Professional Documents
Culture Documents
B
TRANSFORMATION MODEL
1-8
INPUTS OF SHARE TRADING
9-14
TRANSFORMATION PROCESS
15-20
OUTPUTS
FEEDBACKS 22-24
CONSTAIRNTS 25-26
1. POTENTIAL INVESTOR
Potential customers considered only those people who have the desire to invest in the
stock market.
DOMESTIC INVESTORS are those people who are come under the periphery of India
and have the desire, capacity, and capital to invest in the domestic share market.
FOREIGN INVESTORS are those who belong to any other nation outside india.They
may be of Indian origin (NRI or PIO) but living in abroad or purely of foreign origin.
India, banks, and other large institutions which invest their members’ money in shares
and bonds, reinstitution investors. Since they trade in large volumes, they may play a
supportive role when the share market is bearish. When ordinary investors, and even
speculators to a certain extent, shy away from the share market, it is the institutional
investor who often accounts for the bulk of the trade done on the stock exchange, over a
sustained period. The absence of institutional investors in a bear market can have
influencing company policy and in takeover bids. They have professional analysts and
advisors, and can usually read stock market trends much better than individual investors.
With their larger holdings they are often represented on the board of directors, and can
few years. SENSEX and NIFTY are less than 5% below the all time highs.
Advice on buying and selling of Indian stocks and indices. Indian stock market investing
made easy. Expert recommendations, mature tips, share market information at one place.
Making money from Indian stock market was never so easy. But although markets are in the
upswing we find more and more people exiting citing losses in stocks. A close analysis
shows non understanding of financial markets as the main reason for this.
Stock price movement is just more than a simple graph. Fundamental analysis helps you to
identify potential winners which can be multiage’s. Technical analysis helps you time the
markets. If you are a long term investor, Fundamentals play a more important tool. If you
are a short term trader, Technical analysis, news, rumors play a more important role.
Indian corporate earnings are showing strong growth in last 4-5 years which is well
Stock market trading without proper research is bound to make you loose all your finance.
We recommend studying charts; avoid keeping a close eye on quotes / prices, day trading,
penny stocks. Finding a good stockbroker, Stock Market Guide , stock exchange like New
York stock exchange, Toronto exchange, NSE etc. Stock picks should be purely based on
research on fundamentals and technical analysis. Consider future trading and options.
2. MONEY
• the most common medium of exchange; functions as legal tender; "we tried to
• the official currency issued by a government or national bank; "he changed his
Money is essential part of the life of every individual. It is accepted everywhere in all the
transactions around the world. In the perspective of investment, it is essential for every
investment made anywhere around the world. It suits all the transactions because it
3. EXISTENCE OF PROFITABLE
ORGANISATION’S OFFER (NEW ISSUE) AND
STOCK EXCHANGE:-
The industrial securities market is divided into two parts:-
2. Stock exchange
One aspect of their relationship is that they differ from each other organizationally as
well as in the nature of functions performed by them. They have some similarities also
New Issue Market:-NIM deals with the new securities, i.e. securities which were not
previously available and are, therefore, offered to investing public for the first time
What is IPO
It is the process of selling shares that were so far privately held to new investors for the
first time IPO. It is the process for an unlisted company (called issuer) to go public and
offer shares to general public investors. The main purpose of an IPO is to raise capital for
Primary market
The market in which investors have the first opportunity to buy a newly issued security
like in an IPO.
Prospectus
A formal legal document describing the details of the company is created for a proposed
IPO. It is the document that makes investors aware of the risks of an investment.
Book Building
The process by which an the attempt is being made to determine at what price the
built by accepting orders from the investors who indicate the number of shares they
Book building is a process of price discovery in case of IPOs. When Companies come
through the book building route, the price of the issue is not fixed beforehand. Rather the
issue document only gives a floor price or the price band within which investors can bid
for the shares. The IPO applicants bid for the shares being issued by the company quoting
the price of their bid and the quantity that they would like to bid at. Only the retail
investors have the option of bidding at ‘cut-off’. Cut off means that the investors are not
active bidders but they are willing to accept whatever price is getting arrived at based on
bidding done by other persons. After the bidding process is complete, the ‘cut-off’ price
Over subscription
A situation in which the demand for shares offered in an IPO exceeds the number of
shares issued.
