Basics of Stock Market

Ep 1

LEARN
What is STOCK MARKET ??
The stock market is a platform
where buyers and sellers trade
shares of publicly listed
companies.

2 DUKAAN: BSE, NSE

World’s TOP 5
When is It Risky?
1991 to 2024 Nifty { Answer : Short term}
SENSEX
WATCH: CNBC (AFTER MARKET HOURS)
Radha Kishan Damani

• Started D-mart by studying Walmart and other

stores in the US
• I invested in companies and was part of their
success stories and now I will open my company
and let people be part of my success story.
• Dmart IPO at 299 , listed at 600, today at…?
• Face value ; 10
Listed in : 2017 tab 299 abhi…
How many ways do you earn money in the
market?
• Capital Appreciation (Increase in Share Price)
• Dividends :
• Stock Buybacks
• Bonus Shares: AGAD AVSE
• Stock Splits : AGAD AVSE
• Rights Issues
• Preferred Shares
• Mergers and Acquisition Premiums
• IPO Gains: AGAD AVSE
• Future & Options : ADVANCE LEVEL
1) Capital Appreciation

Once you earn money kya hoga?

LTCG : (12.5% , 125K)
2) Stock Buybacks
3) Rights Issues
4) Mergers and Acquisition Premiums
5)

Interest (FD, Inflation) : 10% abv 40k

VS

Dividend, (Vedanta, Google) : Dividend is also

Taxable per your tax slab.
FACE VALUE
• Dividends are given on face value
100% Dividend on market value (Possible ?)

• Face Value: Original price at which promoters started

• Who decides the price of face value?
• Can different companies have different face value?
• How do I know I/ Promoters have shares? (Share certi)
• Would Reliance have a physical share certificate? (DEMAT, MRF)
Porinju Veliyath,
So if acc to Mr Veliyath small companies gives
high return
How many people would have it daily ?
•
Analysis of Britania
• Turnover : Topline , Bottom-line : Profit , PAT (SHARK TANK)
• See the relation between Topline & Bottom line
STOCK SPLIT
• Market value as we saw: 4970
• WHAT WILL HAPPEN?
• CAN WE BUY AS STUDENTS?
Stock split
• Market Value: 5000
• Face Value ; 2
• No of shares: 10

NOW :
• Market Price: 2500
• Face Value: 1
• No of Shares; 20
SO STOCK SPLIT IS GOOD OR BAD ??
NEUTRAL (AT THAT MOMENT)

GOOD (FOR LONG TERM )

Britania declared stock split in Aug 2018 so Market
value in Aug 2018 ~ 2500 , & in Feb its 3110
Share certificate
Questions
• All private limited companies would have still their shares in …. ??
• And all Public listed companies ????
Lec-2
Bonus Shares
• Bonus 1: 1
• Before Bonus Market price: 1000
• Current no of shares = 10

NEW ??
New Scene after Bonus
• No of shares = 20
• New market value = 500
.
WHAT IS DIFFERENCE BTW STOCK SPLIT AND
BONUS
BEFORE BONUS: CUM(Cumulative) BONUS
AFTER BONUS: EX (excluding)BONUS
 HOW BONUS BENEFITS
• Infosys in 1995, invested 5,000, Bought 10 shares
• Till-date gave 8 times 1:1 bonus.

• DO YOUR MATH !!
Types of Security Market
• Primary Market
* Secondary Market

INTRODUCING STARRING
Max shareholders: 200 for Pvt Ltd (My bad)
• Patanjali: Public Limited Company
• Primary market: Relation btw company and buyer
• IPO: Companies provide shares to the buyer , BSE , NSE not involved
•
Secondary Market : Stock Exchange
Which Stock Exchange ??
 I WANNA BUY SHARE. WHAT DO U NEED?
• Demat account
• Savings account
• Trading account (buy/sell)

• What is your old demat = ??

