Share Market Classes - Notes

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Stock Market: It is a place where buy/sell (trading) is done of various companie
s.
In India it is typically called as 'Share Market'
Stock Exchange: Stock Exchange is an Exchange market for Buy/Sell of the compani
es, which is completely auction based, meaning the best buyer will get the share
s, the best seller will sell the shares firstly.
The operation of all the exhanges like stocks, commodities, forex is of the same
kind as explained above.
Almost Every country has got its own stock exchange(s).
Eg: In US:
It is 'Nasdaq', 'Dow Jones' and 'S&P'
In India: Sensex, BSE, NSE
BSE - Bombay Stock Exchange (Sensex)
NSE - National Stock Exchange (Nifty)
Europe: CAC, DAX etc...
Asia: Hang Seng, Shangai, Nikkei etc....
In exchange, the important terms are:
1. Name: It could be the name of the company, commodities or instrument for whic
h trading is going on.
2. Symbol: It is the small unique indentification of the instrument.
3. Last Price: It is last traded price of the insturment - (LTP, CMP - Current M
arket Price)
4. % Change: The total change in the price over the last closing.
5. Bid Qty. (Buy Quantity) : The total number of shares being demanded by a pers
on(s), for the maximum price, amongst all the buyers.
6. Bid Price (Buy Price) : The price of shares being demanded by a person(s) whi
ch is maximum amongst all the buyers.
7. Offer Qty. (Sell Quantity, Ask Quantity) : The total number of shares being O
ffered by a person(s), for the Least price, amongst all the Sellers.
8. Offer Price (Sell Price) : The price of shares being Offered by a person(s) w
hich is least amongst all the buyers.
9. Prev. Close - Previous Close : It is the previous closing price of the instru
ment.
10. Open Price: It is the opening price of the instrument.
11. Avg. Price: It is the avg. price with regard to quantity and median price wh
ere transactions are done.
Note:
Avg. Price is actually weighted Avg.
12. Total shares traded: It is the total number of shares being traded till now
for the day.
13. Turnover: It is Total Number of Shares Traded multiplied by the avg. price.
14. High: It is the highest price where the transaction is done.
15. Low: It is the lowest price where transaction is done.
SEBI: Security Exchange Board of India
-------------------------------------------------------
It is the stock exchange market regulator, which creates laws and regulations, i
t acts as a medium between the traders and the company owners, it resolves inves
tors complaints as well as that of Companies.
BSE and SEBI both are located in Mumbai besides each other, in Dalal Street. Eve
n NSE is located in Nariman Point, Mumbai.
Nifty: The 50 companies representation in the NSE.
Sensex: The 30 companies representation in the BSE.
--------------------end of class 1--------
Promoters: Promoters of a company is the person, or group which have maximum sha
re holdings in the company. The company is managed by them and they play a vital
role in loyality, transparency and fair conduction of Business.
Note: Before buying any company shares, always look at the Promoters of the comp
any and the share holding percentage.
Promoters must be having a good track record of being investor friendly, loyal,
transparent and fair business practices.
IPO: Initial Public Offer.
---------------------------------
IPO is coming up with an public offer to raise the capital for the business need
s. This is the first time that the company issues shares and goes public.
After the IPO, the promoter holding gets diluted and part of the company is now
public's.
The IPO is conducted, organized and managed by the registrars of the company lik
e 'Karvy'.
During IPO
---------------
1. Number of times the IPO subscribed is an important factor, the shares are all
oted on quota basis that has: Retail, QIP (Qualified Institutional Placements),
HNI (High Networth Individuals), Promoters, FII (Foreign Institutional Investor
s), Employees. Number of times IPO subscribed is the factor of total capital IPO
subscribers are ready to pay divided by the capital raised by the company.
The number of shares that you would get upon allotment is nothing but the ipo su
bscription amount divided by the no. of times it was subscribed in that category
.
Mostly the least number of subscription will be under the Retail category itself
.
numbers of shares: 10 crore
price of shares: Rs. 100
Retail Investors: Investment is below 2 lac Rs.
