Stock Market (Share)

A Presentation by: ashish chandak

Major Stock Exchanges in INDIA are :

BSE NSE

(Sensex) (Nifty)

What is Share ?

Shares represent a fraction of ownership in a business.

This fraction comprised of smallest unit(s) of ownership.

Thus share is a unit issued by a company that may be bought or sold on or off an exchange.What is Stock ?

Stocks in the reference of stock market are the total number of shares a person has in one company or many companies.

What is a Stock Market ?

A stock market or equity market is a market for the trading of company stock(shares) and derivatives at an agreed price.

It is an organized market where securities

of govt, semi-govt bodies and corporate enterprises are brought or sold.

Function & Purpose of Stock Market

• The stock market is one of the most important sources for companies to raise money.

• This allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market.

• In the stock market only those securities listed in the stock exchange are transacted.

Who is Stockholder ?

A stockholder (or shareholder) is an individual or company(including a corporation) that legally owns one or more shares of a company. Shareholders vary from individual stock investors to large hedge fund traders.

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Stockholders are granted privileges depending onthe class of stock, including right to vote on matterssuch as elections to the board of directors, the right to share in distributions of the company’s income,the right to purchase new shares issued by the company, and the right to a company’s assets during a liquidation of the company.

Then who is stakeholder ?

A person, group or organization that has interest or concern       in an organization.

Stakeholders can affect or be affected by the      organization's actions, objectives and policies.      Some examples of key stakeholders are creditors, directors,      employees, government (and its agencies),      owners (shareholders), suppliers, unions, and      the community from which the business draws its resources.

TradiNg

The shares of a company are in general be transferrable from one shareholder to another. This leads to buying and selling of shares termed as trading.

Investors usually buy and sell shares on the exchanges through stock brokers registered with the exchange.

Ways of Buying & Selling shares

o Through a stock broker: They arrange the transfer of stock from a seller to a buyer. Both the buyer and the seller of the share pay a commission known as brokerage to the broker o Directly from the company:-

1. If at least one share is owned, most companies will allow purchase of shares directly from the company through their investor relations departments.

2. A direct public offering is an initial public offering(IPO) in which stock is purchased directly from the company, usually without the aid of brokers.

Investment Strategies

Buying Buying stock on margin means buying stock with money borrowed against the stocks in the same account, hoping for the price to rise.

The trader eventually sells back the stock, making money if the price rose in the meantime and losing money if it fell.

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Selling In selling, the trader borrows stock then sells it on the market, hoping for the price to fall.

The trader eventually buys back the stock, making money if the price fell in the meantime and losing money if it rose. Stop-loss: It is an order placed with a broker to sell/buy a stock when it reaches a certain price. It limits an investor’s loss in a stock.

Market Conditions

Bull Market: It is a market condition in which prices of securities or group of securities are rising or are expected to rise.

Bear Market: It is a market condition in which prices of securities or group of securities are falling or are expected to fall.

Listing

What are Listing requirements ? A company may list its shares on an exchange by meeting & maintaining the listing conditions of a particular stock exchange.• Examples include minimum number of shares outstanding, minimum market capitalization, and minimum annual income.

• These requirements vary from exchange to exchange. Example: Bombay Stock Exchange(BSE) has requirements for a minimum market capitalization of Rs. 25 crore and minimum public float equivalent to Rs. 10 crore .

MARKET CAPITALIZATION

Market capitalization is the measure of the size of a business enterprise. It is calculated as the current stock price multiplied by the number of outstanding shares. It is commonly referred as market cap.

The companies were divided into large-cap, mid-cap, and small-cap based on the size of market capitalization.

Large-cap: $10billion-$100billion. Mid-cap: $1billion-$10billion. Small-cap: $100million-$1billion.

Stock market index

The movements of the prices in a market or section of a market are captured in price indices called stock market indices.

Such indices are usually market capitalization weighted, with the weights reflecting the contribution of the stock to the index. Examples: of index include Sensex, Nifty, Dow-jones, Nasdaq, Nikkei etc.

Importance and role of the stock markets

Raising capital for businesses.

Government capital-raising for development projects.

Mobilizing savings for investment.

Facilitating company growth through acquisitions.

Creating investment opportunities for small investors.

Barometer of the economy.

Various Stock Exchanges in the World