basic of stock market

8/14/2019 Basic of Stock Market

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Bonanza Portfolio Ltd. 1

AJourney

intoStock Markets


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Basic of Stock Market


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What is Investment?The money you earn is partly spent and the rest saved for meeting future

expenses. Instead of keeping the savings idle you may like to use savings in

order to get return on it in the future. This is called Investment.

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Why should one invest?

Earn return on your idle resources

Generate a specified sum of money for a specific goal in life

Make a provision for an uncertain future

When to start Investing?

Invest early

Invest regularly

Invest for long term and not short term

What are various options available for investment?

Physical assets like real estate, gold/ jewellery, commoditiesetc.

Financial assets such as fixed deposits with banks, smallsaving instruments with post offices,

insurance/provident/pension fund etc. or securities marketrelated instruments like shares bonds debentures etc.


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What is Stock Exchange?

The Securities Contract (Regulation) Act, 1956 [SCRA] defines Stock Exchangeas any body of individuals, whether incorporated or not, constituted for thepurpose of assisting, regulating or controlling the business of buying, selling ordealing in securities. Stock exchange could be a regional stock exchange whosearea of operation/jurisdiction is specified at the time of its recognition or nationalexchanges, which are permitted to have nationwide trading since inception. NSE

was incorporated as a national stock exchange.

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What is an Equity/Share?

Total equity capital of a company is divided into equal units ofsmall denominations, each called a share. For example, in acompany the total equity capital of Rs 2,00,00,000 is divided into

20,00,000 units of Rs 10 each. Each such unit of Rs 10 is called aShare. Thus, the company then is said to have 20,00,000 equityshares of Rs 10 each. The holders of such shares are members ofthe company and have voting rights.

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What is Commodities?

Commodity markets are markets where raw or primary products areexchanged. These raw commodities are traded on regulatedcommodities exchanges, in which they are bought and sold instandardized contracts.

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Bullions

(GOLD)

Metals

AgroEnerg

y


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What is Forex?The "Forex" is the abbreviated form of Foreign Exchange; it is also

referred as the "Spot FX" market. In Forex trading, the currency of one

nation is traded for that of another. Therefore, Forex trading is alwaystraded in currency pairs. The most commonly traded currency pairs aretraded against the US Dollar (USD). The major currency pairs are theEuro Dollar (EUR/USD); the British Pound (GBP/USD); the Japanese Yen(USD/JPY) and the Swiss Franc (USD/CHF).

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What is IPO?

An Initial Public Offer (IPO) is the selling of securities to thepublic in the primary market. It is when an unlisted companymakes either a fresh issue of securities or an offer for sale ofits existing securities or both for the first time to the public.

Why IPO? Raise Capital to meet working capital, debt repayment, expansion, and a host

of other uses.

Company valuations are done on the basis of which the share value iscalculated.

It is offered to all categories of investors like Retail Investors, Private

Placements, FIIs, Mutual funds, LIC,GIC

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What is a Depository?

A depository is like a bank wherein the deposits are securities(viz. shares,

debentures, bonds, government securities, units etc.) inelectronic form.

National Securities Depository Limited

Central Depository Services Limited

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What is BSE?

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, nowspanning three centuries in its 133 years of existence. What is now popularly known asBSE was established as "The Native Share & Stock Brokers' Association" in 1875.

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What is NSEIL?The National Stock Exchange of India Limited has genesis in the report of the High Powered

Study Group on Establishment of New Stock Exchanges. It recommended promotion of a NationalStock Exchange by financial institutions (FIs) to provide access to investors from all across thecountry on an equal footing. Based on the recommendations, NSE was promoted by leadingFinancial Institutions at the behest of the Government of India and was incorporated in November1992 as a tax-paying company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 inApril 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June1994. The Capital Market (Equities) segment commenced operations in November 1994 andoperations in Derivatives segment commenced in June 2000.

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What is NCDEX?NCDEX is a public limited company incorporated on April 23, 2003 under the

Companies Act, 1956. It obtained its Certificate for Commencement of Business onMay 9, 2003. It commenced its operations on December 15, 2003.

NCDEX is a nation-level, technology driven de-mutualised on-line commodityexchange with an independent Board of Directors and professional management -both not having any vested interest in commodity markets. It is committed to providea world-class commodity exchange platform for market participants to trade in a widespectrum of commodity derivatives driven by best global practices, professionalismand transparency.

NCDEX is located in Mumbai and offers facilities to its members about 550 centersthroughout India. The reach will gradually be expanded to more centers.

Agriculture -Barley, Cashew, Castor Seed, Chana, Chilli, Coffee - Arabica, Coffee - Robusta, Crude Palm Oil,Cotton Seed Oilcake, Expeller Mustard Oil, Groundnut (in shell), Groundnut Expeller Oil, Guargum, Guar Seeds, Gur, Jeera, Jute sacking bags, Indian Parboiled Rice, Indian Pusa Basmati RiceMetals -

Aluminum Ingot, Electrolytic Copper Cathode, Gold, Mild Steel Ingots, Nickel Cathode, Silver,Sponge Iron, Zinc Ingot.Energy -Brent Crude Oil, Furnace Oil.

