Module: 1
Introduction to
Investment
Prof. Rajimol K P, Dept of MBA, Atria IT 1
Module-1 (6 Hours)
Introduction to Investment: Investment Avenues, Attributes, Investor V/s
speculator, Features of a good Investment, Investment Process. Financial
Instruments: Money Market Instruments, Capital Market Instruments,
Derivatives. Securities Market: Trading & Settlement Procedure, Stock Market
Indicators- Indices of Indian Stock Exchanges (only Theory).
Prof. Rajimol K P, Dept of MBA, Atria IT 2
What Is an Investment?
• An investment is an asset or item acquired with the goal of generating income or appreciation.
• An investment involves putting capital to use today in order to increase its value over time.
• An investment requires putting capital to work, in the form of time, money, effort, etc., in hopes of a greater
payoff in the future than what was originally put in.
• An investment can refer to any medium or mechanism used for generating future income, including bonds,
stocks, real estate property, or alternative investments.
• Investments usually do not come with guarantees of appreciation; it is possible to end up with less money
than with what you started.
• Investments can be diversified to reduce risk, though this may reduce the amount of earning potential.
Prof. Rajimol K P, Dept of MBA, Atria IT 3
Investment Avenues
1. Equity Shares
2. Preference Shares
3. Debentures/Bonds
4. Government Securities
5. Money Market Instruments
6. Deposits
7. Life Insurance
8. Mutual Funds
9. Real Assets- Gold, Silver etc
10. Real Estate
11. Art & Antiques
Prof. Rajimol K P, Dept of MBA, Atria IT 4
Investment Attributes
Rate of return
Risk
Marketability
Tax benefits
Liquidity
Safety
Liquidity
Duration
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Prof. Rajimol K P, Dept of MBA, Atria IT 6
Prof. Rajimol K P, Dept of MBA, Atria IT 7
Investment Vs Gambling
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Features of a good Investment
Objective fulfilment
Safety
Return
Liquidity
Hedge against inflation
Tax shield
Capital Growth
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Investment Process
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Prof. Rajimol K P, Dept of MBA, Atria IT 11
Money Market Instruments
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Capital Market Instruments
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Money Market Vs Capital Market
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HOW DOES STOCK MARKET WORK?
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Securities market/Stock exchange
• Security market is a component of the wider financial market
where securities can be bought and sold between subjects of the
economy, on the basis of demand and supply.
• A stock exchange in India adheres to a set of rules and
regulations directed by Securities and Exchange Board of India
or SEBI.
• Securities markets are divided into two categories –
Primary and Secondary markets.
Prof. Rajimol K P, Dept of MBA, Atria IT 17
Features of Stock Exchange
• A market for securities
• Second-hand securities
• Regulate trade in securities
• Dealings only in registered securities
• Transaction
• Recognition
• Measuring device
• Operates as per rules
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Functions of Stock Exchange
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Types of securities market
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Prof. Rajimol K P, Dept of MBA, Atria IT 21
FUNCTIONS
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Initial Public
Public Issue
Offer (IPO)
Follow on public
Right Issue
offer (FPO)
Private
Types of Issues in Placement
Capital Market
Book Building
Offer for Sale
Preferential
Allotment
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Prof. Rajimol K P, Dept of MBA, Atria IT 24
Disadvantages of Security Market Trading
• Liquidity
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Prof. Rajimol K P, Dept of MBA, Atria IT 26
Bombay Stock Exchange
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BSE
• The BSE SENSEX is a free-float market-weighted stock
market index of 30 well-established and financially sound
companies listed on the Bombay Stock Exchange.
• Constituents: 30
• Exchanges: BSE
• Foundation: 1 January 1986
• Market cap: ₹301.7 lakh crore (US$3.8 trillion) (July 2023)
• Operator: ASIA INDEX Pvt. Ltd
• Related indices: BSE SENSEX 50; BSE SENSEX Next 50
• Trading symbol: ^BSESN
• Shri Sundararaman Ramamurthy - MD & CEO.
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Prof. Rajimol K P, Dept of MBA, Atria IT 29
• The Sensex, also known as the sensitivity index, is the benchmark index
of BSE Limited and is the most widely tracked equity gauge in India.
• Officially known as the S&P BSE Sensex since February, 2013, the index
captures the performance of the top 30 largest, most liquid and financially
stable companies from across major sectors of the Indian economy that
are listed on the exchange. It reflects the health of the equity market,
investor sentiment and broadly the state of the economy.
• The Sensex is managed and operated by a joint venture between BSE and
S&P Dow Jones Indices, a global index manager. The composition of the
Sensex is recast or modified from time to time to represent the true
composition of the market.
Prof. Rajimol K P, Dept of MBA, Atria IT 30
NSE
• National Stock Exchange of India Limited is one of the leading
stock exchanges in India, based in Mumbai. NSE is under the
ownership of various financial institutions such as banks and
insurance companies.
• Currency: Indian rupee (₹)
• Founded: 1992; 31 years ago
• Indices: NIFTY 50; NIFTY Next 50; NIFTY 500
• Key people: Girish Chandra Chaturvedi;
(Chairperson); Ashishkumar Chauhan; (MD & CEO)
• Location: Mumbai, Maharashtra, India
• Market cap: US$3.27 trillion (Jan 2023)
• No. of listings: 2,137
Prof. Rajimol K P, Dept of MBA, Atria IT 31
NIFTY 50
• The NIFTY 50 is a benchmark Indian stock market index that represents the
weighted average of 50 of the largest Indian companies listed on the National
Stock Exchange. Nifty 50 is owned and managed by NSE Indices, which is a
wholly owned subsidiary of the NSE Strategic Investment Corporation
Limited.
• Constituents: 50
• Exchanges: National Stock Exchange of India
• Foundation: 21 April 1997
• Operator: NSE Indices
• Related indices: NIFTY Next 50; NIFTY 500
• Trading symbol: ^NSEI
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Trading & Settlement at Stock Exchanges
Prof. Rajimol K P, Dept of MBA, Atria IT 34
Stock Market Index
A stock market index abbreviated as a stock index is an
indicator that shows all the major changes in India's
stock market.
Market indexes provide a broad representative
portfolio of investment holdings.
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Types of Stock Market Indices
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Why Do We Need Indices?
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Formation of Stock Indices
Market-
Cap
Weightage
Price
Weightage
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