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The stock market is a financial market where securities, such as stocks and bonds, are traded (bought and sold). It is a place where companies and governments can raise money by selling securities to investors, and where investors can buy securities as a way to save or invest money. The stock market is also known as the equity market because it is a place where equity instruments, such as stocks, are traded.
The stock market is made up of exchanges, which are institutions that bring buyers and sellers together to trade securities. Popular stock exchanges in India are National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Investors buy and sell securities through brokers, who are intermediaries that facilitate trades between buyers and sellers. Brokers earn a commission for their services, which is often percentage of the value of the trade or a fixed brokerage per order.
The stock market is an important part of the global financial system, because it allows companies to raise the capital they need to grow and expand, and it allows investors to earn returns on their investments. However, the stock market can also be volatile, and the value of securities can go up and down rapidly, depending on a variety of factors.
In the context of financial markets, the primary market refers to the initial sale of securities, while the secondary market refers to the subsequent trading of those securities.
In the primary market, securities are issued by governments, corporations, and other organizations to raise capital. This is typically done through the sale of bonds, stocks, and other securities in an initial public offering (IPO). The primary market is where securities are first offered for sale to the public, and it is often accessed by large institutional investors.
In the secondary market, securities that have already been issued in the primary market are bought and sold among investors. This is typically done through exchanges or over-the-counter (OTC) markets. The secondary market allows investors to buy and sell securities without the need for the issuer to raise additional capital.
A stock exchange is a marketplace where stocks (also known as equities) are bought and sold. A stock exchange is an organized market where publicly traded company stocks and other securities are listed and traded. The stock exchange provides a platform for companies to raise capital by selling stocks and for investors to buy and sell these stocks.
Stock exchanges have a central location (physical or virtual), and they operate during specific hours. Most stock exchanges are open for trading Monday through Friday, although some may have extended hours or be open on weekends as well.
There are several stock exchanges in India, the two most well-known of which are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Both the BSE and the NSE function as securities exchanges, where investors can buy and sell shares of publicly traded companies. They also provide a platform for companies to raise capital by issuing securities, such as stocks and bonds. In addition to facilitating trading, stock exchanges also provide price information, financial statements, and other data that are useful to investors.
A market index is a statistical measure of the changes in the value of a portfolio of securities. It is used to track the performance of a particular market or a segment of the market, and it is typically made up of a basket of stocks or other securities that are representative of the market as a whole.
Market indices are used to gauge the overall performance of the stock market, and they are often used as a benchmark for the performance of individual investors or investment funds. Many people use market indices as a way to track the general direction of the stock market and make investment decisions.
In India, some of the well-known market indices include the BSE Sensex, which is a stock market index of the Bombay Stock Exchange (BSE), and the Nifty 50, which is a stock market index of the National Stock Exchange of India (NSE).
A promoter is a person or group of people who are responsible for the promotion and development of a company. They may be involved in the creation of a new company, or they may be responsible for promoting the growth and success of an existing company. Promoters may be owners or founders of a company, or they may be hired by the company to help promote its products or services.
An investor is a person or entity that puts money into a company or a financial asset, with the expectation of earning a return on their investment. Investors may invest in a variety of assets, including stocks, bonds, real estate, and businesses.
A trader is a person who buys and sells financial instruments, such as stocks, bonds, and currencies, as a way to earn a profit. Traders may work on their own or for a financial institution, and they may use a variety of strategies to make trades.
In general, promoters are focused on the long-term success and growth of a company, while investors are looking to earn a return on their investment, and traders are focused on buying and selling securities to earn a profit in the short term.
Equity refers to the ownership interest in a company or the residual value of an asset after all debts and liabilities have been paid. It is the value of an asset minus any liabilities associated with that asset. For example, the equity in a company can be thought of as the value of the company’s assets minus its debts and other liabilities.
Stock is a type of security that represents ownership in a corporation. It is a financial instrument that represents a share of ownership in a company and entitles the holder to a portion of the company’s profits or losses.
Share, on the other hand, is a unit of ownership in a company or financial asset. One share represents a fraction of ownership in a company, and the total number of shares a company has determines the number of owners it has.
In summary, equity is a general term that refers to the value of an asset or the ownership interest in a company, while stock and share refer specifically to securities that represent ownership in a company.
Debentures and bonds are types of debt securities that are issued by companies and governments to raise capital. They allow the issuer to borrow money from investors for a specific period in exchange for periodic interest payments and the return of principal at maturity.
