introduction to Indian

capital Markets
 Types of capital Markets
• Bond Market – A bond market is where investors go to trade
debt securities, prominently bonds, which may be issued by
corporations.

• Stock Market – A stock represents a share of ownership in a

corporation. A market where such stocks are traded is called a
stock market.
 Intra-day Trading
Intraday trading involves buying and selling of stocks within the same trading
day. Here stocks are purchased, not with an intention to invest, but for the
purpose of earning profits by harnessing the movement of stock indices. Thus,
the fluctuations in the prices of the stocks are harnessed to earn profits from
the trading of stocks.

An online trading account is used for the purpose of intraday trading. While
doing intraday trading, you need to specify that the orders are specific to
intraday trading. As the orders are squared off before the end of the trading
day, it is also called as Intraday Trading.
 Common terms used in stock
markets
• Broker/Brokerage Firm: A registered securities firm are called broker/brokerage firm.
Broker’s acts as an advisor for purchase and sell of listed stocks, they do not own the
securities at any point of the time. But they charge a commission for their service.

• Close Price: The final price at which the stock is traded on a given particular trading day.

• Dividend: A portion of the company’s earnings decided to pay to its shareholders in return to
their investments. It is usually declared as a percentage of current share price or some
specified INR value, usually decided by the board of directors of the company.

• Equity: Common and preferred stocks, which represents shares in the ownership of a
company.

• Market Capitalization: It is the worth of a company in term of it's shares. To get the market
capitalization of a company we simply multiply the current price of a share with total number
of shares issued by the company.
 Nifty and Sensex
• The Sensex and Nifty are "indices of a stock market". There are many other indices other than
these indices.

• An index is basically an indicator which gives us a general idea about stocks going up or down.

• The Sensex is an indicator of all the major companies listed on BSE(Bombay Stock Exchange)
which is situated at Bombay.

• The Nifty is an indicator of all the major companies listed on NSE (National Stock Exchange)
which is situated at Delhi.

• The Sensex is calculated taking into consideration stock prices of top 30 different companies listed
on BSE .

• On the other hand, Nifty is calculated taking into consideration stock prices of top 50 different
companies listed on NSE.
 Procedure to invest
1. Selecting a Broker or Sub-broker
2. Opening a De-mat Account
3. Placing Orders
4. Execution of the Order
5. Settlement
Advantages of investing
• Investment Gains - One of the primary benefits of investing in the stock market is the
chance to grow your money. Over time, the stock market tends to rise in value, though the
prices of individual stocks rise and fall daily. Investments in stable companies that are able
to grow tend to make profits for investors. Likewise, investing in many different stocks will
help build your wealth by leveraging growth in different sectors of the economy, resulting in
a profit even if some of your individual stocks lose value.

• Dividend Income - Some stocks provide income in the form of a dividend. While not all
stocks offer dividends, those that do deliver annual payments to investors. These payments
arrive even if the stock has lost value and represent income on top of any profits that come
from eventually selling the stock. Dividend income can help fund a retirement or pay for
even more investing as you grow your investment portfolio over time.
Advantages of investing
• Ownership - Buying shares of stock means taking on an ownership stake in the
company you purchase stock in. This means that investing in the stock market also brings
benefits that are part of being one of a business's owners. Shareholders vote on corporate
board members and certain business decisions. They also receive annual reports to learn
more about the company.
• They are easy to sell - The stock market allows you to sell your stock at any time.
Economists use the term "liquid" to describe that fact that you can turn your shares into
cash quickly and with low transaction costs. That's important if you suddenly need your
money in a hurry. Since prices are volatile, you run the risk of being forced to take a loss.