Stock MarketStock Market Shares Mutual Funds Commodities An Overview about Stock Market What are Markets? What are shares? What is a stock exchange? Who is a broker? What is a Demat A/c? How to receive income from shares? How much should you invest? How to make investment decisions? How to track your investments? (Portfolio tracker) . What are Markets? A stock market is a market for the trading of company stock/ shares. bonds. 1. securities are sold by and transferred from one investor or speculator to another. .2 Secondary markets: The secondary market is the financial market for trading of securities that have already been issued in an initial private or public offering. and derivatives. debentures etc.1 Primary markets: The primary market is that part of the capital markets that deals with the issuance of new securities. Market is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares.1. In the secondary market. 1. This includes securities listed on a stock exchange as well as those only traded privately. your ownership stake in the company increases. Equity is a share in the ownership of a company. The terms share. entitling the owner to a proportion of distributed. non-reinvested profits known as dividends and to a portion of the value of the company in case of liquidation.2. It represents a claim on the company’s assets and earnings. What are shares? A share is one of a finite number of equal portions in the capital of a company. As you acquire more stock. . equity and stock mean the same thing and can be used interchangeably. is the leading index for large companies on the National Stock Exchange of India. or BSE has a nationwide reach with a presence in 417 cities and towns of India. share market is a corporation or mutual organization which provides facilities for stock brokers and traders. The Bombay Stock Exchange Limited. It consists of 50 companies representing 24 sectors of the economy. Its index. What is a stock exchange? A stock exchange. and representing approximately 47% of the traded value of all stocks on the National Stock Exchange of India.3. to trade company stocks and other securities. . or market indicator is known as the Sensex. The Nifty. or simply Nifty. property and equity trusts. . Brokers also have direct access to the share market and can act as your agent in share transactions. For this service they charge a fee. They can also offer additional services like advice on shares.4. debentures. Who is a broker? A stockbroker is person who is licensed to trade in shares. government bonds and listed property trusts and non-listed investment options (cash management trusts. or CDSL – to be the custodian of dematerialized securities. account. or NSDL. the government has mandated two entities –National Securities Depository. or demat. . and Central Depository Services (India).5. In India. What is a Demat A/c? Investors who wish to trade in the market need to have a dematerialized. i. . How to receive income from shares? We invest in shares to make money – either through a share’s capital growth. the amount by which the share price increases in value over time. or through the dividends it pays to its shareholders.e. Dividends are payments made by companies to shareholders from their profits.7. How much should you invest? Asset allocator and other tools… Benefits of Investing Early Risk vs Returns The Need To Diversify Financial Investment Options .8. 9. it could be unnerving and scary. In short. equity must form a part of every investor’s portfolio. At the same time. not only for retail but institutional investors. equity investment has always remained a big challenge. investing in equities can be a difficult proposition for retail investors. . depending on the investor’s age. perhaps. In fact. monetary requirements. However. The proportion could vary. etc. the most exciting investment opportunities for the investor community. risk appetite. How to make investment decisions? The stock market has. too. follow them religiously. . adherence to discipline in investment and decisions based on company fundamentals are essential ingredients for successful equity investment. A long-term monetary commitment. Set your own rules and more importantly. To cope with volatility. disciplined investment strategy. the mantra for successful equity investment is a well thought-out. Indeed. it is important to have a disciplined and systematic approach to equity investment. How to track your investments? (Portfolio tracker) The Portfolio Manager tracks and monitors all your investments. Investments like equity. These tools help you to track the trends of your current investments as well as some stocks that have caught your eye. cash flows. cash flow and assets. but can use this record of your holdings to base any future investments decisions. it is the most up-to-date and precise indicator of your net worth! With the Portfolio Manager. . mutual funds. through live price updates. borrowing and more can all be tracked. The Portfolio Manager comes along with some useful tools to gain useful insight of volatile markets. you can not only view your investments at each stage.10. Displayed in real time. assets. The Portfolio Tracker Track these things. Transaction History Watch list News Asset Risk Industry Classification Quarterly Data Best Worst Investments Financial Data Consolidated Stocks Consolidated MF's . .95 per share.P/E Ratio' A valuation ratio of a company's current share price compared to its per-share earnings. Calculated as: Market Value per Share Earnings per Share (EPS) For example.05 (43/1. the P/E ratio for the stock would be 22.P/E Ratio' Definition of 'Price-Earnings Ratio .95). if a company is currently trading at Rs43 a share and earnings over the last 12 months were Rs1.Definition of 'Price-Earnings Ratio . . Also sometimes known as "price multiple" or "earnings multiple". EPS is usually from the last four quarters (trailing P/E). but sometimes it can be taken from the estimates of earnings expected in the next four quarters (projected or forward P/E). . In general. It would not be useful for investors using the P/E ratio as a basis for their investment to compare the P/E of a technology company (high P/E) to a utility company (low P/E) as each industry has much different growth prospects. However. the P/E ratio doesn't tell us the whole story by itself. to the market in general or against the company's own historical P/E. It's usually more useful to compare the P/E ratios of one company to other companies in the same industry. a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. Book value can also be arrived at by subtracting current liabilities and debt from total assets. This formula then takes care of the bank's NPAs and gives a correct picture. book value is calculated as 'share capital plus reserves minus miscellaneous assets not written off.How is P/BV calculated? P/BV is a valuation ratio and is arrived at by dividing the market price of a share with the respective company's book value per share. book value is equal to the shareholder's equity (share capital plus reserves and surplus). For the banking and finance companies. . Now. Balance Sheet of Infosys Liabilities Equity capital Reserves & surplus Current liabilities Amount 2.860 .770 720 1.680 47.190 179.910 Fixed assets Investments Deferred tax assets 179.090 Other current assets 41.860 135.860 Assets Cash Amount 69.500 60. Now. as mentioned above.2. Conversely. .860 (equity capital) and Rs 135. which is Rs 241.090 m (reserves and surplus). If one were to take a look at Infosys' consolidated balance sheet for FY08. we shall arrive at a similar figure. book value will be arrived at by adding Rs 2. when we deduct current liabilities from total assets. which equals to Rs 137. by dividing this book value (Rs 137.950 ) by the issued equity shares of the company (approx 572 ). we would arrive at the book value per share figure.950 .