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CAPITAL MARKET

MARKET ANALYSIS

  • What are the various analytical approaches for valuation of stocks?

    It is the process of looking at a company’s business from an investment point of view. The process involves analysing a company’s management capabilities, its competitive advantages, its competitors and the markets it functions in. As part of the analysis, you would look at examining key financial ratios like the net profit margins, operating margins, earnings per share and so on. After examining the key ratios of a business, one can come at a conclusion about the financial health of a stock and determine the value of the stock. It further focuses primarily on the valuation of a company and its relationship with the current share price…

  • INTRODUCTION TO MARKET ANALYSIS

    Stock Market Analysis helps the investors in formulating their investing/trading techniques prior to the opening of the market. This helps them to confirm their conviction on trades. Stock Market Analysis deals with the performance of the stocks in particular and the indexes in general. Stock Market Index typically gives the overall performance of the market or of a specific sector. It is based on the statistical compilations of the prices of the representative set of stocks and reflects a composite value of its component stocks.

  • EPS (Earnings Per Share)

    Now let’s look at the EPS which indicates the overall profitability of a company listed on the stock exchange. Ideally you would like to see a company deliver results, because this leads to the stock’s price rising. Therefore, when examining the earnings of a company you need to look over the last three to five years of earnings to identify whether the forecasted growth is in line or above the average growth

  • PE Ratio (Price Earnings Ratio)

    The potential for a company’s share price to rise and fall often depends on how quickly its earnings are expected to increase. The PE Ratio provides investors with an insight into the financial prospects of a company.

  • Sources of Information in Fundamental Analysis

    Fundamental analysis demands, may insists, on information about a company. It requires subjecting a company’s performance and its financial statements to the most piercing scrutiny as well as the analysis of the economy and the industry in which the company operates. And the fundamentalist makes his buy or sell decision on the basis of his interpretation of the information

  • DIVIDEND YIELD

    Dividend yield gives the relationship between the current price of a stock and the dividend paid by its’ issuing company during the last 12 months. It is calculated by aggregating past year’s dividend and dividing it by the current stock price.

  • DIVIDEND

    Dividend is distribution of part of a company’s earnings to shareholders, usually twice a year in the form of a final dividend and an interim dividend. Dividend is therefore a source of income for the shareholder. Normally, the dividend is expressed on a ‘per share’ basis, for instance – Rs. 3 per share.

  • Need for Financial Derivatives

    There are several risks inherent in financial transactions and asset liability positions. Derivatives are risk shifting devices; they shift risk from those ‘who have it but may not want it’ to ‘those who have the appetitie and are willing to take it.

  • History of Derivatives: A Time Line

    1400s Japanese rice futures

    1600s Dutch tulip bulb options

    1800s Puts and options

  • Definition of Derivatives

    The Securities Contracts (Regulation) [Act SC(R)A], 1956, derivatives in the following manner.

    Derivatives include:

    (i) a security derived from a debt instrument, share, loan (whether secured or unsecured), risk instrument, or contract for differences, or any other form of security.

  • Introduction to Derivatives

    Derivatives are one of the most complex instruments. The word ‘derivative’ comes from the verb ‘ to derive’. It indicates it has no independent value. A derivative is a contract whose value is derived from the value of another asset known as the underlying, which could be a share, a stock market index, an interest rate, a commodity, or a currency, the value of derivative also changes.

  • INTRODUCTION TO CANDLESTICKS HISTORY

    The Japanese began using technical analysis to trade rice in the 17th century. While this early version of technical analysis was different from the US version initiated by Charles Dow around 1900, many of the guiding principles were very similar:

    The “what” (price action) is more important than the “why” (news, earnings, and [...]

  • CONCEPT OF SUPPORT & RESISTANCE

    The concept of SUPPORT AND RESISTANCE is essential to understanding and interpreting the markets. Just as a ball bounces when it hits the floor or drops after being thrown to the ceiling, support and resistance define natural boundaries for rising and falling prices.
    Buyers and sellers are constantly in battle mode. Support defines that level where [...]

  • SUPPORT & RESISTANCE

    Support and resistance represent key junctures where the forces of supply and demand meet. In the financial markets, prices are driven by excessive supply (down) and demand (up). Supply is synonymous with bearish, bears and selling. Demand is synonymous with bullish, bulls and buying. As demand increases, prices advance and as supply increases, prices [...]

  • FUNDAMENTAL ANALYSIS

    The finance theory does not believe that in an efficient capital market, the fundamental approach, or for that matter any other approach, can help anybody out-perform the market consistently. In fact, there is no conclusive evidence either in India or elsewhere, that fundamental analysis out-perform any randomly selected well diversified portfolio over a long investment [...]

  • TECHNICAL ANALYSIS

    A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends. Unlike fundamental analysis, the intrinsic value of the security is not considered. Technical analysts believe that they can accurately predict the future price of a [...]