Technical analysis OF STOCK MARKET presentation of mba 4 sem FINANCE PPT
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This is the html version of the file http://www.bits-goa.ac.in/Departments/Humanities/forex/All%20about%20STOCK%20MARKET.PPT.Google automatically generates html versions of documents as we crawl the web.
First step to Investing in
Stock market!!!!
INDIAN STOCK MARKET
BY:
DARA RAJESH
VISHAL UGLE
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BIRLA INSTITUTE OF
TECHNOLOGY &SCIENCE ,PILANI
GOACAMPUS
STOCK MARKET
WORKING
REGULATORY FRAMEWORK
WHY DO PEOPLE BUY SHARES?
WHY STOCK MARKET IS SO
VOLATILE?
HOW TO MAKE MONEY IN STOCK
MARKET?
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ROLE OF STOCK MARKET IN
ECONOMY
INTRODUCTION:
The market for long term securities likebonds,
equity stocks is divided into PRIMARY MARKE T and SECONDARY MARKE T.
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y PRIMARY MARKE T
Deals wit h t he new issues of
securities.
y SECONDARY MARKE T
Deals wit h outstandingsecurities.
Also known as ³ STOCK MARKE T´.
Stock market??
JARGON OF EQUITY
MARKET:
y SECURI T Y
y BOND
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y STOCK
1)COMMON S T OCKS
2)PREFERRED S T OCKS
y SHARE
y MU T UAL FUNDS .
y PAR VALUE vs. MARKE T VALUE
y BULLISH vs. B EARISH
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How does the stock market
function?y Stock exchanges y Brok ers y R egistrars y Depositories and their participantsy Securities and Exchange Board of India
(SEBI)
MARKET INDICES:
y Stock market indices are t hebarometer of t he stock market .
y B SE SENSEX,NSE-50 etc are some of t he market indices.
Their usefulness:
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y Indices help to recognize broad trendsin the market.
y
The investor can use the indices toallocate the funds
rationally among the stocks.
y Technical analysts use these indices to predict the future
market.
y Indices function as a status report onthe general
economy.
JOB OF THESE INDICES:
These indices have just one job:T o capture t he price movement . So a stock
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index will reflect t he price movements of shares while a bond index captures t he
manner in wh
ich
bond prices go up ordown.
WHY STOCK PRICE
RISES?
The price of every stock increasesor decreases for t he following possiblereasons:
y News about company. y News about t he country. y Exchange rate regime. y Depends on demand
and supply for t hat stock.
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WHO SELECTS THESESTOCKS?
They are selected by t he Index committee.
Some of t he criteria t hey follow include :
1)Market capitalization.
2)Liquidity.
3 )Continuity.
4 )Industry representation.
5)Listed history.
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Whymust I Inv
est in
Shar es?
y W hy need I invest?
y Sowhat a
re the va
rio
us investmentoptions?
y W hy shares?
Other benef its of investing in shar es?
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Because t hey can make big moneyon it . Compared to your investments in
fixed deposits in banks it makes more profits ,but t he bad news is t hat you arealso expected to bear t he losses ,if any.
y 1) Possibility of high returns y 2) Easy liquidity y 3) Unbeatable tax benef its y 4) Income from dividends
What ar e the expenses dur ing a
transaction?
y Capital gains tax
y Securities transaction
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tax
y Brok erage
y Depositor y f ees
SO HOW DOES ONE BUY
SHARES?
There are basically tw o ways in which y ou can invest in shares:
y Purchase shares from
the primar y mark et
(i.e. IPO's)
y Trade in the
secondar y
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mark et, i.e.
stock exchanges.
COMPUTATION OF STOCK
INDEX:
A stock market may eit her be a price index or a wealt h index . In Indiamost of t he indices are using wealt h index
for computation of stock market .
4100/-
2800/-
TOTAL MARKET CAP
3000/-
150/-
2000/-
100/-
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20
IBM
800/-
40/-
600/-
30/-
20
INFOSYS
300/-
30/-
200/-
20/-
10
TATA
Market cap
(Rs.)
Market Price on
18/02/06
Market cap
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(Rs.)
Market Price on
09/02/06
No. of
shares
Company
Face value=Rs.10 /-
Base value=100 /-
Index present value=
(100*4100)/2800=
146.428
WHY STOCK MARKET ISSO
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VOLATILE?
y Acceptance of globalisation,internationalisation and
integration of t he Indian market wit h t heworld markets.
y Introduction of flexible exchange rateregime.
y Intro of new, innovative ,hybrid financial instruments.
y Human element . y T echnological changes.
HOW TO MAKE MONEY IN STOCK MARKET?
y patience, profound knowledge.
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y Best guess. y Diversification . y
Portfoliomanagement .
ROLE OF MARKET
ACTIVITIES IN
ECONOMY:
y In t heory t hey are required to facilitate,support, enable t he healt hy growt h and
functioning of primary markets but in practice t hey are not .
y The current focus of t hinking on t he
SENSEX, market capitalizationetc.reflects an excessive preoccupationwit h t he secondary market activity.
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y Beyond a point, t he expansion of t hesecondary markets may reduce t he
volume of activity not only on t h
e newissue market but also in t he banks,ot her financial institutions, gold, real estate and commodities.
y The multiple serious problems visitingt he stock market caution us against
too much optimism and ent husiasmabout t he stock market .
DRAWBACK S OF
INDIAN STOCK
MARKET:
y Unet hical practices. y Big irrational greed, excessive
speculation.
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y Lack of protection to interests of t hegenuine and small
investors .
y T rading is extremely t hin and restricted .
y Structural and organisational imbalance in t he growt h of t he
stock market .
y Volatility of t he market has increased over t he years.
REMED Y:
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So in order to make it flawless system
aut horities should initiate certainmeasures such as
y Single aut hority
y Demutualization. y Prescribing capital adequacy norms. y Stricter registeration of brokers y Margin requirements .
ACKNOWLEDGEMENTS:
We owe special t hanks to Dr. Patnaik sirand Dr. Monika Set hi madam for t heir helpand encouragement .
REFERENCES:
³Securities analysis and Portfoliomanagement ́
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by Punit havat hy pandian
³Financial institutions and Markets´
by L M Bhole
www.sharekhan.com
www.investopedia.com