The talk was delivered at MAJU on 3rd July 2013 at 0730 PMby Mr Fahim Akhtar. It covers stock market mechanism and is beneficial for stock market employees,stock analyst, bankers, fund managers and students of MBA as well as economics

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STOCK MARKET MECHANISM
by
Mr Fahim Akhtar

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STOCK MARKET MECHANISM
Topic
Introduction

4.  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

8. A place where one is always
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Trading stock is a science and equally art too

10. Something that may be studied or learned like systematized
knowledge
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11. 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

18. 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

22.  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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23.  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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StockStock
LowLow
PricePrice
HighHigh
PricePrice
Gain /Gain /
lossloss %age gain%age gain
Engro FoodsEngro Foods
20.620.6
Aug 2012Aug 2012
154.7154.7
May 2013May 2013 125125 770770
Pak PetroleumPak Petroleum
100100
20082008
200200
20092009 100100 100100
Lucky CementLucky Cement
103103
June 2012June 2012
206206
June 2013June 2013 103103 100100
JahangirJahangir
SiddiquiSiddiqui
CompanyCompany
3.93.9
2 jan 122 jan 12
13701370
31 Jan31 Jan
20082008
1366.11366.1
Bank ofBank of
PunjabPunjab
88
April 2013April 2013
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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