AS Chakravarthy NISM : NCFM Academy Hyderabad : Stock Market

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NCFM Courses in Hyderabad Ameerpet

Best Stock Market Technical Analysis Course in Hyderabad Ameerpet

Undoubtedly, NCFM Academy by A.S Chakravarthy institute located in Ameerpet, Hyderabad is one of the finest, oldest and the best institute training courses/modules like 

  1. Technical Analysis Module
  2. Derivatives Market (Dealers) Module
  3. Fundamental Analysis Module
  4. Capital Markets (Dealers) Module
  5. Mutual Funds: A Beginner’s Module
  6. Currency Derivatives: A Beginner’s Module
  7. Equity Derivatives: A Beginner’s Module

Why NCFM Course Training Center by A.S Chakravarthy?

Shri A.S Chakravarthy is a Stock Markets veteran is the most senior and honored within the FINANCIAL MARKETS industry for his vast experiences, analytical aptitude. One of the greatest assets of his is his training delivery mechanism for Technical Analysis, Stock market, NCFM, NISM modules with real-time examples and certifications.

What is NCFM Certification Training in Hyderabad?

The full form for NCFM is known as “NSE’s (National Stock Exchange’s) Certification in Financial Markets for the financial markets skills and knowledge and certifications in India, the most popular and highly accepted is the NCFM online testing and certifications to acquire financial market jobs and career in India. NCFM is headquartered in Mumbai and its CERTIFICATIONS is mandatory to associate and operate in the financial markets in India. 

The best part of this training is A.S Chakravarthy’s real time examples on each of the above-said modules. His rich experience in Technical Analysis Stock Market Investments modules would definitely add more value to the price you pay in attaining knowledge on NCFM. AS. CHAKRAVARTHY NCFM ACADEMY is the best Stock Market Training Institute in Hyderabad, Ameerpet, Telangana.

Keywords: AS Chakravarthy NCFM Academy Hyderabad, NCFM Courses in Hyderabad, NCFM Training in Hyderabad, Stock Market Course in Hyderabad

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AS Chakravarthy Recommended these Qualities to enter into Stock Market

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AS CChakravarthy: NCFM Course in Hyderabad Ameerpet

Stock Market Training in Hyderabad

Everyone wants to invest and gain good profits in the Stock Market. Often found to be realizing that you could have take some recommendations and precautions taken before entering into such investments.

Here are such recommendations from Stock Market industry expert AS. Chakravarthy, which comes handy.

    1. Vast Knowledge

 

    1. Proper Experience

 

    1. Observation Skills

 

    1. Analysis & Interpretation Skills

 

    1. Guessing and prediction

 

    1. Minimum IQ

 

    1. Common Sense & Spontaneous reaction

 

    1. Little bit Dare and Fear

 

  1. Controlling emotions very important

 

AS. CHAKRAVARTHY NCFM ACADEMY Hyderabad is the Oldest Training Center for NCFM Course in Hyderabad Ameerpet, Stock Market Training in Hyderabad, Ameerpet, Telangana.

Keywords: A.S.Chakravarthy NCFM Academy Hyderabad, Stock Market Training in Hyderabad.

Recommended Qualities to check before entering into Stock Market – AS Chakravarthy 
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AS.CHAKRAVARTHY : PRECAUTIONS before enter into Stock Market

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AS Chakravarthy : NCFM Coaching in Hyderabad

Stock Market Course in Hyderabad

While Recommending the qualities to enter into the stock market, here are some precautions to consider as well. Hope you share among the good wishers and get profitable.

Here are the precautions before to enter into the stock market.

  1. First one should observe overall Scenario of the Market, is it Uptrend or Downtrend. Inexperienced people CAN enter Uptrend only.
  2. Before entering the scrip see whether it is in Uptrend or Downtrend. Observe sector also – Prefer upcoming sector stocks only.
  3. Select High Beta and Liquidity Stocks.
  4. Fundamental and technicals should be observed.
  5. Enquire about Management of the company, to get a proper idea (good/bad) about management.
  6. 99% prefer for delivery business (in Cash Market), – do not prefer deliveries and average also in Bear Market.
  7. Strictly apply Hedging strategy in uncertain conditions.
  8. Never Invest – Borrowed Amounts in Stock Market
  9. Never invest Special Purpose Amount in Stock Market Ex: Family Hospital expenses, Children College Savings, Daughter/Sister Marriage Savings. Invest only surplus amounts.
  10. Ascertain your Loss bearing capacity, never do the business beyond your financial capacity.
  11. Ascertain your holding period capacity.
  12. Those who do not follow the above Rules, they lose a LOT.

Join A.S Chakravarthy NCFM Course and learn Technical Analysis, Stock Market in-depth with a practically oriented teaching approach at A S Chakravarthy NCFM Course Training Institute, Hyderabad, Ameerpet.

A.S. CHAKRAVARTHY NCFM ACADEMY is the Real Stock Market Coaching Institute in Hyderabad, Ameerpet, Telangana.

Keywords: AS Chakravarthy, NISM, NCFM Academy Hyderabad, Coaching, Stock Market Course in Hyderabad.

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Importance of Technical Analysis : AS Chakravarthy NCFM Academy

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Uses of Technical Analysis : AS Chakravarthy NCFM Academy

Technical Analysis Importance : ASC NCFM Academy Hyderabad

 

The Analysis of movement of share prices broadly divided into 3 types

  1. Technical Analysis
  2. Fundamental Analysis
  3. Behavior Analysis

The main objective of these three Analysis is buying shares at near low price and selling the shares at near high price, finally to get good returns on our investment.

Technical Analysis

 What is Technical Analysis?

Technical Analysis analyses the overall trend of the Market or overall trend of the individual Stocks, by using and studying historical data of share prices and Volumes with the help of charts.

Why Technical Analysis?

Technical Analysis analyses emotions of the market participants and moment of the share prices with the help of the charts, to identify near low of the share prices and near high of the share prices, to get good returns on our investment.

Definition of Technical Analysis:

Technical analysis is defined as “The process of improving systematic thinking, keen observation, purposeful analysis and interpretation skills to predict and identify the near future trend by using and studying historical data, primarily prices and volumes of stocks, with the help of charts”. -2016 Definition by A.S.Chakravarthy

Uses of Technical Analysis:

  • To study Past decades Bull & Bear Market Trends (History Repeats again and again)
  • Supply And Demand principle applicability in Stocks
  • And it helps to Buy Securities at near Low Price and to Sell at Near High Price.

ASSUMPTIONS

  • The Market Discounts Everything: Here the market discounts everything means, Market represents the Hopes, fear, Natural Calamities, insider information, muscle power of the market participants and one more important point muscle power is days only, either good or bad market should discount.
  • The Market moves in Trend: The Market should move in upside or downside systematically that means it should follow trend either in upside or downside.
  • History keeps repeating itself: The human(mass) psychology does not change, in a bull market the mass psychology drives the prices upwards will be see over and over again in other bull markets. And same count, the mass psychology seen during a bear market will repeat itself in every successive in bear market.

AS CHAKRAVARTHY NCFM ACADEMY Hyderabad is the ultimate Stock Market Technical Analysis Training in Hyderabad, NISM, NCFM, Technical Analysis Course Institute in Hyderabad, Ameerpet, Telangana.

Keywords: Stock Market, Technical Analysis Course in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad, NCFM Training.

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What is Candle Stick Charts : Chakravarthy NCFM Academy Hyderabad

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Candle Stick Charts : AS Chakravarthy Stock Market Course Hyderabad

Stock Market : Technical Analysis Course in Hyderabad

AS Chakravarthy NCFM Academy Hyderabad is the Best Training Institute for NCFM NISM Stock Market Technical Analysis Course in Hyderabad, Fundamental Analysis, NISM and NCFM Courses Training in Hyderabad.

CANDLE STICK CHARTS

  • Japanese candle sticks charts are first developed by Japanese rice trader in 1600 century. Actually the candle stick charts worldwide popularized credit goes Steven Niosn. He is one expert on the interpretation of Candle Stick Patterns.
  • Candle Stick charts provide visually insight into the current market psychology and its powerful method for analyzing and timing to stock and future markets.
  • Japanese Candle Stick offers a quick picture into psychology of the short term trading, studying the effects not causes and incidents. The fact that prices influenced by investors psychologically drive emotions of fears, greed and hope.
  • The Candle Stick chart represents the open, high, low and closing prices on a day to day basis. Each day’s activity is represented by a Candle Stick.

There are three types of candle sticks:

  • White Candle Stick.
  • Black Candle Stick.
  • Doji Candle Stick. As shown below.

 

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BAR CHARTS in Technical Analysis : ASC NCFM Academy Hyderabad

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About BAR CHARTS : Technical Analysis Training in Hyderabad

Stock Market Courses in Hyderabad : AS Chakravarthy NCFM Academy

AS Chakravarthy NCFM Academy Hyderabad, Ameerpet is Best Institute in Technical Analysis Training  in Hyderabad, NCFM, NISM Courses like Capital Market Dealers Module, Equity Derivative Certification Examination (NISM-8), Commodities Market Module, Technical Analysis Module, Fundamental Analysis Module,  NSE Certification Courses and NISM Certification Courses.

 

BAR CHARTS

  • The bar chart (High-Low-Closing Chart) Analysis is very popular method in Technical Analysis.
  • And another bar chart (Open-High-Low-Closing Chart) Analysis is also popular method in Technical Analysis.
  • In this bar chart High-Low-Closing prices of the day are plotted on day today basis in the form of a bar.
  • The top of the bar would represent the high price of the day the bottom of the bar would represent the low price of the day and a small horizontal hash on the right of the bar would represent the closing price of the day, and we plotted another horizontal hash to the left hand side of the bar as opening price of the day.
  • Bars are basically divide into two types, One is Upward Bar and other one is Downward Bar, I shown below:-

 

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Line charts in Technical Analysis : AS Chakravarthy NCFM Academy

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About Line Chart in Technical Analysis Course in Hyderabad

Stock Market Course: AS Chakravarthy NCFM Courses in Hyderabad

 

The entire Technical Analysis broadly divided in to Three types, one is purely chart analysis and second is chart analysis with the help of indicators (here indicators means leading indicators & lagging indicators) and third Theories.

CHAPETER -I

PURELY CHARTS ANALYSIS:

For Chart Analysis we follow 3 types of charts.

Stage 1. Line Charts Analysis:– For Long term Trends Identification & Short term Trends identification

Stage 2. Bar Charts Analysis:- To know Trend reversals in short term

Stage 3. Candlestick Charts Analysis:- To know Trend reversal in short term

 

STAGE I:  LINE CHARTS:

The Line charts drawn with the help of closing prices. These line charts are plotted on daily, weekly and monthly closing price basis.

  • In the daily charts we use daily data and for the weekly and monthly charts we use weekly and monthly data respectively.
  • The prices are plotted on the XY Chart; where the X axis represents the time and Y axis represent the value of the Scrip.
  • One more important point the X axis represents the actually trading days and not the calendar days.
  • Here in technical analysis we discuss different types of trends (Direction of Movement) and patterns (Models or Shapes) with the help of line charts.

AS. CHAKRAVARTHY NCFM ACADEMY Hyderabad is the excellent Institute NISM NCFM Courses in Hyderabad, Ameerpet, Telangana.

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AS Chakravarthy : What is the Capitalization & Free-float Capitalization?

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NCFM Classes in Hyderabad: Capitalisation & Free float capitalisation

NCFM COURSE TRAINING IN HYDERABAD: Company Capitalisation

What is the Capitalisation and Free-float Capitalisation of the Company

EXPLAINING WITH AN EXAMPLE:

A.S. STEELS LTD

THE TOTAL NO OF SHARES IN THE COMPANY:  5 CRORE SHARES

PROMOTER HOLDING (STOCK) IN THE COMPANY:  3 CRORE SHARES

NON-PROMOTER HOLDING (FREE-FLOAT STOCK) IN THE COMPANY  : 2 CRORE SHARES

FACE VALUE OF THE SHARE:  Rs 10

MARKET VALUE OF THE SHARE :  Rs 300

TOTAL SHARE CAPITAL OF THE COMPANY IS: Rs 10 * 5 CRORE SHARES = Rs 50 CRORES

TOTAL CAPITALISATION OF THE COMPANY IS: Rs 300 * 5 CRORE SHARES = Rs 1500 CRORES

TOTAL FREE- FLOAT CAPITALISATION (NON-PROMOTER CAPITALISATION) OF THE COMPANY IS : RS 300* 2 CRORE SHARES=Rs 600 CRORES 

Here A.S. STEELS LTD has  5 crores shares in total, of which 3 crores are  held by the promoters, so that only 2 crores shares are available for trading to the general public. These 2 crores shares are the so-called ‘free-floating’ shares/Non-promoters shares.

If the price of each share is Rs 300, then the ‘total’ market capitalization of the company is Rs 1500 crores (5 crores shares x Rs 300), but its free-float market capitalization is Rs 600 crores (2 crores shares x Rs 300).

A.S. CHAKRAVARTHY NCFM ACADEMY is the leading NCFM Course Training Institute in Hyderabad, NCFM Classes in Hyderabad Ameerpet, Telangana.

Keywords: Free float Capitalisation, Total Capitalization, Stock Market, NCFM Classes in Hyderabad, NCFM Course training in Hyderabad.

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Facts about BSE Index S&P BSE SENSEX: NCFM Course in Hyderabad

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NISM Course in Hyderabad : About SENSEX : AS Chakravarthy

Stock Market : SENSEX : Technical Analysis Course in Hyderabad

  • BSE : Bombay Stock Exchange ( BSE was established in 1875,  the Oldest Stock Exchange in ASIA)
  • Beginning BSE INDEX name is called SENSEX
  • SENSEX means Sensitive Index
  • SENSEX constructed financial year was 1978-79
  • SENSEX effected from April 1, 1979
  • SENSEX constructed with 30 Stocks
  • SENSEX constructed with 100 Base Point
  • SENSEX, first compiled in 1986, was calculated full market capitalization method, the base year of Sensex was taken as 1978-1979. Since September 1, 2003,  SENSEX is being calculated on a free-float market capitalization methodology
  • After expiry of S&P DJI (S&P Dow Jones Indices) licensing agreement for benchmark indices of the National Stock Exchange (NSE),S&P DJI has now tied up with the Bombay Stock Exchange (BSE) to calculate, disseminate and license the widely followed suite of BSE indices. So FEBRUARY 19,2013- Tuesday  onwards BSE index SENSEX name is change as S&P BSE SENSEX
  • S&P BSE SENSEX constructed by ASIA INDEX Pvt. Ltd, It’s a BSE and S&P DJI joint venture
  • S & P : Standard and Poor  (American Rating Company- At present  BSE Index  S&P BSE SENSEX  to construct, BSE taken technical assistance from  S&P DJI)
  • SENSEX and NIFTY move in 3:1 proportionate
  • SENSEX given Average returns from past 30 years 29% p.a.
  • Either SENSEX or NIFTY represents the present country economy conditions, that’s way out dated sectors strictly delete from the Indices and upcoming sectors include to Indices
  • At the time of selecting the scrip in Sensex  or in Nifty they consider LIQUIDITY of the SCRIP, FREE-FLOAT CAPITALISATION of the company, LARGE VARIETY OF THE SCRIPS  from different SECTORS  (it represent the present country economy conditions), RISK  AND PROFFESSIONAL  MANAGEMENT in the company.

 

AS. CHAKRAVARTHY NCFM ACADEMY Hyderabad is the Best Training in Stock Market Courses Technical Analysis Course in Hyderabad, NISM NCFM course in Hyderabad, Ameerpet, Telangana.

Keywords: BSE INDEX, SENSEX, Base year, Stock Market, Technical Analysis Course in Hyderabad, NISM Course in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

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BSE Index SENSEX 30 Stocks in 1978-79 Base Year (100 points)

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NISM Training in Hyderabad : Base SENSEX 30 Stocks

Stock Market: BSE SENSEX: Technical Analysis Training in Hyderabad

BSE Index SENSEX 30 STOCKS in 1978-79 Base Year (100 Base Points)

  1. Asian Cables  (not in Sensex)
  2. Ballarpur Industries (not in Sensex)
  3. Bombay Burmah (not in Sensex)
  4. Ceat Ltd (not in Sensex)
  5. Century Textiles (not in Sensex)
  6. Crompton Greaves (not in Sensex)
  7. Glaxo Smithkline (not in Sensex)
  8. Grasim (not in Sensex )
  9. GSFC (not in Sensex)
  10. Hindalco
  11. Hindustan Motors (not in Sensex)
  12. HLL
  13. Indian Hotels (not in Sensex)
  14. Indian Organics (not in Sensex)
  15. Indian Rayon (not in Sensex)
  16. ITC
  17. Kirloskar Cummins (not in Sensex)
  18. L&T
  19. M&M
  20. Mukand (not in Sensex)
  21. Nestle (not in Sensex)
  22. Reliance Industries
  23. Scindia Shipping (not in Sensex)
  24. Siemens (not in Sensex)
  25. Tata Motors
  26. Tata Power
  27. Tata Steel
  28. ACC (not in Sensex)
  29. Bombay Dyeing (not in Sensex)
  30. Zenith (not in Sensex)

A.S. CHAKRAVARTHY NCFM ACADEMY Hyderabad is the Best Institute for Stock  Market Course in Hyderabad, Technical Analysis Training course in Hyderabad, NCFM NISM Training in Hyderabad, Ameerpet, Telangana.

Keywords: BSE INDEX, SENSEX, Base year Stocks, Technical Analysis Training in Hyderabad, Stock Market, NISM, AS Chakravarthy NCFM Academy Hyderabad.

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Stock Market Training : S&P BSE SENSEX-30 Stocks as on 31-03-2017

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 NISM Courses in Hyderabad : SENSEX 30 Stocks As on 31-03-2017

Stock Market : Technical Analysis Coaching in Hyderabad

S&P BSE SENSEX 30 STOCKS AS ON 31/03/2017

BSE Index S&P BSE SENSEX 30 Stocks list as on 31st March 2017 given below with sector wise.


Company Sector Closing Price
ADANIPORTS MARINE PORT & SERVICES 339.8
ASIANPAINTC PAINTS FMCG 1071.2
AXISBANK BANKING 490.8
BAJAJ-AUTO AUTOMOBILE 2/3 WHEELERS 2807.5
BHARTIARTL TELECOM SERVICES 349.95
CIPLA PHARMACEUTICALS 592.3
COALINDIA MINING-COAL 292.8
DRREDDY PHARMACEUTICALS 2632.5
GAIL UTILITIES-GAS 376.45
HDFC HOUSING FINANCE 1502.4
HDFCBANK BANKING 1442.3
HEROMOTOCO AUTOMOBILE 2/3 WHEELERS 3223.85
HINDUNILVR FMCG – PERSONAL PRODUCTS 909.75
ICICIBANK BANKING 277.1
INFY IT CONSULTING & SOFTWARE 1020.8
ITC FMCG-CIGARETTES & TOBACCO PRODUCTS 280.45
LT CAPITA GOODS-CONSTRUCTION & ENGINEERING 1577.6
LUPIN PHARMACEUTICALS 1444.8
M&M UTILITIES-CARS & HEAVY VEHICLES 1284.7
MARUTI UTILITIES-CARS 6024.3
NTPC UTILITIES- POWER ELECTRIC 165.95
ONGC OIL & GAS – EXPLORATION & PRODUCTION 185.05
POWERGRID UTILITIES POWER DISTRIBUTION 197.2
RELIANCE INTEGRATED OIL & GAS 1319.2
SBIN BANKING 292.6
SUNPHARMA PHARMACEUTICALS 687.7
TATAMOTORS UTILITIES-CARS & HEAVY VEHICLES 665.95
TATASTEEL IRON & STEEL SECTOR 482.65
TCS IT CONSULTING & SOFTWARE 2431.1
WIPRO IT CONSULTING & SOFTWARE                515.35

 

A.S. CHAKRAVARTHY NISM NCFM ACADEMY Hyderabad is the ultimate Stock Market Training NCFM, NISM Courses in Hyderabad, Technical Analysis Coaching in Hyderabad, Ameerpet, Telangana.

Keywords: S&P BSE SENSEX, Sector, 30 Stocks, NISM Courses in Hyderabad, Stock Market, Technical Analysis Coaching in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

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Stock Market : BSE SENSEX Historical Yearly Returns – Since 1979

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NCFM Training in Hyderabad : SENSEX Yearly Returns since 1979

Stock Market: Technical Analysis Training in Hyderabad

Sensex Historical Yearly Returns – Since 1979

Date Sensex 1 Year Return
1979 100
1980 129 28.57%
1981 173 34.90%
1982 218 25.52%
1983 212 -2.85%
1984 245 15.99%
1985 354 44.24%
1986 574 62.24%
1987 510 -11.10%
1988 398 -21.94%
1989 714 79.13%
1990 781 9.45%
1991 1,168 49.54%
1992 4,285 266.88%
1993 2,281 -46.78%
1994 3,779 65.71%
1995 3,261 -13.71%
1996 3,367 3.24%
1997 3,361 -0.17%
1998 3,893 15.82%
1999 3,740 -3.92%
2000 5,001 33.73%
2001 3,604 -27.93%
2002 3,469 -3.75%
2003 3,049 -12.12%
2004 5,591 83.38%
2005 6,493 16.14%
2006 11,280 73.73%
2007 13,073 15.89%
2008 15,644 19.68%
2009 9,709 -37.94%
2010 17,528 80.54%
2011 19,445 10.94%
2012 17,404 -10.49%
2013 18835 08.22%
2014 22386 18.85%
2015 27958 24.90%
2016 25342 -09.35%

 

NOTE:

  1. 2016 RETURNS MEANS  01-04-2015 TO 31-03-2016 FINANCIAL YEAR RETURNS
  2. 01-04-1979 TO 31-03-1980 FINANCIAL YEAR RETURNS

 

A.S. CHAKRAVARTHY NCFM ACADEMY Hyderabad is the Oldest Stock Market Training Institute in Hyderabad, Technical Analysis Training and NCFM Training in Hyderabad, Ameerpet, Telangana.

Keywords: BSE SENSEX, Yearly Returns, from 1979, Stock Market, NCFM Training in Hyderabad, Technical Analysis Training in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

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BSE SENSEX Sector-wise Market Capitalisation as on 31/03/2017

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NISM Coaching in Hyd: Sensex Sectorwise Mkt Cap as on 31/03/2017

Stock Market Training Institute in Hyderabad TELANGANA

S&P BSE SENSEX Sector-wise Market Capitalisation As on 31/03/2017

Sl.No SENSEX/Sectors Free Float Market Capitalisation
%
S&P BSE SENSEX 100
1 Finance 31.96
2 Information Technology 13.49
3 Transport Equipments 11.41
4 FMCG 11.18
5 Oil & Gas 10.75
6 Healthcare 6.31
7 Capital Goods 4.67
8 Power 3.11
9 Metal,Metal Products & Mining 2.53
10 Chemical & Petrochemical 1.78
11 Telecom 1.70
12 Transport Services 1.12

 

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Keywords: BSE Sensex, Sector, Capitalization, Stock Market Training Institute in Hyderabad, NISM Coaching in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

Sources : www.bseindia.com

 

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Brief about NSE Index Nifty 50 – Well explained by AS Chakravarthy

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NISM Classes in Hyderabad: INDEX : NIFTY 50 (NSE INDEX FIFTY)

Stock Market: NCFM Course in Hyderabad

INDEX : NIFTY 50 (NSE INDEX FIFTY)

NSE INDEX:

The Present NIFTY 50 index is National Stock Exchange of India’s benchmark stock market index for Indian Equity Market. NIFTY 50 CONSTRUCTED date was Nov 3, 1995 with 1000 base points and base capitalization was as on the day 2,06,000 crores , these 50 stocks they taken from 24 sectors and it calculated on full market capitalization methodology.Nov 3, 1995 Nifty 50 was called as S&P CNX NIFTY because for the construction of Nifty, beginning we taken technical assistance from the S&P DJI (S&P Dow Jones Indices). To construct S&P CNX Nifty, NSE and CRISIL started a Joint venture company i.e., IISL (India index service and products Ltd).