Debentures are a type of unsecured bond, meaning that they are not backed by collateral. They are typically issued by companies and are backed only by the creditworthiness and reputation of the issuer.
Bonds, on the other hand, are a type of secured debt, meaning that they are backed by collateral, such as the issuer’s assets or revenue streams. They may be issued by governments, municipalities, or companies, and they generally offer a higher level of security than debentures because they are backed by specific assets.
Both debentures and bonds are considered to be fixed-income securities because they provide a fixed stream of income to investors in the form of interest payments. They are an important source of financing for both companies and governments, and they are often used as a way for investors to diversify their portfolios and earn a predictable return on their investments.
There are many different types of traders and investors, and the type of trader or investor someone is, will depend on their investment objectives, risk tolerance, and the strategies they use to buy and sell securities.
Here are a few examples of different types of traders and investors:
In the financial markets, the bid price is the highest price that a buyer is willing to pay for a security, while the ask price is the lowest price that a seller is willing to accept for a security. The difference between the bid price and the ask price is known as the bid-ask spread.
For example, if a stock is trading at a bid price of Rs. 50 and an ask price of Rs. 50.50, the bid-ask spread would be Rs. 0.50. The bid-ask spread is an important measure of the liquidity of a security, with a narrow spread indicating a high level of liquidity and a wide spread indicating a low level of liquidity.
When buying a security, investors will typically pay the ask price, while when selling a security, they will receive the bid price. The ask price is therefore often higher than the bid price because sellers are typically willing to accept a higher price than buyers are willing to pay.
In general, the bid price and the ask price are determined by the supply and demand for the security in the market, with the price tending to rise when demand is high and fall when demand is low.
The face value of a financial instrument, such as a bond or a stock, is the value that is printed on the face of the instrument. For example, the face value of a Rs. 100 bond is Rs. 100, and the face value of a share of stock with a par value of Rs. 10 is Rs. 10.
The face value of a bond represents the principal amount that the issuer agrees to pay to the bondholder at maturity, while the face value of a stock represents the minimum amount that the company has agreed to pay to the shareholder upon the liquidation of the company.
In some cases, the face value of a financial instrument may be different from its market value, which is the price at which the instrument is currently trading in the market. For example, if a bond with a face value of Rs. 100 is trading at a market value of Rs. 105, the market value of the bond would be higher than its face value.
The face value of a financial instrument is important because it represents the amount that the issuer is obligated to pay to the holder of the instrument at a specific point in time. It is often used as a benchmark for determining the yield or return on investment.
Derivatives are financial instruments that are derived from other assets, such as stocks, bonds, commodities, or currencies. They are used to manage risk or to speculate on the future price movements of the underlying assets.
There are many different types of derivatives, including:
Derivatives can be used to hedge risk, speculate on the price movements of the underlying assets, or take leveraged positions. They are an important part of the global financial system, but they can also be highly complex and risky, and they have been the subject of much regulatory scrutiny in recent years.
Mutual funds are investment vehicles that pool money from many investors and use that money to buy a diversified portfolio of stocks, bonds, or other securities. Each mutual fund is managed by a professional fund manager, who is responsible for selecting the securities to be included in the fund and for making any necessary trades to maintain the desired asset allocation.
Investors in a mutual fund own shares in the fund and the value of their investment is determined by the value of the securities held in the fund’s portfolio. When an investor buys shares in a mutual fund, they are essentially buying a proportionate ownership stake in the securities held by the fund.
Mutual funds offer investors several advantages, including professional management, diversification, and convenience. Because mutual funds allow investors to own a diversified portfolio of securities in a single investment, they can help to reduce risk and volatility compared to owning individual stocks or bonds.
Mutual funds are also relatively easy to buy and sell, and they can be a good choice for investors who don’t have the time or expertise to manage their investments.
However, mutual funds also have some drawbacks, including fees and expenses, which can eat into returns, and the potential for underperformance relative to the market as a whole. It is important for investors to carefully research and compare mutual funds before choosing one to invest in.
SIP stands for Systematic Investment Plan. It is a way of investing in mutual funds or other investment products in which an investor makes regular, predetermined investments over time, rather than investing a lump sum all at once.
SIPs can be set up to invest a fixed amount of money at regular intervals, such as monthly or quarterly. They are often used as a way to invest small amounts of money regularly, such as through payroll deductions.