• What is new demat = ??
• Bank offers an all-in-one account.
• Can a bank be a broker ?? (Icici, HDFC ?)
• Can you have all accounts at 3 different places?
• Can a person have more than 1 demat acc ?
When u buy share what is the proof now that
u o wn share
• Earlier u had ???
Proof : Contract Note
• Like a receipt issued by a broker to the investor which gives various
details
• BROKER SHOULD GENERATE CONTRACT NOTE WITHIN 24HRS OF
BUYING
• WHO TOLD THIS ?? ANS : SEBI
• KAHA AAEGA CONTRACT NOTE ?? : EMAIL , SMS
•
Contract note
•
Settlement days (Refer prev img)
• T+2 (Working days )
•
SEE THE TIME
• BSE CAN HANDLE 6 ORDERS IN 1/100TH OF A SEC
•
Lec 3
•
MoneyControl
• Price in BSE vs NSE
• Prev Close
• LTP (Last traded price)
• LTP can change during market hrs?
• Market hrs: ?? [9:15 to 3:30]
• At 9:15 ppl used to rush to place an order (kya hoga isse)
• Ans: Huge Fluctuation (~ 3%)
• Loss kiska hoga ??
Ans : Small Investors
• Solution: Pre-opening Market session
• Would you be able to bus/sell?
• Would it execute ?
• 9-9:07 : Order place
• 9:08-9:11: Order matching
• 9:11-9:15: Less Moment
• Adv to small investors: ??
• Ans: Guess the trend of market
Why Pre Market Session
• Answer: To Absorb the volatility of the market
• 9-9:15 = Pre-market Session
• 9:15 -3:30 = Market Hrs
• 3:30 – 4:00 = Brokers market
• 4:00 pm - 9:00 am = After market Order [ AMO ]
• Can we place an order after 4 PM???
• When will it get executed ??
•
Closing price of Yesterday = Opening price of
today?
• Yes or No
• Gap up opening
• Gap down opening
• Unch : RARE
• Bid Price (26) : No of ppl, no of shares k no of buy orders
• Offer price (40) : no of sell orders
• Volume (99,224)
• 52 week low & high
Volume
Bonus , 3 imp dates
• Announcement date: The announcement of bonus
• Record date: Iss date pe if u r holding share u get bonus (t+2)
• ex-bonus date: Iss din pe value gets halved (If u buy now will u get a
bonus , No)
• Can u buy shares on ex-bonus date & get bonus? ,No (buy before it)
•
Game for you :
• Moneybhai
•
• RII: retail individual investors (<2 lakhs)
• HNI : high networth individual (> 2lakhs invesment )
• DII : domestic institutional investor
• FII/FPI : foreign institutional investor / foreign portfolio investor
•
Clearing house
•
•
What do depositories do?
• User to broker to Company to Depositories (To convert into demat)
• Why demat?
• Currently t+2 , older times t+30
• Seller -> Seller broker -> Company ->Buyer Broker -> Buyer [BY POST]
• 1996 Demat Act
• Many brokers have become madly rich bcoz the Buyer died
•
DP [DEPOSITORY PARTICIPPANT]
• Broker who opens account at Depository
•
Who has the list of Buyers & Sellers
• Stock exchange -> Brokers (DP) (updates data)-> Depositories
• Why will the company ask for the list of Shareholders on that day
from the depository
• Ans: Bonus
• FUN FACT QUESTION: What if I start buying 1% of Reliance everyday?
• Can I?
• Do I have to disclose my identity?
Lec-4
• Open Outcry: Dalal Street, All brokers have to stay in one place?
Types of Order
• Market Order
• Limit Order
• After Market Order
• Stop Loss order
• Good till Cancelled
• IOC
• CO (COVER ORDER)
• BO (LIMIT ORDER)
Limit Order
• Girls
• Is bargaining allowed in the Market?
• If current price is 2053
• What if be its buying Limit order price and Selling Limit order price
Market Order
• Boys
STOP LOSS ORDER
• Current Price ; 200
• Quantity: 100
• New price: 185
• Loss ??
• My capacity to bear Loss: 500
• Why stop loss ?? Am I gonna be sitting in front of screen everyday ?
•
• The moment my stock hits 195 my POSITION WILL SQUARE OFF
• Losses will be limited
 What if

• If you are an investor u should

ideally set a stop-loss
• Trader vs Investor
• Nuksaan (Mout ko chu k taak se
wapas)
Example
After Market Order
•
IOC: Immediate or Cancel
• Will Limit or Market go hand in hand with IOC
• Trader wants to immediately execute buy/sell order
• If not executed immediately, order gets canceled
•
GTC/GTD
• Good till cancelled
• Good till day
Broker maintains 2 types of books
• Order book: Orders placed
• Trade book: Order executed
Can I modify my order ?
• Can I edit my order from Limit to Market order?
• Why will I do so
• Assume limit order at 190 and Market price is going from 200 to 210
to 220
Bull/Bear
• Bullish / Bearish
• Green /Red
• Long on the market / Short on the market

