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Stock Market Basics

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33 views

Stock Market Basics

Uploaded by

parmeetmaini2002
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Stock Market

By- Parmeet Singh Maini


What are Stocks?

• Stock is ownership in a publicly traded


company.
• Stock is a claim on the company’s
assets and earnings.
• The more stock you have, the greater
your claim an owner.
Types of Stock

• Common Stock – most common


form of stock.
• Dividends are not guaranteed
• Preferred Stock
• Fixed dividend
• Companies may customize other
“classes” of stock.
Ticker Symbols

• All securities traded on the stock


exchange have a ticker symbol
• NSE:BSE
• NSE:SBIN
• NSE:DABUR
• NSE:IEX
• NSE:COALINDIA
Initial Public Offering (IPO)

• The first time a stock is sold to the


public
• Sold in the Primary Market
The Markets

• Primary Markets – where stocks are


created
• Secondary Markets – investors trade
previously issued stocks
• The Stock Market
• Companies are not involved in the
buying and selling of their stock.
The Exchanges

• Where Stocks are Bought and Sold


• National stock exchange [NSE]
• Bombay stock exchange [BSE]
The Indices (index)

• A collection of stocks—representative
of the stock market

• NIFTY 50 – It includes 50 of the approximately


1600 companies listed on the NSE

• BANK NIFTY –The index has 12 stocks from the


banking sector.
How Do You Make Money in the Market?

1. Stock Price Goes Up and You Sell


• Buy low, sell high

2. Dividends
• Not all companies pay dividends
What Causes Stock Prices to Change?

• Supply and Demand


• Earnings and Expectations
• Sentiments and Attitudes
• Economic Indicators
• Follow the Leader (volume)
• Anything 
Why Invest in Stocks?

• The return on investments in the


market are 3-4 times the annual return
of inflation, savings and treasury bonds
• You can make good money in the
market
• You can loose money too……
How Should I Invest?

• What are your financial goals?


• What is your risk tolerance?
• Return rises with risk
• Do you want to actively manage your
portfolio?
• Diversify
• Don’t put all your eggs in one basket!
Where do I Start?

• Learn the Basics


• Setup a brokerage account
• Full-service vs. discount?
• The Internet provides a variety of discount
brokerage firms (do it yourself)
• Fees, commission, minimum balance
• Keep it simple as you learn
• Learn about other investment vehicles
Reading a Stock Table
• Ticker Symbol – the alphabetic name that identifies the stock.
• Price – current stock price
• Open – current day’s opening price
• Close – the last trading price from the previous day
• Net Change – the net change from the previous day
• Day’s Range – the current day’s price range
• 52-Week Hi and Low – the highest and lowest prices at which a
stock has traded over the past year
• Trading Volume – the total number of shares traded for the day
• Market Capitalization – the market value of the company
• Dividend Per Share – annual dividend payment per share.
• Price/Earnings Ratio – the current stock price divided by earnings
per share for the last four quarters
Bulls and Bears

• Bull Market – the economy is great


and stock prices are rising

• Bear Market –the economy is bad


and a recession is looming
Beyond the Basics
• Bonds – a debt investment in which an investor
loans money to an entity (corporate or
governmental) that borrows the funds for a defined
period of time at a fixed interest rate.

• Buying on Margin - borrowed money that is used


to purchase securities.

• Short Selling - a trade in which the investor sells


stock before than buy again.
Options vs. Futures

• Options give the holder the right to buy or


sell the underlying asset at expiration, a
futures contract is an obligation to fulfill the
terms of a contract.
• Options: A privilege, sold by one party to
another, that gives the buyer the right, to buy or
sell a stock at an agreed-upon price within a
certain period or on a specific date
• Futures: A financial contract obligating the buyer
to purchase an asset at a predetermined future
date and price (i.e. currency, commodities)
THANK YOU

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