One of the main benefits of SIPs is that they allow investors to make regular investments over time, rather than trying to time the market. This can be a good strategy for long-term investors, because it allows them to take advantage of averaging, which is the practice of investing a fixed amount of money at regular intervals, regardless of the price of the investment. Averaging can help to reduce the impact of market volatility on an investment portfolio.
SIPs are widely available for mutual funds, but they may also be available for other investment products, such as exchange-traded funds (ETFs) and stocks. It is important for investors to carefully research and compare different SIPs before choosing one to invest in.
IPO stands for Initial Public Offering. It is the process by which a privately held company raises capital by selling shares of its stock to the public for the first time.
When a company goes public through an IPO, it typically hires an investment bank to act as an underwriter, to help it determine the appropriate price for its shares and to market the offering to potential investors. The underwriter will also help the company to prepare and file the necessary documents with the regulatory authorities, such as the Securities and Exchange Board of India (SEBI).
After the IPO, the shares of the company’s stock will be listed on a stock exchange, and they will be available for purchase by the public. The proceeds from the IPO are used to fund the company’s operations and to pay off any debts.
IPOs can be a way for companies to raise capital and for investors to buy shares in a company that they believe has good growth prospects. However, investing in IPOs can also be risky, because the value of the shares may fluctuate significantly after the IPO, and there is no guarantee that the company will be successful. It is important for investors to carefully research and consider the risks and potential rewards of investing in an IPO before making a decision.
Fundamental analysis is a method of evaluating the intrinsic value of a financial asset, such as a stock, by analyzing various financial and economic factors that can affect the asset’s value. It is a way of trying to determine the true value of an asset, rather than its market price, which can be influenced by many different factors, such as supply and demand, market sentiment, and investor behavior.
Fundamental analysts use a variety of tools and techniques to perform fundamental analysis, including financial statement analysis, industry analysis, and economic analysis. They may look at factors such as a company’s revenue and earnings, its debt levels, its competitive position, and the overall health of the economy in which it operates.
The goal of fundamental analysis is to identify undervalued securities that have the potential to generate good returns for investors. It is often used as a long-term investing strategy because it can take time for the underlying value of an asset to be reflected in its market price.
Fundamental analysis can be used in conjunction with other forms of analysis, such as technical analysis, which looks at past price and volume trends to identify trading opportunities.
Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. It is based on the idea that market trends, as shown by charts and other technical indicators, can predict future activity.
Technical analysts use a variety of tools and techniques to perform technical analysis, including chart patterns, trend lines, and various indicators, such as moving averages and relative strength index (RSI). They may also use computer programs to analyze large amounts of data and to identify patterns and trends that might not be readily apparent to the human eye.
The goal of technical analysis is to identify buying and selling opportunities in the market by analyzing past price and volume data. It is often used as a short-term trading strategy because it is based on the assumption that market trends that have occurred in the past are likely to continue in the future.
Technical analysis can be used in conjunction with other forms of analysis, such as fundamental analysis, which looks at a company’s financial and economic fundamentals to determine its value. However, technical analysis is generally not considered to be a good way to determine the intrinsic value of a security.
In India, a depository is an organization that holds securities, such as stocks and bonds, in electronic form on behalf of investors. The two main depositories in India are the National Securities Depository Limited (NSDL) and the Central Depository Services Limited (CDSL).
A depository participant (DP) is an intermediary that is registered with a depository and is authorized to offer depository services to investors. DPs can be banks, brokerage firms, or other financial institutions. They act as a link between the investors and the depository, and they facilitate the process of buying and selling securities through the depository.
Investors can open an account with a DP to hold their securities in electronic form, rather than in physical form. This can make the process of buying and selling securities more efficient and convenient, and it can also reduce the risk of fraud and loss.
Dividends are payments that are made by a company to its shareholders out of its profits or reserves. They are typically paid in the form of cash or additional shares of stock, and they are usually distributed regularly, such as quarterly or annually. The amount of the dividend is typically determined by the company’s board of directors and is based on the company’s profits and financial condition.
Premium is the excess of the market price of a security over its face value or par value. For example, if a stock has a market price of $50 and a par value of $10, the premium would be $40 ($50 market price – $10 par value).
Premiums can be important for investors to consider when buying securities because they can affect the return on investment. For example, if a bond is trading at a premium, the investor may receive a lower yield, because the bond’s price is higher than its face value. Similarly, if a stock is trading at a premium, the investor may receive a lower return on the stock, because the price of the stock is higher than its intrinsic value.