S&P : Standard & Poor (American rating company, beginning we taken technical assistance from S&P)

CNX :   ‘C’  Stands for  CRISIL and NX Stands for NSE (CNX is the brand name of the NIFTY )

NIFTY :  NSE INDEX FIFTY

The index S&P CNX NIFTY, at present it is called as NIFTY 50, was initially (Nov 03, 1995) calculated on total market capitalisation methodology. From June 26, 2009, the computation was changed to free float methodology.

S&P DJI and NSE licensing agreement has expired with effect from 31 January 2013, Following the expiry of licensing pact, S&P CNX Nifty Index has been renamed as CNX Nifty Index from 12th February, 2013 Tuesday  on wards.

CRISIL said on Aug 27, 2013 : CRISIL will be selling its equity stake in India Index Services & Products Limited (IISL), comprising 6,37,000 equity shares of face value Rs.10 each and representing 49% of the total equity share capital of IISL to NSE Strategic Investment Corporation Limited, for a total consideration of Rs.100 crore.

Nov 9, 2015 Starting on Monday, the National Stock Exchange (NSE) announced that its indices CNX Nifty will be known as Nifty 50 that means NSE’s flagship CNX Nifty Index re-branded as NIFTY 50 and at present Nifty is owned and managed by India Index Services and Products Ltd (IISL), which is a wholly owned subsidiary of the NSE Strategic Investment Corporation Limited.

NOTE:- During 2008-12, NIFTY 50 50 Index share of NSE market capitalisation fell from 65% to 29%due to the rise of sectoral indices like NIFTY Bank, NIFTY IT, NIFTY Next 50, etc.

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Keywords: NSE INDEX, NIFTY 50, Stock Market, NISM Classes in Hyderabad, NCFM Course in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

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NIFTY 50 Stocks list as on 3rd Nov 1995: NCFM Course in Hyderabad

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NCFM Training in Hyderabad : NOV 3 1995 : NIFTY 50 STOCKS

Stock Market: NCFM Courses in Hyderabad

List of NIFTY 50 Stocks when constructed on NOV 3 1995,

1 ACC Ltd.
2 Ambuja Cements Ltd.
3 Andhra Valley Power Supply Co. Ltd.
4 Apollo Tyres Ltd.
5 Arvind Mills Ltd
6 Ashok Leyland Ltd.
7 BAJAJ AUTO
8 Brooke Bond Lipton India Ltd.
9 Castrol (India) Ltd.
10 Chambal Fertilizers & Chemicals Ltd.
11 Colgate
12 Dr. Reddy’s Laboratories Ltd.
13 Essar Gujarat Ltd.
14 GRASIM
15 Great Eastern Shipping Company Limited.
16 HDFC Bank Ltd.
17 HDFC Ltd.
18 Hero Honda Motors Limited
19 Hindalco Industries Ltd.
20 Hindustan Unilever Ltd.
21 I T C Ltd.
22 ICICI LTD
23 Indian Aluminium Co. Ltd.
24 indian Hotels
25 INDIAN PETROCHEMICALS CORP.LTD
26 Indian Rayon & Industries Ltd.
27 Indo Gulf Corporation Ltd.
28 Industrial Development Bank of India Limited
29 Industrial Finance Corporation Of India Ltd.
30 Kochi Refineries Ltd.
31 Larsen &toubro ltd
32 Madras Refineries Ltd.
33 Mangalore Refinery & Petrochemicals Ltd.
34 Nagarjuna Fertilizers & Chemicals Ltd.
35 OBC
36 Ponds (India) Ltd.
37 RANBAXY LABS
38 Reliance Capital Ltd.
39 Reliance Industries Ltd.
40 RELIANCE INFRASTRUCTURE LTD
41 Reliance Petroleum Ltd.
42 SCICI Ltd.
43 State Bank of India
44 TATA CHEM
45 Tata Motors Ltd.
46 Tata Power Co. Ltd.
47 Tata Steel Ltd.
48 TATA TEA
49 Thermax Ltd.
50 TVS Suzuki Ltd.

 

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Keywords: NSE INDEX, NIFTY 50, Nov 3, NCFM training in Ameerpet, Hyderabad, NCFM Courses in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

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Definition of Company : Stock Market Courses in Hyderabad

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Definition of Company : Stock Market Courses in Hyderabad

Technical Analysis Course Training in Hyderabad

Definition of  Company:

Company is an artificial person created by Law and having separated legal entity with a perpetual succession, common seal and liability is limited.

Characteristics of a Company

Company is having the following Characteristics:

  • Separate Legal entity
  • Limited Liability
  • Perpetual Succession
  • Common Seal
  • Transferability of Shares
  • Separate Property

Separate Legal Entity

A company is in law regarded as an entity separate from its members. It has an independent corporate existence.

Any of its members can enter into contracts with it in the same manner as any other individual can and he cannot be held liable for the acts of the company even if he holds virtually the entire share capital.

The company’s money and property belongs to it and not to the shareholders (although the shareholders own the company)

Limited Liability

A company may be a company limited by shares or a company limited by guarantee. In a company limited by shares, the liability of members is limited to the unpaid value of the shares.

Perpetual Succession

Being an artificial person a company never dies, nor does its life depend on the life of its members. Members may come and go but the company can go on forever. It continues to exist even if all its members are dead. The existence of company can be terminated only by law.

It means that a company’s existence persists irrespective of the change in the composition of its membership.

Common Seal

Since a company has no physical existence, it must act through its agents and all such contracts entered into by its agents must be under a seal of the company. The common seal acts as the official signature of the company.

Transferability Of Shares

The capital of a company is divided into parts called shares. These shares are, subject to certain conditions, freely transferable, so that no shareholder is permanently wedded to the company. When the join stock companies were established the great object was that the shares should be capable of being easily transferred.

Separate Property

As a company is a legal person distinct from its members, it is capable of owning, enjoying and disposing of property in its own name. Although its capital and assets are contributed by its shareholders, they are not the private and joint owners of its property. The company is the real person in which all its property is vested and by which it is controlled, managed and disposed of.

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Differences between Pvt. Limited Company and Public Limited Company

Expert Technical Analysis Training by AS Chakravarthy - NISM NCFM Academy Hyderabad

Differences between Pvt. Limited Company and Public Limited Company

Stock Market Training Courses in Hyderabad

Differences  between Pvt. Limited Company and Public Limited Company as below: 

Basis for Comparison Public Limited Company

Private Limited Company

Meaning A public company is a company which is owned and traded publicly. A private company is a company which is owned and traded privately.
Minimum members 7 2
Maximum members Unlimited 200
Minimum Directors 3 2
Minimum paid up capital Rs. 5 Lakh Rs. 1 Lakh
Suffix Limited Private Limited
Start of business After receiving certificate of incorporation and certificate of commencement of business. After receiving certificate of incorporation.
Statutory Meeting Compulsory Optional
Issue of prospectus / Statement in lieu of prospectus Obligatory Not required
Public subscription Allowed Not allowed
Quorum at AGM 5 members must present in person. 2 members must present in person.
Transfer of shares Free Restricted

 

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What is Bonus Share Definition and Explanation

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NCFM Training in Hyderabad: What is Bonus Share Definition & Explain

Stock Market: NCFM Training in Hyderabad

Definition of Bonus Share:

Bonus shares are additional shares given to the current shareholders without any additional cost, based upon the number of shares that a shareholder owns. These are company’s accumulated earnings which are not given out in the form of dividends, but are converted into free shares.

Bonus Share Description:

The basic principle behind bonus shares is that the total number of shares increases with a constant ratio of number of shares held to the number of shares outstanding.

Explanation of Bonus Share: if Investor A holds 200 shares of a company and a company declares 4:1 bonus, that is for every one share, he gets 4 shares for free. That is total 800 shares for free and his total holding will increase to 1000 shares.

Companies issue bonus shares to encourage retail participation and increase their equity base. When price per share of a company is high, it becomes difficult for new investors to buy shares of that particular company. Increase in the number of shares reduces the price per share. But the overall capital remains the same even if bonus shares are declared.

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Keywords: Bonus Share, definition, NIFTY 50, NCFM Training in Hyderabad, NCFM Course in Hyderabad, AS Chakravarthy, NCFM Academy Hyderabad.

Sources: Economic Times

 

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About Rights Issue of Shares : Stock Market Courses in Hyderabad

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Technical Analysis in Hyderabad : About Rights Issue of Shares

Stock Market: NCFM Courses in Hyderabad

Do you know about Rights Issue of Shares ?

A rights issue is one of the ways by which a company can raise equity share capital among the various types of equity share capital sources available. These are slightly different from the standard issue of shares. Right shares mean the shares where the existing shareholders have the first right to subscribe the shares.

In layman terms, rights issue gives a right to the existing shareholders to purchase additional new shares in the company. Rights Issue of shares are usually issued at a discount as compared to the prevailing traded price in the market. The existing shareholders are allowed a prescribed time limit/date within which need to exercise the right or the right will thereafter be forgone.

Let us have a look at the features of the rights issue, reasons why rights shares are issued, accounting treatment of rights issue and how market price reacts post rights issue. This will help us understand the concept better.

Features of Rights Issue of Shares

  • The rights shares allow preferential treatment to existing shareholders, where existing shareholders have the right to purchase shares at a lower price on or before a specified date. The shares are issued at a discount as a compensation for the stake dilution that will take place post issue of additional shares.
  • The existing shareholders can trade the rights to other interested market participants until the date at which the new shares can be purchased. The rights are traded in a similar way as the normal equity shares.
  • The amount of rights issue to the shareholders is usually at a proportion of existing holding.
  • The existing shareholders can also choose to ignore the rights; however, one may not do so as existing shareholding will be diluted post issue of additional shares and will result in a loss (in valuation) for existing shareholder.

Why Does a Company Issue Rights Shares?

  • A company may look to raise a large amount of capital for expansion projects which may have a longer gestation period.
  • A project where debt/loan funding may not be available/suitable or expensive usually makes company to raise capital via this route.
  • Companies looking to improve debt to equity ratio or looking to buy a new company may opt for funding via rights issue route.
  • Sometimes troubled companies may issue rights shares to pay off debt to ease the financial strain.

Having looked at the features, let us look at an example of a rights issue.

Right Issue Example:

Let us say an investor owns 1000 shares of ABC Ltd. and the shares are trading at a price of Rs100 ABC Ltd. announces a rights issue in the ratio of 2 : 5, i.e. each investor holding 5 shares will be eligible for 2 shares from the new issuance. The company announces a discounted price of say Rs 60 per share. This means that for every 5 shares of value Rs 100 held by an existing shareholder, ABC Ltd will offer 2 shares at a discounted price of Rs 60.

Portfolio Value before Rights Issue = 1000 shares X Rs 100 = Rs 1,00,000

No. of Right Shares to Be Received = (1000 X 2/5) = 400 Shares

Cost of Purchasing New Shares Using the Rights = 400 shares X Rs 60 = Rs 24,000

New quantity of shares = 1000 Shares + 400 Shares = 1400 Shares

New portfolio value post right issue = Rs 1,00.000 + Rs 24,000 = Rs 1,24,000

Price per share post rights issue = Rs 1,24,000 / 1400 = Rs 88.6 

The theoretical price per share post rights issue equals to Rs 88.6 as against initial price of Rs 100. However, market reaction to rights issue can be slightly different and it is dependent on many other factors.

Let us look at the market price action by a company post rights issue.

Market Price Action Post Rights Issue:

The price action post rights issue depends on various factors that include the reason for the issue of rights share by the company, the future prospects for the growth of the company, the industry outlook, the general market trend etc. among many other things. It, therefore, does not mean that, as the rights issue is given at discount, it may be always beneficial to the existing shareholder.

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Keywords: Rights Issue, Shares, Equity Share, NCFM Courses in Hyderabad, Stock Market Courses in Hyderabad, Technical Analysis in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

 

Sources: https://efinancemanagement.com

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What is Stock Split and Explain: Technical Analysis course in Hyderabad

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Technical Analysis Classes in Hyderabad : What is Stock Split?

Stock Market: NCFM Classes in Hyderabad

Stock Split Definition

When a company declares a stock split, the number of shares of that company increases, but the market cap remains the same. Existing shares split, but the underlying value remains the same. As the number of shares increases, price per share goes down.

Stock Split Description

Stock split is done to infuse liquidity and to make shares affordable for various investors who could not buy the shares of that company before due to high prices.

People often confuse bonus shares with stock split. Distribution of bonus shares only changes its issued share capital whereas stock split splits the company’s authorized share capital.

Example explaining Stock Split

ABC Ltd  is having 1 crore shares ,

Face value of the share is  Rs 10

Market value of the share is Rs 300

Share capital of the company is : Rs 10* 1 crore shares = Rs 10 crores

Capitalisation of the company is : Rs 300 * 1 crore shares = Rs 300 crores

Like this conditions company given splitting benefit  10:1 proportionate, that means here the company face value splitted Rs 10 to Rs 1 ,then the company shares increased to 1 crore to 10 crore shares. After splitting, the company data I given below:-

ABC Ltd is having 10 crore shares,

Face value of the share is Rs 1

Market value of the share is generally godown to Rs 30

Share capital of the company is : Rs 1* 10 crore shares = Rs 10 crores

Capitalisation of the company is: Rs 30 * 10 crore shares = Rs 300 crores

 

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Source: economictimes

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What is Bulk Deal and explanation : Stock Market Course in Hyderabad

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Share Market Courses in Hyderabad : Definition of Bulk Deal

Stock Market: NCFM Courses in Hyderabad

Definition of Bulk Deal:

A bulk deal is said to have happened if under a single client code and in a single or multiple transactions more than 0.5 per cent of a company’s equity shares are traded. A bulk deal can be implemented within the trading hours at any point of time.

Description of Bulk Deal:

Bulk deal order consists of the following attributes:

  1. The order should comprise of buying/selling of at least 0.5% of the total number of equity shares of a company, listed in a particular ‘scrip‘ or exchange.
  2. The broker who manages and implements the trade transaction is solely responsible for notifying about the bulk deals on a daily basis to the particular exchange. The broker is supposed to supply the exchange with the following details and attributes of the order:Name of the scrip, name of the client, quantity of shares bought/sold and the traded price.
  3. If the Bulk Deal comprises of a single trade transaction: The broker has to notify exchange immediately.
  4. If the bulk deal comprises of multiple transactions: The broker should notify the exchange within one hour from the closure of the trading.
  5. The trade executed must result in delivery and shall not be squared off or reversed.
  6. According to SEBI, optimal trading and settlement activities, surveillance and risk regulation measures which are applicable to common trading activities are applicable and exhibited in the trading windows also.
  7. The exchange has to ‘disseminate‘ or share the entire information about the bulk deal in the public market after the closing of trading hours on the same day of the implementation of the bulk deal.

Usually institutional players like Mutual Funds, Asset Management Companies, Insurance Companies, Banks, and Venture Capital Companies participate in bulk deals.

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Keywords: Bulk Deal, Definition, Block Deal, NCFM Courses in Hyderabad, Stock Market, NISM Course in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

Source: Indiainfoline

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What is Block Deal? – Stock Market Course in Hyderabad

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Share Market Coaching in Hyderabad : Definition of Block Deal

Stock Market : NCFM Course in Hyderabad Ameerpet

Block deal is a trade, with a minimum quantity of 5 lakh shares or minimum value of Rs. 5 crore, executed through a single transaction, on the special “Block Deal window”. The window is opened for only 35 minutes in the morning trading hours.

Market regulator SEBI (Securities and Exchange Broad of India) has also made it mandatory for the stock brokers to disclose on a daily basis the block deals made through Data Upload Software (DUS).

Usually block deal happens when two parties agree to buy or sell securities at an agreed price between themselves and inform the stock exchange. The orders in a block deal are not shown to the people who trade from normal trade window.

Stock exchanges should disclose the information on block deals to the public on the same day after market hours. This should contain information bits like name of the scrip, name of the client, quantity of shares, traded price and so on.

 

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Source: Indiainfoline

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What is Large Cap, Mid Cap and Small Cap Stocks?

Top & Best Expert NCFM Course Training Institute in Hyderabad Providing Best Stock Market Course Training

Share Classes in Hyderabad : Large Cap – Mid Cap – Small Cap Stocks

Stock Market: NISM Training in Hyderabad

 

Differences between Large Cap, Mid Cap and Small Cap Stocks

NOTE:- Here, the term ‘cap’ simply refers to the ‘market capitalisation’ of the stock. 

Understanding ‘Market Capitalisation’

There are three main classifications when it comes to stocks –

  1. Large Cap stocks
  2. Mid Cap stocks and
  3. Small Cap stocks

What is market Capitalisation?

It is the value of the stock that you arrive at by multiplying the stock price by the company’s outstanding number of equity shares.

Market Capitalisation = Current Stock Price x Number of Shares outstanding

For a better understanding, let us see an example:

Company ABC has 1,00,00,000 shares outstanding and its current share price is Rs 300. Based on the above formula, we can calculate that Company ABC’s market capitalisation is Rs 300 crores (1,00,00,000 shares x Rs 300 per share.= Rs 300 crores)

Thus, the Large-cap companies, Mid-cap companies and Small-cap companies contribute 80%, 15% and 5% of the total Market Capitalization of the market respectively.

Generally, the absolute market capitalisations of the respective classes are as under:

Large Cap. Above Rs.10,000 Crore
Mid-Cap. Rs.2000 Crore to Rs.10,000 Crore
Small-Cap. Up to  Rs.2,000 Crore

 

The main differences among these categories are as follow:

Parameter

Large Cap

Mid cap

Small Cap

Risk (Probability of negative returns)

Low

High

Very High

Probability of exceptionally high returns

Low

High

High

Liquidity

Very Good

Good

Low

Company Information Availability

Very Good

Good

Poor

 

Large cap stocks according to the BSE- SENSEX  AND BSE-100 INDEX

As we mentioned above, the first category based on market capitalisation is that of ‘large cap stocks’.

One can look at the BSE-Sensex or BSE-100 Index as a reference point for large cap stocks. Market capitalisation for stocks in the BSE-100 Index, for instance, ranges from Rs 20,000 crores to Rs 3,50,000 crores

These are stocks of usually large and well-established companies that have a strong market presence and are generally considered as safe investments. One important fact about large caps is that information regarding these companies is readily available in newspapers and magazines. Most of the large cap companies have good disclosures and therefore there is no dearth of information for an investor looking into them.

Large companies such as Infosys, TCS, and Wipro are classified as large cap stocks. These companies have been around in the industry long enough and have firmly established themselves as leading players. Their stocks are publicly traded and have large market capitalisations.

Mid cap stocks

Mid-caps lie between large cap stocks and small cap stocks. Mid cap stocks are those that generally have a market capitalisation within the range of Rs 5,000 crores and Rs 20,000 crores . These represent mid-sized companies that are relatively more risky than large cap as investment options yet, they are not considered as risky as small cap companies. They rank between the two extremes on all the important parameters like size, revenues, employee and client base.

When one invests in mid-caps for the long term, he may be investing in companies that could become tomorrow’s runaway success stories. Generally speaking, mid cap stocks as an investment can bring you higher returns in 3 to 5 years as opposed to their big brother large cap stocks that can bring you moderate (yet safer) returns during this time frame.

Small cap stocks

Lying at the lowest end of market capitalisation, Small cap stocks are generally viewed under the misconception of being hazardous or ‘quick rich’ stocks. However, both these labels are untrue.

Small cap companies have smaller revenue and client bases, and usually include the start-ups or companies in the early stage of development. Small cap stocks are potentially big gainers as they are yet to be discovered within the sector and can show growth potential in large numbers once unfurled in the market. However, as these enterprises are small ventures, these should be researched properly. This is considering that a lot of small companies do not have the financial strength to survive bad times and some of them might be mismanaged businesses run by greedy promoters. Hence it is essential, especially in the case of small caps investments that one does a thorough research regarding the promoters’ credentials, management strength and track record, and long and short term growth plans of the company before investing.

AS. Chakravarthy NCFM Academy Hyderabad is the Best Institute Share Market Classes, NCFM NISM Training Course in Hyderabad, Ameerpet, Telangana.

Keywords: Large cap, mid cap, small cap, Capitalization, NISM Course in Hyderabad, Stock Market, Share Market Classes in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

Sources : stockshastra.moneyworks4me.com

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Equity Shares group classification in BSE: NCFM Courses in Hyderabad


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Stock Training in Hyderabad: Equity Shares groups classification in BSE

Stock Market: NISM Coaching in Hyderabad

The Bombay Stock Exchange (BSE), India’s leading stock exchange, has classified Equity scrips into categories A, B1, B2, S, T, TS, & Z to provide guidance to the investors. The classification is on the basis of several factors like market capitalization, trading volumes and numbers, track records, profits, dividends, shareholding patterns, and some qualitative aspects.

As on February 2008 following criterion are used for classifying stocks into various categories by the Bombay Stock Exchange (BSE)

What is “Group A” classification of BSE?

It is the most tracked class of scrips consisting of about 200 scrips. Market capitalization is one key factor in deciding which scrip should be classified in Group A.

At present there are 216 companies in the A group

What is “Group S” classification of BSE?

The Exchange has introduced a new segment named “BSE Indonext” With Effect from   January 7, 2005. The “S” Group represents scrips forming part of the BSE-Indonext segment. “S” group consists of scrips from “B1 & B2″ group on BSE and companies exclusively listed on regional stock exchanges having capital of 3 crores to 30 crores. All trades in this segment are done through BOLT system under S group.

What is “Group Z” classification of BSE?

The “Z” group was introduced by the Exchange in July 1999 and includes the companies which have failed to comply with the listing requirements of the Exchange and/or have failed to resolve investor complaints or have not made the required arrangements with both the Depositories, viz., Central Depository Services (I) Ltd. (CDSL) and National Securities Depository Ltd. (NSDL) for dematerialization of their securities.

What are Group B1 & B2 classification of BSE?

All companies not included in group A, S orZ are clubbed under this category. B1 is ranked higher than B2.

B1 and B2 groups will be merged as a single Group B effective from March 2008.

What is Group T classification of BSE?

It consists of scrips which are traded on trade to trade basis.

What is Group TS classification of BSE?

The “TS” Group consists of scrips in the BSE-Indonext segments which are settled on a trade to trade basis as a surveillance measure.

Besides these equity groups there are two other groups i.e. Fixed Income Securities (Group F) and Government Securities (Group G)

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Keywords: BSE, Group Classification, Equity Scrip, Share, Stock Market Training in Hyderabad, NISM Coaching in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

SOURCE 

sources: Article taken from http://finmanac.blogspot.com/

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Eligibilities of Trading Member (Broker): AS Chakravarthy NCFM Course

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AS Chakravarthy NCFM Course: Eligibility of Trading Member (Broker)

Stock Market : NCFM Training in Hyderabad

Here is the process to follow to become Stock Exchange Trading Member or a Broker in India. As you all know Broker means a member in recognized stock exchange who will said be the authorized trader.

Steps to become a Trading Member (Broker) in National Stock Exchange of India Ltd

1.  Eligibility: Indian Citizen, 21 years, HSC or equivalent qualification, 2 years experience in stock market relative affairs.

