Stock Market Fundamentals

This post is for those who have curiosity in the stock Market (which today reached 15K), yet are unable to follow the terms and jargons used.
For our Calculations lets talk about Tata Motors.

Open Price 709.00
High Price 718.00
Low Price 695.65
Close Price 711.20
Number of Trades 20,002.00
Traded Quantity 1,425,392.00
Traded Value 1,014,805,055.65
52 Week High 988.40
52 Week Low 575.00

Based on the demand and supply of the stocks, the traded price fluctuates. The Open Price denotes the price at the start of the day, close at the end of the day. The High and low, as the name suggests are the highest and the lowest prices of the trade that happened during that given period. These 4 points give an idea about the direction of the stock movement and the sentiments on that day.

No of trades signifies how many times did the stock change hands, and Quantity/Volumes denotes the number of shares traded. Typically you would like liquidity. i.e. You should be able to sell/buy whenever you want and whatever quantity you want without influencing the price too much. For you would not like to be in a situation where the stock might be at its highest, but you cannot sell it for there are no takers. As a thumb of rule, a stock which has more than 10,000 average daily trades is liquid. Also a spur/fall in the volumes trend gives us a rough idea about the stability of the prices. Typically when the stock price is stable, the volumes go down, but during an movement (both bear or bull), these volumes will shoot up.

Then there are some Fundamental data:
Market Capitalization ( Rs cr ) 27,384.67
Book Value 177.59
Debt / Equity 0.58
P/E 14.31
Dividend Yield % 2.11
EPS 49.65

Market Capitalization is the Enterprise worth. It is basically the number of issued stocks multiplied by the last traded price of the stock.
Book Value is the book value of he assets (as per the accounting books) divided by the number of stocks.
Debt/ Equity is the measure of leverage used by the company. Higher the ratio, riskier your investments would be.
P/E is Price to Earning Ratio
Dividend Yield: Last Annual Dividend / Price of the stock.
EPS: Earnings Per share. It is the profit which the company divided by the number of shares.

If I have missed anything, please let me know

Advertisements

6 thoughts on “Stock Market Fundamentals

  1. [EPS: Earnings Per share. It is the profit which the company divided by the number of shares.]

    Not really. EPS is Net Income/Common Stock outstanding and NI and Accounting Profit are not the same thing, in my honest opinion.

    [Based on the demand and supply of the stocks, the traded price fluctuates.]

    Yeah true, but I’m sure you would agree that there is much more into it than just this. 🙂

    Like

  2. what are u gettin at ? plus telco /tata motors is not the most representative stock in the sensex..

    me thinks time to look down from this mountain !
    what goes up has naturally to come down
    so im waitin for that fabled correction..

    Like

  3. @Ruhi
    EPS: I totally agree with that. Plus when you account for P-Stock the EPS computation becomes even more complicated.
    However this post is for the truly laymen who after hearing about stock market reaching 15K want to know about it.

    @Prax…
    The example given is just a randomly picked stock.. and for educational purpose only. It has no other meaning.
    However Telco is still a important constituent of the Sensex (plus it has taken enough beating recently… so its one of the few blue chip stocks that u can still by)

    Like

  4. [Plus when you account for P-Stock the EPS computation becomes even more complicated.]

    Yeah, we always need to deduct the preferred stock dividend (non-cumulative; cumulative may or may not be deducted depending upon the dividends in arrears) from the net income to arrive at EPS, else it would be faulty.

    Like

  5. Interesting:).

    But why is Times of India publishing front page headline news stating that Sensex has always followed Sachin’s One Day Cumulative Score! Even their own analysis doesn’t prove this well enough. Just because both are on 15000! was a silly story necessary hehehe

    Like

Leave a Reply.... we want your views

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s