What is Bid-Ask spread?
• Buyers bid for and Sellers ask for.
• This creates the price to fluctuate.
WHAT IS STOCK VOLATILITY?
• Stock prices constantly fluctuate. This is because the demand for the
stock changes.
• As more stocks change hands, greater is the change in its share
price. This is called stock volatility.
• Even the amount of volatility in the market changes on a daily basis.
• To measure this volatility, the National Stock Exchange introduced the
VIX India index, also called the fear gauge. VIX is often used as an
indicator of stock price trends. This is because, VIX rises when there is
more fear and uncertainty in the market.
TYPES OF STOCKS? - (1)
• Stocks on the basis of fundamentals:
Small-cap stocks: up to Rs. 250 crore
Mid-cap stocks: range of Rs. 250 crore and Rs. 4,000 crore
Large-cap stocks: More than Rs.4,000 crore
• Basis of Income:
Income stocks – Distribute dividends, stable companies, mid to large cap, value
appreciation less, secondary source of income, less risky.
Growth stocks-Less or no dividends, invest in business, value appreciation more,
growth potential, multibagger returns, more risky.
TYPES OF STOCKS? - (2)
• Stocks on the basis of risk:
Blue-chip stocks: Well established companies, stable earnings, Lower
debt/liabilities, regular dividends. Safe and stable.
Beta stocks: Risk = Beta =Volatility in Price, Beta = + or - Sign denotes stock
move in sync with market. Higher Beta = higher Risk. >1. but can be smart
profits.
• Basis of price trends:
Cyclical stocks: Dependent on economic trends, fluctuate more as
economic conditions change. Ex – automobile companies. Preferred when
economy is booming.
Defensive stocks: Relatively unmoved by economic conditions Ex – food,
beverages, drugs and insurance sectors. Preferred when economic are
poor.
What are stock quotes?
• Symbol
• High/Low
• Stock price
• Close
• Net change
• 52 week high/low
• Dividend details
• Volume