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V Importanttools of investments and

operations of Share Market

V Investment is a sacrifice of present money
for future benefits
V Better investment plan gives you maximum
V No gain without risk
V Never keep much cash in your home, it
affects the rotation of currency which caused
increase in inflation
V Investment gives you ¶Passive Income·
V Passive Income is that income which don·t
derived by direct efforts in a job
V The salary you get from work is a direct
result of your efforts at work
V Keep your 1 month salary * 6 in your bank
account (Which can be convert into cash at
V Rest of the amount invest in different
V °hose right combination of risk and return
V 40 to 50% of your investment put into secure
instruments like Govt. securities, FD.
V 20-30% of your investment put into balanced
instruments like ULIP, SIP, LI, Bonds
V Rest of percentage invest in high return
instruments. Like shares (High returns carry
high risks)
V Always keep some of your investment
equivalent to cash like FD (for emergencies)
Rental Income

Dividend °  

Interest Income
V Don·t put all of your money in one scrip or in
one sector
V Divide your investment sector wise
V For example- of your invested amount you
can divide it by:
20% in IT sector stocks
30% in Realty Stocks
30% in Banking Stocks
10% in Steel or Automobile stocks
10% in FM°G stocks
V Fundamental Analysis
(Balance sheet & P/L account)
V Benchmark
V Bottom line growth (Net Profit)
V Volume
V °ompany Management
V Return on Equity (around 20% is considered good)
V Debt-to-Equity Ratio
(Total Debt / Equity °apital)
1 is Okay, more than 2 or greater is risky
V Earning Per Share (EPS)
What the company is earning for every share.
Net Profit divide by no. of equity share
V Price/ Earning Ratio (P/E Ratio)
°MP / EPS (°MP-°urrent Market Price)
V On April 2010, there are 2990 companies
listed in BSE and 1354 companies listed in
V BSE established in 1875, oldest Stock
Exchange of Asia
V NSE °ame in April-1994
Index helps you to take the investment decision
in share market.
It is number used to represent the change in a
set of values between a base time period and
another time period.
Stock Index: represents changes in value of a set
of stocks which constitute the index over a base
A 10 100 1000
B 1 150 150

Suppose °urrently
A is traded at Rs. 200 = 2000
B is traded at Rs. 200 = 200
Index = °urrent Market °apitalization * 100
Base Market °apitalization

Index = 2200 * 100 = 191.40

V Only in °NX-NIFTY
V For one month, two month or three month.
V Fixed Lot for each Script
V Required Large Amount for Invest
V Margin provides by Trading House
V Also called Jobber and Fatka.
V Margin available 0 to 20 times.
V Lower brokerage.
V Required lesser amount to invest as compared to
Future and Option
V In is a tool through which stock exchange
controls the market in a panic situation
V If any stock/scrip crosses the certain level of
increase or decrease in a trading session
°ircuit Filter comes in force
V It stops the trading of that stock for the
entire day or for some duration
V °ircuit Filter may put in a particular stock as
well as market index like Sensex and Nifty
V For Sensex- °ircuit level is 15% (Subject to
change according to the norms of BSE)
 For example 12%
Upper rise in stock in a
trading day
 Say 10% fall in
Lower stock in a trading