  1. Necessary Infrastructure:- Office space, Manpower, Equipment (according to the NSE norms)
  1. Disciplinary Proceedings: – Not convicted involving fraud & dishonesty
  1. Fitness:- Not Bankrupt, Not default in any stock exchange, not previously refused by NSE, fully discharged from Debts by creditors (self declaration)
  1. First Send Application to stock exchange for broker ship- stock exchange send that application to SEBI 30 days SEBI satisfy above 1 & 2 points to grant Certificate of Registration.
  1. Maximum Commission of the broker 2.5% (including sub broker commission 1.5%) on Cash Market and Future Market Buy and Sell Values but option Market 2.5% is charged on (Strike Price + Premium) Value.

Note:- but real time brokers collecting for delivery transactions around 0.50%

For Intra-day transactions around 0.05%

For Option Market for each lot Rs.10 to Rs.50

  1. Membership transfer fee Rs. 1 Lakh.
  1. In case if you want TM cum CM Broking Card for individual and Firm Rs.300 Lakhs net worth is required,

In case if you want TM cum CM Broking Card on behalf of Company Rs.300 Lakhs net worth plus Rs.30 Lakhs paid up Capital is required.

  1. Dominant Promoters

a) For individual:- (not exceeding 4 members) his & his spouse not less than 51%. One Person Graduation is compulsory.
b) For Firm:- not less than 51% his & his spouse, children’s & brothers  One Person Graduation is compulsory.
C) Corporate company:- Not less than 40% of the directors share holding (at least 50% each director) 2 Directors Graduation is compulsory.

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Eligibility of Sub-Broker in Stock Market: AS Chakravarthy NCFM Course

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AS Chakravarthy NCFM Courses in Hyderabad : Eligibility of Sub-Broker

Stock Market : NCFM Training in Hyderabad

Eligibility of Sub Broker in Stock Market

  1. Eligibility:- 21 years, 10+2 qualification and paid up capital Rs. 5 lakhs.
  2. Not convicted involving fraud and dishonesty.
  3. Not debarred by SEBI previously.
  4. 51% of shares as dominant promoters his/her and his/her spouse.
  5. First application to stock exchange- Stock exchange send his application to SEBI- SEBI satisfied issued Certificate of Registration
  6. Under which Broker he is going to work as Sub-Broker, particular broker recommendation letter submission is compulsory to SEBI.
  7. Purchase note and sales note issued by the sub broker with 24 hours.
  8. Maximum Brokerage commission 1.5%.

Note:- 

a) But real time sub-brokers collecting for delivery transactions around 0.50%

b) For Intraday transactions around 0.05%

c) For Option Market for each lot Rs.10 to Rs.50

 

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Technical Analysis Course Hyderabad: About Stock Market Terminology

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Technical Analysis Course Hyderabad: About Stock Market Terminology

Stock Market : NCFM Training in Hyderabad

Awareness about the Stock Market Terminology provided by AS Chakravarthy NCFM Academy Hyderabad, Ameerpet is the leading institute training for Stock Market Courses NISM, NCFM, Fundamental and Technical Analysis courses in Hyderabad.

  1. COMPANY: Company is an artificial person created by Law and having separated legal entity with a perpetual succession, common seal and liability is limited.
  2. EQUITY SHARE: The part of something in a company is called Equity, professionals called as Share; it is having the right to receive and sharing the company’s profits in the form of Dividend.
  3. SHARE CAPITAL-Share capital consists of all funds raised by a company in exchange for shares of either common or preferred shares of stock. Share capital (is also called as shareholder’s capital, equity capital, contributed capital or paid-in capital) is the amount invested by a company’s shareholders for use in the business (In other words, share capital is equal to Face value of the share multiplied by the total no. of outstanding equity share o the company). A company that wishes to raise more equity can obtain authorization to issue and sell additional shares, thereby increasing its share capital.
  4. FACE VALUE OF SHARE – Face value is the nominal value (par value) of a Share stated by the issuer. For stocks, it is the original cost of the stock shown in the certificate.
  5. MARKET CAPITALISATION– It is calculated by multiplying the Market price of the company’s shares by the total no. of outstanding shares of the company.
  6. Initial Public Offer (IPO) is a source of collecting money from the public for the first time in the market to fund for its projects. In return, the company gives the share to the investors in the company.
  7. FPO– A follow-on public offer is an issuing of shares to investors by a public company that is already listed on an exchange. An FPO is essentially a stock issue of supplementary shares made by a company that is already publicly listed and has gone through the IPO process.
    For example, Google’s initial public offering (IPO) included both a primary offering (issuance of Google stock by Google) and a secondary offering (sale of Google stock held by shareholders, including the founders).
  8. PRIMARY MARKET– Primary market provides the opportunity to the issuers of securities, both Govt. and corporations, to raise resources to meet their requirements of investments. Securities in the form of equity or debt. can be issued in domestic/international markets at the face value, discounts or premium. The primary market issuance is done either through public issues or private placement.
  9. SECONDARY MARKET– Secondary market refers to a market where securities are traded after being offered to the public in the primary market or listed on the stock exchange. Secondary market comprises of equity, derivative and the debt markets. The secondary market is operated through 2 mediums, namely over the counter(OTC) market and the exchange traded market.
  10. BROKER (TRADING MEMBER)- A member in recognized Stock Exchange is called Broker. The main activity of the Broker is providing service to Buy & Sell the shares of the investors through Stock exchanges. Taking broking card on behalf of individual name, firm name and company name is possible.
  11. STOCK EXCHANGE (NSE & BSE). It’s a recognized trading platform to Buy and Sell the Shares through Brokers/Sub-Brokers.
  12. QIP PLACEMENTS– It’s a capital-raising tool, primarily used in India and other parts of southern Asia, whereby a listed company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants which are convertible to equity shares to a qualified. The Securities and Exchange Board of India (SEBI) introduced the QIP process through a circular issued on May 8, 2006, to prevent listed companies in India from developing an excessive dependence on foreign capital.
  13. FDI– Foreign direct investment or FDI is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company. A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. In simple terms, when any organization in one nation makes an investment in any organization in abroad, it is mostly called as foreign direct investment or FDI.
  14. FII– A foreign institutional investor or FII is an investor or investment fund registered in a country outside of the one in which it is investing. Institutional investors most notably include hedge funds, insurance companies, pension funds and mutual funds. Foreign Institutional Investors or FII refers to investors that are from other countries and that are investing in the Indian financial market. When any organization in abroad make investment in the market related to stock of a nation then this investor is called foreign institutional investor or FII.
  15. DII– Domestic Institutional Investors or DII refers to the Indian institutional investors who are investing in the financial markets of India (For example Stock Market).
  16. HNI– High net worth individual (HNI) is a classification used by the financial services industry to denote an individual or family with high net worth.
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What is Demat Account & Benefits: AS Chakravarthy: Techincal Analysis

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What is Demat Account & Benefits: AS Chakravarthy: Technical Analysis

Stock Market : AS Chakravarthy Technical Analysis Training Hyderabad

What is Demat Account?

Before 1996, Indian investors held their shares and securities in physically, in the form of Certificates. After that, it was the beginning of a new era of paperless trading, where-in instead of the investor taking physical possession of certificates; it was stored or held in an electronic form in a Dematerialized (or Demat) account.

The Demat account can be opened by the investor while registering with an investment broker (or sub-broker) and this Demat account no. can quoted for all transactions to enable electronic settlements of trades to take place. On opening the account, internet password and a transaction password is given for the transfers or purchases of securities.

When an investor buys a share today, it gets credited to the investor’s demat account in just 2 days.

Benefits and Advantages of Demat

  1. Easy and convenient way to hold securities.
  2. Safe and Immediate transfer of securities with reduced paper work.
  3. No stamp duty on transfer of securities and reduced transaction cost.
  4. Automatic credit into demat account for shares arising out of benefits like bonus, Rights issue, split, merger, etc.
  5. A Trader can work from anywhere (e.g. even from home) and a single demat account can hold investments in both equity and debt instruments.
  6. The bonus/right shares allotted to the investor will be immediately credited into his account.There is no risk due to loss on account of fire, theft or mutilation.

For example: delivery failures caused by signature mismatch, postal delays and loss of certificate during transit. Further, it eliminates the risks associated with forgery and due to damaged stock certificates.

Disadvantages of Demat

  1. There is no provision to close a Demat account, which is having illiquid shares. The investor cannot close the account and he and his successors have to go on paying the charges to the participant, like annual folio charges etc.
  2. After liquidating the holdings, many Indian investors don’t close their DP account.They are unaware that DPs charge even on dormant accounts.

Documents Required for Demat Account

To open a Demat account, you have to provide documents which fulfill the requirements of KYC (Know Your Customer) norms. You have to sign a contract with Stock broker. Generally the documents are

1. PAN (Compulsory).

  1. Aadhar Card. 3. Bank statement (last 3 months).
  2. Address Proof.
  3. Two colour photos.
  4. Cancelled Bank crossed Cheque.

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Before Open A/c in Broking Co.: KYC: AS Chakravarthy NCFM Ameerpet

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Before Open A/c in Broking Co.: KYC: AS Chakravarthy NCFM Ameerpet

AS Chakravarthy: Stock Market Technical Analysis Course in Hyderabad

Before opening ‘Trading and Demat account’ in any Broking company, SEBI has advised the Precautions to Investors, in the form of “Know your client (KYC)”. These are as given below

DO’S

  • Deal only with SEBI registered brokers/sub-brokers and verify that the broker/sub-broker has a valid SEBI registration certificate.
  • State clearly who will be placing orders on your behalf and give clear and unambiguous instructions to your broker/ sub-broker.
  • Insist on client registration form to be signed by the broker before commencing operations.
  • Enter into an agreement with your broker/ sub-broker setting out terms and conditions clearly.
  • Ensure that you read the agreement and risk disclosure document carefully before signing.
  • Make sure that you sign on all the pages of the agreement and ensure that the broker or an authorized representative, signs on all the pages of the agreement. Also the agreement should be signed by the witnesses by giving their name and address.
  • Insist on a valid contract note/ confirmation memo for trades done within 24 hours of the transaction.
  • Sign the duplicate contract note/ confirmation memo to be kept with the broker once you receive the original.
  • Insist on a bill for every settlement.
  • Ensure that the broker’s name, trade time and number, transaction price and brokerage are shown distinctly on the contract note.
  • Insist on periodical statement of accounts.
  • Issue cheques/drafts only in the trade name of the broker.
  • Ensure receipt of payment/ deliveries within 4hours of payout.
  • In case of disputes, file written complaint to intermediary/ stock exchange/SEBI within a reasonable time.
  • In case of disputes with the sub-broker, inform the main broker immediately.
  • Familiarize yourself with the rules, regulations and circulars issued by stock exchanges /SEBI.
  • Keep track of your portfolio in your demat account on a regular basis.
  • Ensure that you have money before you buy.
  • Ensure that you are holding securities before you sell.

DON’TS

  • Don’t deal with unregistered brokers / sub – brokers or other unregistered intermediaries.
  • Don’t execute any document with any intermediary without fully understanding its terms and conditions.
  • Don’t leave the custody of your Demat Transaction Slip book in the hands of any broker/sub-broker.
  • Don’t forgo obtaining all documents of transactions even if the broker/sub-broker is well known to you.

Sources : NSEIL (National Stock Exchange of India Ltd.,)

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Keywords: KYC, Demat, Brokser, Stock Market, Technical Analysis Course in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

Source : National Stock Exchange of India Ltd

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AS Chakravarthy : Applying Shares through IPO in Primary Market KYC

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AS Chakravarthy NCFM Course in Hyderabad : KYC for IPO Primary Mkt

Stock Market Technical Analysis Training Hyderabad: AS Chakravarthy

At the time of applying for equity Shares, through Public Issue in Primary Market, SEBI has advised the Precautions to Investors, in the form of Know your client (KYC). These are as given below,

DO’s

  • Read the Prospectus/ Abridged Prospectus carefully, with special attention to:
    1. Risk factors
    2. Background of promoters
    3. Company history
    4. Outstanding litigations and defaults
    5. Financial statements
    6. Object of the issue
    7. Basis of Issue price
    8. Instructions for making an application
  • In case of any doubts/problems, contact the compliance officer named in the offer document.
  • In case you do not receive, within due period, the credit to demat account or refund of application money; lodge a complaint with the compliance officer of the issuer company and with the post-issue lead manager.

DON’Ts

  • Don’t be influenced by any implicit/explicit promise made by the issuer or anyone else.
  • Don’t invest only based on the prevailing Bull Run of the market index or of scrips of other companies in the same industry or scrips of the issuer company/group companies.
  • Don’t expect the price of the shares of the issuer company to necessarily go up upon listing, and forever.

 

A.S. CHAKRAVARTHY NISM NCFM ACADEMY Hyderabad is the Best Stock Market Technical Analysis Training in Hyderabad, Ameerpet, Telangana.

Keywords: Primary Market, KYC, Stock Market, Technical Analysis Training in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad, NCFM Course in Hyderabad.

 

Source : National Stock Exchange of India Ltd

 

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Documents require to open Demat & Trading Account : NCFM Training

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Documents required to open Demat & Trading A/c : NCFM Training

Stock Market Technical Analysis Course in Hyderabad: AS Chakravarthy

Do you want to invest and trade in Stock Market you have to open Demat Account and trading account is compulsory.Documents required to opening Trading and Demat Account along with application form.

To open an account Trading and Demat Account, you need 4 types of documents

Proof of Identity (POI)

Aadhaar Card / Passport / Voter ID card / Driving license. and

PAN Card. (Mandatory)

Proof of Address (POA)

Passport or Voters Identity Card or Ration Card. (or)

Latest 3 months Electricity Bill or Gas Bill. (or)

Latest 3 months Bank Account Statement.

Proof of Income (Only required in case of trading in derivatives segments).

Latest 6 months Bank account statement. (or)

DEMAT account holding statement with a depository participant (or)

Proof of Salary Income by submission of Salary Slip /Form 16.

Valid proof for a corresponding Bank account i.e. Proof of Bank Account

A Cancelled Cheque (with your name printed).

A.S. CHAKRAVARTHY NISM NCFM ACADEMY Hyderabad is the ultimate Stock Market NISM NCFM  Training in Hyderabad, Technical Analysis Course Institute in Hyderabad, Ameerpet, Telangana.

Keywords: Stock Market, Technical Analysis Course in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad, NCFM Training.

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AS Chakravarthy NCFM Academy : Capital Market Module Model Paper

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Capital Market Dealers Module Practice Paper : AS Chakravarthy NCFM

Stock Market : AS Chakravarthy NCFM Course in Hyderabad

AS Chakravarthy NCFM Academy Hyderabad, Ameerpet is ultimate in Training Stock Market NISM and NCFM Courses, like Capital Market Dealers Module, Derivative Market Dealers Module (NISM-8), NSE Certification Courses and NISM Certification Courses. The Best Institute for Capital Market Training – NCFM course in Hyderabad.

NCFM Capital Market (Dealers) Module Practice Paper 

Please find Answers below

1. Appeal against the orders Securities and Exchange Board of India can be made to
___________. [2 Marks] (a) Central Government
(b) Securities Appellate Tribunal
(c) Registrar of Companies
(d) High Court

2. In case, a body corporate is applying for trading membership in the capital
market segment of NSEIL, [3 Marks] (a) at least 5 directors should be graduates of whom one should be a professional.
(b) at least two directors should be graduates and have minimum of 2 years
experience of securities market.
(c) no prior experience is required.
(d) all the directors should be graduates.

3. What is the purpose of ‘Trade Log’ report on the NEAT system?
[2 Marks] (a) There is no report as ‘Trades Log’ report.
(b) To show the trades that have only been cancelled or modified orders for the
dealers belonging to a trading member for the current trading day.
(c) To show the details of the trade related activity by the trading member for a
specific day.
(d) To show the trades that was done by the trading member for the last seven
days.

4. In ASBA, the amount is blocked in
[2 Marks] (a) Trading members account
(b) Investors own account
(c) Both A and B
(d) None of the above

5. The Capital Market Segment of NSE commenced operations in
[1 Mark] (a) Sep-96
(b) Nov-94
(c) Aug-96
(d) Nov-96

6. _____________ obligates the depositories to maintain ownership records of
securities and effect changes in such records electronically at the behest of the
owner of the securities. [2 Marks] (a) The Depositories Act, 1996
(b) The SEBI Act, 1992
(c) The Securities Contract (Regulation) Act, 1956
(d) The Companies Act, 1956

7. The first two characters in ISIN code for a security represents _____.
[1 Mark] (a) issuer type
(b) security type
(c) country code
(d) company identity

8. Which of the following is true regarding the norms and procedures pertaining to
surrender of membership ?
a) A trading member desirous of surrendering membership has to give its request in
writing in a prescribed form
b) The original SEBI registration certificates for all trading segments have to be
submitted by the trading member.
c) Sub-broker registration certificates have to be submitted
d) All leased lines and VSATs will not be dismantled for the surrendering trading
member. [3 Marks] (a) a,b,c
(b) a,c
(c) a,d
(d) a,b,c,d

9. If the eighth and ninth character of the ISIN is mentioned as 04, what does it
indicate [2 Marks] (a) security is security receipt
(b) security is non-convertible preference share
(c) security is a warrant
(d) security is equity share / mutual fund

10. Activities in the ‘Activity Log’ screen on the NEAT system are displayed in
________. [2 Marks] (a) chronological order where within the order number, the details appear with the
oldest activity first and the latest last
(b) descending order of order numbers
(c) ascending order of order numbers
(d) reverse chronological order

11. The ‘Snap Quote’ screen in the NEAT system enables the user to view
________. [1 Mark] (a) instantaneous market information on a desired security.
(b) best five quotes in the market.
(c) quotes in the normal market.
(d) None of the above.

12. Clearing and settlement of trades and risk management are central functions of NSCCL. [2 Marks] (a) FALSE
(b) TRUE
(c) Not Attempted

13. Who provides counter party guarantee for all trades executed on NSEIL?
[1 Mark] (a) NSE Clearing House
(b) NSEIL
(c) NSDL
(d) NSCCL

14. Which of the following is FALSE about auctions in the NEAT system?
[2 Marks] (a) All auction orders are entered into the auction order book.
(b) Auction matching takes place only across orders belonging to the same
auction.
(c) All auction trades take place at the last traded price for that day in the regular
lot book in the normal market.
(d) Auction order matching takes place at the end of the solicitor period for the
auction.

15. Is order cancellation and order modification allowed for orders entered in the
retail debt market segment.
[2 Marks] (a) FALSE
(b) TRUE

16. The FIIs can invest in a company upto _____ % of the paid up capital of the
company. This percentage can be increased upto the sectoral cap as applicable to
the Indian Companies by passing a resolution of its board of directors.
[2 Marks] (a) 32
(b) 26
(c) 28
(d) 24

17. Are secured loans a part of Liability or Asset in balance sheet ?
[1 Mark] (a) Liability
(b) Asset
(c) Not Attempted

18. Member can procure the CTCL Software from – a) Vendors empanelled with NSE
b) Non-empanelled Vendors c) Develop in-house d) All of the above
[1 Mark] (a) b
(b) a
(c) c
(d) d

19. The Client registration form is filled by the client when ________.
[2 Marks] (a) client delivers spurious shares
(b) broker has to file FIR against client
(c) client enrolls himself with the broker
(d) client defaults in making payments

20. The corporate action indicator XB on the NEAT system stands for
[2 Marks] (a) ex-dividend
(b) ex-bonus
(c) ex-rights
(d) ex-interest

21. Which of the following statements is NOT correct?
[1 Mark] (a) Depository is registered owner of the securities held in demat form.
(b) Securities in a depository are fungible.
(c) Securities in a depository are held in dematerialised form.
(d) Dematerialised securities have distinct numbers.
22. Do clearing banks provide stock lending facilities ?
[1 Mark] (a) FALSE
(b) TRUE
(c) Not Attempted

23. SEBI has prescribed the Code of Conduct for the sub-brokers in __________.
[1 Mark] (a) Indian Contract Act, 1872
(b) Securities Contracts (Regulation) Act, 1956
(c) Companies Act, 1956
(d) SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992

24. A stockbroker means a member of _________.
[1 Mark] (a) SEBI
(b) any exchange
(c) a recognised stock exchange
(d) any stock exchange

25. What price does a market order take, in case the security has never been traded
on the NEAT system? [2 Marks] (a) The market order gets cancelled by the system.
(b) Market orders cannot be entered for a security in which a trade has not taken
place.
(c) The market order takes the value of the base price and sits in the order book
as a passive order.
(d) None of the above

26. Member A places a buy order for 1000 shares of ABC Ltd. in the NEAT system at
11:22:01 for Rs.155 per share. Member B places a sell order for 2000 shares of ABC
Ltd. at 11:22:02 for Rs.150 per share. Assume that no other orders were available in
the system during this time. Whether the trade will take place and if yes, at what
price? [1 Mark] (a) 1000 shares get traded at Rs. 150 per share.
(b) 1000 shares get traded at Rs. 150.50 per share.
(c) 1000 shares get traded at Rs. 152.50 per share.
(d) 1000 shares will get traded at Rs. 155 per share.

27. VaR margin is charged at differential rate on the ____________ position of the
client in each security.
[2 Marks] (a) Only sale
(b) Only buy
(c) Gross outstanding
(d) Net outstanding

28. Nifty index drops by 15% at 3:00 pm. Market will be halted _____.
[2 Marks] (a) by half an hour
(b) for remainder of the day
(c) for ten minutes
(d) for fifteen minutes

29. What is FALSE about an outstanding order on the NEAT system?
[2 Marks] (a) It is an order that has been entered by the user and is partially matched.
(b) It is a stop loss order that has not yet been triggered in the market.
(c) It is an order that has been entered by the user and not yet been traded.
(d) It is an order that has been entered by the user, but which has not yet been
completely traded or cancelled.

30. Which of the following is NOT true about SEBI?
[2 Marks] (a) It determines the premium/discounts at which securities are to be issued.
(b) It can specify the matters to be disclosed and the standards of disclosure
required for the protection of investors in respect of issues.
(c) Its regulatory jurisdiction extends over all intermediaries and persons
associated with the securities market.
(d) Its regulatory jurisdiction extends over corporates in the issuance of capital
and transfer of securities.

31. Which of the following is NOT true about corporate securities market reforms?
[1 Mark] (a) The secondary market overcame the geographical barriers by moving to screen
based trading.
(b) Counter-party risk is borne by investors.
(c) The trading cycle in the stock exchanges follow rolling settlement.
(d) The practice of allocation of resources among different competing entities as
well as its terms by a central authority was discontinued.

