Why should you Trade?

(Benefits of Trading)
 No employees to hire
 No inventory, office, other equipment required (only your phone
& computer)
 No vendors, no customers, no invoices, no accounts receivable,
no after sale service
 Minimal time requirement–Trade according to your convenience
 Minimal capital requirement
 Minimal transaction cost
 Minimal requirements to get started
 Simple to learn
 Instantaneous returns
 Sell all & relax—GO ON A VACATION

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Things that you need to Trade
 A computer
 An Internet connection
 A charting software
 A broker
 A properly funded trading account
 A good trading strategy

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 Goals of Trading
1. Earn huge amounts of money
2. Grow money many times more than
inflation or rate of interest of the banks
3. Have a second source of income
4. Financial freedom--Early Retirement
5. Be your own boss !!
6. It gives a kick !!

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 Trading as compared to
investment in property & gold
 RBI cutting rate of interest
 Dead investment

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 This Market is for Everyone
ANY AGE, COLOUR, GENDER, CASTE, RELIGION, EDUCATION DOES
NOT MATTER, MINIMUM TIME INVESTMENT

 Businessmen
 Students support
own education
 Housewives
 Govt. Employee
 Unemployed
(Full Time, Part Time)

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 ITS BUSINESS TIME
Can Be Used as Secondary Income
 How People get Trapped in Share
Market
 Rumor by TV, Friends, TIP
 Agencies
 Astrology
 Softwares or Indicators
 Try to Find Top and Bottom
of Market. Wait for Market
to correct and Miss Opportunities in Stocks

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Trading by Rumor
 Buy on Rumor , Sell on News
 Rumor can be wrong
 Internal Company People only make money because
they buy before Rumor spreads
 General Public gets Trapped.
 E.g.. IDFC, DHFL….etc..etc

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 Stock Upgrade or Downgrade

• Upgrade or Downgrade by Rating Agencies

• Used as a Trap for General Public
• Foreign Agencies doing Research of Indian Companies

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Traders Emotional Cycle

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 Approach towards Trading
 Big Wins -