HNI : Any investment above 2 lac Rs.
QIP: Private companies
FII: Foreign companies
ESOP: Employees Quota
The general scenario is that the Employees quota get least subscription.
Real-time Scenario is as such:
Retail Subscription: 10x
HNI : 15x
QIP: 20x
FII: 30x
Employees: 2x
IPO is also called as 'Primary Market'.
Before investing in IPO, the subscription factor is very much important, general
ly higher the subscription better is the company, better returns can be expected
.
In india, IPO process goes on for about 3 weeks.
Process:
-------------
Step 1: Company Files for the DRHP (Draft Red Herring Prospects) - Meaning it is
planning to come up with the ipo within few weeks.
Reference to check which companies are filing IPO: http://www.moneycontrol.com/i
po/
in this go to section: IPO snap shot.
2. IPO issues open: This is generally the time frame, where the IPO subscription
is done, it is between 3 to 5 days, it is only during this period that you have
to apply for the IPO, once this time is crossed you will not be able to apply f
or the IPO again.
To apply you will have to fill the IPO form, always fill the price at the higher
end.
The forms are available with stock brokers and popular banks and you can also do
wnload it online or even apply it online.
Reference: In the IPO snapshot box go to: 'Issue Now Open'.
Price band: It is the range of share price for the IPO, always fill the ceiling
price or high price while applying.
The priority of allotment is the according to the price, higher the price better
is the priority.
3. Refund: This comes after 10 -12 days of applying for the IPO, it the amount l
eft over after shares has been alloted to you.
4. Listing Date: It is the date where the stock is listed in the stock exchange
s for trading, from here on you can sell your shares that has been alloted to yo
u or buy more shares at the market price. It is generally after 10 days of share
s allotment, during the date of listing there is no limit for the trading price
at both the ends.
----------------------end of class 2----------------------
Fundamental Analysis:
-------------------------------
Fundamental Analysis is a technique to find out how strong the working of the co
mpany is, what kind of valuation it deserves, what price it must have and is the
company good for buying its shares.
Before buying any company you must know if it is fundamentally strong or not?
The important parameters that you have to look at are:
1. Mcap: Market Capitalization - It is the networth of the company.
It is number of shares x the price it quotes.(total value in market)
According to the Mcap, companies are classified into different categories:
1. Largecap: Mcap is more than 10,000 crore
2. Mid cap: Mcap is more than 1000 crore.
3. Small cap: Mcap is less than 1000 crore
4. Micro : Mcap is less than 100 crore.
Note: Whenever you feel that the networth of the company is much more than its M
cap, then that company is good for investment.
Whenever a persons net holding value of any company is atleast 51% of its curren
t mcap, then that company becomes his own company.
Important Note: The risk is minimum when the mcap of the company is more and the
risk increases when the mcap of the company decreases, at the same time: Multib
agger returns can be expected from low mcap companies but from large cap compani
es one can expect only moderate returns.
Multibagger: Returns like 100%, 200% etc... in short term.
Short term: 3 months - 12 months
Medium term: 12 months - 36 months
Long term: 3 years to 10 years
Note: Longer is the holding term of the stock, safer it is for the investment an
d it is very likely to give good returns.
Reference site for Fundamental Analysis of the company:
www.moneycontrol.com ---> type your company name in the 'Get Quotes' box.
2. P/E: Price / Earnings, also called as Price-Earnings Multiple - It is the mca
p of the company divided by the net profit of the company in the latest financia
l year.
Financial year: From April 1 to March 31 --- in India
In US - From Jan 1 to Dec 31.
The P/E ratio of the company should be as less as possible but should be above 0
, then such companies are considered to be fundamentally strong.
A negative P/E means that the company has shown net loss in the latest financial
year.
EPS: Earnings per Share, it is the total Net Profit of the company in the latest
financial year in terms of Rupees per share.
This figure should be as high as possible, then it is considered to be fundament
ally strong.
