Simple way to analysis

1. EASY WAY TO EARN MONEY,
EASY WAY TO LOOSE MONEY
BY
Dr. Seema Thakur
STOCK
EXCHANGE

2. WHAT IS STOCK EXCHANGE?
.
It Define as :-
The securities regulation act of 1956 defined stock exchange as:
“an association , organization , or an individual which is
established for the purpose of assisting , regulating , and
controlling business in buying ,selling and dealing in securities.”

3. Meaning : In brief
• This comes under treasury sector ,which provides service to stock
brokers & traders to trade stocks ,bonds and securities.
• Stock exchanges helps the companies to raise their fund. Therefore
the companies needs to list themselves in the Stock Exchange and
the shares will be issued which is known as equity or ordinary share
and these shareholders are the real owners of the company .
• Board of Directors of the Company are elected out of these Equity
Shareholders only.

4. What is share and Share capital?
• The total capital of company is estimated, registered and divided into units of equal value. This units are known as
Shares
• and collectively they are known as Share Capital.
UNIT SHARE

5. FEATURES OF STOCK EXCHANGE
 It is an organized market
 It is a securities market
 It is an important constituent of capital market i.e., market for long term
finance
 It is a voluntary association of persons desirous of dealing in securities
 stock exchange deals with only authorised member.
 It also deal in second hand securities i.e. Secondary Market.
 Stock Exchange works as per rules and regulations i.e. SEBI Guidelines.

6. IMPORTANT FUNCTION OF STOCK EXCHANGE
Provide central and convenient meeting places for sellers and buyer of
Increase the marketability and liquidity of securities
Smoothen price movement
It regulate company Management.
Promote the habit of saving and investment
Help capital formation
Help companies and government to raise funds from the investors
Provide clearing house facility.

8. Initial members who are still running their
business in stock exchange are:
D.S.Prabhudas &company
Jamnadas Morarjee
Champak lal Devidas
Brymohan Laxminarayan

9. Traders in stock Market
BROKER AND
JOBBER
speculation speculator Arbitragers
Bull Bear Stag
Lame
Duck

10. BROKER AND JOBBER
BROKER: He acts as an intermediary on behalf of others.
A broker in a stock exchange is a commission agent who
transacts business in securities on behalf of non
JOBBER: He is not allowed to deal with the public directly
.He deals with brokers who are engaged with the
. Thus, the securities is bought by the jobber from
members and sells to members who are operating on
stock exchange as broker.

11. DIFFERENCES BETWEEN A JOBBER AND A BROKER
 A jobber is an independent dealer in securities,
purchasing or selling securities on his own
account
 A jobber deals only with the brokers ,does not
deal with the general public
 A jobber earns profit from his operations i.e.,
buying and selling activities Each jobber
specializes in certain group of securities
 A broker deals with the jobber on
behalf of his clients. in other words, a
broker is a middleman between a
jobber and clients
 A broker is merely an agent, buying
or selling securities on behalf of his
clients
 A broker gets only commission for
his dealings The broker deals in
all types of securities
JOBBER BROKER

12. SPECULATION
Speculation involves trading a financial instrument involving high risk in expectation of
significant returns.
It also a practice of engaging in risky financial transactions in an attempt to profit
from short term fluctuations in the market value of a tradable financial instruments.
High-risk trades that are almost akin to gambling fall under the umbrella
of speculation

13. The dealer in stock exchange who indulge in speculation are called
speculator .
A speculator is a person who trades derivatives, commodities, bonds,
equities or currencies with a higher than average risk in return for a higher-
than-average profit potential.
The different types of speculators are :
BULL
BEAR
STAG
LAME DUCK
SPECULATOR

14. BULL {TEJIWALA}
He is speculator who expects the future raise in price of securities he buys
the securities to sell them at future date at the higher price. He is called as
bull because his activities resembles as a bull , as the bull tends to throw its
victims up in the air through its horns. In simple the bull speculator tries to
raise the price of securities by placing a big purchase orders.

15. BEAR {MANDIWALA}
He is speculator who expects future fall in
prices , he does an agreement to sell
securities at future date at the present
market rate .
He is called as bear because his attitude
resembles with bear , as the bear tends to
stamp its victims down to earth through its
paws . In simple the bear speculator forces
of prices of securities to fall through his
activities.

16. STAG {DEER}
He operates in new issue of market .
He is just like a bull speculator .
He applies large number of shares in the issue
market only by paying , application money ,
allotment money.
He is not a genuine investor because , he sells
the allotted securities at the premium and
makes profit.
In simple he is cautious in his dealings .
He creates an artificial rise in prices of new
shares and makes profits.