It is important for investors to carefully consider dividends and premiums when making investment decisions, and to understand how they can affect the potential return on investment.
A Demat account is a dematerialized account, which is an account that holds securities, such as stocks and bonds, in electronic form, rather than in physical form. It is a type of account that is offered by depository participants (DPs) in India, which are intermediaries that are registered with a depository and are authorized to offer depository services to investors.
In India, investors must hold securities in the dematerialized form if the securities are listed on a recognized stock exchange. This means that investors must open a Demat account if they want to buy or sell listed securities.
There are several benefits to holding securities in a Demat account, including:
To open a Demat account in India, you will need to choose a DP and complete the necessary paperwork, which may include proof of identity and address. You will also need to fund your account with money to be used for buying and selling securities.
Brokers play a vital role in the trading of securities in India. They act as intermediaries between buyers and sellers of securities, facilitating the process of buying and selling stocks, bonds, and other securities.
There are several types of brokers in India, including:
Brokers are regulated by the Securities and Exchange Board of India (SEBI) and are required to meet certain standards and follow rules and regulations designed to protect investors.
In order to buy and sell securities in India, investors must typically open an account with a broker and deposit money with the broker to be used for trades. The broker will then execute trades on behalf of the investor, either through a stock exchange or through a system of brokers known as an over-the-counter (OTC) market.
Absolute return is the actual profit or loss generated by an investment over a specific period of time. It is measured in monetary terms, such as rupees or percentage of initial investment.
CAGR, or compound annual growth rate, is a measure of the average return generated by an investment over a specific period of time, expressed as a percentage. It takes into account the effect of compounding, which is the ability of an asset to generate earnings that are then reinvested to generate additional earnings. CAGR is used to smooth out the fluctuations of an investment’s performance over time and to give a more accurate picture of its long-term return.
The main difference between absolute return and CAGR is that absolute return is the actual profit or loss generated by an investment, while CAGR is a measure of the average return over a specific period of time, expressed as a percentage. CAGR is used to smooth out the fluctuations of an investment’s performance over time and to give a more accurate picture of its long-term return.
Being bullish in the stock market means having a positive outlook on the market and expecting prices to rise. Investors who are bullish tend to buy stocks with the expectation that the value will increase, and may also invest in options contracts or other derivatives that profit from rising stock prices.
Being bearish in the stock market means having a negative outlook on the market and expecting prices to fall. Investors who are bearish tend to sell stocks, short-sell stocks or invest in options contracts or other derivatives that profit from falling stock prices.
It’s important to note that these terms have been derived from the behavior of bulls and bears in the wild, a bull attacks by raising its horns upward and a bear swipes downward, thus the market participants are said to be bullish when they anticipate upward movement and bearish when they anticipate downward movement of the markets.
A long position in the stock market refers to owning a stock, or a security with the expectation that the price will rise in the future. When an investor takes a long position in a stock, they are essentially buying shares with the hope that they will be able to sell them at a higher price in the future.
A short position, on the other hand, refers to selling a stock, or a security that the investor does not own, but has borrowed from someone else, with the expectation that the price will fall in the future. When an investor takes a short position in a stock, they are essentially betting that the price of the stock will decline, allowing them to buy shares back at a lower price, return the shares they borrowed, and pocket the difference.
Squaring off a position means closing out a long or short position by buying shares (in case of short position) or selling shares (in case of long position) in order to exit the position and ending the trade. It is done to either to lock in the profit or cut the loss.
In summary, a long position is when you buy a stock in anticipation of its price rising, a short position is when you sell a stock you don’t own in anticipation of its price falling and squaring off refers to the process of closing out an open position.
Fundamental analysis and technical analysis are two methods used to evaluate the potential value of a stock or other investment.
Fundamental analysis is a method of evaluating a security by analyzing the financial and economic factors that affect the company’s value. This includes analyzing financial statements, such as income statements and balance sheets, as well as economic factors, such as interest rates and industry trends. The goal of fundamental analysis is to determine the intrinsic value of a security and to identify companies that are undervalued or overvalued.
Technical analysis, on the other hand, is a method of evaluating a security by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts use charts and other tools to identify patterns and trends that may indicate future price movements. The goal of technical analysis is to identify buying and selling opportunities by analyzing market trends, rather than the underlying fundamentals of a company.