32. A portfolio contains securities with the expected return as follows:-
Security Probability Return
A 50 10
B 30 25
C 20 40
What will be the expected return of the portfolio? [1 Mark] (a) 1.75
(b) 20.5
(c) 1,980
(d) 43

33. Which of the following is FALSE about order cancellation in the NEAT system?
[2 Marks] (a) Order Cancellation functionality is available for all book types.
(b) The user is allowed to cancel auction initiation and competitor orders in auction
market.
(c) Order Cancellation functionality can be performed only for orders which have
not been fully or partially traded (for the untraded part of partially traded orders
only).
(d) Order Cancellation functionality can be performed during market hours and in
pre open period

34. The maximum amount of claim payable from the IPF to the investor (where the
trading member through whom the investor has dealt is declared a defaulter) is
________. [2 Marks] (a) Rs. 15 lakh
(b) Rs. 10 lakh
(c) Rs. 17 lakh
(d) Rs. 1 lakh

35. ABC Bank Ltd has a policy of continuous compounding of fixed deposits. Abhishek
has deposited Rs. 60,000 at the interest rate of 12% for 3 years. How much would
his deposit grow up to at the end of the term?
[2 Marks] (a) 82,068.81
(b) 87,730.8
(c) 77,047.12
(d) 85,999.97
(e) Not Attempted

36. When a user logs in for the first time in the trading system of CM segment, he
has to enter the default password provided by the Exchange. What is this default
password ?
[1 Mark] (a) NEAT
(b) DEFAULT PSWD
(c) NEATCM
(d) NEATPASSWORD

37. Which of the following statement(s) is/are true pertaining to Mark – to – Market
margin ?
a) It is calculated by marking each transaction in security to the closing price of the
security at the end of trading.
b) The margin is collected from the member before the start of the trading of the
next day.
c) The MTM margin is collected on the gross open position of the member.
[1 Mark] (a) a,b
(b) a,b,c
(c) a,c
(d) b,c

38. If the eighth and ninth character of the ISIN is mentioned as 12, what does it
indicate
[2 Marks] (a) security is deep discount bond
(b) security is a floating rate bond
(c) security is regular return bond / promissory note
(d) security is step discount bond

39. If a client buys shares worth Rs. 1,25,000 and sells shares worth Rs. 75,000
through a broker, then the maximum brokerage payable to him is ___.
[2 Marks] (a) Rs. 5,000
(b) Rs. 24,000
(c) Rs. 20,000
(d) Rs. 16,000

40. In case of surrender of the membership at NSEIL, ___________.
[2 Marks] (a) the matter is treated as confidential
(b) only the members are notified by way of a circular
(c) the surrendering member is permitted to trade with a limited exposure
(d) advertisement is issued in leading dailies

41. A trading member on the NSE, has set the branch order value unlimited for his
Chennai branch and Rs. 650 lakh for Kolkata branch. Chennai branch has two users
‘X’ and ‘Y’ with user order value limits of Rs. 250 lakh and Rs. 300 lakh respectively.
Kolkata branch has one user ‘Z’ with user order value limit of Rs. 350 lakh. The
member applies for a new user at Kolkata. What is the maximum user order value
that can be set for the new user?
[3 Marks] (a) Rs. 300 lakh
(b) unlimited
(c) Zero
(d) Not more than Rs. 650 lakh

42. An application for arbitration can be filed within ____ from the date of dispute.
[1 Mark] (a) 3 months
(b) 45 days
(c) 6 months
(d) 1 year

43. SEBI (Intermediaries) Regulations 2008 are not applicable for foreign venture
capital investors.
[1 Mark] (a) TRUE
(b) FALSE

44. Which of the following requirements by intermediaries are laid down by the SEBI
(Intermediaries) Regulations, 2008 for all the Intermediaries.
a) Grant of Registration
b) Code of Conduct
c) Common procedure for action in case of default.
[1 Mark] (a) b,c
(b) a,b,c
(c) b
(d) a,b

45. Which of the following is not a delivery report ?
[2 Marks] (a) Memberwise withheld securities statement
(b) Margin Report
(c) Client Allocation Details
(d) Demat Final Delivery Statement

46. Who can set Branch Order Value limits on the NEAT system?
[2 Marks] (a) None of the above
(b) Dealer
(c) Corporate manager
(d) Branch manager

47. If the eighth and ninth character of the ISIN is mentioned as 07, what does it
indicate
[2 Marks] (a) security is non-convertible preference share
(b) security is a warrant
(c) security is equity share / mutual fund
(d) security is secured debenture

48. If a client buys shares worth Rs. 90,000 and sells shares worth Rs. 1,10,000
through a stock-broker, then the maximum brokerage payable is _____.
[3 Marks] (a) Rs. 4,000
(b) Rs. 6,000
(c) Rs. 2,000
(d) Rs. 5,000

49. If the eighth and ninth character of the ISIN is mentioned as 08, what does it
indicate
[2 Marks] (a) security is equity share / mutual fund
(b) security is non-convertible preference share
(c) security is secured debenture
(d) security is an unsecured debenture

50. NSE’s Certification in Financial Markets is NOT a _____________ testing and
certification system.
[1 Mark] (a) nation-wide
(b) conventional
(c) fully automated
(d) online

51. The securities market has two segments primary and secondary.
Is the above statement True or False
[1 Mark] (a) FALSE
(b) TRUE

52. Auction is held in XYZ for 10,000 shares.
The closing price of XYZ on that day was Rs.146.00
The last traded price of XYZ on that day was Rs.141.00
The close price of XYZ last Friday was Rs.142.00
The previous day’s close price of XYZ was Rs.151.00
What is the maximum allowable price at which the member can put a sell order in
the auction for XYZ? (Price band applicable for Auction market is +/ -15%)
[3 Marks] (a) Rs. 167.90
(b) Rs. 173.65
(c) Rs. 163.30
(d) Rs. 162.15

53. In case of failure to give delivery in a limited physical market, close out price is
_____% over the actual trade price. [2 Marks] (a) 20
(b) 25
(c) 15
(d) 30

54. ______ price is the price for orders after the orders get triggered from the stop
loss book
[1 Mark] (a) Limit
(b) Trigger
(c) Not Attempted

55. A depository participant _______________
[1 Mark] (a) is an investor who buys/sells shares through the depository.
(b) trades in the dematerialised shares.
(c) destroys the share certificates and makes a credit entry for his clients.
(d) is an agent of the depository and takes physical share certificates from his
clients and sends them for dematerialisation.

56. Under the Member Constituent Agreement, trading members are required to
make the clients aware of which of the following
a) trading segment in which the trading member is admitted
b) SEBI Registration number
c) basic risks involved in trading on the Exchange
[1 Mark] (a) b,c
(b) a,b
(c) a,c
(d) a,b,c

57. Mr. Desai has decided to deposit Rs. 100,000 in the bank annually. If the bank
has a policy of continuous compounding and the prevailing interest rate is 11.5%
how much would his deposit grow upto in 2 years? [2 Marks] (a) 166,141.11
(b) 171,507.54
(c) 185,570.7
(d) 224,871.26

58. Which of the following is deemed to be price sensitive information
a) periodical financial results of the company
b) intended declaration of dividends (both interim and final)
c) issue of securities or buy back of securities
d) any major expansion plans or execution of new projects
[1 Mark] (a) b,c,d
(b) a,b,c,d
(c) c,d
(d) a,b,c

59. Which of the following statements is FALSE about the NEAT system?
[1 Mark] (a) All orders placed on NEAT must necessarily result in trades.
(b) Orders are matched automatically by the computer keeping the system
transparent, objective and fair.
(c) All orders received on the system are sorted with the best priced order getting
the first priority for matching.
(d) Similarly priced orders are sorted on time priority basis.

60. If the third character of the ISIN is mentioned as ‘E’ what does this denote ?
[2 Marks] (a) The issuer is company, statutory corporation, banking company
(b) The issuer is mutual fund
(c) The issuer is state government
(d) The issuer is municipal corporation

Answers
1 (b) 21 (d) 41 (a)
2 (b) 22 (b) 42 (c )
3 (c ) 23 (d) 43 (a)
4 (b) 24 (c ) 44 (b)
5 (b) 25 (c ) 45 (b)
6 (a) 26 (d) 46 (c )
7 (c) 27 (d ) 47 (d)
8 (a) 28 (b) 48 (d)
9 (b) 29 (b) 49 (d)
10 (a) 30 (a) 50 (b)
11 (a) 31 (b) 51 (b)
12 (b) 32 (b) 52 (b)
13 (d) 33 (b) 53 (a)
14 (c ) 34 (a) 54 (a)
15 (b) 35 (d) 55 (d)
16 (d) 36 (c ) 56 (d)
17 (a) 37 (b) 57 (d)
18 (d) 38 (d) 58 (b)
19 (c ) 39 (a) 59 (a)
20 (b) 40 (d) 60 (a)

 

Sources: nseindia

Keywords: AS Chakravarthy NCFM Academy, Capital  Market, NCFM, NISM

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AS Chakravarthy NCFM: Equity Derivatives Exam Model Paper (NISM-8)

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Equity Derivative Certification Examination (NISM-VIII) Model Test Paper 

 

Q.1 Theta is also referred to as the _________ of the portfolio [1 Mark]

(a) time decay

(b) risk delay

(c) risk decay

(d) time delay

Q.2 All of the following are true regarding futures contracts except [1 Mark]

(a) they are regulated by RBI

(b) they require payment of a performance bond

(c) they are a legally enforceable promise

(d) they are market to market

Q.3 Clearing Members (CMs) and Trading Members (TMs) are required to collect upfront initial margins from all their Trading Members/Constituents. [1 Mark]

(a) FALSE

(b) TRUE

Q.4 All open positions in the index futures contracts are daily settled at the [1 Mark]

(a) mark-to-market settlement price

(b) net settlement price

(c) opening price

(d) closing price

Q.5. An American style call option contract on the Nifty index with a strike price of 3040 expiring on the 30th June 2008 is specified as “30 JUN 2008 3040 CA”. [1 Mark]

(a) FALSE

(b) TRUE

Q.6 Usually, open interest is maximum in the _______ contract. [1 Mark]

(a) more liquid contracts

(b) far month

(c) middle month

(d) near month

Q.7 An equity index comprises of ______. [1 Mark]

(a) basket of stocks

(b) basket of bonds and stocks

(c) basket of tradeable debentures

(d) None of the above

Q.8 Position limits have been specified by _______ at trading member, client, market and FII levels respectively. [1 Mark]

(a) Sub brokers

(b) Brokers

(c) SEBI

(d) RBI

Q.9 An order which is activated when a price crosses a limit is _________ in F&O segment of NSEIL. [1 Mark]

(a) stop loss order

(b) market order

(c) fill or kill order

(d) None of the above

Q.10 Which of the following is not a derivative transaction? [1 Mark]

(a) An investor buying index futures in the hope that the index will go up.

(b) A copper fabricator entering into futures contracts to buy his annual requirements of copper.

(c) A farmer selling his crop at a future date

(d) An exporter selling dollars in the spot market

Q.11 An investor is bearish about ABC Ltd. and sells ten one-month ABC Ltd. futures contracts at Rs.5,00,000. On the last Thursday of the month, ABC Ltd. closes at Rs.510. He makes a _________. (assume one lot = 100) [1 Mark]

(a) Profit of Rs. 10,000

(b) loss of Rs. 10,000

(c) loss of Rs. 5,100

(d) profit of Rs. 5,100

Q.12 The interest rates are usually quoted on :  [1 Mark]

(a) Per annum basis

(b) Per day basis

(c) Per week basis

(d) Per month basis

Q.13 After SPAN has scanned the 16 different scenarios of underlying market price and volatility changes, it selects the ________ loss from among these 16 observations  [1 Mark]

(a) largest

(b) 8th smallest

(c) smallest

(d) average

Q.14 Mr. Ram buys 100 calls on a stock with a strike of Rs.1,200. He pays a premium of Rs.50/call. A month later the stock trades in the market at Rs.1,300. Upon exercise, he will receive __________. [1 Mark]

(a) Rs.10,000

(b) Rs.1,200

(c) Rs.6,000

(d) Rs.1,150

Q.15 There are no Position Limits prescribed for Foreign Institutional Investors (FIIs) in the F&O Segment. [1 Mark]

(a) TRUE

(b) FALSE

Q.16 In the Black-Scholes Option Pricing Model, when S becomes very large a call option is almost certain to be exercised [1 Mark]

(a) FALSE

(b) TRUE

Q.17 Suppose Nifty options trade for 1, 2 and 3 months expiry with strike prices of 1850, 1860, 1870, 1880, 1890, 1900, 1910. How many different options contracts will be tradable? [1 Mark]

(a) 27

(b) 42

(c) 18

(d) 24

Q.18 Prior to Financial Year 2005 – 06, transaction in derivatives were considered as speculative transactions for the purpose of determination of tax liability under the Income-tax Act [1 Mark]

(a) TRUE

(b) FALSE

Q.19 ______ is allotted to the Custodial Participant (CP) by NSCCL. [1 Mark]

(a) A unique CP code

(b) An order identifier

(c) A PIN number

(d) A trade identifier

Q.20 An interest rate is 15% per annum when expressed with annual compounding. What is the equivalent rate with continuous compounding? [1 Mark]

(a) 14%

(b) 14.50%

(c) 13.98%

(d) 14.75%

Q.21 The favorable difference received by buyer/holder on the exercise/expiry date, between the final settlement price as and the strike price, will be recognized as ___________ [1 Mark]

(a) Income

(b) Expense

(c) Cannot say

(d) None

Q.22 The F&O segment of NSE provides trading facilities for the following derivative instruments, except [1 Mark]

(a) Individual warrant options

(b) Index based futures

(c) Index based options

(d) Individual stock options

Q.23 Derivative is defined under SC(R)A to include : A contract which derives its value from the prices, or index of prices, of underlying securities. [1 Mark]

(a) TRUE

(b) FALSE

Q.24 The risk management activities and confirmation of trades through the trading system of NSE is carried out by _______. [1 Mark]

(a) users

(b) trading members

(c) clearing members

(d) participants

Q.25 A dealer sold one January Nifty futures contract for Rs.250,000 on 15th January. Each Nifty futures contract is for delivery of 50 Nifties. On 25th January, the index closed at 5100. How much profit/loss did he make ? [1 Mark]

(a) Profit of Rs. 9000

(b) Loss of Rs. 8000

(c) Loss of Rs. 9500

(d) Loss of Rs. 5000

Q.26 Manoj owns five hundred shares of ABC Ltd. Around budget time, he gets uncomfortable with the price movements. Which of the following will give him the hedge he desires (assuming that one futures contract = 100 shares) ? [1 Mark]

(a) Buy 5 ABC Ltd.futures contracts

(b) Sell 5 ABC Ltd.futures contracts

(c) Sell 10 ABC Ltd.futures contracts

(d) Buy 10 ABC Ltd.futures contracts

Q.27 An investor is bearish about Tata Motors and sells ten one-month ABC Ltd. Futures contracts at Rs.6,06,000. On the last Thursday of the month, Tata Motors closes at Rs.600. He makes a _________. (assume one lot = 100) [1 Mark]

(a) Profit of Rs. 6,000

(b) Loss of Rs. 6,000

(c) Profit of Rs. 8,000

(d) Loss of Rs. 8,000

Q.28 The beta of Jet Airways is 1.3. A person has a long Jet Airways position of Rs. 200,000 coupled with a short Nifty position of Rs.100,000. Which of the following is TRUE? [1 Mark]

(a) He is bullish on Nifty and bearish on Jet Airways

(b) He has a partial hedge against fluctuations of Nifty

(c) He is bearish on Nifty as well as on Jet Airways

(d) He has a complete hedge against fluctuations of Nifty

Q.29 Suppose a stock option contract trades for 1, 2 and 3 months expiry with strike prices of 85, 90, 95, 100, 105, 110, 115. How many different options contracts will be tradable? [1 Mark]

(a) 18

(b) 32

(c) 21

(d) 42

Q.30 The bull spread can be created by only buying and selling [1 Mark]

(a) basket option

(b) futures

(c) warrant

(d) options

Q.31 A stock broker means a member of_______. [1 Mark]

(a) SEBI

(b) any exchange

(c) a recognized stock exchange

(d) any stock exchange

Q.32 Ashish is bullish about HLL which trades in the spot market at Rs.210. He buys 10 three-month call option contracts on HLL with a strike of 230 at a premium of Rs.1.05 per call. Three months later, HLL closes at Rs. 250. Assuming 1 contract = 100 shares, his profit on the position is ____. [1 Mark]

(a) Rs.18,950

(b) Rs.19,500

(c) Rs.10,000

(d) Rs.20,000

Q.33 A January month Nifty Futures contract will expire on the last _____ of January [1 Mark]

(a) Monday

(b) Thursday

(c) Tuesday

(d) Wednesday

Q.34 Which of the following are the most liquid stocks? [1 Mark]

(a) All Infotech stocks

(b) Stocks listed/permitted to trade at the NSE

(c) Stocks in the Nifty Index

(d) Stocks in the CNX Nifty Junior Index

Q.35 In the books of the buyer/holder of the option, the premium paid would be ___________ to ‘Equity Index Option Premium Account’ or ‘Equity Stock Option Premium Account’, as the case may be. [1 Mark]

(a) Debited

(b) Credited

(c) Depends

(d) None

Q.36 Greek letter measures a dimension to_______________ in an option position.  [1 Mark]

(a) the risk

(b) the premium

(c) the relationship

(d) None

Q.37 An option which gives the holder the right to sell a stock at a specified price at some time in the future is called a ___________. [1 Mark]

(a) Naked option

(b) Call option

(c) Out-of-the-money option

(d) Put option

Q.38 Trading member Shantilal took proprietary purchase in a March 2000 contract. He bought 1500 units @Rs.1200 and sold 1400 units @ Rs. 1220. The end of day settlement price was Rs. 1221. What is the outstanding position on which initial margin will be calculated? [1 Mark]

(a) 300 units

(b) 200 units

(c) 100 units

(d) 500 units

Q.39 In which year, foreign currency futures based on new floating exchange rate system were introduced at the Chicago Mercantile Exchange [1 Mark]

(a) 1970

(b) 1975

(c) 1972

(d) 1974

Q.40 The units of price quotation and minimum price change are not standardized item in a Futures Contract. [1 Mark]

(a) TRUE

(b) FALSE

Q.41 With the introduction of derivatives the underlying cash market witnesses _______ [1 Mark]

(a) lower volumes

(b) sometimes higher, sometimes lower

(c) higher volumes

(d) volumes same as before

Q.42 Clearing members need not collect initial margins from the trading members [1 Mark]

(a) FALSE

(b) TRUE

Q.43 Which risk estimation methodology is used for measuring initial margins for futures/ options Market? [1 Mark]

(a) Value At Risk

(b) Law of probability

(c) Standard Deviation

(d) None of the above

Q.44 The value of a call option ___________ with a decrease in the spot price. [1 Mark]

(a) increases

(b) does not change

(c) decreases

(d) increases or decreases

Q.45 Any person or persons acting in concert who together own ______% or more of the open interest in index derivatives are required to disclose the same to the clearing corporation. [1 Mark]

(a) 35

(b) 15

(c) 5

(d) 1

Q.46 NSE trades Nifty, CNX IT, BANK Nifty, Nifty Midcap 50 and Mini Nifty futures contracts having all the expiry cycles, except. [1 Mark]

(a) Two-month expiry cycles

(b) Four month expiry cycles

(c) Three-month expiry cycles

(d) One-month expiry cycles

Q.47 An investor owns one thousand shares of Reliance. Around budget time, he gets uncomfortable with the price movements. One contract on Reliance is equivalent to 100 shares. Which of the following will give him the hedge he desires? [1 Mark]

(a) Buy 5 Reliance futures contracts

(b) Sell 10 Reliance futures contracts

(c) Sell 5 Reliance futures contracts

(d) Buy 10 Reliance futures contracts

Q.48 Spot Price = Rs. 100. Call Option Strike Price = Rs. 98. Premium = Rs. 4. An investor buys the Option contract. On Expiry of the Option the Spot price is Rs. 108. Net profit for the Buyer of the Option is ___. [1 Mark]

(a) Rs. 6

(b) Rs. 5

(c) Rs. 2

(d) Rs. 4

Q.49 In the NEAT F&O system, the hierarchy amongst users comprises of _______. [1 Mark]

(a) branch manager, dealer, corporate manager

(b) corporate manager, branch manager, dealer

(c) dealer, corporate manager, branch manager

(d) corporate manager, dealer, branch manager

Q.50 The open position for the proprietary trades will be on a _______ [1 Mark]

(a) net basis

(b) gross basis

Q.51 The minimum networth for clearing members of the derivatives clearing corporation/ house shall be __________ [1 Mark]

(a) Rs.300 Lakh

(b) Rs.250 Lakh

(c) Rs.500 Lakh

(d) None of the above

Q.52 The Black-Scholes option pricing model was developed in _____. [1 Mark]

(a) 1923

(b) 1973

(c) 1887

(d) 1987

Q.53 In the case of index futures contracts, the daily settlement price is the ______. [1 Mark]

(a) closing price of futures contract

(b) opening price of futures contract

(c) closing spot index value

(d) opening spot index value

Q.54 Premium Margin is levied at ________ level. [1 Mark]

(a) client

(b) clearing member

(c) broker

(d) trading member

Q.55 In the Black-Scholes Option Pricing Model, as S becomes very large, both N(d1) and N(d2) are both close to 1.0. [1 Mark]

(a) FALSE

(b) TRUE

Q.56 To operate in the derivative segment of NSE, the dealer/broker and sales persons are required to pass _________ examination. [1 Mark]

(a) Certified Financial Analyst

(b) MBA (Finance)

(c) NCFM

(d) Chartered Accountancy

Q.57 The NEAT F&O trading system ____________. [1 Mark]

(a) allows one to enter spread trades

(b) does not allow spread trades

(c) allows only a single order placement at a time

(d) None of the above

Q.58 Margins levied on a member in respect of options contracts are Initial Margin, Premium Margin and Assignment Margin [1 Mark]

(a) TRUE

(b) FALSE

Q.59 American option are frequently deduced from those of its European counterpart [1 Mark]

(a) FALSE

(b) TRUE

Q.60 Which of the following is closest to the forward price of a share price if Cash Price = Rs.750, Futures Contract Maturity = 1 year from date, Market Interest rate = 12% and dividend expected is 6%? [1 Mark]

(a) Rs. 795

(b) Rs. 705

(c) Rs. 845

(d) None of these

 

Q61.    You are a speculator. You predict the market will go up in the near future and want to take advantage of it. You would.  [1 Mark]

a) Buy Nifty futures

b) Sell securities in the cash market.

c) Sell Nifty futures

d) None of the above.

 

Q62. A bull spread is created by        [1 Mark]

a) Buying a call and a put

b) Buying two calls

c) Buying a call and selling a call

d) Selling two calls

 

Q63. Which of the below listed factors does not affect the price of an option on a stock? [1 Mark]

a) Stock price

b) Volatility

c) Dividend

d) Liquidity of stock in the underlying cash market

 

Q64. Trading member Shantilal took proprietary purchase in a March 2000 contract. He bought 1500 units @Rs.1200 and sold 1400 @ Rs. 1220. The end of day Settlement  price was Rs. 1221. What is the outstanding position on which initial margin will be calculated? [1 Mark]

a) 300 units

b) 200 units

c) 100 units

d)  500 units

Q65. Initial margin is collected to_______                                        [1 Mark]

a) make good losses on the outstanding position

b) make good daily losses

c) safeguard against potential losses on out standing positions

d) none of the above

 

Q66. The Neat F & O trading system ________                    [1 Mark]

a) Allows one to enter combination trades

b) does not allow combination trades

c) allows only a single order placement at a time

d) None of the above.

 

Q67. Daily Mark to Market settlement of futures takes place on _____ basis.          [1 Mark]

a) T+0

b) T+3

c) T+5

d) T+1

 

Q68. Immediate or cancel is an order which will automatically ____ in F & O segment of NSEIL.                                                                                                               [1 Mark]

a) Be matched because it being a preferential order

b) be cancelled if it is not matched

c) Get stored in the system for matching, immediately and in its entirely. If not executed immediately

d) cancel the unmatched portion of the Order quantity.

 

Q69.    Futures on individual stocks are allowed                                           [1 Mark]

a) On all stocks listed on the stock exchange

b) On few selected stocks only

c) On all stocks listed on all stock exchanges in India.

d) On all stocks where price is more than Rs. 100 per share.

 

Q70.    If  someone is ‘bearish’ in the market ?                                                          [1 Mark]

a) He expects the market to rise.

b) He expects the market to fall.

c) He expects the market to move sideways.

d) He expects the market to close.

 

Q71. The value of derivative instrument                                                                    [1 Mark]

a) Is fixed

b) Is reset at fixed internals

c) Depends on the value of an underlying asset.

d) None of the above.

