A power point with basic understanding to stock market for a beginner. Hope it would be nice. Done by M.C.Kesav

1. STOCK MARKET:
BY M.C.Kesav

2. CONTENTS:
 HISTORY:
 STOCK AND STOCK MARKET:
 TERMS RELATED TO STOCK MARKET:
 FAMOUS STOCK EXCHANGES:
 CALCULATE SENSEX AND NIFTY INDEX:
 BULLISH AND BEARISH MARKETS:
 STOCK BROKERS:
 HOW TO INVEST? ; DO’s AND DON’Ts
 BENEFITS OF INVESTING IN SHARES:
 WHY INVESTING IN STOCK MARKET IS BENEFICIAL
IN THE LONG RUN?

3. HISTORY:
oStock market unknowingly invented by Dutch East
Indian Company.
oBorrowed money from capitalists in exchange for
profit from the company.
oThis enabled them to do further business.
oSuch contracts were sold at ports and coffee
houses.

4. WHAT IS A STOCK?
oA stock is a security that represents the ownership
of a fraction of a corporation.
oThe units of stock are called shares.
oStocks are bought and sold predominantly on
stock exchanges.
oThe stock market represents the companies that
list stocks for public investors to buy and sell.

5. WHAT IS A STOCK MARKET?
oPlace where shares and other securities in
corporations are issued and traded.
oRepresents the companies that list stocks for
public investors to buy and sell.
oDivided into primary and secondary market.
oEnsures fair pricing practices and transparency in
transactions of buying and selling shares.

6. TERMS ASSOCIATED WITH STOCK
MARKETS:
1) OPEN: stock price at beginning of day.
2) HIGH: highest value reached by stock in a day.
3) LOW: lowest value reached by stock in a day.
4) CLOSE: stock price after the end of market timings.
5) VOLUME: quantity sold.
6) BID: the buying price.
7) OFFER: the selling price.
8) EQUITY: amount of money returned to shareholders by
liquidating all assets after settling debts

7. TERMS ASSOCIATED WITH STOCK
MARKETS:
9. OUTSTANDING SHARES: All shares authorised by company.
10. MARKET CAPITALISATION (Market Cap):
oRefers to the corporate size of a country.
oEquals current stock price * number of outstanding shares.
oShares available for investors called free float market
capitalisation (FFMC).
11. CAPITAL STRUCTURE:
oProportion of debt and equity used for financing business
operations.
oGreater the capital structure, more would be the risk associated to

8. BIG STOCK MARKETS OF THE
WORLD:
1) NYSE (New York Stock Exchange)
2) NASDAQ-America
3) Dow Jones, America
4) S&P 500, America
5) Tokyo Stock Exchange
6) London Stock Exchange
7) Bombay Stock Exchange (BSE)
8) National Stock Exchange (NSE)

9. COMPARISON BETWEEN BSE AND
NSE:
CRITERIA BSE: NSE
INDEX
SENSEX(Sensitive
Index)
NIFTY(NSE Fifty)
NUMBER OF
GROUP STOCKS
30 50
BASE INDEX
VALUE
100 1000
BASE YEAR
(PERIOD)
1978-79 1993-94

10. CALCULATION OF SENSEX AND
NIFTY INDEX:
1. SENSEX:
•SENSEX INDEX = 𝑭𝑭𝑴𝑪 𝒐𝒇 𝟑𝟎 𝒔𝒕𝒐𝒄𝒌𝒔 * Index Factor.
•Here, Index Factor = 100 / Market Cap Value of 1978-79.
•Thus, SENSEX INDEX =
𝑭𝑭𝑴𝑪 (𝟑𝟎)
𝑴𝒂𝒓𝒌𝒆𝒕 𝑪𝒂𝒑 𝑽𝒂𝒍𝒖𝒆 (𝟏𝟗𝟕𝟖−𝟕𝟗)
* 100.
2. NIFTY:
• NIFTY INDEX = 𝑭𝑭𝑴𝑪 𝒐𝒇 𝟓𝟎 𝒔𝒕𝒐𝒄𝒌𝒔 * Index Factor.
• Here, Index Factor = 1000 / Market Cap Value of 1995.
• Thus, NIFTY INDEX =
𝑭𝑭𝑴𝑪 (𝟓𝟎)
𝑴𝒂𝒓𝒌𝒆𝒕 𝑪𝒂𝒑 𝑽𝒂𝒍𝒖𝒆 (𝟏𝟗𝟗𝟓)
* 1000.

