PROJECT ON SHARE MARKET

SUBMITTED BY:

RAWOOT SALEM SUHAIL

ROLL NO. : 131

SEMESTER IV, M.COM

PROJECT GUIDE:

PROF : Y.S BANDERKAR

SUBMITTED TO: UNIVERSITY OF MUMBAI

VASANTRAO NAIK COLLEGE OF ARTS, COMMERCE & BARRISTER

A. R. ANTULAY SCIENCE COLLEGE

Mhasala District Raigad-402105

ACADEMIC YEAR:

2020-2021
 ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep

regards to my guide PROF Y.S BANDERKAR for her exemplary guidance,
monitoring and constant encouragement throughout the course of this thesis.
The blessings, help and guidance given by her time to time shall carry me a long
way in the journey of life on which I am about to embark.

I also take the opportunity to express a deep sense of gratitude to my friends and

teachers for their valuable information and guidance, which helped me in

completing this task through various stages.

Lastly, I thank almighty, my parents, brother, sister and friends for their
constant encouragement without which this assignment would not be possible.
 DECLARATION

I, RAWOOT SALEM SUHAIL , ROLL NO.131 Of VASANTRAO NAIK

COLLEGE OF ARTS, COMMERCE & BARRISTER A. R. ANTULAY
SCIENCE COLLEGE Studying In M.COM, hereby declare that I have
successfully completed this project on "THE STUDY OF SHARE MARKET"
during the Academic Year 2020-2021. The information submitted is true and
original to best of my knowledge.

DATE:

____________________

PLACE :- MAHASALA SALEM SUHAIL RAWOOT

 CERTIFICATE

I hereby certify that SALEM SUHAIL RAWOOT, a student of VASANTRAO

NAIK COLLEGE OF ARTS, COMMERCE & BARRISTER A. R. ANTULAY
SCIENCE COLLEGE studying in M.COM. has completed this project on "THE
STUDY OF SHARE MARKET" under my guidance for the academic year
2020-2021. The information permitted is true and original to the best of my
knowledge.

_______________

MRS JADHAV

(PRICIPAL)

_________________ ________________

PROF Y.BANDERKAR PROF Y.BANDERKAR

DATE:-

PLACE:-MAHASALA
  OBJECTIVES

1) To get a basic understanding of the products, principle investment, players

and functioning of the stock market.

2) understand the terms and jargons used in the financial newspaper,

3) To know the regulatory framework for Indian Stock market.

4) To understand the concept of stocks and stock market.

5) To ako get important lessons about the economy and financial responsibility

6) To learn about trading of stocks in the stock exchanges.

7) To get in depth study of Indian and other global stock markets.

8) To organize stocks in a fair, transparent and competitive way

SR NO INDEX
1 EXECUTIVE SUMMARY
2 INTRODUCTION TO SHARE
MARKET

2.1 WHAT IS SHARE MARKET

CAPITAL MARKET.

PRIMARY MARKET.

2.2 SECONDARY MARKET.

2.3. EXPLAINING SHARE AND

SHARE MARKET.

2.4 TYPES OF SHARE.

2.5. SHAREHOLDERS.

2.6. WHY DOES COMPANY ISSUE

STOCKS?

2.7 ISSUE OF SHARE.

2.8 HOW ARE SHARE PRICES

SET?

2.9 NEED OF SHARE MARKET

2.10 WHY BUY SHARE?

2.11 ADVANTAGES AND

DISADVANTAGES OF SHARE
MARKET FLOTATION.
3 HISTORY OF SHARE MARKET

3.1 HISTORY

3.2 HISTORY OF INDIAN SHARE

MARKE
4 EMERGENCE OF THE SHARE
EXCHANGES

4.1 NATIONAL SHARE

EXCHANGE (NSE)

4.2 BOMBAY SHARE EXCHANGE

(BSE)

4.3 OVER THE COUNTER

EXCHANGE OF INDIA (OTCEI)

4.4 OPERATIONAL FEATURES OF

BSE AND NSE

4.5 THE ROLE OF SHARE

EXCHANGE IN THE ECONOMY
5 TRALING OF SHARE

5.1. MERITS OF OWNING SHARE.

5.2. DEMERITS OF
OWNINGSTOCK.

5.3. WHAT IS TRADING OF

SHARES?
5.4. WHO IS A SHARE BROKER?

5.5. ROLE OF SHARE BROKER IN

A SHARE MARKET

5.6. METHOD OF TRADING IN

SHARE EXCHANGES

5.7. MARKET CORRECTION

5.8. MARKET TREND

5.9. BULLS AND BEARS

5.10. OTHER ANIMALS ON THE

FARM
 5.11. BULLISH AND BEARISH
BEHAVIOR

5.12. HOW TO READ A SHARE

TABLEADO TE?

5.13. WHAT IS A SHARE CHART?

5.14. TYPES OF SHARE CHART

5.15. WHAT CAUSES SHARE

PRICES TO CHANGE

5.16. STRATEGIES FOR

INVESTING IN SHARE

5.17. RISKS THAT EVERY SHARE

FACES
6 THE INDIAN SHARE MARKET

6.1. REGULATORS IN THE SHARE

MARKET

6.2. WHAT IS SHARE INDEX

6.3. TYPES OF SHARE INDICES

6.4. INDIAN SHARE INDICES

6.5. CALCULATE BROKERAGE

RATES AND TAXES
7 GLOBAL SHARE MARKET

7.1. WORLD MARKETS

7.2. TOP 11 IMPORTANT SHARE

EXCHANGES GLOBALLY

7.3. MAJOR SHARE EXCHANGES

(TOP 21 BY MARKET
CAPITALIZATION), AS AT 31
JUNE 2014 (MONTHLY 10
 7.4 NEWYORK SHARE
EXCHANGE (NYSE)

7.6 TOKYO SHARE EXCHANGE

(TSE)
8 INTERVIEW
9 CONCLUSION
10 APPENDIX
10.1BIGGEST FASL IN THE
INDIAN SHARE MARKET

10.2 CURRENT NEWS:

 EXECUTIVE SUMMARY

In the present situation where stock market is going up and down, it is necessary
to invest consciously in the market whatever it is, this is the study about the last
two year function in stock market which enables the investor in taking decision
regarding investment. This study tells the factor which directly or indirectly
affects the market and some basic information on stock market for the new
investors or the students who have some interest in the stock market. The
objective of selecting the topic is to know about the market trends of the stock
market and the information related to the investment for future investors. The
study of fluctuations of the stock market makes the investor aquatinted with the
factor affecting the investment and stock prices can be volatile and some
analysts argue that this volatility is excessive. This is not easy to prove, since it
is difficult to assess certainty about future earnings and dividend. Companies
tend to smooth dividends, so they will be less volatile than stock prices. Volatile
stock prices do not have a major impact on consumption and capital spending
since there is a good chance that price movements in one direction may be
reversed
 INTRODUCTION TO SHARE MARKET

WHAT IS SHARE MARKET?

Definition of 'Share Market'

The market in which shares of publicly held companies are issued and traded
either through exchanges or over-the-counter markets. Also known as the equity
market, the stock market is one of the most vital components of a free-market
economy, as it provides companies with access to capital in exchange for giving
investors a slice of ownership in the company. The stock market makes it
possible to grow small initial sums of money into large ones, and to become
wealthy without taking the risk of starting a business or making sacrifices that
often accompany a high-paying career The stock market lets investors
participate in the financial achievements of the companies whose shares they
hold. When companies are profitable, stock market investors make money
through the dividends the companies pay you and by selling appreciated stocks
at a profit called a capital gain. The downside is that investors can lose money if
the companies whose stocks they hold lose money, the stocks prices goes down
and the investor sells the stocks at a loss.

CAPITAL MARKET
Definition of Capital Markets'

"Markets for buying and selling equity and debt instruments. Capital markets
channel savings and investment between suppliers of capital such as retail
investors and institutional investors, and users of capital Eke businesses,
government and individuals. Capital markets are vital to the functioning of an
economy, since capital is a critical component for generating economic output.
Capital markets include primary markets, where new stock and bond issues are
sold to investors, and secondary markets, which trade existing securities."

Capital markets typically involve issuing instruments such as stocks and bonds
for the medium term In this respect, capital markets are distinct from money
markets, which refer to markets for financial instruments with maturities not
exceeding one year Capital markets have numerous participants including
individual investors, institutional investors such mutual funds, municipalities
and governments , companies and organizations and banks and financial
institutions Suppliers of capital generally want the maximum possible return at
the lowest possible risk, while users of capital want to raise capital at the lowest
possible cost. The stock market falls under the Capital Market Structure.

PRIMARY MARKET

Definition of 'Primary Market' "A market that issues new securities on an

exchange. Companies, governments and other groups obtain financing through
debt or equity based securities. Primary markets are facilitated by underwriting
groups, which consist of investment banks that will set a beginning price range
for a given security and then oversee is sale directly to investors." Also known
as 'hew issue market " (NIM).
The primary markets are where investors can get first crack at a new security
issuance. The issuing company or group receives cash proceeds from the sale,
which is then used to fund operations or expand the business. Exchanges have
varying level of requirements which must be met before a security can be sold.

Once the initial sale is complete, further trading is said to conduct on the
secondary market. which is where the bulk of exchange trading occurs each day.
Primary markets can see increased volatility over secondary markets because is
difficult to accurately gauge investor demand for a new security until several
days of trading have occurred.

There are three ways in which a company may raise equity capital in the
primary market:

SECONDARY MARKET

Definition of 'Secondary Market :-

A market where investors purchase securities or assets from other investors,

rather than from issuing companies themselves . The national exchanges such as
the NATIONAL SHARE EXCHA NGE and the BOMBAY SHARE
EXCHANGE are secondary markets." Secondary markets exist for other
securities as well such as when funds, investment banks, or entities such as
Fannie Mae purchase mortgages from issuing lenders. In any secondary market
trade, the proceeds go to an investor rather than to the underlying
company/entity directly. A newly issued IPO will be considered a primary
market trade when the shares are first purchased by investors directly from the
underwriting investment bank; after that any shares traded will be on the
secondary maiket, between investors themselves. In the primary market prices
are often set beforehand, whereas in the secondary market only basic forces like
supply and demand determine the price of the security, In the case of assets ke
mortgages, several secondary markets may exist, as bundles of mortgages are
often re-packaged into securities like GNMA Pools and re-sold to investors.

In the secondary market, securities are sold by and transferred from one investor
. It is therefore important that the secondary market be highly liquid (originally,
the only way to create this liquidity was for investors and speculators to meet at
a fixed phase regularly ; this is how stock exchanges originated. As a general
rule , the greater the number of investors that participate in a given marketplace,
and the greater the centralization of that marketplace, the more liquid the
market.

Fundamentally, secondary markets mesh the investor's preference for liquidity

(ie , the investor's desire not to tie up his or her money for a long period of time,
in case the investor needs it to deal with unforeseen circumstances) with the
capital user's preference to be able to use the capital for an extended period of
time.

Accurate share price allocates scarce capital more efficiently when new projects
are financed through a new primary market offering, but accuracy may also
matter in the secondary market because;

1) price accuracy can reduce the agency costs of management, and make hostile
takeover a less risky proposition and thus move capital into the hands of better
mangers, and

2) accurate share price aids the efficient allocation of debt finance whether debt
offerings or institutional borrowing
EXPLAINING SHARE AND SHARE MARKET

At some point, just about every company needs to raise money, whether to open
up a West Coast sales office build a factory, or hire a crop of engineers . In each
case, they have two choices:

1) Borrow the money, or

2) raise it from investors by selling them a stake (issuing shares of stock) in the
company. When you own a share of stock, you are a part owner in the company
with a chain (however small i my be) on every asset and every penny in
earnings. Individual stock buyers rarely think like owners, and it's not as if they
actually have a say in how things are done. Nevertheless, it's that ownership
structure that gives a stock is value. If stockowners didn't have a claim on
earnings, then stock certificates would be worth no more than the paper they're
printed on As a company's earnings improve, investors are willing to pay more
for the stock. Over time, stocks in general have been sold investments. That is,
as the economy has giran , so100 have corporate earnings, and so have stock
prices. Since 1926, the average large stock has returned close to 10% a year. If
you're saving for retirement, that's a pretty good deal - much better than U.S.
savings bonds, or stashing cash under your mattress.

Of course, "over time" is a relative term. As any stock investor knows,

prolonged bear markets can decimate a portfolio. Since World War II, Wall
Street has endured several bear markets -- defined as a sustained decline of
more than 20% in the value of the Dow Jones Industrial Average. Bull markets
eventually follow these downturns, but again, the term "eventually" offers small
sustenance in the midst of the downdraft. The point to consider, then is that
investing must be considered a long-term investor if it is to be successful. In
order to endure the pain of a bear market, you need to have a stake in the game
when the tables turn positive. Of course, "over time" is a relative term. As any
stock investor knows, prolonged bear markets can decimate a portfolio. Since
World War II, Wall Street has endured several bear markets -- defined as a
sustained decline of more than 20% in the value of the Dow Jones Industrial
Average. Bull markets eventually follow these downturns, but again, the term
"eventually" offers small sustenance in the midst of the downdraft. The point to
consider, then is that investing must be considered a long-term investor if it is to
be successful. In order to endure the pain of a bear market, you need to have a
stake in the game when the tables turn positive.

TYPES OF SHARE

There are two main types of share common stock and preferred stock Common
share is, well, common. When people talk about share they are usually referring
to this type. In fact, the majority of share is issued is in this form. We basically
went over features of common share in the last section. Common shares
represent ownership in a company and a claim (dividends) on a portion of
profits. Investors get one vote per share to elect the board members, who
oversee major decisions made by management. Over the long term common
share , by means of capital growth yields higher returns than almost every other
investment. This higher return comes at a cost since common share entail the
most risk. If a company goes bankrupt and liquidates, the common shareholders
will not reaches money until the creditors, bondholders and preferred
shareholders are paid.

