipedia.org/wiki/Image:TSX_outside.jpghttp://en.wikipedia.org/wiki/Tokyo_Stock_Exchangehttp://en.wikipedia.org/wiki/Image:TokyoStockExchange1144.jpghttp://en.wikipedia.org/wiki/SWX_Swiss_Exchangehttp://en.wikipedia.org/wiki/Image:Zuerich_Boerse.jpghttp://en.wikipedia.org/wiki/Shanghai_Stock_Exchangehttp://en.wikipedia.org/wiki/Image:Shanghaistockexchange.jpg


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Bombay Stock Exchange

Established as "The Native Share &

Stock Brokers' Association" in 1875

Oldest stock exchange in Asia.

Today, BSE is the world's number 1

exchange in terms of the number of

listed companies & worlds 5th in

transaction numbers.

BSE has two of world's best

exchanges, Deutsche Brse and

Singapore Exchange, as its

strategic partners.


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Bombay Stock Exchange

The BSE Index, SENSEX, is India's

first stock market index that enjoys

an iconic stature , and is tracked

worldwide.


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SENSEX

SENSEX 24 Sep08 / 16:45

BSE Sensex is a value-weighted

index composed of 30 stocks.

It consists of the 30 largest and

most actively traded stocks,

representative of various sectors.

SENSEX is calculated using the

"Free-float Market Capitalization"

methodology

The base period of SENSEX is

1978-79 and the base value is 100

index points.

SENSEX is calculated every 15seconds.


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How Stocks are priced?

First Column indicates abbreviation of name of company.

Latest Price indicates current price or closing price of the day (if in

newspaper)

Change (net) is difference between the previous day closing price &

current stock quote.

Latest Change 52 Weeks

symbol price net % time high low volume high low

BCE 31.15 -0.5 -1.5 16:57 31.75 31.1 3,643,000 33 27.2

BGM 17.06 -0.3 -1.6 15:54 17.3 17 207,400 26.9 17.1

IBM 79.82 -0.3 -0.4 16:01 80.68 79.6 4,999,200 99.1 71.9

MSFT 24.67 -0.3 -1.2 16:00 25.05 24.7 73,696,700 27.9 23.8

Stock Quote Table


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High indicates the highest price while low indicates lowest price of the

stock sold.

Volume describes the no. of shares traded for that day.

The 52- week high & low shows the highest & lowest prices in the

previous year.

Latest Change 52 Weeks

symbol price net % time high low volume high low

BCE 31.15 -0.5 -1.5 16:57 31.75 31.1 3,643,000 33 27.2

BGM 17.06 -0.3 -1.6 15:54 17.3 17 207,400 26.9 17.1

IBM 79.82 -0.3 -0.4 16:01 80.68 79.6 4,999,200 99.1 71.9

MSFT 24.67 -0.3 -1.2 16:00 25.05 24.7 73,696,700 27.9 23.8

Stock Quote Table


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PE Price to Earning ratio. Price per

share divided by earning per share.


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References

1. Stock market in India by D. R. Veena

2. Investment management by Dr. Mittal & Dr. Agarwal

3. The working of stock exchanges in India by H.R. Machiraju

4. The investment game how to win by Prasanna Chandra

5. Managing Investment by Prasanna Chandra

6. Managerial Economics by Dr. Mukund Mahajan

7. www.bseindia.com

8. www.stockmarketbasics.com

9. www.wikipedia.org

10. www.sharekhan.com
http://www.bseindia.com/http://www.stockmarketbasics.com/http://www.wikipedia.org/http://www.sharekhan.com/http://www.sharekhan.com/http://www.wikipedia.org/http://www.stockmarketbasics.com/http://www.bseindia.com/


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Thank You!!

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13486221 basics of stock market

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