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. Company gets listed in exchange. 9.People can buy and sell in open market at whatever price is prevailing at that time. 10. 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

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