Procedure of IPO:
investment banks. The company offering its shares enters a contract with a lead
underwriter to sell its shares to the public by book building process. The underwriter then
approaches investors with offers to sell these shares. Upon selling the shares, the
underwriters keep a commission based on a percentage of the value of the shares sold.
RIGHT ISSUE:-In case of Companies whose shares are already listed and widely
held, shares can be offered to the existing share holders. This is called Right Issue.
In India, section81 of the Companies Act 1956 provides that where a company increase
its subscribe capital by the issue of new shares, either after two year of its formation or
Every transaction in the stock exchange is carried out through licensed members called
brokers.
To trade in shares, you have to approach a broker However, since most stock exchange
brokers deal in very high volumes, they generally do not entertain small investors. These
The general investors should identify a sub-broker for regular trading in shares and place
his order for purchase and sale through the sub-broker. The sub/broker will transmit the
corporation is formed, its initial shareholders are able to acquire shares of stock from the
the public, the primary market comes in where those who subscribe to the initial public
offering (IPO) takes on the shares of stock sold from point of IPO. When those who
bought into a company at IPO point of view decides to sell their shares of stock to other
The stock market is a secondary market for securities trading wherein original or
secondary holders of a company’s shares of stock can sell their stocks to other individuals
The stock market has buyers of stocks or those who wants to own a part of the company
but wasn’t able to do so during the initial public offerings made by the company to the
public when it has decided to list itself as a publicly listed company. The secondary
market or the stock market allows other individuals to sell shares of the company when
the initial shareholders may have realized that they want to sell their shares after gaining
either significant profit or realized significant loss from point of acquiring a company
Stock Exchanges discharge three vital functions in the orderly growth of capital formation
2. Market place
Nexus between savings and investments: - The savings of the community are mobilized
and channeled by stock exchanges for investment in to those sectors which are favoured
by the community at large, on the basis of such criteria as good return appreciation of
Market place: - the second important function discharged by stock exchanges is that they
provide a market place for the purchase and sell of securities, thereby enabling their free
transferability through several successive stages from the original subscriber to the never
Continuous price formation: - The third major function, closely related to the second
discharged by the stock exchanges is process of continuous price formation. The collective
emergence of large no. of buyers and sellers at any point of time, has the effect of bringing
about changes in the levels of security prices in small graduations, there by evening out
3. DEMAT ACCOUNT
Demat refers to a dematerialized account.
Though the company is under obligation to offer the securities in both physical and demat
mode, you have the choice to receive the securities in either mode.
If you wish to have securities in demat mode, you need to indicate the name of the
depository and also of the depository participant with whom you have depository account
in your application.
It is, however desirable that you hold securities in demat form as physical securities carry
Just as you have to open an account with a bank if you want to save your money, make
cheque payments etc, Nowadays, you need to open a demat account if you want to buy or
sell stocks.
So it is just like a bank account where actual money is replaced by shares. You have to
approach the DPs (remember, they are like bank branches), to open your demat account.
Let's say your portfolio of shares looks like this: 150 of Infosys, 50 of Wipro, 200 of HLL
and 100 of ACC. All these will show in your demat account. So you don't have to possess
any physical certificates showing that you own these shares. They are all held
account. Just like a bank passbook or statement, the DP will provide you with periodic
dematerialized form. Although the market regulator, the Securities and Exchange Board
of India (SEBI), has allowed trades of up to 500 shares to be settled in physical form,
PAN CARD:-
taxpayers of India whose income is taxable. This number is issued by the Income Tax
Office.
This number is required for many activities such as opening an account, getting a phone
line, receiving salary or professional fees. The primary purpose of PAN is to prevent tax
evasion by keeping a track of monetary transactions. The PAN is unique, national, and
This number can be considered to be similar to Social security number issued in United
• If the PAN does not follow the above structure, then the PAN will be shown invalid
• The fourth character of the PAN must be one of the following, depending on the type of
assessee:
C — Company
P — Person
F — Firm
T — AOP (Trust)
L — Local Authority
G — Government
• The fifth character of the PAN is the first character in the surname of the person to whom
non-taxpayers.