 

Q72.  Futures contracts can be reversed with any member of the derivatives segment of the exchange.                             [1 Mark]

a) True

b) Cannot be reversed

c) Cannot be reversed for the next one month.

d) False

 

Q73. A call option at a strike of Rs. 176 is selling at a premium of Rs.18,. At what price will it break even for the buyer of the option?. [1 Mark]

a) 196

b) 187

c) 204

d) 194

 

Q74. At the point of entering into the future contract                         [1 Mark]

a) Both the buyer and the seller pay initial margin to the exchange

b) The buyer alone pays initial margin to the exchange.

c) The seller alone pays initial margin to the exchange.

d) No margin is playable to the exchange by the buyer of the seller.

 

Q75. If you have bought a futures contract and the price drops, you will be making a profit. [1 Mark]

a) True

b) False

 

Q76. If the price of the underlying asset rises sharply after the initiation of a futures contract [1 Mark]

a) The long position becomes profitable

b) The long position becomes unprofitable

c) The short position becomes profitable

d) None of the above.

 

Q77. You can buy stock futures in India regardless of whether you own the shares or not. [1 Mark]

a) True

b) False

 

Q78. A fund manager is bullish on the market. What should be his course of action? [1 Mark]

a) Buy the index future

b) Sell the index future

c) Sell his entire portfolio

d) None of the above.

 

Q79. In case of futures, the initial margin is paid only by the seller and not the buyer. [1 Mark]

a) True

b) False

c) True only in Mumbai

d) True only in Delhi.

 

Q80.  A derivative exchange faces                                                                 [1 Mark]

a) Legal risk

b) Operational risk

c) Liquidity risk.

d) All of the above.

 

Q81. The securities which are not delivered in the clearing house during pay-in, are purchased by the clearing house from the market. The process is known as                     [1 Mark]

a) Close-out

b) Penalty

c) Auction

d) Upla badla

 

Q82. If the annual risk-free rate is 10% then the ‘r’ used in the Black-Scholes formula should be                                                                                                         [1 Mark]

a) 0. 095

b) 0.12

c) 12

d) none of the above

 

 

Q83. A stock option is an example of a                                                                      [1 Mark]

a) Commodity

b) Derivative Instrument

c) Money market instrument

d) Foreign Exchange contract

 

Q84. Intrinsic value of an option cannot be negative.            [1 Mark]

a) True

b) False

c) True only in Mumbai

d) True only in Delhi

 

Q85. Market makers add                                                                                            [1 Mark]

a) Speculation to the market.

b) Liquidity to the market.

c) Fluctuation to the market.

d) Nothing to the market.

 

Q86. With decrease in strike price, the premium on Call decreases.              [1 Mark]

a) True

b) False

c) True only in USA

d) True only

 

Q87.    Time value and intrinsic value together comprise option premium.                [1 Mark]

a) True

b) False

 

Q88.  The buyer of an option can lose not more than the option premium paid        [1 Mark]

a) True

b) False

c) True only in USA

d) True only in Japan

 

Q89. The bid is the price at which market maker is prepared.                                    [1 Mark]

a) To buy.

b) To sell

c) To remain idle

d) None of the above.

 

Q90. A stock broker means a member of ____________                                          [1 Mark]

a) SEBI

b) Any exchange

c) Any stock exchange

d) A recognized stock exchange

 

Q91. An investor is bearish about ABC Ltd. and sells ten one-month ABC Ltd. Futures contracts at Rs.5,00,000. On the last Thursday of the month, ABC Ltd. closes at Rs.510. He makes a _________. (assume one lot = 100)                          [1 Mark]

a) Profit of Rs. 10,000

b) loss of Rs. 10,000

c) loss of Rs. 5,100

d) profit of Rs. 5,100

 

Q92.  Mark-to-market margins will be collected on a :                                              [1 Mark]

a) Weekly basis

b) Every 2 days

c) Every 3 days

d) Daily basis

 

Q93. Who will be eligible for clearing trades in stock futures?                                  [1 Mark]

a) All Indian citizens

b) All members of the BSE

c) Only members who are registered with the derivatives segments as Clearing Members

d) all of the above.

 

Q94. The daily settlement price for Index futures shall be decided by                     [1 Mark]

a) SEBI

b) the Reserve Bank of India.

c) The clearing corporation / house

d) none of the above.

 

Q95. Initial margin of the previous day must be paid                                                [1 Mark]

a) By the end of the day.

b) Before beginning of the next trading day.

c) During banking hours next day.

d) None of the above.

 

Q96. Initial margin is set up taking into account the volatility of the underlying market. Generally higher the volatility, higher is the initial margin.                                                 [1 Mark]

a) True

b) False

 

Q97. Value-at-risk is calculated on the basis of                                                         [1 Mark]

a) Historical Volatility

b) Perfect market prices.

c) Equilibrium market prices.

d) None of the above.

 

Q98. The value of an option ______ with increase in volatility                                 [1 Mark]

a) decreases

b) increases

c) does not change

d) increases or decreases

 

Q99. The beta of A.S.STEELS is 1.3. A person has a long A.S.STEELS position of Rs. 200,000 coupled with a short Nifty position of Rs.100,000. Which of the following is TRUE?  [1 Mark]

(a) He is bullish on Nifty and bearish on A.S.STEELS

(b)He has a partial hedge against fluctuations of Nifty

(c) He is bearish on Nifty as well as on A.S.STEELS

(d) He has a complete hedge against fluctuations of Nifty

 

Q100. Who are the participants in the derivatives market?                                        [1 Mark]

a) Hedgers

b) Speculators

c) Arbitrageurs

d) All of the above

 

 

Question No. Answers

1 A 21 A 41 C 61 A 81 C
2 A 22 A 42 A 62 C 82 A
3 B 23 A 43 A 63 D 83 B
4 A 24 C 44 C 64 C 84 A
5 B 25 D 45 B 65 C 85 B
6 D 26 B 46 B 66 A 86 B
7 A 27 A 47 B 67 D 87 A
8 C 28 B 48 A 68 D 88 A
9 A 29 D 49 B 69 B 89 A
10 D 30 D 50 A 70 B 90 D
11 B 31 C 51 A 71 C 91 B
12 A 32 A 52 B 72 A 92 D
13 A 33 B 53 A 73 D 93 C
14 A 34 C 54 A 74 A 94 C
15 B 35 A 55 B 75 B 95 B
16 B 36 A 56 C 76 A 96 A
17 B 37 D 57 A 77 A 97 A
18 A 38 C 58 A 78 A 98 B
19 A 39 C 59 B 79 B 99 B
20 C 40 B 60 A 80 D 100 D

 

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COMMODITIES MARKET Module Model paper: AS Chakravarthy NCFM

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COMMODITIES MARKET Module Model paper: AS Chakravarthy NCFM

Stock Market : As Chakravarthy : Technical Analysis Course Hyderabad

AS Chakravarthy NCFM Academy Hyderabad, Ameerpet is Best Institute in Training NISM and NCFM Courses, like Capital Market Dealers Module, Equity Derivative Certification Examination (NISM-8), Commodities Market Module, Technical Analysis Module, Fundamental Analysis Module, NSE Certification Courses and NISM Certification Courses.

Commodities Market Module Model Test Paper 

Please find Answers below

Q:1. Which of the following can be the underlying for a commodity derivative contract? [1 Mark] (a) Interest Rate
(b) Euro-Indian Rupee
(c) Gold
(d) NIFTY

Q:2. Daily mark to market settlement is done ______________________. [2 Marks] (a) Till the date of contract expiry
(b) As long as the contract makes a loss
(c) On the last day of week
(d) On the last trading day of the month

Q:3. __________ is the actual process of exchanging money and goods. [1 Mark] (a) Transfer
(b) Settlement
(c) Netting
(d) Clearing

Q:4. ___________ work at making profits by taking advantage of discrepancy between prices of the same product across different markets. [2 Marks] (a) Arbitragers
(b) Speculators
(c) Exchange
(d) Hedgers

Q:5. A forward contract is an agreement between two entities to buy or sell the underlying asset at a future date, at today’s pre-agreed price. [2 Marks] (a) FALSE
(b) TRUE

Q:6. Options trading in commodity take place in Indian commodity exchanges. [1 Mark] (a) TRUE
(b) FALSE

Q:7. Commodity exchanges enable producers and consumer to hedge their _______ given the uncertainty of the future. [1 Mark] (a) seasonal risk
(b) profit risk
(c) production risk
(d) price risk

Q:8. Which of the following is not true about the national level exchanges? [2 Marks] (a) Offers online trading
(b) Recognised on permanent basis
(c) Offers single commodity for trading
(d) Volumes higher than regional exchanges

Q:9. Which of the following Exchange does not offer derivative trading in Soybean? [2 Marks] (a) LME
(b) NCDEX
(c) CBOT
(d) MCX

Q:10. _____________ Exchanges provide real time, online, transparent and vibrant spot platform for commodities. [1 Mark] (a) Electronic Spot
(b) Regional
(c) Futures
(d) Stock

Q:11. _________can only trade through their account or on account of their clients and however clear their trade through PCMs/STCMs. [1 Mark] (a) Trading cum Clearing Member
(b) Trading Member
(c) Commodity Participant
(d) Associate Member

Q:12. Trading cum Clearing member can carry out transactions on their own account and also on their clients account. [2 Marks] (a) FALSE
(b) TRUE

Q:13. The minimum networth requirement for PCM on the NCDEX is ____________.
[2 Marks] (a) 50 Lacs
(b) 500 Lacs
(c) 5000 Lacs
(d) 5 lacs

Q:14. Members can opt to meet the security deposit requirement by way of ______. [2 Marks] (a) Cash
(b) Bank Guarantee
(c) Fixed Deposit Receipts
(d) All of the above

Q:15. In the case of certain commodities llike gold and silver, delivery is staggered over last ______ days of the contract. [2 Marks] (a) Two
(b) Three
(c) Five
(d) Thirteen

Q:16. The cash settlement is only for the incremental gain/ loss as determined on the basis of ______. [1 Mark] (a) Final settlement price
(b) Average price for the day
(c) Opening price.
(d) Last traded price

Q:17. Unit of trading for Wheat at NCDEX is __________. [1 Mark] (a) 1 MT
(b) 3 MT
(c) 1 kg
(d) 10 MT

Q:18. Some of the futures contract traded on NCDEX expires on day other than 20th of the month. [1 Mark] (a) True
(b) False

Q:19. By using the currency forward market to sell dollars forward, an _________ can lock on to a rate today and reduce his uncertainty. [1 Mark] (a) Importer
(b) Speculator
(c) Exporter
(d) Arbitrager

Q:20. _________ is the last day on which the futures contract will be traded, at the end of which it will cease to exist. [1 Mark] (a) Redemption Date
(b) Expiry Date
(c) Exercise Date
(d) Maturity Date

Q:21. “A _______option gives the holder the right but not the obligation to buy an asset by a certain date for a certain price.” [1 Mark] (a) Put
(b) ITM
(c) OTM
(d) Call

Q:22. Forward contracts are bilateral contracts and hence exposed to counter party risk.
[1 Mark] (a) TRUE
(b) FALSE

Q:23. An ________ option is an option that would lead to a zero cash flow to the holder if it were exercised immediately. [1 Mark] (a) In the money
(b) At the money
(c) Out of the money
(d) Put

Q:24. A call option with a strike price of 150 trades in the market at premium of Rs.12. The spot price is Rs.160. The time value of the option is Rs._________. [2 Marks] (a) 12
(b) 10
(c) 2
(d) 8

Q:25. A put option with a strike price of 150 trades in the market at Rs.8. The spot price is Rs.160. The intrinsic value of the option is Rs._________. [2 Marks] (a) 0
(b) 8
(c) 2
(d) 10

Q:26. A trader buys three-month put options on 1 unit of gold with a strike of Rs.17000/10 gms at a premium of Rs.70. Unit of trading is 1kg. On the day of expiration, the spot price of gold is Rs.16800/10 gms. What is his net payoff? [4 Marks] (a) (+) 13,000
(b) (+) 20,000
(c) (-) 13,000
(d) (-) 20,000

Q:27. One unit of trading for Guar Seed futures is 10 MT and delivery unit is 10 MT. A trader sells 1 unit of Guar Seed at Rs.2500/Quintal on the futures market. A week later Guar Seed futures trade at Rs.2550/Quintal. How much profit/loss has he made on his position? [2 Marks] (a) (-)5000
(b) (+)5000
(c) (+)50,000
(d) (-)50,000

Q:28. The ____________ position is considered for exposure and daily margin purposes.
[2 Marks] (a) Short
(b) Long
(c) Net
(d) Open

Q:29. Whenever the futures price moves away from the fair value, there would be opportunity for arbitrage. [2 Marks] (a) FALSE
(b) TRUE

Q:30. Consider a three-month futures contract on gold. The fixed charge is Rs.310 per deposit and the variable storage costs are Rs.52.5 per week. Assume that the storage costs are paid at the time of deposit. Assume further that the spot gold price is Rs.15000 per 10 grams and the risk-free rate is 7% per annum. What would the price of three month gold futures if the delivery unit is one kg? Assume that 3 months are equal to 13 weeks. [4 Marks] (a) 15,27,491
(b) 16,24,511
(c) 17,41,200
(d) 15,00,200

Q:31. On the 15th of June a firm involved in spices exports knows that it will receive 3 MT of Pepper on August 15. The spot price of pepper is Rs.12680 per kg and the August Pepper futures price is Rs.13930. A unit of trading is 1 MT and the delivery unit is 1 MT. The exporter can hedge his position by ______________________. [4 Marks] (a) Buying 3 unit of August pepper futures
(b) Buying 15 units of August Pepper futures
(c) Selling 3 unit of August Pepper futures
(d) Selling 15 units of August Pepper futures559.46

Q:32. A company knows that it will require 33,000 MT of Wheat in three months. The hedge ratio works out to be 0.75. The unit of trading is 10 MT and the delivery unit for wheat on the NCDEX is 10 MT. The company can obtain a hedge by _________. [4 Marks] (a) buying 450 units of three-month wheat futures.
(b) selling 2475 units of three-month wheat futures
(c) selling 450 units of three-month wheat futures.
(d) buying 2475 units of three-month wheat future

Q:33. Gold trades at Rs.16000 per 10 gms in the spot market. Three-month gold futures trade at Rs.16150. One unit of trading is 1kg and the delivery unit for the gold futures contract on the NCDEX is 1 kg. A speculator who expects gold prices to rise in the near future buys 1 unit of gold futures. Two months later gold futures trade at Rs.15900 per 10 gms. He makes a profit/loss of ______________. [2 Marks] (a) (+)2500
(b) (+)25,000
(c) (-)2500
(d) (-)25,000

Q:34. When the futures price of a commodity appears underpriced in relation to its spot price, an opportunity for __________ arbitrage arises. [2 Marks] (a) reverse cash and carry
(b) cash and carry

Q:35. A company that wants to sell an asset at a particular time in the future can hedge by taking short futures position. [2 Marks] (a) TRUE
(b) FALSE

Q:36. A _______ order, is an order which is valid for the day on which it is entered. [1 Mark] (a) Good till offset
(b) Good till day
(c) Good till filled
(d) Good till cancelled

Q:37. A Spread order is an order to buy or sell a stated amount of a commodity at a specified price, or at a better price, if obtainable at the time of execution. [1 Mark] (a) FALSE
(b) TRUE

Q:38. CHARJDDEL is a symbol for the _______futures contract traded on NCDEX: [1 Mark] (a) Copper
(b) Chilli
(c) Chana
(d) Crude Oil

Q:39. A trader sells 5 units of gold futures at Rs.16500 per 10 grams. What is the value of his open short position? Unit of trading is 1 Kg and delivery unit is one Kg. [2 Marks] (a) Rs.82,500
(b) Rs.82,50,000
(c) Rs.8,25,000
(d) Rs.82,000

Q:40. The total number of outstanding contracts (long/short) at any point in time is called __________. [2 Marks] (a) Hedge Limit
(b) Transaction Charge
(c) Delivery Lot
(d) Open Interest

Q:41. A trader has sold crude oil futures at Rs.3750 per barrel. He wishes to limit his loss to 20%. He does so by placing a stop order to buy an offsetting contract if the price goes to or above __________. [2 Marks] (a) Rs.4650
(b) Rs.4500
(c) Rs.3825
(d) Rs.3925

Q:42. On introduction of new contracts, the base price is the __________ of the underlying commodity in the prevailing spot markets. [2 Marks] (a) previous days’ average price
(b) previous days’ closing price
(c) price decided by pre-open auction
(d) price decided by the exchange

Q:43. A trader requires to take a long gold futures position worth Rs.85,00,000 as part of his hedging strategy. Two month futures trade at Rs.17000 per 10 gms. Unit of trading is 1Kg and delivery unit is one Kg. How many units must he purchase to give him the hedge? [2 Marks] (a) 5 units
(b) 14 units
(c) 50 units
(d) 10 units

Q:44. A trading member has proprietary and client positions in a March Chilli futures contract. On his proprietary account, he bought 700 trading units at Rs.6000 per Quintal and sold 250 at Rs.6015 per Quintal. On account of client A, he bought 200 trading units at Rs.6012 per Quintal, and on account of client B, he sold 100 trading units at Rs.5990 per Quintal. What is the outstanding position on which he would be margined? [3 Marks] (a) 750
(b) 950
(c) 450
(d) 850

Q:45. For Intention Matching and Seller’s Right contracts traded at NCDEX, one of the components of the amount of penalty imposed on a seller in case of a delivery default would be____ percent of final settlement price. [2 Marks] (a) 2
(b) 2.5
(c) 3
(d) 3.5

Q:46. A bread manufacturer bought five one-month wheat futures contracts at Rs.1155 per Quintal at the beginning of the day. The unit of trading is 10 MT and each contract is for delivery of 10 MT. The settlement price at the end of the day was Rs.1165 per Quintal. The trader’s MTM account will show [4 Marks] (a) (-)2500
(b) (+)2500
(c) (+)5000
(d) (-)5000

Q:47. Proprietary positions are netted at member level without any set-offs between client and proprietary positions. [1 Mark] (a) TRUE
(b) FALSE

Q:48. If the value of claim, difference or dispute is more than ___________on the date of application, then such claim, difference or dispute are to be referred to a panel of three arbitrators. [1 Mark] (a) Rs.10 Lakh
(b) Rs.50 Lakh
(c) Rs.25 Lakh
(d) Rs.75 Lakh

Q:49. On respective ___________ day, clearing members effect depository delivery in the depository clearing system as per delivery statement in respect of depository deals.
[2 Marks] (a) Pay-in
(b) Expiration
(c) Settlement
(d) Pay-out

Q:50. __________ refers to issue of physical delivery against the credit in the demat account of the constituent. [1 Mark] (a) Securitisation
(b) De-materialisation
(c) Re-materialisation
(d) Liquidation

Q:51. Any person seeking to dematerialize a commodity has to open an account with an approved _______________. [1 Mark] (a) Clearing house
(b) Exchange
(c) Depository Participant
(d) Bank

Q:52. The commodities cannot be revalidated after the Final Expiry Date (FED). [1 Mark] (a) TRUE
(b) FALSE

Q:53. Where a trade cancellation is permitted and trading member wishes to cancel a trade, it can be done only with the approval of the ___________. [1 Mark] (a) Clearing Corporation
(b) SEBI
(c) RBI
(d) Exchange

Q:54. If the last trading day as specified in the respective commodity contract is a holiday, the last trading day is taken to be the previous working day of the Exchange. [1 Mark] (a) TRUE
(b) FALSE

Q:55. In the case of settlements culminating into delivery, sales tax at the rates applicable in the state where the ___________ is located will be payable. [1 Mark] (a) Buyer
(b) Delivery Center
(c) Seller
(d) Exchange

Q:56. After the sales tax/VAT obligations are determined, the seller client has to raise the __________. [1 Mark] (a) Award
(b) Schedule
(c) Commodity
(d) Invoice

Q:57. In case the members/constituents are not registered under relevant tax laws with the state in which delivery is affected, they can appoint a Carrying & Forwarding (C&F) agent who would undertake the activities related to the physical delivery of the commodity. [1 Mark] (a) FALSE
(b) TRUE

Q:58. The participants need to access the NSPOT trading system either as client through a member or as __________ of NSPOT. [1 Marks] (a) Dealer
(b) Agent
(c) Member
(d) Contractor

Q:59. Electronic spot exchange benefits the farmers by way of providing _______. [1 Mark] (a) counterparty guarantee
(b) direct access to a national level transparent market
(c) better holding capacity of the produce
(d) All of the above

Q:60. In case the participant would need to ______, then he will have to deposit the goods in NSPOT pre-notified accredited warehouse before putting an order for the corresponding quantity in the NSPOT trading system. [1 Mark] (a) buy
(b) sell
(c) buy and sell
(d) all of the above

Correct Answers : 

1 (c) 31 (c)
2 (a) 32 (d)
3 (b) 33 (d)
4 (a) 34 (a)
5 (b) 35 (a)
6 (b) 36 (b)
7 (d) 37 (a)
8 (c) 38 (c)
9 (a) 39 (b)
10 (a) 40 (d)
11 (b) 41 (b)
12 (b) 42 (b)
13 (c) 43 (a)
14 (d) 44 (a)
15 (c) 45 (b)
16 (a) 46 (c)
17 (d) 47 (a)
18 (a) 48 (b)
19 (c) 49 (a)
20 (b) 50 (c)
21 (d) 51 (c)
22 (a) 52 (a)
23 (b) 53 (d)
24 (c) 54 (a)
25 (a) 55 (b)
26 (a) 56 (d)
27 (a) 57 (b)
28 (d) 58 (c)
29 (b) 59 (d)
30 (a) 60 (b)

A.S. CHAKRAVARTHY NCFM ACADEMY Hyderabad is the leading Institute NISM, NCFM and Technical Analysis Course in Hyderabad, Ameerpet, Telangana.

Keywords: Stock Market, Technical Analysis Course in Hyderabad, NCFM classes in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

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Fundamental Analysis Module Model Paper: AS Chakravarthy NCFM

stock market training institute in hyderabad, stock market training hyderabad, ncfm training in hyderabad, ncfm technical analysis, nse stock market courses, ncfm training in hyderabad, commodity training, investment banker training, commodities training, understanding the vix, ncfm derivative dealer module, course live market stock trading, share market training, hyderabad stock exchange, training for stock trading, money flow index technical analysis,stock market training online, ncfm exam, Advanced Technical Analysis Course, Capital Market Training, Equity Derivative Market Training, Forex Market Training, Commodities Market Training

Fundamental Analysis Module Model Paper: AS Chakravarthy NCFM 

Stock Market: AS Chakravarthy : Technical Analysis Training Hyderabad

AS Chakravarthy NCFM Academy Hyderabad, Ameerpet is Best Institute in Training NISM and NCFM Course in Hyderabad, like Capital Market Dealers Module, Equity Derivative Certification Examination (NISM-8), Commodities Market Module, Technical Analysis Module, Fundamental Analysis Module,  NSE Certification Courses and NISM Certification Courses.

Fundamental Analysis Module Model Test Paper 

Please find the  Answers below

 

Q1          “Stock A generates a return of 20% while stock B generates a return of 25%. The risk free-rate is 5%. Stock A has a standard deviation (risk) of 20%, while stock B has a standard deviation of 15%. Which stock gives a better risk adjusted return?”   [ 2 Marks ]

(a) B

(b) A

 

Q2          The more common secured loans of a company are fixed deposits and short term loans.   [ 2 Marks ]

(a) TRUE

(b) FALSE

Q3          Beta measures _______ risk.   [ 1 Mark ]

(a) cyclical

(b) reducable

(c) non-diversifiable

(d) diversifiable

Q4          The ________ allows for two stages of growth – an initial phase where the growth rate is not a stable growth rate and a subsequent steady state where the growth rate is stable and is expected to remain so for the long term.   [ 1 Mark ]

(a) later stage growth model

(b) Brown growth

(c) two-stage growth model

(d) initial stage growth model

 

Q5          Fundamental analysis is a _________ methodology.   [ 1 Mark ]

(a) Inflation valuation                     (b) volume valuation

(c) Money valuation                       (d) stock valuation

 

Q6          A negative beta shows that the asset ______ follows the market; the asset generally decreases in value if the market goes up.   [ 2 Marks ]

(a) directly

(b) inversely

 

Q7          “Companies must diversify in order to spread the risks of economic slumps, therefore every diversification suits a company. ”   [ 2 Marks ]

(a) TRUE

(b) FALSE

 

Q8          This statement forms a part of the strong form of the Efficient Market Hypothesis.   [ 1 Mark ]

 

(a) “Long-term gains, for the management of a company, with access to inside information’.”

