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STOCK MARKET
What is fundamental Analysis?
Its consists of three Aspects1)Economic Analysis2) Industry Analysis3)Company AnalysisIts is also knows as E.I.C analysis
Its is a study which answers the question ‘which shares to buy”
It is based on the study of the fundamental parameters of the company like profits, operating income, EPS , PE ratio, debt equity ratio, order book etc
What is fundamental Analysis?
Gross Domestic Product
GDP is the market value of all good and services produced within India
It simply shows the economic progress made by the country in a year.
Most important indicator for the investment and selection of country
FII follows this data most closely
GDP Growth Rate
GDP shows country’s economic progressGDP data comes every quarterIn 2008 during world recession the world
GDP was -1.2% while India grew at 5.3%The data shows how the country is
progressing and key factor for capital flowsToday our GDP is below 5% which is
worrying Factor
GDP DATA
From 1999 to 2008 world GDP grew only 2.9%
US contributed 24.3% in 2010 from 29.8% in 1999 to world GDP
India contributed only 1.6% in 1999 to 2.3% in 2010 of world GDP
Composition of Indian GDP
Service sector has 55% contributionAgriculture has 18%Industries account for 26%Agriculture though is lowest but provides
employment to 62% of population directly or indirectly
Indian GDP can grow at 9% only if Agriculture grows at 4%
World GDP Composition
US , UK, Japan, Germany, France and Italy are service oriented economies
They all have more than 80% contribution from services sector
3 Key Parameters
70% of working population below 35% years of age
Out of total production we consume 86% and export only 14%
Our saving rate is 37% highest in (world Average 24%)
Indian produces highest number of English speaking graduates
USA consumes world 40% produces
Population is our strength
US, china & Japan suffering from ageing population.
In 2020 India will have 147 million people in working group
In 2020 China working population will reduce by 50 million
Causes of inflationThere are 2 main causes of inflation1. excessive money supply2. Demand/supply mismatchIndian economy has actual problem of
demand supply on agriculture sideBlack marketing and hoarding results in
rise of food grain prices
Data of Inflation
Inflation is calculated by two ways1. CPI (consumer price Index Method)2.WPI (wholesale price Index Method)Indian Government declares data by WPI
methodCPI always higher that WPI
Deflation
Deflation is a situation where the prices are very low but then also there is no demand for goods & services
In 2008 there was fear that deflation would set in India
But that would never occur due to huge middle class population
They always buy when prices are low
Inflation & Interest ratesContinuous price rise is called as InflationHigh Inflation leads to high Interest ratesHigh interest leads to low demand as cost
of capital goes upLow demand results in to low consumptionLow consumption results in to low GDP
growthLow GDP growth means stock market down
World interest RatesUSA 0.25%Japan 0%Bank of England 1%Europe 1%Australia 2%China 3.3%India average 9 to 10%
Capital Flows
FII Borrow money from these cheap markets
They invest in to emerging countries like India, brazil,Russia & china (BRIC)
India most Favourite for FII’s
Disinvestment Targets
Coal India Rs 15000 CrIOC Rs 19000 CrSail Rs 8000 CrMOIL India Rs 1200 CrPower Grid Rs 7000 Cr
IIP DataIIP Data Stands for Index for Industrial ProductionThis shows the Industrial production DataSeptember IIP data Comes 2% Nov 2010 IIP came 10.8% which was very good indicatorHigh data shows high demandLow data show that manufacturing is lessIn foreign countries the same Indicator is called as PMIPurchaser manager IndexReading of more than 50 shows that Economy is
expandingReading of less than 50 shows that Economy is
contractingCurrently Indian PMI Reading is at 47
Industry Life Cycle
3 main stages of Industry Life Cycle Pioneering StageExpansion Stage Maturity Stage
Valuation Ratios(Price Earning Ratio)
Two version of Price/EarningsLeading P/E= Market price per share Forcasted EPS over next 12
monthsTrailing P/E= Market price per share EPS over pervious 12 months
Can also be calculated asPE= Current Market Capitalization Net Income Attributable to shareholders
Technical Analysis of Stock Markets
Technical Analysis: (TA)
“is a financial term used to denote a security analysis discipline for
forecasting the direction of prices through the study of past market data,
primarily price and volume”
Share Price
Price is a consensus between a buyer and a Seller As
there is always a contradictory view in the market
Important Price Fields:-OpenHighLow Close
Types of charts
• Line charts – Only price field can be used, preferably close
Bar charts –difficult to understand and interpret when continuous in series
Japanese Candlestick charts – easy to understand and interpret
GDP
BILLION USD
GDP YOY GDP QOQINTEREST
RATEINFLATION
RATEJOBLESS
RATEGOV.