In China
• Red is Bull
• Green is Bear
• Why??
Stand Alone vs Consolidated
• Tata Motors ;
• JLR
SHORT SELLING
• NEVER CATCH A FALLING KNIFE
• If share is going from 2500 to 2000
• Should I buy it?
• Then how can I earn money?
• SELL FIRST BUY LATER
• IF YOU HAVE DONE SHORT SELLING YOU HAVE TO COVER/square off
YOUR POSITION BY THE END OF THE DAY
• INTRA DAY
• What if I short-sold at 200 and the share went up at 210
• In short sell either you do DELIVERY or SQUARE OFF YOUR POSITION
• I HAVE SHARES IN MY DEMAT
•
3 ways : (No seller , Forgot , Wrong Broker)
• I short-sold 100 shares at @200 each
• Share went to @180 at 3;15 PM
• What if I forgot to buy shares back
• Or what if I could not get a seller
•
Interesting case in 2009
NOW WHAT
• YOU SOLD SOMETHING YOU DON’T HAVE
• YOU DON’T HAVE SHARES THAT U SOLD SIMILAR TO CHEQUE
BOUNCE
• THIS IS CALLED SHARE AUCTION
•
ABHI KYA ??
• 3:30 TO 4 PM: Post Market Hrs
• Brokers participate in this
• Who wants to buy desperately
• Some other Broker will sell at a much higher rate
• We short-sold at @990
• And forgot to Square off position
• So my broker bought it at 1050 from some other broker
• @60 per share loss
SEBI WILL GIVE PENALTY
• IF NOTHING IS DONE
• ORDER STILL REMAINS UN-EXECUTED
• The penalty seller gave a share is given to the Buyer also
MAST CASE :
• Short sold at @990
• Fall till 800
• So will benefit @190
• I forgot to square off
• So now the broker got at @850 since it is expensive as compared to
LTP
• Still I got @140 profit per share
• Will u get money ??
IEPF: INVESTOR EDU PROTECTION FUND
• Profits in auction will be taken by SEBI
• Since you did wrong / Dis honed your contract
• Thus always short-sell the shares you already have in your Demat
Off Market Transfer
• Shares can be transferred to others’ name
• So if I forgot to square off my position some friend of mine can give
his shares to me and I will be saved from share auction
• Possible?
TYPES OF STOP LOSS
• STOP LOSS MARKET ORDER
• STOP LOSS LIMIT ORDER
Je bhi price hoi at trigger price will sell it
(Volatile market)
Never seen but possible
• top loss me profit ho gaya 
• 95% of the time ur order will get executed at the trigger price only
• this happens when the market
Is volatile
SLIPPAGE
•
3 CASES
STOP LOSS LIMIT ORDER
• LIMIT PRICE << Trigger PRICE
•
So recommended always have stop loss
market order
LOSS OF PROFIT
•
Market correction
• Market has gone down
• Early the price was 100 now its 55 (45% down)
• CAN IT HAPPEN IN ONE DAY ?
•
CIRCUIT FILTER: 100 (LTP OR PREV DAY
CLOSING PRICE?)
• 5% , 10% , 20%
•
WHOLE MARKET FILTER DECIDED BY : SEBI
ONE CERTAIN STOCK : BSE,NSE
LOWER CURCUIT/ LOWER BAND/ LOWER
FILTER
•
• BSE/NSE can change filter to from 20 to even 5%
• Why ?
• To limit the losses of Investors
• They will change over night only if something abnormal happens
• Else every 6 months filters are declared
• There are some companies for which filters are not applicable
•
Consider NSE as mall
• STOCKS [CASH SEGMENT]
• DEBENTURES
• F AND O
• what are Debentures , f&o = Financial
Product
EXEPTIONS FOR CURCUIT FILTERS
• WHICH ARE IN F AND O
• 1ST DAY OF LISTING ON SECONDARY MARKET
•
MARKET WIDE CURCUIT BREAKERS
• In 2008 Market fell by 10% in 50 sec
When did market hit upper circuit
• 2009 when Manmohan Singh came into Power again
• Not only 10% up but also hit 15% circuit
• In 2009-13 many scams came out resulting in 2014 BJP in power
•
ALWAYS ENTER AND EXIT BEFORE CLARITY
(2014)
SUB PRIIME CRISIS 2008
• In 1990-2000 there were so many e-commerce in the US
• In the early 2000’s all these companies crashed , bad for economy.
• Called .com burst
• Nearly 80% market fell
• $5 trillion wiped out
SO NOW WHAT
• WHERE WILL PEOPLE INVEST
• SO USA NEEDED TO BOOST THE ECONOMY
• Thus government told banks to provide loans at 1-2% so people will
have and can invest in real estate
• So banks will give loans to PRIME PEOPLE who can repay loans
• Slowly bank will have less liquidity
Collateralized Debt Obligation: CDO CRA: CREDIT RATING AGENCY
Prime loans + Subprime loans = CDO
 Dr Michel Berry
• He smelled something was going wrong
• So everyone was buying CDOs, He wanted to short-sell CDOs
• Investment bankers were soo greedy that they made an instrument to short-sell CDOs.
• One more instrument CDS (CREDIT DEFAULT SWAP)
• Some people might be scared that CDO might default so investment bankers say that they will insure(Insurance) your product
• Insurance = CDS
• So insurance companies started to sell CDS (AIG= Insurance companies)
• So people started buying CDS and paid money to Insurance companies
• Since everything was new, ideally who can buy CDS who owns a CDO
• But people like Dr. Michel Berry bought CDS as he thought CDS was going to default
• So now loan rates in 2006-7 interest rates again started to rise at 4-5%
• So the subprime people could not repay their loans
• Investment bankers could not get interest from their buyers of CDOs
• CDO holders became naraz, CDS holders became happy
• Insurance companies Had bloodbaths and others were investment bankers
• So now the US government decided to bail out
• Indian Government bailed out PNB
•
Market cap of a company
• No of shares* Mkt Price
• BLUE CHIP COMPANIES
• LARGE CAP
• MID CAP
• SMALL CAP
RING TRADING

