- The stock market refers to the collection of exchanges where public trading of company stocks and shares takes place. It allows companies to raise capital and investors to share in ownership. - Most trading in India occurs on the two main exchanges, Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Common stock types are shares in a company's equity, while preferred stock and bonds are other fixed income securities. - Individual investors can purchase stocks through a brokerage account linked to a trading account and demat account to hold shares electronically. Stock prices fluctuate daily based on demand and supply in the market.

1. Stock Market

2. “
There are only two rules in stock
market:
1. Never lose your money
2. Don’t forget the rule no.1
-Warren Buffett

3. Introduction to Stock
Markets

4. Introduction
▪ The stock market refers to the collection of
markets and exchanges where the issuing
and trading of equities (stocks of publicly
held companies), bonds and other sorts
of securities takes place, either through
formal exchanges or over-the-counter
markets.
▪ Also known as the equity market, the stock
market is one of the most vital components
of a free-market economy, as it provides
companies with access to capital in
exchange for giving investors a slice of
ownership.

5. Introduction Contd…
▪ A Stock market is one of the most important
sources for companies to raise money. This
allows businesses to be publicly traded, or
raise additional capital for expansion by
selling shares of ownership of the company
in a public market.
▪ An economy where the stock market is on
the rise is considered to be an up-and-
coming economy.

6. Indian Stock Exchanges
Most of the trading in the Indian stock
market takes place on its two stock
exchanges:
▪ The Bombay Stock Exchange (BSE)
▪ The National Stock Exchange (NSE).

7. Bombay Stock Exchange
▪ Established in 1875, BSE (formerly known as Bombay
Stock Exchange Ltd.), is Asia's first & the Fastest Stock
Exchange in world with the speed of 6 micro seconds and
one of India's leading exchange groups.
▪ Today BSE provides an efficient and transparent market for
trading in equity, currencies, debt instruments, derivatives,
mutual funds, etc.
▪ It has a global reach with customers around the world and
a nation-wide presence. BSE systems and processes are
designed to safeguard market integrity, drive the growth of
the Indian capital market and stimulate innovation and
competition across all market segments.

8. National Stock Exchange
▪ The National Stock Exchange (NSE) is the leading
stock exchange in India and the fourth largest in the
world by equity trading volume in 2015, according to
World Federation of Exchanges (WFE).
▪ NSE has a fully-integrated business model comprising
our exchange listings, trading services, clearing and
settlement services, indices, market data feeds,
technology solutions and financial education offerings.
▪ NSE is a pioneer in technology and ensures the
reliability and performance of its systems through a
culture of innovation and investment in technology.

9. “ The four most dangerous
words in investing are:
‘ this time it's different.’ ’’

10. Types Of Investments in
Share Markets:

11. Types of Investments:
▪ There are many types of investments and investing styles to choose from. Mutual
funds, ETFs, individual stocks and bonds, closed-end mutual funds, real estate, various
alternative investments and owning all or part of a business are just a few examples.

12. Stocks
▪ A stock is a type of security that signifies ownership in
a corporation and represents a claim on part of the
corporation's assets and earnings.
▪ There are two main types of stock:
1. Common Stock
2. Preferred Stock
▪ Common stock usually entitles the owner to vote at
shareholders' meetings and to receive dividends.
▪ Preferred stock generally does not have voting rights,
but has a higher claim on assets and earnings than
the common shares.

13. Bonds
▪ A bond is a fixed income investment in which an
investor loans money to an entity (typically corporate or
governmental) which borrows the funds for a defined
period of time at a variable or fixed interest rate.
▪ Bonds are used by companies, municipalities, states
and sovereign governments to raise money and finance
a variety of projects and activities.
▪ Bonds are used by companies, municipalities, states
and sovereign governments to raise money and finance
a variety of projects and activities.

14. Mutual Funds
▪ A mutual fund is an investment vehicle made up of
a pool of moneys collected from many investors for
the purpose of investing in securities such
as stocks, bonds, money market instruments and
other assets.
▪ Mutual funds are operated by professional money
managers, who allocate the fund's investments and
attempt to produce capital gains and/or income for
the fund's investors.
▪ A mutual fund's portfolio is structured and
maintained to match the investment objectives
stated in its prospectus.

