Shyam gour

  Technical Analysis 1.1 – Overview we now know that developing a well researched point of view is critical for stock market success. A good point of view should have a directional view and should also include information such as: 1. Price at which one should buy and sell stocks 2. Risk involved 3. Expected reward 4. Expected holding period 1.2 – Technical Analysis, what is it? Technical Analysis is a research technique to identify trading opportunities in market based on the actions of market participants. The actions of markets participants can be visualized by means of a stock chart. Over time, patterns are formed within these charts and each pattern conveys a certain message. The job of a technical analyst is to identify these patterns and develop a point of view. 1.3 – Setting expectations Often market participants approach technical analysis as a quick and easy way to make a windfall gain in the markets.If you approach TA as a quick and easy way to make money in markets, trading

IPO, OFS, and FPO   Supplementary Note IPO, OFS, and FPO – How are they different? IPO Initial Public Offering is when a company is introduced in to the publicly traded stock markets for the very first time. The primary reason for going public is to raise capital which would be to fund expansion projects or cash out early investors. After the IPO is listed on the exchange and is traded in the secondary market, promoters of the company might still want additional capital for which there are three options available: Rights Issue, Offer for Sale and Follow-on Public Offer. Rights Issue The promoters can choose to raise additional capital from its existing shareholders by offering them new shares at a discounted price (generally lower than Market Price).  it limits the company to raise the capital from a small number of investors who are already holding shares of the company and might not want to invest more. OFS The promoters can choose to offer the secondary issue of shares to the whole

Getting started! At this stage, it is extremely important for you to understand why we have so many different learning modules, and how these modules are interrelated. To give you a head up, here are some of  the modules that we will cover in Varsity. 1.Introduction to Stock Markets 2.Technical analysis 3. Fundamental Analysis 4. Futures Trading 5.Option Theory 6.Option Strategies 7.Quantitative Concepts 8.Commodity Markets 9.Risk Management & Trading Philosophy 10.Trading Strategies & Systems 11.Financial Modeling for Investment practice 13.1 - So many modules – how are they interrelated? In order to be successful in the markets, what according to you is the single most important factor? Success in markets is easily defined – if you make money consistently you are successful, and if you don’t you are not! chances are you will think about factors such as risk management, discipline, market timing, access to information etc as the key to be successful in markets. While one can

Clearing and Settlement 10.1 - Overview As a trader or an investor you need not actually worry about how the trades are cleared and settled as there are professional intermediaries to carry out this function seamlessly for you. 10.2 - What happens when you buy a stock? Day 1 – The trade (T Day), Monday The day you make the transaction is referred to as the trade date, represented as ‘T Day’.By the end of trade day your broker will debit Rs.100,000/- and the applicable charges towards your purchase.   So an amount of Rs.100,000/- plus Rs.126.32/- (which includes all the applicable charges) totaling  Rs.100,126.32/- will be debited from your trading account the day you make the transaction. Do  remember, the money goes out of your account but the stock has not come into your DEMAT account yet. Also, on the same day the broker generates a ‘contract note’ and sends you a copy of the same. A contract note is like a bill generated detailing every transaction your made. This is an important

The Trading Terminal 9.1 – Overview When a market participant wants to transact in the market, he can do so by opting one of the options: 1. Call the stock broker, and trade usually called “Call & Trade” 2. Use a web browser to access the markets 3. Use the trading software called the Trading Terminal It allows you to do multiple things such as transacting in shares, tracking your Profit & Loss, tracking market movements, following news, managing your funds, viewing stock charts, accessing trading tools etc.  To keep this chapter as practical as possible let us set two basic tasks to using the TT. 1. Buy 1 share of ITC, and 2. Track the price of Infosys we will be using Zerodha’s web platform ‘Kite’ 9.2 – The login process  The process involves entering your password and answering two secret questions, the answers to which only you know. 9.3 – The Market watch Keeping the first task in mind we will load ITC Ltd onto the market watch. To do this we simply have to type in the sto

Commonly Used Jargons The objective of this chapter is to help you learn some of the common market terminologies, and concepts associated with it. Bull Market (Bullish) – if the stock market index is going up during a particular time period, then it is referred to as the bull market. Bear Market (Bearish) – if the stock market index is going down during a particular time period, then it is referred to as the bear market. Trend - A term ‘trend’ usually refers to the general market direction, and its associated strength. For example, if the market is declining fast, the trend is said to be bearish. If the market is trading flat with no movement then the trend is said to be sideways. Face value of a stock – Face value (FV) or par value of a stock indicates the fixed denomination of a share. Usually when dividends and stock split are announced they are issued keeping the face value in perspective. For example the FV of Infosys is 5, and if they announce an annual dividend of Rs.63 that me

