This document provides an overview of stock market crashes in Pakistan. It discusses three major crashes that occurred in 2000, 2005, and 2008. The 2008 crash saw the KSE 100 index fall over 68% from 16,000 to 5,000 after the market was frozen for over 100 days. Several major companies lost over half their stock value. Causes discussed include political instability, the global recession, and market manipulation by large brokers. Investor losses totaled over 1.4 trillion Pakistani rupees. The document examines the impact and aftermath of each crash through charts and diagrams. It also profiles some of the major players in Pakistan's stock market like Arif Habib, Mian Mansha, and Aqeel Karim
1) The document discusses risk-return analysis and the efficient frontier. It introduces the Capital Market Line (CML), which shows superior portfolio combinations when investing in both risky and risk-free assets.
2) The CML is tangent to the efficient frontier at the market portfolio, which offers the highest Sharpe Ratio. The Sharpe Ratio represents excess return per unit of risk.
3) With access to risk-free borrowing and lending, investors are no longer confined to the efficient frontier, but can choose portfolios along the CML based on their individual risk preferences.
Advantages and disadvantages of money market instrumentRahul saxena
The document discusses the advantages and disadvantages of money market instruments as short-term investments. It notes that money market instruments provide a platform for highly liquid investments with maturities from one day to one year. Some key advantages include safety in parking funds, higher returns than savings accounts, potential tax benefits, and high liquidity. However, disadvantages include the potential for inflation to impact purchasing power over time, some funds carrying greater return risks, and the potential for missing out on higher returns from longer-term investments.
Bombay stock exchange Advanced Study GuideJobi Mathai
The document provides information about the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) of India. BSE is the oldest stock exchange in Asia, established in 1875. NSE was established in 1992 as a nationwide trading facility to ensure equal access to investors. It has become the largest stock exchange in India in terms of market capitalization. The document also describes key stock market indices of India - the BSE Sensex and NSE Nifty 50, which track the performance of major companies listed on the two exchanges.
This presentation covers foreign exchange risk definition, types, management and measurement. Hedging tools and techniques; both internal and external are also discussed.
A stock market or equity market is a public market for trading company stock and derivatives at agreed prices. Stocks are listed on stock exchanges, which are entities like the New York Stock Exchange. When a company issues stock, it raises money from investors in exchange for ownership stakes. Stock buyers own a claim on the company's assets and earnings. A stock exchange provides a market for trading stocks and bonds, and facilitates capital raising for companies. Major Indian stock exchanges include the Bombay Stock Exchange and National Stock Exchange, located in Mumbai.
The document discusses commodity markets in India. It provides an overview of the evolution and structure of derivative markets and commodity exchanges in India. Some key points include: organized futures markets in India began in 1875; the top 5 global commodity exchanges by volume are CME Group, Zhengzhou Commodity Exchange, ICE, Shanghai Futures Exchange, and MCX India; the 5 national commodity exchanges in India are NCDEX, MCX, NMCE, ICEX, and ACE; participants in commodity markets include hedgers, arbitrageurs, and speculators; the regulator is the Forward Markets Commission; and challenges facing commodity markets include lack of options markets and standardization.
The document provides an overview of international financial management. It discusses key concepts such as maximizing shareholder wealth, acquiring funds and making investment decisions. It also covers the nature and scope of international finance, including the roles of treasurers and controllers. Additionally, it outlines some of the major risks and theories related to international trade and business methods like licensing and exporting.
The document discusses various bond valuation concepts like coupon rate, current yield, spot interest rate, yield to maturity, yield to call, and realized yield. It provides examples to calculate these measures and explains how bond prices are determined based on factors like interest rates, time to maturity, and cash flows. Bond duration is introduced as a measure of interest rate risk exposure, and bond risks from default and changes in interest rates are explained.
1) The document discusses risk-return analysis and the efficient frontier. It introduces the Capital Market Line (CML), which shows superior portfolio combinations when investing in both risky and risk-free assets.
2) The CML is tangent to the efficient frontier at the market portfolio, which offers the highest Sharpe Ratio. The Sharpe Ratio represents excess return per unit of risk.
3) With access to risk-free borrowing and lending, investors are no longer confined to the efficient frontier, but can choose portfolios along the CML based on their individual risk preferences.
Advantages and disadvantages of money market instrumentRahul saxena
The document discusses the advantages and disadvantages of money market instruments as short-term investments. It notes that money market instruments provide a platform for highly liquid investments with maturities from one day to one year. Some key advantages include safety in parking funds, higher returns than savings accounts, potential tax benefits, and high liquidity. However, disadvantages include the potential for inflation to impact purchasing power over time, some funds carrying greater return risks, and the potential for missing out on higher returns from longer-term investments.
Bombay stock exchange Advanced Study GuideJobi Mathai
The document provides information about the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) of India. BSE is the oldest stock exchange in Asia, established in 1875. NSE was established in 1992 as a nationwide trading facility to ensure equal access to investors. It has become the largest stock exchange in India in terms of market capitalization. The document also describes key stock market indices of India - the BSE Sensex and NSE Nifty 50, which track the performance of major companies listed on the two exchanges.
This presentation covers foreign exchange risk definition, types, management and measurement. Hedging tools and techniques; both internal and external are also discussed.
A stock market or equity market is a public market for trading company stock and derivatives at agreed prices. Stocks are listed on stock exchanges, which are entities like the New York Stock Exchange. When a company issues stock, it raises money from investors in exchange for ownership stakes. Stock buyers own a claim on the company's assets and earnings. A stock exchange provides a market for trading stocks and bonds, and facilitates capital raising for companies. Major Indian stock exchanges include the Bombay Stock Exchange and National Stock Exchange, located in Mumbai.
The document discusses commodity markets in India. It provides an overview of the evolution and structure of derivative markets and commodity exchanges in India. Some key points include: organized futures markets in India began in 1875; the top 5 global commodity exchanges by volume are CME Group, Zhengzhou Commodity Exchange, ICE, Shanghai Futures Exchange, and MCX India; the 5 national commodity exchanges in India are NCDEX, MCX, NMCE, ICEX, and ACE; participants in commodity markets include hedgers, arbitrageurs, and speculators; the regulator is the Forward Markets Commission; and challenges facing commodity markets include lack of options markets and standardization.
The document provides an overview of international financial management. It discusses key concepts such as maximizing shareholder wealth, acquiring funds and making investment decisions. It also covers the nature and scope of international finance, including the roles of treasurers and controllers. Additionally, it outlines some of the major risks and theories related to international trade and business methods like licensing and exporting.
