BSE is the oldest stock market in
Asia & NSE is the largest stock exchange in India and the third largest in
the world in terms of volume of transactions. Though a number of other
exchanges exist, NSE and BSE are the two most significant stock exchanges in
India.
What is a Stock Exchange? An organization constituted
for the purpose of assisting and carrying out buying, selling or otherwise
dealing in securities. It is also known as Secondary Market.
What are securities? Financial
instruments, including instruments such as shares, bonds, debentures of a company
or body corporate or a government. Thus, a stock
exchange provides a trading platform, where
buyers and sellers can meet to transact in securities.
Note: In INDIA the regulatory body for stock exchange is SEBI i.e.
Securities and Exchange Board Of India.
IPO: An initial public offering (IPO) or stock market launch is a type of
public offering where shares of stock in a company are sold to the general
public, on a securities exchange (like NSE, BSE), for the first time.
Demat Account: In India, shares and securities are held electronically in a
Dematerialized 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). Every shareholder will
have a Dematerialized account for the purpose of transacting shares.
Dematerializing a security means converting it from physical form to electronic form.
In India there are two depositories
which take care of securities dematerialization - NSDL (National Securities Depository Limited) & CDSL (Central
Depository Services Limited).
Equity Stocks: It generally refers to buying and holding of shares of a company on a
stock market by individuals/ firms in anticipation of income from dividends and
capital gains, as the value of the stock rises.
Face Value: It is also known as par value of the stock. Face Value of share is
generally Rs.10.
Dividend: is a payment made by a corporation to its shareholders, usually as a
distribution of profits. When a corporation earns a profit or surplus, it can
either re-invest it in the business (called retained earnings), or it can
distribute it to shareholders.
EPS (Earning Per Share): It is the rupee value of earnings per outstanding share of a company's
equity stock.
EPS (net income formula) = Profits – Dividends / No. Of Outstanding
Shares
P/E Ratio: or price-to-earnings ratio, is an equity valuation multiple. It is
defined as market price per share divided by annual earnings per share.
Shareholders: Individuals who buy (in other words invest in) shares of a company are
the owners of the company and are referred to as share holders. Share holders
usually have voting rights and can participate in management of the company.
Bond: It is a debt security, under which the issuer owes the holders a debt
and, depending on the terms of the bond, is obliged to pay them interest. Bonds
are issued by public authorities, credit institutions, companies and
supranational institutions in the primary markets.
Debenture: A debenture is a document that either creates a debt or acknowledges
it, and it is a debt without collateral.
Nifty is the 50-stock index comprised of some of the largest & most
liquid stocks traded on the NSE.
BSE 100 is the stock index comprised of 100 of the largest & most liquid
stocks traded on the BSE.
Phases of Stock Market:
Bull Phase: A bull market is associated with increasing investor confidence, and
increased investing in anticipation of future price increases (capital gains).
A bullish trend in the stock market often begins before the general economy
shows clear signs of recovery.
Bear Phase: A bear market is a general decline in the stock market over a period of
time. It is a transition from high investor optimism to widespread investor
fear and pessimism.
Information Courtesy : Karvy Value Blogs
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