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Stock Market Terminology


Stock Market Terminology * * * * * * What is a stock ? A type of security that signifies ownership in a corporation and represents a claim on part of the corporation ... – PowerPoint PPT presentation

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Title: Stock Market Terminology

Stock Market Terminology
What is a stock ?
A type of security that signifies ownership in a
corporation and represents a claim on part of
the corporation's assets and earnings. There
are two main types of stocks common and
preferred They are also known as
"shares" or "equity".
Types Of Markets
  • Primary Market
  • Secondary Market
  • Third Market
  • Fourth Market

Principal terms
  • IPO
  • Issue Price
  • Face Value
  • Share Premium
  • Dividend
  • Portfolio
  • Price Appreciation
  • Capital Gain / Loss

Principal terms (contd.)
  • Dematerialisation
  • Depositories
  • Depository Participant
  • Institutional Investor
  • Bonus Shares
  • Convertible Debentures
  • Blue Chip Shares
  • Penny Stocks

Principal terms (contd.)
  • Float / Floating Stock
  • Market Capitalisation
  • Bigger Fool Theory
  • Forwards / Futures
  • Derivatives
  • Call / Put Option
  • Mark To Market / Margin Money

Principal terms (contd.)
  • Stop Loss
  • Circuit Breaker
  • Short Selling
  • Bulls
  • Bears
  • Chickens
  • Pigs

Types Of Stock Analysis
  • There are 2 main types of stock analysis
  • Fundamental Analysis
  • Technical Analysis

Fundamental Analysis
  • Fundamental analysis maintains that markets
    may misprice a security in the short run but that
    the "correct" price will eventually be
    reached. Profits can be made by trading the
    mispriced security and then waiting for the
    market to recognize its "mistake" and re-price
    the security.
  • Fundamental analysis includes
  • Economic analysis
  • Industry analysis
  • Company analysis

Fundamental Analysis
  • The Salient Features are as follows
  • 2 basic approaches Topdown or Bottom-up
  • Used within different portfolio management styles
  • Buy and Hold Investors
  • Value Investors
  • Contrarian Investors
  • To determine future growth rates for buying
    high-priced growth stocks
  • To correctly value good and bad companies

Technical Analysis
Technical Analysis is a method of evaluating
securities by analyzing statistics generated by
market activity, such as past prices and volume.
Technical analysts do not attempt to measure a
security's intrinsic value, but instead use
charts and other tools to identify patterns that
can suggest future activity. It disregards the
intrinsic value of a stock.
Technical Analysis
  • It is based on the following assumptions
  • Market action discounts everything
  • Prices move in trends
  • History tends to repeat itself
  • Criticisms
  • Empirical evidence
  • Efficient Market Hypothesis
  • Random Walk Hypothesis

Technical Analysis
  • Basic Charting Concepts
  • Resistance
  • Support
  • Breakout
  • Trending
  • Average true range
  • Chart pattern
  • Dead cat bounce
  • Momentum

Bombay Stock Exchange Ltd (BSE)
In 1957, it became the first stock exchange to be
recognized by the Indian Government under the
Securities Contracts Regulation Act. It is the
oldest stock exchange in Asia (established in
1875) and is currently located on Dalal Street,
Mumbai. It is the 6th largest stock exchange in
Asia and the 14th largest in the world with
equity market capitalization of US1 trillion as
of December 2011.
Bombay Stock Exchange Ltd (BSE)
There are over 5,112 listed Indian companies and
over 8,196 scrips on this exchange as of December
2011. It has also introduced the world's first
centralized exchange-based internet trading
system, to enable investors
anywhere in the world to trade on the BSE
platform. BSE launched SENSEX (BSE 30), a
free-float market capitalization-weighted stock
market index on January 2, 1986, with a base
value 100 and base year 1978-1979.
Bombay Stock Exchange Ltd (BSE)
  • The SENSEX consists of 30 well-established and
  • financially sound companies listed on BSE Ltd.
  • These Companies represents various industrial
  • sectors of the Indian economy.
  • The market capitalization of the SENSEX was
  • about 29,275 billion while its free-float market
  • capitalization was 14,660 billion as of
  • The Top 3 influential scrips on it are
  • RIL
  • ITC
  • Infosys