Preferred Stock :-

Preferred stock represents some degree of ownership in a company but usually

doesn't come with the same voting res. (This may vary depending on the
companysWith preferred shares, investors are usually guaranteed a fixed
dividend forever. This is different than common stock, which has variable
dividends that are never guaranteed. Another advantage is that in the event of
liquidation preferred shareholders are paid off before the common shareholder
thut stil after debt holders) Preferred stock may also be call she meaning that the
company has the option to purchase the shares from shareholders at anytime for
any reason Some people consider preferred stock to be more like debt than
equity. A good way to think of these kinds of shares is to see them as being in
between bonds and common shares. Common and preferred are the two main
forms of share; however, it's also possible for companies to customize different
classes of share in any way they want. The most common reason for this is the
company wanting the voting power to remain with a certain group; therefore,
different classes of shares are given different voting rights. For example, one
class an shares would be held by a select group who are given ten votes per
share while a second class would be issued to the majority of investors who are
given one vote per share. When there is more than one class of stock, the classes
are traditionally designated as Class A and Class B. Berkshire Hathaway (ticker:
BRK), has two classes of share. The different forms represented by placing the
let behind the ticker symbol in a form like this: "BRK, BRK or "BRK.A,
BRK.B"

SHAREHOLDERS

Definition of Shareholder :-

Any person company or other institution that owns at least one share of a
company's stock . Shareholders are a company's owners. They have the
potential to profit if the company does well but that comes with the potential to
lose if the company does poorly. A shareholder my ask be referred to as a
"stockholder" Unlike the owners of sole proprietorships or partnerships,
corporate shareholders are not personaly able for the company's debts and other
obligations. As corporate shareholders do not play a major role in running the
company. The board of directors and executive management perform that
function Common stockholders are, however, able to vote on corporate matters,
such as who sits on the board of directors and whether a proposed merger
should go through (preferred stockholders usually do not have voting rights).
They also benefit when the company performs well and its share price increases
and they have the right to trade their shares on a share exchange, which makes
share a highly Squid instalment Shareholders do have rights, which are defined
in the corporation's charter and bylaws. They can inspect the company's books
and records, sue the corporation for misdeeds of the directors and officers, and
the company they have a right to a share of the proceeds. However . creditors
bondholders and preferred stockholders have precedence over common
stockholders in a liquidation. Shareholders also have a right to receive a portion
of any dividends the company declares

Shareholders can attend the corporation's annual meeting to learn about the
company's performance, vote on who sits on the board of directors and other
matters. They can also listen to the meeting via conference call and vote by
proxy through the mail or online. To learn more about a company's policies
toward shareholders, consul the company's corporate governance policies

WHY DOES COMPANY ISSUE STOCKS?

Why would the founders share the profits with thousands of people when they
could keep profits to themselves? The reason is that at some point every
company needs to "raise money". To do this, companies can either borrow it
from somebody or raise à by selling part of the company, which is known as
issuing stock. A company can borrow by taking a ban from a bank or by issuing
bonds. Both methods come under "debt financing". On the other hand, issuing
stock is called "equity financing". Issuing stock is advantageous for the
company because it does not require the company to pay back the

money or make interest payments along the way All that the shareholders get in
return for their money is the hope that the shares will someday be worth more
than what they paid for them The first sale of a stock, which is issued by the
private company itself is called the initial public offering (IPO) . It is important
that you understand the distinction between a company financing through debt
and financing through equity. When you buy a debt investment such as a bond,
you are guaranteed the return of your money (the principal) along with
promised interest payments .This isn't the case with an equity investment. By
becoming an owner, you assume the risk of the company not being successful -
just as a small business owner isn't guaranteed a return, neither is a shareholder.
Shareholders earn a lot if a company is successful, but they also stand to lose
their entire investment if the company isn't successful
 ISSUE OF Share

Corporations issue shares of stock to raise money for their business. The shares
that are issued represent the amount of money invested by the shareholders in
the company. Shareholders have an ownership stake in the company and enjoy
certain rights such as voting rights and the receipt of dividends. Therefore it is
very important to consider how to issue stock when organizing your
corporation.

Determine how much stock the corporation will be authorized to issue. The
Articles of Incorporation will set out the maximum number of shares that the
corporation can issue to potential shareholders. This does not mean that the
corporation must issue all of those shares. New corporations will likely hold
back shares so that, if necessary, it can raise capital at a later date . Set forth the
value of the shares that will be issued. The value of each share should be
proportionate to the company's net worth The shares may be marked with a par
amount establishing the minimum amount that the shares can be purchased from
corporation or with a no par amount having no set price for purchase of the
share of stock. The corporation must receive consideration of some value for
each share issued. Common preferred Determine the class of the shares to be
issued corporation will generally issue common stock or preferred stock where
holders of common share would get a dividend following those of preferred
stock Determine how many shares the corporation will initially issue. Generally
this depends on the size of the corporation. In a small corporation the initial
shares may be based upon the contribution that the shareholders are making to
the business. This may be the most important factor when issuing stocks as the
original owner or largest contributor may want to have controlling (51%)
interest in the company. There is no requirement on the number of shares that
have to be issued. The corporation may issue as few as 1 share of stock. There
may be an issue as to the amount of capitalization that the corporation needs.
Some states may require that the corporation have a minimum amount of assets,
know as capitalization, before starting its operation. Make sure you are in
compliance with state and federal securities law. The amount of compliance
again may be affected by the size of the corporation. Small corporations with
only family members participating in the business and closed corporations with
a limited number of shares may not have to register their securities offerings
with the applicable state or federal agencies. Such registration is likely with a
public offering Draft the Share Subscription Agreement. Stock subscription
agreements should include the share price, number of shares purchased and the
transaction details. The certificates should be professionally printed as hard
copies and be issued upon the shareholder's purchase .Whenever a company
wants to raise funds for further expansion or settling up a new business venture,
they have to either take a ban from a financial organization or they have to issue
shares through the share market. In fact the stock market is the primary source
for any company to raise funds for business expansions. If a company wants to
raise some capital for the business it can issue shares of the company that is
basically part ownership of the company. To issue shares for the investors to
invest in the stocks a company needs to get to a stocks exchange and through
the primary market of the stock exchange they can issue the shares and get the
funds for business requirements. There are certain rules and regulations for
getting Easted at a stock exchange and they need to fulfill some criteria to issue
stocks and go public. The stock market is primarily the place where these
companies get listed to issue the shares and raise the find. In case of an already
Easted public company, they issue more shares to the market for collecting
more funds for business expansion. For the companies which are going public
for the first time. they need to start with the Initial Public Offering or the IPO.
In both the cases the companies have to go through the stock market.

This is the primary function of the stock exchange and thus they play the
most important role of supporting the growth of the industry and commerce in
the country. That is the reason that a rising stock market is the sign of a
developing industrial sector and a growing economy of the country. Of course
this is just the primary function of the stock market and just an half of the role
that the stock market phys. The secondary function of the stock market is that
the market plays the role of a common platform for the buyers and sellers of
these stocks that are listed at the stock market. It is the secondary market of the
stock exchange where retail investors and institutional investors buy and sell the
stocks. In fact it is these stock market traders who raise the fund for the
businesses by investing in the stocks
 HOW ARE SHARE PRICES SET?

When a company goes public though an initial public offering (IPO), an

investment bank evaluates the company's current and projected performance
and health to determine the value of the IPO for the business. The bank can do
this by company the company with the IPO of another similar company, or by
calculating the net present value of the film. The company and the investment
bank will meet with investors to help determine the best IPO price through a
series of road shows. Finally, after the valuation and road shows, the firm must
meet with the exchange, which will determine if the IPO price is fair Once
trading starts, share pairs are largely determined by the forces of supply and
demand. A company that demonstrates long-term earnings potential may attract
more buyers, thereby enjoying an increase in share prices. A company with a
poor out book, on the other hand, may attract more sellers than buyers, which
can result in lower prices. In general prices rise during periods of increased
demand when there are more buyers than sellers . Prices fill during periods of
increased supply when there are more sellers than buyers. A continuous rise in
prices is known as an uptrend, and a continuous drop in prices in called a
downtrend. Sustained up trends from a "bull" market and sustained downtrends
are called "bear" markets. Other factors can affect prices and cause sudden or
temporary changes in price. Some examples of this include earnings reports,
political events, financial reports and economic news. Not all news or reports
affect all securities. For example, the stocks of companies engaged in the gas
and oil industry may react to the weekly petroleum status report from the U.S.
Energy Information Administration (the EIA report"). Stock prices can also be
driven by what is known as herd against , which is the tendency for people to
mimic the action of a larger group. For example, as more and more people buy a
stock. pushing the price harder and higher other people will jump on board,
assuming that all the other investors must be reels for that they know something
not everyone . There may be no fundamental or technical support for the price
increase, vet investors continue to buy because others are doing so and they are
afraid of missing out. This is one of many phenomena studied under the
umbrella of fiancé
 NEED OF SHARE MARKET

Share market is an important part of the economy of a country. The stock

market plays pivotal role in the growth of the industry and commerce of the
country that eventually affects the economy of the country to a great extent.
That is reason that the government, industry and even the central banks of the
country keep a close watch on the happenings of the stock market. The stock
market is important from both the industry's point of view as well as the
investor's point of view. Whenever a company wants to raise funds for further
expansion or settling up a new business venture, they have to either take a ban
from a financial organization or they have to issue shares through the stock
market. In fact the stock market is the primary source for any company to raise
funds for business expansions. If a company wants to raise some capital for the
business it can issue shares of the company that is basically part ownership of
the company. To issue shares for the investors to invest in the stocks a company
needs to get insteed to a stocks exchange and through the primary market of the
stock exchange they can issue the shares and get the funds for business
requirements. There are certain rules and regulations for getting Easted at a
stock exchange and they need to fulfill some criteria to issue stocks and go
public. The stock market is primarily the place where these companies get listed
to issue the shares and raise the find. In case of an already Ested public
company, they issue more shares to the market for collecting more funds for
business expansion. For the companies which are going public for the first time.
they need to start with the Initial Public Offering or the IPO. In both the cases
the companies have to go through the stock market.

This is the primary function of the stock exchange and thus they play the
most important role of supporting the growth of the industry and commerce in
the country. That is the reason that a rising stock market is the sign of a
developing industrial sector and a growing economy of the country. Of course
this is just the primary function of the stock market and just an half of the role
that the stock market phys. The secondary function of the stock market is that
the market plays the role of a common platform for the buyers and sellers of
these stocks that are listed at the stock market. It is the secondary market of the
stock exchange where retail investors and institutional investors buy and sell the
stocks. In fact it is these stock market traders who raise the fund for the
businesses by investing in the stocks. For investing in the stocks or to trade in
the stock the investors have to go through the brokers of the stock market.
Brokers actually accurate the buy and sell orders of the investors and settle the
deals to keep the stock trading alive. The brokers basically act as a middle man
between the buyers and sellers. Once the buyer places a buy order in the stock
market the brokers finds a seller of the stock and thus the deal is closed. All
these take place at the stock market and it is the demand and supply of the stock
of a company that determines the price of the stock of that particular company.
So the stock market is not only providing the much required funds for boosting
the business, but also providing a common place for stock trading. It is the stock
market that makes the stocks a liquid asset unlike the real estate investment. It is
the stock market that makes it possible to sell the stocks at any point of time and
get back the investment along with the profit. This makes the stocks much more
liquid in nature and thereby attracting investors to invest in the stock market.

WHY BUY SHARE?

Ownership has its privileges :-

As a shareholder, you have some basic rights. You can vote for or against
the candidates who've been nominated to the company's board of directors.
They're the people who set company policy and choose the chief executive who
runs the business. You can also vote for or against proposals the other
shareholders make to influence what happens at the company and how it is
managed. You also have the right to sell your stock at any time- although you
may choose to hold onto à for years. Let's be honest. Shareholder rights aren't
the reason you buy stock. The reason is to make money by investing in
companies you believe will make money. In the language of investing, you're
seeking a positive return.
ADVANTAGES AND DISADVANTAGES OF SHARE MARKET

FLOTATION

Even if your business is suited to flotation, it may not be the right choice for
you. Being a public company can present a range of benefits to your business,
but there are also issues that might require careful consideration The benefits of
stock market flotation could include giving access to new capital to develop the
business making it easier for you and other investors including venture
capitalists to realise their investment allowing you to offer employees, extra
incentives by granting share options - this can encourage and motivate your
employees to work towards long-term goal a value on your business increasing
your public profile, and providing reassurance to your customers and suppliers
allowing you to do business - eg acquisitions by using quoted shares as currency
creating a market for the company's shares However, you should also consider
the following potential problems: Market fluctuations - your business may
become vulnerable to market fluctuations beyond your control - including
market sentiment, economic conditions or developments in your sector. Cost the
costs of flotation can be substantial and there are also ongoing costs of being a
public company, such as higher professional fees. Responsibilities to
shareholders in return for their capital, you will have to consider shareholders'
interests when running the company - which may differ from your own
objectives .The need for transperancy - public companies must comply with a
wide range of additional regulatory requirements and meet accepted standards
of corporate governance including transperancy, and needing to make
announcements about new developments. Demands on the management team
managers could be distracted from numbring the business during the flotation
process and through needing to deal with investors afterwards. Investor
relations to maximise the benefits of being a public company and attract further
investor interest in shares, you will need to keep investors informed. Employees
may become demotivated if shares are only offered to selected employees. there
could be resentment. Shareholding employees could feel that there is little left
to work for if they are sitting on shares
 HISTORY

During the Roman Republic, the state contracted (leased) out many of its
services to private companies. These government contractors were called
publican, or socyties public as individual company. These companies were
similar to modern corporations , or joint-stock companies more specifically, in
couple of aspects. They issued shares called parties (for large cooperatives) and
particular which were small shares that acted like today's over-the-counter
shares. Polybius mentions that "almost every citizen" participated in the
government leases. There is also an avidance that the price of stocks fluctuated.
The great Roman orator Cicero speaks of parties tempore which means 'share
that had a very high price at that time." This implies a fluctuation of price and
stock market behavior in Rome.

