Capital Market Related Articles

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

October 2, 2017 by A.S.Chakravarthy

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).

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

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

October 11, 2017 by A.S.Chakravarthy

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 –

Large Cap stocks
Mid Cap stocks and
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.

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

October 26, 2017 by A.S.Chakravarthy

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.

Necessary Infrastructure:- Office space, Manpower, Equipment (according to the NSE norms)

Disciplinary Proceedings: – Not convicted involving fraud & dishonesty

Fitness:- Not Bankrupt, Not default in any stock exchange, not previously refused by NSE, fully discharged from Debts by creditors (self declaration)

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.

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

Membership transfer fee Rs. 1 Lakh.

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.

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

October 26, 2017 by A.S.Chakravarthy

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

Stock Market : NCFM Training in Hyderabad

Eligibility of Sub Broker in Stock Market

Eligibility:- 21 years, 10+2 qualification and paid up capital Rs. 5 lakhs.
Not convicted involving fraud and dishonesty.
Not debarred by SEBI previously.
51% of shares as dominant promoters his/her and his/her spouse.
First application to stock exchange- Stock exchange send his application to SEBI- SEBI satisfied issued Certificate of Registration
Under which Broker he is going to work as Sub-Broker, particular broker recommendation letter submission is compulsory to SEBI.
Purchase note and sales note issued by the sub broker with 24 hours.
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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What is Demat Account & Benefits: AS Chakravarthy: Techincal Analysis

October 27, 2017 by A.S.Chakravarthy

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

Easy and convenient way to hold securities.
Safe and Immediate transfer of securities with reduced paper work.
No stamp duty on transfer of securities and reduced transaction cost.
Automatic credit into demat account for shares arising out of benefits like bonus, Rights issue, split, merger, etc.
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.
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

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.
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).

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

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