 Small Wins -

 Small Losses -

 Big Losses -

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Train your Mind for Profit

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 Why Companies issue Shares in
Market?
 You must be familiar with the old adage, ‘It takes money to make
money’. This is applicable to all big and small companies as well.
 Companies need big money to boost their growth strategies,
whether it is big capital purchases, expanding their brands, or
completing large orders. They raise money by either selling a
part of the company or borrowing money.
 In debt financing, the company borrows money from banks or
issues bonds. But this option impacts its future cash flow as it
has to make regular payments and also pay back the complete
principal amount.
 The next option is by issuing shares which is also called equity
financing. The company issues and sells shares to the investors to
raise money. This helps in conserving cash flow.
 What are Stocks?
 Stocks/ Equity shares refer to what a company issues to
its owners which denote their ownership of the
company.
 These can be purchased either via an Initial Public
Offer(IPO), i.e., when the company raises money and
offers the public at large a share of ownership in the
company or via secondary markets i.e., when you buy
it from a previous holder in a marketplace.
 What is a Stock Market?
 The stock market is the market in which shares of
publicly held companies are issued and traded either
through exchanges or over-the-counter markets.
 This is an electronic platform where investors come
together to buy and sell their equity shares.
 Types of Capital Market
 Primary Market
Corporate issues securities such as debt. or equity in
primary market at
 Face value
 at Premium or
 at Discount
 Secondary Market
 Secondary Markets provide an efficient platform for
trading of those securities initially offered in the
primary market.
 Trading in the secondary market is done through stock
exchange.
 Trading in a Stock Market
 Trade in stock markets means the transfer for money
of a stock or security from a seller to a buyer. This
requires these two parties to agree on a price. Equities
(stocks or shares) confer an ownership interest in a
particular company.
 What is a Stock Exchange
 A stock exchange does not own shares. Instead, it acts
as a market where stock buyers connect with stock
sellers. Stocks can be traded on one or more of several
possible exchanges.
 Provide trading platform to investors and provide
liquidity.
 Facilitate Listing of securities.
 Registers members-Stock Brokers, sub brokers
 Make and enforce by-laws
 Manage risk in securities transactions
 Provides Indices
 Types of Stock Exchanges
 The two leading indices that need special mention are
the Nifty 50 (50 Stocks)and the BSE Sensex (30
Stocks).
 Nifty is the stock market index of the NSE. It
comprises the stocks of 50 of the largest Indian
companies from various sectors.
 BSE is the oldest stock market of India. SENSEX stands
for sensitive index and it comprises 30 stocks of
leading Indian companies from almost all sectors of
economy.
History of Indian Stock Market
 Oldest stock market in Asia started in 18th century.
 Informal group of 22 stockbrokers began trading under a
banyan tree each investing a amount of Rs 1.
 The Native Share and Stockbrokers Association which, in
1875 was formally named as the Bombay Stock Exchange
(BSE).
 In 1928 BSE shifted from Town Hall to Dalal Street.
 Premchand Roychand was a leading stockbroker of that
time and he assisted in setting out the procedures for
trading in BSE and they are still being followed.
 Broking Firms at that time were family run enterprises
named after the heads of the family.
 In 1956 BSE was recognised as the 1st stock exchange of the
country under Securities Contracts (Regulation)Act.
 Downfall of BSE and Birth of NSE
 1992 market manipulation scandal involving BSE
member Harshad Mehta.
 This encouraged the creation of the National Stock
Exchange(NSE) on 4 November 1994 which introduces
electronic marketplace.
 In less than a year NSE turnover exceeded the BSE.
 After two years NSE embarked on the launch of Equity
Derivatives Trading.
 In 2000-2001 another major scandal at BSE involving
the then President Mr. Anand Rathi.
 Today NSE has 66% of equity spot turnover and 100%
of equity derivatives turnover.
 Objectives of NSE
 Nation wide trading facility
 Equal access to investors all over the country through
appropriate communication network.
 Provides fair, efficient and transparent securities
market
 Enabling shorter settlement cycles
 Meeting the current international standards of
securities markets.
Types of Stock Exchanges
Worldwide
Operational Features of BSE & NSE
 Automated Trading System
 BSE operates on ‘BSE online Trading’ (BOLT) system.
 NSE operates on ‘National Exchange for Automated Trading’ (NEAT) system.
 Order Management
o Every order has a distinctive order number and a unique time stamp on it.
o Order entered with best price
o Order entered first with the best price will get highest priority.
 Order Matching Rules
o The best buy order is the order with the highest price and the best sell order is the
order with the lowest price.
 Order Conditions
o Time Related
a) Day order
b) GTC order
c) GTD
d) IOC
o Price Related
a) Limit Price
b) Market Price
c) Stop Loss Price
o Quantity Related
a) Disclosed Quantity (DQ)
b) Minimum Fill (MF) Are not available on the system as per SEBI directives
c) All or None Orders (AON)
Operational Features of BSE & NSE
 Market Segments
• Rolling Settlement
o At NSE, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd
working day.
• Limited Physical Market
o To provide an exit route for small investors holding physical shares not
exceeding 500 shares. Referred to as ‘small window’ was introduced on June 7,
1999.
• Settlement Cycle
Activity Day
Trading Rolling Settlement Trading T
Clearing Custodial Confirmation T+1 working days
Delivery Generation T+1 working days
Settlement Securities and Funds pay in T+2 working days
Securities and Funds pay out T+2 working days
Post Settlement Assigning of shortages for close out T+3 working days
Reporting and pick up of bad delivery T+4 working days

