Basics of Stock Market

By Mayank Sharma(Roll Number 205119053)

So...What is Stock?
● In plain and simple words, a share/stock is a
participation in the Ownership of the
Company.
Represents a claim to the company’s earning
to the extent ones’ share holding
You buy a share in the hopes of realizing
returns in the form of dividends and
increased price of share.
How trading happens?
● Brokers provide terminals to the investor
The investor uses the terminal to monitor the
stocks.
Stock Exchange: Eg: NSE,BSE etc.
What companies
one can trade in?

➔ Ones which are listed in the

exchange

➔ IPO

➔ Secondary Market

➔ ADR,GDR in foreign markets etc.

 Kinds of Trading
Intra-day trading
Delivery based trading
 Intra-day Trading
Buying and selling on the same
day.
Brokerage is lesser than in
delivery based trading.
 Delivery Based Trading
Buying and selling are on different days
Higher brokerage than intra-day trading
Minimum delivery charges
What is Short Selling?

Let us consider a company RIL.

Its priced at Rs 2,500/- before opening. You know it’s
going to fall that day because of some
reason. But you don’t have any shares with you
of RIL.
But still you can sell the shares, this is called as short
selling.
 How to select
stocks?

➔ Fundamental Analysis

➔ Technical Analysis
 What is Fundamental Analysis?
Analyzing a stock based on the fundaments of the
country, the sector, and the company individually.
It includes going through balance sheet and profit-
loss statement of the individual company and
checking various ratios.
 3 Important Ratios
EPS: N.P-DIVIDEND/NO OF SHARES
PE: Present Share Price/EPS
P/BV : Present share price/Book value
 What is Technical Analysis?
Forecasting the future direction of prices through the
study of past market data, primarily price and
volume. In its purest form, technical analysis
considers only the actual price and volume behavior
of the market or instrument.
Basic Definitions in Technical Analysis?
Support: Where one buys….
Resistance: Where one sells…
Line Charts
Bar Charts
Candlestick charts
Some Common Terminologies…

Market Capitalization
Dividend
Buy back
Split
Record date
 Dividend

A dividend is a payment made by a corporation to its

shareholders, usually as a distribution of profits. When a
corporation earns a profit or surplus, the corporation is able to
re-invest the profit in the business and pay a proportion of the
profit as a dividend to shareholders.
 Buy-back of Shares

Buy-Back is a corporate action in which a company buys back its shares

from the existing shareholders usually at a price higher than market
price. ... A buyback allows companies to invest in themselves. By reducing
the number of shares outstanding on the market, buybacks increase the
proportion of shares a company owns.
 Split
A stock split is a decision by a company's board of directors to increase the
number of shares that are outstanding by issuing more shares to current
shareholders. ... A stock's price is also affected by a stock split. After a split, the
stock price will be reduced since the number of shares outstanding has increased.
Record Date
What is an Index?
What is
NIFTY,SENSEX?
How is it calculated?
 Some Tips to Newbie’s
Execute couple of paper trades before you actually execute the real trade,
we have many simulators and games available now….
Never buy and sell for full amount in one go
Spread it across a range,it will give much better bottoms and tops
Never average a losing trade.
Happy Trading!
Thank You...