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Month 00 2006

Why earn?. Month 00 2006. Why Invest?. The Objective. Wealth Creation.

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Month 00 2006

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  1. Why earn? Month 00 2006 Why Invest?

  2. The Objective Wealth Creation

  3. Comparative returns for the last 20 yearsWhat $1000 invested at the end of 1986would be worth at the end of 2006?Instrument  Value Average Annual Return   Stocks (S&P500) $9310 11.80%  Real Estate $8540 11.32%   Commodities $6510 9.82%   International Stocks $5020 8.40%   Inflation (CPI) $1820 3.05%    Gold $1550 2.23%   

  4. Unbelievable but it has happened Power of Equity Month 00 2006

  5. How much can you make in 26 years by just investing Rs.10,000 initially in any of financial instruments ? Take a wild guess ??? Let us look at the real example… Just imagine…

  6. In 1981 company declared 1:1 bonus = you have 200 shares In 1985 company declared 1:1 bonus = you have 400 shares In 1986 company split the share to Rs. 10 = you have 4,000 shares In 1987 company declared 1:1 bonus = you have 8,000 shares In 1989 company declared 1:1 bonus = you have 16,000 shares In 1992 company declared 1:1 bonus = you have 32,000 shares In 1995 company declared 1:1 bonus = you have 64,000 shares In 1997 company declared 1:2 bonus = you have 1,92,000 shares In 1999 company split the share to Rs. 2 = you have 9,60,000 shares In 2004 company declared 1:2 bonus = you have 28,80,000 shares In 2005 company declared 1:1 bonus = you have 57,60,000 shares If you have subscribed in 100 shares of ________ company with a face value of Rs. 100 in 1980…

  7. You have 57,60,000 shares of the company Any guess about the company ? (Hint : Its an Indian company) Any guess about the present valuation ? At the end of 2005…

  8. Your present valuation is about Rs. 200 Cr.+ & The company is ‘WIPRO’ The result of ‘Power of Compounding’

  9. CIPLA Investment of Rs. 10,000 in 1979 will fetch Rs. 95 cr.+ INFOSYS Investment of Rs. 10,000 in 1992 will fetch Rs. 1.5 cr.+ RANBAXY Investment of Rs. 1000 in 1980 will fetch Rs. 1.9 cr.+ Other such examples…

  10. Basics of Equity Markets Month 00 2006

  11. Stock Market ============== Mandi Buyers and Sellers come together Seller Seller Seller Buyer Buyer Buyer Buyer Seller Buyer’s Price – Lower Offer Seller’s Price – Higher offer

  12. Stock Exchange (BSE / NSE) Broker Broker Sub- Broker Sub- Broker Client Client

  13. Delivery Based (Primary and Secondary Markets) Depository (NSDL / CDSL) Depository Participant Depository Participant Client Client

  14. Off-line Model Sub broker Depository Participant Bank Client

  15. On-line Model Reliance Money Broker (Reliance Securities) Sub broker Depository Participant Bank (R Money Franchisee)(Reliance Capital)UTI, IDBI, HDFC, Offline CMS Reliance Money Client

  16. Margin Trade Scenario 1 Company A Market Opens 10 am Share Price: Rs. 100/- Buy 100 shares Total Investment Rs. 10000/- At 2 pm Share Price : Rs. 120/- Sell 100 shares Profit: Rs. 2000/- Return on investment: 20%

  17. Margin Trade Scenario 2 Company A Market Opens 10 am Share Price: Rs. 100/- Buy 100 shares Total Investment Rs. 2000/- Broker provides Rs. 8000/- At 2 pm Share Price : Rs. 120/- Sell 100 shares Profit: Rs. 2000/- Return on investment: 100%

  18. Services Available • Equities – Delivery, ATST, Margin • Futures and Options • IPO's online • Research Inputs – Dow Jones, Saans • Trading Ideas – Sachin Chavan, Deepak Mohini • Overseas Equities, Commodities, Currency combinations.

  19. Target Clients • Existing Market • Traders • Investors • IPO Applicants • New Market • MF Investors • ULIP Investors • Debt Market – FD Invetors

  20. Futures Contract Current Share Price Rs. 100 Market assessment of value on last Thursday: Rs. 120/- Contract Value Rs. 120/- My Assessment: Rs. 125/- I ‘ll buy the contract. Counter Party Assessment: Rs. 115/- Counter party sells contract On last Thursday Price is Rs. 121: Buyer Gains. On last Thursday Price is Rs. 118: Seller Gains.

  21. Thank You

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