BUDGETDEBT/GDP
CURRENT ACCOUNT
EXCHANGE RATE
POPULATION
UNITED STATES
15685 1.60% 2.80% 0.25% 1.00% 7.30% -4.10% 101.60% -3.00 119.89 315.09
EURO AREA 12195 -0.40% 0.10% 0.25% 0.70% 12.20% -3.70% 90.60% 1.50 1.36 332.88
CHINA 8230 7.80% 2.20% 6.00% 3.20% 4.00% -1.50% 23.00% 2.30 6.09 1354.04
JAPAN 5960 2.70% 0.50% 0.00% 1.00% 4.00% -9.20% 211.70% 1.10 102.22 127.52
GERMANY 3400 1.10% 0.30% 0.25% 1.24% 5.20% 0.10% 81.00% 6.30 1.36 81.84
FRANCE 2613 0.20% -0.10% 0.25% 0.60% 10.90% -4.80% 90.20% -1.90 1.36 65.28
UNITED KINGDOM
2440 1.50% 0.80% 0.50% 2.20% 7.60% -6.10% 88.70% -3.70 1.63 63.26
BRAZIL 2435 3.30% 1.50% 10.00% 5.84% 5.20% 2.38% 65.10% -2.40 2.31 193.94
RUSSIA 2015 1.20% -0.26% 5.50% 6.30% 5.50% -0.02% 8.40% 4.80 33.14 143.35
ITALY 2013 -1.90% -0.10% 0.25% 0.75% 12.50% -3.00% 127.00% -0.70 1.36 59.39
INDIA 1842 4.40% 0.60% 7.75% 7.00% 3.80% -5.30% 67.57% -4.60 62.37 1217.00
Commodity Trading
Major Trading is done on MCX & NCDEX Commodity Exchange
Commodities AvailableBullion Gold and Silver Oil & Oilseeds
Castor Seeds, Soy Seeds, Castor Oil, Refined Soy Oil, Soymeal, Mustard SeedSpices Pepper, Red Chilli, Jeera,Turmeric Metals Zinc,Lead, Copper, Nickel, Steel ingots Energy Crude Oil, Natural Gas, Heating oil, GasolinePulses ChanaOthers Rubber, Guar Seed , Guargum , Cashew, Almond,Gur, Coffee
ACTIVE COMMODITIES
5 Products Account for more then 80% of the–MCX volume I,e Gold28%, Silver17%, Crude22%Copper15%, NGas6%, Others12%,
Delivery Requirements……..Open a Commodity demat A/cin NSDL &CDSLSales Tax \VAT \TIN Norequired for that place which
you wish to take delivery, or that location which you have received the deliveryfrom the exchange.
If youdon't have theSales Tax \VAT \TIN No,then you can appoint an agent(agent details required) I.e..Name of agent, Sales Tax \VAT \TIN Noof agent , Address & Telephone no of agent.( You can also appoint to SHAREKHAN as a agent for taking the delivery inGold & Silver)
Purely a credit balancein ledger at the time of marking delivery.
Forward Markets Commission (FMC) headquartered at Mumbai, is a regulatory authority which is overseen by the Ministry of Finance, Govt. of India. It is a statutory body set up in 1953 under the Forward Contracts (Regulation) Act, 1952. "The Act provides that the Commission shall consist of not less than two but not exceeding four members appointed by the Central Government out of them being nominated by the Central.......
