I require Help?

mahmeds2000 · #1 5th June 2006, 12:30 AM

Hi all,
Thanks to all senior member and traderji for openning such a valuable site. I want to know that how price of the share is fixed, means why the price of Gujarat ambuja is 93 (why not 200 or 55?) and how it is fixed.
My next Quetion is how the price of the share is moves up and down?
I want the help from any member.

This thread i have open for the beginner. I know that many beginners have many question in there mind so they can ask there quetion on this tread.

thanks
wrgrds
Ahmed

munchikana · #2 5th June 2006, 06:20 PM

What do you mean by "fixing" of share price? Please elaborate. The very term "fixing" sends jitters and causes nervous breakdown for many. Do you mean rigging of share prices? If not, it is only a question of meeting the mind of buyer and seller about the particular figure called price at which transaction takes place. It is a question of demand and supply. If you are able to manage any one side, which can rattle the market, you are the king of Indian stock market.

amitt29 · #3 5th June 2006, 07:36 PM

First of all in a normal market,the ipo(initial public offering)of a company's equity(share)comes.U apply and provided its a normal subscription and a bit of luck u get the requested amount of shares or maybe less.The process is called allotment.The price band of the share is fixed(determined)by arbitrators/bankers by looking at company a/cs,balance sheet etc.
Suppose u are not alloted any shares there is no reason to worry,on the day of the listing(on nse/bse)u can buy them from the market,usually depending on company profile and prospects they gap up or gap down.So u may get in less than or more than the listed price.

Now if u ask for trading part,there are always buy/sell orders in market of a share with a quantity and price.The order for buy and sell are executed when prices are matched.A buy and sell completes a transaction.
The exchanges have fixed a ceiling and floor of prices the upper limit above which the price cant go is called buyers freeze(upper circuit),the lower limit below which the prices cant go is called sellers freeze(lower circuit).These circuits are good for the day.They are usually 8 percent and 10 percent of A group companies.
Hope this helps.

mahmeds2000 · #4 5th June 2006, 08:54 PM

Quote:

Originally Posted by amitt29

First of all in a normal market,the ipo(initial public offering)of a company's equity(share)comes.U apply and provided its a normal subscription and a bit of luck u get the requested amount of shares or maybe less.The process is called allotment.The price band of the share is fixed(determined)by arbitrators/bankers by looking at company a/cs,balance sheet etc.
Suppose u are not alloted any shares there is no reason to worry,on the day of the listing(on nse/bse)u can buy them from the market,usually depending on company profile and prospects they gap up or gap down.So u may get in less than or more than the listed price.

Now if u ask for trading part,there are always buy/sell orders in market of a share with a quantity and price.The order for buy and sell are executed when prices are matched.A buy and sell completes a transaction.
The exchanges have fixed a ceiling and floor of prices the upper limit above which the price cant go is called buyers freeze(upper circuit),the lower limit below which the prices cant go is called sellers freeze(lower circuit).These circuits are good for the day.They are usually 8 percent and 10 percent of A group companies.
Hope this helps.

hi ammit29,munchikana,

Thanks for the reply. i got all the above. But actually i wanted to ask that how to calculate the actual price of any share? what i am thinking the price of the shares in the market are not the actual price it is just according to the trend like now a days many shares are trading below there actual price. What i want to know is, how to calculate the actual price of the share according to there fundamentls? I think there could be some formula for it. So if any body knows it please help i am very eagerly searching for it.

Thanks
wrgrds
Ahmed

jdm · #5 5th June 2006, 10:47 PM

Quote:

Originally Posted by mahmeds2000

i wanted to ask that how to calculate the actual price of any share?

thats the million doller question.

prices are not only governed by the rules of fundamentals, but as you know markets run on sentiments. and these sentimental values hold true, perticularly for the short term.

again two companies, equal in every respect, but one listed in a developed country, say the US and the other in a developing country say India will not have the same valuations. the company listed in US will have twice or more the valuation than its peer in India.

amitt29 · #6 5th June 2006, 10:55 PM

Bingo,valuations are very objective,its different for different person,whether u buy itc at 180+or at 159(with its market cap and equity).Some ppl bought titan at 150 last year,hind zinc at 130,look at valuations now.

munchikana · #7 5th June 2006, 11:36 PM

Now your question becomes a bit clear. You mean intrinsic value of share as opposed to market value of share (that is what we see on trading screen). You want to know the method of calculation of intrinsic value of share. Warren Buffet thrived on it. He purchased the shares near or below their intrinsic value and waited patiently.

mahmeds2000 · #8 6th June 2006, 11:53 AM

Quote:

Originally Posted by munchikana

Now your question becomes a bit clear. You mean intrinsic value of share as opposed to market value of share (that is what we see on trading screen). You want to know the method of calculation of intrinsic value of share. Warren Buffet thrived on it. He purchased the shares near or below their intrinsic value and waited patiently.

Hi munchikana,amit29,jdm,
Thanks for giving reply. Actually i think i wanted to know the same said by munchikana method of calculation of intrinsic value of share. So if you know it please explain it here this will help other pepole also.

thanks in advance
wrgrds
Ahmed

jdm · #9 6th June 2006, 02:07 PM

hi Ahmed,
the answer remains the same.

you can get some figures by implementing fundamental analysis - its true particularly for the long term. but in the short term - even god won't take a risk.

mahmeds2000 · #10 6th June 2006, 03:54 PM

Quote:

Originally Posted by jdm

hi Ahmed,
the answer remains the same.

you can get some figures by implementing fundamental analysis - its true particularly for the long term. but in the short term - even god won't take a risk.

hi jdm,
How to get the figures by waching fundamentals that's what i am asking? i don't know i want the exact solution sir.
Also where is munchikana i am waiting for your reply
wrgrds
Ahmed

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