SHARE Market

7/15/16

Day 1

Stocks/Share

A unit of ownership interest in a corporation or financial asset.

Not a direct control over the business or day to day operations.

The capital of a company is usually divided into certain indivisible units

Each unit is of a fixed amount.

Each such unit is known as Shares.

Entitle the possessor to an equal distribution in any profits as dividend.

7/15/16

Day 1

Being an Owner

Holding a company's stock means being one of the many owners (shareholders).

You have a claim (although usually very small) to everything the company owns.

Technically you own a tiny sliver of every piece assets of the Company.
(furniture, every trademark, and every contract etc.)

You are entitled to your share of the company's earnings as well as any voting
rights.

7/15/16

Day 1

Type of Shares

Equity Shares

Preference Shares

Preference Shares

a) Preferential right of payment of dividend at a fixed rate

b) Preferential right to be repaid of capital when the company goes into
liquidation

7/15/16

Day 1

Equity Shares

a) No preferential right in respect of dividend.

b) No preferential right repayment of capital.
c) Rate of Dividend as per rate recommended by the directors and
declared by the company in general meeting.
d) Represents ownership capital.
e) Equity shareholders collectively own the company.

7/15/16

Day 1

Market
a) A place where buyers and sellers meet together to buy/sale a product.
b) Market may be of different types, depending on product.
c) Like-if product is readymade garments, market is called Mall.
d) Similarly if the product is share then it is Share / Stock Market.

Stock Market
a) A place where buyers and Sellers meet together to buy/sale share.
b) Share is also known as Scrip
c) In market terms it is also called counter.

7/15/16

Day 1

Stock Market
a) A buyer and seller cannot buy/sale itself.
b) Sale / purchase can be done through a special regulatory body - Stock Exchange.
Two nationwide Stock Exchange
)

NSE (National Stock Exchange)

BSE(Bombay Stock Exchange)

c) Trading can be done through members of Stock Exchange

d) A member is called Stock Broker
(for example-Kotak Securities, India Infoline etc. are Stock Brokers).

7/15/16

Day 1

Type of Stock Market

Primary Market

Secondary Market

Primary Market
a) Market where new company or existing company issue shares to public for raising fund.
Purpose = start a new business or expand an existing business.
b) The shares issued in IPO are equity shares.
c) Process of issuing shares to public by new company = IPO (Initial Public Offer).
d) Process of issuing shares to public by existing company = FPO Follow up Public Offer).

7/15/16

Day 1

IPO (Initial Public Offer)

a) The first sale of share by a company to the public.
b) Remains opened for a specified period of days which is generally 5-7 days.
c) An applicant have to apply for IPO to the company, within these days.
d) This fund is raised to do the business by the company.

7/15/16

Day 1

Issue price of IPO

At Par

At Discount:
At Premium:

At Par
Issue price of share

nominal or face value

e.g. - If face value of the share is Rs. 10 per

share.
7/15/16

Day 1

share.
At Premium:
e.g. If face value of the share is Rs. 10 per
share
IPO is issued at Rs. 15 per share.
Then premium is Rs. 5.
b)Premium is the capital profit of the company.
c) Premium amount depends on goodwill of the
7/15/16

Day 1

of share.

At Discount:

e.g. If face value of the share is

Rs. 10 per Share.
IPO is issued at Rs. 8 per
share.
Then Rs. 2 is Discount
7/15/16

Day 1

Application Procedure for IPO

Online

Offline

Online

Applicant must have a Demat account.

He must have online trading accounts with any broker (like Share khan, Kotak
Securities, ICICI Direct, 5 paisa etc.).

He / she can apply online through that broker.

Payment can be done online.

7/15/16

Day 1

Procedure:
Detailed instructions are available on these brokers' web sites.
You have to go to the site and click on Open IPO.
There you will get the list of IPOs open for application.
Once an issue is selected, you will be directed to the Applications page, where the
form can be filled in and submitted online.
Given below is the picture, showing the option of applying online for IPO through
the software of a broker.

7/15/16

Day 1

Click here to apply

You will get a new window where you may have to re-login using your id and password.

User ID Password to login

7/15/16

Day 1

On logging in you will go to the page where you can apply for the available IPO.

Click here to see the available IPO

Click here to apply for

IPO of the given security.

7/15/16

Day 1

Offline:

Investors have to fill an IPO application form manually.

Forms are available from the following sources :

7/15/16

Stalls outside the stock exchanges

With the brokers in various other areas.

Through a share broker or investment consultant.

At various banks.

Day 1

Prospectus of a particular IPO can be checked from the web site of SEBI (
http://www.sebi.gov.in/).

You will have to fill up and remit the amount to the bank designated at the form

Amount to be calculated on the basis of the number of shares applied.

Now it is must to have a Demat Account to apply for the IPO.

Once shares will be allotted, it will be transferred directly to the respective

Demat Account.

7/15/16

Day 1

Scanned copy of an IPO Application form

7/15/16

Day 1

7/15/16

Day 1

Secondary Market

The secondary market is the financial market for trading of securities.

These are securities that have already been issued in an initial private or public
offering.

Secondary market can refer to the market for any kind of used goods.

The market, which exists in a new security just after the new issue, is often
referred to as the aftermarket.

Once a newly issued stock is listed on a stock exchange, investors and

speculators can easily trade on the exchange.

The market makers provide bids and offers in the new stock.

All stock exchanges are part of the secondary market.

7/15/16

Day 2

Stock Exchange
Constituted for the purpose of assisting, regulating or controlling the business of
buying, selling or dealing in securities.
As per the law all the stock exchange has to be corporatised.
It can be be a regional stock exchange.
(area of operation / jurisdiction is specified at the time of its recognition)
It can be a national exchange,
(permitted to have nationwide trading since inception)
NSE was incorporated as a national stock exchange.

7/15/16

Day 2

Two major stock exchanges in India are

1)

National Stock Exchange (NSE)

2)

Bombay Stock Exchange (BSE).

7/15/16

Day 2

Stock Index

A statistical measure of change in an economy or a securities market.

An imaginary portfolio of securities representing a particular market or a portion.
Each index has its own calculation methodology, expressed in terms of a change
from a base value.
The percentage change is more important than the actual numeric value.
Stock and bond market indexes are used to construct index mutual funds and
exchange-traded funds (ETFs).

7/15/16

Day 2

Popular Index:
1)

2)

NIFTY [National Index fiFTY]

An index of National Stock exchange

Computed on the basis of 50 shares traded in NSE

SENSEX SENsitive IndEX

An index of Bombay Stock exchange

Computed on the basis of 30 shares traded in BSE

There are also other Indices such as Bank NIFTY, CNX NIFTY Junior etc:

7/15/16