SMAT NOTES

IPO- INITIAL PUBLIC OFFERING

It means that the company is available to the Market. People can Purchase Or sell the shares of
that particular company whose IPO is Listed
Types of company
 Private- when the company is private limited whose IPO is not listed. E.g.- BOAT, Reliance
Jio

 Public- when the company has an IPO listed on the stock exchange. E.g.- ONGC, RELIANCE
INDUSTRIES

Why IPO is raised?

Whenever any company need fund, It can either take loan from banks or From the open market
in return of its shares That is the main reason on listing an IPO so that funds can be raised from
open market for the company growth.

How IPO is raised

Step 1. Figuring out the valuation of the company
For an example suppose ABC company has a valuation of 10 lakh, they need 1 lakh
So they will be giving 10% of the equity shares of their company to public and that’s how a
private company become Public.

Mandatory checks before applying for IPO

 If they require 1 lakh, how much money they got on 1st day, if they have got
overall more than 3 lakhs, we can apply as it shows the demand for the company
 Whether company is profitable or not, if company is not profitable avoid
investing in that
 Always apply for IPO on second day.
 DAY 2 – BASICS OF STOCK MARKET

What is financial market?

It provides the buyers and sellers the means to trade in Financial Instruments.

Financial Instruments consist of Bonds, Equities, Forex (International currencies), Commodities, Cryptocurrency,
Stock Market and Derivatives.

Types of markets and their timings:

 Equity (Stock/ Cash) Market 09:15am to 03:30pm
 Commodity Market 09:00am to 11:30Pm (eg, Crude, Gold, Natural Gas)
 Forex Market 24hrs
 Derivative Market ( FUTURES AND OPTIONS) – 9:15 AM TO 3:30 PM

Commodity Market (09:00am – 11:30pm):

A commodity market is a marketplace where investors trade several commodities like spices, energy,
precious metals, crude oil within a country. In recent times, the Forward Market of Commissions
allowed around 120 commodities to perform future trading within India.

Forex Market (24hrs):

The foreign exchange (also known as forex or FX) market is a global marketplace for exchanging national
currencies. Because of the worldwide reach of trade, commerce, and finance, forex markets tend to be
the largest and most liquid asset markets in the world. Currencies trade against each other as exchange
rate pairs.

Derivative Market:

The derivatives market refers to the financial market for financial instruments such as futures and
options contracts that are based on the values of their underlying assets (Share price of a company).

What is Stock Market?

The stock market is a place where investors can buy and sell shares of companies. It's a set of exchanges
where companies issue shares and other securities for trading.

Companies of stock market:

Stock market has listed companies which we also call as public companies.
 Public companies are listed companies on Stock Exchange of India also known as NSE (National Stock
Exchange ) and BSE (Bombay Stock Exchange).

NSE and BSE are regulated and controlled by SEBI (Securities Exchange Board of India)

Types of stock market trading?

 Intraday trading. Intraday trading is also known as day trading.
 Swing trading/ short term Trading
 Long term Investment.

Intraday Trading:

Intraday trading means buying and selling stocks on the same trading day. Intraday trading is also known
as Day Trading. We can trade on shares of a company with a discounted price called as margins.

Swing trading:

Swing trading involves taking trades that last a couple of days up to several months in order to profit
from an anticipated price move.

Long Term Investment:

Typically, long-term investing means five years or more, but there's no firm definition. We use
fundamental analysis to do long term investments. We hold shares of a company for many years
probably more than 10 years also to enjoy the benefits of Dividends and Bonuses.
 DAY3 – DEMAT ACCOUNT

What is Demat account?

A Demat(De-materialized) account is an Indian electronic shares and securities account where you can
hold your shares in electronic format.

In India is mandatory to have a Demat account for trading and investing purposes. You cannot invest
directly without it.

Mandated by SEBI for transactions of listed company securities.

Types of market Order

There are four types of market order:

Delivery Order: Delivery orders refers to when you buy, take delivery of the securities, and hold them
in your account. After delivery you can hold the shares for as long as you want and choose to sell them
whenever yu need.

Market Oder: A Market Order is an order to buy or sell a share at the current price which is available
at that point of time.

Limit Order: A Limit orders is order to buy or sell a share at a specific price or better. A buy order can
only be executed at the limit price or lower. A sell Order can only be executed at the limit price or
higher.

SL Order: A SL Order or Stop Loss Order is an order to buy or sell the order only when the price
reaches to specific price which is mentioned.

SL-M Order: A Stop Loss Market or Limit order remains passively in the exchange’s stop loss order
book until your defined trigger price has reached. Once the trigger is reached, the order works exactly
like a limit (SL) or market SL-M) order.

