Basics
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MARKET PREVIEW 10th NOVEMBER, 2009
Nifty continued its pullback from 4538 and recovered quite sharply, signaling strong short-covering. 4860 was 50% retracement of the fall from 5182 and the next hurdle is at 4940, which is 61.8% retracement of the fall. There are chances that this pullback can extend above 61.8% retracement to almost 78.6-99% retracement, but we feel, the chances for these remain quite low, as other parameters such…
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Torpedo Stock
A stock that has fallen substantially in value and that looks like it will continue to fall in value in the foreseeable future. This name refers to this type of stock’s similarity to a battleship after it has been struck by a torpedo: it goes down fast and continues to sink until hits the bottom.
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Absolute Breadth Index
A market indicator used to determine volatility levels in the market without factoring in price direction. It is calculated by taking the absolute value of the difference between the number of advancing issues and the number of declining issues. Typically, large numbers suggest volatility is increasing, which is likely to cause significant changes in stock prices
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ROLE OF STOCK EXCHANGE
■ Raising capital for business .
■ Mobilizing saving for investment.
■ Created investment opportunities for small industries.
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HISTORY OF STOCK EXCHANGE IN INDIA
The working of stock exchanges in India started in 1875. BSE is the oldest stock market in India. The history of Indian stock trading starts with 318 persons taking membership in Native Share and Stock Brokers Association, which we now know by the name Bombay Stock Exchange or BSE in short. In 1965, BSE got [...]
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DIVIDEND YIELD OF THE COMPANY
The dividend yield measures what percentage return a company pays out to its shareholders in the form of dividends. It is calculated by taking the amount of dividends paid per share over the course of a year and dividing it by the stock’s price.
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MARKET PREVIEW OCTOBER 21, 2009
Market view: – Volatile.
Sector-specific: IT stocks appearing positive.
Stock-specific: IOB, ITC, Infosys appearing positive.
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OPEN INTEREST
Open Interest is the total number of outstanding contracts that are held by market participants at the end of the day. It can also be defined as the total number of futures contracts or option contracts that have not yet been exercised (squared off), expired, or fulfilled by delivery.
Open interest applies primarily to the futures market. Open interest, or the total number of open contracts on a security, is often used to confirm trends and trend reversals for futures and options contracts.
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ISSUE MANAGEMENT
The merchant bankers help corporates to raise money from the markets through the issue of shares, debentures, bonds etc. They are designed as managers to the issue. Their main business is to attract public money to capital issues.
They usually render the following services:
1. Drafting of prospectus and getting it approved from the stock exchanges
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MERCHANT BANKING
Merchant Banks are a very important factor in the capital markets. They have a big role to play especially, in placing equity in the primary markets, through the Initial Public Offers route.
Public money or savings play a vital role in financing many big projects. Thousands of crores are raised every year from the markets either through equity or debt from the market. The merchant banks play a crucial role in helping the corporates raise money from there markets.
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SHARE BUY-BACK
Since October 1998 the public limited companies in India are allowed to buy-back their shares from the shareholders. A company can buy-back their own shares or other specified securities including employees’ stock option from out of
It’s free reserves
the securities premium account
the proceeds of an earlier issue than fresh issue of shares made specifically for buy-back [...] -
SHARES
A shares indicates a smaller unit into which the overall requirement of capital of a company is subdivided. For example If the capital is required by a company is Rs 10 Crores, it can be subdivided into 1 crore smaller units called as “Shares”, each one of the units having the value of Rs. 10 each, which in technical words is referred to as “Face value” or “Nominal Value”.
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DECLARATION OF DIVIDENDS
There are four important dates in declaration of dividends:
(1) Date of announcement: On this date, the board of directors announces the dividends.
(2) Date of record: This is the second date which determines which shareholders are entitled to receive dividends. Only those shareholders who own the shares of that company on the date of record are entitled to receive the dividends. If shares are bought after the record date, the owners will not me entitled to receive the dividends.
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PREFERENCE SHARE
Preference shares are a hybrid security that is not heavily utilized by corporations as a means of raising capital. It is hybrid because it combines some of the characteristics of debt and of some equity. Legally a preference share represents a position of the ownership of the company, and thus shown in the balance sheet with the equity shares as making up the capital stock or equity interest.
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LIQUIDITY RATIOS
There are thow methods for measuring stock market liquidity
(A) TURNOVER RATIO
(B) VALUE TRADED RATIO
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LIQUIDITY
Liquidity is one of the most important indicators, that greatly influences stock market development and efficiency. It is one of the factors affecting the price discovery mechanism. A market is considered to be liquid when large volume of trades can take place without any significant effects on price. When an investor is able to transact at a price close to the current market price in the stock market, the market is liquid.
