A presentation on basics of Indian stock marketing including its history, working and current status.

4. What is a Stock Exchange?
A stock exchange is an
institution which provides a
platform for buying and
selling on existing securities
including shares and
debentures.

5. History of Indian Stock Market
An informal group of 22 stockbrokers began trading under a banyan tree opposite
the Town Hall of Bombay from the mid-1850s, each investing a (then) princely
amount of Rupee 1. This banyan tree still stands in the Horniman Circle Park,
Mumbai.
The informal group of stockbrokers organized themselves as the The Native Share
and Stockbrokers Association which, in 1875, was formally organized as the
Bombay Stock Exchange (BSE).
The foot-dragging by the BSE helped radicalise the position of the government,
which encouraged the creation of the National Stock Exchange (NSE), which
created an electronic marketplace. NSE started trading on 4 November 1994.

7. •Sensex is BSE’s
Sensitive Index
•Launched in 1986, it
is made of 30 most
actively traded stocks
in market .
•The basic purpose is
to reflect price
movements of shares.

9. •NIFTY is the index for NSE
and covers over 22 sectors
of Indian economy.
•NSE is divided into two
market segments i.e.
Wholesale Debt Market &
Capital Market Segment.
•NSE is India’s one of the
most technically advanced
stock exchanges.

11. Trading Procedure on a Stock Exchange

15. Trading Procedure on a Stock Exchange
1. Selection of a broker
2. Opening Demat Account with Depository
3. Placing the Order
4. Executing the Order
5. Settlement

16. HOW TO FIND A GOOD STOCK?
There are two types of analysis
FUNDEMENTAL TECHNICAL

17. FUNDAMENTAL ANALYSIS
• At the company level fundamental
Analysis may involve examination of
financial data, management,
business concept, and competition.
• At the industry level, there might be
an examination of supply and
demand forces for the products of
the company.
• General steps to fundamental
analysis:
Economic forecast, group selection,
narrow within growth, company
analysis
( business plan, management etc.)

18. Some ratios are needed to be calculated for checking
the fundamentals of the company:
P/E ratio
Book value
per share
Interest
coverage
ratio
Cash
earning
per share
Dividend
per share
Return on
investment
Operating
ratio
Current
ratio
Asset to
debt ratio
Quick
ratio
Net profit
ratio
Operating
ratio

19. P/E RATIO (price to earning ratio )
It is valuation ratio of a company's current share price
compared to its per-share earnings. It is calculated as :
Market Value per Share / Earnings per Share (EPS)
For example,
If a company is currently trading at Rs1000 a share and earnings over
the last 12 months were Rs100 per share, the P/E ratio for the stock
would be 10times (Rs1000/Rs100).
• It tells you about whether the share is worth buying or not.
• And is also known as "price multiple" or "earnings multiple."

20.  Now that we know the fundamentals of the company
and we have identified the worthy share...but the true
potential of the share is unlocked only when it is
purchased at the right time...now you all must be
wondering how to find that right time, so it can be
done through technical analysis.
 Ideally there is no standard procedure for technical
analysis. Basically they follow the dow theory and a
number of empirical rules developed by chartists for
interpreting market movement.

21. DOW THEORY
• It was propagated by Charles H. Dows (1851–1902),
journalist, founder and first editor of The Wall Street
Journal and co-founder of Dow Jones and Company.
• It stated that there are three important trends in the
market the primary trend, then a secondary
movement which is called a technical correction and
then there is a third movement which is due to the
day to day fluctuations and is not considered
important.
• Basically if you study a share for over a period of
time, you will get to know that a share follows a
certain cycle, i.e. its long term movements can be
tracked. And this helps you identify the right time to
buy or sell the share.

22. Equity
/cash
segment
market
Derivative
market

23. EQUITY/CASH SEGMENT MARKET
• In this market you trade according to the current
market price and the deal is done on the spot.
• It follows a T+2 Settlement that is if the deal is done
on Monday it will be settled on Wednesday.

24. DERIVATIVE MARKET
• The derivatives market is the
financial market for derivatives, financial
instruments like futures contracts or options,
which are derived from other forms of assets.
The market can be divided into two, that for
exchange-traded derivatives and that for over-the-
counter derivatives.

26. Futures market

27. Similar to futures markets, here
you have to pay a premium
instead of a margin
And you are provided with two
options that are call and a put...
You use a ‘call’ when you are
bullish on a share , and you use
a ‘put’ when you are bearish on
the share.

28. Future Prospects
Indian stocks have witnessed gains
especially since the current govt. won
the elections in May 2014.
From the end of June 2014 to the
beginning of March 2015, the ETFs
tracking NIFTY returned more than
15%.
The run up in stocks was fueled up
primarily by the hope of economic and
social development under the
leadership of Modi whose electoral
campaign focused on development.