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Contents

Meaning of stock market


Dealing on stock exchange
Functions , Importance ,Terms used in stock market
Types of operators
Trading
NSE of India (Features)
BSE of India (Features)
Buying & selling Procedures
Stock market indices & Quotations
7 way to survive stock market correction
Conclusion
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Meaning of stock market


Securities :-New issue market
-The stock exchange
Meaning of Stock.
A Stock exchange or securities market is
an organised market where listed
securities are purchased & sold for
investment or speculation.
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Dealing on stock exchange


SEBI (Securities & exchange board of
India) in 1988
SCRA (Securities contracts (Regulation)
Act) in 1956
In force February 20, 1957
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Terms used in stock market

Sensex
Nifty
Squaring off
Rally
Crash
Correction
Bonus shares
Dividend
Book closure date
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Functions of stock market


(To create link between seller & buyer)

Measure of safety & Fair Dealing.


Act of Magic.
Flow of capital to the most Profitable
channels.
Inducement to companies to raise their
standard of performance.
Guidance on cost of capital.
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Importance of stock market


It provides necessary mobility to capital &
directs the flow of capital into profitable &
successful enterprise. It is the barometer
of general economic progress in the
country & exerts a powerful & significant
influence as depressant or stimulant of
business activity.
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Types of operators

Brokers:

1.
2.
3.

Buys/sells on behalf of outsider


Charges Brokerage
Not specialize in particular security

Jobbers: (Mumbai stock exchange-Tarawaniwala)

1.
2.
3.
4.

Buys/sells on his own behalf


Profit from price difference
Specializes in one security
Not prohibited from selling/buying securities on behalf of others
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Types of operators

Bulls: (Tejiwala)

1.
2.
3.
4.

Expects rise in price


Buys securities to sell them in future
Conditions when dominated----BULLISH MARKET
Bulls liquidation

Eg1000 shares @ Rs. 50/-(BUYS)


At settlement date price increased to Rs. 70/Sale price
: Rs. 70
Purchase price : Rs. 50
Difference
: Rs. 20
Profit
: 1000 shares @ Rs. 20 each= Rs. 20,000
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Types of operators
Bears: (Mandiwala)
1.
2.
3.
4.

Expects fall in price


Sells securities for future delivery
Conditions when dominated----BEARISH MARKET
Bears Covering

Eg1000 shares @ Rs. 50/-(SELLS)


At settlement date price decreased to Rs. 40/Sale price
: Rs. 50
Purchase price : Rs. 40
Difference
: Rs. 10
Profit
: 1000 shares @ Rs. 10 each= Rs. 10,000
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Trading
Open outcry system
1. Trading post
2. Jobber
Screen-based system
1. Informational efficiency
2. Full view of market
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NSE of India

Type
Location
Owner
Key people
No. of listings
Market Cap
Indexes

: Stock Exchange
: Mumbai, India
: National Stock Exchange of India
: Ravi Narain (Managing Director)
: 1587
: US$ 1.46 trillion
: S&P CNX Nifty
CNX Nifty Junior
S&P CNX 500

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Features

The NSE is a ringless, national , computerised exchange.

NSE has two segments: WDM


CM

The trading members in capital Market are connected to the


central computer in Mumbai using VSATs.

Opt for order-driven system.

Confirmation slip.

Identity is not revealed.

NSE guaranteed by National securities clearing corporation


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(NSCC). (Eg.- AMore
buysrational
from B)

BSE of India

Type
:Stock Exchange
Location
:Mumbai, India
Owner
:Bombay Stock Exchange
Key people
:Rajnikant Patel (CEO)
No. of listings :~4,800
Market capital :US$ 1.61 trillion

Indexes

:BSE Sensex

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Features
BSE switched from open outcry system to
screen-based system in 1995.
Jobber play an important role (bid
price ,,,,,,,ask price).
Investors have to transact via a
jobber/broker.
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Buying shares

Procedure for buying shares:

1. Locating a Broker
(Client registration form & member-constituent form)

2. Placement of order
(Limit order or market order:
-Day order
-week order
-month order
Open order)

3. Execution of order (contract note)


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Selling shares

Procedure for selling shares:

1. Placement of order
(Sale order ;limit order & market order)

2. Execution of order
(contract note)

3. Internet Trading
(ICICI Web trade)
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Individual stock Quotation


Co., (Prev.cl.), open ,High ,Low ,Close
[vol., Val. Rs 000s , Trades]

P/E

M Cap.

52-Wk H/L

[46436, 43591.29 ,1384]

12.7

(9438.6)

1200/692

(932.80) ,940 ,949 , 931 , 933.20


[138630,130216.84 , 4404]

12.7

(9438.6)

1200/692

Bajaj Auto (932.65) ,937 ,948 , 931 , 932.85

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Stock market Indices


Equal-weighted index : arithemetic average of
price relatives of the sample shares in a certain year with
reference to base year.

Value-weighted index : aggregate market


capitalisation of the sample shares in a certain year in
relation to the base year.

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Data for constructing Stock market Indices


Share

Price in
Base
year

Price in
year t

Price
Relative

No. of
outstan
ding
shares

Market
capitalisa
tion in
base year
(1x4)

Market
capitalis
ation in t
year
(2x4)

50

70

142

10

500

700

40

50

125

20

800

1000

100

90

90
357

500
1800

450
2150

Equal-Weighted index:

Value-weighted index:

(357/3)

(2150/1800)x100
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Seven ways to survive a Stock Market


Correction
1. Stop Listening To Analysts
2. Stop Staring At Your Portfolio Every Thirty
Minutes.
3. Be Patient
4. Speak To Actual Investors With Experience
5. Stop Following Crazy Tips
6. Understand Market Cycles
7. Follow The Guru
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Conclusion
The functioning of stock exchange are
characterized by many shortcomings with long
delays ,lack of transparency in procedures and
vulnerability .So, number of measures were
taken with the objective to provide effective
control of the stock exchange operations ,protect
the investors interest ,check trading.
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rational trading

Thank You