BASICS OF STOCK MARKET

❖ Share = Stock = Equity = Cash Market = Ownership = Stock

Partnership
❖ Stock is a kind of Asset
❖ It is dematerialized to remove paperwork, that is why now we
have a DEMAT ACCOUNT
❖ IPO = Initial Public Offering
❖ NSE = National Stock Exchange (We will trade in NSE) (More
volume)
❖ BSE = Bombay Stock Exchange (Ignore)
❖ Fundamental Analysis

We do this analysis when we want to invest in long-term

The movement in the stock market is mostly due to news

We will not trade based on news

❖ Technical Analysis
We will do this for trading purpose
❖ Index
Every country has its own Index of top best-performing
companies
Nifty50 is an index of the top 50 best-performing companies of
India
❖ Bullish market - When Index price is rising
❖ Bearish market - When index price is falling
❖ Sideways market - Price moving in a range
❖ Types of trading styles
Intraday - 9:15am to 3:15pm
Swing Trading - More than 1 day - up to 3 months
Investing - 3 years +
❖ Your trading style depends on your trading capital and your
nature. You have to evaluate yourself
❖ Types of participants in the stock market
Retail Investor (Public)
High Net worth Investor - H.N.I
Institutional Investor - FII(Foreign) & DII(Domestic)
❖ Short Selling
Selling at a higher price & then Buying at a lower price
 FAQ’s
1. What is Nifty50?
The NIFTY 50 is a benchmark Indian stock market index that
represents the weighted average of 50 of the largest Indian companies
listed on the National Stock Exchange. It is one of the two main stock
indices used in India, the other being the BSE SENSEX.
The Nifty 50 refers to the fifty most popular large-cap stocks that
traded at high valuations in the 1960s and 1970s. Due to their proven
growth records and continual increases in dividends, the Nifty Fifty
were viewed as "one-decision" picks: investors were told to buy and
never sell. In 1996, the Nifty 50 gained an additional meaning in the
financial industry. It refers to the NIFTY 50 Index on the National
Stock Exchange of India.
2. What is a Stock?
A stock is a general term used to describe the ownership certificates
of any company. A share, on the other hand, refers to the stock
certificate of a particular company. Holding a particular company's
share makes you a shareholder.
3. What is IPO?
An initial public offering (IPO) refers to the process of offering shares
of a private corporation to the public in a new stock issuance. Public
share issuance allows a company to raise capital from public
investors. The transition from a private to a public company can be an
important time for private investors to fully realize gains from their
investment as it typically includes share premiums for current private
investors. Meanwhile, it also allows public investors to participate in
the offering.
 4. Do the company change in Nifty50?
Nifty 50 gets shuffled two times in a year, in March and in July.
Reshuffle news comes out before months and sometimes it gets
delayed. In September when Future & Options expire, from the very
next day, the reshuffle gets effective. The new companies which have
newly entered will become effective from 25th September as the F&O
is expiring on that date. From the very first day index will start
trading and consider the weight of the new shares.

5. What is a broker?
Brokerage firms and broker-dealers are also sometimes referred to as
stockbrokers. This includes both full-service brokers and discount
brokers, who execute trades but do not offer individualized investing
advice. Most online brokers are discount brokers, at least at their basic
levels of service, in which trades are executed for free or for a small
set-price commission. Many online brokers now offer premium-level
services with higher fees.

6. What is short selling?

Short selling occurs when an investor borrows a security and sells it
on the open market, planning to buy it back later for less money.
Short-sellers bet on, and profit from, a drop in a security's price.
Short selling has a high risk/reward ratio: It can offer big profits, but
losses can mount quickly and infinitely.
 7. What is Sensex?
Sensex, otherwise known as the S&P BSE Sensex index, is the
benchmark index of India's BSE, formerly known as the Bombay
Stock Exchange.) The Sensex is comprised of 30 of the largest and
most actively traded stocks on the BSE, providing a gauge of India's
economy. The index's composition is reviewed in June and December
each year. Created in 1986, Sensex is the oldest stock index in India.
Analysts and investors use it to observe the cycles of India's economy
and the development and decline of particular industries.

8. What is FII, FPI & DII?

Foreign institutional investors (FII) or foreign portfolio investors
(FPI) refer to investors from other countries putting money in Indian
stock markets. ... Domestic institutional investors (DII) comprise local
mutual funds, insurance companies, local pension funds, and banking
and financial institutions.

