STOCK MARKET MECHANISM
by
Mr Fahim Akhtar
1
2
2
STOCK MARKET MECHANISM
Topic
Introduction
3

General perception

How stock forms

Stock market index

Features of market

Some abnormal gainers / losers

Why investors mostly loose
4
A gamble or a casino
5
A place where big fishes eat small
6
Puzzling function
7
A place where one is always
8
Trading stock is a science and equally art too
9
Something that may be studied or learned like systematized
knowledge
10
Expression
or
application
of
human
creative
skill
&
imagination
11
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
12
 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
13
14
 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
15

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
16

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
17
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
18
A place where buyer and seller meet and trade stocks
under regulations set
19
Bulls indicate market is positive
Bear indicates selling pressure
20
A stock index or stock market index is a method of
measuring the value of a section of the stock market
21

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
22
Benefits of investment in stocks




Possibility of high
returns
Easy liquidity
Unbeatable tax
benefits
Income from
dividends
23
24
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
25
Stock
Low Price
High
Price
Gain /
loss
%age gain
20.6
Aug 2012
154.7
May 2013
125
770
Pak Petroleum
100
2008
200
2009
100
100
Lucky Cement
103
June 2012
206
June 2013
103
100
3.9
2 jan 12
1370
31 Jan
2008
8
April 2013
16
June 2013
Engro Foods
Jahangir
Siddiqui
Company
Bank of
Punjab
1366.1
8
100
26
 Best selling products
 Persistent growth
 Efficient management
 Good products in pipeline to launch
 Eps not too good but expected to go higher
27
 Greed and Fear
 Lack of knowledge
 Rely over brokers and friends
 Lack of analytical skills
 Poor comprehension of / with changing
indicators
 Insider trading
28
 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
29
30