final project on fianancial services

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TOOLS TO ANALYZESECURITIES



HSBC

HSBC Holdings plc is a global financial services company headquartered

in London, United Kingdom.

As of A pril 2, 2008, according to Forbes magazine, HSBC was the fourth

largest bank in the world in terms of assets ($2,348.98 billion), the second

largest in terms of sales ($146.50 billion), the largest in terms of marketvalue ($180.81 billion).

It has around 8,500 offices in 87 countries, 210,000 shareholders, 300,000

staff and 128 million customers worldwide.

As of August 2010, it was the largest company listed on the London Stock

Exchange, with a market capitalization of £115.8 billion.



HSBC I NVEST DIRECT

HSBC Invest Direct is one of India·s leading

financial services organizations providing

individuals and corporates with customized

financial management solutions.H

SBC InvestDirect·s 2000 employees provide a complete range

of investment solution to over 1,38,000 customers

in India through its 88 branches and 190

franchiusee outlets from 133 cities.



EQUITIES

It refers to shares of company. Shares

represent a fraction of ownership in a

business. A share certificate is legal

document that specifies the amount of shares owned by shareholder but

nowadays the shares are traded in

electronic form. For this purpose the

investor has to open a Demat accountwith its broker.



DERIVATIVES

Derivative is a product whose value is derived from the

value of one or more basic variables, called bases

(underlying asset, index or reference rate), in a

contractual manner. The underlying asset can be equity,forex, commodity or any other asset. For example, wheat

farmers may wish to sell their harvest at a future date to

eliminate the risk of a change in prices by that date. Such

a transaction is an example of a derivative. The price of

this derivative is driven by the spot price of wheat whichis the µunderlying¶.



TYPES OF DERIVATIVES

The two types of derivatives that are traded in stock market are

Futures and O ptions.

Futures : A futures contract is an agreement between two parties to

buy or sell an asset at a certain time in the future at a certain price.

Options: O ptions are of two types ± calls and puts. Calls give the

buyer the right but not the obligation to buy a given quantity of the

underlying asset, at a given price on or before a given future date.

Puts give the buyer the right, but not the obligation to sell a givenquantity of the underlying asset at a given price on or before a given

date.



FUNDAMENTAL ANALYSIS

Fundamental analysis is the study of economic, industry, and company

conditions in an effort to determine the value of a company's stock. The

typical approach to analyzing a company involves four basic steps:

1. Determine the condition of the general economy.

2. Determine the condition of the industry.

3. Determine the condition of the company.

4. Determine the value of the company's stock.



P ARAMETERS

Net Profit Margin : A company's net profit margin is a profitabilityratio calculated by dividing net income by total sales.

Book Value Per Share : A company's book value is a price ratio

calculated by dividing total net assets (assets minus liabilities) by

total shares outstanding.

Current Ratio :A company's current ratio is a liquidity ratio

calculated by dividing current assets by current liabilities.

Growth In Profits : The growth in the profits of a company over

the previous years are considered.

Earnings Per Share : Earnings per share are calculated by dividing

net profits of the company with total no. of shares issued.



T YPES OF CHARTS

Line Charts

Bar Charts

Candlestick Charts

Point & Figure Charts



LINE CHARTS

A line chart is the simplest type of chart. Time is displayed on the bottomof the chart and prices are displayed on the side(s). Bars showing volume

for the each day can also be drawn at the bottom of the chart.



B AR CHARTS

A bar chart displays a security·s open, high, low and closing prices.



C A NDLESTICK CHARTS

Candlestick charts display the open, high, low and closing prices in a format

similar to a modern day bar chart, but in a manner that extenuates the

relationship between opening and closing prices.



INTERPRETATION

Because candlesticks display the relationship between open, high, low andclosing prices, they cannot be displayed on securities that have only closing

prices, nor were they intended to be displayed on securities that lack

opening prices.



SUPPORT A ND

RESISTA NCE

Support and resistance is a

concept in technical analysisthat the movement of the price

of a security will tend to stop

and reverse at certainpredetermined price levels.



RESISTA NCE

A re

sistanc

eleve

l is the opposite of a support level. It is where the pricetends to find resistance as it is going up. This means the price is more likely

to "bounce" off this level rather than break through it.



BULLM ARKET OR RISING TREND

A bull market or rising trend is associated with increasing investor confidence,

and increased investing in anticipation of future price increases.A rising trendis one in which the current highs and lows of the market are higher than the

previous highs and lows and the trend line moves upward.



BEAR M ARKET OR F A LLING TREND

A bear market is a general decline in the stock market over a period of time.It is a transition from high investor optimism to widespread investor fear and

pessimism.A falling trend is defined by successively lower high prices and

lower low prices.



PUTS /C A LLS R ATIO

D

eveloped byM

artin Zweig, the puts/calls ratio (µP/C Ratio¶) is a marketsentiment indicator that shows the relationship between no. of Puts to Calls

traded on the stock exchange. Interestingly it provides excellent signals for

market tops and bottoms.

InterpretationBecause investors who purchase calls expect the prices to rise and investors

who purchase the puts expect the prices to decline, the relationship between

the number of puts to calls illustrates the bullish/bearish expectations of the

investors. The higher the level of P/C ratio, the more bearish the investors

are on the market. Conversely, lower readings indicate high call volume and

thus bullish expectations. When it reaches excessive levels, the marketsusually corrects by moving the opposite direction.



DO·S & DONT·S IN STOCK

MARKET

Let your profits run,but cut your losses

short

Sit on your hand when you don·t have a

clue

It·s never too low to sell or too high to buy

Buy the rumor,sell the fact

The trend is your friendMarkets go up the stairs and down the

elevator.



TH ANK YOU

final project on fianancial services

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