How to open DE-MAT and Trading account
Individual,Patnership firm,HUF, a Body Corporate or any legal entity under the provision of The patnership act of 1932/companies Act,1956. Can open demat account.
pan card,bank details,cancel cheque and address proof & his or her Passport size Photograph etc.
Above entity can Open Trading account with above account only Minor Cannot open Trading account.
Trading account is required to do Transaction on exchanges like Bse, Nse & other Regional for buying & selling of shares
Benefits of Opening a Demat Account
Easy and convenient way to hold securities Immediate transfer of securities No stamp duty on transfer of securities Safer than paper-shares (earlier risks associated with physical
certificates such as bad delivery, fake securities, delays, thefts etc. are mostly eliminated)
Reduced paperwork for transfer of securities Reduced transaction cost No "odd lot" problem: even one share can be sold Change in address recorded with a DP gets registered with all
companies in which investor holds securities eliminating the need to correspond with each of them separately.
Transmission of securities is done by DP, eliminating the need for notifying companies.
Automatic credit into demat account for shares arising out of bonus/split, consolidation/merger, etc.
A single demat account can hold investments in both equity and debt instruments.
Traders can work from anywhere (e.g. even from home).
How to buy, Sell & Use Stoploss
29/11/2013 12:39:49 : Trade Confirmation : Sharekhan Order ID - 397055024 Exchange Order ID - 2013112902701611 Exchange DateTime - 29/11/2013 12:39:50 BOUGHT against ADANIPORTS 100 out of 100 at Rs.159 Amount Rs.15900 Exchange Trade No.- 1010205 for Customer ID - 402269 S2k ID - W414156, Name - PAWAN KUMAR
29/11/2013 12:50:07 : Trade Confirmation : Sharekhan Order ID - 397059523 Exchange Order ID - 2013112935297529 Exchange DateTime - 29/11/2013 12:50:07 SOLD against KTKBANK 142 out of 500 at Rs.102.8 Amount Rs.14597.6 Exchange Trade No.- 34099049 for Customer ID - 1509054 S2k ID - 1509054, Name - MAKARAND
29/11/2013 09:15:56 : Trade Confirmation : Sharekhan Order ID - 396909024 Exchange Order ID - 2013112900085284 Exchange DateTime - 29/11/2013 09:15:56 BOUGHT against ALOKTEXT 50 out of 50 at Rs.7.75 Amount Rs.387.5 Exchange Trade No.- 12652 for Customer ID - 1461673 S2k ID - 1461673, Name - ABHIJEETKUMAR .
29/11/2013 13:55:22 : New Order Confirmation : Your request to place Sharekhan Order ID - 397087296 Exchange Order ID - 2013112903432347 Exchange DateTime - 29/11/2013 13:55:24 NEW SELL 50 ALOKTEXT at Rs.7.3 SLTRGR Price Rs.7.5 has been CONFIRMED by the Exchange - NSE for Customer ID - 1461673, S2k ID - 1461673, Name - ABHIJEETKUMAR M MURKUMBI
Derivatives-Future & optionFuture:-A future Contract is an Agreement between
two parties to buy & sell an asset at a certain time in the future at certain price. Future contracts are special types of forward contracts in the sense that former are standardized exchange Traded contracts.
Options are of two types:- Calls & puts. Calls give buyer the right but not the obligation to buy a given quantity of the underlying Asset, at the given price on or before a given future date. Puts gives the seller the right but not the obligation to ell a given quantity of underlying Asset at a given price on or before given future date.
Margin is Required to Trade in Future contract to buy or sell future contract , This is decided by Exchange & it may change on daily basis, it depend on the Volatility of the stock or Market.
To Buy Options I,e Call or Put you need to pay premium upfront . Options buying is less risky compare to selling of Option, as Your Risk is only Confine to your premium you paid upfront.
To sell Options I,e Call or put you need to pay Margin as the risk in this case is Unlimited
THANK YOU…