WELCOME TO LAKSHMISHREE. Basics of Financial Markets Definition: Knowledge of the basic fundamentals...
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Transcript of WELCOME TO LAKSHMISHREE. Basics of Financial Markets Definition: Knowledge of the basic fundamentals...
WELCOME TO LAKSHMISHREE
Basics of Financial Markets
Definition:Knowledge of the basic fundamentals of the Financial Markets
Session Objective:To know about and understand the basics of the Financial
markets
Topics
• What is an Investment? • Investment Options• The Risk & Return• Why Equity?• What is a share?• How is Equity traded?• What is a stock exchange?• Regulation of Securities Market
•Money earned is partly spent and the rest saved for meeting future expenses.
•Investing money to get return on it in the future is Investment.
•Inflation: Rise in the general level of prices of goods and services in an economy over a period of time.
Investment
Investment Options
Physical Assets Financial Assets
Gold/ Jewellery Fixed Deposits
Real Estate Small Savings Instruments (NSC)
Public Provident Fund
Pension Fund
Insurance
Bonds/ Debentures
Shares/ Equity
Saving Deposit Fixed Deposit Insurance, MF, NSC,PPF
Equity Commodity Gold0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
3%
7%
10%
20%
16%
4.5%
Rate of Return (Average)
The Risk & Return
Investment Type Risk Return
Gold/ Jewellery Low Moderate
Real Estate Low Moderate
Fixed Deposits Low Low
Small Savings Instrument Low Low
Public Provident Fund Low Low
Pension Fund Low Low
Mutual fund Moderate* Moderate*
Commodities High High
Equity Market High High
Why Equity?
LONG TERM BENEFIT AND HIGH RETURN ON INVESTMENT
LIQUIDITY
DIVIDEND EARNING
BONUS SHARES
DIVERSIFIED FUND
HIGH RETURN
CAPITAL GAIN TAXADVANTAGE
LOW INVESTMENT
Equity/Share
Total equity capital of a company is divided into equal units of small denominations, each called a share.
The holders of such shares are members of the company and have voting rights.
Equity/Share
Total equity capital of a company is divided into equal units of small denominations, each called a share.
The holders of such shares are members of the company and have voting rights.
How is Equity Traded ?
Company wants to raise Capital
Issues Initial Public Offering (IPO) in Primary Market.
Shares Issued in IPO are then Traded in Secondary Market.
Lets understand how it is Traded……
STOCK EXCHANGE
A common platform where buyers and sellers transact in stocks and shares.
The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are the two leading Exchanges.
There are 23 other regional Exchanges.
Regulation of Securities Market
The responsibility for regulating the securities market is shared by
Department of Economic Affairs (DEA)
Department of Company Affairs(DCA)
Reserve Bank of India (RBI) &
Securities and Exchange Board of India (SEBI).
Regulation of Stock Exchange
The Securities and Exchange Board of India (SEBI) is the regulatory authority in India
ROLE :- Protecting the interests of
investors in securities Promoting the development of
the securities market Regulating the securities market.
Depository
A depository is like a bank wherein the deposits are securities in electronic form.
Two main Depositories in India: Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL).
Advantage of Depository Immediate transfer of securities
No stamp duty on transfer of securities
Elimination of risks associated with physical certificates such as bad delivery, fake securities, etc.
Reduction in paperwork involved in transfer of securities
Reduction in transaction cost
Depository Participant(DP): A depository participant is an agent appointed by the depository to provide its services to investors Eg:- Banks, Financial Institutions and SEBI Registered Trading Members can become DPs.
Lakshmishree. Is a Depository Participant registered with CDSL.
USP’s of Lakshmishree as a DP
Lowest Transaction charges in the Country.
Minimum Rs 11/- for transfer from Demat to Pool or any other Demat.
No charges if shares kept in Pool Account.
No separate Demat A/c required.
Shares kept in Pool Account can be used as Margin for trading.
Life time Demat account at 562/- only
BROKER
A broker is an intermediary of the Stock Exchange.
Only registered members can operate in the stock market.
One can trade by executing a deal only through a registered broker or through a SEBI-registered sub-broker.
Trading on the Exchange
To Buy & Sell Shares, the customer needs
Demat Account
Trading Account
Demat Account
Demat is an abbreviation of Dematerialization.
Securities like shares, debentures are converted from the "material" (paper documents) into electronic data.
Trading Account
Trading Account is an account required for Buying & Selling Shares.
Trading accounts needs to opened with a Broker .
Each account holder is assigned unique client code .
Experienced Investor - Regularly Invests money into various Investment products
Trader - Continuously buys and sells securities
First Time Investor – Wishes to Invests in financial Instruments & earn profits but has not yet started Investing.
Types of Customers
Types of Trades
Intra Day Trade:- Both Buying and selling is done on the same day .
Delivery Based Trading :- Buy today Sell anytime
BTST :- Buy Today Sell Tomorrow
Bullish and Bearish trend
When the market goes up it is called a bullish trend
When the market goes down it is called a bearish trend.
Corporate Actions…
Corporate Action: “Any event initiated by a corporation which impacts its shareholders”
Some examples are dividends, stock splits, rights issues, bonus issues etc.
•Dividend: Dividend is the distribution of part of a company's earnings to shareholders
Stock Split: It is a corporate action which splits the existing shares of a particular face value into smaller denominations so that the number of shares increase. The total value however remains the same.
Stock Split:- brings the share price down to a more "attractive" level. Increases stock liquidity due to greater affordability
Buy back of shares: a method for company to invest in itself by buying shares from other investors in the market. Buyback:- Improves liquidity Enhances shareholders’ wealth
Corporate actions… continued
Learnings
The three things I learnt from this session are:
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I will apply these learnings to my work by :
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