A,B,C,D… OF STOCK

MARKET
Presented by
Mr. Nilesh Karhade
1st Year MBA++
Dept. of Management
Sciences
University of PUNE
Year – 2008-09
 Agenda

The Stock Market is

a very broad term
• Introduction to stock

which involves • Types of Share

trading of variety of
entities.
• About Stock Market

This presentation
• Types of Market
provides basics of
some of the terms &
• Major Stock Exchanges

understanding of • The role of Stock

Exchanges
stock market at
macro level.
• Bombay Stock
Exchange
In this we will focus
on only shares in
 Introduction to Stock

A stock is a small share that represents a

partial ownership of a company.

Stocks are issued by companies in order to

raise capital.

Stock is also referred to as equity, & it is

limited to particular number of shares.
 Types of Share

• Defensive Shares – These are the shares of

stabilized & mature companies. Over the
years these companies have standard
practices for dividend payments.

• Cyclical Shares – These are the shares of

companies engaged in trade cycle. During
boom they do extremely well & during
recessionary phase, they hit the bottom.

• Discount Shares – These are the shares

whose market price is lower than the par
value or book value.
Growth Shares – These are the shares of
 How capital is raised
through shares/stocks?

Issued Capital Reserved Capital

• Registration for Authorized

Paid up capital Capital.
• Amount divided into number of
small units/shares.
• The units which are issued for
sale out of authorized capital are
 How capital is raised
through shares?

Issued Capital Reserved Capital

1. Out of Issued Capital, units

Paid up capital
which are actually sold are
called Paid-up Capital.
2. Shareholders
 How capital is raised
through shares?

Issued Capital Reserved Capital

Example –
Paid up capital
Authorized Capital – Rs. 1 Crore
Issued Capital – Rs. 50 Lakhs
Paid-up Capital – Rs. 35 Lakhs
 About Stock Market

• “Stock market” is a term used to describe the

physical location where the buying and selling
of stocks take place.

• The correct term to be used in pertaining to

the physical location for trading stocks is
“stock exchange.”

• The Stock market in India consists of about

approx. twenty two stock exchanges.

• The stock exchanges constitute a market

where securities issued by the Central & State
Govt., Public bodies & Joint Stock companies
are traded.
 Types of Market

• Primary Market – In this new issues of equity

& debt are arranged either publicly or
privately.

• Secondary Market – The market where

existing securities are traded.

• Future Market – It is a market of contracts

where goods are bought & sold at specified
prices & times.

• Options Market – It is similar to future market

i.e. it is a contract that gives the right, & not
the obligation, to trade a stock at a certain
price before the specified date.
 What is Bulls & Bears
Market?

• Bulls Market - Bull markets occur when a particular

nation experiences high economic production, low
unemployment level, and low inflation rates.
 What is Bulls & Bears
Market?

• Bears Market – It follow the down trends in the

economy. Such indicators of economic downfall are
increased unemployment and inflation. These
 Major Stock Exchanges
Market Value Total Share Turnover
Region Stock Exchange
(trillions of US
(trillions of US dollars)
dollars)
Africa JSE Securities Exchange 0.94 0.349
Americas NASDAQ 4.39 12.4
Americas São Paulo Stock Exchange 1.4 0.476
Americas Toronto Stock Exchange 2.29 1.36
Americas/Europe NYSE Euronext 20.7 28.7
Asia-Pacific Australian Securities Exchange 1.453 1.003
South Asia Bombay Stock Exchange 1.61 0.263
Asia-Pacific Hong Kong Stock Exchange 2.97 1.7
Asia-Pacific Korea Exchange 1.26 1.66
South Asia National Stock Exchange of India 1.46 0.564
Asia-Pacific Shanghai Stock Exchange 3.02 3.56
Asia-Pacific Shenzhen Stock Exchange 0.741 1.86
Asia-Pacific Tokyo Stock Exchange 4.63 5.45
Europe Frankfurt Stock Exchange (Deutsche Börse) 2.12 3.64
Europe London Stock Exchange 4.21 9.14
Europe Madrid Stock Exchange (Bolsas y Mercados Españoles) 1.83 2.49
Europe Milan Stock Exchange (Borsa Italiana) 1.13 1.98
Europe Moscow Interbank Currency Exchange (MICEX) 0.9652 0.4882
Europe Nordic Stock Exchange Group OMX1 1.38 1.6
Europe Swiss Exchange 1.33 1.58
Ref. – www.wikipedia.org
 The Role of Stock
Exchanges

• Raising Capital for Business – It facilitates

companies to raise capital through selling of
shares to the investing public.