Note: The actual growth of a company can be seen not through turnover or net pro
fit but through EPS only.
BV: Book Value - Book value of the company is the total asset value of the comp
any per share.
BV of the company should be as high as possibe when compared to its share price,
the it is fundamentally strong because company might have assests like land ban
k etc....
Asset: Property Value.
Market Lot: This figure is the minimum number of shares you can buy/sell. Most o
f the times it is 1.
---------------------- end of class 3 ----------------------
FV (Face Value): The face value of the company is the virtual origin share price
of the company when compared to is Current Market Price.
Generally most of the companies have FV 10.
When the FV of the company is more, then there is huge scope for growth in the c
ompany, such companies are fundamentally strong.
When is termed as 'issue at par', it means that the company is issuing shares at
Face Value.
Dividend: Whenever a company makes excess profits and uses only the part of the
profits for expansion, then the rest of the money it distributes amongst the sha
re holders in the form of tax-free dividends.
Div % is the % in terms of FV of the company.
Eg: If the FV of the company is 10 Rs. and it has declared a dividend of 20%, th
en the share holders will get Rs.2/share.
There are two types of dividend:
1. Annual : Once in a year
2. Interim: Anytime during the year and any number of times it can be declared.
Note: The company which pays dividend consistently over years is very much inves
tor friendly.
Eg. Sree Sakthi Paper.
Andhra Bank
Div. Yield (%): It is the percentage return from the current market price of the
company through the current financial year dividend.
Best site to find out the dividend paying companies:
http://www.moneycontrol.com/stocks/marketstats/bsetopdiv/index.html.
Industry P/E: This is the average P/E ratio of the competitor (peer) companies.
If the P/E ratio of the company is much less compared to the industry P/E, then
the company is fundamentally strong.
Price / Book: It is the ratio of Current price of the company divided by its Boo
k Value.
This figure should be as less possible, then it is considered to be fundamentall
y strong company having huge assests.
Eg. when it is 0.1, that means that the company is having the property worth 10
times the CMP (share price)
--------end of class 4--------------------
Bonus: Bonus is the number of shares increased with the existing ones, without p
aying anything for the extra shares.
It is given in the form of ratio like,
X:Y; where X is the extra shares given and Y is for the number of shares.
Eg: 1:2, it means that the company has given 1 extra share for every 2 held.
Generally the company issues bonus when it thinks that the current price is much
below the actual valuation of the company.
During the time of the bonus the company share price rises and after that the pr
ice also gets divided with the ratio of bonus shares issued.
Splits: Split is done by the company whenever it feels that the price of the com
pany is lesser than the valuation.
Split also multiplies your number of shares like bonus but here the face value r
educes by the ratio of split.
Eg: a company with CMP Rs.1000 and FV 10 announces split 5:1 means
now the CMP of the company becomes Rs.200, FV: Rs.2 and the number of shares are
multiplied by 5.
Rights: Company issues Rights whenever it requires capital, in rights the compan
y issues new shares in which only the existing share holders can apply. Generall
y the price at which you get the rights is lesser than the CMP of the company.
It is up to you to apply for the rights or not, generally rights must be applied
whenever the rights price is lesser compared to CMP.
This again is given in the form of ratio: X:Y, how many new shares X, you can ap
ply for Y number of shares held.
Eg: A company is issuing Rights in the ratio of 1:2 for the price Rs.100 means t
hat you can get 50% extra shares of the company of the existing shares you have,
each for the price of Rs.100
Note: The rights have to be applied before the ending date, if there is oversubs
cription then the shares are alloted in the ratio of subscription done.
The companies that come with rights issue and the issue gets oversubscribed then
, the company is considered to be fundamentally strong.
Preference Share Allotment: In this the company issues new shares to the promote
rs, the new shares are issued with the 6 months avg. CMP of the company.
Promoters are nothing but owners of the company who have maximum shares of the c
ompany.
Note: If the Preference share allotment price is much less than CMP, then the co
mpany is not genuine and vice-versa.