The document discusses various bond valuation concepts like coupon rate, current yield, spot interest rate, yield to maturity, yield to call, and realized yield. It provides examples to calculate these measures and explains how bond prices are determined based on factors like interest rates, time to maturity, and cash flows. Bond duration is introduced as a measure of interest rate risk exposure, and bond risks from default and changes in interest rates are explained.
The document provides information on economic integration and regional trade blocs like SAARC. It discusses the stages of economic integration from preferential trade areas to full economic unions. SAARC is introduced as a regional cooperation organization in South Asia established in 1985 with 8 member countries. The objectives of SAARC are to promote economic and social development, strengthen cooperation, and improve living standards in South Asia. Key principles are respect for sovereignty and non-interference in internal affairs.
This document discusses different types of stock market indices. It describes market capitalization weighted indices, which give higher weight to companies with higher market capitalization. Free float market capitalization weighted indices exclude shares not available for public trading. Price weighted indices give higher weight to companies with higher stock prices. Examples provided include the S&P 500, Nikkei 225, Sensex and Nifty indices. The document also discusses how indices are calculated and adjusted over time.
The document provides information about the capital market in India. It begins with an introduction to the capital market and its key participants. It then discusses the history and development of the capital market in India before and after independence. It provides details on the organizational structure of the Indian capital market, including the primary market, secondary market, and various segments like government securities, industrial securities, development financial institutions, and financial intermediaries.
The document discusses the Sensex and Nifty stock market indices in India. It provides the following key points:
1. Sensex is an index of the top 30 companies on the Bombay Stock Exchange that indicates if stock prices are generally rising or falling. Nifty is an index of the top 50 companies on the National Stock Exchange.
2. Both indices are calculated based on the total market value and capitalization of their component stocks.
3. The Indian stock market experienced a meltdown in 2008 as foreign investors withdrew money due to high domestic inflation, unstable politics, rising fuel prices, and a slowing US economy that was showing signs of recession.
The document provides an overview of security analysis and different analytical techniques used, including fundamental analysis and technical analysis.
Fundamental analysis involves analyzing the economy, industry, and company to determine a company's intrinsic value. Technical analysis uses historical price and volume data to identify trends and patterns that can predict future price movements. Key techniques include chart analysis and identifying support/resistance levels and patterns like head and shoulders. The efficient market hypothesis suggests stock prices already reflect all available public information and it is difficult to outperform the overall market through analysis alone.
This document summarizes the history and development of the concept of market efficiency. It discusses early works in the 1900s that anticipated the idea, and key studies in the 1950s-60s that developed the random walk model and market efficiency theory. Major topics covered include event studies in the late 1960s that provided empirical evidence; analysis in the 1960s-70s of mutual funds and managers that supported efficient markets; and anomalies identified starting in the 1970s that challenged aspects of efficiency. The document concludes by noting the ongoing debate between the efficient market framework and behavioral theories to explain anomalies.
This document provides an overview of the Capital Asset Pricing Model (CAPM). It outlines the key assumptions of CAPM, including that investors aim to maximize returns based on risk. It describes how the capital market reaches equilibrium when there is no incentive to trade. It also defines concepts like the capital market line, securities market line, beta, and the CAPM formula. Examples are provided to demonstrate how to calculate expected returns using CAPM. The document concludes by discussing empirical testing of CAPM and common findings that its assumptions do not always hold in practice.
Risk management using Derivatives as a toolKrutiShah114
This document explains the basics of risk, derivative tools and how these tools can be used to manage risk in an organisation. It has real life case studies showing how companies have failed by using derivatives incorrectly. The document also has a success case study wherein a company had effectively used derivatives to manage its risk.
Derivatives are financial instruments whose value is derived from an underlying asset such as stocks, bonds, commodities, currencies, or market indexes. There are several types of derivatives including forwards, futures, options, and swaps. Derivatives allow investors to hedge risk or speculate on the future price of the underlying asset. While derivatives can be used to manage various risks, they also pose risks such as increased speculation, greater financial instability, and price instability if not properly regulated. Effective risk management including policies, oversight, and competency is needed to use derivatives safely.
The document provides an overview of derivatives transactions in India. It discusses the types of derivative markets including exchange traded and over-the-counter markets. It also describes the main types of traders in derivatives markets - hedgers who aim to reduce risk, speculators who take on risk to profit from price movements, and arbitrageurs who seek to profit from pricing discrepancies. Finally, it outlines the most common types of derivative contracts including forwards, futures, options, and swaps.
The presentation provided an overview of the Bangladesh stock market, including regulatory authorities, operational procedures, market efficiency status, past successes and failures. It discussed two stock exchanges in Bangladesh, key laws and regulations, the listing process, trading policies, and analyses showing the market is generally inefficient. It also examined reasons for past market failures in 1996 and 2011, and provided recommendations to improve transparency, oversight and investor protections going forward.
Derivatives - Basics of Derivatives contract covered in this pptSundar B N
Derivatives - Basics of Derivatives including forward, futures, swap and options contracts which covers HISTORY OF DERIVATIVES, CHARACTERISTICS OF DERIVATIVES , FEATURES OF DERIVATIVES, FUNCTIONS OF DERIVATIVES MARKET, USES OF DERIVATIVES, DIFFERENCE BETWEEN SHARES AND DERIVATIVES SHARES DERIVATIVES, DEFINITION OF UNDERLYING ASSET, DERIVATIVES ADVANTAGES AND DISADVANTAGES, PARTICIPANTS/ TRADERS IN DERIVATIVES MARKET, SPECULATORS, ARBITRAGEURS, HEDGER
Subscribe to Vision Academy for Video assistance
https://www.youtube.com/channel/UCjzpit_cXjdnzER_165mIiw
The document provides an overview of the capital market in India, including definitions, key features, functions and regulatory framework. It defines the capital market as the market for financial instruments like stocks, bonds, and other securities. Some key points discussed include:
- Capital markets have two main functions - allocation of savings to investment opportunities and facilitating transfer of assets.
- They are regulated in India by entities like the Ministry of Finance, Securities and Exchange Board of India (SEBI), and Reserve Bank of India (RBI).
- Various types of capital market instruments are discussed, including stocks, bonds, derivatives, mutual funds, gold ETFs, and more.
Technical analysis a study on selected stocks conducted at religare securit...Projects Kart
Technical analysis is a method of evaluating securities such as stocks by analyzing statistics generated from market activity, like prices and trading volume. Technical analysts believe historical patterns in prices and volumes can help predict future price movements. The document discusses various technical analysis tools like charts, indicators, and patterns that analysts use to identify trends and make predictions. It also outlines some key assumptions of technical analysis, such as the idea that stock prices already reflect all publicly available information.