Close out of shortages T+5 working days

Replacement of bad delivery T+6 working days
Reporting of re-bad and pick up T+8 working days
Close out of re-bad delivery T+9 working days
 Nifty Sectoral Indices
 There are several sectoral indices which represent a
specific industry sector.
 All stocks in a sectoral index belong to that sector only.
 Sectoral Indices are very useful in tracking the
movement and performance of a particular sector.
 Nifty Auto Index
Company Name Symbol
Amara Raja Batteries Ltd. AMARAJABAT
Apollo Tyres Ltd. APOLLOTYRE
Ashok Leyland Ltd. ASHOKLEY
Bajaj Auto Ltd. BAJAJ-AUTO
Bharat Forge Ltd. BHARATFORG
Bosch Ltd. BOSCHLTD
Eicher Motors Ltd. EICHERMOT
Exide Industries Ltd. EXIDEIND
Hero MotoCorp Ltd. HEROMOTOCO
MRF Ltd. MRF
Mahindra & Mahindra Ltd. M&M
Maruti Suzuki India Ltd. MARUTI
Motherson Sumi Systems Ltd. MOTHERSUMI
TVS Motor Company Ltd. TVSMOTOR
Tata Motors Ltd DVR TATAMTRDVR
Tata Motors Ltd. TATAMOTORS
 Nifty Bank Index
Company Name Symbol
Axis Bank Ltd. AXISBANK
Bank of Baroda BANKBARODA
Bank of India BANKINDIA
Canara Bank CANBK
Federal Bank Ltd. FEDERALBNK
HDFC Bank Ltd. HDFCBANK
ICICI Bank Ltd. ICICIBANK
IndusInd Bank Ltd. INDUSINDBK
Kotak Mahindra Bank Ltd. KOTAKBANK
Punjab National Bank PNB
State Bank of India SBIN
Yes Bank Ltd. YESBANK
 Nifty Financial Services Index
Company Name Symbol
Axis Bank Ltd. AXISBANK
Bajaj Finance Ltd. BAJFINANCE
Bajaj Finserv Ltd. BAJAJFINSV
Bajaj Holdings & Investment Ltd. BAJAJHLDNG
HDFC Bank Ltd. HDFCBANK
Housing Development Finance
Corporation Ltd. HDFC
ICICI Bank Ltd. ICICIBANK
Kotak Mahindra Bank Ltd. KOTAKBANK
LIC Housing Finance Ltd. LICHSGFIN
Mahindra & Mahindra Financial
Services Ltd. M&MFIN
Power Finance Corporation Ltd. PFC
Rural Electrification Corporation Ltd. RECLTD
Shriram Transport Finance Co. Ltd. SRTRANSFIN
State Bank of India SBIN
Sundaram Finance Ltd. SUNDARMFIN
 Nifty FMCG Index
Company Name Symbol
Britannia Industries Ltd. BRITANNIA
Colgate Palmolive (India) Ltd. COLPAL
Dabur India Ltd. DABUR
Emami Ltd. EMAMILTD
GlaxoSmithkline Consumer Healthcare Ltd. GSKCONS

Godrej Consumer Products Ltd. GODREJCP

Godrej Industries Ltd. GODREJIND
Hindustan Unilever Ltd. HINDUNILVR
I T C Ltd. ITC

Jubilant Foodworks Ltd. JUBLFOOD

Marico Ltd. MARICO
Procter & Gamble Hygiene & Health Care Ltd. PGHH
Tata Global Beverages Ltd. TATAGLOBAL
United Breweries Ltd. UBL
United Spirits Ltd. MCDOWELL-N
 Nifty IT Index
Company Name Symbol
Cyient Ltd. CYIENT
HCL Technologies Ltd. HCLTECH
Info Edge (India) Ltd. NAUKRI
Infosys Ltd. INFY
Justdial Ltd. JUSTDIAL

MindTree Ltd. MINDTREE

Oracle Financial Services Software Ltd. OFSS
Tata Consultancy Services Ltd. TCS
Tech Mahindra Ltd. TECHM

Wipro Ltd. WIPRO

 Nifty Media Index
Company Name Symbol
D.B.Corp Ltd. DBCORP
Den Networks Ltd. DEN
Dish TV India Ltd. DISHTV
Eros Intl Media Ltd. EROSMEDIA
HT Media Ltd. HTMEDIA
Hathway Cable & Datacom Ltd. HATHWAY
Inox Leisure Ltd. INOXLEISUR
Jagran Prakashan Ltd. JAGRAN
Network18 Media & Investments Ltd. NETWORK18
PVR Ltd. PVR

Siti Cable Network Ltd. SITICABLE

Sun TV Network Ltd. SUNTV
TV Today Network Ltd. TVTODAY
TV18 Broadcast Ltd. TV18BRDCST

Zee Entertainment Enterprises Ltd. ZEEL

 Nifty Metal Index
Company Name Symbol
APL Apollo Tubes Ltd. APLAPOLLO
Bhushan Steel Ltd. BHUSANSTL
Coal India Ltd. COALINDIA
Hindalco Industries Ltd. HINDALCO
Hindustan Zinc Ltd. HINDZINC
JSW Steel Ltd. JSWSTEEL
Jindal Steel & Power Ltd. JINDALSTEL
NMDC Ltd. NMDC
National Aluminium Co. Ltd. NATIONALUM
Orissa Min Dev Co Ltd. ORISSAMINE

