Stock Market

Stock Market(or Stock Exchange) is a market where a deal is made between buyers and sellers of the shares. In India NSE(National Stock Exchange) and BSE(Bombay Stock Exchange) are two main stock exchanges, Nifty and Sensex are there index
Index in stock Exchange
BSE(Bombay Stock Exchange)-->Sensex(here are more company)
But Sensex mainly take data of 30 companys.
NSE(National Stock Exchange)-->Nifty(here are less company)
Similarly Nifty mainly take data of 50 companys.
NOTE:-These company are not fiexed these are change such as in 2016 PNB Bank and Vedanta in nifty, but due to there poor performance they are repalce by Aurobindo pharma and Eicher Motors.

Type of profit in Stock Exchange

In stock markets you get profit by 2 ways
1-Dividend
When a company shares some of its profit with the shareholders, its called dividend. But its is not compulsory for the company to provide dividend to its shareholders, Company provide divident or not it is completely depends on its Bord of directors of the company. Usually small companies do not provide dividends.
2-Capital Appreciation
Capital appreciation means when the value of the share rises, investment value also rises.Let we purchase a share in 1000 rupess and after 2 year its price will be 1600. then 600 hike is called capital appreciation.
NOTE:-If company grow then its share price also increase this is main source of income in share market.

Type of selling and buying in Stock Exchange

In Stock market there are mainly two type of selling and buying. 1-Trading when we holding the shares for a Short term it is known as trading. For trading we need techanical analysis of a share.

• Intraday trading:-We have to sell the intraday shares same day and if we do not do it then broker do this.
• Scalp trading:-holding the shares for a second or a munite
• Swing trading:-holding the shares few days to a weeks
• Position trading:-holding the shares for few a months

2-Investing
holding the shares atlest a year. For Investing we need Fundamental analysis of a share. In investing we always take deliver of share
NOTE:-In India share settlement done according to T+2 Cycle, that means when we buy a share that is Transaction day and after that day it will take 2 days to reflect in our Demat account. if we taken it delivery.

What we need to start investing in share market?

First we need a demat account(open by CDSL and NSDL) and a trading account(open by Brokers such as Zerodha, Upstox,etc). In Demat accout we put our deliver share By the the help of trading account we can buy and sell.In Stock market timing:-9:15Am to 3:30Pm(open for normal work) and 9:00Am to 9:15Am(only open for After Market Order).

How can we Analysis share?

For Analysis of a share we must know
First of all we have to understand company busness model
for example:-Domino's in delivery business, But some people think that it is in Pizza businees.
Second we have to understand some technical term such as
vol-->volume-->It means number of shear trade within a day that is known as it volume.
Bid price--> price offer by buyer.
offer price--> price offer by seller.
VWAP(volume weighted average price)-->Average price of share at present day.
L/U price band-->lower and upper control limit Price band-->It is used to control the sudden change in price, if share goes up and down then this then trading of that share will stop for that day.

Balance sheet of a company

Balance sheet of a company[(profit and loss statement) or (cashflow statement)] are know as financial statement of the company.
It is basically 2 type:-
1-Consolidated financial statement
In Consolidated financial statement we have financial statement of parent company and its child company(subsidiaries company, Associate companies, joint ventures). By the help of Consolidated financial statement we know about financial condition of parent company as well as its child company.
2-Standalone financial statement As name suggest Standalone means only that companies(parent company).
Note:-In most of financial app we get only Standalone financial statement. But on Money control website we get both Consolidated financial statement and Standalone financial statement