This document provides an overview of the stock market and how to trade stocks in India. It discusses key terminology like brokers, Demat accounts, indexes, order types, and trading basics. The major stock exchanges in India are NSE and BSE. To start trading, one needs a Demat account with a broker and then can place buy and sell orders on a trading terminal. Fundamental and technical analysis are two common approaches for identifying trading opportunities.
1. Common stock represents ownership in a corporation and a claim on its assets and earnings. There are different types including common, preferred, and classes A and B.
2. Owners of common stock are also known as shareholders or equity owners. They may receive dividends as determined by the board of directors and can benefit from capital gains.
3. Fundamental analysis and technical analysis are two main approaches used to evaluate common stocks and make investment decisions.
ETFs are exchange traded funds that track an index or commodity like stocks. ETFs can be bought or sold throughout the trading day like stocks through a broker or online account. There are different types of ETFs including index ETFs that track stock market indexes, commodity ETFs that track commodities like gold, and liquid ETFs that track money market securities. ETFs offer advantages over stocks and mutual funds like real-time trading, ability to use limit orders, and minimum trading lots of just one unit. Investors can invest in ETFs by registering with a broker and placing orders to buy or sell ETFs.
The document discusses the derivative market in India and risk management in banks. It defines derivatives and their various types like futures, options, and swaps. It explains how derivatives help banks manage risks like credit risk, interest rate risk, and liquidity risk. The history of derivatives trading in India is also summarized dating back to 1875. Key players in the market like hedgers, speculators, and arbitrageurs are identified along with their roles.
Capital Markets Development in Bangladesh: The Status of Dhaka Stock ExchangeZafour
The document summarizes the status of the Dhaka Stock Exchange (DSE) in Bangladesh. It provides background on the establishment of DSE in 1964 and its growth over time. DSE now has 378 listed securities and four markets - public, spot, block, and odd lot. However, DSE faces challenges like price manipulation, delays in settlement, and lack of proper financial reporting by some listed companies. To improve the stock exchange, suggestions include enforcing transparency in company reporting, monitoring for malpractices, introducing electronic settlement systems, and encouraging other financial institutions to participate directly in share trading. Overall capital market development in Bangladesh aims to strengthen regulation, modernize infrastructure, and increase the supply of quality securities.
This document provides an overview of Sharekhan Limited, an Indian stock brokerage firm. It discusses Sharekhan's history, corporate structure, products offered, and reasons for choosing Sharekhan. Key points covered include Sharekhan being a leading retail brokerage firm in India with over 800 branches across 600 cities. It offers various trading and investment accounts like Classic, Speedtrade, and Dial-n-Trade. Sharekhan provides access to research, online trading platforms, and investment advice to help customers make informed investment decisions.
The document provides information on economic integration and regional trade blocs like SAARC. It discusses the stages of economic integration from preferential trade areas to full economic unions. SAARC is introduced as a regional cooperation organization in South Asia established in 1985 with 8 member countries. The objectives of SAARC are to promote economic and social development, strengthen cooperation, and improve living standards in South Asia. Key principles are respect for sovereignty and non-interference in internal affairs.
This document discusses different types of stock market indices. It describes market capitalization weighted indices, which give higher weight to companies with higher market capitalization. Free float market capitalization weighted indices exclude shares not available for public trading. Price weighted indices give higher weight to companies with higher stock prices. Examples provided include the S&P 500, Nikkei 225, Sensex and Nifty indices. The document also discusses how indices are calculated and adjusted over time.
The document provides information about the capital market in India. It begins with an introduction to the capital market and its key participants. It then discusses the history and development of the capital market in India before and after independence. It provides details on the organizational structure of the Indian capital market, including the primary market, secondary market, and various segments like government securities, industrial securities, development financial institutions, and financial intermediaries.
The document discusses the Sensex and Nifty stock market indices in India. It provides the following key points:
1. Sensex is an index of the top 30 companies on the Bombay Stock Exchange that indicates if stock prices are generally rising or falling. Nifty is an index of the top 50 companies on the National Stock Exchange.
2. Both indices are calculated based on the total market value and capitalization of their component stocks.
3. The Indian stock market experienced a meltdown in 2008 as foreign investors withdrew money due to high domestic inflation, unstable politics, rising fuel prices, and a slowing US economy that was showing signs of recession.
The document provides an overview of security analysis and different analytical techniques used, including fundamental analysis and technical analysis.
Fundamental analysis involves analyzing the economy, industry, and company to determine a company's intrinsic value. Technical analysis uses historical price and volume data to identify trends and patterns that can predict future price movements. Key techniques include chart analysis and identifying support/resistance levels and patterns like head and shoulders. The efficient market hypothesis suggests stock prices already reflect all available public information and it is difficult to outperform the overall market through analysis alone.
This document summarizes the history and development of the concept of market efficiency. It discusses early works in the 1900s that anticipated the idea, and key studies in the 1950s-60s that developed the random walk model and market efficiency theory. Major topics covered include event studies in the late 1960s that provided empirical evidence; analysis in the 1960s-70s of mutual funds and managers that supported efficient markets; and anomalies identified starting in the 1970s that challenged aspects of efficiency. The document concludes by noting the ongoing debate between the efficient market framework and behavioral theories to explain anomalies.
This document provides an overview of the Capital Asset Pricing Model (CAPM). It outlines the key assumptions of CAPM, including that investors aim to maximize returns based on risk. It describes how the capital market reaches equilibrium when there is no incentive to trade. It also defines concepts like the capital market line, securities market line, beta, and the CAPM formula. Examples are provided to demonstrate how to calculate expected returns using CAPM. The document concludes by discussing empirical testing of CAPM and common findings that its assumptions do not always hold in practice.
Risk management using Derivatives as a toolKrutiShah114
This document explains the basics of risk, derivative tools and how these tools can be used to manage risk in an organisation. It has real life case studies showing how companies have failed by using derivatives incorrectly. The document also has a success case study wherein a company had effectively used derivatives to manage its risk.
Derivatives are financial instruments whose value is derived from an underlying asset such as stocks, bonds, commodities, currencies, or market indexes. There are several types of derivatives including forwards, futures, options, and swaps. Derivatives allow investors to hedge risk or speculate on the future price of the underlying asset. While derivatives can be used to manage various risks, they also pose risks such as increased speculation, greater financial instability, and price instability if not properly regulated. Effective risk management including policies, oversight, and competency is needed to use derivatives safely.
The document provides an overview of derivatives transactions in India. It discusses the types of derivative markets including exchange traded and over-the-counter markets. It also describes the main types of traders in derivatives markets - hedgers who aim to reduce risk, speculators who take on risk to profit from price movements, and arbitrageurs who seek to profit from pricing discrepancies. Finally, it outlines the most common types of derivative contracts including forwards, futures, options, and swaps.
