1. Basics of Stock Market for beginners

1. Basics of Stock Market
Dr. Mangesh Bhople

2. Basics Of Stock Market
Investment Motive
When to Start Investing
Where to Invest
Before investing in a Market
Why Trade In Stock Market
Things to know about the share and market
Important Concepts

3. Investment Motive
Earn returns
on your idle or
excess money
Generate a
specified sum
of money for
a specific goal
in life
Make a
provision for
an uncertain
future

4. When to Start Investing??
Invest early
Invest
regularly
Invest for
long term
and not
short term
The three golden
rules for all
investors are

5. Where to Invest – Investment
opportunities
Physical assets
E.g. real estate, gold/
jewellery, commodities
etc.
Financial Assets
Eg.
FD, RD, Post Office,
Insurance, PPF, PF,
Shares, Bonds, Mutual
fund etc.

6. Before investing in a Market – One must know
about……
Share Company Face Value
Market Value
BSE – Bombay
Stock Exchange
NSE – National
Stock Exchange
Primary
Market
Secondary
Market
SEBI

7. Why Invest / Trade In Stock Market??
Starting with
tiny fund
Minimum
time to
trade
High
Liquidity
User friendly
operations
of stock
market.

8. • An indivisible unit of capital,
• expressing the ownership
relationship between the
company and the
shareholder.
• The denominated value of a
share is its face value, and
the total of the face value of
issued shares represent the
capital of a company, which
may not reflect the market
value of those shares.
What
is a
Share?

9. •Eg. Tata Motors Ltd.
•Price per share x
No. of Shares =
Company’s capital
What
is a
Share?
1 2 3 4 5
Share Capital

10. Features of Equity Shares
Equity shareholders have
the right to vote on
various matters of the
company
The management of the
company is elected by
equity shareholders.
The equity share
capital is held
permanently by the
company and returned
only upon winding up.
Equity shares give the
right to the holders to
claim dividend on the
surplus profits of the
company.
The rate of dividend on
the equity capital is
determined by the
management of the
company.
Equity shares are
transferable in nature.

11. Advantages
of Equity
Shares
to the
shareholders
Equity shares are
liquid in nature
and can be sold
easily in the
capital market.
The dividend rate
is higher for the
equity
shareholders when
the company earns
high profits.
The equity
shareholders have
the right to control
the company’s
management.
Double benefit
i.e. Dividend and
appreciation in the
value of their
investment.

12. Advantages
of Equity
Shares
to the
Company
Permanent Source
of Capital
No requirement
of creating a
charge over the
assets
Liability of the
equity shares is
not required to
be paid
Does not have
any obligation to
pay dividend to
the shareholders
Increases credit
worthiness

13. Types of Equity Shares and Share Capital
Authorized Share Capital
Authorized capital is the maximum
amount of capital that a company can
issue.
Issued Share Capital
Out of the authorized share capital, the
capital which the company offers to the
investors is termed as issued share capital.
Subscribed Share Capital
Subscribed capital is a part of the issued
share capital that investors agree and
accept.
Paid Up Capital
Paid up capital is a part of the subscribed
capital for which the investors pay. In
general, the companies issue the shares to
the investors after collecting all the money
from them. Conceptually the paid-up
capital is the amount of capital that the
company invests in the business.
Right Shares
When you make an investment in
equity shares and the company issues
further shares to you, it is termed as
the right shares. The right shares are
issued to protect the ownership of the
existing investors.
Bonus Shares
Bonus shares are issued by the
company to its investors in the form
of a dividend.
Sweat Equity Shares
When the employees or directors
perform their job well in terms of
providing know-how or intellectual
property rights to the company, the
company issues sweat equity shares
to them as a reward.

14. Various Prices of Equity Shares
Par or Face Value
Par or face value represents the value of
shares recorded in the books of accounts.
Issue Price
The price at which the shares of the company
are offered to the investors is called the issue
price. In most of the new companies, the face
value and the issue price of a share is the
same.
Share at Discount and Share Security Premium
Discount = Issue price < Face Value
Premium = Issue price > Face Value
Book Value
Book value is the balance sheet value of
shares.
Book value = Paid Up Capital + Reserves and
Surplus – Any Loss / Total Number of Equity
Shares of the Company
Market Value
When the company is listed on the stock
exchange, the price at which the shares of the
company are traded is termed as the market
value of the shares. The stock market value
would differ with the fundamental value of
shares because in both the cases different
sentiments affect the stock value.
Fundamental Value
Fundamental value or intrinsic value of the
shares is determined on the basis of the
fundamentals of the company. This value is
mostly required during mergers and
acquisitions.

15. Top 10 Most Expensive Stocks in India 2020
MRF Ltd.
Honeywell
Automation
Shree Cements Page Industries
3M India Nestle India Ltd. Eicher Motors Abbott India
Tasty Bite
Eatables
Bombay Oxygen
Investments
Ltd.

16. Thank You!!