3. BROKER:-
Thus if you want to buy say 100 shares of a company XYZ (which is listed on say
through a stock broker registered in NSE to carry out his transactions on National
Stock exchange.
Stock brokers are governed 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
Before start of trading with a stock broker, you are required to furnish your details
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. Please go
registered with SEBI. Examine the SEBI registration number and other relevant details
TRANSFORMATION PROCESS:-
Simply put, you should invest so that your money grows and shields you against rising
inflation. The rate of return on investments should be greater than the rate of inflation,
leaving you with a nice surplus over a period of time. Whether your money is invested in
stocks, bonds, mutual funds or certificates of deposit (CD), the end result is to create
wealth for retirement, marriage, college fees, vacations, better standard of living or to just
pass on the money to the next generation or maybe have some fun in your life and do
things you had always dreamed of doing with a little extra cash in your pocket. Also, it's
exciting to review your investment returns and to see how they are accumulating at a
The sooner the better. By investing into the market right away you allow your
investments more time to grow, whereby the concept of compounding interest swells
unpredictability of the markets, research and history indicates these three golden rules for
all investors
1. Invest early
2. Invest regularly
While it’s tempting to wait for the “best time” to invest, especially in a rising market,
remember that the risk of waiting may be much greater than the potential rewards of
because you earn income not only on the original investment but also on the reinvestment
of dividend/interest accumulated over the years. The power of compounding is one of the
most compelling reasons for investing as soon as possible. The earlier you start investing
and continue to do so consistently the more money you will make. The longer you leave
your money invested and the higher the interest rates, the faster your money will grow.
That's why stocks are the best long-term investment tool. The general upward
That’s the reasoning behind investing for long term rather than short term.
There is no statutory amount that an investor needs to invest in order to generate adequate
returns from his savings. The amount that you invest will eventually depend on factors such as:
Remember that no amount is too small to make a beginning. Whatever amount of money you
can spare to begin with is good enough. You can keep increasing the amount you invest over
a period of time as you keep growing in confidence and understanding of the investment
options available and So instead of just dreaming about those wads of money do something
concrete about it and start investing soon as you can with whatever amount of money you can
spare.
1. Open a broking account with a registered stock broker. You can also open an internet
trading account and start trading by click of a mouse. A large number of brokers such as
ICICI Web-trade, Motilal Oswal Securities, and Geojit Securities etc. are offering e-
broking services.
2. Submit your details and sign the broker client agreement with your broker. This is
mandatory.
CDSL. If your broker is also a DP, you can open the DP account with him also. Sign the
4. Don't deal with unregistered intermediaries, as this would expose you to counter party
risk and may lead to losses without any stock exchange recourse for remedy.
7. Insist on a contract note issued for each day of trading and confirm the details printed
8. Don't fall prey to promises of unrealistic high returns. It is easy to lose money that way.
10. Promptly issue delivery instructions to your DP for transferring the shares sold by you to
your broker's account. Failure to do so may result in huge losses for you.
11. Use the Investors' Grievance Redressal system of the stock exchanges and Depository to
Mutual funds normally come out with an advertisement in newspapers publishing the date
of launch of the new schemes. Investors can also contact the agents and distributors of
mutual funds who are spread all over the country for necessary information and application
forms. Forms can be deposited with mutual funds through the agents and distributors who
provide such services. Now a days, the post offices and banks also distribute the units of
mutual funds. However, the investors may please note that the mutual funds schemes being
marketed by banks and post offices should not be taken as their own schemes and no
assurance of returns is given by them. The only role of banks and post offices is to help in
investing in a particular scheme. On the other hand they must consider the track record of the
Non-Resident Indians (NRI) can also invest in mutual funds. Normally, necessary details
The performance of a Mutual Fund is reflected in its net asset value (NAV) which is
disclosed on daily basis in case of open-ended schemes and on weekly basis in case of close-
ended schemes. The NAVs of mutual funds are required to be published in newspapers.
The NAVs are also available on the web sites of mutual funds. All mutual funds are also
(AMFI) and thus the investors can access NAVs of all mutual funds at one place
SEBI is the regulatory authority of Capital Market. It plays a vital role in the
Capital Market and directs the Companies as well as investors and brokers.