QIP: Qualified Institutional Placement - In this the company issues new shares a
t a determined price to other companies or firms.
Note: If the company is giving the QIP for higher price compared to CMP, then it
is genuine else you cannot trust the company.
ADR & GDR (American Depository Receipt & Global Dipository Receipt) - In this co
mpany issues new shares to American Share holders and Global share holders respe
ctively.
They fall under the category of FII.
Note: If the ADR or GDR issues is near to CMP, the company is genuine but if it
much less than the CMP, then it is not trustful.
-----------end of class 5------------------
Debuntures: Debuntures are nothing but the shares that have fixed returns irresp
ective of the price of the company, it gives returns just like the FD, ranging b
etween 5% - 15% per annum generally.
Nowadays, even debuntures can be transacted online.
Note: Whether the company shows loss or profit the returns to the debunture shar
e holders always remains the same.
Convertible Debuntures: These kind of debuntures over a period of time that is a
lready stated, gets automatically converted into shares.
Optionally Convertible Debuntures: These kind of debuntures over a period can be
converted to shares else can be redeemed for the price paid up for the debuntur
e.
ESOP: Employees Stock Options Placement - Issuing the shares to the employees as
a bonus along with the salary.
----------------------------------------------
Trading Platforms:
--------------------------
1.Cash Segment: NSE/BSE

It is further divided into:
Intraday and Delivery.
2. Derivatives: Futures and Options.
Intraday trading: In this the buy-sell transaction is completed within the day i
tself.
For High Mcap Companies one can also sell before buying if he feels that the com
pany price can come down by the end of the market session, but eventually he has
to buy it before the closing if he forgets that, then the shares go for auction
and penalty upto 20% is levised for it.
When you first do the buy transaction and did not sell by the same day then this
shares are treated as delivery.
Margin: The cash balance you hold with the stock broker.
For intraday trading various stock brokers allow upto 4 times the exposure of th
e margin and for delivery they allow 2 days grace period called as T+2.
Note: The margin exposure varies from stock broker to broker and for company to
company.
If the client fails to put the margin within T+2, he will be charged penalty for
each day after it and some stock brokers also have the mechanism for auto-sell
of holdings.
*Note: Never indulge in extra margin fund buying (buying more than margin in you
r account).
The intraday trading is just like Legal gambling, where in, more than 90% client
s lose the money to the 10% share market tycoons.
It is strongly advisable to trade only in the delivery segment.
If the sell is done before buy then it termed as 'Short'.
During Bankcrupcy
---------------------------
During the bankcrupcy, the share holders get the least preference to get the mon
ey, the priority of giving the money is as follows:
1. Secured Loans
2. Unsecured Loans
3. Debuntures
4. Share Holders
-------end of class 6---------------------
Real time Example: KFA - Kingfisher airlines after years of operations fails to
pay the interest for loans it has taken from several banks and organization, suc
h condition is termed as bankrupcy, it winds up its business, the total loan it
had taken is say, 2000 crore, its property after auction fetches it 2500 crore,
then firstly of the 2500 crore, 2000 crore would be given to all the banks and o
rganization where it has taken loans and the of remaining 500 crore, the debuntu
res will get their money first say it is 200 crore, then the left over 300 crore
amount will be divided with the number of shares, that is what you would get.
Secured Loans: Which is againt property.
Unsecured Loans: Which is without any security. Interest rate in unsecured loans
is generally very high.
Never trust the companies that have huge unsecured loans.
Note: Promoters also raise the money from banks by pledging (mortgage) their own
shares, this is the last option they have to raise money for their business.
*Note: Never trust companies that have huge number of shares pledged, the pledgi
ng is generally done at a huge discount price compared to CMP, if the CMP falls
below the pledge price, the banks start selling the shares in the exchange.
Loans are also called as debts, never trust companies having huge debts.
Debt free companies are the one which have no loans at all.
Reference: In moneycontrol go for,
Financials to check the assets and debt of the company.