Ratnamani Metals & Tubes Ltd. RATNAMANI

Steel Authority of India Ltd. SAIL
Tata Steel Ltd. TATASTEEL
Vedanta Ltd. VEDL

Welspun Corp Ltd. WELCORP

 Nifty Private Bank Index
Company Name Symbol
Axis Bank Ltd. AXISBANK
City Union Bank Ltd. CUB
Federal Bank Ltd. FEDERALBNK
HDFC Bank Ltd. HDFCBANK
ICICI Bank Ltd. ICICIBANK
IndusInd Bank Ltd. INDUSINDBK
Karnataka Bank Ltd. KTKBANK
Karur Vysya Bank Ltd. KARURVYSYA
Kotak Mahindra Bank Ltd. KOTAKBANK
Yes Bank Ltd. YESBANK
 Nifty Pharma Index
Company Name Symbol
Aurobindo Pharma Ltd. AUROPHARMA
Cadila Healthcare Ltd. CADILAHC
Cipla Ltd. CIPLA
Divi's Laboratories Ltd. DIVISLAB
Dr. Reddy's Laboratories Ltd. DRREDDY
Glaxosmithkline Pharmaceuticals Ltd. GLAXO
Glenmark Pharmaceuticals Ltd. GLENMARK
Lupin Ltd. LUPIN
Piramal Enterprises Ltd. PEL
Sun Pharmaceutical Industries Ltd. SUNPHARMA
 Nifty PSU Bank Index
Company Name Symbol
Allahabad Bank ALBK
Andhra Bank ANDHRABANK
Bank of Baroda BANKBARODA
Bank of India BANKINDIA
Canara Bank CANBK
IDBI Bank Ltd. IDBI
Indian Overseas Bank IOB
Oriental Bank of Commerce ORIENTBANK
Punjab National Bank PNB
State Bank of India SBIN
 Nifty Realty Index
Company Name Symbol
DLF Ltd. DLF
Delta Corp Ltd. DELTACORP
Godrej Properties Ltd. GODREJPROP
Housing Development and Infrastructure Ltd. HDIL
Indiabulls Real Estate Ltd. IBREALEST
Oberoi Realty Ltd. OBEROIRLTY
Phoenix Mills Ltd. PHOENIXLTD
Prestige Estates Projects Ltd. PRESTIGE
Sobha Ltd. SOBHA
Unitech Ltd. UNITECH
Benefits of being a Shareholder
 The benefits distributed by the company to its
shareholders are:
 Dividend: You as an equity shareholder have a right to
the profits generated by the company. Profits are
distributed in part or in full in the form of dividends.
Dividend is your earning on the investment made in
shares, just like interest in case of bonds or debentures.
 Capital Appreciation: An increase in the value of the
company usually reflected in its share price. This means
an increase in net worth, which results in appreciation
in the value of shares.
 Equities are the only investment assets that are exempt
from any taxes, if held for over one year, which means
that you get to keep all the returns generated.
What are Stock Brokers and What
is Brokerage?
 A stockbroker is a regulated professional individual,
usually associated with a brokerage firm or broker-
dealer, who buys and sells stocks and
other securities for both retail and institutional
clients, through a stock exchange or over the counter,
in return for a fee or commission.
 A brokerage fee is a fee charged by an agent, or agent's
company to facilitate transactions between buyers and
sellers. The brokerage fee is charged for services such
as negotiations, sales, purchases, delivery or advice on
the transaction.
Equity Investing Process
Choose a broker and
open a broking account