The presentation provided an overview of the Bangladesh stock market, including regulatory authorities, operational procedures, market efficiency status, past successes and failures. It discussed two stock exchanges in Bangladesh, key laws and regulations, the listing process, trading policies, and analyses showing the market is generally inefficient. It also examined reasons for past market failures in 1996 and 2011, and provided recommendations to improve transparency, oversight and investor protections going forward.
Derivatives - Basics of Derivatives contract covered in this pptSundar B N
Derivatives - Basics of Derivatives including forward, futures, swap and options contracts which covers HISTORY OF DERIVATIVES, CHARACTERISTICS OF DERIVATIVES , FEATURES OF DERIVATIVES, FUNCTIONS OF DERIVATIVES MARKET, USES OF DERIVATIVES, DIFFERENCE BETWEEN SHARES AND DERIVATIVES SHARES DERIVATIVES, DEFINITION OF UNDERLYING ASSET, DERIVATIVES ADVANTAGES AND DISADVANTAGES, PARTICIPANTS/ TRADERS IN DERIVATIVES MARKET, SPECULATORS, ARBITRAGEURS, HEDGER
Subscribe to Vision Academy for Video assistance
https://www.youtube.com/channel/UCjzpit_cXjdnzER_165mIiw
The document provides an overview of the capital market in India, including definitions, key features, functions and regulatory framework. It defines the capital market as the market for financial instruments like stocks, bonds, and other securities. Some key points discussed include:
- Capital markets have two main functions - allocation of savings to investment opportunities and facilitating transfer of assets.
- They are regulated in India by entities like the Ministry of Finance, Securities and Exchange Board of India (SEBI), and Reserve Bank of India (RBI).
- Various types of capital market instruments are discussed, including stocks, bonds, derivatives, mutual funds, gold ETFs, and more.
Technical analysis a study on selected stocks conducted at religare securit...Projects Kart
Technical analysis is a method of evaluating securities such as stocks by analyzing statistics generated from market activity, like prices and trading volume. Technical analysts believe historical patterns in prices and volumes can help predict future price movements. The document discusses various technical analysis tools like charts, indicators, and patterns that analysts use to identify trends and make predictions. It also outlines some key assumptions of technical analysis, such as the idea that stock prices already reflect all publicly available information.
This document provides an overview of the stock market and how to trade stocks in India. It discusses key terminology like brokers, Demat accounts, indexes, order types, and trading basics. The major stock exchanges in India are NSE and BSE. To start trading, one needs a Demat account with a broker and then can place buy and sell orders on a trading terminal. Fundamental and technical analysis are two common approaches for identifying trading opportunities.
1. Common stock represents ownership in a corporation and a claim on its assets and earnings. There are different types including common, preferred, and classes A and B.
2. Owners of common stock are also known as shareholders or equity owners. They may receive dividends as determined by the board of directors and can benefit from capital gains.
3. Fundamental analysis and technical analysis are two main approaches used to evaluate common stocks and make investment decisions.
ETFs are exchange traded funds that track an index or commodity like stocks. ETFs can be bought or sold throughout the trading day like stocks through a broker or online account. There are different types of ETFs including index ETFs that track stock market indexes, commodity ETFs that track commodities like gold, and liquid ETFs that track money market securities. ETFs offer advantages over stocks and mutual funds like real-time trading, ability to use limit orders, and minimum trading lots of just one unit. Investors can invest in ETFs by registering with a broker and placing orders to buy or sell ETFs.
The document discusses the derivative market in India and risk management in banks. It defines derivatives and their various types like futures, options, and swaps. It explains how derivatives help banks manage risks like credit risk, interest rate risk, and liquidity risk. The history of derivatives trading in India is also summarized dating back to 1875. Key players in the market like hedgers, speculators, and arbitrageurs are identified along with their roles.
Capital Markets Development in Bangladesh: The Status of Dhaka Stock ExchangeZafour
The document summarizes the status of the Dhaka Stock Exchange (DSE) in Bangladesh. It provides background on the establishment of DSE in 1964 and its growth over time. DSE now has 378 listed securities and four markets - public, spot, block, and odd lot. However, DSE faces challenges like price manipulation, delays in settlement, and lack of proper financial reporting by some listed companies. To improve the stock exchange, suggestions include enforcing transparency in company reporting, monitoring for malpractices, introducing electronic settlement systems, and encouraging other financial institutions to participate directly in share trading. Overall capital market development in Bangladesh aims to strengthen regulation, modernize infrastructure, and increase the supply of quality securities.
This document provides an overview of Sharekhan Limited, an Indian stock brokerage firm. It discusses Sharekhan's history, corporate structure, products offered, and reasons for choosing Sharekhan. Key points covered include Sharekhan being a leading retail brokerage firm in India with over 800 branches across 600 cities. It offers various trading and investment accounts like Classic, Speedtrade, and Dial-n-Trade. Sharekhan provides access to research, online trading platforms, and investment advice to help customers make informed investment decisions.
This document contains information about Dr. K. Karthikeyan, an Associate Professor of Commerce and Dean/Controller of Examinations at Vivekananda College. It includes sections on types of securities traded in the stock market like equity shares, bonds, mutual funds etc. It discusses stock exchanges in India, their role in the economy, types of memberships, and trading strategies like arbitrage, day trading etc. The document is an educational guide on the Indian stock market.
1) The document analyzes and compares various stock broking firms in India. It provides an overview of the Indian stock market and profiles Microsec Capital Ltd, detailing its services.
2) Primary data was collected through surveys to understand customers' preferences. Online trading is preferred over offline. Equity is the most popular investment product. ICICI Direct is the most preferred broking firm.
3) Key factors in choosing a broking firm are low brokerage, good customer service, brand loyalty, margin money, trading tips, and timely research reports. Friends and internet are the main sources of awareness about broking firms.
This document provides an overview of financial markets in Bangladesh. It discusses the relationship between lenders and borrowers, and defines the capital market and money market. The capital market involves trading of financial securities and commodities with maturities over one year, while the money market involves short-term trading of assets with maturities under one year. The document also compares the key differences between the capital and money market, and briefly discusses the foreign exchange market and repo market.
The document discusses the Karachi Stock Exchange (KSE) in Pakistan. It provides background on the KSE, establishing that it was founded in 1949 and is Pakistan's largest stock exchange. It also discusses some key terms related to stock exchanges, such as shares, and the roles that different entities play in the stock market such as members, agents, investors, and banks. The document outlines how stock exchanges can raise capital for businesses and mobilize savings for investment in a country's economy.
