Introduction:

In the 1600s the Dutch east India company employed hundreds of ships to trade
gold, porcelain, spices and silks around the globe. But running this massive
operation wasn’t cheap. In order to fund their expensive voyages, the company
turned to private citizens, individuals who could invest money to support the
trip in exchange for share of the ship’s profits. This practice allowed the
company to afford even granders voyages increasing profits for both themselves
and their investors. Selling these shares in coffee houses and shipping ports
across the continent, the Dutch east India company unknowingly invented the
world’s first stock market.

stock market refers to the collection of markets and exchanges where the issuing
and trading of equities (stocks of publicly held companies),bonds and other
sorts of securities takes place, either through formal exchanges or over the
counter markets.

stock market is one of the most vital components of a free market economy, as
it provides companies with access to capital in exchange for giving investors a
slice of ownership.

Stock market is one of the most important sources for companies to raise
money. This allows business to publicly traded or raise additional capital for
expansion by selling shares of ownership of the company in a public market.

Indian stock exchanges:

There are two main stock exchanges in india:

Bombay stock exchange (BSE) was established in 1875 and it is 9 th largest stock
exchange in the world with market capitalization of $3.2 trillion and 5500
companies are listed on bse.

National stock exchange (NSE) was established in 1992 and it is 10 th largest

stock exchange in the world with market capitalization of $3.1 trillion.
What is stock exchange ? and how to purchase stocks.

Stock exchange is a virtual market where buyers and sellers trade in existing
securities. It is a market hosted by an institute or any such government body
where stocks, bond , future, options etc are traded. Stock exchange is a meeting
place for buyer and sellers.

IPO:

Let’s imagine a new coffee company that decides to launch on the market. First,
the company will advertise itself to big investors. If they think the company is a
good idea they get the first crack at investing and then sponsor the company’s
initial public offering (IPO). This launches the company onto the official public
market, where any company or individuals who believes the business could be
profitable might buy a stock.

Brokers:

A broker is a person who is licensed to buy and sell stocks, provide investment
advice and collect a commission on each purchase or sale.

Demat account:

Deamt account is an account to hold stocks in electronic form. In india demat

accounts are maintained by two depository organisation, national securities
depository limited and central depository services limited.

Types of investment In stock market:

Stocks:

A stock is a type of security that signifies ownership in a corporation and

represents a claim on part of the corporation asset and earnings. There are two
types of stocks

Common stock usually entitles the owner to vote in shareholders meeting and
to receive dividends.
Preferred stock generally does not have voting rights but has higher claim on
asset and earnings than the common stock.

Bonds:

A bond is a fixed income investment in which an investor loan money to an

entity which borrows the funds for a defined period of time at a variable or
fixed interest rate.

Mutual funds:

A mutual fund is an investment vehicle made up of a pool of money collected

from many investors for the purpose of investing in securities such as stocks,
bonds, money market instruments and other asset.

ETF:

An ETF is a marketable security that tracks an index. A commodity bonds or a

basket of assets like an index fund unlike a common stock on a stock exchange.
GDP OF INDIA:

The correlation between GDP and stock market so first I am going to talk about
what is GDP? GDP stands for gross domestic product which measures the value
of economic activity within a country another way it could be said is GDP is
equal to spending + gross investment + government investment + government
spending and revenue created from exports and imports or it can also be said as
money made within a country. So if GDP continues to increase that more are
jobs created incomes are created and its all cycle so let’s say if incomes are
increased more spending which leads to more spending. Stock market isn’t just
based on the country’s economy but also investors are thinking it’s the same
supply and demand chain that drives up GDP and said for to drive up our
economic input and output. Let me say an example a stock XYZ that has terrific
earnings reports, great growth, great management team then lot of people are
willing to invest in it and are willing to pay more for it because they think they
will make great returns and as more investors want it there is less supply for in
this more demand which drives up the price but again let’s say XYZ company
reports terrible earnings then that will drive down the price because there will
be a huge sell off and there is more supply than there actual demand. And
obviously if the country’s economy is in a good place there will be more
investors and if economy is in bad place investors will be scared to invest in it
and that’s the correlation between GDP and stock market. India’s economy is
the fifth-largest in the world with a GDP of $2.94 trillion.
Inflation:

What is inflation? Now let me tell you in a very simple format when too much
money chases a particular good it leads to an inflation if I have to put in a
slightly different way inflation basically means an increase in the price of goods
and services over a period of time which devalues the purchasing power of
money and currency. for example at one point we could buy a particular
commodity or we could buy something like a samosa for like 10rs or 15rs but
now you might need to spend around 30rs for it so that basically does not mean
that the good and services have actually become expensive it also means that
the money or the purchasing power of our currency has devalued so the price of
good and services have also gone up and the price of the purchasing power of
our currency has also gone down and that lead to inflation. Inflation rate
between 2-6 is considered as good and 6.1 considered as bad. Current inflation
rate is 5.1% for the financial year 2021-2022.

Stock market trend:

As we have seen a sharp 50% drop in month of march 2020 stock market has
recovered since then. The 30 Stock index BSE Sensex crossed 54800 points to
it's all-time high as on August 2021. NSE Nifty also touched new heights
crossing 16300 points to it's all-time high.