Around 1250 in France at Toulouse, 96 shares of the Milling Company were

traded at a value that depended on the profitability of the mills the society
owned. As early as 1288, the Swedish mining and forestry products company
has documented a stock transfer, in which that the Bishop of Vastars acquired a
12.5% interest in the mine (or more specifically, the mountain in which the
copper resource was available, Great Copper Mountain) in exchange for an
estate.The earliest recognized joint-stock company in modern times was the
English (British) East India Company, one of the most famous joint-share
companies . It was granted an English Royal Charter by Elizabeth I on
December 31, 1600, with the intention of favouring trade privileges in India.
The Royal Charter effectively gave the newly created Honourable East India
Company (HEIC) a 15-year monopoly on all trade in the East Indies. The
Company transformed from a commercial trading venture to one that virtually
India as it acquired auxiliary governmental and military functions, until its
dissolution. Soon afterwards, in 1602, the Dutch East India Company issued the
first shares that were made trade able on the Amsterdam Stock Exchange, an
invention that enhanced the ability of joint stock companies to attract capital
from investors as they now easily could dispose of their shares. The Dutch East
India Company became the first multinational corporation and the first mega
corporation. Between 1602 and 1796 it had traded 2.5 million tons of cargo with
Asia on 4.785 ships and had sent a million Europeans to work in Asia,
surpassing all other rivals. The innovation of joint ownership made a great deal
of Europe's economic growth possible following the Middle Ages. The
technique of pooling capital to finance the building of ships, for example, made
the Netherlands a maritime superpower. Before adoption of the joint-stock
corporation, an expensive venture such as the building of a merchant ship could
be undertaken only by governments or by very wealthy individuals or families.
Economic historians find the Dutch stock market of the 17th century
particularly interesting: there is clear documentation of the use of stock futures,
stock options, short selling the use of credit to purchase shares, a speculative
bubble that crashed in 1695, and a change in fashion that unfolded and reverted
in time with the market (in this case it was headdresses instead of hemlines). Dr.
Edward Stringham also noted that the uses of practices such as short selling
continued to occur during this time despite the government passing laws against
it. This is unusual because I shows individual parties fulfilling contracts that
were not legally enforceable and where the parties involved could incur a loss.
Stringham argues that this shows that contracts can be created and enforced
without state sanction or, in this case, in spite of laws to the contrary

HISTORY OF THE INDIAN STOCK MARKET-THE ORIGIN

One of the oldest stock markets in Asia, the Indian Stock Markets have a 200
years old history. 18th Century East India Company was the dominant
institution and by end of the century, business in its loan securities gained full
momentum. In 1830's Business on corporate stocks and shares in Bank and
Cotton presses started in Bombay. Trading list by the end of 1839 got broader.
1840's Recognition from banks and merchants to about half a dozen brokers
1850's Rapid development of commercial enterprise saw brokerage business
attracting more people into the business 1860's The number of brokers increased
to 60 1860-61 The American Civil War broke out which caused a stoppage of
cotton supply from United States of America: marking the beginning of the
"Share Maria in India 1862-63 The number of brokers increased to about 200 to
250 1865 A disastrous slump began at the end of the American Civil War (as an
example, Bank of Bombay Share which had touched Rs. 2850 could only be
sold at Rs. 87) Independance Scenario - Establishment Different Stock
Exchanges 1874 With the rapidly developing share trading business, brokers
used to gather at a street (now well known as " Dalal Street ") for the purpose of
transacting business . 1875 "The Native Share and Stock Brokers Association"
(also known as "The Bombay Stock Exchange") was established in Bombay
1880's Development of cotton mills industry and set up of many others 1894
Establishment of "The Ahmedabad Share and Stock Brokers' Association
1880-90's Sharp increase in share prices of jute industries in 1870's was
followed by a boom in tea stocks and coal

EMERGENCE OF THE SHARE EXCHANGES

Now, I will mention in short on the main stock exchanges of India, i.e. NS
rational Stock Exchange) BSE (Bombay Stock Exchange) and OTCEI (Over
The Counter Exchange Of India. Though OTCEI plays a part of the key rock,
NSE and BSE are the most important Stock Exchanges in India, which
dominates and influences the Indian economy

The National Stock Exchange (NSE) :-

is India's leading stock exchange covering various cities and towns across the
country. NSE was set up by leading institutions to provide a modern, fully
automated screen-based trading system with national reach The Exchange has
brought about unparalleled transparency, speed & efficiency safety and market
integrity. It has set up facilities that serve as a model for the securities industry
in terms of systems, practices and procedures.
NSE has played a catalytic role in reforming the Indian securities market in
terms of microstructure, market practices and trading volumes. The market
today uses state-of-art information technology to provide an efficient and
transparent trading, clearing and settlement mechanism, and has witnessed
several innovations products services viz. demutualisation of stock exchange
governance, screen based trading, compression of settlement cycles,
dematerialisation and electronic transfer of securities, securities lending and
borrowing professional of trading members, fine-tuned risk management
systems, emergence of clearing corporations to assume counterparty risks,
market of debt and derivative instruments and intensive use of information
technology. The National Stock Exchange of India Ltd. (NSE) located in the
financial capital of India, Mumbai National Stock Exchange (NSE) was
established in the mid 1990s as a demutualised electronic exchange. NSE
provides a modem, fully automated screen-based trading system, with over two
trading terminal, through which investors in every nook and corner of Indian
trade.

NSE has a market capitalisation of more than USS15 trillion and Number of
securities (equities segment) available for trading are 3,091 as on June 2014.
Though a number of other exchanges exist . NSE and the Bombay Stock
Exchange are the two most significant stock exchanges in India, and between
them are responsible for the vast majority of share transactions, NSES flagship
index, the S&P CNX NIFTY, is used extensively by investors in India. and
around the world to take exposure to the Indian equities market NSE was
started by leading Indian financial institution at the behest of the Government of
India to bring transparency to the Indian market, and has a diversified
shareholding comprising domestic and global investors. The domestic investors
includes Life Insurance Corporation of India, GIC, State Bank of India and
Infrastructure Development Finance Company (IDFC) Lad, while the foreign
investors include MS Strategic (Mauritius) Strategic Holdings Mauritius
Limited, Tiger Holdings and Norwest Venture Partners X FII-Mauritius. It
offers trading, clearing and settlement services in equity, debt and equlity
derivatives. It is India's largest exchange, globally in cash market trades, in
currency trading and index options. As on June 2013, NSE has 1673 VS AT
terminals and 2720 lease lines, spread over more than 2000 cities across India.
The exchange was incorporated in 1992 as a tax-paying company and was
recognized as a stock exchange in 1993 under the Securities Contracts
(Regulation) Act, 1956, when Mr. P. V. Narasimha Rao was the Prime Minister
of India and Dr. Manmohan Singh was the Finance Minister. NSE commenced
operations in the Wholesale Debt Market (WDM) segment in June 1994. The
Capital market (Equities) segment of the NSE commenced operations in
November 1994, while operations in the Derivatives segment commenced in
June 2000.

BOMBAY SHARE EXCHANGE (BSE)

The Bombay Share Exchange is the oldest exchange in Asia. It traces its history
to 1855, when four Gujarati and one Parsi stockbroker would gather under
banyan trees in front of Mumbai Town Hall The location of these meetings
changed many times as the number of brokers constantly increased. The group
eventually moved to Dalal Street in 1874 and in 1875 became an official
organization known as "The Native Share & Stock Brokers Association". On 31
August 1957, the BSE became the first share exchange to be recognized by the
Indian Government under the Securities Contracts Regulation Act. In 1980, the
exchange moved to the Phirare Jeejeebhoy Towers at Dahl Street, Fort area. In
1986, à developed the BSE SENSEX index, giving the BSE a means to measure
overall performance of the exchange. In 2000, the BSE used this index to open
its derivatives market, trading SENSEX futures contracts The development of
SENSEX options along with equity derivatives followed in 2001 and 2002,
expanding the BSE's trading platform. Established in 1875, BSE Ltd. (formerly
known as Bombay Stock Exchange Ltd. and established as "The Native Share
and Stock Brokers Association") is one of Asia's fastest stock exchanges, with a
speed of 200 microseconds and one of India's leading exchange groups. BSE is
a corporatized and entity, with a broad shareholder-base that includes two
leading global exchanges, Deutsche Bourse and Singapore Exchange, as
strategic partners, BSE provides an efficient and transparent market for trading
in equity, debt instruments, derivatives, and mutual funds. It also has a platform
for trading in equities of small-and-medium enterprises (SME). Over the past
139 years, BSE has facilitated the growth of the Indian corporate sector by
providing an efficient capital-raising platform More than 5000 companies are
listed on BSE, making it the world's top exchange in terms of listed members.
The companies listed on BSE Lad. command a total market capitalization of
USD 1.51 Trillion as of May 2014 It is also one of the world's leading
exchanges (3rd largest in March 2014) for Index options trading (Source: World
Federation of Exchanges). BSE also provides a host of other services to capital
market participants, including risk management, clearing, settlement, market
data services, and education. It has a global reach with customers around the
world and a ration-wide presence. BSE systems and processes are designed to
safeguard market integrity, drive the growth of the Indian capital market, and
stimulate inovation and competition across all market segments. BSE is first
exchange and the second in the world to obtain an ISO 9001 2000 certification
and the Information Security Management System Standard BS 7799-2-2002
certification for its On-Line trading System (BOLT). It operates one of the most
respected capital market educational institutes in the country (the BSE Institute
Ltd.), BSE also provides depository services through its Central Depository
Services Ltd. (CDSL) arm BSE's popular equity index the S&P BSE SENSEX
(Formerly SENSEX)-is India's most widely tracked stock market benchmark
index. It is traded internationally on the EUREX as well as leading exchanges of
the BRCS nations (Brazil, Russia, China and South Africa). On Tuesday, 19
February 2013 BSE has entered into Strategic Partnership with S&P DOW
JONES INDICES and the SENSEX has been renamed as 'S&P BSE SENSEX
OVER THE COUNTER EXCHANGE OF INDIA (OTCED The OTC
Exchange Of India (OTCEI), also known as the Over-the-Courter Exchange of
India, is based in Mumbai Maharashtra. An electronic stock exchange based in
India that is comprised of small and medium-sized firms booking to gain access
to the capital markets. Like electronic exchanges in the U.S. such as the Nasdaq,
there is no central place of exchange and all trading is done through electronic
networks. It is India's first exchange for small companies, as well as the first
screen-based nationwide stock exchange in India. OTCEI was set up to access
high-technology enterprising promoters in raising finance for new product
development in a cost-effective manner and to provide a transparent and
efficient trading system to investors. OTCEI is promoted by the Unit Trust of
India, the Industrial Credit and Investment Corporation of India, the Industrial
Development Bank of India, the Industrial Finance Corporation of India. and
other institutions and is a recognised stock exchange under the SCR Act. OTC
Exchange Of India also known as Over-the-Country Exchange of India or
OTCEI was set up to access high-technology enterprising promoters in raising
finance for new product development in a cost effective manner and to provide
transparent and efficient trading system to the investors The OTC Exchange Of
India was founded in 1990 under the Companies Act 1956 and was recognized
by the Securities Contracts Regulation Act. 1956 as a stock exchange. Features
of OTCEI Introduced Screen Based trading for the fint time in Indian Stock
market Trading takes place through a network of computers of over the counter
(OTC) dealers located at several places, Inked to central OTC computers. All
the activities of OTC trading process was fully computerized.

OPERATIONAL FEATURES OF BSE AND NSE:

The leading share exchanges in India have developed itself to a large

extentsince its emergence. These stock exchanges aim at offering the investors
and traders better transparency, genuine settlement cycle, honest transaction and
produce and solve investor grievances if any. Please Note: The researcher has
not covered all the operational features of both the stock exchanges, but has
taken into consideration only the ones which are important to understand the
thesis. The aim to describe these operational features is for better understanding
of the working of stock exchanges. This is done for the purpose of easy
understanding from the reader's point of view Let us see and understand its
general operational features.

The Role of the Share Exchange in the Economy

Share exchanges a vital role in the functioning of the economy by providing the
back bone to a modern nation's economic infrastructure. Share exchanges help
companies raise money to expand. They also provide individuals the ability to
invest in companies. Share exchanges provide order and impose regulations for
the trading of share. Finally, stock exchanges and all of the companies that are
associated with the share exchanges provide hundreds of thousands of jobs
Business Expansion Share exchanges provide companies the ability to raise
capital to expand their businesses. When a company needs to raise money they
can sell shares of the company to the public. They accomplish this by ksting
their shares on a share exchange. Investors are able to buy shares of public
offerings and the money that is raised from the investors is used by the company
to expand operations, buy another company or hire additional workers. All of
this leads to increased economic activity which helps drive the economy.

TRADING OF SHARE

MERITS OF OWNING STOCKS

Earn dividends:-

Dividends are nothing but a part of company's profits distributed to its share
holders. The company's management may declare dividends either in between a
financial year (called interim dividends) or at the end of the financial year
(called final dividends). However, it is not mandatory for the companies to pay
dividends. It can use the profits for alternative uses like expansion The decision
to pay or not to pay dividends is taken at the annual meeting by the majority
voting of the shareholders. Blue-chip companies (large companies) generally
are consistence dividend payers.

Capital appreciation :-

As the company expands and grows, it acquires more assets and makes more
profit. As a result, the value of is business increases. This, in turn, drives up the
value of the stock. So when you sell you will receive a premium over what you
paid. This is known as capital gain and this is the main reason why people
invest in stocks. They aim capital appreciation.

