EQUITY PPT 2022

Coincident Indicator  Coincident indicators are witnessed they signal occur. Since these happe much predictive insights, but provide

at around the same time the changes en almost in real time, they don’t offer e a fair reading of the current scenario.

Coincident Indicator



What is Monetary Policy RBI

Vs Banks

Key Event and Their Effe  Monetary Policy :  The monetary policy is a tool with which the Reserv controlling the interest rates. They do this by tweak over every country’s central bank is responsible for the RBI has to strike a balance between growth and means the borrowing rates are high (particularly fo cannot grow. If corporations don’t grow, the econom  On the other hand when the interest rates are low, in the hands of the corporations and consumers. W the sellers tend to increase prices leading to inflati the factors and should carefully set a few key rate chaos. The key RBI rates that you need to track are as follows:

ects on Market ve Bank of India (RBI) controls the money supply by king the interest rates. RBI is India’s central bank. World r setting the interest rates. While setting the interest rates d inflation. In a nutshell – if the interest rates are high that or corporations). If corporate can’t borrow easily they my slows down. borrowing becomes easier. This translates to more money With more money there is increased spending which means ion. In order to strike a balance, the RBI has to consider all es. Any imbalance in these rates can lead to an economic

Key Event and Their  Repo Rate – Whenever banks want to borrow mon lends money to other banks is called the repo rate. Reverse repo rate – Reverse Repo rate is the rate as it tightens the supply of money. The reverse repo rate is currently at 7%. Cash reserve ratio (CRR) – Every bank is mandator they maintain is dependent on the CRR. If CRR incre is again not good for the economy. The RBI meets e the market watches out for  Inflation : Inflation is a sustained increase in the ge erodes the purchasing power of money. All things b from Rs.15 to Rs.20 then this price increase is attrib inflation rate is not desirable as it could lead to ec Types of Inflation : 1 . Consumer Price Index 2 . W  .

Effects on Market ney they can borrow from the RBI. The rate at which RBI . If repo rate is high that means the at which RBI borrows money from banks. for the economy rily required to maintain funds with RBI. The amount that eases then more money is removed from the system, which every quarter to review the rates. This is a key event that eneral prices of goods and services. Increasing inflation being equal, if the cost of 1 KG of onion has increased buted to inflation. Inflation is inevitable but a high conomic uneasiness. Wholesale Price Index

What is IIP data



Key Event and Their Effe  Index of Industrial Production (IIP) The Index of Industrial Production (IIP) is a short term indica data is released every month (along with inflation data) by the name suggests, the IIP measures the production in the Ind India uses the reference point of 2004-05. The reference p industries submit their production data to the ministry, which increasing it indicates a vibrant industrial environment (as th economy and markets. A decreasing IIP indicates a sluggish and markets.  Purchasing Managers Index (PMI) The Purchasing managers index (PMI) is an economic indica manufacturing and service sectors in the country. This is a su indicator where the respondents – usually the purchasing m the previous month. A separate survey is conducted for the consolidated on to a single index. Typical areas covered in the survey include factors such as others. The PMI number usually oscillates around 50. A reading ab 50 indicates a contraction in the economy. And a reading a

ects on Market ator of how the industrial sector in the country is progressing. The y Ministry of Statistics and Programme implementation (MOSPI). As dian industrial sectors keeping a fixed reference point. As of today, point is also called the base year. Roughly about 15 different h collates the data and releases it as an index number. If the IIP is he production is going up) and hence a positive sign for the h production environment, hence a negative sign for the economy ator which tries to capture the business activity across the urvey based managers indicate their change in business perception with respect to service and the manufacturing sectors. The data from the survey is new orders, output, business expectations and employment amongst bove 50 indicates expansion and below at 50 indicates no change in the economy.

What is ADR & GDR



What is ADR & GDR  An American Depositary Receipt (\"ADR\") is a physical certificate evidencing ownership of American Depositary Shares (\"ADSs\"). The term is often used to refer to the ADSs themselves.  An American Depositary Share (\"ADS\") is a U.S. dollar denominated form of equity ownership in a non-U.S. company. It represents the foreign shares of  the company held on deposit by a custodian bank in the company 's home  country and carries the corporate and economic rights of the foreign shares,  subject to the terms specified on the ADR certificate.  One or several ADSs can be represented by a physical ADR certificate. The  terms ADR and ADS are often used interchangeably.

ADSs provide U.S. investors with a convenient way to invest in overseas securities and to trade non-U.S. securities in the U.S. ADSs are issued by a depository bank, such as JPMorgan Chase Bank. They are traded in the same manner as shares in U.S. companies, on the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) or quoted on NASDAQ and the over-the-counter (OTC) market. Although ADSs are U.S. dollar denominated securities and pay dividends in U.S. dollars, they do not eliminate the currency risk associated with an investment in a non-U.S. company.

