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Basics On Stock Market

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All one needs to know before studying in depth about stock market.

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Basics On Stock Market

  1. 1. -Preksha Sancheti 1512554
  2. 2. SHARES & STOCK SHARE STOCK (1 Share of the company) (A bundle of shares)
  3. 3. BONDS & STOCK Bonds Stock Part lenders of the company Part owners of the company A part of debt of the companySecurity name for debentures A part of equity of the company Security name for shares
  4. 4. Bonds & Debentures Bonds are backed by collateral security Debentures are backed by credit All Debentures are Bonds but not all Bonds are Debentures. An Unsecured Bond is a Debenture.
  5. 5. How Does A Company Issue Its Shares? New Company Initial Public Offering Market Secondary Market
  6. 6. New Company When a new company is formed , the initial investors apart from the idea generator or the initiator of the company, are called ANGEL INVESTORS.
  7. 7. IPO Market • A company goes public when it further plans to expand its business and requires huge fund for the same. • The company first has to convert into a Public Company and appoint a Merchant Banker. • The job of the merchant banker is to conduct diligence on the company filing for an IPO and ensure the legal proceedings. • The merchant banker also Underwrites shares by agreeing to buy a part of the IPO. • The shares are issued in the market called IPO. • The IPO is also knows as the Primary Market.
  8. 8. There are two main exchanges followed by traders: NSE-National Stock Exchange(Nifty) BSE-Bombay Stock Exchange(Sensex) Sensex Is calculated by market capitalisation of 30 Companies Nifty is calculated by market capitalisation of 50 companies Secondary Market
  9. 9. Financial Intermediaries • Entities that offer services by performing functions of the stock market. • Their functions are complied with the regulations laid down by the SEBI.
  10. 10. Stock Broker • A registered trader with the stock exchange. • They act like the gateways to stock exchange. • They provide Trading Account, used for all market related transactions. (buying and selling of shares) • Facilitate fund transfer between trading and personal bank accounts. • They act like a messenger between two traders . • Not all brokers facilitate exchanges abroad.
  11. 11. Depository A depository offers the service of Demat account. They are like banks to the owned shares. Once the trade is done, the share certificate gets transferred from trading account and stored in Demat account. Currently, there are only two depositories in India; NSDL-National Securities Depository Limited CDSL-Central Depository Services Limited
  12. 12. MARKET WATCH A market watch is a forum that provides business news, analysis and stock market data.
  13. 13. Symbol of the company Last Traded Price % Change of price from the closing price Last traded price on the previous day Opening Price for the day Highest traded price Lowest traded price Volume of shares traded
  14. 14. NOTE: 1.The opening price differs from the previous day’s closed price due to the market timings. 2.The market trades between 9:15am to 3:30pm and remains closed on Saturdays and Sundays but the companies continue to operate. Therefore, prices keep fluctuating even when the market is shut. 3.Trade is made on lot size of shares. Every company has its own bundle of shares which are traded together as a stock.
  15. 15. Price Determination of Shares Book Value ASSETS LIABILITIES Equity Assets-Liabilities=Book Value Of Shares
  16. 16. Market Value What Is Market Capitalisation? Market capitalisation means to calculate the market value of the company. The total number of shares of a company trading in the market are determined. The current market value of the share is then multiplied by the total shares.
  17. 17. Technical Analysis It is a method to develop a point of view on markets. It helps in identifying the entry and exit time while trading on a particular stock. Assumptions in TA 1. Market discounts everything-All known and unknown activities/information is reflected in the latest price stock. 2. Always prefer knowing ‘HOW’ over ‘WHY’ 3. Prices move in a trend. A major rise/fall happens over time and not immediately. 4. History repeats itself simply because market traders react to fluctuations in a similar way .
  18. 18. Few Technical Tools/Methods Daily Trade Pattern Every price movement is recorded to know the highest and lowest for the day. It is important to mark the opening and closing to know the overall price trend for the day
  19. 19. Line Chart The line charts can be plotted for various time frames namely monthly, weekly, hourly etc. The advantage of the line chart is its simplicity. With one glance, the trader can identify the generic trend of the security. The line chart does not provide any additional detail apart from trend of the security. Line chart takes into consideration only the closing prices ignoring the open, high and low.
  20. 20. Bar Chart The Bar Chart is a bit more versatile. It displays all the four price variables namely open, high, low, and close. A bar has three components.
  21. 21. central line – highest price bottom end- lowest price The left mark–open Price The right mark–close Price The length of the central line-the range for the day
  22. 22. Candle Stick Pattern  The candlesticks is originated from Japan.  The open and close prices are displayed by a rectangular body. Candles can be classified as a bullish or bearish candle usually represented by blue/green/white and red/black candles respectively. The consideration given for this presentation is blue and red combination to represent bullish and bearish candles respectively.
  23. 23. Bullish Candle The Central real body – connects the opening and closing price Upper shadow – Connects the high point to the close Lower Shadow – Connects the low point to the open
  24. 24. Bearish Candle The Central real body – connects the opening and closing price However the opening is at the top end and the closing is at the bottom end of the rectangle Upper shadow – Connects the high point to the open Lower Shadow – Connects the Low point to the close

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