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Stock Market Terminologies': Presented By: Isha Natu

The document defines key stock market terminology and concepts. It discusses the differences between debt and equity as ways for companies to raise capital. It also describes the primary differences between the capital market and money market, and defines common instruments in financial markets like stocks, bonds, commodities, and derivatives. The key Indian stock exchanges of Bombay Stock Exchange and National Stock Exchange are also summarized.

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Isha Natu
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69 views20 pages

Stock Market Terminologies': Presented By: Isha Natu

The document defines key stock market terminology and concepts. It discusses the differences between debt and equity as ways for companies to raise capital. It also describes the primary differences between the capital market and money market, and defines common instruments in financial markets like stocks, bonds, commodities, and derivatives. The key Indian stock exchanges of Bombay Stock Exchange and National Stock Exchange are also summarized.

Uploaded by

Isha Natu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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‘Stock Market

Terminologies’

Presented By : Isha Natu


How a company acquires capital?

Debt Equity

 Banks provides loans  Private investors provide


to the company. funding to the company.

 Company returns the  Investors may get their


principal, interest over a return dividends from the
set time period. company or sell their shares
to other buyers.
Financial Markets

Capital Market Money Market

• Treasury Bills
• Call Money Market
• Commercial Bills
Equity Debt • Certificates of Deposits

• Primary
• Secondary
• Derivatives
Capital Money
Market Market

 Long term investment  Short term investment

 Anyone can participate  Only banks can participate

 Variable returns  Fixed returns

 High risk  Low risk


Primary Secondary
Market Market
 Participants are new entrants  Participants are listed companies

 Includes IPO.  Includes FPO

 3-10 days of duration Duration is for lifetime

 Shares are bought  Shares can be bought or sold.

 Under, Over and Full Subscription Only Over and Full Subscription are
are included included

 Money flow is from investor to  Money flow is from investor to


company investor

 Fixed price and Book Building According to the demand and supply
Process. of shares.
Instruments of Financial
Market

 Bonds
 Debentures
 Commodity
 Shares
 Forex
 Mutual Funds
 Derivatives
Bonds
A bond is a fixed income investment in which an investor loans money to
an entity (typically corporate or governmental) which borrows the funds
for a defined period of time at a variable or fixed interest rate.

Debentures

A debenture is a medium- to long-term debt instrument used by large


companies to borrow money, at a fixed rate of interest from the public.

Commodity
A reasonably interchangeable good or material, bought and sold freely
as an article of commerce. Commodities include agricultural products,
fuels, and metals and are traded in bulk on a commodity exchange.
Shares

Share can be defined as one of the equal parts into which a


company's capital is divided, entitling the holder to a proportion of
the profits.

Forex

Forex, also known as foreign exchange is a decentralized global


market where all the world's currencies trade. The forex market is
the largest, most liquid market in the world with an average daily
trading volume exceeding $5 trillion.
Mutual Funds
A mutual fund is formed when capital collected from
different investors is invested in company shares, stocks or
bonds.

Derivatives
A derivative is a financial security with a value that is
reliant upon or derived from an underlying asset or group
of assets. The derivative itself is a contract between two
or more parties based upon the asset or assets.
Over The Counter
Over-the-counter (OTC) or off-exchange trading is done
directly between two parties, without the supervision of an
exchange. It is contrasted with exchange trading, which occurs
via exchanges.

Market Capitalization
Market capitalization is the market value of a publicly
traded company's outstanding shares.

Market capitalization is equal to the share price multiplied


by the number of shares outstanding.
Depository
A depository is a facility such as a building, office, or warehouse
in which something is deposited for storage or safeguarding. It
can refer to an organization, bank, or institution that holds
securities and assists in the trading of securities.

Stock Market Index


It is a measurement of a section of the stock market which
is computed from the prices of selected. It is a tool used by
investors and financial managers to describe the market, and to
compare the return on specific investments.
Stock Exchange

A stock exchange provides a platform for stock brokers to


buy and sell shares of stock, bonds, and other securities.
Many large companies have their stocks listed on a stock
exchange.

Top stock exchanges include NASDAQ, NYSE, LSE, BSE


and NSE.
Bombay Stock
Exchange
 Asia’s oldest stock exchange
originated in 1875.

 Mr. S. Ravi is the Chairman


and Mr. Ashish Chauhan is the
managing Director and CEO.

 5000+ companies are


registered with market
capitalization of $2.3 trillion.

The Sensitive Index (Sensex)


was launched in 1986.
National Stock
Exchange
 Fourth largest in the world
originated in 1992.

 Mr. Ashok Chawla is the


Chairman of the Board of Directors
and Mr. Vikram Limaye is the
Managing Director and CEO of
NSE.

 NIFTY 50 Index, which tracks


the largest assets in the Indian
equity market.

 1700+ companies are registered


with $1.41 trillion as the total
market capitalization.
Monetary Policy

Deposit

Reverse Repo Rate

Bank RBI
(Reserve Bank of India)

Repo Rate

Loan
Ways of Fund Raising

 Initial Public Offer (IPO)


 Follow on Public Offer
(FPO)
 Right Issue
 Qualified Institutional
Placement (QIP)
 Private Placement
 Depository Receipts (ADR,
GDR)
Initial Public Offer (IPO)

An initial public offering is when a private company or


corporation raises investment capital by offering its stock
to the public for the first time.

Follow on Public Offer (FPO)

An FPO is a stock issue of additional shares made by a


company that is already publicly listed and has gone
through the IPO process.
Right Issue

Offering of rights to the existing shareholders of a company that


gives them an opportunity to buy additional shares directly from
the company at a discounted price.

Qualified Institutional Placement (QIP)

A qualified institutional placement (QIP) is, at its core, a way


for listed companies to raise capital, without having to submit
legal paperwork to market regulators.
Private Placement
A private placement is a capital raising event that involves
the sale of securities to a relatively small number of select
investors.

Depository Receipts (ADR, GDR)


A depository receipt is a negotiable financial instrument
issued by a bank to represent a foreign company's publicly
traded securities.

An American Depository Receipt (ADR) is a negotiable


certificate issued by a U.S. bank representing a specified
number of shares in a foreign stock that is traded on a U.S.
exchange. A Global Depository Deceipt (GDR) represents
a bank certificate issued in more than one country for shares
in a foreign company.

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