• ALL OR NONE
• WHEN HUGE NO OF SHARES
ARE TRADED IT IS CALLED
“BLOCK DEAL”
•
TYPES OF ORDER BASED ON QTY
• AON: ALL OR NONE
• MF: MIN FILL (AT LEAST ATLA TO JOYE J CHE )
• DQ: Disclosed quantity
BID ASK SPREAD(91.75-90.75)
Now bid ask price (92.25-90.75)
10lakh shares so buyer will bargin
1,000 shares karte karte dikhaenge
So if u have big QTY and u don’t wanna disclose
•
MIS: Margin intra-day square off
CNC: Cash and carry
INDICES : NIFTY (50), SENSEX[ SENSITIVITY
INDEX] (30)
•
Why index is required ?
• If someone asks you how is the overall market performing
• Will I tell them individual company data?
• That is why an index is used.
DOES TOP 30 COMPANIES LIST ON BSE ?
HOW TO CALC SENSEX VALUE
•
•
Edelweiss.in
•
Why do we discuss Free float
• Whenever we calc Market cap of Sensex and nifty
• It is no of free-floating shares * Market price of each share
• In India (as per SEBI regulations):
• Minimum Public Shareholding (MPS): The public must hold at least
25% of the company's shares within three years of listing. This means
promoters can hold a maximum of 75% of the shares post-listing.
• For companies with an initial public offering (IPO) size of less than
₹4,000 crore, at least 10% of the shares must initially be offered to
the public, and the promoter holding cannot exceed 90%.
DMART OWNER HAD 78% SHARES
• He sold 3% shares in a day
• Share fell by 5%
How much % of shares are pledged (Available
public )
Is pledging illegal ?
• NO
• ELON MUSK TAKES LOANS ON BASIS OF HIS SHARES
•
MAHURAT TRADING
• Diwali , 5-7PM (1hr)
•
Zomato entered Sensex
CAN I BUS/SELL NIFTY ??
• Nifty is also a product
• U can buy and sell nifty in F and O
•
IISL IS A SUB COMPANY OF NSE
U have to give a token of money to buy this
@10% called margin money
Lot size
• Secondary market: 1 for share
• For Nifty: 75
• For IPO : Ideally 15,000 rupees per lot
Market : Money market , capital Market
• The money market has nothing to do with the stock
market

