Smart Disha Workshop-06 April 2017-Basics on Stock Market

1
2 Days Workshop -Part-I
AT
G. H. Patel College of Engineering
and Technology, Anand
06-07 April 2017

BULL & BEAR: Game called
- INVESTMENT-
M- 70436 90580 www.smartdisha.com

www.smartdisha.com info@smartdisha.com M-70436 90580 LL- 079 4800 7780
DAY-1- 06 April 2017
Session-1 Basics for Securities Market
Session-2 Fundamental Analysis
Session-3 Technical Analysis
DAY-2- 07 April 2017
Session-4 Risk management through
Derivatives
Session-5A/B Commodity & Currency Market
The Game called
“INVESTMENT”

Session-1
Basics for Securities Market
The Game called
“INVESTMENT”

INVESTMENT BASICSINVESTMENT BASICS

BASICSBASICS
What is Saving?
What is Investment?
Why should one invest?
When to start invest?
What care should one take while investing?
What is interest?
Determinants of interest rate?

INVESTMENT OPTIONSINVESTMENT OPTIONS
PHYSICAL ASSETS
FINANCIAL ASSETS

SHORT TERM INVESTMENT OPTIONSSHORT TERM INVESTMENT OPTIONS
Saving bank account
Liquid funds
Fixed deposits

LONG TERM INVESTMENT OPTIONSLONG TERM INVESTMENT OPTIONS
Post office saving scheme
PPF
Company FD
Bonds
Debenture
Mutual Funds
Equity Shares

OTHER CONCEPTSOTHER CONCEPTS
What is Index?
What is depository?
What is dematerialization?
Stock exchange
Derivative market

SECURITIES PRIMARY ANDSECURITIES PRIMARY AND
SECONDARY MARKETSECONDARY MARKET

PRIMARY MARKETPRIMARY MARKET
What is Primary Market?
IPO
FPO
Right Issue
Preferential Issue

IPO PROCESSIPO PROCESS
Who is Merchant Banker?
Pricing Of Issue
Face value
Premium and Discount to
Face Value
Book Building Process
Cut-off Price
Prospectus
Abridged Prospectus
Listing of Securities
Delisting of Securities

SECONDARY MARKETSECONDARY MARKET
What is Secondary market?
Diff. between Primary and Secondary market
What is Stock Exchange?
Products in Secondary Market
Shares / Debentures / Bonds
What is Trading member?
What is Clearing Member?
What is Clearing Corporation?
What is Rolling Settlement?
What is Pay-in and Pay-out?
What is Auction?

REDRESSAL MECHANISMREDRESSAL MECHANISM
Investor grievances cell of stock exchange
Arbitration through stock exchange
Investor protection fund

CORPORATE ACTIONSCORPORATE ACTIONS
Dividend
Stock Splits
Bonus
Buy back of shares

End Of Session-1
17www.smartdisha.com info@smartdisha.com M-70436 90580 LL- 079 4800 7780

Session-2 Fundamental Analysis

WHAT IS TIME VALUE OF MONEY?WHAT IS TIME VALUE OF MONEY?
Future value of single cash flow
Future value of annuity
Present value of single cash flow
Present value of annuity

ANALYZING RETURNANALYZING RETURN
Simple Return
I = P*r*t
Compounded Return
FV = PV (1+i)^t

RATIO ANALYSISRATIO ANALYSIS

LIQUIDITY RATIOLIQUIDITY RATIO
Current Ratio = Current Assets / Current Liability
Acid – Test Ratio =
[ Current Assets – Inventory ] / Current Liability

TURNOVER RATIOSTURNOVER RATIOS
Inventory Turnover Ratio = Cost of good sold /
average inventory
Debtors turnover ratio = Net credit sales /
Average Account Receivable
Average collection period = average debtors /
avg. daily credit sales

Average collection period = 365 days / debtors
turnover
Fixed assets turnover ratio = net sales / net fixed
assets
Total assets turnover ratio = net sales / average
total assets

LEVERAGE/CAPITAL STRUCTURELEVERAGE/CAPITAL STRUCTURE
RATIOS:RATIOS:
Debt – equity ratio = total debt / total
equity
Debt asset ratio = total debt / total assets

PROFITABILITY RATIOS:PROFITABILITY RATIOS:
Gross Profit Ratio = [gross profit /net sales]
*100
Net Profit Ratio = [net profit /net sales] *100

PROFITABILITY RATIOS:PROFITABILITY RATIOS:
Return on Total Assets = PBIT / Total Assets
Return on Capital Employed = PAT / Total Capital
Employed
Return on Shareholders' Equity = PAT / Net worth

PROFITABILITY RATIOSPROFITABILITY RATIOS
EPS = Profit available to shareholder / no. of equity
share outstanding
Price-earnings ratios = P/E Ratio =Market Price /
EPS

End Of Session-2

Session-3 Technical Analysis

 How to select stocks or Commodities for trading.
 How to generate profits in intra-day, short-term
and long-term trading by using Technical Analysis.
 When to buy and sell stocks or commodities.
 Trend Identification
 Trend Strength
 Over Bought / Over Sold area
 How to minimise the risk.
BENEFITS OF TECHNICALBENEFITS OF TECHNICAL
ANALYSISANALYSIS

TYPES OF CHARTSTYPES OF CHARTS
 LineLine ChartChart
 BarBar ChartChart
 CandlestickCandlestick ChartChart
 KagiKagi chartchart
 PointPoint andand figurefigure
 RenkoRenko ChartChart
 ThreeThree LineLine BreakBreak ChartsCharts

WHAT IS THE PURPOSE OF DRAWING TRENDWHAT IS THE PURPOSE OF DRAWING TREND
LINES?LINES?
The purpose of drawing trend lines is to identify
where possible reversals will take place. They
can also signal that a change in trend may occur.
TypesTypes ofof trendtrend::
• Up Trend
• Down Trend
• Sideways Trend

CANDLESTICK FORMATIONCANDLESTICK FORMATION

DODOJIJI (BULLISH /(BULLISH / BEARISHBEARISH))
• .

