Intro to Financial Mkts_FIP Session 1.pptx

financial market

1. LM THAPAR SCHOOL OF MANAGEMENT, THAPAR INSTITUTE OF ENGINEERING & TECHNOLOGY Masters of Business Administration Course : Finance-in-Practice Faculty: Dr. Sonia Garg Session 1 : Introduction to Financial Markets Duration: 120 mins Slides: 20 CLEANLINESS IS NEXT TO GODLINESS

2. Financial Markets Where people buy and sell financial products Players : Buyers, Sellers, Enablers (Stock Exchange, Brokers, Clearing Houses, Custodians, Credit Rating Agencies), Regulators (SEBI, RBI) 03/03/23 Financial Markets 2

3. Classification of Financial Markets 03/03/23 Financial Markets 3

4. IPO: Initial Public Offering NYKAA (ET Online 11/11/21) 03/03/23 Financial Markets 4

5. Economic Times (15/4/2021) 03/03/23 Financial Markets 5

6. Products traded in financial markets 03/03/23 Financial Markets 6

7. Financial Market Enablers 03/03/23 Financial Markets 7

8. 03/03/23 Financial Markets 8

9. Regulatory Framework The SEBI Act, 1992 The Companies Act, 2012 The Securities Regulation Act, 1956 The Depository Act, 1996 Regulators: RBI and SEBI 03/03/23 Financial Markets 9

10. NSE: National Stock Exchange https://www1.nseindia.com/ 03/03/23 Financial Markets 10

11. SEBI: Securities Exchange Board of India Filings IPOs Mutual Funds Takeover Rights issue Buyback https://www.sebi.gov.in/ 03/03/23 Financial Markets 11

12. Stock Analysis Technical Analysis Study of stock price movement Stock price action is based on human behavior Assumption history repeats itself Methodology: trend analysis Tools: Various Technical Indicators Short term approach Fundamental Analysis Study of company, Industry and economy fundamentals Growth prospects Operational efficiencies Methodology: Intrinsic Value Tools: Discounted Cashflow models or relative valuation Long term approach 03/03/23 Financial Markets 12

13. Technical Indicators: Price & Volume study Trend Continuation & Reversal Patterns Triangles Flags Head & Shoulder Gaps Cup and handle Hammer Moving Averages Crossovers & MACD Simple Moving Averages & Crossovers Exponential Moving Averages & Crossovers Moving Average Convergence Divergence 03/03/23 Financial Markets 13 Technical Indicators Trend Development & Patterns Relative Strength Indicator Slow and Fast Stochastics Bollinger Bands Bar & Candlestick charts Point & Figure Resistance & Support Higher highs Lower lows

14. Fundamental Analysis EIC Analysis Economy Analysis (sustainable growth rate prediction) Industry Analysis (industry growth rate prediction and competitive position to predict market share) Company analysis (company growth rate vis-à-vis industry growth rate prediction) Valuation Discounted Cash Flow Models Predict growth rates for initial high growth period and later sustainable period Forecast cash flows for the future using the growth rates Discount cashflows using WACC Relative Valuation Use industry peers’ valuation to value the company 03/03/23 Financial Markets 14

15. Technical Advice: Economic Times 3 March 2023 03/03/23 Financial Markets 15

16. Fundamental Advice: Financial Express 03/03/23 Financial Markets 16 6 February 2023

17. How to read Economic Times Front Page Markets: Beating Volatility Smart Investing Companies: Pursuit of Profit Disruptions: Startup & Tech 03/03/23 Financial Markets 17

18. Efficient Market Hypothesis (Prof. E Fama ) Share prices fully reflect all available information and prices are equal to their intrinsic values . New information comes into the market and it will be reflected into share price instantly and constantly . Since information will come randomly, price will move randomly around the intrinsic or fair values. Three forms of EMH 03/03/23 Financial Markets 18

19. Derivative Market Futures Agreement to buy or sell an asset for a certain price at a certain time Market’s expectation of price in the future (at expiry) An obligation Options A call option is an option to buy a certain asset by or at a certain date for a certain price (the strike price) A put option is an option to sell a certain asset by or at a certain date for a certain price (the strike price) Gives you the range of market’s expectation of price in the future (at expiry) American or European A right 03/03/23 Financial Markets 19 Derivatives are different from spot market in Time of delivery Purpose Zero sum game Futures/Options

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