17. LAME DUCK
He is speculator when the bear operator
finds it difficult to deliver the securities to
the consumer on a particular day as
agreed upon .
He struggles as a lame duck in fulfilling his
commitment .
This happens when the prices do not fall
as expected by the bear and the other
party is not willing to postpone the
settlement to the next period.

18. 'Arbitrageur'
 An arbitrageur is a type of investor who attempts to profit
from price inefficiencies in the market by making
simultaneous trade that offset each other to capture risk-
free profits.
 It seek out price discrepancies between stocks listed on
more than one exchange by buying
the undervalued shares on one exchange while short
selling the same number of overvalued shares on another
exchange, thus capturing risk-free profits as the prices on
the two exchanges converge.

19. Largest stock exchanges
IN THE WORLD
LONDON STOCK EXCHANGE
NEW YORK STOCK EXCHANGE
SHANHAI STOCK EXCHANGE
AUSTRALIA STOCK EXCHANGE
TOKYO STOCK EXCHANGE
HONG KONG STOCK EXCHANGE
TORONTO STOCK EXCHANGE
NASDAQ OMX STOCK EXCHANG
IN INDIA
NATIONAL STOCK EXCHANGE
BOMBAY STOCK EXCHANGE
CALCUTTA STOCK EXCHANGE
COCHIN STOCK EXCHANGE
MULTI COMMODITY EXCHANGE
DERIVATIVES EXCHANGE
OTC EXCHANGE
PUNE STOCK EXCHANGE
INTERCONNECTS EXCHANGE

20. LONDON STOCK EXCHANGE
It was the first stock
exchange established by
east India company in 18th
century in London. The top
gainer of LONDON STOCK
EXCHANGE is “Blue chip
shares”.

21. BOMBAY STOCK EXCHANGE
It is oldest and first stock exchange
of India established in the year
1875.
First it was started under banyan
tree opposite to town hall of
Bombay over 22 stock brokers.
The top gainer in BSE is 100
companies in that GMR infra is first

22. NATIONAL STOCK EXCHANGE OF INDIA (NSE OR NSEI)
The NSE of India is the leading stock
exchange of India, covering 370 cities and
towns in the country.
It was established in1994 as a TAX
company.
It was established by 21 leading financial
institutions and banks like the IDBI, ICICI,
IFCI, LIC, SBI, etc.

23. Features of NSEI
Nation wide coverage i.e., investors from all over country
Ring less i.e., it has no ring or trading floor
Screen-based trading i.e., trading in this stock exchange is done
electronically.
Transparency i.e. the use of computer screen for trading makes the
dealings in securities transparent.
Professionalization in trading, i.e., it brings professionalism in its
functions

24. OVER-THE-COUNTER EXCHANGE OF INDIA (OTCEI)
The OTCEI is a national, ringless and
computerized stock exchange.
It was established in october,1990.
it started its operation in september,1992.
Features of OTC
1. It is a nation-wide stock exchange. Its operational areas cover entire India.
2. It is a ring less stock exchange. The trading ring(i.e., trading place)commonly
found in a traditional stock exchange is not found in the OTCEI.
3. It is a computerized stock exchange

25. SEBI REGULATE STOCK EXCHANGE
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)
The SEBI was constituted on 12th April,1988 under a resolution of the
Government of India.
On 31st january,1992,it was made a statutory body by the Securities
and Exchange board of India Act,1992.
The Companies (Amendment) Act,2000 has given certain powers to
SEBI as regards the issues and transfer of securities and non-
payment of dividend

26. Function Of SEBI
Regulating the business in stock exchange and any other securities
markets.
Promoting and regulating self-regulatory organization.
Registering and regulating the work of collective investment scheme,
including mutual funds.
Prohibiting fraudulent and unfair trade practices relating to securities
market.
Promoting education, and training of intermediaries of securities
market

27. Power of SEBI
• Power to approve the bye-laws of stock exchange
• Power to inspect the books of accounts
• Power to grant license to any person for the
purpose of dealing in certain areas.
• Power to delegate powers exercisable by it.

28. How to see the value of shares in stock exchange
• SENSEX is an indicator to checkout in BSE
• NIFTY is an indicator to checkout in NSE

29. How stock exchanges get
money
They get their money by listing fees paid by the
corporation to have their company traded

30. The Daily graph of the companies is being showed in
following manner

31. HOW TO DEAL AND INVEST IN STOCK EXCHANGE
In order to deal with a securities one as to have an account called Demat a/c or
Trading a/c. It is just like a bank account.
Same procedure of opening the bank account is followed to open the a/c.
But all the banks does not give this facility of opening the account , only few
provide this facility.
After demat a/c or Trading a/s is opened then the securities is bought and sold.
The banks which gives facility of demat a/c in India is
• ICICI Bank
• Citi Bank
• Bank of Baroda

32. HAPPY INVESTMENT WITH
LOTS OF PROFITS
END
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