What is Intraday?
Intraday trading is the buying and selling of the same stocks within a single day. If the prices
goes up after buying of the stocks you make a profit and if the prices goes down from the price
you bought you make a loss.
What is Leverage?
A leverage can be used in Intraday only. It is the 1:5 ratio applied to the margin amount to
where you have to pay 20% of the total price of the stock which you are borrowing for the day.
For example,
You have 10k in your broker’s E-wallet and you want to buy a share priced at 1k. So, you have
to pay 200rs but your share price is still worth as 1k. Initially you would get 10 shares at 1k price
worth 10k now after the use of leverage you can buy 50 shares at 200rs worth 10k. But you
have only a day to hold it before bell rings. If you unable to buy or sell the shares at the given
time you will be charged a penalty and your intraday order will automatically turn into type
delivery order worth 10k.

What is Circuit Breaker in stock market?

A Circuit Breaker means a price that includes a lower limit or Lower Circuit and Upper limit or
Upper Circuit. These circuits are the prices at which it will be traded in the market for the day.
Lower Circuit: s lower circuit is the limit where the prices might fall till the desired level or more
than that occasionally.
Upper Circuit: An upper Circuit is the limit where the prices will g o up till the desired level or
sometime more than that.
All these circuits are determined by the market regulator SEBI, helps in curbing price
manipulation to a large extent by stock operators. Circuits acts like volatility safeguards for
investors.
 DAY 4 – SHORT SELLING

What is short selling?

Short selling occurs when an investor sell a share first and expects to buy it back later for less money.

Normally trading is done, when we buy any thing at 1000 and sells at 1200 we make a profit of 200

Profit Formula is -selling price – buying price

What we do in shortselling is first we sell the stocks at higher price and then we buy back at lower price

Let say I have sold reliance at 2000

In order to make profit the price should be going down below 2000 then only we will be able to make
profit

If it goes above 2000 we wont be able to make profit, we will be losing money

For an example

When you sell something let say a land at 1 lakh

Now after some days the value of land increases so if we see you have sold the land in loss

But after some days, if the value of land goes below 1 lakh, you have made profit actually

PLEASE NOTE, SHORT SELLING IS ONLY DONE IN INTRADAY MEANS WE CAN SELL ANYTIME AFTER 9:15
BUT WE HAVE TO BUY BACK BEFORE 3:20 PM OR ELSE BROKER WILL EXIT THE STOCK
CANDLESTICKS PATTERN HAD BEEN SHARED IN THE GROUP

SUPPORT AND RESISTANCE AND TRENDLINE

 What Is Support ?

 Support is price Range or particular line from where stock is taking

support and going up Again And again it’s called as Support

 We Can Draw Support in every different time frame Like Monthly,

weekly, Daily, Hourly ,15m and 5m time Frames It depends on what
kind of trade you want to do like long term, short term, intraday or
Scalping

 Always remember bigger time Frame = More accuracy
 What Is Resistance

 Price range or a particular line from where Stock is Taking Rejection

again and again it is Called As Resistance

 We Can Draw Resistance in every different time frame Like Monthly,

weekly, Daily, Hourly ,15m and 5m time Frames It depends on what
kind of trade you want to do like long term, Short term, intraday or
Scalping
 Trend Line
Types of Trend line
 Down Trend
 Up trend
 Sideway

 Down trend
When market Moves in down trend that time market change the
direction. Ascending channel to deciding channel, that time
market goes in down trend.

Example:

 Whenever you’re going to draw Trend line in higher time frame

minimum 3 to 4 candles should be touch to the trend line.
  Up trend

When market change the Direction from descending Channel to

ascending Channel that time market move in up trend.
Example:

 Whenever you’re going to draw Trend line in higher time frame

minimum 3 to 4 candles should be touch to the trend line.
 Sideway

When Market not making proper higher high and lower low that
market is in sideway, it’s called sideway Market.

Example:

I
There are three types of trade based on support and resistance
1. 1. Reversal Trade – it is a trade where market will be reversing from
support or resistance, and we enter in the trade
We will buy at support by looking at bullish reversal candlesticks and sell and
resistance by looking at Bearish reversal Candlesticks
 2. Breakout trade – whenever any support or resistance is broken market will
move in that direction
Lets say if support is broken market will be going down and if resistance is broken
market will be going up
But after breakout we need retest.
Retest is like confirmation of breakout of important level
As soon as support breaks and it becomes resistance and for retest we need to
see bearish reversal candlesticks and resistance breaks and it becomes support
and we have to see bullish reversal candlesticks for retest
 3. FAKEOUT

Fake out is like Reversal trade only, in this we see that some support and
resistance is broken but it reverses so it important for us to wait for retest
FUTURE

Future is a derivative, whose value is derived from their underlying assets

Like reliance future will be followed by reliance stock movement

There are two types of futures

1. Stock futures like reliance futures, tata steel futures
2. Index futures like nifty futures, bank nifty futures

Future is like a contract where buyers and sellers meet and decide what they
want from this, some will want the price to go down and some will want the price
to go up

Future is a contract, then it will be having validity also.

So the future contracts gets over on last Thursday of every month, if Thursday is
holiday then a day before that.

At any given time, there will be always 3 month future contracts available
June month contract will get over on last Thursday of June which is 30 th June and
after that sep month contract will come
July month will get over on last Thursday of July and vice versa

For pros and cons please watch the video