15. Exchange-Traded Fund
▪ An ETF, or exchange-traded fund, is a marketable
security that tracks an index, a commodity, bonds, or a
basket of assets like an index fund. Unlike mutual funds, an
ETF trades like a common stock on a stock exchange.
▪ ETFs experience price changes throughout the day as they
are bought and sold. ETFs typically have higher
daily liquidity and lower fees than mutual fund shares, making
them an attractive alternative for individual investors.
▪ Because it trades like a stock, an ETF does not have its net
asset value (NAV) calculated once at the end of every day
like a mutual fund does.

16. Stock Exchanges and how
to purchase stocks?

17. Stock Exchanges
They began simply as meeting places where
investors gathered to discuss companies and
their shares, and to trade shares
As they became more formal, these meeting
places became the trading floors of exchanges,
where traders made deals face to face.
Today, many of these exchange floors have been
replaced by sophisticated electronic dealing
systems run on computer systems that now
operate in major cities throughout the world.
A stock exchange is simply a place where financial instruments
can be bought or sold.

18. Working of Stock Exchanges
A stock exchange is simply a place where financial instruments
can be bought or sold.
STOCK EXCHANGE
Financial
Instrument
s
BuyersCash
Cash
Financial
Instrument
s
Sellers

19. Purchasing Stock:

20. Brokers:
A Broker is a person who is licensed to buy and sell
stocks, provide investment advice, and collect a
commission on each purchase or sale:
▫ Purchases stocks on an organized exchange
(stock market)
▫ For example, certified individuals, banks etc
▫ Over ¾ of all stocks are bought and sold on an
organized exchange

21. Organized Exchanges
▪ Minimum requirements for a stock to ensure only
reputable companies are used
▪ Each exchange has a limited number of seats
available which brokerage firms purchase to give
them the legal right to buy and sell stocks on the
exchange
▪ Ex: NSE (National Stock Exchange of India),
NYSE (New York Stock Exchange), NASDAQ etc.

22. Demat Account and Trading Account
Bank saving A/c
Trading A/C
This is stock broker.
Demat A/c
This is where the
stocks are kept

23. Trading account

24. Demat account:

25.  Majorly through company performance (earnings & profit (Called divident)),
bonuses and rewards, and through trading financial instruments like stocks,
bonds

26. WHAT MAKES A
STOCK PRICE UP AND
DOWN

27. DEMAND
&
SUPPLY

31. When to Invest or Not?

33. Bulls:-
Bullish characteristics are when the
market is showing confidence, prices
increase and market indicators rise.
Conditions:
▪ Unemployment is low
▪ Stock Rising
▪ Prices going up
Market Conditions:
Bear:-
Prices hover at the same level and then
go down, indices fall and volumes are
stagnant.
Conditions:
▪ Unemployment is high
▪ Stocks decreasing
▪ Prices going down

34. Calculation of Indices:

35. Stock Market Index
▪ A stock market index is a method of measuring a section of
the stock market. Many indices are cited by news or financial
services firms and are used as benchmarks, to measure the
performance of portfolios such as mutual funds.
▪ Stock market indices are calculated using Free Float Market
Capitalisation.
▪ A stock market index acts the indicator of the performance of
the economy or a sector of the economy

36. Free Float Market Capitalization
Free float concept is an index construction
methodology which makes use of free float
shares in the market and is used to
calculate the market index. Free float
market capitalization is the total worth of all
shares of a company which are available for
trading in the open market. These shares
are called free float shares and are available
for trading by anyone.

37. Example:
Suppose BSE index (SENSEX) consists of only 2 stocks such as 'X' and 'Y'
Company 'X' has 10000 outstanding shares out of
which only 5000 are available for trading in open
market. Market price of share is Rs.100
Company 'Y' has 5000 outstanding shares out of which
2000 shares are held by promoters and remaining 5000
are free float shares (open market shares). Market price
of share is Rs.50.
Here;
Sum of free float market cap of company X and
company Y is 500000+100000=600000 Assume market
cap during 1978-79 is 500000
Now apply formula:
SENSEX = (sum of free float market cap of 30 major companies of BSE) X Index vale in 1978-79 /
Market cap value in 1978-79
Stocks Issued stocks Market Price Market Cap
X 10000 100 1000000
Y 5000 50 250000
Stocks Open Market
Stock
Market Price Market cap
X 5000 100 500000
Y 2000 50 100000

38. “
The bulls will make money
The bears will make money
Only
The pigs gets slaughtered