SHARES&

EQUITY MARKET

TOPIC

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PRESENTED BYPavitra P. KunderRinesh K. DhaneshaVivian V. DbrittoSagar K. BajpyeYash k. Shah

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WHAT ARE SHARES?

A share is one of a finite number of equal portions in the capital of a company, entitling the owner to a proportion of distributed, non-reinvested profits known as dividends and to a portion of the value of the company in case of liquidation.

Equity is a share in the ownership of a company. It represents a claim on the company’s assets and earnings. As you acquire more stock, your ownership stake in the company increases

The terms share, equity and stock mean the same thing and can be used interchangeably.

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PAVITRA

A stock market is a market for the trading of company stock/ shares, and derivatives. This includes securities listed on a stock exchange as well as those only traded privately.

Market is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares, bonds, debentures etc.

The primary market is that part of the capital markets that deals with the issuance of new securities.

The secondary market is the financial market for trading of securities that have already been issued in an initial private or public offering. In the secondary market, securities are sold by and transferred from one investor or speculator to another.

WHAT are MARKETs ?

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WHAT IS A STOCK EXCHANGE?

A stock exchange, share market or bourse is a corporation or mutual organization which provides facilities for stock brokers and traders, to trade company stocks and other securities.

The Bombay Stock Exchange Limited, or BSE has a nation-wide reach with a presence in 417 cities and towns of India.

Its index, or market indicator is known as the Sensex. The S&P CNX Nifty, or simply Nifty, is the leading index for large companies on the National Stock Exchange of India.

It consists of 50 companies representing 24 sectors of the economy, and representing approximately 47% of the traded value of all stocks on the National Stock Exchange of India

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The largest stock market in the United States, by market capitalization is the New York Stock Exchange (NYSE).

In Canada, the largest stock market is the Toronto Stock Exchange.

Major European examples of stock exchanges include the Amsterdam Stock Exchange, London Stock Exchange, Paris Bourse, and the Deutsche Borse (Frankfurt Stock Exchange).

In Africa, examples include Nigerian Stock Exchange, JSE Limited, etc.

Asian examples include the Singapore Exchange, the Tokyo Stock Exchange, the Hong Kong Stock Exchange, the Shanghai Stock Exchange, and the Bombay Stock Exchange.

Largest stock market around the world

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WHO IS A BROKER?

A stockbroker is person who is licensed to trade in shares. Brokers also have direct access to the share market and can act as your agent in share transactions.

For this service they charge a fee.

They can also offer additional services like advice on shares, debentures, government bonds and listed property trusts and non-listed investment options

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Market participants

Market participants include individual retail investors, institutional investors such as mutual funds, banks, insurance companies and also publicly traded corporations trading in their own shares.

Some studies have suggested that institutional investors and corporations trading in their own shares generally receive higher risk-adjusted returns than retail investors.

A few decades ago, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, usually with long family histories to particular corporations.

Over time, markets have become more "institutionalized"; buyers and sellers are largely institutions

RINESH

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WHAT IS DEMAT ACCOUNT ?

The term "demat", in India refers to a dematerialized account for individual Indian citizens to trade in listed stocks or debenture in electronic form rather than paper, as required for investors by the Securities Exchange Board of India (SEBI).

In a demat account, shares and securities are held electronically instead of the investor taking physical possession of certificates.

A demat account is opened by the investor while registering with an investment broker (or sub-broker). The demat account number is quoted for all transactions to enable electronic settlements of trades to take place.

Access to the demat account requires an internet password and a transaction password. Transfers or purchases of securities can then be initiated. Purchases and sales of securities on the demat account are automatically made once transactions are confirmed and completed.

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Function and purpose

The stock market is one of the most important sources for companies to raise money.

This allows businesses to be publicly traded, or raise additional financial capital for expansion by selling shares of ownership of the company in a public market.

The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities.

This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate.

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Almost every large corporation started out as a small, mom-and-pop operation and through growth, became financial giants.

Wal-Mart, Dell Computer, and McDonald’s had combined profits of $10.34 billion this year.

Wal-Mart was originally a single-store business in Arkansas.

Some companies actively increase liquidity by trading in their own shares.

Function and purpose

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How to track your investments? (Portfolio tracker)

The Portfolio Manager tracks and monitors all your investments, cash flow and assets, through live price updates.

Investments like equity, mutual funds, assets, cash flows, borrowing and more can all be tracked.

Displayed in real time, it is the most up-to-date and precise indicator of your net worth! With the Portfolio Manager, you can not only view your investments at each stage, but can use this record of your holdings to base any future investments decisions.

VIVIAn

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Trading

Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry.

This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously.

The other type of stock exchange is a virtual kind, composed of a network of computers where trades are made electronically via traders.

Actual trades are based on an auction market model where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at market means you will accept any ask price or bid price for the stock, respectively.)

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Dividend Payout Ratio: The percentage of earnings paid to shareholders in dividends.

