FINE$$E—The Finance Club

of IMNU
welcomes you.
STOCKS & SHARES
 INVESTMENTS
• Bonds
• Stocks
• Mutual Funds
• Alternative Investments:
Options
Futures
Forex
Gold
Real estate
Insurance, etc
Stocks and Shares
A share is a unit of ownership interest in a corporation or
financial asset.

Shares typically takes the form of:

• EQUITY SHARE: As a unit of ownership, equity shares
typically carries voting rights that can be exercised in
corporate decisions.

• PREFERENCE SHARE: It typically does not carry voting

rights but is legally
entitled to receive a certain level of dividend payments
before any dividends can be issued to other shareholders.

STOCK: A fully paid up share is called a STOCK.

In common usage, “share” is synonymously used instead of a

“stock”. It is
because only full paid up shares can be traded in the
Secondary market.
 CAPITAL MARKET

The Capital Market is the market for securities,

where companies
and governments can raise long term funds. It is a
market in
which the money is lent for periods longer than a
year.

It consists of :
Primary Markets
Secondary markets
 PRIMARY MARKET
Primary Market is that part of the capital market
that deals with
the issuance of new securities.
 Includes all types of securities issued for the first
time.
 Companies, Governments or public sector
organizations can obtain funding through the sale
of new stocks or bond issue.

Primary market consists of

 IPO (Initial Public Offering): where unlisted
companies is selling the securities to the public
for the first time.
 SECONDARY MARKET
• The secondary markets are those where existing
securities are sold and bought from one investor
or speculator to another, usually on an exchange.
Also
• Secondary market is the market where stocks are
traded after they are initially offered to the
investor in primary market (IPO’s).
• National Stock Exchange (NSE) and BOMBAY
STOCK EXCHANGE (BSE) are examples of
secondary markets.
• Secondary Market consists of Equity market and
Debt market.
 SEBI
The Securities and Exchange Board of India was established on April
12, 1992 in
accordance with the provisions of the
Securities and Exchange Board of India Act,
1992.

PREAMBLE
The Preamble of the Securities and Exchange Board of India describes
the basic
functions of the Securities and Exchange Board of India as
“…..to protect the interests of investors in
securities and to promote the development of, and to
regulate the securities market and for matters connected
therewith or incidental thereto”

Functions and Responsibilities

SEBI has to be responsive to the needs of three groups, which
constitute the market:
• the issuers of securities
 Stock Exchange Indicators

The Stock Exchange Indicators are considered to be

the
barometer of economic activity.
In India, we have two important indicators, each
signifying the
Prominent stock exchanges of India:

• S&P CNX NIFTY

• BSE SENSEX
 S&P CNX Nifty
• S&P CNX Nifty is a well diversified 50 stock index
accounting for 21 sectors of the economy. It is
used for a variety of purposes such as
benchmarking fund portfolios, index based
derivative and index funds.
• S&P CNX Nifty is owned and managed by India
Index Services and Products Ltd. (IISL) which is a
joint venture between NSE and CRISIL.
• NIFTY is endorsed by Standard & Poor's (S&P),
who are world leaders in index services.
• Companies must meet certain requirements in
terms of market capitalization and liquidity before
they can be considered for inclusion in the index.
• The index is calculated based on a free-float
capitalization method when weighting the effect
of a company on the index
 BSE SENSEX
• BSE SENSEX or Bombay Stock Exchange
Sensitive Index is a value-weighted index
composed of 30 stocks started in 01 Jan, 1986.
• It consists of the 30 largest and most actively
traded stocks, representative of various sectors,
on the Bombay Stock Exchange.
• The base value of the SENSEX is 100 on April 1,
1979, and the base year of BSE-SENSEX is 1978-
79.
• The index is calculated based on a free-float
capitalization method when weighting the effect
of a company on the index
 Speculation of stocks
Definition: it involves the buying, holding, selling, short term selling
of stocks to earn
profits from fluctuations in its price as opposed to buying it for
income via method like
dividend or interest.

KINDS OF SPECULATION:
• Bull Market- Purchase of shares at current prices to sell at a higher
price in the near future and making a profit if the expectations
come true.

• Bear Market- Selling of securities in the hope that we will be able

to purchase it at a lesser price. It is also called Short selling. Bears
are generally pessimistic about the state of a given market.

Food for Thought

Although you often hear that the stock market is constantly in a state
of flux as the
bears and their optimistic counterparts, "bulls", are trying to take
control, do
remember that over the last 100 years or so the U.S. stock market
 CAUSES OF PRICE FLUCTUATIONS

• Demand and Supply

• Bank Rate
• Speculative Pressure
• Change in Company’s Board of Directors
• Financial Position of the Company
• Political Factors
• New Budget Proposal
• Other Factors: Expected Monsoon
Crude Oil Prices
Stock Broker’s Scam like Harshad Mehta & Ketan
Pareek
Trading Screen
THANK YOU