(b) “‘No long-term gains, even for the management of a company, with access to inside information’.”

(c) “Short-term gains, for the management of a company, with access to inside information’.”

 

Q9          The Auditor’s Report will draw the attention of the reader to accounting changes and the effect that these have on the financial statements.   [ 1 Mark ]

(a) FALSE

(b) TRUE

 

Q10        “When an investor buys stock, she generally expects to get only one type of cash-flow – dividends. ”   [ 1 Mark ]

 

(a) TRUE

(b) FALSE

 

Q11        “The Director’s Report is a report submitted by the directors of a company to shareholders, informing them of the performance of the company under their stewardship.”   [ 2 Marks ]

(a) TRUE

(b) FALSE

 

Q12        Estimated EPS of ABC Ltd. for next year is Rs. 132. Assume PE multiple of 22 (Forward P/E) for the next year. Then the target price of ABC Ltd. works out to Rs. ____.   [ 3 Marks ]

(a) 2904

(b) 3240

(c) 2869

(d) 3567

 

Q13        “As of March 31, with amounts expressed in Rs. crores, ABC Ltd.’s cash assets amounted to 7,797 , while current liabilities amounted to 3,050. The cash ratio of ABC Ltd. Is ______.”   [ 3 Marks ]

(a) 2.56

(b) 3.68

(c) 4.67

(d) 3.45

 

Q14        _______ is one of the most critical factors to be considered while investing in any company.   [ 1 Mark ]

(a) Management

(b) Managing director

(c) Location of the company

(d) Auditors

 

Q15        Companies pledge assets when they take ______ loans.   [ 2 Marks ]

(a) secured

(b) unsecured

 

Q16        Lower-beta stocks mean greater volatility and are therefore considered to be riskier.   [ 1 Mark]

(a) TRUE

(b) FALSE

 

Q17        “To find the intrinsic value of a company, the fundamental analyst initially takes a bottom-up view of the company performance, its financial condition, industry analysis etc.”   [ 1 Mark ]

(a) TRUE

(b) FALSE

 

Q18        The?concept of time value of money?arises from the relative importance of ________.   [ 1 Mark ]

(a) physical asset vs. financial asset

(b) assets now vs. in future

(c) now vs. future

(d) money vs. time

 

Q19        “If the intrinsic value of a stock is below the market price, the investor would buy the stock because he believes that the stock price is going to fall and come closer to its intrinsic value.”   [ 1 Mark ]

(a) TRUE

(b) FALSE

 

Q20        Indian listed companies must periodically report their financial statements to the regulators only.   [ 1 Mark ]

(a) FALSE

(b) TRUE

 

Q21        “Consider the stock of ABC Technologies Ltd. which has a beta of 0.5. This essentially points to the fact that based on past trading data, ABC Technologies Ltd. as a whole has been relatively more volatile as compared to the market as a whole.”   [ 2 Marks ]

(a) FALSE

(b) TRUE

 

Q22        The _______ ratio measures the degree to which a firm generates sales with its total asset base.   [ 1 Mark ]

(a) net asset turnover (NAT)

(b) current asset turnover (CAT)

(c) total asset turnover (TAT)

(d) basic asset turnover (BAT)

 

Q23        Estimated EPS of ABC Ltd. for next year is Rs. 130. Assume PE multiple of 21 (Forward P/E) for the next year. Then the target price of ABC Ltd. works out to Rs. ____.   [ 3 Marks ]

(a) 2760

(b) 2730

(c) 2820

(d) 2790

 

Q24        Economic indicators allow analysis of economic performance and predictions?of future performance.   [ 2 Marks ]

(a) TRUE

(b) FALSE

 

Q25        “Examples of leading indicators are the agricultural production, fixed capital investment etc.”   [ 1 Mark ]

(a) TRUE

(b) FALSE

 

Q26        “According to the Efficient Market Hypothesis, stocks always tend to trade _________ on stock exchanges, making it impossible for investors to either consistently purchase undervalued stocks or sell stocks at inflated prices.”   [ 1 Mark ]

 

(a) at their fair value

(b) at their mis-priced value

(c) at their technical value

(d) at their expected value

 

Q27        Professionally managed companies are those that have at the helm a member of the controlling family.   [ 1 Mark ]

(a) FALSE

(b) TRUE

 

Q28        “As of March 31, with amounts expressed in Rs. crores, ABC Ltd.’s current assets amounted to 11,304, while current liabilities amounted to 4353. The current ratio of ABC Ltd. Is _____.”   [ 3 Marks ]

(a) 3.46

(b) 1.6

(c) 4.35

(d) 2.6

 

Q29        The Beta is a measure of the ______ of a security that cannot be avoided through diversification.   [ 1 Mark ]

(a) pro-cyclical risk

(b) cyclical risk

(c) un-systematic risk

(d) systematic risk

 

Q30        The published financial statements of a company in an _______ consist of its Balance Sheet as at the end of the accounting period detailing the financial condition of the company on that date.   [ 1 Mark ]

(a) Equity Report

(b) Annual Report

(c) Executive Report

(d) Interim Report

 

Q31        “Based on ABC Ltd.’s EPS of Rs. 108 for the year, the trailing 12 month PE of ABC Ltd. at a price of Rs. 1300 per share works out to be _____. ”   [ 3 Marks ]

(a) 17.02

(b) 15.06

(c) 18.09

(d) 12.04

 

Q32        The weak form of the ________ stipulates that current asset prices reflect past price and volume information.   [ 1 Mark ]

(a) Inefficient Market Hypothesis

(b) Efficient Price Hypothesis

(c) Efficient Market Hypothesis

 

Q33        The Balance Sheet details the financial position of a company on a particular date.   [ 1 Mark ]

(a) TRUE

(b) FALSE

 

Q34        “As of March 31, with amounts expressed in Rs. crores, ABC Ltd.’s current assets amounted to 15,678, while current liabilities amounted to 6786. The current ratio of ABC Ltd. Is _____.”   [ 3 Marks ]

(a) 3.56

(b) 4.45

(c) 2.31

(d) 1.67

 

Q35        “The?risk-free interest rate?is the theoretical?rate of return?of an investment with ______, including?default risk. ”   [ 1 Mark ]

(a) zero risk

(b) positive risk

(c) negative risk

(d) unlimited risk

 

Q36        A firm with a 5% growth rate and a return on equity of 15% will have a stable period pay-out ratio of _____.   [ 2 Marks ]

(a) 23%

(b) 37%

(c) 33%

(d) 28%

 

Q37        The managing director represents the shareholders and it is his duty to report to the shareholders and the general public on the stewardship of the company by him or her.   [ 2 Marks ]

(a) TRUE

(b) FALSE

 

Q38        Higher-beta stocks mean less volatility and are therefore considered to be less riskier.   [ 1 Mark ]

(a) FALSE

(b) TRUE

 

Q39        “In the bottom-up approach, an analyst investigates both international and domestic economic?indicators, such as GDP growth rates, energy prices, inflation and interest rates. ”   [ 1 Mark ]

(a) TRUE

(b) FALSE

 

Q40        Rs. 100 of today’s money invested for one year and earning 8% interest will be worth Rs. _____ after one year.   [ 1 Mark ]

(a) 110

(b) 108

(c) 120

(d) 125

 

Q41        A firm with a 7% growth rate and a return on equity of 20% will have a stable period pay-out ratio of _____.   [ 2 Marks ]

(a) 35%

(b) 38%

(c) 28%

(d) 39%

 

Q42        A firm with a 3% growth rate and a return on equity of 10% will have a stable period pay-out ratio of _____.   [ 2 Marks ]

(a) 30%

(b) 25%

(c) 26%

(d) 22%

 

Q43        Behavioural Finance is a field of finance that proposes _______ theories to explain stock market anomalies.   [ 2 Marks ]

(a) relationship-based

(b) neural-based

(c) consumer-based

(d) psychology-based

 

Q44        A procyclic economic indicator is one that moves in the opposite direction as the economy.   [ 2 Marks ]

(a) FALSE

(b) TRUE

 

Q45        Examples where Efficient Market Hypothesis is purported to succeed are anomalies like cheap stocks outperforming the market in the long term.   [ 2 Marks ]

(a) FALSE

(b) TRUE

 

Q46        _______ are those to whom the company owes money for raw materials and other articles used in the manufacture of its products.   [ 2 Marks ]

(a) Unsecured creditors

(b) Secured debtors

(c) Trade creditors

(d) Trade debtors

 

Q47        “Consider a stock, with an expected dividend per share next period of Rs. 2.00, a cost of equity of 16%, and an expected growth rate of 6% forever. The value of this stock is:”   [ 2 Marks ]

(a) 30

(b) 35

(c) 25

(d) 20

 

Q48        _________ uses financial analysis to envisage the movement of stock prices.   [ 1 Mark ]

(a) Fundamental analysis

(b) Money analysis

(c) Stock analysis

(d) Inflation analysis

 

Q49        “Auditors are required to report any change, such as a change in accounting principles or the non-provision of charges that result in an increase or decrease in profits.”   [ 1 Mark ]

(a) TRUE

(b) FALSE

 

Q50        The _________ is an example of a procyclic economic indicator.   [ 2 Marks ]

(a) Gross Domestic Product (GDP)

(b) Unemployment rate

 

Q51        _______ are amounts set aside from profits for an estimated expense or loss.   [ 2 Marks ]

(a) Long term assets

(b) Liabilities

(c) Provisions

(d) Current assets

 

Q52        “It is upon the quality, competence and vision of the auditors that the future of company rests. ”   [ 1 Mark ]

(a) TRUE

(b) FALSE

 

Q53        “_________, which accounting helps to standardize, is presented in the companies? financial reports. ”   [ 1 Mark ]

(a) Internal information

(b) Technical information

(c) Financial information

(d) Non public information

 

Q54        “The?moderately-strong form of the Efficient Market Hypothesis?stipulates that private information or insider information too, is quickly incorporated by market prices and therefore cannot be used to reap abnormal trading profits.”   [ 2 Marks ]

(a) FALSE

(b) TRUE

 

Q55        “Evidence in the psychology literature reveals that individuals have unlimited information processing capabilities, do not exhibit systematic bias in processing information, are not prone to making mistakes, and never tend to rely on the opinion of others.”   [ 2 Marks ]

(a) TRUE

(b) FALSE

 

Q56        “Based on ABC Ltd.’s EPS of Rs. 123 for the year, the trailing 12 month PE of ABC Ltd. at a price of Rs. 1400 per share works out to be _____. ”   [ 3 Marks ]

(a) 17.69

(b) 15.67

(c) 13.56

(d) 11.38

 

Q57        “Stock A generates a return of 12% while stock B generates a return of 15%. The risk free-rate is 5%. Stock A has a standard deviation (risk) of 15%, while stock B has a standard deviation of 20%. Which stock gives a better risk adjusted return?”   [ 2 Marks ]

(a) A

(b) B

 

Q58        “As of March 31, with amounts expressed in Rs. crores, ABC Ltd.’s current assets amounted to 13,456, while current liabilities amounted to 5456. The current ratio of ABC Ltd. Is _____.”   [ 3 Marks ]

(a) 1.78

(b) 3.76

(c) 2.47

(d) 4.67

 

Q59        “Consider a stock, with an expected dividend per share next period of Rs. 1, a cost of equity of 15%, and an expected growth rate of 6% forever. The value of this stock is:”   [ 2 Marks ]

(a) 20

(b) 19

(c) 15

(d) 11

 

Q60        The usual unsecured loans a company has are debentures and term loans.   [ 2 Marks ]

(a) TRUE

(b) FALSE

Answers

1 B 21 A 41 A
2 B 22 C 42 A
3 C 23 B 43 D
4 C 24 A 44 A
5 C 25 A 45 A
6 B 26 A 46 C
7 B 27 A 47 D
8 B 28 D 48 A
9 B 29 D 49 A
10 B 30 B 50 A
11 A 31 D 51 C
12 A 32 C 52 B
13 A 33 A 53 C
14 A 34 C 54 A
15 A 35 A 55 B
16 B 36 C 56 D
17 B 37 B 57 B
18 B 38 A 58 C
19 B 39 B 59 D
20 A 40 B 60

B

 

AS CHAKRAVARTHY NCFM ACADEMY Hyderabad is the leading Institute NISM, NCFM and Technical Analysis Training in Hyderabad, Ameerpet, Telangana.

Keywords: Stock Market, Technical Analysis Training in Hyderabad, NCFM classes in Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

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Introduction of Future Market : Types of Derivatives : AS Chakravarthy

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Introduction of Future Market : Types of Derivatives : AS Chakravarthy

Stock Market : Technical Analysis Training Hyderabad: AS Chakravarthy

A future Market contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. But unlike forward contracts, the futures contracts are standardized and exchange traded. To facilitate liquidity in the futures contracts, the exchange specifies certain standard features of the contract. It is a standardized contract with standard underlying instrument, a standard quantity and quality of the underlying instrument that can be delivered, (or which can be used for reference purposes in settlement) and a standard timing of such settlement. A futures contract may be offset prior to maturity by entering into an equal and opposite transaction.

The standardized items in a futures contract are:

  • Quantity of the underlying
  • Quality of the underlying
  • The date and the month of delivery
  • The units of price quotation and minimum price change
  • Location of settlement

Types of Derivatives

Here we define some of the more popularly used derivative contracts. Some of these, namely futures and options will be discussed in more details at a later stage.

Forwards: A forward contract is an agreement between two entities to buy or sell the underlying asset at a future date, at today’s pre-agreed price.

Futures: A futures contract is an agreement between two parties to buy or sell the underlying asset at a future date at today’s future price. Futures contracts differ from forward contracts in the sense that they are standardised and exchange traded.

Options: There are two types of options – call and put. A Call option gives the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. A Put option gives the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date.

Warrants: Options generally have lives of up to one year, the majority of options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter.

Baskets: Basket options are options on portfolios of underlying assets. The underlying asset is usually a weighted average of a basket of assets. Equity index options are a form of basket options.

Swaps: Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts.

The two commonly used swaps are:

  • Interest rate swaps: These entail swapping only the interest related cash flows between the parties in the same currency.
  • Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction.

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Keywords: Stock Market, Technical Analysis Training Hyderabad, AS Chakravarthy NCFM Academy Hyderabad.

 

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Commodities Market : Derivatives : AS Chakravarthy NCFM Academy

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Commodity Derivatives Market : AS Chakravarthy NCFM Academy

AS Chakravarthy NCFM Course in Hyderabad : Stock Market Training

Why Commodity Derivatives introduced worldwide?

The origin of derivatives can be traced back to the need of farmers to protect themselves against fluctuations in the price of their crop. From the time of sowing to the time of crop harvest, farmers would face price uncertainty. Through the use of simple derivative products, it was possible for the farmer to partially or fully transfer price risks by locking-in asset prices. These were simple contracts developed to meet the needs of farmers and were basically a means of reducing risk.

A farmer who sowed his crop in June faced uncertainty over the price he would receive for his harvest in September. In years of scarcity, he would probably obtain attractive prices. However, during times of oversupply, he would have to dispose off his harvest at a very low price. Clearly this meant that the farmer and his family were exposed to a high risk of price uncertainty.

On the other hand, a merchant with an ongoing requirement of grains too would face a price risk – that of having to pay exorbitant prices during dearth, although favorable prices could be obtained during periods of oversupply. Under such circumstances, it clearly made sense for the farmer and the merchant to come together and enter into a contract whereby the price of the grain to be delivered in September could be decided earlier. What they would then negotiate happened to be a futures-type contract, which would enable both parties to eliminate the price risk.

Today, derivative contracts exist on a variety of commodities such as corn, pepper, cotton, wheat, silver, etc. Besides commodities, derivatives contracts also exist on a lot of financial underlying like stocks, interest rate, exchange rate, etc.

History of Commodity Derivative Markets.

The Commodity derivative was first introduced in Chicago Board of Trade in the year 1848, where as the first futures clearing house came into existence in 1925.

Commodity futures markets have a long history in India. Cotton was the first commodity to attract futures trading in the country leading to the setting up of the Bombay Cotton Trade Association Ltd in 1875.

Futures trading in oil seeds started in 1900 with the establishment of the Gujarati Vyapari Mandali, which carried on futures trade in groundnut, castor seed and cotton.

Calcutta Hessian Exchange Ltd. was established in 1919 for futures trading in raw jute and jute goods. But organized futures trading in raw jute began only in 1927 with the establishment of East Indian Jute Association Ltd.

Futures trading in bullion began in Mumbai in 1920 and subsequently markets came up in other centres like Rajkot, Jaipur, Jamnagar, Kanpur, Delhi and Kolkata.

1952 Forward Contracts (Regulation) Act, 1952, was enacted.

The Act provided for 3-tier regulatory system:

(a) An association recognized by the Government of India on the recommendation of Forward Markets Commission,
(b) The Forward Markets Commission (it was set up in September 1953) and
(c) The Central Government.

Forward Contracts (Regulation) Rules were notified by the Central Government in July, 1954.

The National Agriculture Policy announced in July 2000 and the announcements of Hon’ble Finance Minister in the Budget Speech for 2002-2003 were indicative of the Governments resolve to put in place a mechanism of futures trade/market.

The year 2003 is a landmark in the history of commodity futures market witnessing the establishment and recognition of three new national exchanges [National Commodity and Derivatives Exchange of India Ltd. (NCDEX), Multi Commodity Exchange of India Ltd (MCX) and National Multi Commodity Exchange of India Ltd. (NMCE)]

Present Traded Commodities in Indian Commodity Markets: 

Spices:

Pepper

Chilli

Jeera

Turmeric

Coriander

Plantation Products

Rubber

Coffee-Robusta Cherry AB

Cashew

Energy

Crude Oil

Furnace Oil

Thermal Coal

Brent Crude Oil

Natural Gas

Cereals:

Wheat

Barley

Maize (Yellow/Red)

Polymers

Polypropylene

Linear Low density polyethylene

Polyvinyl Chloride

Fibres

Indian 28.5mm Cotton

V-797 Kapas

Medium Staple Cotton

Kapas

Raw Jute

Pulses

Chana

Masoor

Yellow Peas

Precious Metals

Gold

Silver

Platinum

Oil & Oilseeds

Castor Seed

Sesame Seeds

Cotton Seed Oilcake

Others

Guar Seeds

Potato

Mentha Oil

Guar Gum

CER

Gur

Almond

Metals

Steel

Copper

Zinc

Aluminium

Nickel

 

Soy Bean

Refined Soy Oil

Soybean meal (local & export)

Mustard Seed

KachhiGhani Mustard Oil

Rapeseed – Mustard Seed Oil Cake

Crude Palm Oil

RBD Palmolein

Groundnut in shell

Groundnut expeller Oil

 

Note: Currently, Rice, Sugar, Urad and Tur are de-listed (as on 1 April 2010).

 

AS. Chakravarthy NCFM Academy Hyderabad is the Oldest Training Center in Stock Market, NISM and NCFM Course in Hyderabad, Ameerpet, Telangana.

Keywords: A.S.Chakravarthy NCFM Academy Hyderabad, Stock Market Training in Hyderabad.

 

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AS Chakravarthy NCFM course Hyderabad: Commodity exchanges-India

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Stock Market: NCFM Course in Hyderabad: Commodity exchanges-India

AS Chakravarthy : NISM NCFM Course in Hyderabad Ameerpet

AS.Chakravathy NCFM Academy Hyderabad is the Best Institute for Commodity Market and Stock Market Training, NISM NCFM Course in Hyderabad, Fundamental and Technical Analysis Course in Hyderabad, Ameerpet.

In India at present the main Commodity Exchanges and  Traded products are given below:

No.  Exchanges  Main Commodities
1 Multi Commodity Exchange of India Ltd., Mumbai* Gold, Silver, Copper, Crude Oil, Zinc, Lead, Nickel, Natural gas, Aluminium, Mentha Oil, Crude_Palm_Oil, Refined Soya Oil, Cardamom, Guar Seeds, Kapas, Potato,
Chana\Gram, Melted Menthol Flakes, Almond, Wheat,
Barley, Long Steel, Maize, Soybean Seeds, Gasoline US,
Tin, Kapaskhali, Platinum, Heating Oil
2  National Commodity & Derivative Exchange Ltd., Mumbai * Guar Seed, Soy Bean, Soy Oil, Chana,RM Seed, Jeera,  Turmeric, Guar Gum, Pepper, Cotton Cake, Long Steel,  Gur, Kapas, Wheat, Red Chilli, Crude Oil, Maize, Gold,Copper, Castor Seeds, Potato, Barley, Kachhi Ghani Mustard Oil, Silver, Indian 28 Mm Cotton, Platinum
3 National Multi Commodity Exchange of India Limited, Ahmedabad  Rape/Mustard Seed, Guar Seeds, Nickel, Jute, Refined  Soya Oil, Zinc, Rubber, Chana\Gram, Isabgul, Lead, Gold, Aluminium, Copper, Turmeric, Copra, Silver, Raw Jute, Mentha Oil.
4 Indian Commodity Exchange Ltd, Gurgaon *  Gold, Crude Oil, Copper, Silver
5 National Board of Trade.  Indore. Soy bean, Soy Oil
6 Chamber Of Commerce., Hapur Gur, Mustard seed
7 Ahmedabad Commodity Exchange Ltd.  Castorseed
8 Rajkot Commodity Exchange Ltd, Rajkot  Castorseed
9 Surendranagar Oilseeds Association Ltd, S.Nagar  Cotton & Kapas
10 The Rajdhani Oil and Oilseeds Exchange Ltd., Delhi  Gur, Mustard Seed
11 Haryana Commodities Ltd.,Sirsa  Mustard seed, Cotton seed Oil Cake
12 India Pepper & Spice Trade Association. Kochi Pepper Domestic-MG1,Pepper 550 G/L,
13 Vijay Beopar Chamber Ltd.,Muzaffarnagar  Gur
14 The Meerut Agro Commodities Exchange Co. Ltd., Meerut  Gur
15 Bikaner Commodity Exchange Ltd.,Bikaner Guarseed,
16 First Commodity Exchange of India Ltd, Kochi  Coconut oil
17 The Bombay Commodity Exchange Ltd. Mumbai  Castor Seed
18 The Central India Commercial Exchange Ltd, Gwaliar Mustard seed
19 Bhatinda Om & Oil Exchange Ltd., Batinda. Gur
20 The Spices and Oilseeds Exchange Ltd., Sangli Turmeric
21 The East India Jute & Hessian Exchange Ltd, Kolkatta  Raw Jute
22 The East India Cotton Association Mumbai.  Cotton

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NCFM Courses in Hyderabad : NIFTY 50 Futures Contract specification

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NCFM Courses in Hyderabad : NIFTY 50 Futures Contract specification

Stock Market : AS Chakravarthy NISM NCFM Courses in Hyderabad

 

NIFTY 50 Futures Contract Specification:

NIFTY 50 is the National Stock Exchange’s Index and it is constructed by IISL.