Mutual funds in Pakistan are registered as trusts under the Trust Act of 1882 and regulated by the Securities and Exchange Commission of Pakistan (SECP). Mutual funds were first introduced in Pakistan in 1962 with the public offering of the National Investment Trust. There are two main types of mutual funds in Pakistan - open-end funds and close-end funds. Open-end funds issue redeemable units, while close-end funds issue shares that are listed and trade on stock exchanges. The mutual fund industry in Pakistan is overseen by the Mutual Funds Association of Pakistan (MUFAP), which works to promote transparency, ethics and growth in the asset management industry.
The document provides an overview of the Indian financial market and its components. It discusses the key segments that make up the Indian financial market including the capital market, money market, debt market, and the roles of regulatory bodies like SEBI. It also summarizes some popular short-term and long-term investment options available in India. Finally, it provides details about a specific financial services firm called Reliance Securities including its management team, products offered, and board of directors.
This document provides an overview of the research methodology used in the study. It outlines the objectives of the study which are to evaluate SEBI's role in the Indian capital market, study risk levels and company performance between 1992-2006, examine corporate governance implementation, and analyze investor perceptions of SEBI. It then describes the profile of the Ludhiana Stock Exchange, including its founding, governance structure, operations like turnover and listing activities, and the establishment of a subsidiary company to allow trading on larger exchanges as regional exchanges lost business.
The document provides information about stock exchanges and the Bombay Stock Exchange (BSE) specifically. It discusses that BSE is the oldest stock exchange in Asia, located in Mumbai, India. It was established in 1875 and facilitates trading of company stocks and securities among its members. BSE plays a vital role in the Indian economy by channeling foreign investment and providing employment. It also contributes substantial tax revenue to the government.
This document provides an overview of a summer training project on equity analysis of banks. It includes an introduction to technical analysis and fundamental analysis. It discusses the investment portfolio of Kotak Life Insurance, including their investments in various banks. It also outlines the objectives, research methodology, and structure of the document. The document is a summary of a student project analyzing equity investments in banks using both technical and fundamental analysis approaches.
An working on finding how to maintain working capital efficiently and effectively in an foreign exchange business.
How to manage negative working capital
Balance Sheet Analysis and ratio analysis
Fund Flow statement analysis.
Capital market-in-bangladesh-an-overview-in-the-present-context91avijit
The document provides an overview of the capital market in Bangladesh, including:
1. It defines the capital market and describes its key functions of allowing companies and governments to raise long-term funds.
2. It outlines the structure of the capital market in Bangladesh, which includes two stock exchanges (Dhaka Stock Exchange and Chittagong Stock Exchange) and a securities regulator.
3. It discusses some challenges facing the Bangladesh capital market, including a lack of supply of fundamentally sound shares causing overheating situations and overpricing.
This document is a summer training report submitted by Karan Saraf to BCIPS, Dwarka in partial fulfillment of the requirements for a Bachelor of Business Administration degree. It discusses Karan's summer internship at Sharekhan Ltd, where he learned about the stock market, equity and derivatives trading, and Sharekhan's products and services. The report includes sections on the history and key features of the Indian stock market and exchanges, regulators like SEBI and RBI, and an overview of the brokerage industry in India.
This document compares different stock broking firms. It provides an overview of the Indian stock market and exchanges. It then profiles Microsec Capital Ltd, describing the services it offers such as equity and derivatives trading, commodities trading, investment banking, insurance, depository services, portfolio management, mutual funds and mediclaim. The document also discusses demat accounts and their benefits. Finally, it mentions that the document will analyze activation charges and brokerage rates of different firms.
The document discusses the history and development of stock markets in India from their origins in Bombay in the 1800s to the present day. It describes the establishment of key stock exchanges across India as well as the founding of the National Stock Exchange in 1992. The document also outlines the primary and secondary markets and various investment services offered by Sharekhan, a retail brokerage firm.
MNC funds & Opportunity and Special Situations funds : Are they worth a look?Dhuraivel Gunasekaran
This document discusses mutual funds that focus on opportunities and special situations as well as MNC stocks and funds. It provides examples of special situations like de-listing, mergers and acquisitions, buybacks, and debt restructuring that could present investment opportunities. It finds that two MNC funds performed well in the past year by benefiting from rising MNC stock prices. Overall, opportunity/special situation funds and MNC funds may yield returns by capitalizing on unique company events and MNC growth, but performance depends on the fund manager's ability to identify opportunities.
Perception of derivatives @ smc investment project reportBabasab Patil
This document provides a summary of a study conducted on investors' perceptions of derivative products in Hubli City. Key findings from the study include:
1) Around 50% of people surveyed in Hubli were unaware of derivatives.
2) Risk, returns, and volatility were the main factors investors considered when investing in derivatives.
3) While derivatives were seen as potentially high returning, they were also viewed as volatile and risky investments.
The document concludes by suggesting ways for SMC Investment Solutions & Services to increase awareness of derivatives in Hubli in order to gain more investors, such as educational seminars and maintaining ongoing contact with customers.
The document provides an overview of the Indian stock market and securities market. It discusses the key participants in the securities market like stock exchanges, brokers, portfolio managers, and others. It also summarizes the primary and secondary market segments. The document then discusses international scenarios and trends in stock markets globally and in India. It provides statistics on market capitalization and trading volumes. Finally, it discusses some of the major online brokerage firms operating in India like ICICIdirect, IndiaBulls, Abhipra Capital and others and provides a brief SWOT analysis of SMC Global Securities.
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Stock Market Crashes
1. Exploring Stock Market Crashes 1
EXPLORING
STOCK MARKET
CRASHES
Stock Markets of Pakistan
By
Fahim Akhtar
15 May 2012
fahimakhtar07@hotmail.com
fahimakhtar@aia.org.pk
2. Exploring Stock Market Crashes 2
CONTENTS
S / No Subject / Topic / Issue Page
1 Introduction
2 Market Mechanism
3 Participation Pattern of Market
4 Historical Growth of Market
5 Portfolios building and Results
6 Aggressive Portfolios
7 Defensive Stocks and Impact
8 All time Favorite Stocks
9 In search of Crashes
10 Interviews and Meeting
11 Survey and Analysis
12 Views of Investors with hefty losses
13 Conclusion
14 Recommendations
5. Exploring Stock Market Crashes 5
MARKET MECHANISM
How Stock Market Functions
What stock market is?
This is the market in
which shares of listed
companies are issued and
traded either through
exchanges or over-the-counter
markets. Also known as the
equity market, it is one of the most vital areas
of a market economy as it provides companies with access to capital and
investors with a slice of ownership in the company and the potential of gains
based on the company's future performance.