What is ADR / 133

/ GDR www.isfm.co.in 23 May 2022

Global Depository Rece  Global Depository Receipt a global finance vehicle th capital simultaneously in tw  markets through a global o in public or private market a negotiable certificate us  represents company’s trad underlying shares correspo ratio say 1 GDR=10 share

eipts ts (GDRs) may be defined as hat allows an issuer to raise wo or offering. GDRs may be used ts inside or outside US. GDR, sually ded equity/debt. The ond to the GDRs in a fixed es.

Which are the factors that price of a stock?  Broadly there are two factors:  (1) stock specific and (2) market specific.  The stock-specific factor is related to people’s expectations about the company,  its future earnings capacity, financial health and management, level of  technology and marketing skills.  The market specific factor is influenced by the investor’s sentiment towards  the stock market as a whole. This factor depends on the environment rather  than the performance of any particular company. Events favourable to an

influence the  resulting in a boom in the market. On the other hand, unfavorable events  like war, economic crisis, communal riots, minority government etc. depress  the market irrespective of certain companies performing well. However, the  effect of market-specific factor is generally short-term. Despite ups and  downs, price of a stock in the long run gets stabilized based on the stock specific  factors. Therefore, a prudent advice to all investors is to analyse and  invest and not speculate in shares.  economy, political or regulatory environment like high economic growth,  friendly budget, stable government etc. can fuel euphoria in the

What is Ratio Analysis



Ratio Analysis of Stoc 137 Price to Earning ROCE Ratio PEG Ratio Quantita facto Dividen Yield

ck Market Return on Equity ative Debt to ors Equity Ratio Book nd Value d www.isfm.co.in 23 May 2022

Ration Analysis of Stock  PE Ratio - The price earnings ratio is the rat share price relative to its per-share earnings  The price-earnings ratio indicates the rupee company in order to receive one rupee of th sometimes referred to as the multiple becaus per dollar of earnings. If a company were c interpretation is that an investor is willing to  In general, a high P/E suggests that investors future compared to companies with a lower may currently be undervalued or that the co past trends.  PE Ratio = Current Market Price/ Earni

ks……. tio for valuing a company that measures its current s. amount an investor can expect to invest in a hat company’s earnings. This is why the P/E is se it shows how much investors are willing to pay currently trading at a multiple (P/E) of 20, the pay Rs20 for Re1 of current earnings. s are expecting higher earnings growth in the P/E. A low P/E can indicate either that a company ompany is doing exceptionally well relative to its ing Per Share of the latest FY

Ration Analysis of Stock  Debt to Equity Ratio  The debt-to-equity ratio measures the relationship between amount of capital contributed by shareholders (i.e. equity). riskier A lower debt-to-equity number means that a compan  Debt to Equity Ratio =(Total Liabilities)/(Total Sharehold  rule, companies with a debt-to-equity ratio more than 1  considered carefully before investing.  Return on Equity (ROE)  Return on equity (ROE) is the amount of net income returned corporation’s profitability by revealing how much profit a c other words, ROE tells you how good a company is at rewa  Return on Equity = (Net Income)/(Average Stockholder Equ  As a thumb rule, always invest in a company with ROE grea also a good sign.

ks……. n the amount of capital that has been borrowed (i.e. debt) and the Generally, as a firm’s debt-to-equity ratio increases, it becomes ny is using less leverage and has a stronger equity position. der Equity) As a thumb of 1 are risky and should be d as a percentage of shareholders equity. ROE measures a company generates with the money shareholders has invested. In arding its shareholders for their investment. uity) ater than 20% for at least last 3 years. A yearly increase in ROE is

Ration Analysis of Stock  Debt to Equity Ratio  The debt-to-equity ratio measures the relationship between amount of capital contributed by shareholders (i.e. equity). riskier A lower debt-to-equity number means that a compan  Debt to Equity Ratio =(Total Liabilities)/(Total Sharehold  rule, companies with a debt-to-equity ratio more than 1  considered carefully before investing.  Return on Equity (ROE)  Return on equity (ROE) is the amount of net income returned corporation’s profitability by revealing how much profit a c other words, ROE tells you how good a company is at rewa  Return on Equity = (Net Income)/(Average Stockholder Equ  As a thumb rule, always invest in a company with ROE grea also a good sign.

ks……. n the amount of capital that has been borrowed (i.e. debt) and the Generally, as a firm’s debt-to-equity ratio increases, it becomes ny is using less leverage and has a stronger equity position. der Equity) As a thumb of 1 are risky and should be d as a percentage of shareholders equity. ROE measures a company generates with the money shareholders has invested. In arding its shareholders for their investment. uity) ater than 20% for at least last 3 years. A yearly increase in ROE is

