Colloquium Session on Stock Market Demystified

The Colloquia Session on ‘Stock Market Demystified’ was conducted at the Amrita School of Business, Amaravati, offering MBA students valuable insights into the stock market, financial strategies and personal finance management. The session was led by Mr. Sameek Ghosh, a seasoned professional with more than 24 years of experience in academia and the financial industry. His expertise in leveraging generative AI, data analytics and risk management tools provided a robust foundation for the discussions.

The session began with a formal welcome by the host, who introduced Mr. Sameek Ghosh’s impressive credentials, including his work in business intelligence, statistical process optimization, and mentorship of postgraduate students. Our speaker’s innovative approach to financial markets promised a session rich in practical and theoretical knowledge, setting the tone for an enlightening exploration of stock market dynamics and personal finance strategies.

Our distinguished guest began the session by highlighting the key expectations industry professionals have from MBA graduates.  The following are essential for succeeding in the competitive corporate landscape:

• Clear Articulation and Communication: Students must express their thoughts and ideas effectively, with confidence and clarity, during interviews and professional interactions.
• Strong Fundamentals: A solid grasp of theoretical knowledge and its application is critical for tackling real-world business challenges.
• Proficiency in Data Handling: Students must develop skills ranging from basic reporting to managing complex datasets using advanced tools, irrespective of their specialization.
• Adaptability and Dedication: The ability to learn quickly, work extra hours when necessary, and continuously upgrade one’s knowledge base is crucial for professional growth.

The speaker introduced the basics of the stock market, explaining it as a platform where companies list their shares for exchange, and investors buy and sell these shares. He also detailed the commodity market, where goods like gold, silver, and crude oil are traded. Key points included:

• Price Movements: Stock prices exhibit three behaviours – upward movement, range-bound fluctuations, or downward movement.

• Probability of Success: The probability of making profits in the stock market stands at 33%, making it statistically disadvantageous for investors without proper knowledge or strategies.

To enhance the probability of success, Prof. Sameek emphasized the importance of thorough research before investing:

• Stay updated on global events, including geopolitical tensions, international trade dynamics, and global crises like pandemics, which affect market stability.
• Monitor political events, such as government policy changes, elections, and trade agreements, as they impact stock and commodity markets.
• Consider broader economic factors such as inflation, interest rates, and GDP trends that influence the market.
• Analyze a company’s annual reports to assess financial health and long-term growth potential.
• Fundamental Research: Analysing a company’s annual reports, economic trends, and global events.
• Technical Research: Studying price charts, patterns, and historical data to make informed decisions.

The speaker elaborated on three primary strategies used in financial markets:

• Speculation: This involves predicting the growth of a business to make profits, but it comes with high risks. Losses can be significant, and the approach is statistically disadvantageous.
• Arbitrage: A risk-free strategy that leverages price differences between markets, such as spot and futures. While returns are capped at 8-12%, this strategy requires rapid decision-making and execution.
• Hedging: A risk minimization strategy using derivative instruments like futures and options. It requires proficiency in finance, economics, statistics and the psychological resilience to handle potential losses.

Hedging concepts were explained in further detail as a method to define and limit financial losses rather than eliminate them. Key instruments discussed included:

• Futures and Options: These are contracts used to hedge risks but are not suitable for speculative trading.
• Market Indices: Investing in indices like NIFTY50, which reflect the economy’s performance, was recommended as a safer approach for beginners.

Mr. Sameek Ghosh stressed the significance of personal finance management as a path to financial independence. Key takeaways included:

• Insurance and derivative instruments should be treated as risk management tools, not investment options.
• The power of compounding and the need for simulated practice before real investments were highlighted.

The session concluded with an interactive discussion, where participants raised questions about market indices, derivative trading, and practical investing strategies.  Mr. Sameek’s detailed responses provided clarity and actionable insights.

The session highlighted the importance of comprehensive knowledge, combining theoretical understanding and technical expertise, for navigating the stock market. Success requires thorough research, including fundamental and technical analysis, and a clear focus on risk management through hedging strategies and prudent use of derivatives. The speaker emphasized the need to treat hedging instruments as safeguards, similar to insurance policies and not as investment vehicles. He underscored the value of disciplined financial planning, savings and compounding.  A key insight was the necessity of practicing investment strategies on paper before entering real markets, ensuring preparedness and minimizing risks. Mr. Sameek Ghosh’s expertise and engaging delivery made the session a transformative experience for all attendees.