Receive bonus shares:-

For the time being, let us understand that bonus shares are - Free shares are
given to you Later on we will discuss about bonus shares in detail
Rights issue :-

A company may require more funds to expand it's business and for that, it may
need more funds. 1 such cases, the company can issue shares to the public.
However, before approaching the public, the existing shareholders will be given
a chance to subscribe to more shares if they want. That's called a rights issue.
This is done in order to ensure that the existing shareholders maintain the same
degree of control in the company. Thus you can maintain the participation in the
company profits

Stocks can be pledged :-

Stocks are considered as assets and hence, banks accept shares as security for
raising bans. Should there be an emergency, shares can quickly pleadge to raise
funds. Apart from that . Brokerage firms allow you to money from their account
based on the current share holding you have in your demat account maintained
with them If you want to utilize a sudden surprise opportunity in markets, but if
you don't have the cash right now, you can adopt this route.

High liquidity :-

Stocks are highly liquid. It can be converted into cash in no time. With online
trading, all it takes is the click of button to sell you holdings. You can receive
your cash in two days

Capital appreciation or dividends:-

The above mentioned income sources may not be present in every company you
buy. For example if fou're buying company that has a huge potential to grow. I
may not pay it's surphs as dividends. Instead, à will be used for further growth.
In such cases, huge capital appreciation may happen. So depending upon your
investment strategy, you'll have to choose what you want. It's always wise to go
for capital appreciation rather than dividends
 DEMERITS OF OWNING SHARE

Since common stock represents ownership of a business, stockholders are the

last to get paid. Eke all other owners. A company must first pay its employees,
suppliers, creditors, maintain is facilities and pay its taxes. Any money left can
then be distributed among owners.

While shareholders are company owners, they do not enjoy all of the rights and
privileges that the owners of privately held companies do. For example, they
cannot normally walk in and demand to review in detail the company's books

Investors in a company not know all that there is to know about the company.
This limited information can sometimes cause investment decision-making to
be difficult. Stock prices tend to be volatile. Prices can be erratic, rising and
declining quickly. Such decides often cause investors to panic and sell which
actually only serves to back in their basses. Stock values can sometimes change
for no apparent reason which can be quite frustrating for the investor who is
trying to anticipate the stock's behaviour based on the actual performance of the
company

WHAT IS TRADING OF SHARE?

Most shares are traded on exchanges, which are places where buyers and sellers
meet and decide on a price. Some exchanges are physical locations where
transactions are carried out on a trading floor. You've probably seen pictures of
a trading floor, in which traders are wildly throwing their arms up . waving
yelling, and signaling to each other. The other type of exchange is virtual
composed of a network of computers where trades are made electronically The
purpose of a stock market is to facilitate the exchange of securities between
buyers and sellers, reducing the risks of investing Just imagine how difficult it
would be to sell shares if you had to call around the neighbourhood trying to
find a buyer. Really a stock market is nothing more than a super-sophisticated
farmers' market linking buyers and sellers.

WHO IS A SHARE BROKER?

Definition of 'Share broker'

1. An agent that charges a fee or commission for executing buy and sell orders
submitted by an eastor.

2. The firm that acts as an agent for a customer, charging the customer a
commission for is services.

A stockbroker is an individual /organisation who are specially given license to

participate in the securities market on behalf of clients. The stockbroker has the
role of an agent. When the Stockbroker acts as agent for the buyers and sellers
of securities, a commission is charged for this service.

As an agent the stock broker is merely performing a service for the investor.
This means that the broker will buy for the buyer and sell for the seller, each
time making sure that the best price is obtained for the client.

An investor should regard the stockbroker as one who provides valuable service
and information to assist in making the correct investment decision. They are
adequately qualified to provide answers to a number of questions that the
investor might need answers to and to assist in participating in the regional
market. Here are some questions which arise in the minds of the investors
before the take help of the brokers for investing their money in a particular
company.

Are they governed by any Rules and Regulations?

Of course, yes. Stock brokers are govermnet by SEBI Act, 1992, Securities
Contracts (Regulation) Act, 1956, Securities and Exchange Board of India
[SEBI (Stock brokers and Sub brokers) Rules and Regulations, 1992], Rules,
Regulations and Bye laws of stock exchange of which he is a member as well as
various directives of SEBI and stock exchange issued from time to time. Every
stock broker is required to be a member of a stock exchange as well as
registered with SEBI. Examine the SEBI registration number and other relevant
details can be found you from the registration certificate issued by SEBI.

How do I know whether a broker is registered or not?

Every broker displays registration detail on their website and on all the official
documents. You can confirm the registration details on SEBI website. The SEBI
website provides the details of all registered brokers. A broker's registration
number begins with the letters "INB" and that of a sub broker with the letters
"INS"

What are the documents to be signed with stock broker?

Before start of trading with a stock broker, you are required to furnish your
details such as name, address, proof of address, etc. and execute a broker client
agreement. You are also entitled to a document called 'Risk Disclosure
Document, which would give you a fair idea about the risks associated with
securities market. You need to go through all these documents carefully.

SUB BROKERS:-

According to the BSE website Sub-broker" means any person not being a
member of a Stock Exchange who acts on behalf of a member-broker as an
agent or otherwise for assisting the investors in buying selling or dealing in
securities through such member-brokers. Al Sub-brokers are required to obtain
a Certificate of Registration from SEBI without which they are not permitted to
deal in securities SEBI has directed that no broker deal with a person who is
acting as a sub-broker unless he is registered with SEBI and it shall be the
responsibility of the member-broker to ensure that his clients are not acting in
the capacity of a sub-broker unless they are registered with SEBI as a sub-
broker. It is mandatory for member-brokers to enter into an agreement with all
the sub-brokers. The agreement bys down the rights and responsibilities of
member-brokers as well as sub-brokers

ROLE OF SHARE BROKER IN A SHARE MARKET

When you plan to start investing in a stock market, the first thing you have to do
is to choose a share broker. It is just like choosing a car you think is most
suitable for you. You can thoroughly research the whole market in order to find
the best car for you but require a medium or a venue to execute the actual
transaction. The same strategy is needed when you want to buy share in a share
market. You can select a company to invest in by conducting detailed research
about is future prospects but you still need to have a broker to make the final
transaction and purchase its share from the share market.
 A share broker acts as the agent of an investor and represents his clients
to buy or sell stocks, derivatives and other securities.

The term share broker applies to companies that deal in securities as well as to
its employees who are technically working for the brokerage and are its
registered representatives. Most share brokers work far away from share trading
fours. The primary role of a stock broker is to execute transactions on behalf of
his clients buying and selling securities in the stock market.

As a representative of his clients, a stock broker seeks the best deals to buy and
sell stock.

They usually deal in all types of securities and also handle derivatives such as
commodity futures. They ask advice their clients about when to make
transactions and guide them about what to book for in market dealings.
However they are not censed investment advisor and therefore, you should
always consult Your Personal Financial Mentor before making any financial
investment decision in a stock market. After completion of the transaction, they
forward to their clients and make transfer arrangements of stock certificates or
other paperwork. Stock brokerage firms and individual stock brokers are
regulated by the Securities and Exchange Commission and other specific
markets. An individual broker must pass a test administered by concerned
regulatory authorities and mast complete he eastmation through brokerage
firms. which in some cases require registration when a concemal securites
commission.

Stock brokers are paid commissions which usually consist of a percentage of a

of trade transaction in a stock market.

Brokerage firms are also known as discount brokers as they offer trade
transactions at a single price. They provide recommendations only on those
investments that meet financial goal and needs of a client. A stock broker
provides advisory services for investing in a stock market and i return an
investor pays a fixed fee. They also offer special features, such as check writing
interest-bearing accounts, credit cards and direct deposits and hence, play a role
of providing these limited banking services. Margin interest payments are
charged to investors for borrowing against the brokerage account for investment
in a stock market. They also take service charges from their clients for
performing administrative tasks, such as for handling Individual Retirement
Account (IRA) and for mailing share in the form of certificates. They can also
purchase options, exchange traded funds (ETFs), bonds, shares, mutual funds,
and other investments on your behalf.

METHOD OF TRADING IN SHARE EXCHANGE

A share exchange is a corporation or organization that provides trading facilities

for share brokers and traders. Instruments traded on stock exchanges include
share, investment trusts, commodities, options, mutual funds, unit trusts and
bonds. Only members can trade on an exchange.

➤ Specialists

A member of an exchange who acts as the market maker to facilitate the trading
of a given share . The specialist holds an inventory of the share , posts the bid
and ask prices , manages limit orders and executes trades. Specialists are also
responsible for managing large movements by trading out of their own
inventory. If there is a large shift in demand on the buy or sell side, the
specialist will step in and sell out of their inventory to meet the demand until the
gap has been narrowed. Before we address this question, let's review what
specialists do. Specialists are people on the trading floor of an exchange, such
as the NYSE, who hold inventories of particular share. A specialist's job is not
only to match buyers and sellers, but also to keep an inventory for him or
herself that can be used to shift the market during a period of liquidity.

The job of the specialist originated in 1872, when it was recognized that there
was a need for a new system of continuous trading - before this, each share had
a set time during which it could be traded. Under the new system, brokers began
to deal in a specific stock to remain at one location on the floor of the exchange.
Eventually, the role of these brokers involved into that of the 'specialist.
Floor Brokers

An independent member of an exchange who is authorized to execute trades on

the exchange floor on behalf of clients . A floor broker is a middleman who acts
as an agent for clients, indirectly giving them the best access possible to the
exchange floor. A floor broker's clients typically include institutions and
wealthy people such as financial-service firms, pension funds, mutual finds,
high net worth individuals and traders. A floor broker's primary responsibility is
"best execution" of client orders, and to achieve this objective, he or she must
continuously assess myriad factors including market information, market
conditions, prices and orders. A floor broker is different from a floor trader,
who trades as principal for his or her own account,

Also known as "pit broker "

whereas the floor broker acts as an agent for clients. A floor broker also differs
from a commission broker in that the latter is an employee of a member firm,
while the floor broker is an independent member of the exchange. Floor brokers
trade on the floor on the major exchanges. Floor brokers buy and sell securities
in their own account. Floor brokers are required to take and pass written tests in
order to trade. They must able by exchange rules, and they must be a member of
the exchange on which they trade.

A floor broker provides information for their clients.

A floor broker's clients can include banks, broker-dealers, hedge funds, mutual
funds, pension funds, day traders and even some high net-worth individuak.
"We are the 'eyes and ears' to our clients' stocks. We give them market color, let
them know of market turns and find liquidity from the other hundred or so floor
brokerage shops." our source told us.
 They earn a living from commission on each share traded.

A tour broker earns commission for each share traded. This can be anywhere
from half a penny per share or five cerets a share, the floor broker explained a

A floor broker's workday begins a few hours before the opening bell.

The stock market opens at 9:30 am and the closing bells rings at 400 p.m., but a
NYSE broker begins his or her day much earlier than that A floor broker migls
get in around 7:30 a.m or 813) a.m our source said. At this time, a floor broker
will typically read newspapers, go over the news-wires check their Bloomberg
terminal and perhaps emias stories/links to the customers

Then the orders and 'look' requests start coming in.

At about 9:00 am a fhor broker starts getting orders and "bok" requests When
someone asks for a "look" near the open or close of the market it means tinding
out a price for the open/close and/or what the buy/sell ambalate is It someone
asks for a "look" in the middle of the day, that means tinding out some coke on
the stock such as who's been buying who's been selling any numors or news
that's out. A broker would ask a specude to find this information out

Share brokers/Financial Advisers

Share brokers, financial advisers certified financial planners and registered

representatives buy and sell stocks on behalf of their clients and customers.
They must pass certain written exams in order to carry out trades and adhere to
ethical standards. A stockbroker is someone who can buy or sell stock, futures
or currencies in your behalf. There are many good stock broking firm .
Professional brokers spend a lot of time watching the markets; their systems
provide them with most up to date information on any stock Remember, though
that your destiny is in your hands not your stockbroker. Don't go blaming your
stockbroker if the market turns around on you The market will do what a has to
do, and all that is under your control is your own money management skill
There are several types of share bakers: Internet broker, discount broker, fill
service brokers). Internet brokers: This web site explains how to trade and do it
yourself. It is the cheapest way, no advise given by stockbrokers but you get
access to all the took. You are on your own take the time to learn the track of
the trade and practice it

Discout broker You pay small see but cheaper the and sence broker They only
take your buy or sell under) Fool once bike More expensive as they w pros de
you with the educated advance about you want them to execute. They provide
any other information you wish to know. Remember to always double check of
content order will your broker NEVER ne the person on the other site is heard
you correctly

Day Traders

Day traders are individuals who buy and sell securities for their own accounts,
Day traders will trade quickly--making purchases and sales on the same day.
Day trading is defined as the buying and selling of a security within a single
trading day. This can occur in any marketplace, but is most common in the
foreign-exchange (for ex) market and stock market. Typically, day traders are
well educated and well funded. They utilize high amounts and short-term
trading strategies to capitalize on small price movements in highly Equid stocks
or currencies. Day traders serve two critical functions in the marketplace: they
keep the mark efficiently via arbitrage and they provide much of the markets
(especially in the stock market). This article will take an objective look at day
trading, who does it and how it is done. (Did you know there are school that
teach day trading? See The Best Day Trading School) Characteristics of a Day
Trader This article will focus on professional day traders - that is those who
trade for a living, not simply as a hobby or for a "gambling high" These traders
are typically well-established in the field and here in-depth knowledge of the
marketplace. Here are some of the prerequisites to day trading Knowledge and
Experience in the Marketplace: Individuals who attempt to day trade without an
understanding of market fundamentals often end up money Sufficient Capital
One cannot expect to make money day trading. Day traders use only risk
capital, which they can afford to se. Not only does this protect them from
financial in it also helps eliminated emotion from their trading. A large amount
of capital is often necessary to capital effectively on intra- day price
movements. A Strategy needs an edge over the rest of the market. There are
several different strategies that day traders , including swing trading arbitrage
and trading news, among others. These strategies are refined until they produce
consistent profits and effectively limit looses.