The Stock Markets Index 7.1 - Overview a real time summary on the traffic situation how would you got it? it is unlikely you would check each and every road in the city to find the answer. The wiser thing for you to do would be to quickly check, a few important roads and junctions across the four directions of the city and observe how the traffic is moving. If you observe chaotic conditions then you would simply summarize the traffic situation as chaotic, else traffic can be considered normal. if I were to ask you how the stock market is moving today, how would you answer my question?  It would be clumsy to check each and every company, figure out if they are up or down for the day and then give a detailed answer. you would just check few important companies across key industrial sectors. If majority of these companies are moving up you would say markets are up. So essentially identify a few companies to represent the broader markets. 7.2 - The Index The important companies are pre pac

The Stock Markets 6.1 - Overview By virtue of being a public company, the company is now liable to disclose all information related to the company to the public. The shares of a public limited company are traded on the stock exchanges on a daily basis. The stock market is a place where market participants can access any publicly listed company and trade from their point of view, as long as there are other participants who have an opposing point of view. Afer all, different opinions are what make a market. 6.2 - What really is the stock market? The stock market is a place where market participants can access any publicly listed company and trade from their point of view, as long as there are other participants who have an opposing point of view. Afer all, different opinions are what make a market. The stock market is an electronic market place. Buyers and sellers meet and trade their point of view. 6.3 - What moves the stock? Scene-1 The management makes a statement to the press that t

The IPO Markets - Part 2 5.1 - Overview This is extremely important to know because the IPO market, also called the Primary market sometimes attracts companies offering their shares to public without actually going through a  healthy round of funding in the past. Of course you need to treat this with a pinch of salt  but nevertheless it acts as an indicator to identify well run companies. 5.2 - Why do companies go public? The promoter has 3 advantages by taking his company public.. 1.He is raising funds to meet Capex requirement 2.He is avoiding the need to raise debt which means he does not have to pay finance charges  which translates to better profitability 3.Whenever you buy a share of a company, you are in essence taking the same amount of risk as the promoter is taking. when the company goes public, the promoter is actually spreading his risk  amongst a large group of people. There are other advantages as well in going for an IPO… 1.Provide an exit for early investors Any existin

  The IPO Markets - Part 1 4.1 - Overview Why do companies go public? We will learn new financial concepts during the course of this chapter. 4.2 - Origin of a Business why companies go public, To understand this concept  better, we will build a tangible story around it. Let us split this story into several scenes just so  that we get a clear understanding of how the business and the funding environment evolves SCENE 1 – THE ANGELS Let us imagine a budding entrepreneur with a brilliant business idea – to manufacture highly fashionable, organic cotton t-shirts. The designs are unique, has attractive price points and the best quality cotton is used to make these t-shirts. He is confident that the business will be successful, and is all enthusiastic to launch the idea into a business Let us assume that he pools in his own money and also convinces two of his good friends to invest in his business. Because these two friends are investing at the pre revenue stage and taking a blind bet on

Financial Intermediaries 3.1 - Overview From the time you access the market – let’s just say, to buy a stock till the time the stocks comes  and hits your DEMAT account, a bunch of corporate entities are actively involved in making this  work for you.  These entities are generally referred to as the Financial Intermediaries 3.2 - The Stock Broker The basic services provided by the brokers includes.. 1.Give you access to markets and letting you transact 2.Give you margins for trading – We will discuss this point at a later stage 3.Provide support – Dealing support if you have to call and trade. Sofware support if you have  issues with the trading terminal 4.Issue contract notes for the transactions – A contract note is a written confirmation detailing  the transactions you have carried out during the day 5. Facilitate the fund transfer between your trading and bank account 6.Provide you with a back office login – using which you can see the summary of your account 7.The broker charges a

Regulators  2.1 - What is a stock market? Just like the way we go to the neighborhood kirana store or a super market to shop for our daily needs, similarly we go to the stock market to shop (read as transact) for equity investments.  2.2 - Stock Market Participants and the need to regulate them 1.Domestic Retail Participants – These are people like you and me transacting in markets  2.NRI’s and OCI – These are people of Indian origin but based outside India 3.Domestic Institutions – These are large corporate entities based in India. Classic example would be the LIC of India.  4.Domestic Asset Management Companies (AMC) – Typical participants in this category would be the mutual fund companies such as SBI Mutual Fund, DSP Black Rock, Fidelity Investments, HDFC AMC etc.  5.Foreign Institutional Investors – Non Indian corporate entities. These could be foreign asset management companies, hedge funds and other investors  Now, irrespective of the category of market participant the agenda fo

The Need to Invest  1.1 - Why should one Invest? 1.Fight Inflation – By investing one can deal better with the inevitable – growing cost of living – generally referred to as Inflation  2.Create Wealth – By investing one can aim to have a better corpus by the end of the defined time period. In the above example the time period was upto retirement but it can be anything – children’s education, marriage, house purchase, retirement holidays etc  3.To meet life’s financial aspiration  1.2 - Where to invest? When it comes to investing one has to choose an asset class that suits the individual’s risk and return temperament. An asset class is a category of investment with particular risk and return characteristics. The following are some of the popular assets class… 1.Fixed income instruments  2.Equity  3.Real estate  4.Commodities (precious metals) Fixed Income Instruments Typical fixed income investment includes: 1.Fixed deposits offered by banks  2.Bonds issued by the Government of India  3.