logging in or signing up Volatility in stock market abhijitaishwarya Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 36 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: January 17, 2012 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... Premium member Presentation Transcript Volatility in Stock Market: Volatility in Stock Market Dr. Abhijit P. Phadnis Presentation in Finance Fair Lokmanya Seva Sangh, Vileparle September 25, 2011Overview: Overview What is volatility? Causes of volatility Measures of volatility Defense against volatilityVolatility: Volatility Variation in price of an asset Change in price against our expectation Movement larger than expected Erosion of capital or potential erosionCauses of volatility: Causes of volatility Global economic environment Domestic economic environment Domestic political environment Characteristics of asset class Characteristics of specific asset within the class Human behaviour MediaGlobal economic environment: Global economic environment US: Worries of recession again Europe: In debt trap Euro: Would it splinter? Unemployment in US & Europe Risk aversion: Gold, Swiss Franks, Yen Arab Spring & worries about oil Chinese commodities aggressionDomestic economic environment: Domestic economic environment Unrelenting inflation Global commodity price pressures Agri commodity price pressures Tightening of interest rates Slowing growth: intended consequence High input & interest costs Increase in sales but moderate increase in profits: loss of full pricing power Risk of deficit, higher than envisagedDomestic political environment: Domestic political environment Mired in corruption scandals Lack of decisive leadership External power centers Conflict of interestCharacteristic of asset class: Characteristic of asset class External drivers impact each asset class differently Shares Lower interest rates Uncertainties Higher commodity prices Higher growth Characteristic of specific stock: Characteristic of specific stock Market capitalization Management Leverage Promoter Shareholding Collateralized Promoter Shares Hype around business models Expectations built into priceOperating and Financial Leverage: Operating and Financial Leverage 10 Sales 600 Variable Costs 450 Fixed Cost 50 Less: Interest 20 Earnings Before Tax 80 Contribution 150 EBITDA or Operating profit 100 Operating Leverage = 150/100 = 1.5 Financial Leverage = 100/80 = 1.25 Total leverage = 1.5 X 1.25 = 1.875When Sales move up by 10%: When Sales move up by 10% 11 Sales 660 Variable Costs 495 Fixed Cost 50 Less: Interest 20 Earnings Before Tax 95 Contribution 165 EBITDA or Operating profit 115 For 10% jump in sales Profit goes up by 18.75%When sales go down by 10%: When sales go down by 10% 12 Sales 540 Variable Costs 405 Fixed Cost 50 Less: Interest 20 Earnings Before Tax 65 Contribution 135 EBITDA or Operating profit 85 For 10% fall in sales Profit goes down by 18.75%Human aspects: Human aspects Individual circumstances Greed & fear: Collective psyche Individual (retail) vs. institutional Circumstances Expertise Volatility is in the mind!Media: Media Media adds to the confusion & panic Vested interests Planting of news Plays on listeners mindMeasures of volatility: Measures of volatility Standard deviation of the returns VIX BetaCyclical movements: Cyclical movements Bonds Stocks Commodities Bonds Stocks CommoditiesStrategies: Strategies Riding the correct asset class Manage exposure Balancing with your current income & wealth Family responsibilities Being nimble footed to switch Exploit the opportunities thrown by volatility You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
Volatility in stock market abhijitaishwarya Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 36 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: January 17, 2012 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... Premium member Presentation Transcript Volatility in Stock Market: Volatility in Stock Market Dr. Abhijit P. Phadnis Presentation in Finance Fair Lokmanya Seva Sangh, Vileparle September 25, 2011Overview: Overview What is volatility? Causes of volatility Measures of volatility Defense against volatilityVolatility: Volatility Variation in price of an asset Change in price against our expectation Movement larger than expected Erosion of capital or potential erosionCauses of volatility: Causes of volatility Global economic environment Domestic economic environment Domestic political environment Characteristics of asset class Characteristics of specific asset within the class Human behaviour MediaGlobal economic environment: Global economic environment US: Worries of recession again Europe: In debt trap Euro: Would it splinter? Unemployment in US & Europe Risk aversion: Gold, Swiss Franks, Yen Arab Spring & worries about oil Chinese commodities aggressionDomestic economic environment: Domestic economic environment Unrelenting inflation Global commodity price pressures Agri commodity price pressures Tightening of interest rates Slowing growth: intended consequence High input & interest costs Increase in sales but moderate increase in profits: loss of full pricing power Risk of deficit, higher than envisagedDomestic political environment: Domestic political environment Mired in corruption scandals Lack of decisive leadership External power centers Conflict of interestCharacteristic of asset class: Characteristic of asset class External drivers impact each asset class differently Shares Lower interest rates Uncertainties Higher commodity prices Higher growth Characteristic of specific stock: Characteristic of specific stock Market capitalization Management Leverage Promoter Shareholding Collateralized Promoter Shares Hype around business models Expectations built into priceOperating and Financial Leverage: Operating and Financial Leverage 10 Sales 600 Variable Costs 450 Fixed Cost 50 Less: Interest 20 Earnings Before Tax 80 Contribution 150 EBITDA or Operating profit 100 Operating Leverage = 150/100 = 1.5 Financial Leverage = 100/80 = 1.25 Total leverage = 1.5 X 1.25 = 1.875When Sales move up by 10%: When Sales move up by 10% 11 Sales 660 Variable Costs 495 Fixed Cost 50 Less: Interest 20 Earnings Before Tax 95 Contribution 165 EBITDA or Operating profit 115 For 10% jump in sales Profit goes up by 18.75%When sales go down by 10%: When sales go down by 10% 12 Sales 540 Variable Costs 405 Fixed Cost 50 Less: Interest 20 Earnings Before Tax 65 Contribution 135 EBITDA or Operating profit 85 For 10% fall in sales Profit goes down by 18.75%Human aspects: Human aspects Individual circumstances Greed & fear: Collective psyche Individual (retail) vs. institutional Circumstances Expertise Volatility is in the mind!Media: Media Media adds to the confusion & panic Vested interests Planting of news Plays on listeners mindMeasures of volatility: Measures of volatility Standard deviation of the returns VIX BetaCyclical movements: Cyclical movements Bonds Stocks Commodities Bonds Stocks CommoditiesStrategies: Strategies Riding the correct asset class Manage exposure Balancing with your current income & wealth Family responsibilities Being nimble footed to switch Exploit the opportunities thrown by volatility