Stock Market  For Dummies (Me and You!)
What is stock market? <ul><li>Why are you telling me all this?
Why its important to me?(assets and earnings)
Debt v/s Equity – Difference between Debt and Equity financing
IPO – Initial Public Offer
Risk – Risk of being an owner - Dividends
Common v/s Preferred Stocks – Preferred Stock between Bond and Common
Different classes of Stock – Class A and Class B – Voting rights – Steve Jobs – Mark Zuckerberg – Laxmi Mittal </li></ul>`
Authorities
How stocks trade
<ul><li>Farmer's market
Buyers and sellers meet
Primary and Secondary Market
Primary Market – IPO
Secondary Market – No control of company what so ever
Bombay Stock Exchange and National Stock Exchange
Over the counter exchange – Trading floor and Virtual Trading </li></ul>
SENSEX
<ul><li>BSE SENSEX – 30
Started 1 January 1986
Consists of 30 company across different sectors
Nerve of the economy
The index is calculated based on a free float capitalization method—a variation of the market capitalization method.
The base value of the SENSEX is taken as 100 on April 1, 1979, and its base year as 1978-79.
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Stockmarket For Dummies

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Stock Market for Dummies

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Stockmarket For Dummies

  1. 1. Stock Market For Dummies (Me and You!)
  2. 2. What is stock market? <ul><li>Why are you telling me all this?
  3. 3. Why its important to me?(assets and earnings)
  4. 4. Debt v/s Equity – Difference between Debt and Equity financing
  5. 5. IPO – Initial Public Offer
  6. 6. Risk – Risk of being an owner - Dividends
  7. 7. Common v/s Preferred Stocks – Preferred Stock between Bond and Common
  8. 8. Different classes of Stock – Class A and Class B – Voting rights – Steve Jobs – Mark Zuckerberg – Laxmi Mittal </li></ul>`
  9. 9. Authorities
  10. 10. How stocks trade
  11. 11. <ul><li>Farmer's market
  12. 12. Buyers and sellers meet
  13. 13. Primary and Secondary Market
  14. 14. Primary Market – IPO
  15. 15. Secondary Market – No control of company what so ever
  16. 16. Bombay Stock Exchange and National Stock Exchange
  17. 17. Over the counter exchange – Trading floor and Virtual Trading </li></ul>
  18. 18. SENSEX
  19. 19. <ul><li>BSE SENSEX – 30
  20. 20. Started 1 January 1986
  21. 21. Consists of 30 company across different sectors
  22. 22. Nerve of the economy
  23. 23. The index is calculated based on a free float capitalization method—a variation of the market capitalization method.
  24. 24. The base value of the SENSEX is taken as 100 on April 1, 1979, and its base year as 1978-79.
  25. 25. share price times the number of shares outstanding
  26. 26. Index divisor – magic number </li></ul>
  27. 27. NIFTY <ul><li>Same Index covers 50 companies across 22 sectors
  28. 28. The base period for the S&P CNX Nifty index is November 3, 1995
  29. 29. The base value of the index has been set at 1000, and a base capital of Rs 2.06 trillion
  30. 30. Nifty Index was developed by Ajay Shah and Susan Thomas.
  31. 31. Total return on Sensex and Nifty is around 20% </li></ul>
  32. 32. <ul><li>Depository
  33. 33. A bank or company which holds funds or securities deposited by others, and where exchanges of these securities take place.
  34. 34. NSDL – National Security Depository Limited
  35. 35. CDSL – Central Depository Services Limited
  36. 36. Depository Participant – Intermediaries between depository and investors
  37. 37. SEBI – Security and Exchange Board of India – Regulator of securities market in India
  38. 38. What all needed? Trading account, demat account and of course MONEY! </li></ul>
  39. 39. Rules of making money!
  40. 40. <ul><li>Rule No 1 : Never lose money in stock market
  41. 41. Rule No 2 : Never forget rule no 1 </li></ul>
  42. 42. Factors affecting stock market <ul><li>Economic Factors
  43. 43. Market trends and rumors
  44. 44. Global market indicators
  45. 45. Govt policies and regulations
  46. 46. Company or sector wide factors </li></ul>
  47. 47. <ul><li>Capitalization – Large Cap, Mid Cap and Small Cap
  48. 48. Groups – A, B and Z
  49. 49. Circuit – Control mechanism
  50. 50. Kinds of trade – Intra day and Delivery
  51. 51. Short selling and Short covering </li></ul>
  52. 52. The Bear The Bull and Farm
  53. 53. Picking up the right stock!
  54. 54. <ul>Fundamental Analysis </ul><ul><li>Analyzing stocks on the basis of country, sector or individually
  55. 55. Includes going through the balance sheet of the company and P/L statement and checking various ratios
  56. 56. EPS = Net Earnings / Outstanding Shares
  57. 57. Trailing, Current and Forward EPS
  58. 58. P/E = Stock Price / EPS
  59. 59. High P/E -> Overpriced stock (Not always!)
  60. 60. Indicator of market sentiment towards the stock </li></ul>
  61. 61. <ul><li>PEG (Price to Future Growth ratio)
  62. 62. PEG = (P/E)/ (projected growth in earnings)
  63. 63. Technically Lower the better
  64. 64. Compare it to P/E
  65. 65. This is projected ratio, not always accurate!
  66. 66. Interest coverage ratio
  67. 67. IC = EBIT/ Interest expense
  68. 68. Below 1.5 = signs of trouble times! </li></ul>
  69. 69. <ul><li>Debt/Equity Ratio
  70. 70. D/E = Total Liabilities / Shareholders Equity
  71. 71. Sector based, Auto manufacturing -> High
  72. 72. IT companies -> Low
  73. 73. Check the competitor or top 5 sector based ratios when considering this </li></ul>
  74. 74. Technical Analysis <ul><li>Support
  75. 75. Resistance
  76. 76. Depends on past prices and volumes of stock traded.
  77. 77. All about reading the graphs
  78. 78. Out of the reach for this presentation </li></ul>
  79. 79. Hedging and Speculation <ul><li>Hedging means insuring against a negative event
  80. 80. It is done to reduce exposure to various risks
  81. 81. Hedgers try covering the risks
  82. 82. Hedgers try to reduce the risks associated with uncertainty
  83. 83. Speculation is opposite of hedging
  84. 84. Speculators are risk lovers
  85. 85. Speculators make bets or guesses
  86. 86. A hedger seeks to cover a foreign exchange risk
  87. 87. A speculator accepts and seeks out to accept it to make profit </li></ul>
  88. 89. <ul><li>Never risk more than 10% of your trading capital in a single trade.
  89. 90. Never do overtrading.
  90. 91. Don't enter a trade if you are unsure of the trend.
  91. 92. When in doubt, get out, and don't get in when in doubt.
  92. 93. Distribute your risks equally among different markets.
  93. 94. Avoid taking small profits and large losses.
  94. 95. Be willing to make money from both sides of the market.
  95. 96. Never change your position without a good reason.
  96. 97. Don't follow a blind man's advice.
  97. 98. When you lose don't blame it on luck. </li></ul>
  98. 99. <ul><li>A well diversified portfolio
  99. 100. Investment in good shares
  100. 101. Lot of patience </li></ul>
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