In 1988 the Securities and Exchange Board of India (SEBI) was established by the
a fully autonomous body (a statutory Board) in the year 1992 with the passing of the
Securities and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place
responsibilities, to cover both development & regulation of the market, and independent
powers have been set up. Paradoxically this is a positive outcome of the Securities Scam
of 1990-91.
Since its inception SEBI has been working targeting the securities and is attending to the
fulfillment of its objectives with commendable zeal and dexterity. The improvements in
clearing corporations etc. reduced the risk of credit and also reduced the market.
norms, the eligibility criteria, the code of obligations and the code of conduct for different
registrars, portfolio managers, credit rating agencies, underwriters and others. It has
framed bye-laws, risk identification and risk management systems for Clearing houses of
stock exchanges, surveillance system etc. which has made dealing in securities both safe
Another significant event is the approval of trading in stock indices (like S&P CNX Nifty
& Sensex) in 2000. A market Index is a convenient and effective product because of the
following reasons:
Two broad approaches of SEBI is to integrate the securities market at the national level,
and also to diversify the trading products, so that there is an increase in number of traders
dealers etc. to transact through the Exchanges. In this context the introduction of
real landmark.
SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatory framework for
derivatives trading and suggest bye-laws for Regulation and Control of Trading and Settlement of
Derivatives Contracts. The Board of SEBI in its meeting held on May 11, 1998 accepted the
recommendations of the committee and approved the phased introduction of derivatives trading
in India beginning with Stock Index Futures. The Board also approved the "Suggestive Bye-laws"
as recommended by the Dr LC Gupta Committee for Regulation and Control of Trading and
SEBI then appointed the J. R. Verma Committee to recommend Risk Containment Measures (RCM)
in the Indian Stock Index Futures Market. The report was submitted in November 1998.
However the Securities Contracts (Regulation) Act, 1956 (SCRA) required amendment to include
"derivatives" in the definition of securities to enable SEBI to introduce trading in derivatives. The
necessary amendment was then carried out by the Government in 1999. The Securities Laws
(Amendment) Bill, 1999 was introduced. In December 1999 the new framework was approved.
Derivatives have been accorded the status of `Securities'. The ban imposed on trading in
Thereafter SEBI formulated the necessary regulations/bye-laws and intimated the Stock
Exchanges in the year 2000. The derivative trading started in India at NSE in 2000 and BSE
Any company or a listed company making a public issue or a rights issue of value of
more than Rs 50 lakhs is required to file a draft offer document with SEBI for its
observations. The company can proceed further only after getting observations from
SEBI. The company has to open its issue within three months from the date of SEBI's
observation letter.
Through public issues, SEBI has laid down eligibility norms for entities accessing the
primary market. The entry norms are only for companies making a public issue (IPO or
FPO) and
There are many important things you need to know to trade and invest successfully in the
stock market or any other market. 12 of the most important things that I can share with
1. Buy low-sell high. As simple as this concept appears to be, the vast majority of
investors do the exact opposite. Your ability to consistently buy low and sell high, will
2. The stock market is always right and price is the only reality in trading. If you want to
make money in any market, you need to mirror what the market is doing. If the market is
going down and you are long, the market is right and you are wrong. If the stock market
is going up and you are short, the market is right and you are wrong.
Other things being equal, the longer you stay right with the stock market, the more
money you will make. The longer you stay wrong with the stock market, the more money
3. Every market or stock that goes up will go down and most markets or stocks that have
gone down will go up. The more extreme the move up or down, the more extreme the
movement in the opposite direction once the trend changes. This is also known as "the
4. If you are looking for "reasons" that stocks or markets make large directional moves,
you will probably never know for certain. Since we are dealing with perception of
markets-not necessarily reality, you are wasting your time looking for the many reasons
markets move.
A huge mistake most investors make is assuming that stock markets are rational or that
they are capable of ascertaining why markets do anything. To make a profit trading, it is
only necessary to know that markets are moving - not why they are moving. Stock market
whys.
sometimes months in advance. If you wait to invest until it is totally clear to you why a
stock or a market is moving, you have to assume that others have done the same thing
You need to get positioned before the largest directional trend move takes place. The
market reaction to good or bad news in a bull market will be positive more often than not.
