Transcript The Stock Markets

The Stock Markets
Road to the stock market
1.
A company is created as single proprietorship or as a
partnership.
2.
All partners put in some money.
3.
Company starts to grow, need arises to market products
more.
4.
Company seeks bank loan and/or VC funding
5.
Companies growth is even more rapid so Company decides to
list
6.
It is determined that the partners will get a fixed number of
shares and another part is sold to outside people.
8.
9.
10.
Company gets listed in exchange.
People can buy and sell in open market at whatever price is
prevailing at that time.
Price keeps fluctuating based on perception and performance.
Stock Exchange
There are 23 stock exchanges in India. Mumbai
stock exchange (BSE) is the largest and has over
6000 stocks listed.
BSE accounts for 66% of trading volume in the
country
Some Stock Exchanges in India
1.
Bombay Stock Exchange
2.
National Stock Exchange (also in Mumbai)
3.
Bangalore Stock Exchange
4.
Calcutta Stock exchange
5.
Ahmedabad Stock exchange
Individual Stocks
 Stock symbol/Ticker Symbol
 Bombay Stock Exchange has 30 companies listed under its
SENSEX
 Similarly Wall street has the DOW Jones Industrial average
of 30 stocks
 Rise and Fall of individual stocks in this list affects the
SENSEX overall
Other than individual stocks, what else is part of the exchange
?
Some companies in the Stock
Exchange
ACC
DLF
HDFC
CIPLA
Factors affecting stock prices
What affects Stock prices :
1.
Profitability of the company
2.
Future performance of the company
3.
Past performance of the company
4.
Any untoward recent incidents
5.
Inflation of the country
6.
Unforeseen events
7.
Price of dollar v/s Rupee
8.
Political scenario and
So on
The Ratios
What is the P/E Ratio
Price
Earnings
P/C Ratio
Determines value of stock
Why do companies list in the
mkt.
1.
Assists the economy by providing a body for
interested investors
2.
It helps good companies raise funds from the public
3.
Encourages capital formation
4.
Government can undertake huge projects in the
country by raising capital through public issue.
5.
It benefits both the capital seeker as well as the
capital giver
? How does it benefit the capital giver
6.
Stock price being higher than earnings and property
values, company enjoys better bargaining power when
there is a merger or a takeover
7.
Better reputation and credit
Benefits for the Investors
1. Investment is liquid
2. Can invest in a business opportunity upto
the amount of risk one can afford to take
3. Securities are collateral for loan
4. Stock exchanges are usually a well
controlled and well run unit and risk of
losing money due to malpractice is low
Terms you should know
•
Shares
•
Dividends
•
Exchange Traded Funds (ETF)
•
Mutual Funds
•
Buy back shares
•
Bonus Shares
•
Share Split
•
Debentures/Bond – non collateralized loans/debts
•
Broker
•
Jobber – independently buys and sells securities and is not allowed
to deal with non members directly
•
SEBI – Securities and Exchange board of India. Issue securities,
approve laws, protect investors.
•
Derivatives - speculate on a share price reaching a particular value
at a particular time
Decrypting Stock Market News
* India's benchmark BSE index falls 0.05 percent, while
the 50-share NSE index loses 0.02 percent, marking a
second consecutive session of range-bound trading.
* Flat movements track steady to lower Asian shares
as signs of a slowdown in global growth continue
to weigh.
* State Bank of India extends falls to its lowest since
mid-May on continued fears about asset quality after reporting a
surge in bad loans last week. Shares down 1.1 percent after
falling 4.1 percent on Friday.
* Deutsche Bank downgrades SBI to "hold" from "buy", calling
April-June "one of its worst quarters in terms of asset
quality."
* Shares in India's state-run producer Oil & Natural Gas Corp
up 1.7 percent after the company reported over the
weekend a higher-than-expected jump in quarterly profit.
A Portfolio
Graphs
QUESTIONS