OPEC:
Oil isn’t just petrol for car it is an ingredient in a lot of what we use from the
plastic glove that keeps our hand clean to the tires that keep you on the road.
Which means this product can be affected by the fluctuating price of oil. That
price is largely decided by supply and demand and the collective actions of an
organization OPEC. OPEC stands for Organization of the Petroleum Exporting
Countries (OPEC) is an intergovernmental organization or cartel of 13
countries. Founded on 14 September 1960 in Baghdad by the first five members
(Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela).
The group was created to monitor the stability and price of the petroleum
market, which was previously determined by the US dominated multinational
oil companies. Today these oil producing member countries supply over 40% of
world’s crude oil production and together they control more than 80% of the
world’s proven crude oil reserves.
 ● Major Crude oil producers:
➢ Saudi Arabia
➢ Canada
➢ United states
➢ Russia

Indian oil and gas sector can be divided into three segments namely -

Upstream
The upstream oil companies are involved in the process of exploration and
production (E&P) of crude and natural gas. These companies are high
capital intensive. They are involved in site identifying; soil testing, drilling,
exploring, pumping and transferring oil to the refineries. In India, ONGC is
the largest public sector upstream company.
Midstream
The midstream oil companies are those, which procure, crude from the
upstream companies and then refine and process it into the end products
which can be used by the end consumers.
Downstream
These are the companies, which collect the end products from the
midstream companies at the refinery gate and market them to the end
consumer. IOC is the major marketing company in India and it also
feature in Fortune 500.

● NELP-New Exploration Licensing Policy:

New exploration licensing policy (NELP) was introduced by the
government of india, during 1997-98 to provide an equal platform to both
public and private sector companies in exploration and production of
hydrocarbons with Directorate general of hydrocarbons (DGH) as a nodal
agency for its implementation level playing field for both public and
private players.
● Financial year 20-21 for oil industry

 The one big world event in early march 2020, apart from the
coronavirus spread has been the monumental oil price crash, the biggest
one day drop, ever since the gulf war. The price of crude oil plummeted
by over 30%. Brent crude the worldwide oil price benchmark dipped by
over 30% and traded negative.

 COVID-19 pandemic, the past 12 months have been quite challenging

for the oil and gas industry. Global crude demand dropped by about 30
percent and oil prices had a free fall. The Indian oil and gas industry
responded commendably and operated safely during this period.

 However, the current crisis will have a lasting impact on the industry.
This is because changes in operating models, travel habits, accelerating
digitisation, and finally urgency for decarbonisation will result in
demand rebalancing in the medium term and decline in the longer run.
The oil and gas ecosystem will have to reconfigure based on these
changing demand patterns and actions of governments and regulators,
and investors’ preference.
Strength
 Brand Equity

ONGC has invested in building a strong brand portfolio and has ensured to
create an environment that is conducive to the growth of the Indian economy.

 Technology

ONCG ensures quality in its products through automation of activities which

has also helped the company scale up and down its capabilities depending on
the demand conditions.

 Focus on Sustainability

ONGC has ensured that it protects and cares for the environment and has an
integrated Health, Safety & Environment (HSE) program has proactively
managed the environment.

• Strong Dealer Community

ONGC has a strong dealer community by building a culture among the dealers
and distributors by asking them not only to promote the company’s products but
also invest in educating and training the sales team to explain and create the
relationship with the customer and help them extract the maximum benefits out
of the products.

Weaknesses:

 Government control on allocation:

Post APM, ONGC has been independent to sell its product at
international crude prices to its customer refineries. However, the
GOI continues to allocate most of the crude oil produced in the
industry to other PSU refineries. As a result, ONGC, as per MOU, has
limited power to sell its produce independently in the open market at
international prices.
 Investment in R&D

The company’s investment in Research and Development is said to be

below the leading players in the industry. Even though ONGC is
spending a good amount on the R&D aspect, however, the company has
not been able to compete with the leading players in the industry when it
comes to innovation. The company has come across as a company that
chooses to bring out products that are based on tested features.

Opportunities:

• Developing economy:

Historically, demand for petroleum products has traced the economic growth
of the country. With GDP expected to grow at near 9-10 % in the long-term, the
energy sector would benefit from the same, going forward. To put things in
perspective, diesel sales grew by nearly 12% (which constitutes 40% of the
entire petro-products basket), petrol sales by 9% and a double-digit growth in
LPG (liquefied petroleum gas) .

 Government decisions:

The recent price increases and also the decision to allow oil companies to
increase prices within a band of 10% augurs well for the industry. This step is
likely to reduce government interference and provide some autonomy to oil
companies when it comes to increasing petrol and diesel prices in order to
protect margins.
Threats:

 Competition:

Oil-marketing companies had complete control over the downstream

marketing business while private sector players were restricted to only
refining. However, with entry of private players such as Reliance,
Essar Oil and Shell (in the waiting), the sector is likely to witness
increased competition going forward. Since private players will not
be bound to provide for these subsidies, PSU marketing players are
likely to suffer from lower throughput per outlet.
 Lack of freedom:

Although the government has decided to provide autonomy to oil

companies to increase petrol and diesel prices within a 10% band, other
products such as LPG and kerosene continue to remain under the
government controlled price mechanism. As per the current
estimates, the subsidies on LPG amount to Rs 887 per cylinder after
factoring in duty cuts and that on kerosene is over Rs 13.60 per litre.