Equity Market

The first thing that we learnt about was equity market. The BSE (Bombay Stock Exchange)
was started in 1979 with the base of 100. There are 30 companies in BSE and 50 companies
on NSE.
A company can get listed on share markets through IPO (Initial Public Offering). The
regulator here is SEBI. When the shares are first offered to public, this market is known as
primary market. Then this shares are traded in secondary market in which you can purchase
or sell shares, secondary markets been NSE having the most volumes then BSE with the
second rank and then other small exchanges.
To operate in share market, you require three accounts.

Demat account
Trading account
Bank account

Your shares will be there in D-met account. The transaction would be carried out through
trading account. And you have to transfer money from your bank account to trading account.
Now when we decide to purchase shares of a certain company, we have to look at following
things and make a decision on whether to purchase or not.

Reputation of management
Industry outlook
Company outlook and comparison with other companies in same sector
Debt
Credit Rating
P/E Ratio
Past Performance
Future Projects
Fluctuations in Price

Now how the trade is carried out in markets. The markets provide software through which we
can carry out trade in markets. BOLT is a platform provided by BSE and NIT is a platform
provided by NSE. Another platform available is ODIN which is provided by a company
named Financial Technologies. The advantage of ODIN is you can operate on both BSE and
NSE using this single software.

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The other thing we came to know is that according to market capitalization the companies are
divided into large cap, mid cap and small cap. There are sub-indices also based on sectors
like BANKEX for banking sector.
Mutual Fund
Mutual Fund is a fund made by raising money from investors and then it is managed by an
investment company. The company then invest this money in different sectors like equity,
debt or any other monetary instrument. The total value of all the securities minus any
liabilities is known as Net Asset Value. The returns generated are distributed among the
investors in proportion to their investment.
There are two types of mutual funds.

Depending on Structure
Depending on Investment Objective

Depending on Structure
It contains open-ended and close-ended schemes. Open-ended schemes means you are
allowed to enter or exit after the New Fund Offer period. But this is not true in the case of
close-ended scheme. You can enter only at the time of NFO and it will have a maturity period
till that period you cannot exit. Interval scheme is a combination of open and close ended
scheme.
Depending on Investment Objective
Here you can invest in equity funds, debt funds, hybrid funds, fixed deposits, PF, insurance
etc. We invest in debt fund when we want to earn fixed returns. In debt fund we invest in
treasury bills, bonds and government securities.
Investment in equity fund is by far the riskiest investment option. Here we can invest in
sector specific funds, thematic funds and equity linked savings scheme.
Hybrid funds are used to get benefits from both equity and debt. It has fair amount of
exposure to both equity and debt markets.
We have here SIP (Systematic Investment Plan), SWP (Systematic Withdrawal Plan) and STP
(Systematic Transfer Plan) for Investment. In SIP we have to invest a certain amount over at
regular interval so we can get huge benefit over long time. SWP is a scheme in which we
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have to invest a lump sum amount and after some time we can withdraw certain amount per
month as a fixed income. STP is a scheme in which we can transfer our money from debt to
equity or equity to debt as per the market conditions.
And the assignment we are doing that is the equity research based on industry. We are divided
into team of two to do that. As I already mentioned that we need to research based on
fundamentals and technical based on charts and other government policies which can change
the profits actually margins of the industry so that we can invest in such sectors which
havent run yet but having a great potential to run in the coming future. In that assignment we
have selected various industries first and studying about all those industries to get are desired
industry. We are working on two industries(sectors) right now, we will select finally the one
with better potential.

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