Choose a DP and open a

Demat account

Decide which bank

account you will use for
your investments

Start Investing!
 Choosing a Broker
 Brokers have to be registered with the Securities and Exchange
Board of India (SEBI), which is a regulatory body policing all brokers
in India.
 It is important to deal with a broker who has a good reputation. This
is broadly reflected in the past record and the credibility he enjoys in
the market.
 Inquire about whether the broker has a strong research unit and the
quality of research calls he has given in the past.
 As per SEBI guidelines, a broker can charge a maximum of 2.5% of the
consideration as brokerage. The rate charged by the broker depends
on the value of broking business you provide him.
 You can buy or sell shares by different modes of transaction, either
by phone or placing your order through the broker’s website.
 Service Quality
 How fast a broker can transact, since markets operate on a real time
basis, small delays can end up huge losses.
 Prompt transfer of your shares by the broker to your demat account.
 Prompt payment to you in case of sales.
Choosing a Depository Participant(DP)
 A depository can be compared to a bank. It holds
securities(shares, debentures, bonds, etc.) of
investors in electronic form.
 A depository interfaces with the investors
through its agents called Depository
Participants(DPs).
 If you want to avail the services offered by the
depository, you have to open an account (Demat
account) with a DP.
 A large number of DPs are registered Services
with two depositories in India which are NSDL
(National Securities Depository Ltd.) and CSDL
(Central Depository Services Ltd.)
 What is a Demat Account
 In India, shares and securities are held electronically in
a dematerialized (or "Demat") account, instead of the
investor taking physical possession of certificates.
 A Dematerialized account is opened by the investor while
registering with an investment broker (or sub-broker).
 The Dematerialized account number is quoted for all
transactions to enable electronic settlements of trades to
take place.
 Every shareholder will have a Dematerialized account for
the purpose of transacting shares.
 Access to the Dematerialized account requires
an internet password and a transaction password. Transfers
or purchases of securities can then be initiated.
 Purchases and sales of securities on the Dematerialized
account are automatically made once transactions are
confirmed and completed.
 Basic Terminologies Of Stock
Market
 Agent: A brokerage firm is said to be an agent when it acts on behalf of the client in buying or
purchasing of shares. At no point of time in the entire transaction the agent will own the shares.
 Ask/Offer: The lowest price an owner is willing to sell the stocks.
 Assets: Everything the company owns on its name, including the cash, equipments, land,
technology etc. which shows the total wealth of the company.
 At the money: A situation at which an options strike price is identical to the price of the
underlying securities. Options trading activity tends to be high when options are at the money.
 Bearish Market: A market in which stock prices are falling consistently.
 Beta: It is a measurement of relationship between stock price of any particular stock and the
movement of whole market.
 Bid: It is the highest price a buyer is willing to pay for a stock. It is opposite of ask/offer.
 Blue Chip Stock: Stocks of large, well-established and financially-sound companies which hold
a record of consistently increasing rate of paying the dividends over decades to its stock holders.
Blue chip stocks typically have a market capitalization in thousands of crores.
 Board Lot: A standard trading unit as defined by the particular exchange board. Board lot size
usually depends on the per share price. Common board lot size are 50, 100, 500, 1000 units.
 Bonds: It is promissory note issued by companies or government to its buyers. It speaks about
the specified amount held for a specified time period by the buyer.
 Basic Terminologies Of Stock Market
 Book: An electronic record of managing all the pending buy and sell orders of particular
stocks.
 Bullish Market: A market in which the stock price are increasing consistently.
 Business Day: Monday to Friday, excluding public holidays.
 Call Option: An option that is given to investor the right but not obligation to buy a particular
stock at a specified price within a specified time period.
 Close Price: The final price at which the stock is traded on a given particular trading day.
 Commodities: Product used for commerce that are traded on a separate, authorized
commodities platform. Commodities include agricultural products and natural resources.
 Convertible Securities: A security (bonds, debentures, preferred stocks) by an issuer that
can be converted into other securities of that issuer are known as convertible securities. The
conversion usually occurs at the option of the holder, but it may occur at the option of the
issuer.
 Debentures: A type of debt instrument that is not secured by physical assets or collateral.
Debentures are backed only by the general creditworthiness and reputation of the issuer. A
debenture is an unsecured form of investment.
 Defensive Stock: A stock that provides a constant dividends and stable earnings even in the
periods of economic downturn i.e. even in the extreme critical situations of the stock market
these companies continue to pay the dividends at a constant rate.
Basic Terminologies Of Stock Market
 Delta: The ratio that compares the change in the price of the underlying asset to the
corresponding change in the price of a derivative. Sometimes referred to as the hedge ratio.
It has a range from 0 to 1.
 Derivatives: A security whose price is derived from one or more underlying assets. The
most common underlying assets include stocks, bonds, commodities, currencies, interest
rates and market indexes.
 D/E Ratio: The debt-to-equity ratio (D/E) is a financial ratio indicating the relative
proportion of shareholders' equity and debt used to finance a company's assets. Closely
related to leveraging, the ratio is also known as Risk, Gearing or Leverage.
 Diversification: Reducing the investment risk by purchasing shares of different companies
operating in different sectors.
 Expiry Date: Last date for exercising the option being the last Thursday of the relevant
month on NSE.
 Face value: It is the cash denomination or the amount of money the holder of the
individual security going to earn from the issuer of the security at the time of maturity. It is
also known as par value.
 Hedge: A strategy or an attempt in reducing the risk of adverse price movements of assets.
 Income Stock: A security which has a solid record of dividend payments and offers the
dividend higher than the common stocks.
 Index: A statistical measurement of change in the economy or security market. Indices
have their own calculation methodology and are usually measured as a percentage change
in the base value over the time.
 Basic Terminologies Of Stock Market
