Archive for May 9th, 2008
World Share Market is one of the most happening markets of the world. It is dynamic and discounts everything right from economical to political informations and considers market to be supreme.
Shares are certificates which gives ownership rights to the holder in the company concerned.
Share Market is an organized market where shares are issued and traded. These shares are either traded through Stock exchanges or Over-the-Counter in physical or electronic form.
Share Market plays an important role in channelizing capital from the investors to the business houses. This is one of the very important routes through which businesses, especially the small ones, get their funds for expansion.
Investors (general public, institutional investors comprising both domestic and the foreign ones, banks, mutual funds, insurance companies, etc.) invest in the share market with the hope of capital appreciation. Investment in Share Market is not restricted only to shares but might be in derivative products such as futures, options, etc. where the underlying assets are the company shares.
Investment in Share Markets are possible either through Stock Exchanges, or Over-the-Counter. Stock Exchanges are organized market places where stocks, bonds and other equivalents are traded between the buyers and sellers and the contracts are standardized ones. But in case of Over-the-Counter, the trade takes place through a network of dealers. Generally, the OTC contracts are bilateral customized contracts unlike the standardized ones.
There are two channels through which investment can be done in the share market, one is Primary Market and the other is Secondary Market. Primary Market deals with securities that are channelized through the Initial Public Offer (IPO) route. In the Secondary Market, investors trade the securities among themselves.
Share Market originated in USA in the early 18 th century. Shares gave a ownership right to its holders and also is a source of money making for them along with the growing of the company concerned. Congress met on Wall street in 1789 for authorizing issue of government bonds for financing the war costs. Businessmen of Wall Street regularly traded stocks and bonds among themselves and used to leave their securities with the auctioneers. The Auctioneer used to get a commission on every selling of the stocks and bonds. The need of an organized stock exchange arose along with the increase in the number of stocks and bonds.
On 17 th May 1792, 24 brokers came together and signed an inclusive document for enabling security trade among themselves for maintaining a fixed commission on these trades. This is considered as the foundation of NYSE (New York Stock Exchange). Some of the largest Stock Exchanges of the World Share Market are :-
Indian Share Market
Indian Share Market started functioning in the year 1875. The first trading association in India was was Native Share and Stock Broker’s Association. Get detailed on Indian Share Market:
Mumbai Share Market
Mumbai Share Market is well known in the overall Indian Share Market scenario. Find an overview on Mumbai Share Market:
China Share Market
As to statistics, the market capitalization of the overall China Share Market upto May, 2007 is calculated at US$2.3 trillion.
Global Share Market
Global Share Market has been operating with the belief that market is supreme and discounts every incident regarding (domestic economy, world economy, specific company news, tips, etc.) around the globe.
May 9th, 2008
Share Market Value is not the value of a specific share of a company. Rather it depicts the value of the whole market. The picture of the entire share market can be observed only through the index. Thus, the valuation of the index would give the Share Market Value.
Share Market Index gives a composite idea about the relevant market. It is created through the selection of a set of shares out of the whole array of stocks which can represent the mood of the overall market. Share indexes work as a source of information for the economy as a whole.
The most common method of valuating the Share Market Index is the Weighted Average Market Capitalization Method. In this method each of the outstanding shares comprising the index are attached with a weight in accordance with its market capitalization.
Market Capitalization of a Company = (Stock Price) x (Total Number of Outstanding Shares Of the Company)
Market Capitalization measures the value of the company. This helps to categorize different companies into various sizes such as large-cap, mid-cap and small-cap where cap signifies capitalization.
Now, let us take an example to elucidate the weight attachment technique in Weighted Average Market Capitalization Method. Suppose that the market capitalization of all the stocks in an index is 10 million dollars. Now, if the market capitalization of a particular stock is 1 million dollar then the weight to be attached with that stock is 1% of the index.
Share Market Valuation can also be done through Price weighted Index. Here, the valuation of a certain index is done by considering the price of the company shares comprising the index. Hence, the movement in price of a single company share can heavily affect the value of the index. One of the very important index valued by using this method is Dow Jones Industrial Average.
Another form of share market valuation method is Fundamentally Weighted Index where the weights are attached to the shares according to the fundamental factors like sales.
Thus we can see that share market value is an average where weights are attached to the outstanding shares according to different methods used. Share market value works as a good signal to the investors for gauging the health of the share market in particular and of the domestic economy in general.
May 9th, 2008
Share Market Investment signifies investment made by the investors (general public, institutional investors, banks, mutual funds, insurance companies, etc.) in the share market. It is not restricted to investing in shares only. The investment might be in derivative products such as futures, options, etc. where the underlying assets are the company shares. Shares are certificates which represents ownership rights of the holder in a company. An investor invests in share with the hope of capital appreciation in the future. This investment is purely a speculative one. But many derivative products (future, call option, put option, etc.) have come into existence for hedging purposes.