Technical term we get from Balance sheet of a company

Mkt. Cap
Market capitalization tell us about total value of the company.
Book value
Book value is Actual value of share. Book value of a share effectively indicates a company net asset value(total assets-total liabilities)
NOTE:-But by book value we can not calculate intangible assets such as brand value, goodwill, intellectual property etc. Therefore by the help of book value we are not able to calculate IT company.
P/B ratio
P/B ratio tell us that compare to book value how much value invester are paying.
P/B ratio=(market price per share)/(book value per share)
P/B ratio also help us to tell that stock us under price or over price.
NOTE:-It also do not work on intangible assets therefore by P/B ratio work only on manufacturing companies, automobile, asset-heavy companies.
EPS(Earning per shares)
total profit of company=10,000
Number of shares=2,000
EPS=10,000/2,000
EPS=5
so company is getting 5 rupees from a shares
More that value of EPS better for shares holder as its shares value is more.
As EPS is given by company of every Quarter(4 months) and TTM( Tralling twelve Months that means EPS of 12 months).
NOTE:-But EPS value is compare in same sector of company. second thing EPS do not consider debt of company.
price to earning ratio(P/E)
price to earning ratio=(price of 1 share in the stock market)/EPS(Earning per shares)
price to earning ratio=100/5=20
from this price to earning ratio we know that for 1 ruppes earning of company invester is paying 20 rupees.
some point to remember
Normally if P/E is low then it is good for us But if company is growing very fast then its Earning per shares(EPS) also increase very fast therefore mostly such company have very high P/E ratio. So if EPS is growing very fast then do not think to much about P/E ratio there P/E ratio may be 60 to 70 also because of there growth record.
price to earning ratio do not work very correctly on Real Estate company Let's suppose if in a year 2000 Real Estate company sell 100 flat then its P/E ratio go very down. But in next year 2001 company sell only 1 flat its P/E ratio increase slightly. Therefore in such company(Real Estate company,Mines and Mineral company) we see P/B ratio.
If company take large amount of debt in that case also P/E ratio goes down as EPS increase.
Normally According to Financial advisors
if price to earning ratio is between 13 to 20 that is consider as good
if price to earning ratio is more than 20 then then there will be 2 reason
1-company share is over price
2-invester thinking that company future is very good.
Normally, if price to earning ratio is less than 13
1-company share is under price
2-invester thinking that company future is not good.
Note:- Some sector have low price to earning ratio for example diamond and fertilizer industry. But some sector have high price to earning ratio for example IT and Pharmaceutical industry. Therefore by using price to earning ratio we can compare 2 company of same sector.
Industry p/E
Industry P/E means Average sum of P/E ratio of full industry that sector such full IT and Pharmaceutical industry
Beta
Beta is used to know that how much share follow the market.
If beta
1=exactly behave just like market
0.5 to 1=follow market trand but low volatile share
More than 1 that means more volatile
Negative:-just opposite to behavior of market
Face value
First time when a company issue the share to promoter against there equity capital(amount) that is known as face value. Face value of share does not change with time it is fixed untill share do not split.
Dividend
Dividend is always given on face value of share. Whenever a company decide to give dividend. They also decide Record date(The date at which you must have company share for getting divident)
Deliverables.
Deliverables means how many share are purchase for delivery.
Deliverables=(Delivery shares/total volume)X100

Enterprise value

Enterprise value=(market capitalization+debt)-(cash)

Negative of Enterprise value means company have more cash as compare to company value

ROE

If company buy 10 product at the price of 10 ruppess and sell in 20 ruppess then there

1-margin=50%

2-Return on equity(ROE)=(Total income/total investment)x100

ROE=(100/100)*100

ROE=100%

Factor affecting share price

Quarter results of company:-it is one of most important factor, if quater result of company is not good in that case generally the share price of the company is go down.
Inside trading:-inside trading means, trading by the person who is working in that company. As they get news of company decision more early then anyone else.
Government policy:-goverment policy also affect the share price of the company.
promoter holding:-If promoter holding is decreasing in a company generally it will be a bad news for the comapany.
Developing and adapting new technology:-If company is not adapting new technology it may be hazardous for the company. We have many examle who do not adapting new technology such as Nokia mobile, kodak camera.
Other factor:-Future prospects of the company, Top management of a company.