SIMPLE POINT TO UNDERSTAND EQUITY MARKET

1. EQUITY INVESTMENTS Presented by HONEY POULOSE

3. USE OF MONEY # Unit of accounts : For calculating the value of assets # Medium of exchange: For catering his basic needs # Store of value: For transactional demand and precautionary demand

4. BOOKMAN LOW OF MONEY “ Wealth in the form of money will not multiply ”

5. WEALTH IS CREATED BY CIRCULATTION OF MONEY MORE WE CIRCULATE MORE WE CREATE BOOKMAN LOW OF MONEY

6. BOOKMAN LOW OF MONEY “ For a better life, Earn money wisely Saved money regularly Invest them smartly”

7. SELECTION OF INVESTMENTS RATE OF RETURN RISK LIQUIDITY TAXES CONVENIENTS

8. INVESTMENT VEHICLES

9. PLAN YOUR INVESTMENT Step 1 # Creating investment objectives & destinations and understanding threats & hurdles of the objectives Step 2 # Selecting the type of investments and ratios Step 3 # Active or passive portfolio working plans Step 4 # selection of securities Step 5 # portfolio management Step 6 # portfolio analysis

10. INVESTMENT SRATEGY ROAD MAP

11. CAPITAL MARKET

12. PUBLIC LIMITED COMPANIES WORKING CAPITAL BONDS PREVILAGE SHARES EQUITY SHARES BONUS SHARES PREFERENCE SHARES CAPITAL MARKET

13. AIM : Regulating capital flow from higher part to lower part distribution of wealth generated in the nation to the public Triggering economic growth of a nation CAPITAL MARKET

14. Total Assets Equity Company borrowing. Must repay 100% at fixed point in future + rate of interest (fixed or floating). Bonds are issued by companies to investors. Owners’ investment, + / - accumulated profits. No repayment date for owner’s investment. Owner will receive dividends. DIFFERENCE BETWEEN DEBTS AND EQUITY Debt

15. DIFFERENCE BETWEEN DEBTS AND EQUITY Companies Governments, supra-national agencies, e.g. World Bank, Mortgage Backed, Asset Backed, Companies Who issues? High risk, high return Low risk, consistent return Long-term expected return Equities considered an inflation hedge as companies can increase prices if costs rise Inflation negative for bonds as it makes the final values worth less in real terms Inflation Much higher risks than bonds as no maturity date at which investment is returned, therefore, value set by market Risk if held to maturity is default, otherwise will receive nominal bond value back. Bond investors have first call on company assets Risk Dividend + / - capital appreciation Interest + / - capital appreciation Return No Yes Maturity Equities Bonds

16. Bonds are priced according to how much investors are prepared to pay for an interest payment stream over a time period (interest rate) , and depending on the confidence that the final sum will be returned (credit DIFFERENCE BETWEEN DEBTS AND EQUITY Down Up Economy will fall so interest rates will fall. Investors prepared to pay more for bond coupon (less demand for money) c) Bird Flu outbreak Up Down Government likely to increase interest rate so better value in new bonds b) Booming economy (GDP + 8%) Up Down Future value of bond worth less in real terms a) Rising inflation (+2%) Bond interest rate Bond price Result Scenario

17. INTREST RATE 2001-2006

18. LIC RETURNS 1994-2005

19. OPPURTUNITIES IN EQUITY INVESTMENT CAPITAL APPRECIATION DERIVATIVE INCOME OVERCOME INFLATION LIQUIDITY CONVENIENCE

20. CAPITAL APRECIATION 2004-05

21. PREVILAGE ISSUES EQUITIES BONUS ISSUES PREFERENCE ISSUES TYPES OF SHARES

22. BONDS AND SHARES Dividend with fixed rates Cumulative dividends available Will get preference in profit distribution Aim: Distribute shares to persons other than public Features PREFERENCE ISSUES

23. BONDS AND SHARES Profit/loss sharing ownerships Eligible for dividend,capital appreciation,bonus,rights Risk, profit, rate of income high Aim: Capitalize money from public Features EQUITIES

24. BONDS AND SHARES RIGHT ISSUES Aim : Capitalize more money with out issuing new shares Features Available only to existing share holders Offer with respect to existing share holdings Available with offer price or face value Eligible for dividend, capital appreciation,bonus shares

25. BONUS ISSUES Aim : Add profit to the share capital of the company Features : Distribution of profit in the form of equities Offer with respect to existing share holdings Eligible for dividend , capital appreciation BONDS AND SHARES

26. TYPES OF CAPITAL MARKETS Capital market Share market Debts Derivatives Primary market Secondary market IPOs,Bonds, Public issues,Privilege issues,Private placements Trading of equities and bonds

27. PROCESS OF CAPITAL MARKET PRIMARYMARKET SECONDARY MARKET Finding a broker Taking demat account Giving order Fixed price order Stop loss order Market order Internet trading Public issues Book building issues Right issues Private placements ADR GDR

28. Limited company Fundamental analysis Technical analysis Intrinsic value Management value Industry value Annual report Share ratios Economy analysis Industry analysis Company analysis Technical analysis

29. SHARE ANALISIS

36. COMPARISON RATIOS

37. BOOK VALUE : Book value =share capital +reserves/number of shares Indicate net value of shares by company EARNING PER SHARE E P S =net profit/number of shares It indicate actual earning /return of a share ( dividend+reserve capital or capital gain ) PRICE EARNING RATIO P/E= Market price/EPS Indicate break even time for the particular shares COMPARISON RATIOS

38. YEILD Yield =dividend/market price*100 Indicate the percentage return of dividend return RETURN ON EQUITY ROE= Total share capital+ reserves/net profit Indicate profit making ability of a particular company from available funds COMPARISON RATIOS

39. SENSEX

47. LEADING STOCK EXCHANGES

48. Market is Expensive

49. TRENDS 0F INDIAN SENSEX Strong Market Rally Source: Merrill Lynch Research

50. WEALTH BY SHARE INVESTMENTS BIILGATES 5000CR$ MICROSOFT WAREN BOOFAY 3500CR $ BARKSHARE FATHWA ASIM PREMJI 60000CR WIPRO MUKESH AMBANI 4700CR RELIENCE SUNIL MITHAL 3OOOCR BHARATHI TELECOME Presented by HONEY POULOSE