• Mobilizing savings for investment – When

people invest in shares it leads to most
rational allocation (agriculture, commerce,
industry), as otherwise it remains idle in
deposits with banks.

Bombay Stock Exchange

Frankfurt Stock Exchange London Stock Exchange
Hong Kong Stock Exchange
 The Role of Stock
Exchanges

• Facilitating company growth – Companies

views acquisition as an opportunity to expand
their horizon. Stock market is one of the
simplest and most common ways for a
company to grow by acquisition or fusion.

• Creating investment opportunities for small

investors – It enables small investor to invest
in shares as per their affordability.

Madrid Stock Exchange

Mexican Stock Exchange
Osaka Securities Exchange
Philippine Stock Exchange
 The Role of Stock
Exchanges

• Government capital-raising for development

projects – It may decide to borrow money for
several projects (sewage & water treatment,
housing) by selling securities known as
bonds.

• Barometer of the economy - Movement of

share prices and in general of the stock
indexes can be an indicator of the general
trend in the economy.

hanghai Stock Exchange

SWX Swiss ExchangeTokyo Stock Exchange Toronto Stock Exchange
 Bombay Stock Exchange

• Established as "The
Native Share & Stock
Brokers' Association" in
1875

• Oldest stock exchange in

Asia.

• Today, BSE is the world's

number 1 exchange in
terms of the number of
listed companies & worlds
5th in transaction
numbers.
 Bombay Stock Exchange

• The BSE Index, SENSEX, is

India's first stock market
index that enjoys an
iconic stature , and is
tracked worldwide.
 SENSEX
• BSE Sensex is a value-
weighted index composed
of 30 stocks.

•
SENSEX 24 Sep 08 / 16:45
It consists of the 30
largest and most actively
traded stocks,
representative of various
sectors.

• SENSEX is calculated
using the "Free-float
Market Capitalization"
methodology

• The base period of

How Stocks are priced?
52
Latest We
Chang ek
e         s     h
   
symbol
  price net- % - time high low3 volume low2
0 1 1 7
- - 16:5 3,643,00 2 1
BCE 31.15 5
0 5
1 7 31.75 1 0 336 2
7
- - 15:5 7 9 7
BGM 17.06 3
0 6
0 4 17.3 179 207,400 9
9 1
1
- - 16:0 2 4,999,20 2 2
IBM 79.82 3
0 4
1 1 80.68 6
4 0 1
7 9
3
16:0 73,696,7
MSFT 24.67 3 2 0 25.05 7 00 9 8

Stock Quote Table

First Column indicates abbreviation of name of

company.
Latest Price indicates current price or closing price
of the day (if in newspaper)
Change (net) is difference between the previous
How Stocks are priced?
52
Latest We
Chang ek
e         s     h
   
symbol
  price net- % - time high low3 volume low2
0 1 1 7
- - 16:5 3,643,00 2 1
BCE 31.15 5
0 5
1 7 31.75 1 0 336 2
7
- - 15:5 7 9 7
BGM 17.06 3
0 6
0 4 17.3 179 207,400 9
9 1
1
- - 16:0 2 4,999,20 2 2
IBM 79.82 3
0 4
1 1 80.68 6
4 0 1
7 9
3
16:0 73,696,7
MSFT 24.67 3 2 0 25.05 7 00 9 8

Stock Quote Table

High indicates the highest price while low

indicates lowest price of the stock sold.
Volume describes the no. of shares traded for that
day.
The 52- week high & low shows the highest &
How Stocks are priced?

PE – Price to Earning ratio.

Price per share divided by
earning per share.
 References
• Stock market in India by D. R. Veena
• Investment management by Dr. Mittal & Dr.
Agarwal
• The working of stock exchanges in India by H.R.
Machiraju
• The investment game how to win by Prasanna
Chandra
• Managing Investment by Prasanna Chandra
• Managerial Economics by Dr. Mukund Mahajan
• www.bseindia.com
• www.stockmarketbasics.com
Thank You!!

Questions??