GST Course

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Greetings of  the  day  to  all  the  members of CCI Family. 

After writing exams in Nov’13, I thought to start with a series on “A to Z of Finance”. After reading many novels, Articles and browsing net I finally feel that it’s the right time to convert my ideas into writing.

So as was promised to many members on the club that I will share knowledge relating to Finance, so here I come with the First part of my exclusive series i.e.

Introduction –  

The series will comprise of :

- A journey into stock market

- Mergers & Acquisitions

- Tips for Investing

- And many more

In this Article I will be discussing the basics of stock market.:

- Things to be avoided

- Factors affecting stock market

- Derivatives

- Grey Market

- Other factors affecting the market    

# Read the article very patiently, step by step try to analyze the points &in case you feel stuck start reading it again from the beginning.      

Stock Exchanges in India –  

- Bombay stock exchange (BSE)

- National stock exchange (NSE)  

BSE – Started on 1 January 1986

- Consists of 30 largest and most actively traded stocks.

- E.g. RIL, L&T, HUL, TCS, etc.  

NSE – Known as NIFTY 50

- E.g. SBI, ONGC, TCS, HERO, etc.  

Depository and Depository Participants –  

- Depository means a bank or company which holds securities deposited by others and where exchange of these securities take place.  

- National securities Depository Limited (NSDL)

- Central Depository securities Limited (CDSL)      

- Depository participants are an agent of the Depository.

- They are intermediaries between the Depository and investors.

- Modex, Sherkhan, Edelwis, etc.  

Settlement Procedure –  

- Settlement is done on a T + 2 basis for cash markets.

- Trades entered into on a particular day are settled on a third day. E.g. if stocks are purchased on Tuesday they must be settled on Thursday. Above mentioned procedure is also known as “Rolling Settlement”  

Factors affecting Stock Market –  

- Economic factors

- Market Trends & Rumours (Speculation)

- Insider Trading

- Government policies & Regulations

- Other factors  

Medium of approaching Capital market –  

- Equity shares

- Debentures


- Derivatives  

IPO’s (Initial Public Offer) –  

- It is a process through which companies raise capital to meet working capital, debt repayment, expansion, etc.

- It is offered to all the categories like Retail investors, Private placements, FI’s, etc.

- Issue is brought as a book building issue which is priced at a price band or at a fixed price.

- Companies have to file Draft Red Hearing Prospectus (DRHP) After DRHP the IPO is given credit rating by ICRA & CRISIL depending on the valuations, risk, growth policies of the company.  

Grey Market –  

- It is also known as “Fictitious Market”.

- Before listing of IPO’s there is a market value which exists among the brokers who do business in Grey market and the premiums are predefined depending upon the demand & supply. Highest ever grey market premium for any IPO was for Reliance Power i.e. 100%  

Selection of stocks -        

- Fundamental analysis

- Technical analysis  

Fundamental analysis –  

- Analyzing a stock on the basis of fundaments of the country, the sector and the company individually.

- It includes going through the Balance sheet and Profit & loss of the said company & checking various ratios.

- Checking of EPS, PE Ratio, MPS, Interest coverage, etc.  

Technical Analysis –  

- Forecasting the future directions of prices through the study of past market data primarily price & volume.

- Checking of support, resistance, stop loss, etc.  

Foreign Markets –  

- Dowjones

- Nasdaq

- Nikkei

- Shanghai      

Derivatives –  

- NSE is the largest derivative exchange in India.

- They have a maximum of 3 months expiration cycle.

- Contracts are available for trading with 1, 2 & 3 months.  

Things to be avoided –      

- Don’t follow a bind man’s advice.

- Avoid getting in & out of the market too soon.

- Only trade active stocks.

- Never invest without putting a stop loss.

- Never do overtrading.

- When in doubt get out and don’t get in when in doubt.  

So this brings an end to my article. In this article I have covered the basics of some vital concepts which you all should be aware of.

In my next Article I would be discussing tips for investing in stock market.  

I guess many of you might be aware of the above facts but I couldn’t ignore the above as these are necessary for my series.  

So be patient and be ready for the next part.  

About the Writer –  

CA Final Student

CIMA Management Level  

B.Com (P)  

# Any sought of queries or suggestions for the remaining parts are most welcome. Feel free to contact me at sanyam.arora27@

Tags :

Category Shares & Stock, Other Articles by - SANYAM ARORA