The basic difference between fundamental and technical analysis is that fundamental analysis looks at the underlying value of a company, while technical analysis looks at the market trends and patterns to predict the future performance of a stock.
While fundamental analysis is focused on a company’s financial and economic fundamentals, technical analysis uses charts, trends and market indicators to predict future stock prices.
In financial statements, the top line refers to the company’s revenue or sales. It is also called the “gross revenue” or “net sales,” and it is typically the first item on an income statement. The top line represents the total amount of money that a company has earned through its operations during a specific period of time, such as a quarter or a year.
The bottom line, on the other hand, refers to the company’s net income or profit. It is also called “net earnings” or “net profit,” and it is typically the last item on an income statement. The bottom line represents the amount of money that a company has earned after accounting for all expenses and taxes. It shows how much profit a company has made after deducting all costs of goods sold, operating expenses, taxes, and other expenses.
In summary, the top line represents a company’s revenue, while the bottom line represents a company’s net income or profit. The difference between the top line and bottom line is the expenses, taxes and other costs. The top line shows the gross revenue, while the bottom line shows the net income after all the costs have been accounted for.
In stock market, the open, close, high, and low price refer to the prices at which a stock traded during a specific period of time, such as a day, a week or a month.
The open price is the price at which a stock first trades when the market opens for the day. This is the starting point for the stock’s trading activity for the day.
The close price is the price at which a stock last trades when the market closes for the day. This is the final point for the stock’s trading activity for the day.
The high price is the highest price that a stock traded for during the period in question.
The low price is the lowest price that a stock traded for during the period in question.
These prices are used by investors, traders and analysts to evaluate the performance of a stock and make decisions about buying and selling. For example, a stock that has a big difference between its high and low price for the day might be considered to be volatile, while a stock that has a small difference between its high and low price might be considered to be stable.
In summary, the open, close, high, and low prices represent the prices at which a stock traded during a specific period of time, such as a day, a week or a month, and is used to evaluate the performance of a stock and make decisions about buying and selling.
In India, long-term capital gain refers to the profit earned from the sale of a capital asset, such as real estate, equity shares, or mutual funds, after holding it for more than 36 months (3 years). Long-term capital gains are taxed at a lower rate than short-term capital gains (gains from selling assets held for less than 36 months). The current tax rate for long-term capital gains on equity shares and equity oriented mutual funds is 10% without indexation and 20% with indexation benefit.
Indexation benefit is a method to adjust the cost of acquisition of an asset, taking into account the inflation over the years. It helps in reducing the tax liability on long-term capital gains.
In addition, Indian citizens and resident individuals can claim an exemption from long-term capital gains tax, if they invest the sale proceeds in specified investments such as bonds issued by National Highways Authority of India (NHAI) and Rural Electrification Corporation (REC) or buying a new residential house within 2 years (1 year in some cases) from the date of sale.
It’s important to note that the Indian tax laws are subject to change and the information provided is based on the knowledge cut-off date and the current laws, it’s always advisable to consult with a tax professional or tax advisor before making any decisions.
The stock market timings in India for the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are as follows:
It’s important to note that Indian stock market timings are subject to change, particularly during the daylight saving time or any other changes in timing due to market events or other reasons. Also, the timings for derivatives trading may vary, it’s always best to check the official website of the stock exchange or consult with a stockbroker for the updated timings.
A pre-market session in India refers to the period of time before the regular stock market trading hours, typically between 9:00 AM IST to 9:15 AM IST. During this session, investors and traders can place and modify orders for stocks and other securities that will be executed at the opening of the regular trading session.
During this session, the market participants can see the indicative prices of the securities, based on the orders placed during the pre-market session, but they cannot trade on them until the market opens. This period of time allows traders and investors to get an idea of the direction the market is likely to take when it opens, and make adjustments to their trading strategies accordingly.
It’s important to note that during the pre-market session the trading volume is usually low and the prices can be more volatile than during the regular trading hours. Additionally, the market participants can’t be sure of the execution of their orders during this session as the prices may change during the regular trading hours.
After-market orders (AMO) in India refers to the orders placed by investors and traders to buy or sell securities during the post-market hours, after the regular market trading hours have ended. These orders will be executed at the next trading day’s opening price.
AMO’s are placed through the exchange’s trading system, usually through the trading terminals of the stockbrokers and execute on the next trading day during the pre-open session. The prices at which the orders are placed are determined by the exchange, based on the market conditions and liquidity.
