FINANCIAL MARKET
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Transcript of FINANCIAL MARKET
1
STOCK MARKET MECHANISMby
Mr Fahim Akhtar
22
3
STOCK MARKET MECHANISMTopic
Introduction
General perception
How stock forms
Stock market index
Features of market
Some abnormal gainers / losers
Why investors mostly loose
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A gamble or a casino
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A place where big fishes eat small
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Puzzling function
A place where one is always
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Trading stock is a science and equally art too
Something that may be studied or learned like
systematized knowledge
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Expression or application of human creative skill &
imagination
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A company is desirous to expand the
business. Options for generating the required
funds:-
Get from some one amongst FNF
Borrow from bank
Get maximum financers from general
public
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Company is registered under company ordinance
IPOs ( Initial Public Offering ) is offered
IPO given normally multiples of 500
Fund raised through IPO utilized in business
Stock trades in stock exchange
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Registered company engages in business
with funds generated
Company reports profit quarterly
Earnings and profitability is disbursed amongst
all stake holders including those holding share
during specified time
Company earns more, shares goes up and in
case of loss share sinks
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Company doing good or bad business
Financial results and bright or depressive
expectations
Players go for buying seeing rapid growth or selling
anticipating depressed earnings
New innovative product launched / business explored
Some incentives / taxation affecting stock
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Growth in earnings and profitability
Better management
Cheaper inputs and raw material
Demand going up for product or service
News and rumours
Stocks mostly moves in speculation and attempt
to discovers the right price
Fundamental analysis is gauged on historical and present data, but with the goal of making financial forecast .
A company stock valuations and predict its
probable price
Make a projection on its business performance
Evaluate its management and make internal
business decisions
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A place where buyer and seller meet and trade stocks under regulations set
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Bulls indicate market is positive
Bear indicates selling pressure
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A stock index or stock market index is a method of measuring the value of a section of the stock market
Opportunities & Better returns Pronounced risk factor Speculation, rumours and news orientation Diverse type of participants Connectivity with other financial markets Dependence on commodity move Fiscal, monitory and taxation policy effects Sector performance and incentives by
government
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Possibility of high returns
Easy liquidity Unbeatable tax
benefits Income from
dividends
Benefits of investment in stocks
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Market has a trend of crashes every 3-4 years
The reasons for 2008 crash were
Poor law and order after assassination of lady PM
Bad economic outlook
Panic selling by funds and foreigners
Recession
Market manipulation
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StockStockLow Low Price Price
HighHigh
PricePriceGain / Gain / lossloss
%age %age gaingain
Engro FoodsEngro Foods20.620.6
Aug 2012Aug 2012154.7154.7
May 2013May 2013 125125 770770
Pak Pak PetroleumPetroleum
100100
20082008200200
20092009 100100 100100
Lucky Lucky CementCement
103103
June 2012June 2012206206
June 2013June 2013 103103 100100
Jahangir Jahangir Siddiqui Siddiqui CompanyCompany
3.93.9
2 jan 122 jan 1213701370
31 Jan 31 Jan 20082008
1366.1366.11
Bank of Bank of PunjabPunjab
88
April April 20132013
1616
June 2013June 2013 88 100100
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Best selling products
Persistent growth
Efficient management
Good products in pipeline to launch
Eps not too good but expected to go higher
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Greed and Fear
Lack of knowledge
Rely over brokers and friends
Lack of analytical skills
Poor comprehension of / with changing indicators
Insider trading
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Plan your Investment
Go for long term Investment
Control your fear and greed
Decide right entry and exit in market
Diversify your portfolio
Always keep some reserve cash
Learn science and develop art of investment
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