Stock Market Basics

What is a Stock Market?

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 Stock Market Basics

† It is a market like any other market. It is

place to buy and sell
„ Shares/Stocks
„ Bonds/Debentures
„ Mutual Funds
† Bombay Stock Exchange (BSE) and
National Stock Exchange (NSE) are India’s
premier stock exchanges

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 Stock Market Basics

† Internationally –
„ NYSE
„ NASDAQ
„ Tokyo Stock Exchange
† Virtually every national capital will
have a prominent Stock Exchange

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Stock Market Basics

How are shares traded?

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 Stock Market Basics

† Screen based trading

† Price Determination
„ Fundamentals
„ Sentiment
„ Market Movement
† Brokerage
† Securities Transaction Tax (STT)

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 Stock Market Basics

How does one read the newspapers

for stock prices?

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 Stock Market Basics

† Opening
† High
† Low
† Close
† Volume Traded

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Stock Market Basics

What is a Stock Market Index?

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 Stock Market Basics

† Like any other index, a stock market

index is an indicator
† Prominent Indian Indices
„ SENSEX
„ NIFTY
† Internationally –
„ Dow Jones Index
„ FTSE
„ NIKKEI
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Stock Market Basics

How is an Index crafted?

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 Stock Market Basics

† Market Capitalisation
„ No. of shares * Market Price of share
† Weightage in Index
† Base Year of Index
† Current Base of Sensex is 1st April
1979 = 100
† Replacing stocks in the index

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Stock Market Basics

Categories of Shares

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 Stock Market Basics

† Based on Market Cap and frequency

of trading
„ A group
„ B1 group
„ B2 group
„ Z category
† Delivery/Payment– T+2

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Stock Market Basics

What is dematerialisation or
demat?

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 Stock Market Basics

† Shares are not physically exchanged

† They are kept in a depository
„ NSDL,CSDL
† Share holder gets a pass book like
account; hence shares are not in physical
form –they are dematerialised
† Benefits
„ More secure
„ Less delays

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Stock Market Basics

What are Bulls and Bears?

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 Stock Market Basics
† Bull
„ Optimist
„ Believes price will rise
„ Buys
† Bear
„ Pessimist
„ Believes price will fall
„ Sells

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 Stock Market Basics

What are Futures and Options?

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 Stock Market Basics

† Future contracts to be honoured at a

pre-determined price that is decided
upon now
† Option to buy or sell a stock at a pre-
determined price – for a fee
„ Call – Option to buy
„ Put – Option to sell
† No more “forward trading”

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Stock Market Basics

Thank You !!

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