CBE Presentation

8/2/2019 CBE Presentation

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A stock market or equity market is a public entity for the tradingof company stock(shares) and derivatives at an agreed price; theseare securities listed on a stock exchange as well as those onlytraded privately.

A stock exchange is an entity that provides services for stockbrokers and traders to trade stocks, bonds, and other securities.Stock exchanges also provide facilities for issue and redemption ofsecurities and other financial instruments, and capital events

including the payment of income and dividends. Securities tradedon a stock exchange include shares issued by companies, unittrusts ,derivatives, pooled investment products and bonds

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Oldest Stock Exchange in Asia

Location: Dalal Street, Mumbai, India

First Stock Exchange in the country to obtain permanentrecognition in 1956 from The Government of India under The

Securities Contracts (Regulation) Act 1956 No of listing: 4996

Market Capitalization: US$1.78 trillion (Oct 2010

Index: BSE Sensex

Website: www.bseindia.com

World's number 1 exchange in the world in terms of the numberof listed companies .

World's 5th most active in terms of number of transactionshandled through its electronic trading system.


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The National Stock Exchange of India was incorporated inNovember 1992 as a tax paying company.

In April 1993,it was recognized as a stock exchange under thesecurities contract(Regulation) Act, 1956.NSE commenced

operation in the WDM in June 1994 The capital market segment of the NSE commenced operation in

November 1994 ,while operation in the derivatives segment inJune 2000

Market capitalization of around 7,262,507 crores(October 2010)

NSE is the third largest Stock Exchange in the world in terms ofthe number of trades in equities.

It is the second fastest growing stock exchange in the world.


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Market Capitalization of the company which is the product of acompanys total number of shares outstanding and the market priceof the share .

Market capitalization of a stock plays an important role in decidingwhich stock one invests. the best stock based on its marketcapitalization and ones risk profile can help to earn great returns ontheir investment.

The market capitalization changes with time as a result of factors likecompany performance, economic factors like inflation, interest rates,etc.

In India, one can find companies with market capitalization rangingfrom a few lakh to as much as few lakh crores. As a result, companiesare usually classified as large-cap, mid-cap and small-cap companies.

BSEs classifies companies according to their Market Capitalization byusing the 80-15-5 method.


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Recommendations while investing in Stock Market

Ride the Winners not the losers - Time and time again, investors take profits by

selling their appreciated investments, but they hold onto stocks that havedeclined in the hope of a rebound. If an investor doesn't know when it's time tolet go of hopeless stocks, he or she can, in the worst-case scenario, see the stocksink to the point where it is almost worthless. Of course, the idea of holding ontohigh-quality investments while selling the poor ones is great in theory, but hardto put into practice.

Avoid Chasing HOT TIPS - Whether the tip comes from your brother, yourcousin, your neighbour or even your broker, you shouldn't accept it as law.When you make an investment, it's important you know the reasons for doing so;do your own research and analysis of any company before you even consider

investing your hard-earned money.

Dont sweat the Small Stuff - As a long-term investor, you shouldn't panicwhen your investments experience short-term movements. When tracking theactivities of your investments, you should look at the big picture.


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Dont overemphasize the P/E ratio Investors often place too much importanceon the price-earnings ratio (P/E ratio). The P/E ratio must be interpreted within acontext, and it should be used in conjunction with other analytical processes. So, alow P/E ratio doesn't necessarily mean a security is undervalued, nor does a highP/E ratio necessarily mean a company is overvalued.

Common misconception loss in buying a low-priced stock is less - A commonmisconception is that there is less to lose in buying a low-priced stock. Butwhether you buy a $5 stock that plunges to $0 or a $75 stock that does the same,either way you've lost 100% of your initial investment. A lousy $5 company hasjust as much downside risk as a lousy $75 company.

Pick a strategy and stick with it - There are many ways to be successful and noone strategy is inherently better than any other. However, once you find yourstyle, stick with it. An investor who flounders between different stock-picking

strategies will probably experience the worst, rather than the best, of each.

Focus on the future - The tough part about investing is that we are trying tomake informed decisions based on things that have yet to happen. It's importantto keep in mind that even though we use past data as an indication of things tocome, it's what happens in the future that matters most.


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Adopt a long term perspective - Large short-term profits can often entice thosewho are new to the market. But adopting a long-term horizon and dismissing the"get in, get out and make a killing" mentality is a must for any investor. Thisdoesn't mean that it's impossible to make money by actively trading in the shortterm. But, as we already mentioned, investing and trading are very different waysof making gains from the market. Trading involves very different risks that buy-and-hold investors don't experience. As such, active trading requires certainspecialized skills.

Be Open Minded - Many great companies are household names, but many goodinvestments are not household names. Thousands of smaller companies have thepotential to turn into the large blue chips of tomorrow. In fact, historically, small-caps have had greater returns than large-caps; over the decades from 1926-2001,small-cap stocks in the U.S. returned an average of 12.27% while the Standard &Poor's 500 Index (S&P 500) returned 10.53%.

Be concerned about taxes, but dont worry - Putting taxes above all else is adangerous strategy, as it can often cause investors to make poor, misguideddecisions. Yes, tax implications are important, but they are a secondary concern.The primary goals in investing are to grow and secure your money. You shouldalways attempt to minimize the amount of tax you pay and maximize your after-

tax return, but the situations are rare where you'll want to put tax considerationsabove all else when making an investment decision.

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