The market reaction to good or bad news in a bear market will be negative more often
than not.
6. The trend is your friend. Since the trend is the basis of all profit, we need long term
trends to make sizeable money. The key is to know when to get aboard a trend and stick
with it for a long period of time to maximize profits. Contrary to the short term
perspective of most investors today, all the big money is made by catching large market
7. You must let your profits run and cut your losses quickly if you are to have any chance
of being successful. Trading discipline is not a sufficient condition to make money in the
markets, but it is a necessary condition. If you do not practice highly disciplined trading,
you will not make money over the long term. This is a stock trading “system” in itself.
competition model of capitalism. The Efficient Market Hypothesis at root shares many of
the same false premises as the perfect competition paradigm as described by a well
known economist.
The perfect competition model is not based on anything that exists on this earth.
Consistently profitable professional traders simply have better information - and they act
on it. Most non-professionals trade strictly on emotion, and lose much more money than
they earn.
The combination of superior information for some investors and the usual panic as losses
mount caused by buying high and selling low for others, creates inefficient markets.
9. Traditional technical and fundamental analysis alone may not enable you to
consistently make money in the markets. Successful market timing is possible but not
If you eliminate optimization, data mining, subjectivism, and other such statistical tricks
10. Never trust the advice and/or ideas of trading software vendors, stock trading system
authors, etc., unless they trade their own money and have traded successfully for years.
Note those that have traded successfully over very long periods of time are very few in
number. Keep in mind that Wall Street and other financial firms make money by selling
11. The worst thing an investor can do is take a large loss on their position or portfolio.
Market timing can help avert this much too common experience.
You can avoid making that huge mistake by avoiding buying things when they are high.
It should be obvious that you should only buy when stocks are low and only sell when
Since your starting point is critical in determining your total return, if you buy low, your
long term investment results are irrefutably better than someone that bought high.
12. The most successful investing methods should take most individuals no more than
four or five hours per week and, for the majority of us, only one or two hours per week
It is the total transformation process of share trading and the investors should follow all
OUTPUTS:-
certificate. And funds. Through the proper investment we can get the profit. It is the
the point of view, it is the proper way of long term financing (fund raising).
There are following output which we can get after the transformation of various inputs.
company, they become one of the owners of the company. Shareholders choose who runs
a company and are involved in making key decisions, such as whether a business should
be sold.
While shares are most obviously associated with the stock market, the majority of small
businesses don't go near a stock market in their lifetime. They are more likely to issue
shares in their company in return for a lump sum investment. This may either be from
friends and family or, for businesses that are looking for capital to fund high growth,
• Stock Markets
advantage of raising money in this way is that you don't have to pay the money back or
pay interest to the investors. Instead, shareholders are entitled to a share of the
At the end of a calendar year, a company's board decides whether the business has done
well enough to pay shareholders a dividend. A dividend is a part of the company's profits
be paid at the half-year point. The dividend is calculated per share, so the more shares
you own, the more money you get. Dividends attract income tax, but not National
Insurance.
reinvested in this way each year. If an employee holds these shares for three years, they
pay no income tax on them. If not, the dividend used to pay for the shares becomes
taxable.
Debenture:-
company's stamp and carries an undertaking that the debenture holder will get a fixed
debenture matures.
companies to obtain funds. It is defined as "a debt secured only by the debtor’s earning
power, not by a lien on any specific asset."[1] It is similar to a bond except the
securitization conditions are different. A debenture is usually unsecured in the sense that
there are no liens or pledges on specific assets. It is, however, secured by all properties
not otherwise pledged. In the case of bankruptcy, debenture holders are considered
general creditors. The advantage of debentures to the issuer is they leave specific assets
burden free, and thereby leave them open for subsequent financing. Debentures are
generally freely transferable by the debenture holder. Debenture holders have no voting
Types:-
1. Convertible Debentures, which can be converted into equity shares of the issuing
liable company. They usually carry higher interest rates than the convertible ones.
hybrid security with debt- and equity-like features. Although it typically has a low
coupon rate, the holder is compensated with the ability to convert the bond to common
From the issuer's perspective, the key benefit of raising money by selling convertible
bonds is a reduced cash interest payment. However, in exchange for the benefit of
reduced interest payments, the value of shareholder's equity is reduced due to the stock
dilution expected when bondholders convert their bonds into new shares.