AMO’s are mainly used by market participants to take advantage of the price movements that may occur after the market closes due to events like earnings announcements, dividends, or any other corporate action. It’s also used by traders and investors who can’t execute their trades during the regular market hours due to time constraints or other reasons.
It’s important to note that after-market orders are subject to additional rules and regulations and the prices may be different from the prices during the regular trading hours due to lack of liquidity. Additionally, the execution of the orders may not be guaranteed as the prices may change during the pre-market session.
In India, the opening price of a stock on a particular day is determined by the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) using a specific algorithm known as the opening price system.
The opening price system takes into account the orders placed during the pre-market session and the last traded price of the stock on the previous day. It uses this information to determine the opening price of the stock, which is the price at which the first trade of the stock takes place when the market opens.
The opening price is calculated based on the order book, which contains all the buy and sell orders placed before the market opening, taking into account the best buy and sell orders. The opening price is determined in such a way that the opening price should be close to the closing price of the previous day and also should be close to the price of the last traded order.
It’s important to note that the opening price is not always the same as the previous day’s closing price, as it can be affected by various factors such as market conditions, global economic events and other reasons.
The listing price of a stock refers to the price at which a stock is initially offered for sale to the public when it is first listed on a stock exchange. This price is determined by the issuing company in consultation with its investment bankers, and is based on various factors such as market conditions, the company’s financial performance, and the number of shares being offered for sale.
The listing price is also known as the initial public offering (IPO) price or the issue price. It is the price at which the shares are issued to the public during an IPO, and also the price at which shares are traded on the stock exchange when they are first listed.
Face value, on the other hand, is the value assigned to a stock by the issuing company. It is also known as the par value, and it is the value at which the stock is recorded on the company’s balance sheet. The face value of a stock does not have any direct relation to the market value of the stock. The face value is usually a very small value and does not reflect the true value of the stock.
In summary, the listing price is the price at which a stock is initially offered for sale to the public when it is first listed on a stock exchange, while face value is the value assigned to a stock by the issuing company, it is the value at which the stock is recorded on the company’s balance sheet, it is usually a small value and does not reflect the true value of the stock.
In financial markets, transactions typically go through three phases:
In summary, the three phases of market transaction are the order phase, matching phase and settlement phase. The order phase is the initial phase in which investors and traders place their buy or sell orders, the matching phase is the phase in which the exchange or trading platform matches the buy and sell orders and executes the trade, and the settlement phase is the final phase in which the trade is settled and the assets are transferred from the seller to the buyer.
There are several types of brokers in India, including:
Brokers are regulated by the Securities and Exchange Board of India (SEBI) and are required to meet certain standards and follow rules and regulations designed to protect investors.
In order to buy and sell securities in India, investors must typically open an account with a broker and deposit money with the broker to be used for trades. The broker will then execute trades on behalf of the investor, either through a stock exchange or through a system of brokers known as an over-the-counter (OTC) market.
Price adjustment in the Indian stock market refers to a mechanism used by the stock exchanges to adjust the prices of securities to maintain orderly trading and to prevent manipulation of prices. This mechanism is also known as circuit breaker, which is used to curb excessive volatility in the markets.
When the market is highly volatile, and the indices move beyond a certain level, the circuit breaker triggers and trading is halted for a certain period of time. The exchange uses this time to adjust the prices of securities to prevent further volatility, and then trading resumes.
The circuit breaker is activated at different levels for different market conditions. For example, if the market moves beyond a 10% level, the circuit breaker is activated and trading is halted for 15 minutes. If the market moves beyond a 15% level, the circuit breaker is activated and trading is halted for the remainder of the trading session.
The price adjustment mechanism is implemented by the stock exchanges to protect the interests of small investors, prevent panic selling and to maintain orderly trading. It’s important to note that this mechanism may change depending on market conditions and regulatory requirements.
Corporate actions in the Indian stock market refer to the various events or decisions taken by a company that affects its shareholders. These events include things like stock splits, dividend payments, bonus issues, mergers and acquisitions, and more. Corporate actions can have a significant impact on the value and performance of a stock, and they can also affect the rights and privileges of shareholders.
Corporate actions can benefit traders in several ways:
It’s important to note that corporate actions are subject to regulatory approval, and the company needs to inform the stock exchange and shareholders in advance. Additionally, the impact of corporate actions can vary depending on the nature of the action and the specific circumstances of the company. Traders should always research and evaluate the potential impact of corporate actions before making investment decisions.