For pledging of shares one can check in 'share holding pattern'.
Stock Brokers: Stock brokers are the authorized dealers through which any one ca
n buy/sell shares.
To become a stock brokers you have to get the license from NSE/BSE exchange.
The most famous are: Karvy, IIFL, Angel, Motilal Oswal, India Bulls etc...
Sub-brokers: They are the agents working under the stock broker, can be regarded
as a branch of stock broker. Stock sub-brokership is nowadays given as franchis
ee, you can also get one.
Before choosing a stock broker, following things have to be checked:
1. How old he is?
2. What is the brokerage?
3. What is the margin he is providing?
4. What is the software he is providing? what is the cost of it?
5. Is he providing online trading platform?
6. What is the AMC charges? If any? AMC - Annual Maintanance Charge.
7. Account opening charges, number of days for account activation.
Brokerage: It is the commission that the stock broker charges for every 100 Rs.
of Trade.
The brokerage is different for Intraday, Delivery and Derivatives, it will be th
e least for intraday and maximum for Delivery.
Intraday brokerage varies from:
3 paisa - 10 paisa
Delivery brokerage varies from:
30 paisa - 75 paisa
When you trade there are other charges also that apply like:
STT, Education cess, CDSL charges, Service charges etc... which are in the form
of taxes to the governmet, this figure will be common with any stock borker.
Intraday - 1 paisa approx.
Delivery - 3 paisa approx.
Meaning if you are buying a share of Rs. 100 then you will be billed an amount o
f Rs. 100.04 - Intraday
Rs. 100.53 - Delivery
@ IIFL (for least brokerage)
Say the same share you sell it for Rs.102, the sell price will be calculated as
follows:
Rs. 101.96 - Intraday
Rs. 101.47 - Delivery
Net Profit: Intraday: 1.92 paisa/share
Delivery: 96 paisa/share
CDSL: Central Depository Securities Ltd.
NSDL: National Security Depository Ltd.
All the share that you buy or sell are stored in CDSL/NSDL.
------------------------ End of class 7 --
Derivaties Trading: Trading the securities in Lot and Contract based is called a
s Derivatives Trading.
It is allowed only for the High Mcap Companies, in NSE/BSE, derivative trading i
s allowed for nearly 80 companies.
It is also called as F&O segment.
In derivatives we have, Futures and Options. Both of these sections you can eith
er buy first or also go short, the minimum shares you have to buy is called as t
he 'Lot Size'. The transaction has to be closed before the expiry of the contrac
t period (Last Thursday of the month).
In Futures, the CMP of the company more or less will be the same as in cash.
The brokerage for Futures is same as intraday.
Derivatives has got the margin which changes day to day according to the volatil
ity of the stock price, more the volatility more is the margin required, more th
e stability in the stock price, lesser is the margin required.
It is termed as span margin, which is applicable per contract basis.
Advantages with Futures
--------------------------------
1. Can go short, without any auction or penalty.
2. Liquidity is generally higher here.
3. With less amount you can buy more shares.
4. The brokerage you pay is of intraday even when you can hold the stocks for ne
arly a month.
* Risk: The margin of each stock changes day by day, if you fail to facilitate t
he increased margin for the next day, your holdings are squared by the system.
Options: In option trading we bet on the price of the company, this price is cal
led as the 'strike price'.
If you feel that the company price can increase drastically within few days then
you can buy Options: 'Call' and if you feel that the price can fall down drasti
cally within few days then you can buy 'Put'.
Note: If the company CMP, doesn't cross your strike price within the first 15 da
ys of the start of the derivative period, you will be in heavy loss else vice ve
rsa.
Meaning: If the CMP of the company has crossed the strike price, then you are in
profit and advisable to hold on to it till the expiry for more gains and vice-v
ersa.
Brokerage for Options is per lot basis which is between Rs. 50 - Rs.200
Generally Future and Options have to be used together for hedging.
Hedging is the concept of reducing the loss, or preventing excess loss if the ou
tcome of the CMP is not as you have anticipated, in this you have to be long in
futures and short in Options else vice-versa.