11. Exploring Stock Market Crashes 11
SECP. The Securities
and Exchange
Commission of Pakistan
(SECP) is the financial
regulatory agency in
Pakistan whose
objective is to develop a
modern and efficient
corporate sector in and a capital market based on sound regulatory principles,
in order to foster economic growth and prosperity.
KSE. Karachi stock
exchange is responsible
for offering quality
services to investors in
buying and selling of
securities including their
transaction. Exchange is
also the immediate
regulator responsible to take care of investors protection program and
growth of investment environment within the country and abroad.
12. Exploring Stock Market Crashes 12
Participation Pattern in Stock Market. In order to participate as investor in
stock market, one is required to open an account with CDC and sub account
with one of the member of stock exchange for active trade and
implementation of orders for buying and selling of stocks. There are 200
members registered with Karachi stock exchange and half of them are active
traders and functioning to serve the investors. Some of the top brokers are:-
1. Kasb securities
2. akd securities
3. BMA trade
4. IGI trade
5. SCS trade
6. Taurus Securities
7. MM Securities
8. Top line Securities
9. Foundation securities
10. Arif Habib securities
11. Sunrise capital
12. Burj capital
13. Invest cap
14. Elixir securities .
13. Exploring Stock Market Crashes 13
Major Participants of Market
1. Local investors. At least 2,000,000 account holders are registered
in CDC for stock trading in different stock exchanges of Pakistan.
Unfortunately, active traders are not more than 50,000 right now.
This includes investors operating accounts from Rs 100,000 and in
some cases Rs 5000 also. Ironically, most of these accounts are
dormant and non functional and number of operational accounts
reduced to 20,000 in December 2011 with lowest participation in
last ten years. The participation has again grown significantly and
there are above 80,000 account holders working in stock market on
regular basis.
2. Foreign investors. This category includes investors from abroad
and they are the one looking for opportunities all over the world and
choose a specific market considering several important factors
such as economic growth of the country, investment protection and
prospects of capital gain in better time frame. They build portfolio
buy active buying in selected stocks and leave market by selling
their position in profit or under some panic conditions in which their
investment in threatened.
3. Mutual funds. Mutual fund industry offers an opportunity to those
individuals who have no time and desire to go into the intricate
system of market mechanism. Different products of mutual funds
are designed and launched to benefit those investors who are
14. Exploring Stock Market Crashes 14
interested to get the professional fund mangers hired by mutual
funds industry. Fund managers build their portfolio positions basing
on opportunity and sell them off on significant gains or in case of
any threat to investment like foreigners.
4. Institutions. National investment trust ( NIT) is one of the
organization strategically engaged in investing in stock market. For
this purpose, professionals of NIT work out complete plan to build a
portfolio and invest subsequently in market. There are different
intuitions engaged in looking for opportunity in stock market and
take positions in appropriate time by selecting suitable stocks which
are trading in lower multiples.
5. Banks. Banks are also engaged in investment in stock market and
build portfolio for capital gains. Banks also buy back shares
increase their holding in their own stocks. Banks also give loans to
stock and brokerage companies for the purpose of extending badla
or margin trade to investors and institutions. Banks selling when
margins are called during crashes is also important and exert
pressure in market.
15. Exploring Stock Market Crashes 15
Composition of KSE - 30 Index
1. MCB Bank Limited
2. Oil & Gas Development Company Limited
3. National Bank of Pakistan
4. Pakistan Petroleum Limited
5. Pakistan Oilfields Limited
6. Fauji Fertilizer Company Limited
7. Pakistan Telecommunication Co Limited
8. Pakistan Industrial Credit & Investment Corporation Limited
9. Pakistan State Oil Company Limited
10. The Hub Power Company Limited
11. Engro Chemical Pakistan Limited
12. The Bank of Punjab Askari Commercial Bank Limited
13. D G Khan Cement Limited
14. Fauji Fertiliser Bin Qasim Limited
15. Bank Al-Habib Limited
16. Faysal Bank Limited
17. Adamjee Insurance Company Limited
18. Sui Northern Gas Pipelines Limited
19. Sui Southern Gas Company Limited
20. Nishat Mills Limited
21. Bank Al Falah Limited
22. Arif Habib Securities Limited
16. Exploring Stock Market Crashes 16
23. Kot Addu Power Company Limited
24. United Bank Limited
25. Lucky Cement Limited
26. Shell Pakistan Limited
27. Picic Commercial Bank Limited
28. Attock Petroleum Limited
29. Fauji Cement Company Limited
30. Banl Alhabib
17. Exploring Stock Market Crashes 17
Top Gainers in stock exchange
Stock Price in Price in Rupees ( Gain in Gain %
Rupees ( 1 12 May 2012) Rupees
January
2012)
Engro Foods 22.25 50.58 28.33 127
Fauji Fertilizer 147 180( including 33 22.44
bonus and
dividends)
Jahangeer 4.04 22.39 18.35 454.20
Siddiqi Company
Limited
Lucy Cement 75.04 109 33.96 45.25
Muslim 134 190 ( including 56 41.79
Commercial bonus and dividend)
Bank
OGDC 151 166 15 9.93
Pakistan 168 187( including 28.9 17.22
Petroleum dividend)
Summit bank 1.64 4.1 2.48 150
United bank 52.56 82( including cash 29.44 56
dividend)
19. Exploring Stock Market Crashes 19
Historical Growth of Stock Market. Graph given below indicates the
historical performance of market. Only a period commencing from 1092 has
been indicated here because this is the time when stock market started
performing in real sense and was exposed to risk also. Market moved from
1500 points and touched the level of 16000 during 2008 and than witnessed
the most critical crisis of history in which index was trading between 4000-
5000. Market is again performing and currently lies at 14600 levels.
Crash 2008
Crash 2005
Crash 2000
20. Exploring Stock Market Crashes 20
IN SEARCH OF CRASHES
Unfortunately our market remains exposed to crashes and the process is
repeated with an interval of 3-5 years. A stock market crash is a sudden
dramatic decline of stock prices across a significant cross-section of a stock
market, resulting in a significant loss of paper wealth. Crashes are driven by
panic as much as by underlying economic factors. They often follow
speculative stock market bubbles. Stock market crashes are social
phenomena where external economic events combine with crowd behavior
and psychology in a positive feedback loop where selling by some market
participants drives more market participants to sell. Generally speaking,
crashes usually occur under the following conditions: a prolonged period of
rising stock prices and excessive economic optimism, a market where P/E
ratios exceed long-term averages, and extensive use of margin debt and
leverage by market participants. There is no numerically specific definition of
a stock market crash but the term commonly applies to steep double-digit
percentage losses in a stock market index over a period of several days.