9. Can we buy some stocks in both NSE & BSE?

The exchange which you choose to invest in stocks does not matter.
Both BSE and NSE are equally good and offer a robust technology
platform for buying and selling stocks. However, investors should
note that there is always a minor price difference between NSE and
BSE. For example, if XYZ stock is trading at Rs.100 on NSE the
price displayed could be Rs.99.
 10. What benefits the stock market gives to the company?
Listing stimulates liquidity, giving shareholders the opportunity to
realize the value of their investments. It allows shareholders to
transact in the shares of the company, sharing risks as well as
benefitting from any increase in the organizational value.

11. Will there always be somebody selling/buying in every

stock?
If the stock has low liquidity, yes there could be times when there are
no buyers or sellers at a specific price, so if you put a limit order to
buy or sell at a price with no other corresponding sellers or buyers,
then your order may take a while to get executed or it may not be
executed at all. You can usually tell if a stock has low liquidity by the
small size of the average daily volume, the lack of order depth, and
the large size of the gap between bids and offers. When there are no
buyers, you can't sell your shares, and you'll be stuck with them until
there is some interest from other investors.
12. What are the types of analysis?

❖ Fundamental Analysis
The goal of fundamental analysis is to determine whether a
company’s future value is accurately reflected in its current stock
price.
Fundamental analysis attempts to estimate the value of a particular
stock based on a variety of factors, such as the current finances of the
company and the prevailing economic environment. Fundamental
analysis also may include speaking with a company’s management
team and assessing how the company’s products are received in the
marketplace.
When a fundamental review is complete, the analyst may decide the
stock is an attractive opportunity because the market has
underestimated its future prospects. The analyst also may determine
the stock to be a “hold” or a “sell” if the value is fully reflected in the
price.
❖ Technical Analysis
Technical analysts evaluate recent trading movements and trends to
attempt to determine what’s next for a company’s stock price.
Generally, technical analysts pay less attention to the fundamentals
underlying the stock price.
Technical analysts rely on stock charts to make their assessment of a
company’s stock price. For example, technicians may look for a
support level and resistance level when assessing a stock’s next move.
A support level is a price level at which the stock might find support
and below which it may not fall. In contrast, a resistance level is a
price at which the stock might find pressure and above which it may
not rise.

13. What are Different kinds of trading?

❖ Intraday Trading -
Day traders are active traders who execute intraday strategies to profit
off of price changes for a given asset.
Day trading employs a wide variety of techniques and strategies to
capitalize on perceived market inefficiencies.
Day trading is often characterized by technical analysis and requires a
high degree of self-discipline and objectivity.
 ❖ Swing Trading -
Swing trading involves taking trades that last a couple of days up to
several months in order to profit from an anticipated price move.
Swing trading exposes a trader to overnight and weekend risk, where
the price could gap and open the following session at a substantially
different price.
Swing traders can take profits utilizing an established risk/reward
ratio based on a stop loss and profit target, or they can take profits or
losses based on a technical indicator or price action movements.

❖ Investing -
Position trader refers to an individual who holds an investment for an
extended period of time with the expectation that it will appreciate in
value.
Position traders are trend followers.
A successful position trader has to identify the entry/exit levels and
have a plan in place to control risk, usually via stop-loss levels.
14. What is the Margin amount and how it is useful in trading?
Margin trading is a legitimate risk and rewards investing proposition.
Margin (Leverage) offers flexibility to traders, who use the strategy to
take advantage of market opportunities by borrowing money from
their brokerage firms to buy stocks that they may otherwise not be
able to afford.
 15. What are the three types of market conditions?
❖ Bullish
❖ Bearish
❖ Sideways (Choppy)

16. What is a consolidation?

Consolidation in Technical Analysis and Trading
Consolidation is also a technical analysis term referring to security
prices oscillating within a corridor and is generally interpreted as
market indecisiveness. Put another way, consolidation is used in
technical analysis to describe the movement of a stock's price within a
well-defined pattern of trading levels.

17. Where to check Nifty 50 companies?

https://www1.nseindia.com/live_market/dynaContent/live_watch/equi
ties_stock_watch.htm

18. Where to check for different Nifty sectors?

https://www.nseindia.com/products-services/indices-sectoral

19. Why should I use the trading view website for analysis?
Whether you're into active trading or just curious about what the
market is doing from time to time, Trading View is an excellent tool
to use for researching, charting, and screening your favorite stocks.

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