--------End of Class 8 ------------------
Arbitragers: They are ones who buy a company into one platform and sell the same
in another platform, instantly.
The difference between the CMP of the company in various platforms gives them th
e profit.
Eg. Buying in BSE and Selling in NSE, when the price difference is found.
Note: Arbitraging is safe trading, as the trader instantly squares up his transa
ction, the market volatility will not affect his profit at all.
Note* : Before buying any company check the prices in both the exchanges, where
ever it is less, buy there and in the same way while you sell too.
But for intraday trading, you have to do the transaction in the same exchange.
ETF: Electronic Traded Funds, here important commodities like Gold and Silver p
rice are quoted in the form of shares, one can buy precious metals in the form o
f shares virtually, the price of ETF is independent of sensex or stock market an
d varies only according to their international prices.
Note: It is always advisable to Buy Gold and Silver ETFs for investment rather t
han Physical to avoid shop keeper's margin and other heavy taxes, infact the phy
sical gold in not 100% pure too unlike the ETFs.
Commodities Exchange
(mcx / ncdex): This is yet another trading platform which has only commodities l
ike agri commodities, spices, metals, gold, silver etc...
Here the trading is done only in the futures segment.
But if you want to take the delivery then you also have the spot market there bu
t, the minimum lot is 1 quintal (100 kgs) or
1000 kgs (1 ton). Whatever you are buying in the spot market you have to pay ext
ra for the delivery charges, which is according to the weight.
Note: The commodities market has got nothing to do with the stock market infact,
the commodites prices only depends on the monsoon rains, output, import/export
etc...
When there is no enough production or when the demand is higher, the price goes
up and vice-versa.
Note: Commodities is much more risky than stock market also, because the prices
here are operated and manipulated by the big industries collabration.
Exchange Market Timings:
Stock market: Monday to Friday between 9.15 am to 3.30 pm.
Commodities: Monday to Saturday between 9 am to 11 pm.
Both the markets are closed on national holidays except on the day of diwali, on
diwali the market is open for 1 hour, according to the muhurat and it typically
termed as - 'Mahurat Trading'
The best website for refering the commodites is - www.commoditiescontrol.com and
www.moneycontrol.com/commodity
Note: the prices that you see for various commodities is per ton based generally
.
--------------End of class 9 -------------
Mutual Funds: Mutual Funds are the companies who take the investment from you an
d invest in the shares according to their in depth research, Generally mutual fu
nds give more returns when compared to the sensex.
The portfolio (stock holdings), they is is well diversified and possess the leas
t risk. It is also a good platform to invest money.
The CMP of a mutual fund is called as NAV - Net Asset Value.
We have two types of mutual funds:
Open Ended and Close Ended.
In open ended fund you can buy and sell at any point of time but in close ended
fund you have to wait till the lock in period is over like 3 yrs, 5yrs etc...
Mutual funds is a good destination for investment when made for long term point
of view. The IPO of mutual fund is called as - NFO - New fund offer.
While investing in mutual funds you must have a look at the ratio of funds allot
ment which is in the form of Debt:Equity; Debt is Debuntures, when a MF is alloc
ating more money in Debt then, the returns from it would be average but at the s
ame time risk would also be less; and vice-versa.
Reference site: http://www.moneycontrol.com/mutualfundindia/
Note: Now a days, one can also buy insurance + Mutual Fund together which is cal
led as ULIP, it will give you two benefits: Insurance + Returns.
ULIP: Unit Linked Insurance Plan.
SIP: Systematic Investment Plan, herein instead of paying the whole money at the
end of the year, you pay the premium every month on month just like the EMI.
In mutual funds you have two types:
G: Growth, D: Dividend
In Dividend Mutual Funds you get the net profit they make at the end of every ye
ar and its NAV remain the same but, the growth Mutual Fund will never give retur
ns per annum basis, the profit they get, they reinvest to make more profits out
of it and hence the NAV also rises accordingly.
