Table of Contents
Trading Terms
CMP (Current Market Price)
Current market price of the stock. (It is equvalent term to LTP (Last traded price) during market time).
Price Earnings (P/E) Ratio
Earnings per share in the last 12 months of the company to its current market price.
Eg: if the X company current stock market price is 200 and its report says Rs. 10 is earning per share in the last 12 months.
Then P/E ratio of the company is 200/10 = 20
Market Capitalization
Total value of the company by its outstanding shares.
Eg: if the X company holds 10Lac outstanding shares with current market price is Rs. 200 per share.
Then the market capitalization of the company is 10Lac * 200 = 20 crore.
Types of Market Capitalization in Indian Stock Exchange
- Small Cap (Less than 8,500 crore)
- Mid Cap (Between 8,500 to 28,000 crores)
- Large Cap (Above 28,000)
Risks and Returns of Different Market Capitalization
| Criteria | Small Cap | Mid Cap | Large Cap |
| Liquidity | Low | High | Very High |
| Return | Very high | High | Low |
| Risk | Very high | High | Low |
Divident/Divident Yield:
Divident is “dividing the companies earnings to its shareholders for their investments”. Divident is not available for all the company/stocks. It is decided by board of directors of the company.
Divident Yield:
- X Percentage per share
- X INR per share
Eg: If company is decided to provide INR 10 as divident rate and the current share price is 500.
Then Divident yield is 2% (10/500 = 0.02 * 100 = 2%)
Is higher divident yield is good ?
Higher divident yield indicates the high risk also, so always select the stocks which is medium/low risk with better divident yields.
How much divident yield is considered to be good ?
This is not something to define as it depends on the various factors and market conditions. But between 4 to 6% is defined as good divident yield by market analysts and 2.2 to 4% is something average to be considered.
D/E ratio (Debt to Equity Ratio)
Debt you own and equity you own.
How to calculate D/E ratio ?
D/E = Total liabilities / Total equity (shareholders capital)
Liabilities: Salaries payable, Wages payable, Rents Payable etc.
Debt: Accounts payable, Loans payable etc.
Is high D/E (Debt to Equity) is good ?
High D/E means the company is not able to generate the sufficient cash flows. So investors should prefer always the low D/E ratio companies.
What is recommended D/E ratio ?
Less than (<) 0.4% can be considered for the D/E factor to analyse your company or stock. Also greater than (>) 0.6% is risk value. Better to avoid or keep very less investments if all the other factors are good.
Equity vs Stock vs Share :
All represents the ownership in an entity or company.
Intrinsic value:
Intrinsic value is very helpful to understand whether the stock is under valued or over valued. Intrinsic value is considered as the important factor for investors to analyse the stock and decide whether the current price can be better to buy this stock.
How to calculate the intrinsic value ?
Intrinsic values are calculated by lot of different methods and ways. But many screener tools uses lot of past data and some complex formula to derive the value. This below formula can be helpful to decide which price to buy, but if the stock is already over valued then it might not help you to decide whether to buy or not.
Intrinsic value calculation by Relative value methods
Intrinsic value of the stock = P/E ratio (X) Earnings per share (EPS)
Eg: If the P/E ratio of the stock is 16 and the EPS of the most recent year is 12 then the intrinsic value by the relative method is = 192.
Note: If the intrinsic value is lesser than the current market price then do not buy the stocks. If the intrinsic value is higher then you can plan. But do not consider only this data to decide.
Eg: If the X stock intrinsic value is 200 and current market price is 150 then you can plan to buy.
But, if the intrinsic value is 200 and the current market price is 230 then do not buy and wait atleast 10% lesser than the intrinsic value to go for the buy side. (here 180)
Screener Queries
How to find the Debt free companies ?
Run this query on stock screener india.
Debt to equity = 0This will now display only the debt free companies.
How to find the companies which are providing the divident (yields) ?
Dividend yield > 0How to find the companies which are providing the divident (yields) and also debt free ?
Debt to equity = 0 AND Divident yield > 0How to search the stocks by multiple factors ?
Market Capitalization > 5000 AND
Debt to equity < 0.4 AND EPS > 0 AND
Intrinsic Value > Current price AND
Up from 52w low <20 AND Dividend yield > 0 AND
Volume > 50000 AND Price to book value < 1.0But you can consider the price to book value upto 3.0
How to query High Risk Stocks based on the Market Capital and other factors like price to book value ?
Market Capitalization > 1000 AND
Debt to equity < 1 AND EPS > 0 AND
Intrinsic Value > Current price AND
Up from 52w low <20 AND Dividend yield > 0 AND
Volume > 50000 AND Price to book value < 3.0How to query the decent stocks which you can plan for short / mid / long term ?
Market Capitalization > 1000 AND
Debt to equity < .4 AND EPS > 0 AND
Intrinsic Value > Current price AND
Up from 52w low <20 AND
Volume > 50000 AND Price to book value < 3.0Recommended to invest less amount and gradually increase the count if it goes in the downside,