Calculated as:=Yearly dividend per shs.

  Earning per shs.Or equivalently

= Dividend Net income

The payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio.

Dividend Payout Ratio

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The behavior of the stock market

SAGAR

The use of  "bull" and "bear" to describe markets comes from the way in which each animal attacks its opponents. That is, a bull thrusts its horns up into the air, and a bear swipes its paws down.

These actions are metaphors for the movement of a market: if the trend is up, it is considered a bull market. And if the trend is down, it is considered a bear market.

The Bull market is when everything in the economy is great, people are finding jobs, gross domestic product (GDP) is growing, and stocks are rising. Things are just plain rosy! Picking stocks during a bull market is easier because everything is going up. Bull markets cannot last forever though, and sometimes they can lead to dangerous situations if stocks become overvalued. If a person is optimistic and believes that stocks will go up, he or she is called a "bull" and is said to have a "bullish outlook".

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Irrational behavior

Sometimes, the market seems to react irrationally to economic or financial news, even if that news is likely to have no real effect on the fundamental value of securities itself. But, this may be more apparent than real, since often such news has been anticipated, and a counter reaction may occur if the news is better (or worse) than expected. The stock market may be swayed in either direction by press releases, rumors and mass panic; but generally only briefly, as more experienced investors quickly rally to take advantage of even the slightest change.Over the short-term, stocks and other securities can be battered or buoyed by any number of fast market-changing events, making the stock market behavior difficult to predict. Behaviorists argue that investors often behave 'irrationally' when making investment decisions thereby incorrectly pricing securities, which causes market inefficiencies, which, in turn, are opportunities to make money.

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CrashesA stock market crash is often defined as a sharp dip in share prices of equities listed on the stock exchanges. In parallel with various economic factors, a reason for stock market crashes is also due to panic and investing public's loss of confidence. Often, stock market crashes end speculative economic bubbles.There have been famous stock market crashes that have ended in the loss of billions of dollars and wealth destruction on a massive scale.

An increasing number of people are involved in the stock market, especially since the social security and retirement plans are being increasingly privatized and linked to stocks and bonds and other elements of the market.

There have been a number of famous stock market crashes like the Wall Street Crash of 1929, the stock market crash of 1973–4, the Black Monday of 1987, the Dot-com bubble of 2000, and the Stock Market Crash of 2008.One of the most famous stock market crashes started October 24, 1929 on Black Thursday. The crash began in Hong Kong and quickly spread around the world.

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Types Of Stock

Growth Stock: A stock that experiences a continued period of growth exceeding that of the economy. Generally, the duration is over a year in length.

Income Stock: A stock that has a high, consistent, dividend paid annually.

Speculative Stock: Stocks that offer the potential for substantial price appreciation, usually because of some special situation such as new management or the introduction of a promising new product.

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YASH

Cyclical Stocks: These are stocks whose earnings and overall market performance are closely linked to the general state of the economy.

Defensive Stocks: These stocks tend to hold their own, and even do well, when the economy starts to falter.

Mid-cap stocks: These medium-sized companies, generally with market values of less than $4-$5 billion but more than $1 billion.

Small-cap stocks: are stocks that generally have market values of less than $1 billion but can offer above-average returns.

TYPES OF STOCK

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Short Selling

In short selling, the trader borrows stock (usually from his brokerage which holds its clients' shares or its own shares on account to lend to short sellers) then sells it on the market, hoping for the price to fall.

The trader eventually buys back the stock, making money if the price fell in the meantime and losing money if it rose.

Exiting a short position by buying back the stock is called "covering a short position.“

Hence most markets either prevent short selling or place restrictions on when and how a short sale can occur. The practice of naked shorting is illegal in most (but not all) stock markets.

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Types Of Value

Par Value: A dollar amount that is assigned to a security when representing the value contributed for each share in cash or goods.

Book Value: the value of the equity of the firm divided by the number of shares outstanding.

Liquidation Value: the value obtained for selling all the assets of the corporation on the auction block.

Market Value: the current market price of the stock times the number of shares outstanding.

Investment (Intrinsic) Value: the value of the corporation based on discounted cash flow analysis and the income generating capacity of the firm.

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Investment strategies

One of the many things people always want to know about the stock market is, "How do I make money investing?" There are many different approaches; two basic methods are classified by either fundamental analysis or technical analysis. Fundamental analysis refers to analyzing companies by their financial statements found in SEC Filings, business trends, general economic conditions, etc. Technical analysis studies price actions in markets through the use of charts and quantitative techniques to attempt to forecast price trends regardless of the company's financial prospects.Additionally, many choose to invest via the index method. In this method, one holds a weighted or unweighted portfolio consisting of the entire stock market or some segment of the stock market . The principal aim of this strategy is to maximize diversification, minimize taxes from too frequent trading, and ride the general trend of the stock market.

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THANK YOU

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