Note: The maximum returns are from the mutual funds which have investment in the
small and mid cap companies.
Most Ideal Portfolio: Invest in the companies where mutual funds are investing (
Mid cap and Small cap), whenever the mutual funds of the above two category have
a company name in common and that too with high allocation you too can invest i
n those companies.
For best returns select the top 10 companies from the point above to get more re
turns that even mutual funds.
Note: One can buy mutual fund through online or with any stock broker also.
The portfolio of the mutual funds should be checked on month on month basis and
accordingly the changes have to be done in your portfolio also.
PMS: Portfolio Management Service
------------------------------------
In this, your investment is managed by the stock brokers, here also the returns
are good from long term point of view but the commission is very high. They take
away 10% - 30% of your returns every year as commission.
The best place to go for PMS is:
www.EquityIntelligence.com
-----------end of class 10----------------
Some of the best sources to find good and winning portfolio:
1. Rakesh Jhunjhunwala : His portfolio for the account Rare Enterprises.
Generally, whatever companies are being holded by rakesh jhunjhunwala they tend
to give multibagger returns over long term.
Each of his stock pick has been very successful so far in the history.
The portfolio that he builts up has two most important things, each of the stock
that he invests, the company must be having unique services without any competi
tors.
It is advisable to buy some of the stocks that he holds that havent yet risen sh
arply, to get good returns from it.
Golden Rule of Rakesh Jhunjhunwala and Radha Kishan Damani
"Always invest in those stocks which are branded and having unique business mode
l with no competitors in the industry, such companies are well set to give high
returns over long term"
Reference for Rakesh's Portfolio:
http://rakesh-jhunjhunwala.in/index.php/2012/09/03/rakesh-jhunjhunwala-portfolio
-september-2012/#&panel1-3
RK Damani:
------------------
Guru of Rakesh Jhunjhunwala, his stocks holdings also follows the same strategy
as that of Rakesh's.
Pick the stocks like you have done in Rakesh's stocks, his reference for portfol
io is:
http://rakesh-jhunjhunwala.in/index.php/2011/09/11/radhakishan-damanis-multibagg
er-stock-portfolio-picks/#&panel1-8
Porinju - Times of India Editor
-----------------------------------------
Veliyath Porinju, a renowned stock investor, his research of stocks is excellent
when compared to even the best broking houses, what ever stock he picks tend to
rise fast.
He is also one amongst the most successful stock investors.
Follow his recommendations and have the stocks in the portfolio for the time he
has stated.
Referece: Twitter.com/porinju
For his investment ideas and Research Papers:
http://www.equityintelligence.com/KnowledgeCenter/Investment-Ideas
CAGR: Cummulative Annual Growth Rate, it is the average compounding rate of grow
th of a company y-o-y (year on year)
-----------------End of class 11---------
Financial Reports and Balance Sheets
---------------------------------------------
Every company Listed in the BSE/NSE, releases the profit and loss reports every
3 months, it is called as quarterly results, the end of 4th quarterly report is
termed as annual report, here in a balace sheet is sent to the exchanges showing
the turnover, expenses, profit/loss and other important details like the share
holding, EPS etc... is presented to the public.
These reports can be seen at: nseindia.com, bseindia.com and moneycontrol.com
While viewing the report the most important figures to be observed are:
Topline Growth : Sales growth over previous quarter and the corresponding quarte
r of the previous year.
Bottomline Growth : The net profit growth over the previous quarter and the corr
eponding quarter of the previous year.
Promoter Holding: Should be rising or static
FII's Holding: Should be rising or static
Public Holding: Should be falling or static
EPS: The most important figure, should always be rising.
Standalone: The results from the company's core business.
Consolidated: The total results from the companie's all the business under that
firm, its core business, then from its subsidaries (other small companies under
him), returns from his investments etc...