Ration Analysis of Stock  Book Value Ratio - The price-to-book ratio ( market value to its book value. It is calculate by the latest quarter's book value per share.  A lower P/B ratio could mean that the stock something is fundamentally wrong with the co varies by industry.  This ratio also gives some idea of whether yo the company went bankrupt immediately.  P/B Ratio = Stock Price/Total Assets Intangi  Dividend Yield - A financial ratio that indica each year relative to its share price. Dividen be calculated by dividing the INR value of d held by the INR value of one share of stock  Dividend Yield = Annual Dividend Yield Pe

ks……. (P/B Ratio) is a ratio used to compare a stock's ed by dividing the current closing price of the stock . It is also “Price Equity Ratio.” is undervalued. However, it could also mean that ompany. As with most ratios, be aware that this ou're paying too much for what would be left if ible Assets and Total Liabilities ates how much a company pays out in dividends nd yield is represented as a percentage and can dividends paid in a given year per share of stock er Share/ Price per share

Ration Analysis of Stock  PEG Ratio - The price/earnings to grow earnings (P/E) ratio divided by the grow period. The PEG ratio is used to determ company's earnings growth into account complete picture than the P/E ratio.  While a low P/E ratio may make a stoc company's growth rate to get the stock's lower the PEG ratio, the more the stock performance. The degree to which a PE underpriced stock varies by industry an thumb is that a PEG ratio below one is d  PEG Ratio = Price Earning Ratio/Annu

ks……. wth ratio (PEG ratio) is a stock's price-to- wth rate of its earnings for a specified time mine a stock's value while taking the t, and is considered to provide a more ck look like a good buy, factoring in the s PEG ratio can tell a different story. The may be undervalued given its earnings EG ratio value indicates an over or nd by company type, though a broad rule of desirable. ual growth rate of EPS

Ration Analysis of Stock  Price to Sales Ratio (P/S)  The stock’s price/sales ratio (P/S) ratio measures th P/S ratio is another stock valuation indicator simila  Price to Sales Ratio = (Price per Share)/(Annual Sa  The P/S ratio is a great tool because sales figures income statement items, like earnings, can be easily  Current Ratio  The current ratio is a key financial ratio for evaluat current assets available to cover current liabilities. with its short-term assets. If the ratio is over 1.0, the But if the current ratio is less than 1.0, the opposite  Current Ratio = (Current Assets)/(Current Liabilities

ks……. he price of a company’s stock against its annual sales. ar to the P/E ratio. ales Per Share) are considered to be relatively reliable while other y manipulated by using different accounting rules. ting a company’s liquidity. It measures the proportion of It is a company’s ability to pay its short-term liabilities e firm has more short-term assets than short-term debts. e is true and the company could be vulnerable s)

Ration Analysis of Stock  8 Financial Ratio Analysis that Every  Earnings Per Share (EPS) – Increasin  Price to Earnings Ratio (P/E) – Low c sector  Price to Book Ratio (P/B) – Low com  Debt to Equity Ratio – Should be les  Return on Equity (ROE) – Should be  Price to Sales Ratio (P/S) – Smaller  Current Ratio – Should be greater t  Dividend Yield – Depends on Invest

ks……. y Stock Investor Should Know: ng for last 5 years compared to companies in the same mpared companies in the same sector ss than 1 greater than 20% r ratio (less than 1) is preferred than 1 tor/ Increasing preferred

What is Portfolio Managem

ment

What is a Portfolio  A Portfolio is a combination of different investment assets m goal(s). Items that are considered a part of your portfolio c  shares, debentures, bonds, mutual fund units to items such as portfolio has come to signify an investment in financial instru  What is Diversification?  It is a risk management technique that mixes a wide variety impact of any one Securities on overall portfolio performan portfolio.  What are the advantages of having a diversified portfolio  A good investment portfolio is a mix of a wide range of as time, so with a mix of asset types, your entire portfolio doe your stocks go down, you may still have the stability of the studies and formulas that demonstrate why diversification is your eggs in one basket.\" If you spread your investments ac your entire portfolio getting affected by the adverse return

mixed and matched for the purpose of achieving an investor's can include any asset you own-from s gold, art and even real estate etc. However, for most investors a uments like shares, debentures, fixed deposits, mutual fund units. y of investments within a portfolio. It is designed to minimize the nce. Diversification is possibly the best way to reduce the risk in a o? sset class. Different securities perform differently at any point in es not suffer the impact of a decline of any one Securities. When bonds in your portfolio. There have been all sorts of academic s important, but it's really just the simple practice of \"not putting all cross various types of assets and markets, you'll reduce the risk of ns of any single asset class.

10 Golden Rules for Po  1. Always use 100 – Age formula for i  2. Portfolio should not contain more tha  3. One sector size should not be more t  4. Portfolio should be diversify but esca  5. Choose one market leader and one g  6. Focus only two things what going to  7. Never buy 100 % share of any comp  8. Must maintain liquidity in a/c to enca  9. Never do average of loss making st  10. Always use stop loss during trading

ortfolio Management investment. an 15 -20 stocks. than 20% of total portfolio size. ape from broad diversify. growing company from one sector. change in next 10 years and what not. pany at a single time, use 40 -60 ratio. ase the opportunities. tocks. g or investment.

What is Indexation