STRATEGY BREAKDOWN

TYPE RISK REWARD

Swing trading High high
arbitrage Low medium
Trading news Medium Medium
Mearg and aqustation Medium high

Desclinc A portatable strategy useless without discipline . Many day triders end
up sing a lot of miney hocase they fall to make trades that meet their own . As
they say Plan the trade and trade the plan Success is importan wthout discipline

casual Traders

A casual trader is a person who tries to build up a portfolio by buying and

selling securities for his own account over a period of time. Technology has
filed the process and given the casual trader much of the same information and
tools available to professional traders Casual trading is a newly developed
variant of finial trading. It consists of the same principles carried out in trading
rooms but involves the use of trading platforms that can be operated from the
trader's residence. Castel trading is a general name for all trading actions that
are carried out by individuals without the use of a mediator. They can be found
in stock exchange, foreign exchange, commodities and other markets.

Online Trading

Online trading is available to any person that has an account at an online trading
firm A person can enter trades from a personal computer and set price limits and
targets Commissions are often much less than at a full-service brokerage firm.
The act of placing buy/sell orders for financial securities and/or currencies with
the use of a brokerage's internet-based proprietary trading. The use of online
trading increased dramatically in the mid- to late-k with the introduction of
affordable high-speed computers and internet connections The use of online
trades has increased the number of discount brokerages because trading allows
many brokers to cit costs and part of the savings can be post on to customers in
the form of lower commissions Another benefit of online trading is the
improvement in the speed of which transactions can be executed and settled,
because there is no need for paper-based documents to be copied, filed and
entered into an electronic format

Legend has it that Joseph sold all the share he owned the day before Black
Thursday . the start of the catastrophic 1929 stock market crash. Many investors
suffered basses in the crash, which became one of the hallmarks of the Great
Depression What middle Kennedy sell? According to the story, he got a stock
tip from a shoeshine boy. In the 1920s, the stock market was the realm of the
rich and powerful thought that if a shoeshine boy could own stock, something
mast have gone terribly Now, plenty of common people own stock. Online
trading has given anyone who has a computer, enough money to open an
account and a reasonably good financial history the ability to invest in the
market. You don't have to have a personal broker or a disposable fortune to do z
and most analysts agree that average people trading stock is no longer sign of
indpending doom The market has become more accessible, but that doesn't
mean you should take online trading lightly In this article, we'll bok at the
different types of online trading accounts, as well as how to choose an online
brokerage, make trades and protect yourself from fraud . A share of stock is
basically a tiny piece of a corporation people who buy stock are investing in the
future of a company for as long as they own their shares. The price of a s varies
according to economic conditions, the performance of the company and
investors attitudes. The first time a company offers to stock for public sales
called an initial public offering (IPO), also known as "going public When a
business makes a profit, & can share that money with share holders by issuing a
dividend. A business can also se s profit or re-invest it by making improvements
to the business or hiring new people Stocks that one frequent are income stocks
Share in t companies that re-invest their profits are share

MARKET CORRECTION

A market correction refers to a price decline of at least 10% of any security or

market index following a temporary upswing in market prices.

How it works/Example:

The stock market's value is always rising and filling Sometimes, the market will
experience short-term gains, even though nothing has really changed. These
increases in value are usually due to mss psychology the part of investors driven
by anticipation of perceived gains. As more investors buy into the trend, the
price increases. Once the price is high enough buying slows, and some investors
begin to sell to back in their gains. This decrease in price, following a short-
term increase, is called a market connection.

Why it Matters

Market corrections are usually tracked once an upswing in market prices has
come and gone. A correction in a stock's price following an upswing is
indicative of a stock's true market value and may not indicate a loss in wake so
much as a market's return to stability Market corrections are a big part of
technical analysis. Many investors will use indicators to try to determine when
the correction will begin and end so that they can buy when prices are lower.

MARKET TREND

A market trend is a tendency of a financial market to move in a particular

direction over time. These trends are classified as secular for long time frames,
primary for medium time frames and secondary for short time frames. Traders
identify market trends using technical basis a framework which characterizes
market trends as predictable price tendencies within the market when price
reaches support and resistance levels, varying over time.

Secular market trend:

A secular market trend is a long-term trend that lasts 5 to 25 years and consists
of a series of primary trends. A secular bear market consists of smaller bull
markets and larger bear markets; a secular bull market consists of larger bull
markets and smaller bear markets. Primary market trend: A primary trend has
broad support throughout the entire market (most sectors) and lasts for a year or
more o Bull market: A bull market is a period of generally rising prices. The
start of a bull market is marked by Wide spread permission Bear market:

A bear market is a general decline in the stock market over a period of time. It is
a transition from high investor optimism to widespread investor fear and
pessimism. A market top (or market high) is usually not a dramatic event. The
market has simply reached the highest point that a will, for some time (usually a
few years). It is retroactively defined as market participants are not aware of it
as it happens A decline then follows, usually gradually at first o Market and
later with more rapidity o Market bottom A market bottom is a trend reversal
the end of a market downturn, and precedes the beginning of an upward moving
trend (bull market). It is very difficult to identify a bottom (referred to by
investors as "bottom picking") while it is occurring The upturn following a
decline is often short-lived and prices might resume. This would bring a loss for
the investor who purchased stock(s) during a misperceived or "fake" market
bottom

Secondary market:

Secondary trends are short-term changes in price direction within a primary

trend. The duration is a few weeks or a few months. One type of secondary
market trend is called a market correction. A correction is a short term price
decline of 5% to 20% or so. A correction is a movement that is not large enough
to be a bear market (ex post).

THE STUDY OF STOCK EXCHANGE

Another type of secondary trend is called a bear market rally (sometimes called
"sucker's rally or "dead cat bounce") which consist of a market price increase of
only 10% or 20% and then the prevailing, bear market trend resumes. Bear
market res occurred in the Dow Jones index alter the 1929 stock market crash
leading down to the market bottom in 1932, and throughout the 1960s and early
1970s. The Japanese Nikkei 225 has been typified by a number of bear market
since the late 1980s while experiencing an overall long-term downward trend.

BULLS AND BEARS

The two most commonly used terms in stock markets. A common story is that
the terms 'Bull market' and 'Bear market are derived from the way those animals
attack. Bulls are supposed to be aggressive and attacking while bears would
wait for the prey to come down Another story is that long back, bear trappers
would first trade in the market and fix a price for bear skins, which they actually
didn't own Once the price is fixed, they would go hunting for bear skins. So
eventually even if the prices go down, they will still be able to sell if for a high
price. This term eventually was used to describe short sellers and speculators
who sell what they do not own and buy it when the price comes down and
makes money in the process

What are Bears?

Definition of Bear Market

A market condition in which the prices of securities are falling, and widespread
pessimism causes the negative sentiment to be self-sustaining. As investors
anticipate bosses in a bear market and selling continues, pessimism only grows
Although figures can vary for many, a downturn of 201% or more in multiple
broad market indexes, such as the Dow Jones Industrial Average (DIIA) or
Standard & Poor's 500 Index (S4 500), over at least a two-month period, is
considered an entry into a bear market.

Bear:

An operator who expects the share price to fall . A bear market is the opposite
of a bull market. When the prices of stocks moves crashes rapidly cracking
previous bows, you may assume that it's a bear market. Genrally markets must
fill by more than 20% to confirm that the bear market

What are Bulls?

Definition of 'Bull Market :-

A financial market of a group of securities in which prices are rising or are

expected to rise. The term "bull market" is most often used to refer to the stock
market, but can be applied to anything that is traded, such as bonds, currencies
and commodities.
Bull :-

An operator who expects the share price to rise and takes position in the market
to sell at a later date . When the prices of stocks curves up rapidly cracking
previous highs, you my assume that it's a bull market. If there are many bullish
days in a row you can consider that as a 'bull market run. Technically a bull
market is arise in value of the market by at least 20% Bull Market: A rising
market where buyers far outnumber the sellers A bull market is one where
prices are rising, whereas a bear market is one where prices are falling. The two
terms are also used to describe types of investors

Bull market :-

A stock market bull is someone who has a very optimistic view of the market;
they may be stock-holders or maybe investors who aggressively buy and sell
stocks quickly. A bear investor, on the other hand, is pessimistic about the
market and may make more conservative stock choices. Sometimes, the terms
are used to refer to specific funds or stocks. Bear market funds, for example, are
those that are falling and faring poorly. Investors sometimes refer to bull stocks
to describe securities that are aggressively rising and making their investors
money. Knowing what is meant by the bear and bull market can help you
understand whether the market is currently rising or falling. There is no need to
get frightened by a bear market indicator , however, as experts agree that the
market is cyclical. When prices start falling they will eventually rise too.

What Drives Bear and Bull Markets?

The stock market is affected by many economic factors. High employment

levels, strong economy, and stable social and economic conditions generally
build investor confidence and encourage investors to put their money in the
stock market. Often, this bull markets . Also, new technologies and companies
that encourage investors to put their money in stocks can create bull markets.
For example, in the 1990s, the dot com craze encouraged many investors to put
their money in stocks that they felt would keep increasing. In some cases, a
bullish market is simply self-perpetuating Since the market is doing well, à only
encourages investors to invest more money or to start investing. On the other
hand, discouraging economic or social political changes in a society can push
the market down Sudden instability or unemployment or even fears of
unemployment caused by wars and other problems can start to make investors
more conservative and therefore lead to bear markets. Of course, again this
becomes a self-perpetuating trend. As the economy slows down, companies
begin downsizing Increased unemployment makes people far less willing to
gamble on the stock market. Sometimes, a panic caused by dire predictions
about the market can also create bearish conditions

How To Predict Bear and Bull Markets?

The easiest way to predict both types of markets is to realize that what goes up
must come A stock market bull is someone who has a very optimistic view of
the market; they may be stock-holders or maybe investors who aggressively buy
and sell stocks quickly. A bear investor, on the other hand, is pessimistic about
the market and may make more conservative stock choices. Sometimes, the
terms are used to refer to specific funds or stocks. Bear market funds, for
example, are those that are falling and faring poorly. Investors sometimes refer
to bull stocks to describe securities that are aggressively rising and making their
investors money. Knowing what is meant by the bear and bull market can help
you understand whether the market is currently rising or falling. There is no
need to get frightened by a bear market indicator, however, as experts agree that
the market is cyclical. When prices start falling they will eventually rise too.

What Drives Bear and Bull Markets?

The stock market is affected by many economic factors. High employment

levels, strong economy, and stable social and economic conditions generally
build investor confidence and encourage investors to put their money in the
stock market. Often, this bull markets . Also, new technologies and companies
that encourage investors to put their money in stocks can create bull markets.
For example, in the 1990s, the dot com craze encouraged many investors to put
their money in stocks that they felt would keep increasing. In some cases, a
bullish market is simply self-perpetuating Since the market is doing well, à only
encourages investors to invest more money or to start investing. On the other
hand, discouraging economic or social political changes in a society can push
the market down Sudden instability or unemployment or even fears of
unemployment caused by wars and other problems can start to make investors
more conservative and therefore lead to bear markets. Of course, again this
becomes a self-perpetuating trend. As the economy slows down, companies
begin downsizing Increased unemployment makes people far less willing to
gamble on the stock market. Sometimes, a panic caused by dire predictions
about the market can also create bearish conditions How To Predict Bear and
Bull Markets?

The easiest way to predict both types of markets is to realize that what goes up
must come down. That is, if the market is rising, then you know that at some
point it will start to fall again Similarly , if the market is currently falling, you
can be certain that eventually it will pick up again. There are no precise ways to
predict either bull or bear markets, although general social economic situations
can help you to determine what will happen. A country which wages a war will
experience bullish market conditions as government contracts create more jobs
and boost investor confidence if their expectation is to win Sudden international
crises push the market downward and create bearish conditions. News is very
often a good indicator of where investors are headed. The reports will inform
about loss of investor confidence as well as sudden economic downturns that
may affect the market. If you notice from stock market research that several
indexes have changed by 15% to 20%, you can be sure that market direction is
changing. When you notice such changes, it is time to sit up and take notice.
You may be headed for a bullish or bearish market. Market Conditions In Both
Cases

While referring to markets is either bull or bear is very general there are certain
types of specific markets conditions that exist in both markets. For example, a
bullish market is often accompanied by a sudden increase demand for securities
and smaller supplies of the same securities. This is because more investors are
willing to buy securities while fewer wish to sell. This, of course, only pushes
prices higher. The very opposite is true in a bearish market.
The investor's behaviour is another condition prevalent in both markets. In
bullish markets, there's a sudden increase interest in the stock market. More
people are hopeful about possible profits on the stock market and most people
are optimistic about economic conditions. In a bearish market, investors are not
very confident and therefore invest less. Investing During Bear and Bull
Markets New investors often assume that they need to avoid investing during
bear markets, and invest heavily during bull markets. This is not the case.
Experienced investors know that you need to be able to invest in any sort
market , provided that you do so wisely. Each investor has a different strategy
for dealing with a bull market or bearish markets. Many investors try to take
advantage of bull markets by buying stocks as soon as the market gets bullish,
and then starting to sell when prices seem to have reached their peak. The
difficulty, of course, is that it is almost impossible to tell when the trend is
beginning and when it will peak. In genral investors can take more chances with
the market during a bull phase. Since overall prices where , the chances of
making a profit are good. In bearish market conditions, prices are falling and the
possibility of loss is pretty good. What is worse, it is not always possible to tell
when bearish conditions will end. Therefore, if during such market conditions,
you may have to suffer some losses before bullish times return and you're able
to realize a profit. For this reason many investors decide on short selling or
fixed income securities and other more conservative types of investment.
Defensive stocks are another good option that remain stable during bearish
conditions. On the other hand, some investors see bearish market conditions as
an ideal time to invest in more stocks. Since many people are selling off their
stocks valuable blue-chip stocks - at prices, it is possible to set up long-term
investments that will prove valuable during bullish times. While every investor
groves to see the upswing in prices during a bull market, the wise investor will
be able to handle a bear market as well Whether you are just beginning to invest
or are an experienced investor, deal with various market conditions you need
not panic but decide patiently on investment
 MARKET TIMING

The basic idea behind stock market investment is simple- Buy knew, sell high
and make money So to make money, you buy stocks in a bear market when
stock prices are low and sell stocks in a bull market when stock prices are high
However, knowing the exact time when a bear market would start or when a
bull market run would come is not possible. Just when you thought the markets
would go up, it may surprise you by trading . Your strategy should be to pick up
shares in the bear market and sell when there's a bull market nun

OTHER ANIMALS ON THE FARM

The Other Animals on the Farm - Chickens and Pigs Chickens are afraid to lose
anything. Their fear overrides their need to make profits and so they turn only to
money-market securities or get out of the markets entirely. While it's true that
you should never invest in something over which you lose sleep, you are also
guranteed never to see any return if you avoid the market completely and never
take any risk, Pigs are high-risk investors booking for the one big score in a
short period of time. Pigs buy on hot tips and invest in companies without doing
their due diligence. They get inpatient, greedy. and emotional about their
investments, and they are drawn to high-risk securities without putting in the
proper time or money to learn about these investment vehicles. Professional
traders have the pigs, as it's often from their losses that the bulls and bears reap
their profits.

