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Basics of Broking: By: Kaushal Mandalia Associate Financial Planner
Basics of Broking: By: Kaushal Mandalia Associate Financial Planner
By : Kaushal Mandalia
Associate Financial Planner
M LEARNING
S Made Simple Kaushal@thefinancialplanners.in
What is Equity Market
Share = Share
Equity Market Share Market
In Business
Profit =
Earning Per Share Equity Represents Portion of BUSINESS
(PROFIT) which is GROWING
M LEARNING Kaushal@thefinancialplanners.in
S Made Simple
How to EARN From Equity Market
Equity RETURNS =
Price GAP (Capital Earnings) + Dividend
Exit Route
M LEARNING Kaushal@thefinancialplanners.in
S Made Simple
What is Stock Exchange
M LEARNING Kaushal@thefinancialplanners.in
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Electronic Trading
M LEARNING Kaushal@thefinancialplanners.in
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What is INDEX?
• Other Examples
• BSE Midcap, BSE Small Cap etc,
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Kaushal@thefinancialplanners.in S Made Simple
ORDER Execution
• Select a broker and enter into broker client agreement and fill client
registration form.
• Get a trade confirmation through phone and ask for the contract note on the
end of the day.
• Contract note describes the rate, date, time at which the trade is transacted
and brokerage rate.
M LEARNING Kaushal@thefinancialplanners.in
S Made Simple
IMPORTANT TERMS
M LEARNING Kaushal@thefinancialplanners.in
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Book Closure / Record Date
• It is the date after which company will not handle any transfer of
shares request until the benefits are transferred.
Analogy :For E.g. a company policy says, Candidate joining before 15th Sept of the year are
qualified for Performance Appraisal to be conducted at the end of Financial Year.
Kaushal@thefinancialplanners.in
Book Closure Announcement
M LEARNING
Source : Moneycontrol as on 31st October 2008 S Made Simple
No Delivery Period, Ex Dividend Date, Ex Date
• No Delivery Period
• Once company declares record date, Exchange set up No Delivery Period – A time
during which only trading is permitted and all trades are settled after the period
gets over.
• Ex Dividend Date
• The date on or after which a security begins trading without the dividend included
in the contract price.
• Ex Date
• The first date of the No Delivery Period.
• The buyers of the shares on or after Ex Date will not get any
M LEARNING
benefits of Dividend or Bonus. S Made Simple
Buy Back
M LEARNING Kaushal@thefinancialplanners.in
S Made Simple
Pay in and Pay Out
Buyer
Seller
Securities Transferred
Funds transferred to Buyer
to Seller
M LEARNING Kaushal@thefinancialplanners.in
S Made Simple
Auction
• Auction is conducted for those securities that members fall to deliver / short
deliver during pay-in
• There are three factors which give rise to auction
• Short Deliveries
• Un-rectified Bad Deliveries
• Un-rectified company obligations
• The buy / sell auction for a capital market is managed thro’ auction market
• If the shares are not bought at auction, i.e. if the shares are not offered for
sale, exchange squares up the transaction as per SEBI guidelines. Square-up
happens at the highest price from the relevant trading period till the auction
day or at 20% above the last available closing price whichever is higher.
Kaushal@thefinancialplanners.in
Fundamental Analysis
M LEARNING Kaushal@thefinancialplanners.in
S Made Simple
Example – Technical Analysis
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Key Ratios
• PE ratio
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PE Ratio
Reliance Industries Ltd
• PE ratio = Price per Share /
Earning per Share
M LEARNING Kaushal@thefinancialplanners.in
S Made Simple
Highest PE Ratio
M LEARNING Kaushal@thefinancialplanners.in
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Price to Book Value
M LEARNING Kaushal@thefinancialplanners.in
S Made Simple
Most Undervalued Stocks
M LEARNING Kaushal@thefinancialplanners.in
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Most Overvalued Stocks
M LEARNING Kaushal@thefinancialplanners.in
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Demat - Meaning
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Arbitrage
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IPO and Book Building
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Learning..
Kaushal@thefinancialplanners.in
INVESTOR’S PSYCHOLOGY
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A Small Complication
M LEARNING Kaushal@thefinancialplanners.in
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Investor psyche - wrong emotion dominates at the
wrong time
M LEARNING Kaushal@thefinancialplanners.in
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When everyone is GREEDY you should be
FEARFUL and when Everyone is FEARFUL You
should be GREEDY
WARREN BUFFET
M LEARNING Kaushal@thefinancialplanners.in
S Made Simple
Sentiments V/s Business Efficiency..
Long Term Earnings..
M LEARNING Kaushal@thefinancialplanners.in
S Made Simple
Important Parameters for Investing in Equity Market
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S Made Simple
Thank You.
M LEARNING
S Made Simple Visit : www.finance-sapm.blogspot.com