Investment in Share Markets are possible either through
• Stock Exchanges , or
• Over-the-Counter
Stock Exchanges are organized market places where stocks, bonds are other equivalents are traded between the buyers and sellers . The contracts are standardized and not customized ones.
But in case of Over-the-Counter , the trade takes place through a network of dealers. Generally, the OTC contracts are bilateral customized contracts unlike the standardized ones.
But in case of OTC, there is least surveillance and the dealer network doesn’t act as the counter-party
There are two channels through which investment can be done in the share market, one is Primary Market and the other is Secondary Market . Primary Market deals with securities that are channelized through the Initial Public Offer ( IPO ) route. In the Secondary Market , investors trade the securities among themselves.
Share market Investment can be done though investing :-
• Directly investing in Shares of companies
• Investing in Derivative Products
Investors could directly invest in the shares by investing in the following types of share variants :-
• Common Stock
Common Stocks give an ownership right to the holders of the stock and hence the share holders are entitled to the earnings of the company according to their stake and the time-to-time investments announced by the company. These are ordinary shares which can be bought or sold at any point of the market hour because of their high liquidity.
• Preferred Stock
These stocks also give ownership right to its holders and they enjoy the privilege of receiving dividends from the company in preference to any other common share holders. But these stocks are less liquid than the common ones.
• c) Convertible Preferential Stocks
The holders of Convertible Preferential Stocks have the option of converting them into common stocks of the issuing company. The dividends in these stocks are comparatively higher.
Some of the Derivative Products are :-
• Futures
These are contracts of specified periods where the investor does not actually buys the share of the company but buys specified contracts of buying the share in the future.
• Options
Here the buyer is buying the right and not the obligation of either buying or selling the share at a predetermined date.
If the investor buys the right and not the obligation of buying the share at a predetermined date then it is known as Call Option .
If the investor buys the right and not the obligation of selling the share at a predetermined date then it is known as Put Option .
Derivative products are used by the investors for hedging the risk associated with any of his naked positions in the cash market. These products help to increase the liquidity of the share market .
Share Investments are of two types :-
• Traditional Investment
Buy or sell of securities for holding purposes with a view of medium and long term perspective. They basically rely on efficient fundamental analysis of the stock they are taking position on. The investors falling into this type are known as Portfolio Managers .
• Trading or Speculation
Traders continuously have a watch on the market during the trading hours and the moment they find any opportunity arising they pounce on it for scalping the profit out. These type of trading are highly risky and are not considered as traditional investments because of their higher risk of loss than average. Speculators generally rely on the technical analysis. Now-a-days, it is not a purely risky venture after the invention of many sophisticated investment tools (such as futures, options, short selling, stop loss orders, etc.) which help the speculators to hedge the risk.
Thus, share market investment is full of risks but there are also instruments for hedging the same.
May 9th, 2008
Share Market Data gives detailed data of every aspects of the share market relevant to the investors for further investment purposes. These data are used by the investors, analysts (both Fundamental and Technical analysts ) and economists for their own analytical purposes for coming up to conclusions.
Share Market Data help the investors in selection of stocks in accordance to their investment needs and consequently help in growing their investments and profits. These detailed data help to transform an ordinary investor to a informed one ultimately giving them mileage over others in this zero game market where the loss of one is gain of another.
Share market is the market for securities where organized issuance and trading of shares takes place either through stock exchanges or over-the-counter in electronic or physical form. Shares are certificates which represents ownership rights of the holder in a company.
Generally, Share Market Data include :-
*Data on Prices (Last traded price, 5 best Ask/Bid prices, Percentage change from previous price, Today’s High/Low, 52-Week *High/Low, and many more )
*Data related to volume of shares (Real Time Volume, Daily Volume, 10-days Average Price)
*Data related to financial fact sheets (Balance Sheet, Profit/Los)
*Fundamental Data (Net Profit, Dividend pay-out, etc.)
*Technical Analysis Data(Charts, Graphs and Calculations) including Price Earning Ratio, Earnings Per Share, Oscillators, Moving Averages, etc.
Seasonal Price Projections of companies and indexes
Comprehensive historical data (financial and fundamental) of companies ranging up to two decades Informed investors generally make their decisions on share investment based on either of the following two analyses or a mixture of the two :-
Fundamental analysis This looks into any type of relevant data ( cash flow , return on assets , history of profits , etc.) associated with the company which could have an effect on the value and price of the stock . It tries to measure the intrinsic value of a company’s stock.
Technical analysis
Technical analysis tries to evaluate the future trend of stock prices by using various statistical tools, charts, etc. Technical analysts focus on the historical price movement of a stock.
Share Market Data have immense importance to the fundamental and technical analysts who do their respective research on the market for coming up with market projections. Thus the share market data plays an important role in the share market.
May 9th, 2008
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