Crashes are often distinguished from bear markets by panic selling and
abrupt, dramatic price declines. Bear markets are periods of declining stock
market prices that are measured in months or years. While crashes are often
associated with bear markets, they do not necessarily go hand in hand.
Seeing in the context of international markets, the crash of 1987, for example,
did not lead to a bear market. Likewise, the Japanese Nikkei bear market of
21. Exploring Stock Market Crashes 21
the 1990s occurred over several years without any notable crashes. In this
project we have taken and analyzed data from year 2000 to date and during
this period we have witnessed three crashes which are:-
Major Crashes
1. 2000
2. 2005
3. 2008
Hostile investors protesting after the
crash of 2008
24. Exploring Stock Market Crashes 24
Flow chart –2005 Crash
Market felt sharply with sell off
Market
Insider trading manipulation
Inquiry ordered
No major step taken
against culprits
25. Exploring Stock Market Crashes 25
Year 2008 Crash. Market was trading at all time historically high index level
when this crash came. With the demise of late Benazir Bhutto and damage
done during protest to infrastructure and resources market came under
pressure and foreign investor participation was withdrawn. International
recession news and depreciating crude oil prices also damaged stock market.
Panic sell off was there and regulator of stock exchanged freeze the stock
market for four months to control collapse of stock market. Freezing of market
made really bad effects and post freeze panic caused steep fall in which
market depreciated more than 68 %.Every one who had anything to do with
the Pakistan capital market—the regulators, brokers and traders now fall over
each other in condemning the ‘floor’ or freeze as an unforgivable blunder. It
turned the catastrophe into calamity. The ‘floor’ remained in place for as many
as 108 days. When it was finally lifted on December 14, the market, as was
feared, came crashing down to the level of 4782 points in fewer than fifteen
sessions. No one had ever figured out the loss caused to investors, but an
idea can be had from the evaporation of paper value of corporate Pakistan.
As much Rs1.4 trillion were swept off the market capitalization, which dipped
from Rs2.881 trillion on August 8 to Rs1.578 trillion on January 24, 2009,
when the market started to show first sign of recovery. The KSE offered
payment of only 6.7 per cent compensation of the claims of investors, who
lost their investments due to default of five brokers in the August-2008 market
crash on the condition that they surrender their right to challenge the partial
settlement in any court of law. Thousands of small investors lost billions of
26. Exploring Stock Market Crashes 26
rupees during the 2008 market floor, leading to cancellation of membership of
five defaulter brokers, including Eastern Capital, Prudential Securities, Capital
One Equities, MKA Securities and Click Trade.
KSE 100 index KSE 100 index Change % age
before Crash after Crash
16000 5000 11000 68.75
27. Exploring Stock Market Crashes 27
Flow diagram – Market Crash in 2008
Poor law and order &
political instability –KSE 100
index 15600
Global sell off Recession effects Foreigners
KSE 100 index 9600 selling
Market Panic created by
manipulation freeze
by top
brokers
Regulators
responsible
for not
ensuring Nose down to 4782 KSE
risk level
mechanism
MTS was
removed
Market moved to 8600
when freeze was
31. Exploring Stock Market Crashes 31
Major market players
Arif Habib Grroup. One of the largest
business groups of country. He has very
important role in functioning and participation
of market. The Arif Habib Group (AHG) ranks
amongst the fastest growing multi-sector
groups in Pakistan. This has been made
possible by a proven record of a strong ability
in identifying and developing successful business ventures and generating
phenomenal returns despite subdued economic development. -------------------
-------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
32. Exploring Stock Market Crashes 32
Mian Mansha
Mian Muhammad Mansha is owner of
Nishat group and an important figure of
stock market. He holds control of Muslim
Commercial bank, Adamjee Insurance,
Dera Ghazi Khan Cement and Nishat Mills
shares. His textile mill in Faisalabad under
the name of Nishat Mills still is one of the
biggest textile units in Faisalabad. . Apart
from these large acquisitions, he was simultaneously expanding his Nishat
Textiles segment, Nishat Textiles is Pakistan's largest fabric mill.-----------------
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33. Exploring Stock Market Crashes 33
Aqeel Karim Dhedee. Aqeel Karim Dhedhi,
Chairman AKD Group, is widely acknowledged
as one of Pakistan’s leading economic
authorities. His innovative investment
strategies have led him to become an iconic
figure in Pakistan’s capital market. ----------------
--------------------------------------------------------------
--------------------------------------------------------------
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----------------------------------------------------------------------------------------------------.
34. Exploring Stock Market Crashes 34
Interviews / Meetings. A number of well positioned officials, intellectuals and
leading investors were interacted for research purpose for the completion of
project. Views extended and opinion given by these people enabled the
teams to form some conclusions with regard to sustainability and crash issues
of market. Only a few amongst them have been picked for this paper and
succeeding paragraphs will cover details of the opinion by these individuals.
35. Exploring Stock Market Crashes 35
FLOW CHART – MARKET CRASH
Foreign investment withdrawn
Funds selling
Index in pressure
Margin calls for debt products
crash
40. Exploring Stock Market Crashes 40
2. When greed overcomes the market; no one talks about fear. Greed
completely eclipses out fear and the fact that people usually have a
short term memory also does quite a bit of good. In times of bull
market rallies,
people forget
what it was
like a few
months or few
years ago and
what it meant
to be fearful.
Survey and conclusions drawn
1. Social Web Survey. A survey was launched on social website face
book to ascertain the reason of causes of stock market crashes. Participants
in survey were mostly active investors of stock market who gave their views
with regard to market falling in crisis. Contents are mentioned in appendix 2.
Options offered were:-
a. Selling by foreigners
b. Speculative buying
c. Poor risk mechanism
d. Risk or badla
41. Exploring Stock Market Crashes 41
e. Insider trading
f. Law and order and political instability.
g. Effects of recession in international market.
h. Bad macro indicator
i. Prompt revision of rules and policies.
42. Exploring Stock Market Crashes 42
2. Feed back from stock brokerage houses. All top stock brokers
were contacted through e mails to get feed back from them purely basing on
facts held in the form of data. Some of these houses have replied positively
and conclusion drawn is:-
a. Almost all investor suffering heavy losses were utilizing badla or
leverage product. With the deposit of some amount 3- 4 times
buying were held in portfolio of these investors. When market
started falling sharply, their positions were sold to settle the
margin falling in the account and this created more pressure.
b. Instead of understanding the gravity of crisis, many investor
were optimistic and were expecting market rebound and
utilized leverage product to make more profit and later their
holdings were forcefully sold by the brokerage houses.
c. stock brokerage houses were having pressure from banks and
investment companies side to maintain the margin and in order
to ensure that margins were settled continuously.