 Initial Public Offering (IPO): A company's first issue of shares to general public. IPOs are
issued by smaller, younger companies seeking funds for expansion and growth, but large
companies also practice this to become publicly traded companies.
 Limit Order: An order to buy or sell a share at a specified price. The order will be executed
only at the specified limit price or even better. A limit order sets a minimum price the seller is
willing to accept and maximum price the buyer is willing to pay for it.
 Listed Stocks: The shares of an issuer that are traded on the stock exchange. The issuer has to
pay fees to be listed in the stock exchange and abide by the regulations of the stock exchange
to maintain listing privilege.
 Market Capitalization: The total value in INR of all of a company's outstanding shares. It is
calculated by multiplying all the outstanding shares with the current market price of one
share. It determines the company's size in terms of its wealth.
 Mutual Fund: A pool of money managed by experts by investing in stocks, bonds and other
securities with the objective of improving their savings. These experts will create a diversified
portfolio from these funds.
 Moving Average: A simple moving average (SMA) is a simple, or arithmetic, moving
average that is calculated by adding the closing price of the security for a number of time
periods and then dividing this total by the number of time periods. Short-term averages
respond quickly to changes in the price of the underlying, while long-term averages are slow to
react.
 Odd Lot: A number of shares which are less than or greater than but not equal to the board
lot size. For example, if the board lot size is 100 shares, an odd lot would be 95 or 102 shares.
Usually odd lots are difficult for trading and it is not accepted easily in the market.
 Basic Terminologies Of Stock Market
 Out-of-The-Money (OTM): For call options, this means the stock price is below the
strike price. For put options, this means the stock price is above the strike price. The
price of out-of-the-money options consists entirely of "time value.”
 Portfolio: Holding of any individual or institution. A portfolio may include various
type of securities of different companies operating in different sectors.
 Positions Limit: Maximum number of futures and options contract that any individual
investor can hold at any given point of time.
 Pre-opening Session: The pre-open session is for duration of 15 minutes i.e. from 9:00
AM to 9:15 AM. In pre-open session order entry, modification and cancelation takes
place.
 Price Earnings (P/E) Ratio: A valuation of companies last traded share price to its
latest reported 12 months earnings per share. For example, if the last traded share price
of any X company is INR 40 and earnings over a last 12 months per share is INR 2, then
the P/E ratio of that X company is INR 20 (40/2)
 P/B Ratio: The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's
market value to its book value. It is calculated by dividing the current closing price of
the stock by the latest quarter's book value per share.
 Put Option: An option that is given to investor the right to sell a particular stock at a
stated price within a specified time period. Put option is purchased by those who
believe that particular stock price is going to fall down than the stated price.
 Risk: A probable chances of investments actual returns will be reduced then as
calculated. Risk is usually measured by calculating the standard deviation of the
historical price returns. Standard deviation is directly proportional to the degree of risk
associated.
Basic Terminologies Of Stock Market
 Securities: A transferable certificate of ownership of investment in products such as
stocks, bonds, future contracts and options which an individual holds.
 Strike Price: The price at which the holder of an option can buy (in case of call option)
or sell (in case of put option) the securities they hold when the option is executed.
 Stock Split: An attempt to increase the number of outstanding shares of a company by
splitting the existing shares. It is usually done to increase the availability of shares in the
market. The usual split ratio is 2:1 or 3:1, i.e. one share is split into two or three.
 Short Selling: Short selling is when you sell shares even though you don’t own them,
and is permitted in Indian stock markets. This is done when you expect the price of a
share to fall and want to profit from it without owning the shares. You have to square off
your positions by the end of the day.
 Stoploss: Stoploss is a buy or sell order which gets triggered automatically, once the
stock reaches a certain price. The aim here is to limit the loss on a security (buy or sell)
position.
 Thin Market: A market in which there are comparatively low number of bids to buy and
offers to sell. Since the number of transactions is low the prices are very volatile.
 Trading session: The period of time from 9:15 AM to 3:30 PM is open for trading for
both sellers and buyers, within this time frame all the orders of the day must be placed.
Here all the orders placed in pre-opening sessions are matched and executed.
 Basic Terminologies Of Stock Market
 Large cap stocks
One can look at the BSE-Sensex or BSE-100 Index as a reference point for large cap
stocks. Market capitalization for stocks in the BSE-100 Index, for instance, ranges
from Rs 200 bn to Rs 3,500 bn.
These are stocks of usually large and well-established companies that have a strong market
presence and are generally considered as safe investments
Large companies such as Infosys, TCS, and Wipro are classified as large cap stocks. These
companies have been around in the industry long enough and have firmly established
themselves as leading players.
 Mid cap stocks
Mid caps lie between large cap stocks and small cap stocks. Mid cap stocks are those that
generally have a market capitalization within the range of Rs 50 bn and Rs 200 bn.
When one invests in mid caps for the long term, he may be investing in companies that could
become tomorrow's runaway success stories. Generally speaking, mid cap stocks as an
investment can bring you higher returns in 3 to 5 years as opposed to their big brother large
cap stocks that can bring you moderate (yet safer) returns during this timeframe.
 Small cap stocks
Lying at the lowest end of market capitalization. Small cap companies have smaller revenue
and client bases, and usually include the start-ups or companies in the early stage of
development. Small cap stocks are potentially big gainers as they are yet to be discovered
within the sector and can show growth potential in large numbers once unfurled in the
market.
How to Pick up Stocks for Trading?
 Trade only in Fundamentally Good stocks. Don’t be a
Long Term Investor
 Don’t buy Penny Stocks just because they seems to
be at Low Price.
 Find Stocks which are in Trend – Either Upside or
Downside
 Purchasing shares of different companies spread
across different industries and creating a diversified
portfolio has proven to be one of the most reliable
tools of risk reduction.

