BASICS OF STOCK

MARKET
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WHAT IS INVESTMENT???

The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future.
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WHY ONE SHOULD INVEST???

To earn return on idle resources.
To generate a specified sum of money for a specific goal in life. To make a provision for an uncertain future.

REASONS
To meet the cost of inflation. The aim of investment is to provide a return above the inflation rate to ensure that the investment does not decrease in value. Tip: By investing early you allow your investments more time to grow.
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GOLDEN RULE FOR INVESTORS

1)Invest early.
2)Invest regularly. 3)Invest for long term and not short term.

INTEREST
When we borrow money ,we are expected to pay for using it- this is known as interest. Interest is an is an amount charged to the borrower for the privilege of using the Lenders money. Factors determining interest rates: Demand for money. Level of Government borrowings. Supply of money. Inflation rate. The RBI and the Government policies which determine some of the variables.
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OPTIONS
1. Physical Assets

2. Financial Assets

LONG-TERM FINANCIAL OPTIONS

1. Post Office Savings 2. Public Provident Fund

3. Company Fixed Deposits

4. Bonds 5. Mutual Funds
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STOCK EXCHANGE
The Securities Contract (Regulation) Act, 1956 defines Stock Exchange as any body of individuals,constituted for the purpose of assisting, regulating or controlling the business of buying,selling or dealing in securities. Stock Exchange could be a regional stock exchange whose area of operation is specified at the time of its recognition or national exchanges, which are permitted to have nationwide trading. NSE was incorporated as a national stock exchange

MAJOR STOCK EXCHANGES

NSE - National Stock Exchange

BSE - Bombay Stock Exchange

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EQUITY/SHARE
Total equity capital of a company is divided into equal units of small denominations, each called a share. The holders of such shares are members of the company and have voting rights.

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WHY DO COMPANIES NEED TO ISSUE SHARES TO THE PUBLIC?

When a company would like to grow, it issues stocks to raise funds and pay for ongoing business activities It is popular because: The company does not have to repay the money. Paying dividends is optional. Dividends are distributions of earnings paid to stockholders

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INDEX
SENSEX

An index is basically an indicator.

It gives you a general idea about whether most of the stocks have gone up or down. The Sensex is an indicator of all the prices of the major companies of the BSE.

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NIFTY

Nifty is an indicator of all the major companies of NSE. The Nifty index is a composite of the top 50 stocks listed on the National stock exchange. It is a simplified tool which helps investors &ordinary people alike, understand what happens in the stock market & by extension, the economy.

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BSE Index showing the status of market at particular time

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BOMBAY STOCK EXCHANGE(BSE)

Bombay Stock Exchange, is the 10th largest stock exchanges in the world by market capitalization.

The companies listed on BSE Ltd command a total market capitalization of USD Trillion 1.2 as of October 31, 2012.

BSE is the first exchange in India and second in the world to obtain an ISO certification.

BSEs popular equity index - the SENSEX - is India's most widely tracked stock market benchmark index.

The graph of SENSEX from July 1997 to March 2011

NATIONAL STOCK EXCHANGE(NSE)

A regional stock exchange founded in 1885 as the Cincinnati Stock Exchange. In 1980 the exchange closed its trading floor and became the first all-electronic stock exchange and subsequently moved its operations to Chicago. In 2003, it changed its name to the National Stock Exchange. It has more than 2000 stocks from different sectors listed with it.

The NSE was established with the main objectives of establishing a nationwide trading facility for equities, debt instruments and hybrids.

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STOCK MARKET & RECESSION

Indian companies have major outsourcing deals from the US. The India economy is likely to lose between 1-2% in GDP growth in the next fiscal year. Indian companies with big tickets deals in the US would see their profit margins shrinking. The worries for exporters will grow as rupee strengthens further against the dollar. A weak dollar could bring more foreign money to Indian markets. Oil may get cheaper brining down inflation. A recession could bring down oil prices to $70.
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The economy and the stock market are closely related. The stock markets reflect the buoyancy of the economy.

The whole of Asia would be hit by a recession as it depends on the US economy. The US economy accounts for 30 per cent of the world's GDP.

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Sensex Index as on 17th Jan 2013 at 9:53 am

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