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Stock market is an organised market, where securities of govt, semi govt bodies and corporate enterprises are brought or sold.
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Is the Stock Market and Share Market same? • Stock market and share market essentially mean the same thing. Both terms describe an exchange in which buyers and sellers of stock or shares may trade in a market with high liquidity
Share: • Share is a unit issued by a company at the time of raising fund from the market. It is a certificate issued to a person who applies for it and is given at a value predetermined by the company. • It is the smallest unit of ownership that may be bought or sold on or off an exchange. Stock: • Stocks in the reference of stock market are the total number of shares a person has in one company or in many companies.
Stock Market • Stock market is an organised market, where securities of govt, semi govt bodies and corporate enterprises are brought or sold. • It is established for the purpose of assisting, regulating and controlling business in buying selling and dealing in securities. • In the stock market only those securities listed in the stock exchange are transacted. • Individuals alone can buy and sell securities.
Types of Stock Market • Primary Market: • The first group of investors to whom a new issue of a security is sold. • The primary market consists of the issuer and the first buyers of the issue. • The primary market can be a time more volatile than the secondary market because it is difficult to determine the underlying value of new issues. 2. Secondary Market: • A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. • The national exchanges - such as the New York Stock Exchange and the NASDAQ are secondary markets.
Market Conditions Bull Market: • A financial market conditions in which prices of securities or group of securities are rising or are expected to rise. • Bull markets are characterized by optimism, investor confidence and expectations that strong results will continue. Bear Market: • It is a market condition in which the prices of securities are falling. • As investors anticipate losses in a bear market and selling continues, pessimism only grows
Types of Stocks BLUE CHIP : • The blue chips carry the highest value. • Large, established firms with a long record of profit growth, dividend payout and a reputation for quality management, products and services are referred to as Blue Chip companies and their stocks are Blue Chip stocks. PENNY : • Penny stocks are low-priced, speculative stocks that are very risky. • These stocks are generally issued by the type of companies with a short or erratic history of revenues and earnings. INCOME : • Income stocks are stocks that pay higher-than-average dividends over a sustained period. • These above average dividends tend to be paid by large, established companies with stable earnings. VALUE : • A value stock is a type of stock that is currently selling at a low price. • Companies that have good earnings and growth potential but whose stock prices do not reflect this are considered value companies. • Investors who buy value stocks believe that these stocks are only temporarily out of favour and will soon experience great growth.
Procedure for listing in Stock Exchanges • Company decide to go public and raise fund from the market and decide upon the Total amount to be raised from the Market. • They get clarification from SEBI. • This amount is broken down in number of shares by deciding the Face Value. As per the norms of the SEBI the FV is to be multiple of 5. Normal practice is keeping this at Rs10. • Then the No of shares to be introduced in the Market is decided. • Depending upon the response of the Stock as IPO, when it is opened on Secondary Market the price is decided. • The combined collection of the firm from IPO and Secondary Market operations becomes the Market Capitalisation of the firm, from which a share of Profitability is distributed among the share holders in the form of Dividend
Market Capitalization • Market capitalization is often called as market cap is a measurement of the size of a business enterprise. • It is the total dollar market value of all of a company's outstanding shares calculated by multiplying a company's shares outstanding by the current market price of one share. • The companies were divided into large-cap, mid-cap, and small-cap based on the size of market capitalization. Large-cap: $10 billion–$100 billion. Mid-cap: $1 billion–$10 billion. Small-cap: $100 million–$1 billion.
Stock Markets in India • » Bombay Stock Exchange • » National Stock Exchange • » Regional Stock Exchanges Ahmadabad Bangalore Bhubaneswar Calcutta Cochin Coimbatore Delhi Guwahati Hyderabad Jaipur Ludhiana Madhya Pradesh Madras Magadh Mangalore Meerut OTC Exchange Of India Pune Saurashtra Kutch Uttar Pradesh Vadodara
BSE Indexes BSE SENSEX: • The Bombay Stock Exchange SENSEX also referred to as BSE 30. • It is a free-float market capitalization weighted index of 30 well-established and financially sound companies listed on Bombay Stock Exchange. BSE Mid-Cap: • BSE Mid-Cap tracks the performance of scrips between 80 & 95% of aggregate market capitalisation. • It is also introduced to track the performance of companies with relatively smaller market capitalization. BSE Small-Cap: • BSE Small-Cap index tracks the performance of remaining 5% scrips (95-100%). • It is introduced to track the performance of companies with relatively smaller market capitalization. BSE-500: • It represents more than 93% of the listed universe Companies with large market capitalization.
Some Companies listed in BSE based on Market Capitalization:
NSE Indexes S&P CNX Nifty: • It is Standard & Poor's CRISIL NSE Index 50. Nicknamed Nifty 50 or simply Nifty . • It is the leading index for large companies on the National Stock Exchange of India. • The S&P CNX Nifty stocks represent about 60% of the total market capitalization of the National Stock Exchange. CNX Nifty Junior: • It represents the next range of liquid securities after S&P CNX Nifty. • It representing approximately 10% of the traded value of all stocks on the National Stock Exchange of India. S&P CNX 500: • The S&P CNX 500 is India’s first broad-based stock market index of the Indian stock market. • The S&P CNX 500 represents about 96% of total market capitalization and about 93% of the total turnover on the National Stock Exchange of India (NSE).
Importance Of Indices The stock market indexes are useful in a number of ways to stock investors: • The market indexes provide an historical perspective of stock market performance. • It provide a yardstick with which investors can compare the performance of their individual stock portfolios. • It acts as a forecasting tool. Studying the historical performance of the stock market indexes, investors can forecast trends in the market
