basics of stock markets
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DESCRIPTIONBasics of Stock Market
Prof R. S. Verma
Jignesh Thakkar P-36
Nahush Mhaskar P-19
Aditi Sabaria C-31
Kiran Pawar P- 26
- STOCK MARKET
- STOCK EXCHANGES IN INDIA
- BSE SENSEX 30
Started on 01 January, 1986
Consists of the 30 largest
and most actively traded stocks
- NSE NIFTY 50
The 50 stocks that were most favored by institutional investors in the 1960s and 1970s.
- HOW THE INDICES ARE CALCULATED?
Find outthe free-float market cap of all the 30 companies that make up the Sensex!
Add all the free-float market caps of all the 30 companies!
3. Make all this relative to the Sensex base. The value you get is the Sensex value!
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.
- Transaction Process(How To Start Trading And Investing)
We need to have a DEMAT account.
We need to have a Trading account.
And of course money
- 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.
Eg. If u purchase shares on Monday, the settlement day would be Wednesday.
- FACTORS AFFECTING STOCK MARKET
Market trends & Rumours
Global Market indicators
Govt Policies and Regulations
Company wide factors
- Sectoral Indices
Oil & gas
Large Cap - Above 750 cr.
Mid Cap : Between Rs 75 cr. and Rs 750 cr.
Small Cap : Below Rs. 75 cr.
A : It is the most tracked class of scripts consisting of about 216 scripts.
T : Traded on trade to trade basis.
Z : companies which have failed to comply with its listing requirements.
- Control Mechanism
Circuit is the price limit or range, outside which the stock price can't go.
For example, let's say closing price of X stock yesterday was 100 Rs. The applicable circuit limit for X is 5%. In this circumstances, the price of X can't go above 105 (5% above previous close) and below 95 (5% below previous close).
- Why IPOs?
Raise Capital to meet working capital, debt repayment, expansion, and a host of other uses.
Company valuations are done on the basis of which the share value is calculated.
It is offered to all categories of investors like Retail Investors, Private Placements, FIIs, Mutual funds, LIC,GIC
Issue is either brought as a book building issue which is priced at a price band OR is brought at fixed price
Companys have to file DRHP(Draft red herring prospectus) with Sebi as a guide line.
After DRHP the IPO is given ratings by ICRA & CRISIL depending on the valuations, business risk, future growth policies of the company, Investor risk appetite.
- IPO Grey Market
Before listing of IPO there is a market value which exists amongst the brokers who do business in GREY MARKET were the premiums are predefined depending on the demand and supply availability
This orders are booked in advance and settled on the date of listing and the difference if any is settled in cash
Highest ever Grey market premium for any IPO was for Reliance Power which was 100%
- Kinds of Trading
Delivery based Trading
- Intraday Trading
- Buying and Selling on the same day.
- Brokerage will be different for intra-day and delivery based trading, intra-day being lesser
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