 

Underlying index NIFTY 50
Exchange of trading National Stock Exchange of India Limited
Security descriptor FUTIDX
Contract size Permitted lot size shall be 75

(minimum value Rs.5 lakh)

Price steps Re. 0.05
Price bands Operating range of 10% of the base price
Trading cycle The futures contracts will have a maximum of three month trading cycle – the near month (one), the next month (two) and the far month (three). New contract will be introduced on the next trading day following the expiry of near month contract.
Expiry day The last Thursday of the expiry month or the previous trading day if the last Thursday is a trading holiday.
Settlement basis Mark to market and final settlement will be cash settled on T+1 basis.
Settlement price Daily settlement price will be the closing price of the futures contracts for the trading day and the final settlement price shall be the closing value of the underlying index on the last trading day of such futures contract.

 

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AS Chakravarthy NCFM Training in Hyderabad: NIFTY 50-Index Options

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AS Chakravarthy NCFM Training in Hyderabad: NIFTY 50-Index Options

Stock Market: NCFM Courses in Hyderabad

AS Chakravarthy NCFM Academy  is the best Institute for NCFM Training in Hyderabad.

NIFTY 50  Index Option Contract Specification: NIFTY 50 is the National Stock Exchange’s Index and it is constructed by India Index Services and Products Limited (IISL), its fully owned by NSE at present.

 

Underlying index NIFTY 50
Exchange of trading National Stock Exchange of India Limited
Security descriptor OPTIDX
Contract size Permitted lot size shall be 75

(minimum value Rs.5 lakh)

Price steps Re. 0.05
Price bands A contract specific price range based on its delta value and is computed and updated on a daily basis.
Trading cycle Trading cycle The options contracts will have a maximum of three month trading cycle – the near month (one), the next month (two) and the far month (three). New contract will be introduced on the next trading day following the expiry of near month contract. Also, long term options have 3 quarterly and 5 half yearly expiries
Expiry day The last Thursday of the expiry month or the previous trading day if the last Thursday is a trading holiday.
Settlement basis Cash settlement on T+1 basis.
Style of Option European
Strike Price Interval Depending on  the  Index level
Daily Settlement Price Not Applicable
Final Settlement Price Closing Value of  the index on  the  last trading day.

 

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Source: www.nseindia.com

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AS Chakravarthy NCFM Course in Hyderabad: Stock Futures Contract

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AS Chakravarthy : NCFM Course in Hyderabad: Stock Futures Contract

AS Chakravarthy Technical Analysis Course in Hyderabad

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Contract specification of Stock Futures Contract

Underlying Individual Securities
Exchange of trading National Stock Exchange of India Limited
Security descriptor FUTSTK
Contract size As specified by the exchange

(minimum value Rs.5 lakh)

Price steps Re. 0.05
Price bands Operating range of 20% of the base price
Trading cycle The futures contracts will have a maximum of three month trading cycle – the near month (one), the next month (two) and the far month (three). New contract will be introduced on the next trading day following the expiry of near month contract.
Expiry day The last Thursday of the expiry month or the previous trading day if the last Thursday is a trading holiday.
Settlement basis Mark to market and final settlement will be cash settled on T+1 basis.
Settlement price Daily settlement price will be the closing price of the futures contracts for the trading day and the final settlement price shall be the closing price of the underlying security on the last trading day.

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Stock Market : NCFM Course in Hyderabad: Stock Options Contract

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Stock Market : NISM Course in Hyderabad: Stock Options Contract

AS Chakravarthy Technical Analysis Course in Hyderabad

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Contract specification of Stock Options Contract

Underlying Individual Securities available for trading in Cash Market
Exchange of trading National Stock Exchange of India Limited
Security descriptor OPTSTK
Style of Option European
Strike Price Interval As specified by  the  Exchange
Contract size As Specified by the Exchange

(minimum value Rs.5 lakh)

Price steps Re. 0.05
Price bands Not Applicable
Trading cycle The options contracts will have a maximum of three month trading cycle – the near month (one), the next month (two) and the far month (three). New contract will be introduced on the next trading day following the expiry of near month contract.
Expiry day The last Thursday of the expiry month or the previous trading day if the last Thursday is a trading holiday.
Settlement basis Daily Settlement on T+1 basis and final option exercise settlement on T+1 basis.
Daily Settlement Price Premium value (net)
Final Settlement Price Closing Price of underlying security on the  last trading day of the option contract.

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Derivative Participants : NCFM Stock Market Course in Hyderabad

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AS Chakravarthy stock market course hyderabad: Derivative Participants

Stock Market : Technical Analysis Course in Hyderabad

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Derivative contracts are of different types. The most common ones are forwards, futures, options and swaps. Derivative Market Participants who trade in the derivatives market can be classified under the following three broad categories: hedgers, speculators, and arbitragers.

  1. Hedgers: The farmer’s example that we discussed about was a case of hedging. Hedgers face risk associated with the price of an asset. They use the futures or options markets to reduce or eliminate this risk.
  2. Speculators: Speculators are participants who wish to bet on future movements in the price of an asset. Futures and options contracts can give them leverage; that is, by putting in small amounts of money upfront, they can take large positions on the market. As a result of this leveraged speculative position, they increase the potential for large gains as well as large losses.
  3. Arbitragers: Arbitragers work at making profits by taking advantage of discrepancy between prices of the same product across different markets. If, for example, they see the futures price of an asset getting out of line with the cash price, they would take offsetting positions in the two markets to lock in the profit.

Whether the underlying asset is a commodity or a financial asset, derivatives market performs a number of economic functions.

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AS Chakravarthy NCFM Course in Hyderabad : Forwards and Futures

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Stock Market : NCFM Course in Hyderabad : Forwards and Futures

AS Chakravarthy NISM NCFM : Technical Analysis Course in Hyderabad

Forward contracts are often confused with futures contracts. The confusion is primarily because both serve essentially the same economic functions of allocating risk in the presence of future price uncertainty. However futures are a significant improvement over the forward contracts as they eliminate counterpart risk and offer more liquidity. Below Table lists the distinction between the forwards and futures contracts

 

Futures Forwards
Trade on an organized exchange OTC in nature
Standardized contract terms Customized contract terms
More liquid Less liquid
Requires margin payments No margin payment
Follows daily settlement Settlement happens at end of period

 

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Forward Contracts : Stock Market : NCFM Course in Hyderabad

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AS Chakravarthy Stock Market Course in Hyderabad: Forward Contracts

Stock Market : NCFM Course in Hyderabad  Ameerpet

A forward contract is an agreement to buy or sell an asset on a specified date for a specified price. One of the parties to the contract assumes a long position and agrees to buy the underlying asset on a certain specified future date for a certain specified price. The other party assumes a short position and agrees to sell the asset on the same date for the same price. Other contract details like delivery date, price and quantity are negotiated bilaterally by the parties to the contract. The forward contracts are normally traded outside the exchanges.

The salient features of forward contracts are as given below:

  • They are bilateral contracts and hence exposed to counter-party risk.
  • Each contract is custom designed, and hence is unique in terms of contract size, expiration date and the asset type and quality.
  • The contract price is generally not available in public domain.
  • On the expiration date, the contract has to be settled by delivery of the asset.
  • If the party wishes to reverse the contract, it has to compulsorily go to the same counter-party, which often results in high prices being charged.

Limitations of forward markets

 Forward markets world-wide are posed by several problems:

  • Lack of centralization of trading,
  • Illiquidity and
  • Counter party risk

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Stock Market Course in Hyderabad: Global Commodity Exchanges

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Stock Market Course in Hyderabad: Global Commodity Exchanges

Stock Market : NISM : NCFM Course in Hyderabad

 

AS Chakravarthy NCFM Academy is the Best training Institute in Stock Market Course in Hyderabad, NISM, NCFM Course in Hyderabad and Technical Analysis Course in Hyderabad Ameerpet and coaching given in various modules like Capital Market, Derivative Market (NISM-8), Technical Analysis module, Fundamental Analysis Module, Commodity Market Module, Currency Derivative Module (NISM-1), Mutual Funds Modules  (NISM-5A).

 

Details are given below rankings in Global Commodity Exchanges.

Global Ranking of Volumes on Commodities (Futures, Options and Indices) for Jan-June 2009

   

 

Exchange  Traded Volumes

(000 contracts)

 Futures (in %)
New York Mercantile Exchange (NYMEX), US 206,026 84
Dalian Commodity Exchange, China 170,869 100
Shanghai Futures Exchange, China 151,544 100
Zhengzhou Commodity Exchange, China 93,213 100
Chicago Board of Trade (CBOT), US 83,234 82
Intercontinental Exchange (ICE ) Futures UK 78,373 99
Multi Commodity Exchange (MCX), India 77,743 100
London Metal Exchange (LME) UK 55,185 95
Intercontinental Exchange (ICE), US 25,271 80
Tokyo Commodity Exchange, Japan 14,643 100
National Commodity and Derivatives Exchange (NCDEX), India 11,434 100
Chicago Mercantile Exchange (CME), US 9,786 88
London International Financial Futures and Options Exchange (LIFFE), UK 4,240 90
Tokyo Grain Exchange, Japan 2,730 100
LIFFE, US 2,177 99.7
ICE Futures Canada 1,929 98
Kansas City Board of Trade 1,789 97
LIFFE Paris 1,665 75
Central Japan Commodity Exchange 841 100
Minneapolis Grain Exchange 577 98
Dubai Mercantile Exchange, UAE 272 100
MERCADO A TERMINO DE BUENOS AIRES Argentina 88 84
Kansai Commodities Exchange Japan 41 100

Source: www.nseindia.com

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Stock Market : NISM NCFM Course in Hyderabad : Types of Companies

Expert Technical Analysis Training by AS Chakravarthy - NISM NCFM Academy Hyderabad

Types of Companies : Stock Market : NISM NCFM Course in Hyderabad

AS Chakravarthy NCFM Academy : Stock Market Course in Hyderabad

AS Chakravarthy NCFM Academy is the ultimate training Institute in Stock Market Course in Hyderabad, NISM, NCFM Course in Hyderabad and Technical Analysis Course in Hyderabad Ameerpet and coaching given in various modules like Capital Market, Derivative Market (NISM-8), Technical Analysis module, Fundamental Analysis and other popular modules.

Types of Companies are divided on various basis classified below:

(A) On the basis of incorporation:

On the basis of incorporation, companies can be classified as:

(i) Chartered companies:

The crown in exercise of the royal prerogative has power to create a corporation by the grant of a charter to persons assenting to be incorporated. Such companies or corporations are known as chartered companies. Examples of this type of companies are Bank of England (1694), East India Company (1600). The powers and the nature of business of a chartered company are defined by the charter which incorporates it. After the country attained independence, these types of companies do not exist in India.

(ii) Statutory companies:

A company may be incorporated by means of a special Act of the Parliament or any state legislature. Such companies are called statutory companies, Instances of statutory companies in India are Reserve Bank of India, the Life Insurance Corporation of India, the Food Corporation of India etc. The provisions of the Companies Act 1956 apply to statutory companies except where the said provisions are inconsistent with the provisions of the Act creating them. Statutory companies are mostly invested with compulsory powers.

(iii) Registered companies:

Companies registered under the Companies Act 1956, or earlier Companies Acts are called registered companies. Such companies come into existence when they are registered under the Companies Act and a certificate of incorporation is granted to them by the Registrar.

(B) On the basis of liability:

On the basis of liability the company can be classified into:

(i) Companies limited by shares:

When the liability of the members of a company is limited to the amount if any unpaid on the shares, such a company is known as a company limited by shares. In a company limited by shares the liability of the members is limited to the amount if any unpaid on the shares respectively held by them. The liability can be enforced during existence of the company as well as during the winding up. Where the shares are fully paid up, no further liability rests on them.

(ii) Companies limited by guarantee:

It is a registered company in which the liability of members is limited to such amounts as they may respectively undertake by the memorandum to contribute to the assets of the company in the event of its being wound up. In the case of such companies the liability of its members is limited to the amount of guarantee undertaken by them. Clubs, trade associations, research associations and societies for promoting various objects are various examples of guarantee companies.

(iii) Unlimited companies:

A company not having a limit on the liability of its members is termed as unlimited company. In case of such a company every member is liable for the debts of the company as in an ordinary partnership in proportion to his interest in the company. Such companies are not popular in India.

(C) On the basis of number of members:

On the basis of number of members the company can be classified into:

(i) Private company:

A private company means a company which by its articles of association:

(i) Restricts the right to transfer its shares

(ii) Limits the number of its members to 200 (excluding members who are or were in the employment of the company) and

(iii) Prohibits any invitation to the public to subscribe for any shares or debentures of the company.

(iv)Where two or more persons hold one or more shares in a company jointly, they are treated as a single member. There should be at least two persons to form a private company and the maximum number of members in a private company cannot exceed 200. A private limited company is required to add the words “Private Ltd” at the end of its name.

(ii) Public company:

A public company means a company which is not a private company. There must be at least seven persons to form a public company. It is of the essence of a public company that its articles do not contain provisions restricting the number of its members or excluding generally the transfer of its shares to the public or prohibiting any invitation to the public to subscribe for its shares or debentures. Only the shares of a public company are capable of being dealt in on a stock exchange.

(D) According to Domicile:

(i) Foreign company:

It means a company incorporated outside India and having a place of business in India.

According to Section 591 a foreign company is one incorporated outside India:

(a) Which established a place of business within India after the commencement of this Act or (b) Which had a place of business within India before the commencement of this Act and continues to have the same at the commencement of this Act.

(ii) Indian Companies:

A company formed and registered in India is known as an Indian Company.

(E) Miscellaneous Category:

(i) Government Company:

It means any company in which not less than 51 percent of the paid up share capital is held by the Central Govt, and/or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments. The subsidiary of a Government company is also a Government company.

(ii) Holding and subsidiary companies:

A company is known as the holding company of another company if it has control over another company. A company is known as subsidiary of another company when control is exercised by the latter over the former called a subsidiary company. A company is to be deemed to be subsidiary company of another

(a) If the other:

(a) Controls the composition of its Board of directors or

(b) Exercises or controls more than half of its total voting power where it is an existing company in respect where of the holders of preference shares issued before the commencement of the Act have the same voting rights as the holders of equity shares or

(c) In the case of any other company holds more than half in nominal value of its equity share capital or

(b) If it is a subsidiary of a third company which is subsidiary of the controlling company.

(iii) One man Company:

This is a company in which one man holds practically the whole of the share capital of the company and in order to meet the statutory requirement of minimum number of members, some dummy members hold one or two shares each. The dummy members are usually nominees of principal shareholder. The principal shareholder is in a position to enjoy the profits of the business with limited liability. Such type of companies are perfectly valid and not illegal.

 

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NISM Course Training in Hyderabad : Understanding of Mutual Funds

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NISM Course Training in Hyderabad : Understanding of Mutual Funds

Stock Market : NISM NCFM Course in Hyderabad

Understanding of Mutual Funds:

Mutual fund is a vehicle to mobilize moneys from investors, to invest in different markets and securities, in line with the investment objectives agreed upon, between the mutual fund and the investors. In other words, through investment in a mutual fund, a small investor can avail of professional fund management services offered by an asset management company.

Why Mutual Fund Schemes?

Mutual funds seek to mobilize money from all possible investors. Various investors have different investment preferences. In order to accommodate these preferences, mutual funds mobilize different pools of money. Each such pool of money is called a mutual fund scheme.  Every scheme has a pre-announced investment objective. When investors invest in a mutual fund scheme, they are effectively buying into its investment objective.

Types of Funds

Open-Ended Funds, Close-Ended Funds and Interval Funds

Open-ended funds are open for investors to enter or exit at any time, even after the NFO.

Close-ended funds have a fixed maturity. Investors can buy units of a close-ended scheme, from the fund, only during its NFO.

Interval funds combine features of both open-ended and close-ended schemes. They are largely close-ended, but become open-ended at pre-specified intervals. For instance, an interval scheme might become open-ended between January 1 to 15, and July 1 to 15, each year.

Actively Managed Funds and Passive Funds

Actively managed funds are funds where the fund manager has the flexibility to choose the investment portfolio, within the broad parameters of the investment objective of the scheme.

Passive funds invest on the basis of a specified index, whose performance it seeks to track.

Debt, Equity and Hybrid Funds

A scheme might have an investment objective to invest largely in equity shares and equity-related investments like convertible debentures. The investment objective of such funds is to seek capital appreciation through investment in this growth asset. Such schemes are called equity schemes.

Schemes with an investment objective that limits them to investments in debt securities like Treasury Bills, Government Securities, Bonds and Debentures are called debt funds.

Hybrid funds have an investment charter that provides for investment in both debt and equity. Of late, there have been funds that also invest in Gold along with either debt or equity or both.

Types of Debt Funds

Gilt funds invest in only treasury bills and government securities, which do not have a credit risk (i.e. the risk that the issuer of the security defaults).

Diversified debt funds on the other hand, invest in a mix of government and non-government debt securities such as corporate bonds, debentures and commercial paper. These schemes are also known as Income Funds.

Junk bond schemes or high yield bond schemes invest in companies that are of poor credit quality. Such schemes operate on the premise that the attractive returns offered by the investee companies makes up for the losses arising out of a few companies defaulting.

Fixed maturity plans are a kind of debt fund where the investment portfolio is closely aligned to the maturity of the scheme.

Floating rate funds invest largely in floating rate debt securities

Liquid schemes or money market schemes are a variant of debt schemes that invest only in short term debt securities.

 Types of Equity Funds

Diversified equity fund is a category of funds that invest in a diverse mix of securities that cut across sectors.

Sector funds however invest in only a specific sector. For example, a banking sector fund will invest in only shares of banking companies. Gold sector fund will invest in only shares of gold-related companies.

Thematic funds invest in line with an investment theme. For example, an infrastructure thematic fund might invest in shares of companies that are into infrastructure construction, infrastructure toll-collection, cement, steel, telecom, power etc. The investment is thus more broad-based than a sector fund; but narrower than a diversified equity fund.

Equity Linked Savings Schemes (ELSS), as seen earlier, offer tax benefits to investors. However, the investment is subject to lock-in for a period of 3 years.

Equity Income / Dividend Yield Schemes invest in securities whose shares fluctuate less, and the dividend represents a larger proportion of the returns on those shares. The NAV of such equity schemes are expected to fluctuate lesser than other categories of equity schemes.

Arbitrage Funds take contrary positions in different markets / securities, such that the risk is neutralized, but a return is earned. For instance, by buying a share in BSE, and simultaneously selling the same share in the NSE at a higher price. Most arbitrage funds take contrary positions between the equity market and the futures and options market. (‘Futures’ and ‘Options’ are commonly referred to as derivatives. These are designed to help investors to take positions or protect their risk in some other security, such as an equity share. They are traded in exchanges like the NSE and the BSE. Although these schemes invest in equity markets, the expected returns are in line with liquid funds

 Gold Funds

These funds invest in Gold and Gold-related securities. Gold Exchange Traded Fund, Gold Sector Fund

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Futures Market Terminology : Stock Market: NISM Course in Hyderabad

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Futures Market Terminology : Stock Market: NISM Course in Hyderabad

Derivatives divided in to Futures , Options and Swaps. In Future market we generally used the following Futures Market Terminology as below:

  •  Spot price: The price at which an underlying asset trades in the spot market.
  • Futures price: The price that is agreed upon at the time of the contract for the delivery of an asset at a specific future date.
  • Contract cycle: It is the period over which a contract trades. The index futures contracts on the NSE have one-month, two-month and three-month expiry cycles which expire on the last Thursday of the month. Thus a January expiration contract expires on the last Thursday of January and a February expiration contract ceases trading on the last Thursday of February. On the Friday following the last Thursday, a new contract having a three-month expiry is introduced for trading.
  • Expiry date: is the date on which the final settlement of the contract takes place.
  • Contract size: The amount of asset that has to be delivered under one contract. This is also called as the lot size.
  • Basis: Basis is defined as the futures price minus the spot price. There will be a different basis for each delivery month for each contract. In a normal market, basis will be positive. This reflects that futures prices normally exceed spot prices.
  • Cost of carry: Measures the storage cost plus the interest that is paid to finance the asset less the income earned on the asset.
  • Initial margin: The amount that must be deposited in the margin account at the time a futures contract is first entered into is known as initial margin.
  • Marking-to-market: In the futures market, at the end of each trading day, the margin account is adjusted to reflect the investor’s gain or loss depending upon the futures closing price. This is called marking-to-market.
  • Maintenance margin: Investors are required to place margins with their trading members before they are allowed to trade. If the balance in the margin account falls below the maintenance margin, the investor receives a margin call and is expected to top up the margin account to the initial margin level before trading commences on the next day.

 

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List of Abbreviations: NISM – NCFM : Stock Market Course in Hyderabad

Expert Technical Analysis Training by AS Chakravarthy - NISM NCFM Academy Hyderabad

List of Abbreviations: NISM – NCFM : Stock Market Course in Hyderabad

Technical Analysis Course in Hyderabad : AS Chakravarthy

AS Chakravarthy NCFM Academy Hyderabad is the pioneer Institute for Stock Market Course in Hyderabad, NCFM course in Hyderabad, Technical Analysis Course in Hyderabad, Ameerpet, Telangana. They are providing coaching for Stock Market courses like NISM – NCFM, Technical and fundamental Analysis, Stock Trading and investments for short term and long term basis.

 

In Stock Market we generally used the abbreviations given in the List of Abbreviations as below:

ADs Authorised Dealers
AT Algorithmic Trading
AI Auction Inquiry
AL Activity Log
ASBA Application Supported by Blocked Amount
ADRs American Depository Receipts
AL Activity Log
AON All or None
BOVL Branch Order Value Limit
BSE Bombay Stock Exchange
BM Branch Manager
CADT Client Allocation Details
CDS Currency Derivatives Segment
CD Cum- Dividend
CB Cum- Bonus
CLI Client
CI Cum-Interest
CM Clearing Member
CR Cum- Rights
CSD Collateral Security Deposit
CDSL Central Depositories Services Ltd.
CM Capital Market
Co. Company
CTCL Computer to Computer Link
DEA Department of Economic Affairs
DFDS Demat Final Delivery Statement
DFRS Demat Final Receipt Statement
DMA Direct Market Access
DP Depository Participant
DPG Dominant Promoter Group
DQ Disclosed Quantity
DvP Delivery versus Payment
ECBs External Commercial Borrowings
EPI Early Pay-In
FCCBs Foreign Currency Convertible Bonds
FI Financial Institution
FII Foreign Institutional Investors
FIPB Foreign Investment Promotion Board
F&O Futures and Options
FTP File Transfer Protocol
FPO Follow-on Public Offer
GDRs Global Depository Receipts
HUF Hindu Undivided Family
ICDR Issue of Capital and Disclosure Requirements
IEPF Investor Education and Protection Fund
IFSD Initial Free Security Deposit
INST Institutional
IOC Immediate or Cancel
IPO Initial Public Offer
IPF Investor Protection Fund
ISC Investor Service Cell
ISIN International Securities Identification Number
KYC Know Your Client
LTP Last Trade Price
MBP Market By Price
MAC Membership Approval Committee
MF Mutual Funds
MI Market Inquiry
MM Market Movement
MCA Member Constituent Agreement
MCA Ministry of Corporate Affairs
MRC Membership Recommendation Committee
MTM Mark To Market
MW Market Watch
NEAT National Exchange for Automated Trading
NCFM NSE’s Certification in Financial Markets
NCIT Non Custodian Institutional Trade
ND No Delivery
NISM National Institute of Securities Market
NOC No Objection Certificate
NSCCL National Securities Clearing Corporation Ltd.
NSDL National Securities Depository Ltd.
NSE National Stock Exchange
NT Negotiated Trade
O L Odd Lot market
OCXL Order Cancellation
OTC Over The Counter
OECLOB Open Electronic Consolidated Limit Order Book
OO Outstanding Orders
OM Order Modification
OS Order Status
PAN Permanent Account Number
PCM Professional Clearing Member
PFRDA Pension Fund Regulatory and Development Fund
PRO Proprietary
PT Previous Trades
RBI Reserve Bank of India
RDD Risk Disclosure Document
RETDEBT Retail Debt
RDM Retail Debt Market
SAT Securities Appellate Tribunal
SBTS Screen Based Trading System
SC(R)A Securities Contracts (Regulation) Act, 1956
SC(R)R Securities Contracts (Regulation) Rules, 1957
SEBI Securities and Exchange Board of India
SL Stop Loss
SLBS Securities Lending and Borrowing Scheme
SGF Settlement Guarantee Fund
SQ Snap Quote
SRO Self Regulatory Organization
STT Securities Transaction Tax
SURCON Surveillance and Control
T+2 Second day from the trading day
TFT Trade for Trade
TFTS Trade for Trade Surveillance
TM Trading Member
UCC Unique Client Code
UDR Unique Documentary Requirement
UTI Unit Trust of India
UOVL User Order Value Limit
VaR Value at Risk
VIX Volatility Index
VSAT Very Small Aperture Terminal
WDM Wholesale Debt Market
XB Ex- Bonus
XD EX-Dividend
XI Ex-Interest
XR Ex- Rights

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Mutual Funds – KYC: Stock Market: NCFM NISM Course in Hyderabad

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Mutual Funds – KYC: Stock Market: NCFM NISM Course in Hyderabad

Stock Market Training Courses in Hyderabad

Before investing in Mutual Funds every investor has to follow below precautions advised by SEBI, in the form of “Know your client (KYC)”. These are as given below

Mutual Funds – KYC:

 DO’s

  • Read the offer document carefully before investing.
  • Note that investments in mutual funds may be risky, and do not necessarily result in gains.
  • Invest in a scheme depending upon your investment objective and risk appetite.
  • Note that past performance of a scheme or a fund is not indicative of the scheme’s or the fund’s future performance. Past performance may or may not be sustained in the future.
  • Keep regular track of the NAV of the schemes in which you have invested.
  • Ensure that you receive an account statement for your investments/redemptions.

