Basics Of Stock Market. By Ronak Nangalia Sohrab Kothari

Transcription

1 Basics Of Stck Market By Rnak Nangalia Shrab Kthari

2 Investment & Need f Investment The mney yu earn is partly spent and the rest saved fr meeting future expenses. Instead f keeping the savings idle yu may like t use savings in rder t get return n it in the future. This is called Investment. One needs t invest t 1. earn return n yur idle resurces 2. generate a specified sum f mney fr a specific gal in life 3. make a prvisin fr an uncertain future

3 When t Start Investing The sner ne starts investing the better. By investing early yu allw yur investments mre time t grw, increases yur incme, by accumulating the principal and the interest r dividend earned n it, year after year. The three glden rules fr all investrs are: 1. Invest early 2. Invest regularly 3. Invest fr lng term and nt shrt term

4 Where t Invest One may invest in: 1. Physical assetslike real estate, gld/jewellery, cmmdities etc 2. Financial assetssuch as fixed depsits with banks, small 2. Financial assetssuch as fixed depsits with banks, small saving instruments with pst ffices, insurance/prvident/pensin fund etc r securities market related instruments like shares, bnds, debentures etc.

5 Shrt Term: 1. Savings Bank Accunt Shrt & Lng Term Optins fr Investment 2. Mney Market r Liquid Funds 3. Fixed Depsit with Banks Lng Term: 1. Pst Office Savings 2. Public Prvident Fund 3. Bnds 4. Mutual Funds

6 Befre investing in a Market Befre investing, it is always wise t learn the Basics f Stck Market. We have cmpiled articles and tutrials n the Share Market Basics.Als included here explanatin f Stck Market Termsand jargn used by peple invlved in trading stcks and shares. Whether it is Bmbay Stck Exchange (BSE), Natinal Stck Exchange (NSE), Lndn Stck Exchange (LSE) r New Yrk Stck Exchange (NYSE), trading terms r mre r less similar

7 Why Trade In Stck Market 1. Yu d nt need a lt f mney t start making mney, unlike buying prperty and paying a mnthly mrtgage. 2. It requires very minimal time t trade -unlike building a cnventinal business 3. It s fast cashand allws fr quick liquidatin (Yu can cnvert it t cash easily, unlike selling a prperty r a business). 4. It s easy t learn hw t prfit frm the stck market. But Yu need t have yur basicsclear. Unless yu d.yu will be wasting yur time and lsing mney. Yu need t be crystal clear f each and every aspect f Investments, stck ptins, Stck Trading, Cmpany, Shares, Dividend & Types f Shares, Debentures, Securities, Mutual Funds, IPO, Futures & Optins,What des the Share Market cnsist f? Exchanges, Indices, SEBI, Analysis f Stcks Hw t check n what t buy?, Trading Terms(Limit Order, Stp Lss, Put, Call, Bking Prfit & Lss, Shrt & Lng), Trading Optins Brkerage Huses etc.

8 Stck Market System Primary market stck marketis a secndary market trade stck fr listed crpratins Prgressive develpment f stck market

9 Primary Market The primary market prvides the channel fr sale f new securities. Primary market prvides pprtunity t issuers f securities; Gvernment as well as crprate t raise resurces t meet their requirements f investment and/r discharge sme bligatin. They may issue the securities at face value, r at a discunt/premium and these securities may take a variety f frms such as equity, debt etc. They may issue the securities in dmestic market and/r internatinal market

10 Why Cmpanies need t issue shares t Public Mst cmpanies are usually started privately by their prmter(s). Hwever, the prmters capital and the brrwings frm banks and financial institutins may nt be sufficient fr setting up r running the business ver a lng term. S cmpanies invite the public t cntribute twards the equity and issue shares t individual investrs. The way t invite share capital frm the public is thrugh a Public Issue. Simply stated, a public issue is an ffer t the public t subscribe t the share capital f a cmpany. Once this is dne, the cmpany allts shares t the applicants as per the prescribed rules and regulatins laid dwn by SEBI.

11 Secndary Market Secndary market refers t a market where securities are traded after being initially ffered t the public in the primary market and/r listed n the Stck Exchange. Majrity f the trading is dne in the secndary market. Secndary market cmprises f equity markets and the debt markets Difference between Primary and Secndary Market is In Primary Market securities are ffered t public fr subscriptin fr the purpse f raising capital r fund Secndary Market is an equity trading venue in which already existing/pre-issued securities are traded amng investrs.

12 Equity Investment When yu buy a share f a cmpany yu becme a sharehlder in that cmpany. Shares are als knwn as Equities. Equities have the ptential t increase in value ver time. It als prvides yur prtfli with the grwth necessary t reach yur lng term investment gals. Research studies have prved that the equities have utperfrmed mst ther frms f investments in the lng term. Equities are cnsidered the mst challenging and the rewarding, when cmpared t ther investment ptins. Research studies have prved that investments in sme shares with a lnger tenure f investment have yielded far superir returns than any ther investment. Hwever, this des nt mean all equity investments wuld guarantee similar high returns. Equities are high risk investments. One needs t study them carefully befre investing

13 Types f investrs Speculatrs Hedgers Arbitragers

14 Imprtant Jargns BSE Sensitive Index r SENSEX Bull Market Bear Market Delivery Intraday Dematerializatin Lng Buy Shrt Selling Stp Lss Prtfli Tick Size Averaging Bking Prfit r Lss Crash - Curciuts Right Issue Stck bnus Stck Split

15 Jargns SNP CNX NIFTY 50 Nifty CNX 100 Nifty Junir Future Index Future Cntract Margin Premium Discunt Market lt Rll ver Optins Call Put Lng Psitins Shrt psitins Expiry