www.ptacoaching.com
 Fundamental Analysis
 For assessing stocks, this method uses revenues,
earnings, future growth, return on equity, profit
margins and other data to determine a company's
underlying value and potential for future growth.
 In terms of stocks, fundamental analysis focuses on
the financial statements of the company being
evaluated.
 Technical Analysis
 Technical analysis is a method of evaluating securities by
analyzing the statistics generated by market activity, such
as past prices and volume.
 Technical analysts do not attempt to measure a
security's intrinsic value, but instead use charts and other
tools to identify patterns that can suggest future activity.
 Technical analysis can be used on any security with
historical trading data. This includes
stocks, futures and commodities, fixed-income
securities, forex, etc.
 If you understand the benefits and limitations of technical
analysis, it can give you a new set of tools or skills that will
enable you to be a better trader or investor.
 Understanding Taxes Involved
 The Service tax is 12.36%(12% + 0.24% education cess + 0.12%
secondary and higher education cess) only on brokerage.
 The STT (Security Transaction Tax) is 0.025% only on selling
amount. STT is not applicable for delivery trading.
 The Stamp duty on total turnover for a day which is 0.002%.
Stamp duty is not applicable for delivery trading.
 Finally you have to pay Regulatory charges on total turnover
for a day which is 0.004%
 In delivery trading Demat fee is applicable. This varies from
broker to broker.
 Capital gains tax if you have made a profit and you sell your
shares before 1 year.
 Golden Rules
 Gain proper knowledge & do research before investing.
 Do your homework.
 Pay the right price.
 Diversify
 Do not buy on tips.
 Buy shares of companies whose business you understand.
 Don’t sell in panic.
 Don’t borrow money to invest in equities.
 Don’t marry a stock.
 Invest regularly and gradually build your portfolio.
 Monitor your portfolio.