What Type of Investor Will You Be?

There are plenty of different investment styles and strategies out there. Even
though the bulls and bears are constantly at odds, they can both make money
with the changing cycles in the market Even the chickens see some returns,
though not a lot. The one loser in this picture is the pig Make sure you don't get
into the market before you are ready. Be conservative and never invest in
anything you do not understand. Before you jump in without the right
knowledge, think about this old stock market saying: "Bulls make money bears
make money, but pigs !

BULLISH AND BEARISH BEHAVIOUR

The terms bullish and bearish are often used to describe the conditions in the
market or the sentiment of investors. They are very important terms and are
used in nearly all types of trading. from currencies to stocks. Traders can take
advantage of both bullish and bearish markets if they have sufficient knowledge
of the market conditions that are associated with these cycles. When traders
understand the meaning of bearish and bullish and are able to identify the
cycles, they will know how to profit off of any market condition.

Investors and Markets

An investor with bearish sentiment believes that a rise in the value of asset
prices presents an excellent opportunity to trade those assets and get out of the
market. On the other hand, investors with bullish sentiment wait until prices are
entering the market with the hope that prices will increase and they will then
trade their stocks to make a profit. Traders can generate profits in both bearish
and bullish market cycles. When a rise is suspected in the markets, bullish
investor either purchase assets or hold onto long-term investments Below is an
illustration of investor sentiment. Traders may also short' a stock if they believe
it will decline. However, institutional hedge funds and money managers are the
primary players in shorting stocks. Investors who are bullish may eventually
migrate to become bearish investors over time. Meredith Whitney is well-
known for calling bull runs in markets and her fame grew in 2009 when she said
the markets were rallying for no reason and the gains would soon be lost.
According to Tom an expert trader and Lord mutual fund manager, investors
who are seeking exposure to the best assets should not wait until a bear cycle
before purchasing those assets. says that expensive assets are priced in
proportion to the market rallying periods.
 What Causes Share Prices To Change

Share prices change every day as a result of market forces. By this we mean that
share prices change because of supply and demand. If more people want to buy
a share (demand) than sell it (supply), then the price moves up. Conversely, if
more people wanted to sell a stock than buy it, there would be greater supply
than demand, and the price would fall. Understanding supply and demand is
easy. What is difficult to comprehend is what makes people like a particular
share and dislike another share. This comes down to figuring out what news is
positive for a company and what news is negative. There are many answers to
this problem and just about any investor you ask has their own ideas and
strategies.

That being said, the principal theory that the price movement of a stock
indicates what investors feel a company is worth. Don't equate a company's vale
with the stock price. The value of a company is its market capitalization, which
is the stock price multiplied by the number of shares outstanding. For example,
a company that trades at $100 per share and has 1 million shares outstanding
has a lesser value than a company that trades at $50 that has 5 million shares
outstanding ($100 x 1 million $100 million while $50 x 5 million $250 million).
To further complicate things, the price of a stock doesn't only reflect a
company's current , it also reflects the growth that investors expect in the future.

The most important factor that affects the value of a company is its earnings
Earnings are the profit a company makes, and in the long run no company can
survive without them It makes sense when you think about it. If a company
never makes money, it isn't going to stay in business. Public companies are
required to report their earnings four times a year (once each quarter). Wall
Street watches with rabid attention at these times, which are referred to as
earnings seasons. The reason behind this is that analysts base their future value
of a company on their earnings projection If a company's results surprise (are
better than expected), the price jumps up. If a company's results disappoint (are
worse than expected), then the price will fall Of course, it's not just eamings that
can change the sentiment towards a stock (which in turn, changes its price). It
would be a rather simple world if this were the case! for example, dozens of
internet companies rose to have market capitalizations in the billions of dollars
without ever making even the smallest profit. As we all know, these valuations
did not hold, and most internet companies saw their wakes shrink to a fraction
of their highs. Still, the fact that prices did move that much demonstrates that
there are factors other than current earnings that influence stocks Investors have
developed literally hundreds of these variables, ratios and indicators. So, why
do stock prices change? The best answer is that nobody really knows for sure.
Some believe that it isn't possible to predict how stock prices will change, while
others think that by drawing charts and looking at past price movements, you
can determine when to buy and sell The only thing we do know is that stocks
are volatile and can change in price extremely rapidly.

STRATEGIES FOR INVESTING IN SHARE

Below are ten guidelines that are smart and often necessary to follow in order to
be successful at long term investing in share.

1. "Buy low and sell high."

This is a very obvious bit of advice but achieving this goal can be more difficult
than it might seem and this simple rule can be easy to forget. An obvious key to
successfully investing in stocks is to pick investments to buy that will increase
in value over time and then eventually sell the stock at a higher price. Some of
the recommendations and guidelines that follow may be helpful in following
this first principle. It is important to understand that it is impossible to time the
market precisely. Even very skilled investors make mistakes, but they learn
from them and gradually make fewer bad investment decisions over time. No
investor buys and then sell at exactly the right price. But good stock investors
have the strategies, knowledge, and discipline to, much more often than not, buy
shares of stock at lower prices than what they sell them at In order to "buy " and
"sell high" it is sometime necessary to do the opposite of what the majority of
investors seem to be doing. This is called being contrarian When everyone eke
is pessimistic about a company they have likely acted on their negative opinions
and sold shares of its stock. On the other hand, when investors are very
optimistic about the prospects of a company, they have likely already acted on
their hopefulness and purchased the stock. An investor who can buy at an
extreme moment when others have been selling and sell when others have been
aggressively buying may be able to accomplish the goal of "buying low/selling
high" more often than those who follow the general consensus Unfortunately ,
this strategy doesn't always work! Sometimes there are good reasons for
investors' pessimism and a company is headed from bad to worse. Someone
who buys when everyone else is selling may end up owning stock in a company
with grim bong term prospects. Alternatively selling shares of a great company
with wonderful team potential (e.g., Microsoft in the early 1990s; Apple in the
early 2000s) too soon can be very frustrating as well Needless to say,
successfully investing in stocks is never easy.

2. Understand what you are buying.

It is a good idea to have an understanding of the company you are purchasing

shares of its stock and be able to is solid reasons for why you think the
company's camings will increase order time. Many investors rely on the advice
of investment professionals and investment services for recommendations on
stocks to purchase (or sell). Seeking out multiple sources of advice and opinion
is a good idea in order to more fully appreciate the pros and the cons of buying
a particular stock. Pay attention to who provides good versus bad advice so that,
over time, you can learn whose opinions to better trust. If you are making your
own investment decisions, it is not a good idea to put all of your trust in any one
individual or one investment services' advice. Consider mutiple opinions and do
your own thinking as well Some investors meet with success by investing in
companies for Which they already have a very good understanding (or hold a
good opinion of because they like what the company makes or the service they
provide. This is a perfectly valid and, often useful strategy. At the same time, it
is a good idea to do some research about the past financial performance of a
company and projections for its future earnings. Personal experience can help,
but there are many reasons why it will not always lead to accurate predictions
about the future stock price of a company
3. Patience is a virtue.

Sometimes an investor can be right about the stock he or she has purchased but
wrong on the timing as to when & was bought. A stock might go down after a is
purchased, but ultimately go way up in price thereby creating a nice profit

RISKS THAT EVERY STOCK FACES

There are many sector specific and even company specific risks in investing in
this article, however, we will look at some universal risks that every stock faces,
regardless of its business Commodity Price Risk Commodity price risk is
simply the risk of a swing in commodity prices affecting the business.
Companies that sell commodities benefit when prices go up, but suffer when
they drop. Companies that use commodities as inputs see the opposite effect.
However, even companies that have nothing to do with commodities, face
commodities risk. As commodity prices climb, consumers tend to rein in
spending, and this affects the whole economy, including the service economy.

Headline Risk

Headline risk is the risk that stories in the media will hurt a company's business.
With the endless torrent of news washing over the world, no company is safe
from headline risk. For example, news of the Fukushima nuclear crisis, in 2011,
punished stocks with any related business, from uranium miners to U.S. utilities
with nuclear power in their grid. One bit of bad news can lead to a market
backhash against a specific company or an entire sectopften both Larger scale
bad news such as the debt crisis in some eurozone nations in 2010 and 2011-
can purish entire economies, let alone stocks, and have a palpable effect on the
global economy
Rating Risk

Rating risk occurs whenever a business is given a number to either achieve or

maintain. Every business has a very important number as far as is credit rating
goes. The credit rating directly affects the price a business will pay for
financing. However, publicly traded companies have another number that
matters as much as, if not more than the rating. That number is the analysts
rating. Any changes to the analysts rating on al stock seem to have an outsized
psychological impact on the market. These shits n ratings, whether negative or
positive, often cause swings far harder than is justified by the events that led the
analysts to adjust their ratings

Obsolescence Risk

Obsolescence risk is the risk that a company's business is going the way of the
dinosaur. Very, very few businesses Eve to be 100, and none of those reach that
ripe age by keeping to the same business processes they started with The
biggest obsolescence risk is that someone may find a way to make a similar
product at a cheaper price. With gbbal competition becoming increasingly
technology savvy and the knowledge gap shrinking,obsolescence risk will likely
increase over time.

Detection Risk

Detection risk is the risk that the auditor . compliance program regulator or
other authority will fail to find the bodies buried in the backyard until it is too
late. Whether it's the company's management skimming money out of the
company, improperly stated earnings or any other type of financial shenanigans,
the market reckoning will come when the news surfaces. With detection risk,
the damage to the company's reputation may be difficult to repair and it's even
possible that the company will never recover if the financial fraud was
widespread (Error, Bro-X, ZZZZ Best, Crazy Eddie's and so on).
Legislative Risk

Legislative risk refers to the tentative relationship between government and

business. Specifically, it's the risk that government actions will constrain a
corporation or industry. thereby adversely affecting an investor's holdings in
that company or industry. The actual risk be realized in a number of ways-an
antirust suit, new regulations or standards, can taxes and specific and so on. The
negative risk varies in degree according to industry, but every industry has some
some In theory, the government acts as cartilage to keep the interests of
businesses and the public from grinding on each other. The government steps in
when business is endangering the public and seems unwilling to regulate itself.
In practice, the government tends to hate. Legislation increases the public image
of the importance of the government, as well as providing the individual
congressmen with publicity. These powerful incentives lead to a lot more
negative risk than is truly necessary.

Inflationary Risk and Interest Rate Risk

These two risks can operate separately or in tandem Interest rate risk, in this
context. simply refers to the problems that a rising interest rate causes for
businesses that need financing. As their costs in up due to interest rates, it's
hundred for them to stay in business. If this climb in rates is occurring in a time
of inflation, and rising rates are a common way to fight inflation, then a
company could potentially see is financing costs climb as the value of the
dollars it's bringing in decreases. Although this double trap is less of an issue for
companies that can pass higher costs forward, inflation also has a dampening
effect on the consumer. A rise in interest rates and inflation combined with a
weak consumer can lead to a weaker economy, and, in some cases, stagflation

Model Risk

Model risk is the risk that the assumptions underlying economic and business
modes, within the economy, are wrong. When model get out of whack, the
businesses that depend on those model being right get hurt. This starts a domino
effect where those companies struggle or fail and, in turn, hurt the companies
depending on them and so on The mortgage crisis of 2008-2009 was a perfect
example of what happens when model, in this case a risk exposure model are
not giving a true representation of what they are supposed to be measuring.

The Bottom Line

There is no such thing as a risk-free stock or business. Although every stock

faces these risks and additional risks specific to their business, the rewards of
investing can still far outweigh them. As an investor, the best thing you can do
is to know the risks before you buy in, and perhaps keep a bottle of whiskey and
a stress ball nearby during periods of market turmoil

THE INDIAN SHARE MARKET

REGULATORS IN THE INDIAN STOCK MARKET

The two main important regulators Reserve Bank Of India in Indian Stock
Market are: Securities Exchange Board Of India

RESERVE BANK OF INDIA

Reserve Bank of India is the apex monetary Institution of India. It is also called
as the central bank of the country.

The Reserve Bank of India was established on April 1. 1935 in accordance with
the provisions of the Reserve Bank of India Act, 1934 . The Central Office of
the Reserve Bank was initially established in but was permanently moved to
Mumbai in 1937. The Central Office is where the Governor sits and where
policies are formulated. Though originally privately owned, since
nationalization in 1949, the Reserve Bank is fully owned by the Government of
India. It acts as the apex monetary authority of the country. The Central Office
is where the Govemor sits and is where policies are fomuhted. Though
originally privately owned, since nationalization in 1949, the Reserve Bank is
fully owned by the Government of India. The preamble of the reserve bank of
India is as follows: "...to regulate the issue of Bank Notes and keeping of
reserves with a view to securing monetary stability in India and generally to
operate the currency and credit system of the country to its advantage,"

The RBI plays an important part in the Development Strategy the Government
of India. It is a member bank of the Asian Clearing Union. The general
superintendence and direction of the RBI is entrusted with the 21-member
Central Board of Directors: the Governor, 4 Deputy Governors 2 France
Ministry representatives, 10 government-nominated directors to represent
important elements from India's economy, and 4 directors to represent local
boards headquartered at Mumbai Kolkata, Chennai and New Delhi Each of
these local boards consists of 5 members who represent regional interests, as
well as the interests of co-operative and indigenous banks.