The convertible bond markets in the United States and Japan are of primary global
importance. These two domestic markets are the largest in terms of market capitalisation.
Other domestic convertible bond markets are often illiquid, and pricing is frequently non-
standardised.
Mutual Fund:-
Mutual Fund is a investment company that pools money from shareholders and invests in
a variety of securities, such as stocks, bonds and money market instruments. Most open-
end mutual funds stand ready to buy back (redeem) its shares at their current net asset
value, which depends on the total market value of the fund's investment portfolio at the
time of redemption. Most open-end mutual funds continuously offer new shares to
investors.
disclosed in offer
Short, a mutual fund is a common pool of money in to which investors with common
investment objective place their contributions that are to be invested in accordance with
the stated investment objective of the scheme. The investment manager would invest the
money collected from the investor in to assets that are defined/ permitted by the stated
objective of the scheme. For example, an equity fund would invest equity and equity
related instruments and a debt fund would invest in bonds, debentures, gilts etc . Mutual
Fund is a suitable investment for the common man as it offers an opportunity to invest in
A mutual fund scheme can be classified into open-ended scheme or close-ended scheme
Open-ended Fund
An open-ended Mutual fund is one that is available for subscription and repurchase on a
continuous basis. These Funds do not have a fixed maturity period. Investors can
Close-ended Fund
A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is
open for subscription only during a specified period at the time of launch of the scheme.
Investors can invest in the scheme at the time of the initial public issue and thereafter
they can buy or sell the units of the scheme on the stock exchanges where the units are
listed.
A scheme can also be classified as growth fund, income fund, or balanced fund
The aim of growth funds is to provide capital appreciation over the medium to long-
term. Such schemes normally invest a major part of their corpus in equities. Such funds
have comparatively high risks. These schemes provide different options to the investors
schemes generally invest in fixed income securities such as bonds, corporate debentures,
Government securities and money market instruments. Such funds are less risky
compared to equity schemes. These funds are not affected because of fluctuations in
equity markets.
Balanced Fund
The aim of balanced funds is to provide both growth and regular income as such schemes
invest both in equities and fixed income securities in the proportion indicated in their
offer documents. These are appropriate for investors looking for moderate growth. They
generally invest 40-60% in equity and debt instruments. These funds are also affected
These funds are also income funds and their aim is to provide easy liquidity, preservation
of capital and moderate income. These schemes invest exclusively in safer short-term
instruments such as treasury bills, certificates of deposit, commercial paper and inter-
Gilt Fund
default risk. NAVs of these schemes also fluctuate due to change in interest rates and
other economic factors as is the case with income or debt oriented schemes.
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index,
S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same
It is the prerequisite of investment in the share market that the allocation of capital should
be proper and in the right areas so that the returns should be maximum and there should be
certainty of the returns to the investor .It is the basic function of the capital budgeting and
working capital management that there should be wise and proper allocation of the capital
in the right places and firm so that maximum return should be obtained…
Our range of loan facilities will help you finance the medium to long-term needs of your
business. We know how important it is to get the right type of loan and have the money in
place when you need it, and so we aim to be quick and flexible in turning round your
requests. Long term financing provide capital deficit businesses funds for the period over
1 year. It contrasts to short term financing because short term financing provides funds for
and large companies have some kind of debt throughout the life of their business.
These businesses normally turn to lenders not only to expand their companies or to
purchase equipment, but also to finance operating capital to even out cash flow.
FEEDBACKS OF TRADING IN
CAPITAL MARKET:-
Investor’s point of view:-
(1).Return/Profit
(2).Tax Benefits
(3).Exclusive Right
(8).Economic Growth
1. Return/profit:-
A investor can get a better return and huge profit after investing in capital market. it is
only the process through we get proper return. The main objective of an investor is to
Profit can be earned by allocation of fund efficiently and in right areas. So that the
chances of return is more in investing in share market. And there should be certaininty
of getting return back. always invest in that firm which is well recognized and
which investors is investing must have goodwill at present and the shares purchased
Dividend
Dividends are payments made by companies to their stockholders in order to share a portion of
the profits from a particular quarter or year. The amount that any particular stockholder receives
is dependent upon how many shares of stock they own and how much the total amount being
divided up among the stockholders amounts to. This means that after a particularly profitable
quarter a company might set aside a lump sum to be divided up amongst all of their stockholders,
though each individual share might be worth only a very small amount potentially fractions of a
cent, depending upon the total number of shares issued and the total amount being divided.