THREETHREE BLACKBLACK CROWSCROWS (BEARISH)(BEARISH)
HAMMER/INVERTEDHAMMER/INVERTED--HAMMERHAMMER
((BULLISHBULLISH //BEARISH ))

ENGULFENGULF (BEARISH)(BEARISH)
HARAMIHARAMI (BULLISH)(BULLISH)

SUPPORT & RESISTANCESUPPORT & RESISTANCE

RESISTANCE CONVERT INTORESISTANCE CONVERT INTO
SUPPORTSUPPORT
(VICE(VICE--VERSA)VERSA)

CHARTCHART PATERNPATERN --HEADHEAD AND SHOULDERSAND SHOULDERS
(BEARISH)(BEARISH)

INVERTED HEAD AND SHOULDERSINVERTED HEAD AND SHOULDERS
(BULLISH)(BULLISH)

DOUBLE TOPSDOUBLE TOPS (BEARISH)(BEARISH)

DOUBLE BOTTOMS (BULLISH)DOUBLE BOTTOMS (BULLISH)

RSI Overbought / Over sold zone

Readings below 20 considered oversold and readings above 80
considered overbought. These levels can be adjusted to suit
analytical needs.
Default is 14 days or also known as 14 period.
The stochastic oscillates between 0 and 100, with The
Stochastic Oscillator can be used like any other oscillator by
looking for overbought/oversoldoverbought/oversold readings, positivepositive // negativenegative
divergencesdivergences and centerlinecenterline crossoverscrossovers.
STOCHASTIC READINGSTOCHASTIC READING

STOCHASTICSTOCHASTIC
Selling and Buying calls generate in the graph, stochastic signalling buy/sell at the same time on
price reversal candle form at higher and lower levels
STOCHASTIC EXTREME VALUESSTOCHASTIC EXTREME VALUES

The procedure for calculating the MACD lines is as follows:
StepStep 11.. Calculate a 12 period exponential moving average of the
close price.
close price.
StepStep 33.. Subtract the 12 period moving averages from the 26
period moving averages. This is the fastfast MACDMACD lineline..
fast MACD line calculated above. This is the slowslow or signalsignal
MACDMACD lineline..
MACD CALCULATION

MOVING AVERAGE CROSSOVERMOVING AVERAGE CROSSOVER

THE DOW THEORYTHE DOW THEORY
DowDow theorytheory waswas developeddeveloped byby thethe fatherfather ofof TechnicalTechnical
AnalysisAnalysis.. CharlesCharles DowDow developeddeveloped thethe DowDow TheoryTheory fromfrom hishis
analysisanalysis ofof marketmarket priceprice actionaction inin thethe latelate 1919thth centurycentury.. TheThe
basicbasic ofof DowDow theorytheory isis moremore thanthan 100100 yearsyears oldold yetyet eveneven inin
today'stoday's volatilevolatile andand technologytechnology--drivendriven markets,markets, thethe basicbasic
componentscomponents ofof DowDow theorytheory stillstill remainremain validvalid..
TheThe DowDow TheoryTheory addressesaddresses notnot onlyonly technicaltechnical analysisanalysis andand
priceprice action,action, butbut alsoalso marketmarket philosophyphilosophy.. TheseThese areare broadbroad
conceptsconcepts andand bestbest appliedapplied toto stocksstocks asas aa groupgroup oror indexindex..

ELLIOT WAVE THEORYELLIOT WAVE THEORY

Retracement:
To calculate the Fibonacci Retracement levels, a significant low
to a significant high should be found. From there, prices should
retrace the initial difference (low to high or high to low) by a ratio
of the Fibonacci sequence, generally the 2323..66%%,, 3838..22%%,, 5050%%,,
6161..88%%,, oror thethe 7676..44%% retracement.
Retracement is based on the numbers identified in Fibonacci
sequence to define area of supportsupport andand resistanceresistance. Traders
use the Fibonacci retracement levels as potential support and
resistance areas. Since so many traders watch these same
levels and place buybuy andand sellsell ordersorders onon themthem toto enterenter tradestrades
oror placeplace stopsstops, the support and resistance levels tend to
become a self-fulfilling prophecy.
FIBONACCI RETRACEMENT

EXAMPLE IN THE UPTRENDEXAMPLE IN THE UPTREND

EXAMPLE IN THE DOWNTRENDEXAMPLE IN THE DOWNTREND

End Of Session-3

ALL THE BESTALL THE BEST

Smart Disha Workshop-06 April 2017-Basics on Stock Market

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