• Capital Market: Primary and secondary market

IPO : Initial Public offering
• FPO: Follow on public offer
• OFS : Offer for Sale
Why does IPO,FPO,OFS HAPPEN ?
• Bcoz Company needs money simple
• What is difference btw IPO/FPO and OFS
OFS (PROMOTERS SELL THEIR OWN SHARES)
from Issued capital
• The company has 2 things :
• Authorized capital: 1000 (example)
• Issued capital: 300
• So the company can issue new shares of 700
• IPO : Authorized cap
Pvt ltd -> Public ltd -> IPO
Book Value
• Book value : Net assets – External Liabilities/ No of shares
So now
• If some investors are happy with the 25 per share book value and
want to exit the company
• Whom will they sell to ??
• It’s a public Ltd company afterall
• So that is why they go for an IPO
• ISSUE PRICE : The price at which company offers its share in IPO
• Is it possible that company would go door to door to convince ppl
that our company has actually performed good and has potential
that’s y our issue price is lets say 65 against 10 rupees face value
• So now can I as promoters go to Different Banks , Mutual funds , Big
institutional investor ??
• Can I do that alone everyday ??
• So I hire a person who goes to all these places on our behalf and
writes that which Mutual fund house/ Bank / Big Investor is ready to
buy our share at how much price some will say 62 some will say 68
etc
• So that person whom I hired will write these prices in a book lets say
and note that down
• BOOK BUILDING ISSUE (Type of IPO)
So who are these ppl who go to different
Mutual fund house/ Banks
• These are Merchant Bankers
• What do they do: Merger & Acquisition, IPO, etc
• So now Merchant bankers give a price range to Companies
• So now a company in IPO tells common people like us to decide the
actual worth of the company since they give us the option that at
what price we wanna buy the share
• They give us a band/Range of price called PRICE BAND
• Like the company will give price band of 70-80
HOW WILL I INFORM EVERYONE THAT MY IPO
WITH THIS PRICE RANGE IS COMING
• Where is it told?
• PROSPECTUS
• SEBI will review this
• What will the prospectus include ??
• Price band, Reason to issue money, What does the company do , Any
cases against the company?
•
HOW IS IPO ALLOTED
• EARLIER IT WAS HIGHER THE VALUE MORE CHANCES
• NOW IT IS LOTTERY SYSTEM
• SO MORE DEMAT ACCOUNTS MEANS HIGHER CHANCES
• HUF (HINDU UNDIVIDED FAMILY) CAN ALSO OPEN A DEMAT ACC
• You will get 3 days to invest in IPO

UNDERWRITER: IF THERE IS IPO LESS SUBSCRIBED THESE INSTITUTIONS

WILL BUY THE DIFFERENCE BTW MIN SUBSCRIPTION (90%) and ACTUAL
SUBSCRIPTION
• Whenever the day 1 of listing of any company it will list on 10:00 AM
•
Last lec
• 90% should be subscribed in IPO
• So company will adjust price accordingly
•
Merchant banker= Book runner lead manager

Register and transfer agent (These people will transfer

from promoters share certi to my demat and it will take
more than t+2 thus if you face any issues that you have
not received then you need to contact these transfer
agents )
Banker to the issue
• Who manages the escrow account (The acc where investors put their
money in )
ASBA (Application supported by blocked
amounts )
• Now when we apply for IPO and we get the shares or money back in
our account the gap is nearly 14 days
• Thus we are losing interest in 14 days
• Thus who is earning? The company
• Thus SEBI introduced ASBA
• So now if I did a purchase of 2000 for IPO and the total amt is 5000
rupees
• My 2000 rupees is gonna be blocked in my account. Although they
can be seen in my acc but effectively I can only use 3000
Earlier O/D = Over draft
IPO DETAILS
• CHITTORGARH.COM
IPO FOR LOAN REPAYMENT ??
 D MART
•
HERE BY

• We finish this series where we learn more

than 70+ concepts min
UNTIL NEXT TIME

SIGNING OFF
~OM UNADKAT