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STOCKEXCHANGESININDIA BSE NSE
Rulesforearningmoneyinthemarket • Rule 1: Never lose your money in the market. • Rule 2: Never forget Rule 1.
What is a share/stock/equity? • Shares represent a fraction of ownership in a business. The common feature of all these is equity participation. Different classes of shares have different voting rights. • Ownership of shares is documented by a legal document that specifies the amount of shares owned by the shareholder, and other specifics of the shares, such as the par value or the class of the shares (if any). • These days these stock certificates have been dematerialized.(No physical document!)
Fundamental Analysis Price per share P / E Ratio Annual Earnings per share Market Capitaliza tion P Ratio / B Tangible liabilitie - assets s
Importance and role of the stock markets • Raising capital for businesses • Government capital-raising for development projects • Mobilizing savings for investment • Facilitating company growth through acquisitions • Creating investment opportunities for small investors • Barometer of the economy
Stock markets and the financial risk • Sometimes the market seems to react irrationally to economic or financial news. This may 'temporarily' move financial prices away from their long term aggregate price 'trends'. (Positive or up trends are referred to as bull markets; negative or down trends are referred to as bear markets). Over-reactions may occur—so that excessive optimism (euphoria) may drive prices unduly high or excessive pessimism may drive prices unduly low.
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