SECURITIES AND EXCHANGE BOARD OF INDIA

SEBI Act, 1992: Securities and Exchange Board of India (SEBI) was first
established in the year 1988 as a non-stantory body for regulating the securities
market. It became an autonomous body in 1992 and more powers were given
through an ordinance. Since then a regulates the market through its independent
powers

FUNCTIONS

The Preamble of the Securities and Exchange Board of India describes the basic
functions of the Securities and Exchange Board of India as to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities market and for matters connected there with or incidental
thereto It drafts regulations in its negative capacity, it conducts investigation
and enforcement action in its executive function and it passes rulings and orders
in its judicial capacity. Though this makes it very powerful, there is an appeal
process to create accountability. There is a Securities Tribunal which is a three-
member tribunal A second appeal les directly to the Supreme Court. SEBI has
taken a very proactive role streamlining disclosure requirements to international
standards

WHAT IS SHARE INDEX

SHARE INDEX.

The share index function as an indicator of the general economic scenario of a

country /region/ sector . If the stock market indices are growing, it indicates that
the overall general economy of the country is stable and that the investors have
faith in the growth story of the economy. If, however, there is a plunge in the
stock market index over a period. Immediate indicates that the economy of the
country is in troubled waters. It's also an indication of what the corporates in
that country are facing. A stock index is created by selecting a group of high
performing stocks. For example - The FTSE 100 (the stock index of London
stock exchange) is constructed from the top 100 companies trading in the
London stock exchange. If the FTSE 100 records a jump over a period of time,
it indicates that most of the top 100 companies in England are doing well at that
point of time and that the investors are positive about putting their money in
England.

TYPES OF INDICES

There are different types of indices and FTSE 100 was just an example. Stock
indices can be constructed For the entire world (global indices) For an entire
continent (regional indices-for example S&P Latin american 40) For an entire
country (national indices -for example Sensex & NIFTY for India ) For a
particular sector in a country-(sectorial indices-for example BSE BANKEX
which tracks top banking companies in India) For any other theme / group of
economy / companies you want to track. (example Dow Jones Islamic world
market index) The MSCI global and the S&P Global 100 are examples of world
stock indices which tracks the largest companies in the world irrespective of
their country of origin. The MSCI global id an index with over 6000 stocks
included from different parts of the developed world. It specifically excludes
companies from emerging economies. When stock indices are constructed to
track the performance of the economy of a country (like Sensex in India), it
called a national Irrespective of the type of index, the purpose of any index is
the same. It provides to the public, a quick view of how the economy (based on
which the index is constructed) is functioning A sudden slide in indices denotes
that the investors have lost faith. There could be several reasons for that like
poor economic reforms, high inflation, high borrowing costs, amendments in
has that not well received by the business community downgrades by world
credit rating agencies. scams, corruption the list is endless. These indices also
serve as benchmarks for measuring performance of fund managers or for
measuring the performance of an individual's stock portfolio.

CONSTRUCTION OF SHARE INDEX A share index can be calculated in two

ways. By considering the price of the component weighted method . stocks
alone. This method is called the price By considering the market value or size of
the company-called the capitalization weighted method. To conclude, stock
indices are barometers to measure general economic performance of an
particular country / sector. It's updated every second throughout on every
trading so as to reflect the exact picture of the economy It's also a permanent
record of the history of markets - it's highs and bows, booms and crashes As
said before our national indices are NIFTY which is followed for NSE and
SENSEX which is followed for BSE , I will be further exphining NIFTY and
SENSEX in short.

INDIAN SHARE INDICES

The CNX NIFTY, also called the NIFTY 50 or simply the NIFTY, is National
Share Exchange of India's benchmark index for Indian equity market NIFTY is
owned and managed by India Index Services and Products Ltd, (IISL), which is
a wholly owned subsidiary of the NSE Strategic Investment Corporation
Limited. IISL is India's first specialized company focused upon the index as a
core product. IISL has a marketing and licensing agreement with Standard &
Poor's for co-branding equity indices. CNX' in its name stands for 'CRISIL NSE
Index . CNX NIFTY has shaped up as a largest single financial product in India,
with an ecosystem comprising: exchange traded funds (onshore and offshore),
exchange-traded futures and options: (at NSE in India and at SGX and CME
abroad), other index funds and OTC derivatives (mostly offshore).

The CNX NIFTY covers 22 sectors of the Indian economy and offers
investment exposure to the Indian market in one portfolio. During 2008-12,
CNX NIFTY 50 Index share of NSE market capitalisation fell from 65% to
29% [1] due to the rise of sectorial indices like CNX Bank, CNX IT, CNX Mid
Cap, etc. The CNX NIFTY 50 Index gives 29.70% weight age to financial
services, 0.73% weight age to industrial manufacturing and nil weight age to
agricultural sector The CNX NIFTY index is a free float market capitalisation
weighted index. The index was initially calculated on full market capitalisation
methodology. From June 26, 2009, the computation was changed to free float
methodology. The base period for the CNX NIFTY index is November 3, 1995,
which marked the completion of one year of operations of National Stock
Exchtal Market Segment. The base value of the index has been set at 1000, and
a base capital of Rs 2.06 trilion. The CNX NIFTY Index was developed by Ajay
Shah and Susan Thomas. The CNX NIFTY currently consists of the following
50 major Indian companies: Kindly Note, post expiration of agreement between
IISL and Standard and Poor's Financial Service LLC (S&P) on 31st Jan 2013,
index is addressed as CNX NIFTY Index. (Fomerly S&P CNX NIFTY Index)

SENSEX

The SENSEX-(or SENSitve indEX) was introduced by the Bombay stock

exchange on January 11 1986. It is one of the prominent stock market indexes
in India. The SENSEX is designed to reflect the overall market sentiments. It
comprises of 30 stocks. These are , well-established and financially sound
companies from min sectors
METHOD ADOPTED FOR SENSEX CACULATION

The method adopted for calculating SENSEX is the market capitalisation

weighted method in which weights are assigned according to the size of the
company. Larger the size, higher the weight age. The base year of SENSEX
1978-79 and the base index value is set to 100 for that period .The total value of
shares in the market at the time of index construction is assumed to be '100' in

terms of "points". This is for the purpose of case of calculation and to logically
represent the change in terms of percentage. So, next day, if the market
capitalization moves up 10%, the index also moves 10% to 110.

HOW IS THE INDEX CONSTRUCTED?

The construction technique of index is quite easy to understand if we assume

that there is only one stock in the market. In that case, the base value is set to
100 and let's assume that the stock is currently trading at 200, Tomorrow the
price hits 260 (30% increase in price) so, the index will move from 100 to 130
to indicate that 30% growth. Now let's assume that on day 3, the stock finishes
at 208. That's a 20% fall from 260/So, to indicate that fall, the SENSEX will be
corrected from 130 to 104(20% fall).

As our second step to understand the index calculation, let us try to extend the
same logic to two stocks-A and B. A is trading at 200 and let's assume that the
second stock 'B' is trading at 150. Since the SENSEX follows the market
capitalization weighted method. we have to find the market capitalization (or
size of the company in terms of price) of the two companies and proportionate
weight age will have to be given in the calculation.

Multiply the total number of shares of the company by the market price. This
figure is technically called 'market capitalization'. Back to our example We
assume that company A has 100,000 shares outstanding and B has 200,000
shares outstanding. Hence, the total market capitalization is (200 x 100000+ 150
x 200000) Rs 500 lakhs. This will be equivalent to 100 points. Lets assume that
tomorrow, the price of A hits 260 (30% increase in price) and the price of B hits
135. (10% drop in price). The market capitalization will have to be reworked. It
would be-260 x 100,000+ 135 x 200,000=530 lakhs. That means, due to the
changes in price, the market capitalization has moved from 500 lakhs to 530
indicating a 6% increase. Hence, the index would move from 1 to 106 to
indicate the net effect. This logic is extended to many selected stocks and this
calculation process is done every minute and that's how the index moves!

CALCULATION OF SENSEX

What we said was the general method to construct indices. Since, the Sensex
consists of 30 large companies and since it's shares my be held by the
government or promoters etc, for the purpose of calculating market
capitalization only the free float market value is considered, instead of the total
number of shares

What is free float?

That's the total number of shares available for the public to trade in the market.
It excludes shares held by promoters, governments or trists, FDls etc... To find
the bee that market vale, the total value of the company (total shares x mmiket
price) is further mutiplied by a free that market value factor, which is nothing
but the percentage of tree Bloat shares of a particular company

CALCULATE BROKERAGE RATES AND TAXES

Let's see how to calculate Brokerage and taxes for itraday trading and for
delivery trading in the Indian Stock Market. The current maximum intraday
brokerage offered is 0.05% for buying and 0.05% for selling (we provide 0.03%
for buying and 0.03% for selling these rates can be reduced further if you do
daily high volume trading) Brokerage cakuhtion for day trading (intraday
trading)
Taxes:

1. The service tax is of 10.36% only on brokerage. (Update Mar 09-The service
tax is reduced 10.30% including education cess)

2. The STT (Security Transaction Tax) is of 0.025% only selling amount.

3. The stamp duty on total turnover for a day which is 0.002%.

4. and finally you have to pay Reguhtory charges on total turnover for a day
which is 0.001% Please note - These all taxes will add up to very small amount
at the end of the day compared to your profits. A fee charged by an agent, or
agent's company to facilitate transactions between buyers and Brokerage: sellers
. The brokerage fee is charged for services such as negotiations, sales,
purchases, delivery or advice on the transaction. There are many types of brokel
ge fees added in areas such as insurance, realty, delivery services or stocks,
Brokerage will usually be based on a ether a percentage of the transaction or a
that fee. They can ako be a combination of the two. Here is an example of the
fee breakdown from a typical stock brokerage: Stock Price Over $2 $28 that
rate up to 999 shares, 3 cents per share over 999 shares

GLOBAL SHARE MARKET

New York Stock Exchange (NYSE) - Headquartered in New York City. Market
Capitalization (2011, USD Billions) 14,242; Trade Vale (2011, USD Billions)
-20,161 .

The largest stock exchange in the world by both market capitalization and trade
value . NYSE is the premier listing venue for the world's leading large- and
medium-sized companies. Operated by NYSE , the holding company created by
the combination of NYSE Group, Inc. and N.V., NYSE offers a broad and
growing array of financial products and services in cash equities, futures,
options, exchange-traded products (ETPs), bonds, market data, and commercial
technology solutions. Featuring more than it includes 90% of the Dow Jones
Industrial Average and 82% of the S&P 500 stock market indexes volume .

2. NASDAQ OMX - Headquartered in New York City. Market Capitalization

(2011, USD Billions)-4,687: Trade Value (2011, USD Billions) - 13,552.
Second largest stock exchange in the world by market capitalization and trade
value . The exchange is owned by NASDAQ OMX Group which also owns and
operates 24 markets, 3 clearing houses and 5 central securities depositories
supporting quanties, options, fixed involve. derivatives, commodities, futures
and structured products. It is a home to approximately 3,400 listed companies
and its main index is the NASDAQ Composite, which has been published since
its inception. Stock market is also followed by S&P 500 index.

3. Tokyo Stock Exchange - Headquartered in Tokyo. Market Capitalization

(2011. USD Billions) 3,325: Trade Value (2011, USD Billions)-3.972.

Third largest stock exchange market in the world by aggregate market

capitalization of its listed companies. It had 2.292 companies which are
separated into the First Section for large companies, the Second Section for
mid-sized companies and the Mothers section for high growth startup
companies. The main indices tracking Tokyo Stock Exchange are the Nikkei
225 index of companies selected by the Nhon Keizai Shimbun the TOPIX index
based on the share prices of First Section companies and the 130 index of large
industrial companies. 94 domestic and 10 foreign securities companies
participate in TSE trading The London Stock Exchange and the Tokyo Stock
Exchange are developing jointly traded products and share technology,
History: Prewar history

The Tokyo Stock Exchange was established on May 15, 1878, as the Tokyo
Kabushiki Torhikijo under the direction of then-Finance Minister Olouma
Shigenobu and capitalist advocate Shibusawa Eichi. Trading began on June 1,
1878) In 1943, the exchange was combined with ten other stock exchanges in
major Japanese cities to form a single Japanese Stock Exchange. The combined
exchange was shut down and reorganized shortly after the bombing of
Nagasaki. Postwar history

The Tokyo Stock Exchange reopened under its current Japanese name on May
16, 1949, pursuant to the new Securities Exchange Act The TSE ramp from
1983 to 1990 was unprecedented, in 1990 account over 60% of the world's stock
market capitalization (by far the world's largest) before falling precipitously in
value and rankings today, but still remains one of the 3 largest exchanges in the
world by market capitalization of listed shares. The current TSE building was
opened on May 23, 1988, replacing the original TSE building from 1931, and
the trading floor of the TSE was closed on April 30, 1999, so that the exchange
could switch to electronic trading for all transactions. A new facility called TSE
Arrows opened

Index:

Nikkei 225

The Nikkei 225, more commonly called the Nikkei the Nikkei index, or the
Nikkei Stock Average is a stock market index for the Tokyo Stock Exchange
(TSE). It has been calculated daily by the Nihon Keizai Shimbun (Nikkei
newspaper since 1950. It is a price-weighted index (the unit is yen), and the
components are reviewed once a year. Currently, the Nikkei is the most widely
quoted average of Japanese equities, similar to the Dow Jones Industrial
Average. In fact, it was known as the "Nikkei Dow Jones Stock Average" from
1975 to 1985. Topic Tokyo Stock Price Index, commonly known as TOPIX,
along with the Nikkei 225, is an important stock market index for the Tokyo
Stock Exchange (TSE) in Japan, tracking all domestic companies of the
exchange's First Section. It is calculated and published by the TSE As of 1
February 2011, there are 1,669 companies listed on the First Section of the TSE,
and the market value for the index was Y197.4 trillion

INTERVIEW

I Had visited to meet MR depth study and his experience as a investor in the
Stock Market. My experience of interacting of was really informative and
knowledge able. Here are these set of questions which I had prepared before
meeting him and he answered them each respectively.

