market capitalization

A Presentation on market Capitalization : 

A Presentation on market Capitalization 1 Submitted To:- Mr. Prateek Jain Finance Faculty INC Alld Submitted By :- Swarnima Srivastava 8nbah016 INC Alld

Market capitalization : 

Market capitalization Market capitalization is simple sense means the market valuation of companies. In equity market the size of company is determine by market capitalization of that company. market capitalization is simply the worth of a company in terms of   it’s shares! To put it in a simple way, if you were to buy all the shares of a particular company, what is the amount you would have to pay? That amount is called the “market capitalization”! To calculate the market cap of a particular company, simply multiply the “current share price” by the “number of shares issued by the company”!Depending on the value of the market cap, the company will either be a “mid-cap” or “large-cap” or “small-cap” company. Market capitalization = Market value of shares * Numbers of share 2

Calculation of market capitalization : 

Calculation of market capitalization There are 2 methods of calculating market capitalization. Total float. Free float. A simple way to understand the “free-float market cap” would be, the total cost of buying all the shares in the open market! FORMULA of free float = Free float factor * Market Capitalization of company For Example :- Suppose, for a “free-float market cap” of Rs.100,000 Cr... the Sensex value is 4000… Then, for a “free-float market cap” of Rs.150,000 Cr... the Sensex value will be.. So, the Sensex value will be 6000 if the “free-float market cap” comes to  Rs.150,000 Cr! 3

Impact of high market capitalization on investor buying. : 

Impact of high market capitalization on investor buying. To increase the understanding and knowledge of market participants about market indicators that behavioral and psychological aspects of investing and speculating.  To facilitate benchmarking and back testing of numbers against important historical milestones of market. Widening the scope of hedging activities and instruments available for hedging. It involves searching for undervalued stocks which could be undervalued for varieties of regions, including temporary factors impacting profit anticipated macro economics changes. To diversify the risk . 4

INDICES : 

INDICES They are used to indicate performance but depend upon the securities used to calculate them the calculation weighting measures Number which measures the change in a set of values over a period of time. Stock index represents the change in value of a set of stocks which constitute the index A good stock market index is one which captures the behavior of the overall equity mark 5

Importance of Indices : 

Importance of Indices A barometer for market behavior A benchmark portfolio performance  a passive fund management in index funds an underlying for index futures and options 6

Trading on BSE and NSE : 

Trading on BSE and NSE To provide Transparency, Efficiency and Depth to market, BSE and NSE provide Screen Based Trading on Trading Platforms called ‘BOLT’ and ‘NEAT’. These platforms provide Trading Facility to Brokers, Sub-brokers and their clients through thousands of trading terminals spread throughout the nation. BSE and NSE provide trading facility on two segments ,which are - Cash Segment and - Derivative Segment NSE also has another segment called WDM, Wholesale Debt Market. 7

CALCULATION : 

CALCULATION Calculation Weighting Methods: price weighting sum prices and divided by a constant to determine average price EXAMPLE: THE DOW JONES INDICES Three Calculation Weighting Methods: value weighting (capitalization method) price times number of shares outstanding is summed divide by beginning value of index EXAMPLE: S&P500 WILSHIRE 5000 RUSSELL 1000 8

ARITHMETIC MEAN : 

ARITHMETIC MEAN ARITHMETIC MEAN provides a good indication of the expected rate of return for an investment during a future individual year it is biased upward if you attempt to measure an asset’s long-run performance 9

Categorization of stock on bases of capitalization;- : 

Categorization of stock on bases of capitalization;- Large capitalization:- if the market capitalization of a company is high, we call such a company as a large capitalization company. There is not fixed value above which a stock the categorized as large capitalized it is relative concept most of the schemes defines a large capitalization of the highest value stock on the mid capitalization index or lowest valued stock of a large capitalization index. Higher the market capitalization grater the liquidity in the stock.   Mid Capitalization: - these can be understood a medium sized company. it is having a value between the highest valued company and lowest valued company of a mid capitalization index. Small capitalization: These are relatively smaller company. It is having a market capitalization lower than the least valued company of a mid-cap index is. 10

Companies of large, medium & small capitalization. : 

Companies of large, medium & small capitalization. 11 Companies of large, medium & small capitalization.

Legal Framework : 

Legal Framework Securities Contract (Regulation) Act,1956 Securities Contracts (Regulation) Rules,1957 SEBI Act 1992 SEBI (Stock Broker and Sub-Brokers) Rules and Regulations,1992 The Depositories Act,1996 Indian Contracts Act,1872 Indian Companies Act,1956 12

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