DON’Ts

  • Don’t invest in a scheme just because somebody is offering you a commission or some other incentive, gift etc.
  • Don’t get carried away by the name of the scheme/mutual fund.
  • Don’t be guided solely by the past performance of a scheme/fund or be taken in by promises of future returns.
  • Don’t forget to take note of the risks involved in the investment.
  • Don’t hesitate to approach the proper authorities for redressal of your doubts/grievances.
  • Don’t deal with any agent/broker dealer who is not registered with AMFI.

 

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List of Mutual Funds Companies in India : NISM Courses in Hyderabad

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List of Mutual Funds Companies in India : NISM Courses in Hyderabad

Stock Market : NISM NCFM Coaching in Hyderabad Ameerpet

 

List of Mutual Funds Companies in India has classified as below:

A. Bank Sponsored

1. Joint Ventures – Predominantly Indian

• BOI AXA Investment Managers Private Limited
• Canara Robeco Asset Management Company Limited
• SBI Funds Management Private Limited

2. Joint Ventures – Predominantly Foreign

• Baroda Pioneer Asset Management Company Limited

3. Others

• IDBI Asset Management Ltd.
• Union Asset Management Company Private Limited (formerly Union KBC Asset Management Co. Pvt. Ltd)
• UTI Asset Management Company Ltd B.Institutions 1. Indian
• IIFCL Asset Management Co. Ltd.
• LIC Mutual Fund Asset Management Limited

B.Institutions

  1. Indian
  • IIFCL Asset Management Co. Ltd.
  • LIC Mutual Fund Asset Management Limited

C. Private Sector

1. Indian

• Edelweiss Asset Management Limited
• Escorts Asset Management Limited
• IDFC Asset Management Company Limited
• IIFL Asset Management Ltd. (Formerly known as India Infoline Asset Management Co. Ltd.)
• IL&FS Infra Asset Management Limited (CIN U65191MH2013PLC239438)
• Indiabulls Asset Management Company Ltd.
• JM Financial Asset Management Limited
• Kotak Mahindra Asset Management Company Limited (KMAMCL)
• L&T Investment Management Limited
• Mahindra Asset Management Company Pvt. Ltd.
• Motilal Oswal Asset Management Company Limited
• Peerless Funds Management Co. Ltd.
• PPFAS Asset Management Pvt. Ltd.
• Quantum Asset Management Company Private Limited
• Sahara Asset Management Company Private Limited
• Shriram Asset Management Co. Ltd
• SREI Mutual Fund Asset Management Pvt. Ltd.
• Sundaram Asset Management Company Limited
• Tata Asset Management Limited
• Taurus Asset Management Company Limited

2. Foreign

• BNP Paribas Asset Management India Private Limited
• Franklin Templeton Asset Management (India) Private Limited
• Invesco Asset Management (India) Private Limited
• Mirae Asset Global Investments (India) Pvt. Ltd.

3. Joint Ventures – Predominantly Indian

• Aditya Birla Sun Life AMC Limited
• Axis Asset Management Company Ltd.
• DSP BlackRock Investment Managers Private Limited
• HDFC Asset Management Company Limited (Corporate Identification Number – U65991MH1999PLC123027)  • ICICI Prudential Asset Mgmt.Company Limited
• Reliance Nippon Life Asset Management Limited

4. Joint Ventures – Predominantly Foreign

• HSBC Asset Management (India) Private Ltd.
• Principal Pnb Asset Management Co. Pvt. Ltd.

5. Joint Ventures – Others

• DHFL Pramerica Asset Managers Private Limited

 

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Source: www.amfiindia.com

 

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Option Market Terminology : Stock Market: NISM Course in Hyderabad

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Share Market : Option Market Terminology : NISM Course in Hyderabad

Stock Market Training Courses in Hyderabad

Derivatives divided in to Futures , Options and Swaps. In Option market we generally used the following Option Market Terminology as below:

Options are the most recent and evolved derivative contracts. They have non-linear or asymmetrical profit profiles making them fundamentally very different from futures and forward contracts. Options have allowed both theoreticians as well as practitioner’s to explore wide range of possibilities for engineering different and sometimes exotic pay off profiles. Option contracts help a hedger reduce his risk with a much wider variety of strategies.

An option gives the holder of the option the right to do something in future. The holder does not have to exercise this right. In contrast, in a forward or futures contract, the two parties have committed themselves or are obligated to meet their commitments as specified in the contract. Whereas it costs nothing (except margin requirements) to enter into a futures contract, the purchase of an option requires an up-front payment. This chapter first introduces key terms which will enable the reader understand option terminology. Afterwards futures have been compared with options and then payoff profiles of option contracts have been defined diagrammatically. Readers can create these payoff profiles using payoff tables. They can also use basic spreadsheet software such as MS-Excel to create these profiles.

Option Market Terminology:

  • Index options: Have the index as the underlying. They can be European or American. They are also cash settled.
  • Stock options: They are options on individual stocks and give the holder the right to buy or sell shares at the specified price. They can be European or American.
  • Buyer of an option: The buyer of an option is the one who by paying the option premium buys the right but not the obligation to exercise his option on the seller/ writer.
  • Writer of an option: The writer of a call/put option is the one who receives the option premium and is thereby obliged to sell/buy the asset if the buyer exercises on him. There are two basic types of options, call options and put options.
  • Call option: It gives the holder the right but not the obligation to buy an asset by a certain date for a certain price.
  • Put option: It gives the holder the right but not the obligation to sell an asset by a certain date for a certain price.
  • Option price/premium: It is the price which the option buyer pays to the option seller. It is also referred to as the option premium.
  • Expiration date: The date specified in the options contract is known as the expiration date, the exercise date, the strike date or the maturity.
  • Strike price: The price specified in the options contract is known as the strike price or the exercise price.
  • American options: These can be exercised at any time up to the expiration date.
  • European options: These can be exercised only on the expiration date itself. European options are easier to analyze than American options and properties of an American option are frequently deduced from those of its European counterpart.
  • In-the-money option: An in-the-money (ITM) option would lead to a positive cash flow to the holder if it were exercised immediately. A call option on the index is said to be in-the-money when the current index stands at a level higher than the strike price (i.e. spot price > strike price). If the index is much higher than the strike price, the call is said to be deep ITM. In the case of a put, the put is ITM if the index is below the strike price.
  • At-the-money option: An at-the-money (ATM) option would lead to zero cash flow if it were exercised immediately. An option on the index is at-the-money when the current index equals the strike price (i.e. spot price = strike price).
  • Out-of-the-money option: An out-of-the-money (OTM) option would lead to a negative cash flow if it were exercised immediately. A call option on the index is out-of-the money when the current index stands at a level which is less than the strike price (i.e. spot price < strike price). If the index is much lower than the strike price, the call is said to be deep OTM. In the case of a put, the put is OTM if the index is above the strike price.
  • Intrinsic value of an option: The option premium has two components – intrinsic value and time value. Intrinsic value of an option at a given time is the amount the holder of the option will get if he exercises the option at that time. The intrinsic value of a call is Max [0, (St — K)] which means that the intrinsic value of a call is the greater of 0 or (St — K). Similarly, the intrinsic value of a put is Max [0, K — St], i.e. the greater of 0 or (K — St). K is the strike price and St is the spot price.
  • Time value of an option: The time value of an option is the difference between its premium and its intrinsic value. Both calls and puts have time value. The longer the time to expiration, the greater is an option’s time value, all else equal. At expiration, an option should have no time value.

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Purpose and Benefits of Derivatives: Stock Market Course in Hyderabad

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Purpose and Benefits of Derivatives: Stock Market Course in Hyderabad

Stock Market : NISM NCFM Coaching in Hyderabad

“Derivative” concept was first introduced in Chicago Board of Trade in 1848. After 152 years, from 2000 year on wards this concept was introduced in India.

Why Derivative concept was introduced worldwide?

The main Purpose and benefits of derivatives instruments are described below:

The financial markets are very risky markets as unexpected incidents also influence the market. To ensure, these unexpected incidents risk, this concepts was introduced as a “Hedging” product. The main purpose of derivative markets is:

  • Changes in equity markets around the world.
  • Currency exchange rate shifts.
  • Changes in interest rates around the world.
  • Changes in global supply and demand for commodities such as agricultural products, precious and industrial metals and energy products such as oil and natural gas.

“Derivatives are financial instruments. These represent the value the asset such as Equity, Bullion, Currency, Commodity etc. So when you invest in derivatives, you actually place a bet on whether the value of the asset represented will increase or decrease by a certain percentage and within a set period of time. Therefore, derivatives are merely contracts or bets that get their value from existing or future prices of underlying securities. In derivatives, you are essentially buying a promise from the original owner of the asset to transfer ownership of the asset rather than the asset itself.

The benefits of derivative instruments are described below,

  1. Price Discovery

Futures market prices of the assets depend on a continuous flow of information from around the world. A broad range of factors (such as climatic conditions, political situations, debt default, refugee displacement, environmental condition etc.) can influence the demand and supply of assets and thus the current and future prices of the underlying asset on which the derivative contract is based, changes the price as per the kind of information. This process is known as “Price Discovery”.

  1. Risk Management

Risk management is the process of identifying the desired (future) level of risk, identifying the actual (Present) level of risk and altering the latter to equal the former. This process is widely termed as hedging and speculation. “Hedging” is defined as a strategy for reducing the risk in holding a market position while “Speculation”is taking a position in the way the markets will move.

  1. They improve Market efficiency for the Underlying Asset.

For example, investors who want exposure to the NIFTY 50 can buy an NIFTY Bees stock index fund or replicate the fund by buying NIFTY 50 futures and investing in risk-free bonds. Either of these methods will give them exposure to the index without the expense of purchasing all the underlying assets in the NIFTY 50 Stocks.

  1. Derivatives help to reduce “Market Transaction” costs.

Because derivatives are a form of insurance or risk management, the cost of trading in them has to be low or investors will not find it economically sound to purchase such “insurance” for their positions.

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Source :www.investopedia.com

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Settlement Cycle for Demat Securities : NCFM Training in Hyderabad

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Settlement Cycle for Demat Securities : NCFM Courses in Hyderabad

Stock Market : Technical Analysis Course in Hyderabad

Cash Market Settlement Cycle for Dematerialized Securities as follows:

Normal Market: The trades executed each trading day are considered as a trading period and trades executed during the day are settled based on the net obligations for the day. At National Stock Exchange, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd working day. Typically trades taking place on Monday are settled on Wednesday, Tuesday’s trades settled on Thursday and so on.

A tabular representation of the settlement cycle for rolling settlement is given below

 

Activity  Day
Trading Rolling Settlement T
Clearing Custodial Confirmation T+1 working days
Delivery Generation  T+1 working days
Settlement Securities and Funds pay-in  T+2 working days
Securities and Funds pay-out  T+2 working days
Valuation of shortages based on closing prices (at T+1 closing prices) T+2 working days
Post Settlement Auction T+2 working days
Auction settlement  T+3 working days
Bad Delivery Reporting T+4 working days
Rectified bad delivery pay-in and pay-out T+6 working days
Re-bad delivery reporting and pickup T+8 working days
Close out of re-bad delivery and funds pay-in & pay-out T+9 working days

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Cash Market Settlement Process : Stock Market Courses in Hyderabad

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Cash Market Settlement Process : NCFM Courses in Hyderabad

Stock Market : Technical Analysis Course Training in Hyderabad

The Cash Market settlement process begins as soon as member’s obligations are determined through the clearing process. The clearing banks and depositories provide the necessary interface between the custodians/clearing members (who clear for the trading members or their own transactions) for settlement of funds/securities obligations of trading members. The clearing corporation provides a major link between the clearing banks, clearing members and the depositories. This link ensures actual movement of funds and securities on the prescribed pay-in and payout day. The core processes involved in the settlement process are:

The cash market settlement process for transactions in securities in the CM segment of NSE is presented in the below:

ASC NCFM ACADEMY HYDERABAD

Explanation:

(1) Trade details from Exchange to NSCCL (real-time and end of day trade file).

(2) NSCCL notifies the consummated trade details to CMs/custodians who affirm back. Based on the affirmation, NSCCL applies multilateral netting and determines obligations.

(3) Download of obligation and pay-in advice of funds/securities.

(4) Instructions to clearing banks to make funds available by pay-in time.

(5) Instructions to depositories to make securities available by pay-in time.

(6) Pay-in of securities (NSCCL advises depository to debit pool account of custodians/CMs and credit its account and depository does it).

(7) Pay-in of funds (NSCCL advises Clearing Banks to debit account of custodians/CMs and credit its account and clearing bank does it).

(8) Pay-out of securities (NSCCL advises depository to credit pool account of custodians/CMs and debit its account and depository does it).

(9) Pay-out of funds (NSCCL advises Clearing Banks to credit account of custodians/CMs and debit its account and clearing bank does it).

(10) Depository informs custodians/CMs through DPs.

(11) Clearing Banks inform custodians/CMs.

 

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Share Capital Types : Stock Market : NISM NCFM Course in Hyderabad

Expert Technical Analysis Training by AS Chakravarthy - NISM NCFM Academy Hyderabad

Meaning of Share Capital : NISM NCFM Course in Hyderabad

Stock Market : NISM NCFM Training Courses in Hyderabad Ameerpet

AS Chakravarthy NCFM Academy Hyderabad is the Best Institute for Stock Market Course in Hyderabad, NISM NCFM Course in Hyderabad, Technical Analysis Course in Hyderabad, Ameerpet, Telangana.

Share capital is the sum of money received by a company by selling its shares to the investors. When a company issues fresh share to the investors and raises fund, it directly increases the value of share capital.

The amount of total share capital cannot be more than the amount of authorized share capital of a company. Increase in market price of shares does not affect the value of share capital because share capital is calculated based on the par value of shares and not on the basis of market price.

Share capital is shown on the balance sheet of a company.

Types of Share Capital

Types of Share capital can be categorised in authorized share capital, issued share capital, subscribed share capital, called up share capital and paid up share capital.

Authorized share capital:

Authorized share capital refers to the total capital that a company is authorized to accept from investors by issuing shares. In simple terms, a company cannot raise capital more than its authorized capital.

It represents the capital with which a company is registered that’s why it is also known as ‘registered capital’.

Issued Share Capital:

Issued Share Capital represents that part of total authorized share capital which has been issued by a company for subscription by investors. Usually, companies do not issue all of their shares for control purpose. Thus, the part which is issued represents the issued share capital.

Subscribed share capital:

It refers to that part of issued share capital, which has been subscribed by investors. It means when a company issues shares to raise capital, it may or may not receive subscriptions for all of its shares. The part of issued share capital for which subscription has been received is known as subscribed share capital. So subscribed share capital can be equal to subscribed share capital but not more than that.

Called up share capital:

A company collects the full amount of share price in more than one lot. The part of subscribed share capital which has been asked for payment represents called up share capital.

Paid up share capital:

It represents that part of called up share capital which has been paid by investors.

Paid up share capital = Called up share capital – Call in arrears.

Example:

Suppose ABC Ltd. is registered with a capital of Rs 1 crore divided into shares of Rs 10 each. It issues 8 lakh shares to raise a fund of Rs 80 lakh but investors subscribe for 6 lakh shares. The company calls for Rs 4 per share out of Rs 10 (Nominal value of shares) and it receives payment for only 5 lakh and 50 thousands shares.

Now,

Authorized share capital (10 lakh shares of Rs.10 each) = 1 crore

Issued share capital (8 lakh shares of Rs.10 each) = 80 lakh

Subscribedshare capital (6 lakh shares of Rs.10 each) = 60 lakh

Called up share capital (6 lakh × Rs.4) = 24 lakh

Paid up share capital (5 lakh and 50 thousand × Rs.4) = 22 lakh

Call in arrears (50 thousand × Rs.4) = 2 lakh

Source: monetarysection.com

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Who Regulates Financial Market Entities: asc NCFM Academy Ameerpet

Expert Technical Analysis Training by AS Chakravarthy - NISM NCFM Academy Hyderabad

NCFM Course in Hyderabad : Who Regulates Financial Market Entities

Stock Market : Technical Analysis Course in Hyderabad

Who Regulates Financial Market Entities like Banks, Trading Member, Auditor, Mutual Funds, Venture Capital Funds etc., given below is a list of types of companies/ intermediaries/service providers in the financial market. The names of the relevant bodies that regulate them are given in the second column.

 

Type of Entity                                                           Regulatory body

Auditors                                                                          ICAI/CAG

Banks                                                                               RBI

Banks – Issue Collection                                               SEBI

Chit Funds                                                                      REGISTRAR OF CHIT FUNDS

Collective Investment Schemes                                  SEBI

Companies – All                                                             MCA/ROC

Companies – Listed                                                       MCA/ROC/SEBI/SE

Company Secretaries                                                    ICSI

Co-operative Banks                                                       RBI

Cost Accountants                                                           ICWAI

Credit Rating Agencies                                                 SEBI

Custodial Services                                                         SEBI

Debenture Trustees                                                     SEBI

Depositories                                                                   SEBI

Depository Participants                                               SEBI/NSDL/CDSL

Foreign Investment Institutions                                SEBI

Housing Finance Companies                                       NHB

Insurance Brokers/ Agents                                        IRDA

Insurance Companies                                                  IRDA

Investment Bankers (Merchant Bankers)               SEBI

Investor Associations                                                  SEBI

Media (Newspapers, Magazines, TV)                        MIB

Mutual Funds & Asset Management Companies     SEBI

Mutual Fund Brokers/ Agents                                    AMFI/SEBI

Non-Banking Financial Companies (NBFCs)             RBI

Nidhi Companies                                                           MCA

Plantation Companies                                                  SEBI

Portfolio Managers                                                       SEBI

Registrars & Share Transfer Agents                          SEBI

Stock Brokers                                                                SEBI/Stock Exchange

Stock Exchanges                                                           SEBI

Sub-Brokers                                                                  SEBI

Venture Capital Funds                                                 SEBI

 

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Types of Shares : Stock Market : NCFM Course Training in Hyderabad

Expert Technical Analysis Training by AS Chakravarthy - NISM NCFM Academy Hyderabad

Types of Shares : Stock Market : NISM

NCFM Courses in Hyderabad

Stock Market : Technical Analysis Course in Hyderabad

Most companies only ever have one type of shares (or class of share).  The shares are commonly called ordinary shares and will be the ones the company was incorporated with.

However, in general, if a company has more than one type of share the main differences between them will be found in one or more of the following areas:

Entitlement to dividends: Shares may have the right to normal dividends, preferential dividends (that is, the right to be paid a dividend before other share classes), a dividend only in certain circumstances or no dividends at all.

Entitlement to capital on winding up: If the company is dissolved any assets left after the company’s debts are paid can be distributed to shareholders. However, different share classes may have different rights to capital distribution – with some shares ranking first and others only paid if sufficient assets remain after others have received their full distribution of capital.

Voting rights: Usually, this is as simple as shares either carrying voting rights or not. However, weighted or tiered voting rights are also possible – so, for example, shares may carry extra voting rights in certain circumstances or on certain important matters affecting the company.

Types of Shares as below:

 1. Ordinary shares

These carry no special rights or restrictions.  They rank after preference shares as regards dividends and return of capital but carry voting rights (usually one vote per share) not normally given to holders of preference shares (unless their preferential dividend is in arrears).

Some companies create more than one class of ordinary shares – e.g. “A Ordinary Shares”, “B Ordinary shares” etc. This gives flexibility for different dividends to be paid to different shareholders or, for example, for pre-emption rights to apply to some shares but not others.

2. Deferred ordinary shares

A company can issue shares which will not pay a dividend until all other classes of shares have received a minimum dividend. Thereafter they will usually be fully participating.  On a winding up they will only receive something once every other entitlement has been met.

3. Non-voting ordinary shares

Voting rights on ordinary shares may be restricted in some way – e.g. they only carry voting rights if certain conditions are met. Alternatively, they may carry no voting rights at all.  They may also preclude the shareholder even attending a General Meeting. In all other respects they will have the same rights as ordinary shares.

4. Redeemable shares

The terms of redeemable shares give the company the option to buy them back in the future; occasionally, the shareholder may (also) have the option to sell them back to the company, although that’s much less common.

The option may arise at or after a specific date, between two dates or be effective at any time the shares are in issue. The redemption price is usually the same as the issue price, but can be set differently. A company can only redeem shares out of profits or the proceeds of a new share issue, which may restrict its ability to redeem shares even if the directors would like to exercise the option.

If a company chooses to have redeemable shares, it must also have non-redeemable shares in issue. At no point can all of its share capital be made up of redeemable shares.

5. Preference shares

These shares are called preference or preferred since they have a right to receive a fixed amount of dividend every year.  This is received ahead of ordinary shareholders.  The amount of the dividend is usually expressed as a percentage of the nominal value.  So, aRs.10, 5% preference share will pay an annual dividend of Rs.0.50. The full entitlement will be paid every year unless the distributable reserves are insufficient to pay all or even some of it.  On a winding up, the holders of preference shares are usually entitled to any arrears of dividends and their capital ahead of ordinary shareholders.  Preference shares are usually non-voting (or only have a vote only when their dividend is in arrears).

6. Cumulative preference shares

If the dividend is missed or not paid in full then the shortfall will be made good when the company next has sufficient distributable reserves.  It follows that ordinary shareholders will not receive any dividends until all the arrears on cumulative preference shares have been paid.

By default, preference shares are cumulative but many companies also issue non-cumulative preference shares.

7. Redeemable preference shares

Redeemable preference shares combine the features of preference shares and redeemable shares. The shareholder, therefore, benefits from the preferential right to dividends (which may be cumulative or non-cumulative) while the company retains the ability to redeem the shares on pre-agreed terms in the future.

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Source: https://www.informdirect.co.uk

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