This document provides an overview of stock markets and how they operate. It defines key terms like shares, shareholders, stock exchanges, and trading. It explains how companies list shares on an exchange and how investors can purchase shares. It also discusses different analysis methods used to evaluate stocks, popular stock market indices, benefits of stock markets, factors that influence prices, and the impact of crashes.

2. NEVER DEPEND ON SINGLE INCOME,MAKE INVESTMENT
TO CREATE SECOND SOURCE
- WARREN BUFFET

3. Indianfinancialsystem
Financial institution
Financial market
Financial
instrument
Financial services

4. Financial
market
Capital
market
Primary
market
Secondary
marketMoney
market

5. Stock market
A stock market or equity market is a
financial market for the trading of
company stock( shares) and their
derivatives at an agreed price.

6. 1) Shares represent a fraction of ownership in a business. The common
feature of all these is equity participation. Different classes of shares
have different voting rights.
2) Ownership of shares is documented by a legal document that specifies
the amount of shares owned by the shareholder, and other specifics of the
shares, such as the par value or the class of the shares (if any).
3) These days these stock certificates have been dematerialized.(No
physical document!)

7. 1) A shareholder (or stockholder) is an individual or company (including a
corporation) that legally owns one or more shares of a company.
2) Shareholders are granted privileges depending on the class of stock,
including the right to vote on matters such as elections to the board of
directors, the right to share in distributions of the company's income, the
right to purchase new shares issued by the company, and the right to a
company's assets during a liquidation of the company.
3) Shareholders vary from individual stock investors to large hedge fund
traders.

8.  A company may want additional capital to invest
in new projects.
 The promoters may simply wish to reduce their
holding, freeing up capital for their own private
use.
 Once a company is listed, it will be able to issue
further shares via a rights issue, thereby again
providing itself with capital for expansion
without incurring any debt.
 Financing a company through the sale of stock in
a company is known as equity financing.

9.  The shares of a company are in general be
transferrable from one shareholder to another .
This leads to buying and selling of shares termed
as trading.
 Investors usually buy and sell shares on the
exchanges through a stock brokers registered
with the exchange.
 A company may list its shares on an exchange by
meeting and maintaining the listing requirements
of a particular stock exchange.

10.  At any given moment, the price is strictly a result
of supply and demand. The supply is the number
of shares offered for sale at any one moment.
The demand is the number of shares investors
wish to buy at exactly that same time.
 Actual trades are based on an auction market
model where a potential buyer bids a specific
price for a stock and a potential seller asks a
specific price for the stock. (Buying or selling at
market means you will accept any ask price or
bid price for the stock, respectively.) When the
bid and ask prices match, a sale takes place.

11.  The set of conditions imposed by a given stock
exchange upon companies that want to be listed
on that exchange.
 Examples include minimum number of shares
outstanding, minimum market capitalization, and
minimum annual income.
 These requirements vary from exchange to
exchange. Example: Bombay Stock Exchange
(BSE) has requirements for a minimum market
capitalization of Rs.25 Cr and minimum public
float equivalent to Rs.10 Cr whereas the London
Stock Exchange has requirements for a minimum
market capitalization (£700,000) .

12.  Through a stock broker: They arrange the
transfer of stock from a seller to a buyer. Both
the buyer and the seller of the share pay
commission known as brokerage to the broker.
 Directly from the company:
1. If at least one share is owned, most companies
will allow the purchase of shares directly from
the company through their investor relations
departments.
2. A direct public offering is an initial public
offering(IPO) in which the stock is purchased
directly from the company, usually without the
aid of brokers.

13.  Margin Buying
Buying stock on margin means buying stock with
money borrowed against the stocks in the same
account. These stocks, or collateral, guarantee
that the buyer can repay the loan; otherwise, the
stockbroker has the right to sell the stock to
repay the borrowed money. The broker usually
charges 8-10% interest on margin borrowing.
 Short selling
In short selling, the trader borrows stock (usually
from his brokerage) then sells it on the market,
hoping for the price to fall. The trader eventually
buys back the stock, making money if the price
fell in the meantime and losing money if it rose.

14.  Fundamental analysis refers to analyzing
companies by their financial statements found in
SEC Filings, business trends, general economic
conditions and the growth prospects of
company's market segment. A few parameters
which are looked upon include Price to Earnings
(PE) Ratio, Price to Book Value ratio, Equity to
Debt ratio.
 Technical analysis studies price actions in
markets through the use of charts and
quantitative techniques to attempt to forecast
price trends regardless of the company's financial
prospects. A few examples include Trend lines,
Bollinger Bands, Oscillators etc.

15. shareperEarningsAnnual
shareperPrice
Ratio/ EP
sliabilitie-assetsTangible
tionCapitalizaMarket
Ratio/ BP

16. Up Trend-Line

18. Bollinger
Bands

19.  The movements of the prices in a market or
section of a market are captured in price
indices called stock market indices. Such
indices are usually market capitalization
weighted, with the weights reflecting the
contribution of the stock to the index.
Examples of index include Sensex, Nifty, DJIA,
S&P500, Nikkei etc.
 The constituents of the index are reviewed
frequently to include/exclude stocks in order
to reflect the changing business environment.

20.  Raising capital for businesses
 Government capital-raising for development
projects
 Mobilizing savings for investment
 Facilitating company growth through
acquisitions
 Creating investment opportunities for small
investors
 Barometer of the economy

21.  Sometimes the market seems to react
irrationally to economic or financial news.
This may 'temporarily' move financial prices
away from their long term aggregate price
'trends'. (Positive or up trends are referred to
as bull markets; negative or down trends are
referred to as bear markets). Over-reactions
may occur—so that excessive optimism
(euphoria) may drive prices unduly high or
excessive pessimism may drive prices unduly
low.

22.  A stock market crash is often defined as a
sharp dip in share prices of equities listed on
the stock exchanges. In parallel with various
economic factors, a reason for stock market
crashes is also due to panic and investing
public's loss of confidence. Often, stock
market crashes burst speculative economic
bubbles.
 Famous stock market crashes have lead to
the loss of billions of dollars and wealth
destruction on a massive scale.

23. Sara tabassum
Mohammed Amer