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What is MCX?

Headquartered in the financial capital of India, Mumbai, Multi Commodity

Exchange of India Ltd (www.mcxindia.com) is a demutualised nationwideelectronic commodity futures exchange set up by Financial Technologies (India)Ltd. with permanent recognition from Government of India for facilitating onlinetrading, clearing & settlement operations for futures market across the country.

The exchange started operations in November 2003.

MCX has achieved three ISO certifications including ISO 9001:2000 for quality

management, ISO 27001:2005 - for information security management systemsand ISO 14001:2004 for environment management systems. MCX offers futurestrading in more than 50 commodities from various market segments includingbullion, energy, ferrous and non-ferrous metals, oil and oil seeds, cereal, pulses,plantation, spices, plastic and fiber. The exchange strives to be at the forefront ofdevelopments in the commodities futures industry and has forged strategicalliances with various leading International Exchanges, including Tokyo

Commodity Exchange, Chicago Climate Exchange, London Metal Exchange, NewYork Mercantile Exchange, New York Board of Trade, Bursa Malaysia Derivatives,Berhad and others.

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http://www.mcxindia.com/http://www.mcxindia.com/


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What is DGCXDubai has historically been an international hub for the physical trade of not only gold, but

also many other commodities and so the establishment of the Dubai Gold & Commodities

Exchange (DGCX) was the next logical step for the region and the local economy. DGCXcommenced trading in November 2005 as the regions first commodity derivatives exchangeand has become today, the leading derivatives exchange in the Middle East, providing theright products, at the right price and the right time.

DGCX is an initiative of the Dubai Multi Commodities Centre (DMCC), Financial Technologies(India) Limited and the Multi Commodity Exchange of India Limited (MCX). The Managementteam of DGCX comprises senior personnel from the commodities, securities and financialservices industries bringing a wealth of experience and expertise to ensure the success of

DGCX.DGCX offers the unique advantage of being located in the Middle East, one of the worlds

largest areas of financial liquidity.

Dubai is one of the worlds fastest growing business centers, with over 400 internationalinstitutions from around the globe and US $160 billion high net worth investment business. Itis also the worlds fifth largest re-exporter and grew on average by over 13.4% per yearbetween 2000 and 2005.

Dubai offers a strong, stable government and a balanced, world class regulatory framework.With a zero tax environment and free trade zones offering 100% ownership, it has becomethe entry point for much of the Middle Easts liquidity and trade activity.

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H T St t T di


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How To Start TradingAnd Investing

We need to have a DEMAT account.

We need to have a Trading account.

And of course money

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Wh t I t I t k


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Why to Invest In stockMarket

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Your own benefit

(major benefits)

Gain from IPOEarn Cash and Stock DividendCapital GainGet Tax exemptionOwnership of a company

Benefit of the Nation

(major benefits)

IndustrializationInfrastructure developmentGDP growthPer Capita IncomeStandard of livingEmploymentAsset Distribution

R l f i i


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Rules for earning money inthe market

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Rule 1: Neverlose your moneyin the market.

Rule 2: Never

forget Rule 1.

F t Aff ti St k


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Factors Affecting StockMarket

Economic Factors

Market trends & Rumors Global Market indicators

Government Policies and Regulations

Company wide factors

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Kinds of Trading

Intra-day Trading

Buying and Selling on the same day.

Brokerage will be different for intra-day and

delivery based trading, intra-day being lesser Delivery based Trading

Buying and Selling are on different days

Brokerage will be higher than intra-day

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Foreign Markets

Dowjones

Nasdaq Nikkei

Shanghai

FTSE

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Attributes of good


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Attributes of goodinvestors

One should be a good Manager and not day trader.

A well diversified portfolio Investment in good shares.

Have patience.

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Thi t b id d hil


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Things to be avoided whiletrading & investing Never risk more than 10% of your trading capital in a single trade.

Always use stop loss orders.( Here you should know your loss you can give in a

situation where the trade starts going against you.) Never do overtrading.

Don't enter a trade if you are unsure of the trend.

When in doubt, get out, and don't get in when in doubt.

Only trade active stocks

Distribute your risks equally among different markets.

Extra money from successful trades should be placed in a separate account.

Never average a loss.

Never get out of the market because you have lost patience, or get in because you areanxiously waiting.

Avoid taking small profits and large losses.

Avoid getting in and out of the market too soon.

Never buy or sell just because the price is low or high.

Never change your position without a good reason.

Don't try to guess tops or bottoms

When you lose don't blame it on luck.

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basic of stock market

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