Individuals who own large amounts of stock receive much more from the dividends than those
who own only a little, but the total per-share amount is usually the same.
Dividends are paid by companies as a method of sharing their profitable times with the
stockholders that have faith in the company, as well as a way of luring other investors into
pays in dividend payments, the more likely it is to sell additional common stock…
The Government of India has introduced schemes for the benefit of tax saving for NRIs and PIOs
by the way of investments. Following are the tax exemptions that NRIs and PIOs can enjoy.
Income from the investments cited below is totally exempted from tax:
• Units of Unit Trust of India (UTI), mutual funds, bonds, securities and saving certificates
(as per the conditions mentioned under the Income-tax laws and regulations).
• Long term capital gains from transfer of equity shares in a company and/or equity
oriented schemes of Mutual funds that are subject to securities transaction tax.
(3).Exclusive Right:-
An equity share holder have the right to claim on the income of a company .they have a
claim on income left after paying dividend to preference share holders. The rate of dividend on
these shares is not fixed. It depends upon the earning available after paying dividend on
liquidation of a company the assets are utilized first to meet the claims of creditors and
preference share holders but everything left, there after ,belongs to the equity share holders.
An equity share holders have the voting right in the meetings of a company and have a
To Safeguards the interests of equity share holders and enable them to maintain their
proportional ownership, Sec.81 of Companies Act, 1956 provides that whenever a public limited
company proposes to increase it’s subscribed capital by the allotment of further shares, after the
expiry of two years from the formation of the company or expiry of one year from the first
allotment if shares in the company, whichever is earlier, such shares must be offered to holders
of existing equity shares in proportion, as circumstances admit, to the capital paid-up on these
shares.
Through issue of equity shares, the company gets permanent capital which is not returned back
during its life time. Long term s a base for the financial structure of a firm.genreally financial
needs for more than five year are included in long term finance. Long term funds are required to
create production facilities through purchase of fixed assets such as Plant, Machinery, Land,
capital is simple and economical source for the company. In the equity share the ownership is
Brokers can boost their income with production bonuses, profit-sharing plans and trips to Europe
or Hawaii for beating sales goals. A broker who has a very large client list or who does a lot of
to switch--firms.
When you buy or sell stocks, you will need a broker. A stock broker charges a fee called a
commission. Here are the equations to calculate the costs and profits or losses of buying and
selling stocks:
you'll pay a commission of 2% to 3%. Typically in the industry, brokers do have discretion to
give customers a break, depending on the size of the account. Of the amount you actually pay,
Edward Jones gives its brokers 40% and keeps 60%. The split is similar with bonds, load mutual
funds and annuities. On average, brokerage firms give their reps 37% of the commission paid by
investors.
Equation:-
Cost of purchase: (stock price) (number of shares bought) + commissions
commission can be a percentage of the purchase price or a fixed fee. A discount broker usually
charges $15 to 30 commission per transaction. A full- service broker usually charges $50 to 120
for buying or selling 100 shares of stock. You pay a commission when you buy or sell stocks.
(8).Economic Growth:-
The Economic growth of any nation depends upon the per capita income of the nation. In share
market the foreign investors also invest their money in various firms and organizations in the
form of securities which leads to huge turnover of foreign capital from a country to a country.
Which leads to developments and growth in various sectors? Example External sectors financial
sectors and in domestic capital market. These all investment are in the form of securities of a
country .therefore this cash inflow leads to increase in the foreign exchange treasure.
So the above explanation indicate that the growth of the nation increase with growth of a
company /organization.
investment returns. Inflation affects all aspects of the economy, from consumer spending,
business investment, and employment rates, to government programs, tax policies, and interest
rates.
