Stock market mechanism - MAJU

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The talk was delivered at MAJU on 3rd July 2013 at 0730 PMby Mr Fahim Akhtar. It covers stock market mechanism and is beneficial for stock market employees,stock analyst, bankers, fund managers and students of MBA as well as economics

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Stock market mechanism - MAJU

  1. 1. 1 STOCK MARKET MECHANISM by Mr Fahim Akhtar
  2. 2. 22
  3. 3. 3 STOCK MARKET MECHANISM Topic Introduction
  4. 4.  General perception  How stock forms  Stock market index  Features of market  Some abnormal gainers / losers  Why investors mostly loose 4
  5. 5. 5 A gamble or a casino
  6. 6. 6 A place where big fishes eat small
  7. 7. 7 Puzzling function
  8. 8. A place where one is always 8
  9. 9. 9 Trading stock is a science and equally art too
  10. 10. Something that may be studied or learned like systematized knowledge 10
  11. 11. Expression or application of human creative skill & imagination 11
  12. 12. 12 A company is desirous to expand the business. Options for generating the required funds:-  Get from some one amongst FNF  Borrow from bank  Get maximum financers from general public
  13. 13. 13  Company is registered under company ordinance  IPOs ( Initial Public Offering ) is offered  IPO given normally multiples of 500  Fund raised through IPO utilized in business  Stock trades in stock exchange
  14. 14. 14
  15. 15. 15  Registered company engages in business with funds generated  Company reports profit quarterly  Earnings and profitability is disbursed amongst all stake holders including those holding share during specified time  Company earns more, shares goes up and in case of loss share sinks
  16. 16. 16  Company doing good or bad business  Financial results and bright or depressive expectations  Players go for buying seeing rapid growth or selling anticipating depressed earnings  New innovative product launched / business explored  Some incentives / taxation affecting stock
  17. 17. 17  Growth in earnings and profitability  Better management  Cheaper inputs and raw material  Demand going up for product or service  News and rumours Stocks mostly moves in speculation and attempt to discovers the right price
  18. 18. Fundamental analysis is gauged on historical and present data, but with the goal of making financial forecast .  A company stock valuations and predict its probable price  Make a projection on its business performance  Evaluate its management and make internal business decisions 18
  19. 19. 19 A place where buyer and seller meet and trade stocks under regulations set
  20. 20. 20 Bulls indicate market is positive Bear indicates selling pressure
  21. 21. 21 A stock index or stock market index is a method of measuring the value of a section of the stock market
  22. 22.  Opportunities & Better returns  Pronounced risk factor  Speculation, rumours and news orientation  Diverse type of participants  Connectivity with other financial markets  Dependence on commodity move  Fiscal, monitory and taxation policy effects  Sector performance and incentives by government 22
  23. 23.  Possibility of high returns  Easy liquidity  Unbeatable tax benefits  Income from dividends Benefits of investment in stocks 23
  24. 24. 24
  25. 25. 25 Market has a trend of crashes every 3-4 years The reasons for 2008 crash were  Poor law and order after assassination of lady PM  Bad economic outlook  Panic selling by funds and foreigners  Recession  Market manipulation
  26. 26. 26 StockStock LowLow PricePrice HighHigh PricePrice Gain /Gain / lossloss %age gain%age gain Engro FoodsEngro Foods 20.620.6 Aug 2012Aug 2012 154.7154.7 May 2013May 2013 125125 770770 Pak PetroleumPak Petroleum 100100 20082008 200200 20092009 100100 100100 Lucky CementLucky Cement 103103 June 2012June 2012 206206 June 2013June 2013 103103 100100 JahangirJahangir SiddiquiSiddiqui CompanyCompany 3.93.9 2 jan 122 jan 12 13701370 31 Jan31 Jan 20082008 1366.11366.1 Bank ofBank of PunjabPunjab 88 April 2013April 2013 1616 June 2013June 2013 88 100100
  27. 27. 27  Best selling products  Persistent growth  Efficient management  Good products in pipeline to launch  Eps not too good but expected to go higher
  28. 28. 28  Greed and Fear  Lack of knowledge  Rely over brokers and friends  Lack of analytical skills  Poor comprehension of / with changing indicators  Insider trading
  29. 29. 29  Plan your Investment  Go for long term Investment  Control your fear and greed  Decide right entry and exit in market  Diversify your portfolio  Always keep some reserve cash  Learn science and develop art of investment
  30. 30. 30

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