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Stock Market
Stock Market
Key Terms
Equity Share
A unit representing the owners share in the profits of the company. Equity share holders get dividend. Equity shares are traded on stock exchange. A unit representing the owners share in the profit of the company: fixed dividend and dividend paid before paying the equity share holders A unit representing the lenders claim on the company.
Preference share
Bond/Debenture
Buying shares
Directly from the company: primary market From existing shareholders: secondary market
Primary Markets
Public issue
Book building
DLF Issue in the price band of 450 - 550. You can apply for 10 shares minimum and in multiples of 10. You can quote a specific price or apply for shares at a cut-off price as decided by the issuers after all the applications are received.
Rights Issue
A company offers additional shares for the existing shareholders of the company.
Helps in retaining control of management Appeasement of existing shareholders by issuing shares at less than market price.
Secondary Market
Stock Exchange: a place for buying and selling shares of those companies who have issued the shares.
STATISTICS
India - population 110 crores GDP $1000 bn x 43 = Rs. 43000 bn = Rs. 43,00,000 crores Active participants in stock markets: 20 lakhs
Depository system
COMPANY R&T AGENT
DP
Anoop
NSDL CDSL DP DP
DP DP DP Radhika
DP
Trading mechanism
BANK BANK BANK BANK
SELL ORDER
BUY ORDER
Ashish BROKER B
NSE
BROKER A
Jayant
NSCCL
DEMAT DEMAT CM-BP-ID DEMAT DEMAT
Settlement Schedule
Regulation
Finance Ministry: Overall Policy RBI: Banking system SEBI: Security markets AMFI: Mutual funds
Foreigners
Foreign Institutional Investors P-notes Hedge funds Foreign brokers Foreign portfolio managers
Locals
Institutions: LICs, GICs, Banks Mutual Funds Domestic Brokers Domestic large (HNI) Investors Market operators (Large, medium and small) Day traders
Conclusions
Individuals are small Institutions are many and do not hold sway over markets for long times Depth of the market is increasing rapidly Information revolution has brought in nearly strong efficient markets
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