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Stock Market Investment


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IABF Education Institute gives to you details about Stock Market details, How to know about stock markets, What is Stock Market, Who is broker, What is D/Mat A/C, Functions of Brokers, Know about NIFTY,

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Stock Market Investment

  2. 2. INTRODUCTION • STOCK MARKET is a public entity for the trading of company stock (share) and derivatives at an agreed price. • The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers, thus providing market place.
  3. 3. 1.What is a stock exchange? It is a corporation or mutual organization which provides facilities for stock brokers and traders, to trade company stocks and other securities. Its index, or market indicator is known as the Sensex. 2. 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. 3. What is a Demat A/C? Investors who wish to trade in the market need to have a dematerialized, or demat, account. In India, the government has mandated two entities –National Securities Depository, or NSDL, and Central Depository Services (India), or CDSL – to be the custodian of dematerialized securities.
  4. 4. FUNCTIONS OF BROKERS • Receive and track orders • Find other parties • Negotiate prices • Server as focal point trading • Execute orders
  6. 6. STOCK MARKET INDEX • All India All Industries Share Price Index combined and published by the Economic Times on daily basis. • S&P CNX Nifty combined and published by NSE India on daily basis.(50 STOCKS) • BSE Sensex combined and published by BSE on daily basis.(30 STOCKS)
  7. 7. BUYING SHARES • PRIMARY MARKETS – part of capital markets that deals with the issue of new securities (directly from the company). • SECONDARY MARKETS –here securities are sold by and transferred from one investor to another (from existing shareholder)
  8. 8. PLAYERS IN THE STOCK MARKET • Brokers- members of the stock exchange authorized to trade • Stock exchange • Clearing corporation • Banks • Depository participants
  9. 9. DEMATERIALISATION OF SHARES: • Trading in the shares of the Company is compulsory in dematerialized form for all investors. The Company has, therefore, enlisted its shares with both the depositories, viz, National Securities Depository Limited (NSDL) and Central Depository Services India Limited (CDSL).
  10. 10. WHAT IS DEMATERIALISATION? • Dematerialisation is a process by which the physical share certificates of an investor are taken back by the Company and an equivalent number of securities are credited in electronic form at the request of the investor. • An investor will have to first open an account with a Depository Participant so that the dematerialised holdings can be credited into that account. • This is very similar to opening a Bank Account.
  11. 11. WHAT IS A DEPOSITORY? • A Depository (NSDL & CDSL) is an organisation like a Central Bank where the securities of a shareholder are held in the electronic form at the request of the shareholder through the medium of a Depository Participant.
  12. 12. WHO IS A DEPOSITORY PARTICIPANT? • A Depository Participant (DP) is your representative ( agent ) in the depository system providing the link between the Company and you through the Depository. • While the Depository can be compared to a Bank , DP is like a branch of your bank with whom you can have an account. • According to SEBI guidelines, Financial Institutions like banks, stockbrokers etc . can become participants in the depository.
  13. 13. SECONDARY MARKET 1. TRADING- Cash trading Spot trading Forward ,Future (Derivative trade) 2. Clearing &Settlement
  14. 14. TRADING • The NSE trading system called 'National Exchange for Automated Trading' (NEAT ) is a fully automated screen based trading system. • It is on line and nationwide trading system. • It adopts the principle of an order driven market.
  15. 15. TRADING MECHANISM SYSTEM • In this system a member can punch into the computer quantities of securities and prices at which he likes to transact. • The transaction is executed as soon as it finds a matching sale or buy order from a counter party.
  16. 16. International Aspects of Stock Markets • European markets becoming an increasing force with introduction of a common currency, the Euro • International stock markets allow investors to diversify by holding stocks issued by corporations in foreign countries • Increased risk due to less complete information about foreign stocks, foreign exchange risk, and political risk
  17. 17. WORLD CAPITAL MARKET • Why Raise Funds Outside Domestic Markets? • Domestic market not sufficiently developed to supply the funds needed • Reduced costs (assumes markets not completely integrated) • Diversify funding sources • Foreign currency exposure management
  18. 18. How to receive income from shares? We invest in shares to make money – either through a share’s capital growth, i.e. the amount by which the share price increases in value over time, or through the dividends it pays to its shareholders.
  19. 19. How to make investment decisions? • To cope with volatility, it is important to have a disciplined and systematic approach to equity investment. • Set your own rules and more importantly, follow them religiously. • Indeed, the mantra for successful equity investment is a well though out, disciplined investment strategy. 2) How to track your investments? (Portfolio tracker) : The Portfolio Manager tracks and monitors all your investments, cash flow and assets, through live price updates. • With the Portfolio help, you can not only view your investments at each stage, but can use this record of your holdings to base any future investments decisions.
  20. 20. CONCLUSION • More over investing in stock market is a kind of investment that one cannot learn or understand only through theoretical knowledge, its simply a game in which one can accelerate only through market based practical knowledge and fair investment strategy. • Before one examines a company or start up a new firm, it is important to understand the nature of businesses and the stock market. This is the cornerstone of learning to invest well. • At last the stock market can be a great source of confusion for many people. An average person may believe that investing is a form of gambling; they are certain that if you invest, you will more than likely end up losing your money. But at the same time any one with a small investment can make a good profit if he/she have good knowledge of