Research Reports: Various Research agencies like crisil and renowned stock broke
rs like sharekhan releases the reports of the companies explaining in it why whe
n and at what price the company should be bought what is the target price of the
company within the stated time period:
Some of the best research reports sources are here:
1. Sharekhan's Research Reports
2. Porinju's Research Reports
3. CRISIL's Research Reports.
4. Multibagger Penny Stocks Blog
(available at: www.multibaggerpennystocks.com)
To check any research reports of a company, one can type in google:
<company name> Research Report filetype:pdf
Eg: swelect enery Research Report filetype:pdf
Currency Fx trading
-----------------------------
Recently in india one more exchange has opened up as currency derivatives wherei
n people can do the contract trading on currencies like rupee, dollar, pound etc
...
The main features of the currency derivate trading are as follows:
1. A seperate demat account is required for it.
2. The brokerage is very less and in not % basis but flat like Rs.50/lot
3. The margin exposure is very high, most of the times it is 1:50
4. The liquidity is very high, you can take the contract upto 2 years forward.
5. Generally it is advisable to go short (Sell) dollars in the advance period as
it most of the times quotes in premium.
Eg: If the dollar rate in spot is 55$, then the futures of one year advance will
be 58$, so even if dollar raises by 3$ within 1 year you will not be in loss.
6. The taxes are least in foreign exchange market.
------------end of class 12-------------
Technical Analysis: Technical analysis is buying and selling stocks according to
their price movement, the price of the any company varies day to day, and hence
forms a chart kind of pattern over a definite time period.
It is observed when the stock price movement forms any kind of chart pattern it
gives the buy and sell signals.
Note: The Technical analysis will only work when there are no external factors a
ffecting the stock price movement, at the same time one should also understand t
hat there are lot of external factors affecting day to day, so very rarely techn
ical analysis will work.
Very Important Note: The reading of the buy/sell signals in technical analysis s
hould be supported by the volume.
Important Terms:
200 DMA - 200 Days Moving Average
50 DMA - 50 Days Moving Average
20 DMA - 20 Days Moving Average
Bullish Pattern: Means a stock is forming a base to rise.
Bearish Pattern: Means a stock is forming a base to fall.
Support : Meaning the price of the stock is stable, it is very unlikely that it
will fall below its support price.
Resistance: Meaning the price of the stock is stable, it is very unlikely that i
t will rise below its resitance price.
Note: The Support and the Resistance price has the approx. values of 3% on eithe
r side.
Target Price: Till what price the stock can move.
SL (Stop Loss): At what price you should book the loss in case, the price moveme
nt is not as predicted.
Break Out: When the stock crosses its resistance level, it means that nothing ca
n stop it from rising.
Break down: When the stock crosses its support level, it means that nothing can
stop it from falling further.
Bullish Chart Patterns:
--------------------
.
.
-------end of class 13----------------
Bearish Chart Patters:
-------------------------------
.
.
Candle Stick Pattern:
----------------------------
A price chart that displays the high, low, open, and close for a security(compan
y) each day over a specified period of time.
READ MORE: http://en.wikipedia.org/wiki/Candlestick_chart
http://www.swing-trade-stocks.com/candlestick-patterns.html
Best sources for Technical Charts:
1. http://www.indiabulls.com/securities/research/techanalysis/tech_analysis.aspx
2. www.moneycontrol.com
Sholder Patterns
---------------------
Bullish and Patterns:
---------------------------
----------------end of class 14-----------
Important Sayings and Guidelines by share market experts
---------------------------------------------
1. Warren Buffet
"Buy when people are fearful, Sell when they are greedy"
2. Rakesh Jhunjhunwala
"Buy when people sell, sell when they buy, as 90% of the investors are losers, d
o the opposite of them to be a winner, this is how the remaining 10% people make
money"
3. R.K Damani
"Buy at rumours and sell at News"
Important strategies of investment and trading
-------------------------------------------
1. Build a portfolio of top 10 fundamental stocks
.
.
.
Buying or selling shares in india infoline
-------------------------------------------
1. Go to : www.indiainfoline.com
2. Click on trade
3.
--------end of class-----------------------

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