1. What do you understand by Securities Market I are the different types of

securities market?

Security market is a market where securities are issued and traded. It is the
market for different types of securities mainly: debt, equity and derivatives
Debt market is further divided into three parts:

-Government securities market Money market

- Corporate Debt market Equity market is divided into two parts:

• Primary market - Secondary market Derivatives market is also divided into

two parts:

• Options market - Futures market.

2. What is the difference between Bombay Stock Exchange and National Stock
Exchange?

Bombay Stock Exchange index SENSEX was started in 1986 whereas National
Stock Exchange index mainly Nifty started in 1995. The base year for the
SENSEX is 1978-79 and base value is 100 whereas the base year for nifty 1994
and base is 1000. is

- BSE consists of 30 scripts whereas NSE consists of 50 scripts BSE is screen

based trading whereas NSE is ring less, national computerized exchange. BSE
has adopted both quote driven system and order driven system whereas NSE his
opted for an order driven system
3. What are the types of Risks? Generally there are two types of risk:
Systematic risk and Unsystematic risk.

Systematic risks are:

• Market risk

• Purchasing power risk

• Interest rate risk Unsystematic risks are:

Business risk

Financial risk

Liquidity risk!

4. What kind of stocks would you issue for a start up?

A start up typically has more risk than a well-established firm The kind of
stocks that one would issue for a start up would be those that protect the
downside of equity holders while giving them upside. Hence the stock issued
may be a combination of common stock, preferred stock and debt notes with
warrants (options to buy stock),

5. When should a company buy back stock? When k believes the stock is
undervalued and believes it can make money by investing in itself. This can
happen in a variety of situations. For example, if a company has suffered some
decreased earnings because of an inherently cyclical industry (such as the
semiconductor industry'), and believes is stock price is unjustifiably low, it will
buy back its own stock. On other occasions, a company will buy back its stock
if investors are driving down the price precipitously. In this situation, the
company is attempting o send a signal to the market that it is optimistic that its
falling stock price is not justified. It's saying: "We know more than anyone else
about our company. We are buying our stock back. Do you really think our
stock price should be this low?"
6. Is the dividend paid on common stock taxable to shareholders? Preferred
stock?

Is it tax deductible for the company?

The dividend paid on common stock is taxable on two levels in the U.S. First at
the firm level, as a dividend comes out from the net income after taxes (i.e, the
money has been taxed once atleast ) and then at the shareholder level The
shareholders are taxed for the dividend as ordinary income (0.1). Dividend for
preferred stock is treated as an interest expense and is tax free at the corporate
level

7. Why would an investor buy preferred stock? (L.) An investor that wants the
upside potential of equity but was to minimize risk would buy preferred stock.
The investor would receive steady interest-like payments (dividends) from the
preferred stock that are more assured than the dividends from common stock.

(2.) The preferred stock owner gets a superior right to the company's assets
should the company go bankrupt.

(3.) A corporation would invest in preferred stock because the dividends on

preferred stock are taxed at a bwer rate than the interest rates on bonds.

7. Why would a company distribute its earnings through dividends to common

stockholders? Regular dividend payments are sink that a company is healthy
and profitable. Also, issuing dividends can attract investors (shareholders).
Finally a company may distribute earnings to shareholders it hacks profitable
investment opportunities.

8. What is your investing strategy? Different investors have different strategies.

Some book for undervalued stocks, others for stocks with growth potential and
yet others for stocks with steady performance. A strategy could also be focused
on the big-term or short-term, and be more risky or less risky. Whatever your
investing strategy is, you should be able to articulate these attributes.
9 Which of the following risk factors disturb the stock market continuously?
Corporate drawn 25% Market value fluctuations 40% Economic breakdown
35%

Function disturb the stock market continuously 25% Corporate drawn factors
disturb the stock market continuously 40% Market value fluctuations factors
disturb the stock market continuously 35% Economic breakdown factors disturb
the stock market continuously.

CONCLUSION

You can make a bt of money investing in stocks or trading in the stock market,
but it is not something for the new investors. Care must be taken when it comes
to stock investments. The investor must have a solid understanding of stocks
and how they trade in the market or risk losing money in a volatile type of
investment.

Having stock in a company means you are an owner. How many shares of stock
you have determines the extent of that ownership. As part owner, you receive
dividends and have voting rights.

A stock represents equity, while a bonds is a debt. Bonds are low-risk

investment vehicles with guaranteed returns, while stocks involves more risk.
This is why stocks have a higher rate of return compared to bonds.

In investing. the riskier the investment the bigger the chance of making more
money. Investing in stocks can make you lots of money if you invest in the right
company. . However, you can lose all of it too.
 There are two main types of stocks common and preferred. Stocks can be
further classified into different classes depending on the company.

The stock market is a place where people go to trade stocks. Two of the most
important stock exchanges in India are the National Stock Exchange and the
Bombay Stock Exchange and globally it is the United States are the NYSE and
Nasdaq.

Purchase of stocks are commonly done through a brokerage. You can also get a
dividend reinvestment plan (DRIP). Stocks are volatile. Prices change according
to supply and demand. Many people have different opinions on why stock
prices move the way they do. One of the most important factors that influence
prices is earnings.

Learning how to read stock tables or a stock quote is a must if you are planning
to be a serious investor in stocks. It is not hard to read a stock quote once you
know what the different terms and symbols stand for.

The bull phases carned decent returns and the bear phases incurred boss The
outbok for India is remarkably good. Bank, corporate and personal balance
sheets are strong Corporations are experiencing high profits. The stock market
is at a record high Commodity markets are at their strongest. Lead
manufacturing sectors such as software, textiles and steel have dividends.
Spices exports have reached beyond the targets.

In the bull phases vohitilities were lower than bear phases.

Always remember the old stock market saying "Bulk make money, bears mike
money. but pigs get shughtered!". This will perhaps save you many times from
losing on your investment
 APPENDEX

10 BIGGEST FALLS IN THE INDIAN STOCK MARKET:

Here are the ten biggest falls in the Indian stock market history.

21 Jan 2008 | Indian markets feel the US slowdown heat Investors rushed to sell
stocks, pulling down SENSEX, the benchmark index of the Bombay Stock
Exchange, by 1.408.35 points or 7.41%, is largest single-day fall in absolute
terms. A stockbroker reacts as he monitors share prices during intra-day trade at
a brokerage firm in Mumbai on Friday.

24 Oct 2008 | Global events, RBI inaction roil bourses Indian stocks led the fall
across the world, registering one of their worst days ever after the country's
central bank refrained from reducing its policy rate in a review and a
confirmation that the UK is indeed in recession with data showing that is
economy shrunk in the gree months ended September the first such decline
since 1991.

17 Mar 2008 | Bear Stearns keeps a bear grip on SENSEX India bellwether
SENSEX fell 6%, down 951 ports to close below the 15,000 level the index's
second largest fall ever in absolute terms- as stocks markets worldwide slumped
after the near colapse of Bear Steams Cos Inc., Wall Street's fifth heigst
measurment bank, emergency actions from the US Federal Reserve and fears of
more casualties +3 Mar 2008 | SENSEX feels heat of farm loan write-offs,
global pressure The Bombay Stock Exchange's (BSE) benchmark index
suffered its second biggest single-day drop ever, the first day of trading after the
2008 Union Budget was presented, as plans for the country's largest farm ban
write-down added to deepening fears of a recession in the US. While the sell-off
on negative global market cues was expected, the massive ban waste -off by
state-banks announced in the Budget increased bearishness
22 Jan 2008 (Will US Fed cut provide succour? India's bellwether stock index
SENSEX recouped almost two-thirds of the record 2.272.93 points loss it
sutered intra day to close at 16,729.94, down 875 41 or 4.976, even as equity
markets across Asus continued to fail

6 July 2009 | Budget sends stocks into a tizzy; SENSEX loses 5.8% The
SENSEX slumped 869.65 points, or 5.8%, to 14,043.40, the most since

7 January. The S&P CNX Nifty index on the National Stock Exchange, too,
stumped 5.8%, or 258.55 points, to 4,165,70. Mark To Market | End of India
premium story; more global now? The 5.8% drop in the SENSEX is the biggest
ever on a budget day, in many ways the markets have themselves to blame for
having heightened expectations.

11 Feb 2008 | Reliance Power stumbles, as does the stock market As Reliance
Power Lid's shares stumbled out of opening bell they would eventually chose
down 17.27% - Bombay Stock Exchange's benchmark index, the 30-stock
SENSEX , fell 833 points or 4.78%, to close at 16.630 on growing global
worries over slowing economic expansion

8 May 2006 | Thursday thud At the end of a day of trading the 30-share index
stood at 11391 points, a fall of 826 points, or 6.76 per cent. The previous
biggest one-day fal was 570.42 points on April 28, 1992. All the 30 shares that
make up the index slumped with ACC, Hindako and Tata Steel getting battered
the most and ceding over 10% each, reports The Telegraph

10 Oct 2008 SENSEX, rupee, industrial growth down The benchmark index of
the Bombay Stock Exchange, the SENSEX, and the rupee fell sharply following
the lead of US markets that closed sharply down and Asian and European
markets that continued to be rolled a result of the ongoing credit crisis that
originated in the US, but had since spread to Europe and Asia.
13 March 20081 Global meltdown takes toll on SENSEX The Bombay Stock
Exchange's (BSE) SENSEX 770.63 points, or 4.78%, to close at 15,357.35, is
since 31 August, as the short bout of optimism after Tuesday's cash injections
by five central banks, including the $200 billion boost from the US Federal
Reserve, melted on fresh fears.

INDIAN SHARE MARKET RAISE IN VOLATILE ELECTION DAY

TRADE

Indian stocks rose to record highs in a volatile trading session after vote counts
showed the main opposition alliance set for the biggest election win in 30 years.
The rupee strengthened, while the India VIX tumbled.

The S&P BSE SENSEX (SENSEX) increased 0.9 percent to 24,121.74, after
swinging between a gain of 6.1 percent and a loss of 0.1 percent. The rupee rose
0.9 percent against the dollar. The India VIX sank 34 percent as the stock
market moved in a narrower trading range than the last election in 2009, when
the SENSEX surged 17 percent. The Bank of New York Mellon India ADR

Index gained 3.4 percent after the close of trading in Mumbai. The value of
Indian equities has climbed by more than $330 billion since Sept. 13, when the
opposition Bharatiya Janata Party named Nerandra Modi as is candidate for
prime minister. While analysts have speculated Modi will do more than the
ruling Congress Party to revive economic growth some investors sold shares
today to lock-in gains, said Alex Mathews, the head of research at Geojit BNP
Paribas Financial Services Ltd. Tom Mark, the creator of indicators to show
market turning points, said on May 13 that stocks may have a "film impulse to
the upside," followed by a retreat of about 11 percent. "The market has largely
discounted quite a lot of the positive news" Sam Maltani, a director of emerging
markets at F&C Asset Management , which oversees about $150 billion, said in
a telephone interview from London. "There has to be little bit of consolidation
and profit taking" Sector Rotation Lenders including ICICI Bank Ltd.
(ICICIBC) were among today's biggest gainers as investors speculated faster
economic growth will lead to higher credit quality, while power companies

surged on bets that improved infrastructure will boost electricity use.

Enterprises Ltd. (ADE), one of the biggest companies in Modi home state of
Gujarat, climbed 5.8 percent to the

highest level since September 2011. Technology heath-care and consumer

staples companies, favorate industries as India's economy slowed to near the
weakest pace in a decade, retreated today as investors shifted money into stocks
that are more geared to recovery. Infosys Ltd. (INFO), an exporter of software
services, and ITC Lid. (ITC), a producer of cigarettes, were the biggest drags on
the SENSEX. Trading in CNX city index shares surged to levels 165 percent
higher than the 30-day average, according to data compiled by Bloomberg The
gauge's intraday swing was the biggest since an eight-second crash in October
2012, which was spurred by mishandled trades and briefly erased more than $50
billion of value.

Relative Value

Global funds bought a net 36.3 billion rupees of Indian stocks today, the highest
single-day inflow since March 21, according to provisional data from the
exchanges. The SENSEX has climbed about 14 percent this year and trades at
15 times projected 12-month earnings the most expensive level since 2011. The
MSCI Emerging Markets Index is valued at 11 times The BJP and is lead in 334
of 543 seats up for grabs, more than the 272 needed for a majority, according to
NDTV Proponents see Modi who has overseen annual economic growth of 10
percent as the head of Gujarat state since 2001, as a leader who can speed up
infrastructure projects, while opponents blame him for 2002 riots that killed
about 1,000 people, mostly Muslins. Modi rejects accusations of any
wrongdoing

Confidence Boost
Public works projects helped Gujarat outpace the national economic growth rate
in 11 of the past

12 financial years for which data is available. The BJP has pledged to construct
100 new cities, build high-speed railway lines and roll out a national fiber optics
network. "If the government can really push itself, then confidence will increase
further." Rakesh Arora, the head of research at Capital Securities India Pvt. and
the most accurate forecaster for the SENSEX in 2013, said by phone. He raised
Nity target for the year to March 2015 to 8,400 from 7,200. The gauge rose 1.1
percent to a record 7,203 today. Weak growth and Asia's second fastest inflation
have eroded purchasing power in a nation where more than 800 million people
live on less than $2 per day Projects worth $2.30 billion are awaiting clearance
as lawmaking stalled in Prime Minister Manmohan Singh's coalition, data from
the Cabinet Committee on Investment show. Subsidy bills rose fivefold in the
past decade to 2.6 trillon rupees (S44 billion) a year, a period in which the
Indian economy only doubled in size.