11. SPECULATORS:
oEngage in risky financial transaction in a attempt
to gain profit from short or medium term
fluctuation.
oInvolves tradable goods and financial instruments.
oMost investors ignores fundamental value of
securities and focus on price movements:
oIndian Stock Exchange has 4 speculators:
a) Bull b) Bear c) Stag d)Lame Duck

12. BULLISH VS BEARISH MARKET:
BULL:
Buys stock to sell at high price in future.
Stock seeming to increase in value is called “bullish”.
Shows positive attitude and indicates economic growth.
Most investors are mostly bullish.
BEARISH:
Stock that seems to decrease in value is called “bearish”.
Sells stock at present in anticipation of loss in price of stock.
Shows negative attitude and might lead to stock crash.

13. FACTORS OF FLUCTUATION OF
STOCK PRICES:
oAffected by market forces like:
a) Price of raw materials.
b) Changes in production technology.
c) Shifting costs of labour.
o Investors worried about:
a) Changes in leadership.
b) Bad publicity and political influence.
c) New laws and trade policies.
o Personal interests of investors.

14. STOCK BROKERS:
oBridge between normal investors and stock
market.
oLicensed and regulated financial firm that
facilitates buying and selling stock, bonds, IPO etc.
oMainly divided into discount or traditional brokers
on basis of fee and guidance provided.

15. HOW TO INVEST?
1
• Obtain a PAN Card
2
• Open a DEMAT and Trading Account
3
• Employ a dependable broker
4
• Bank Account
5
• UIN (Unique Identification Number)
6
• Buying and selling of shares

16. DO’S OF INVESTING IN A STOCK
MARKET:
a) Invest only what you can afford to lose.
b) Invest upon deep research.
c) Try to invest at different companies.
d) Engage a dependable broker.
e) Invest more at ‘bad-times which gets well soon’.
f) Buy insurance to guard against the unforeseen.
g) Monitor the changes to company-shares.

17. DON’T’S OF INVESTING IN A STOCK
MARKET:
a) Don’t think it as a money-machine.
b) Don’t rely on tips or suggestions, if you are a
first timer.
c) Don’t have bearish attitude.
d) Don’t entirely sell valuable shares.
e) Don’t try to time the market, follow disciplined
investment approach.

18. BENEFITS OF INVESTING IN STOCK
MARKETING:
oTo meet individual financial goals.
oTake advantage of a growing economy.
oHelpful during inflation.
oInvestments are important to meet the price hike
during inflation.
oMost viable Securities with several
monetary benefits.
oEasy to buy and sell.

19. BENEFITS OF INVESTING IN
SHARES:
oPossibility of increase in value of share.
oIncome from dividends.
oEasy liquidity.
oTax benefits on income earned such as
exemptions.

20. WHY INVESTING IN STOCK
MARKET IS BENEFICIAL IN
THE LONG RUN?

21. STOCK PRICE OF COMPANIES
BETWEEN (1999-2019)
Year: ITC Reliance HDFC Infosys
1999 16.94 - 5.52 -
2004 21.86 117.82 36.29 88.54
2009 57.23 299.69 101.57 141.51
2014 214.55 435.28 331.55 445.64
2019 282.70 1114.94 1061.45 656.95

23. ANY QUESTIONS?A M.C. Kesav
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