It is because of the inflation that share market has collapsed, it is bound to affect the investors. In
fact, the way the share market was going up was itself creating doubts in the minds of the people
about its real growth. When the market crossed 10,000 points nobody was able to explain the
logic of it. So also when it reached 12,000 points, it remained unexplainable. The happenings in
the share market were certainly a cause of concern. The government ought to have looked into
the factors when the market started rising all of a sudden. However, stocks are still a good hedge
against inflation because, in theory, a company’s revenue and earnings should grow at the same
1) Share prices are affected by forces of demand and supply. Demand and supply of stocks
depends on various factors like macroeconomic situation, profitability of the company and its
growth, Good & reputed management, size of the company, growth in particular sector,
2)Sens*x means sensitivity index. It is index of Bombay stock exchange and is considered as
Shares which forms part of sens*x.It has a base year of 1979 with base value of 100. It is
3)Majority of trading in stock exchange is done in India in two exchanges i.e. BSE & NSE.Both
these exchanges have there own indices which capture the movement in price of there constituent
securities. For eg Nifty for NSE (Comprises of 50 stocks) and Sens*x for BSE (Comprises of 30
Stocks).Derivative products are also available on these indices. These constituent stocks are
carefully selected to give true indication regarding growth. Factors considered are Market Cap,
MARKET NEWS:-
News is a big factor affecting stock price. Negative news decreases the future prospects of the
company and a positive release increase people interest in buying the shares. Some time, there
might be a good news that company price might show small movement. So, the factor that
matters more is news. Always use wait and watch policy in the market, if there is no fixed
News from the side of finance minister also affects the share price as well as on whole stock
market. If the finance minister announces the bailout package or any relaxation to the any
company it leads to the rise in the share price. Same as if he announces any negative statement it
company as it is most important factor affecting share price and helps in determining company’s
health. EPS affect buying tendency and causes increase in particular stock price. So for profitable
investment, it is always recommended to go through the quarterly reports of the company before
deciding to invest in it and short list the possibilities before actually buying the shares of a
particular company
Inputs:-
(1). Potential investor
(2) Money
investor’s view:
(2) Fluctuation in share price
(1)return/profit Transformati
(2)tax benefits on Process
(3) Exclusive right (3) Market news
(4) Ownership
Outputs:-
Company’s view: (4) Earning per share
(1) Certificate of Various
(1)permanent capital Securities
National view:
(1)Economic growth
Transformation model
Matrix table
Investor’s
Require-
-ment
Profit/Interest 10
Ownership 8
Security 6
Explanation: -
Profit/ interest: -
Matrix calculation indicates that investors are highly interested toward the profit and return in the
Profit and interest highly depend upon the types of securities. Because different type of security
have different characteristics. In the equity share there are high risk and better return and in case
savings schemes.
Profit/interest is most affected by company’s performance. The investor gets the profit according
Economic conditions also affect the profit and interest on an investor. Because at the time of
So, finally profit and interest are most important to every investor and it affected by various
factors.
Ownership: -
Ownership got 176 points, which indicate investors give priority to ownership less than profit.
Ownership of the company or any organization highly depends upon the type of securities.
Because only Equity shares provide the ownership of the company. And others have different
criteria.
Availability of offer is less important for the ownership of the company. Because can get through
For getting the ownership of the company is not so important. Because a person can takeover a
company running in losses and other can takeover a company running in profit.
firm.
Security:-
Security has 168 point which indicate that security has moderate priority to the security because
in the investments are more risky.
Types of securities have moderate effect on the security of various securities. Because risk are as
follows:
Company’s performance has huge impact on security because it happened in” SATYAM’S
CASE”
Economic condition also affects the security. Because at the time of GLOBAL ECONOMIC
SLOWDOWN the company cannot perform better.
Right to income: -
Right to income has 91 point, which indicates less priority to right to income. Because they are
Right to analyses the incomes of any company’s not highly depend upon the types of securities.
Company’s performance has minor role in right to income .If the company announces faulty
income statement at the time of good performance then shareholders can see the income.
for the income if the company try to get benefits of ECONOMIC SLOW DOWN and show a
faulty statement.
Claim on Assets: -
Claim on assets has 78 point, which indicates minimum priority to the Claim on assets because
Types of security have moderate effect on claim on assets. Because the preference order of claim
on security as follows:
Company’s performance also has impact on claim on assets because if the company has come at