STOCK MARKET

INTRODUCTION
• STOCK MARKET is a public entity for the
trading of company stock (share) and
derivatives at an agreed price.
• The purpose of a stock market is to
facilitate the exchange of securities
between buyers and sellers, thus providing
market place.

1.What is a stock exchange?
It is a corporation or mutual organization which provides facilities
for stock brokers and traders, to trade company stocks and other
securities. Its index, or market indicator is known as the Sensex.
2. Who is a broker?
A stockbroker is person who is licensed to trade in shares. Brokers also
have direct access to the share market and can act as your agent in share
transactions.
3. What is a Demat A/C?
Investors who wish to trade in the market need to have a
dematerialized, or demat, account. In India, the government has
mandated two entities –National Securities Depository, or NSDL, and
Central Depository Services (India), or CDSL – to be the custodian of
dematerialized securities.

FUNCTIONS OF BROKERS
• Receive and track orders
• Find other parties
• Negotiate prices
• Server as focal point trading
• Execute orders

TERMS TO RELATE
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SENSEX
NIFTY
BULL
BEAR
CRASH
DIVIDENT
SQUARING OFF
RALLY

STOCK MARKET INDEX
• All India All Industries Share Price Index
combined and published by the Economic
Times on daily basis.
• S&P CNX Nifty combined and published
by NSE India on daily basis.(50 STOCKS)
• BSE Sensex combined and published
by BSE on daily basis.(30 STOCKS)

BUYING SHARES
• PRIMARY MARKETS – part of capital
markets that deals with the issue of new
securities (directly from the company).
• SECONDARY MARKETS –here securities
are sold by and transferred from one
investor to another (from existing
shareholder)

PLAYERS IN THE STOCK
MARKET
• Brokers- members of the stock exchange
authorized to trade
• Stock exchange
• Clearing corporation
• Banks
• Depository participants

DEMATERIALISATION OF
SHARES:
• Trading in the shares of the Company is
compulsory in dematerialized form for all
investors.
The Company has, therefore, enlisted its shares
with both the depositories, viz, National
Securities Depository Limited (NSDL) and
Central Depository Services India Limited
(CDSL).

WHAT IS DEMATERIALISATION?
• Dematerialisation is a process by which the physical
share certificates of an investor are taken back by the
Company and an equivalent number of securities are
credited in electronic form at the request of the investor.
•
An investor will have to first open an account with a
Depository Participant so that the dematerialised
holdings can be credited into that account.
•
This is very similar to opening a Bank Account.

WHAT IS A DEPOSITORY?
• A Depository (NSDL & CDSL) is an
organisation like a Central Bank where the
securities of a shareholder are held in the
electronic form at the request of the
shareholder through the medium of a
Depository Participant.

WHO IS A DEPOSITORY
PARTICIPANT?
• A Depository Participant (DP) is your representative
( agent ) in the depository system providing the link
between the Company and you through the Depository.
• While the Depository can be compared to a Bank , DP
is like a branch of your bank with whom you can have
an account.
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According to SEBI guidelines, Financial Institutions like
banks, stockbrokers etc . can become participants in the
depository.

SECONDARY MARKET
1. TRADING- Cash trading
Spot trading
Forward ,Future (Derivative trade)
2. Clearing &Settlement

TRADING
• The NSE trading system called 'National
Exchange for Automated Trading' (NEAT ) is a
fully automated screen based trading system.
• It is on line and nationwide trading system.
• It adopts the principle of an order driven
market.

TRADING MECHANISM SYSTEM
• In this system a member can punch into
the computer quantities of securities and
prices at which he likes to transact.
• The transaction is executed as soon as it
finds a matching sale or buy order from a
counter party.

International Aspects of Stock
Markets
• European markets becoming an increasing force
with introduction of a common currency, the
Euro
• International stock markets allow investors to
diversify by holding stocks issued by
corporations in foreign countries
• Increased risk due to less complete information
about foreign stocks, foreign exchange risk, and
political risk

WORLD CAPITAL MARKET
• Why Raise Funds Outside Domestic
Markets?
• Domestic market not sufficiently developed to supply the
funds needed
•
Reduced costs (assumes markets not completely
integrated)
•
Diversify funding sources
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Foreign currency exposure management

How to receive income from
shares?
We invest in shares to make money – either
through a share’s capital growth, i.e. the amount
by which the share price increases in value over
time, or through the dividends it pays to its
shareholders.

How to make investment decisions?
• To cope with volatility, it is important to have a disciplined and
systematic approach to equity investment.
•
Set your own rules and more importantly, follow them religiously.
• Indeed, the mantra for successful equity investment is a well though
out, disciplined investment strategy.
2) How to track your investments? (Portfolio tracker) :
The Portfolio Manager tracks and monitors all your investments, cash
flow and assets, through live price updates.
• With the Portfolio help, you can not only view your investments at
each stage, but can use this record of your holdings to base any
future investments decisions.

CONCLUSION
• More over investing in stock market is a kind of investment that
one cannot learn or understand only through theoretical
knowledge, its simply a game in which one can accelerate only
through market based practical knowledge and fair
investment strategy.
•
Before one examines a company or start up a new firm, it is
important to understand the nature of businesses and the stock
market. This is the cornerstone of learning to invest well.
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At last the stock market can be a great source of confusion for
many people. An average person may believe that investing is
a form of gambling; they are certain that if you invest, you will
more than likely end up losing your money. But at the same
time any one with a small investment can make a good profit if
he/she have good knowledge of