43. Exploring Stock Market Crashes 43
3. Views of Investors Suffered in Crash. A record of those investors
who suffered heavy losses in stock market crashes was picked up from stock
brokerage houses and CDC. Some of these investors when approached
replied and assisted during the survey. Their feed back reflects:-
a. Investors were mostly not apprehensive of market crash in the
beginning and did not sell their holding in right time. Most of the
stock on leverage were pledge by the brokerage house to
maintain the margin.
b. Decision to freeze market did not allowed investors to take
decisions themselves rather market freeze created panic and
when freeze was lifted they preferred to sell booking heavy
losses.
c. During crashes efficiency and services of stock brokerage
house depleted to the extent that there was no one to guide
investors with regard to their investment methodology.
d. Most of the investors suffering heavy losses were not aware
with the market mechanism and merely attempted to invest in
market with the intent to multiply their wealth quickly.
e. Investors were not aware with their rights and their expected
response when their brokers were defaulted. It was an uphill
task to put forward claims for compensation.
45. Exploring Stock Market Crashes 45
Conclusions - Key Causes of Market Crisis
1. High leveraging has become a phenomenon in most global markets
since mid-2000 and our market is no exception to this. Leveraged products
with different titles are prepared and offered to investors to buy stocks 3- 4
times more than the cash they have in possession. In our market this product
is known as MTS (margin trading system).An investors with a cash of Rs
100,000.00( one hundred thousand) is allowed to buy stocks of worth Rs
300,000.00( three hundred thousands) and even more in case of in hose
badla offered by stock brokerage houses. When share prices fall investors
are required to deposit the amount to maintain margins and failing in these
they are required to sell their held stocks. High leveraging is one of the factors
that contribute to stock market crash.
2. Sell-off was seen in our market by foreign funds in tandem with global
market sell-off in the summer of 2000 and 2008.During 2000 and 2008 market
passed through fear of recessions and were badly hit in which pries of
commodities also came down. Crude oil came down significantly to half of its
all time high. Our stock market also was subject to his effects and a
continuous exit from foreign investors was seen. Sell off caused consistent
pressure in index and took market down.
3. The composition of our indices is inappropriate and some stock particularly
of oil and gas sector and mainly OGDC is index heavy stock. Any buying or
selling in oil and gas sector and OGDC directly effects the index and turn
sentiments accordingly. During all major crashes selling in OGDC which is
46. Exploring Stock Market Crashes 46
often a top pick of foreign investors caused index to came down sharply and
this falling down also contributed to crash. Composition of index
inappropriately with very few heavy weight stocks offers players to cause
panic like situation in market. This specially occurs when index looses much
by selling in one odd stocks only first in a particular session cause bearish
sentiments in investors.
4. Manipulation by a group, brokerage house or individual investors with hefty
portfolio. This includes generation of very high activity of buying along with
spread of rumours with brighter news on basic fundamental changes in dull
stock stocks actually with no reality of any positive change. Later, when news
were confirmed fake causing panic amongst investors with selling, the bears
rules in totality. Our stock market is full with the history of stocks
outperforming initially and falling nose down causing losses to small investor
sin particular.
5. Insider trading has been a feature of our market. Insider trading is basically
trading in a stock with privileged information. This kind of trade shifts entire
market momentum in different order and hurts market and confidence of
investors.
6. Some major investors also enter in market carrying black money or
sometime with the objective of multiplying departmental financial situation
healthy in quicker way. The investment in amateur pattern with no or hasty
time frame also affected market in past.
47. Exploring Stock Market Crashes 47
7. Foreign investment portfolio assumes significant importance. This portfolio
is built by off shore accounts holders some time by foreigners and many time
some domestic players operating portfolio accounts of abroad while sitting in
Pakistan. A real foreigner investor invest with a lot of work considering
valuation in our markets in comparison with other market taking into account
internal political situation of country too. In our few crashes one of the
reasons was uncertain of change on political canvas also.
8. Poor market mechanism is also one of the causes which also become
reasons of crash. This ranges from application of all measures likely to affect
market adversely ranging from financing to placing of circuit barkers at
appropriate levels. Revision of gain limits in case of a particular stock in
appropriate manner may bring imbalance sentiments in market environments
and later proves harmful results.
9 . Lack of apprehension, awareness and education in case of a small
investors. Small investors mostly rely on broker’s advice while forming their
investment portfolios. Many time small investors do not follow any investment
plan at all. Irrational decisions coupled with lack of know how caused heavy
looses to investors particularly when the investment plans and portfolios were
changed frequently in abrupt manners.
10. Fear and greed are two elements playing significant role for stock
traders. Fear cause in panic selling and market greed force an investor to buy
in leverage or badla and when market felt these positions are sold in loss
causing more pressure in index.
50. Exploring Stock Market Crashes 50
Recommendations
1. Leverage products time to time
known as badla and MTS is required to be
made more stable with incorporation of risk
issues handling in extending of leverage
buying specially to normal investors and
banks. More liquidity to banks with debt availability may avert force selling
and offer some stability to market in crash of crash.
2. Our education format of business
management studies contain in adequate
stuff for very important equity market
mechanism including fundamentals,
technical and companies ordnance.
Revision of syllabus and incorporation of
these topics will gradually assist in grooming investors base in future.
Certifications and diplomas for stock market do not exist in Pakistan in
required numbers and financial literacy is required to be enhanced to handle
this issue.
3. Re composition of index is required with
weight of stocks shifted in appropriate
pattern. Rise and fall of a specific stock
should not affect the indices extraordinarily
and existing weight of oil based stocks may
51. Exploring Stock Market Crashes 51
be shifted in balanced order.
4. Insider trade, market manipulation and other malpractices must be dealt
with iron hands with more emphasis be given to investor’s protection and
compensation issues when ever this kind of practice is seen. In this aspect all
market regulators have to play an important role and devise policy that should
eliminate the possibilities of insider trade.
5. Enhancing broker’s quality and capability must be done with imposition of
strong penalties on violation of regulatory violations which should never be
accepted. Broker and his representative establish the most intimate
relationship with inventors in stock market and quality of services offered by
brokers must improve. This entails persistent guidance of investors in all
decisions and provision of quality research for the assistance of investors.
6. Some arrangements for guidance of new investors are essentially needed.
Fresh investors coming to market must be cautioned to educate themselves
before investing in market in which risk is always associated.
7. Regulators, brokers and other bodies must endeavour to make investors
wiser with the tricky affair of trading on margins and they should be
discouraged initially for some time to trade in leverage unless they get
experience.