Final Project on fianancial services
Transcript of Final Project on fianancial services
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TOOLS TO ANALYZESECURITIES
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HSBC
HSBC Holdings plc is a global financial services company headquartered
in London, United Kingdom.
As of A pril 2, 2008, according to Forbes magazine, HSBC was the fourth
largest bank in the world in terms of assets ($2,348.98 billion), the second
largest in terms of sales ($146.50 billion), the largest in terms of marketvalue ($180.81 billion).
It has around 8,500 offices in 87 countries, 210,000 shareholders, 300,000
staff and 128 million customers worldwide.
As of August 2010, it was the largest company listed on the London Stock
Exchange, with a market capitalization of £115.8 billion.
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HSBC I NVEST DIRECT
HSBC Invest Direct is one of India·s leading
financial services organizations providing
individuals and corporates with customized
financial management solutions.H
SBC InvestDirect·s 2000 employees provide a complete range
of investment solution to over 1,38,000 customers
in India through its 88 branches and 190
franchiusee outlets from 133 cities.
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EQUITIES
It refers to shares of company. Shares
represent a fraction of ownership in a
business. A share certificate is legal
document that specifies the amount of shares owned by shareholder but
nowadays the shares are traded in
electronic form. For this purpose the
investor has to open a Demat accountwith its broker.
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DERIVATIVES
Derivative is a product whose value is derived from the
value of one or more basic variables, called bases
(underlying asset, index or reference rate), in a
contractual manner. The underlying asset can be equity,forex, commodity or any other asset. For example, wheat
farmers may wish to sell their harvest at a future date to
eliminate the risk of a change in prices by that date. Such
a transaction is an example of a derivative. The price of
this derivative is driven by the spot price of wheat whichis the µunderlying¶.
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TYPES OF DERIVATIVES
The two types of derivatives that are traded in stock market are
Futures and O ptions.
Futures : A futures contract is an agreement between two parties to
buy or sell an asset at a certain time in the future at a certain price.
Options: O ptions are of two types ± calls and puts. Calls give the
buyer the right but not the obligation to buy a given quantity of the
underlying asset, at a given price on or before a given future date.
Puts give the buyer the right, but not the obligation to sell a givenquantity of the underlying asset at a given price on or before a given
date.
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FUNDAMENTAL ANALYSIS
Fundamental analysis is the study of economic, industry, and company
conditions in an effort to determine the value of a company's stock. The
typical approach to analyzing a company involves four basic steps:
1. Determine the condition of the general economy.
2. Determine the condition of the industry.
3. Determine the condition of the company.
4. Determine the value of the company's stock.
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P ARAMETERS
Net Profit Margin : A company's net profit margin is a profitabilityratio calculated by dividing net income by total sales.
Book Value Per Share : A company's book value is a price ratio
calculated by dividing total net assets (assets minus liabilities) by
total shares outstanding.
Current Ratio :A company's current ratio is a liquidity ratio
calculated by dividing current assets by current liabilities.
Growth In Profits : The growth in the profits of a company over
the previous years are considered.
Earnings Per Share : Earnings per share are calculated by dividing
net profits of the company with total no. of shares issued.
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T YPES OF CHARTS
Line Charts
Bar Charts
Candlestick Charts
Point & Figure Charts
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LINE CHARTS
A line chart is the simplest type of chart. Time is displayed on the bottomof the chart and prices are displayed on the side(s). Bars showing volume
for the each day can also be drawn at the bottom of the chart.
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B AR CHARTS
A bar chart displays a security·s open, high, low and closing prices.
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C A NDLESTICK CHARTS
Candlestick charts display the open, high, low and closing prices in a format
similar to a modern day bar chart, but in a manner that extenuates the
relationship between opening and closing prices.
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INTERPRETATION
Because candlesticks display the relationship between open, high, low andclosing prices, they cannot be displayed on securities that have only closing
prices, nor were they intended to be displayed on securities that lack
opening prices.
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SUPPORT A ND
RESISTA NCE
Support and resistance is a
concept in technical analysisthat the movement of the price
of a security will tend to stop
and reverse at certainpredetermined price levels.
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RESISTA NCE
A re
sistanc
eleve
l is the opposite of a support level. It is where the pricetends to find resistance as it is going up. This means the price is more likely
to "bounce" off this level rather than break through it.
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BULLM ARKET OR RISING TREND
A bull market or rising trend is associated with increasing investor confidence,
and increased investing in anticipation of future price increases.A rising trendis one in which the current highs and lows of the market are higher than the
previous highs and lows and the trend line moves upward.
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BEAR M ARKET OR F A LLING TREND
A bear market is a general decline in the stock market over a period of time.It is a transition from high investor optimism to widespread investor fear and
pessimism.A falling trend is defined by successively lower high prices and
lower low prices.
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PUTS /C A LLS R ATIO
D
eveloped byM
artin Zweig, the puts/calls ratio (µP/C Ratio¶) is a marketsentiment indicator that shows the relationship between no. of Puts to Calls
traded on the stock exchange. Interestingly it provides excellent signals for
market tops and bottoms.
InterpretationBecause investors who purchase calls expect the prices to rise and investors
who purchase the puts expect the prices to decline, the relationship between
the number of puts to calls illustrates the bullish/bearish expectations of the
investors. The higher the level of P/C ratio, the more bearish the investors
are on the market. Conversely, lower readings indicate high call volume and
thus bullish expectations. When it reaches excessive levels, the marketsusually corrects by moving the opposite direction.
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DO·S & DONT·S IN STOCK
MARKET
Let your profits run,but cut your losses
short
Sit on your hand when you don·t have a
clue
It·s never too low to sell or too high to buy
Buy the rumor,sell the fact
The trend is your friendMarkets go up the stairs and down the
elevator.
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TH ANK YOU