Bombay Stock Exchange Ltd (BSE)
In January 1989, BSE National Index was
introduced, which was renamed as BSE-100 Index
from October 14, 1996 and launched its
dollar-linked version on May 22, 2006. On July
25, 1990, the SENSEX touched the four-digit
figure for the first time and closed at
1,001. SEBI was formed officially by the
Government of India in 1992 with SEBI Act 1992
being passed by the Parliament of India. On
March 7, 2007, Singapore Exchange Limited entered
into an agreement to invest in a 5 stake in BSE
Important Facts
First in India to introduce Equity
Derivatives. First in India to launch a Free
Float Index. First in India to launch US version
of BSE Limited. First in India to launch Exchange
Enabled Internet Trading Platform. First in India
to obtain ISO certification for a stock
exchange. 'BSE On-Line Trading System' (BOLT) has
been awarded the globally recognised Information
Security Management System standard
BS7799-22002 First to have an exclusive facility
for financial training. First in India in the
financial services sector to launch its website
in Hindi and Gujarati. Shifted from Open Outcry
to Electronic Trading within just 50 days. First
bell-ringing ceremony in the history of the
Indian capital markets (listing ceremony of
Bharti Televentures Ltd. on February 18, 2002)
National Stock Exchange Ltd (NSE)
It was incorporated in November 1992 as a
tax-paying company and in April 1993, it was
recognized as a stock exchange under the
Securities Contracts Regulation Act, 1956. It is
the 16th largest stock exchange in the world and
largest in India by daily turnover and number of
trades, for both equities and derivative
trading. It is the second fastest growing stock
exchange in the world with a recorded growth of
16.6 and over 1,640 listings as of December
2011. In 1996, the NSE launched SP CNX Nifty
(Nifty 50) Nifty 50 is the largest single
financial product in India, with an ecosystem
comprising ETFunds (onshore and offshore),
ETFutures Options, other index funds and OTC
derivatives (mostly offshore). From June 26,
2009, the computation for calculating Nifty Index
was changed to free float methodology from full
market capitalization methodology.
National Stock Exchange Ltd (NSE)
The base period for the SP CNX Nifty index is
November 3, 1995. The base value of the index has
been set at 1000, and a base capital of Rs 2.06
trillion. In December 1996, CNX Nifty Junior was
launched. It consists of 50 companies
representing approximately 10 of the traded
value of all stocks on the NSE. In June 2005,
Futures options in BANK Nifty Index was
launched on National Stock Exchange. In 2007,
the NSE launched derivatives on Nifty Junior
CNX 100 and derivatives on Nifty Midcap 50. In
August 2009, Interest Rate Futures was launched
on this exchange.
List of Major Stock Exchanges Of The World
Rank Economy Stock Exchange Location Market Cap (US Billions) Trade Value (US Billions)
1  United States NYSE Euronext (US Europe) New York City 14,242 20,161
1  Europe NYSE Euronext (US Europe) New York City 14,242 20,161
2  United States NASDAQ OMX (US North Europe) New York City 4,687 13,552
2  Europe NASDAQ OMX (US North Europe) New York City 4,687 13,552
3  Japan Tokyo Stock Exchange Tokyo 3,325 3,972
4  United Kingdom London Stock Exchange London 3,266 2,837
5  China Shanghai Stock Exchange Shanghai 2,357 3,658
6  Hong Kong Hong Kong Stock Exchange Hong Kong 2,258 1,447
7  Canada Toronto Stock Exchange Toronto 1,912 1,542
8  Brazil BMF Bovespa São Paulo 1,229 931
9  Australia Australian Securities Exchange Sydney 1,198 1,197
10  Germany Deutsche Börse Frankfurt 1,185 1,758
11  Switzerland SIX Swiss Exchange Zurich 1,090 887
12  China Shenzhen Stock Exchange Shenzen 1,055 2,838
13  Spain BME Spanish Exchanges Madrid 1,031 1,226
14  India Bombay Stock Exchange Mumbai 1,007 148
15  South Korea Korea Exchange Seoul 996 2,029
16  India NSE Mumbai 985 589
17  South Africa JSE Limited Johannesburg 789 372
18  Russia MICEX Moscow 771 514