TASK DAY 1.

Q.1) WHAT IS PRIMARY MARKET WITH EXAMPLES?

ANS: The primary market is where securities are created. It’s in this market that firms sell new stocks
and bonds to the public for the first time. An initial public offering, or IPO, is an example of primary
market. These trades provide an opportunity for investors to buy securities from the bank that did the
initial underwriting for a particular stock. An IPO occurs when a private company issues stock to the
public for the first time.

For Example, company ABCInc. Hires five underwriting firms to determine the financial detail of its IPO.
The stock will be $15. Investors can then buy the IPO at this price directly from the issuing company. This
is the first opportunity that investors have to contribute capital to a company through the purchase of
its stock. A company is comprised of the funds generated by the sale of stock on the primary market.

Q.2) WHAT IS SECOUNDARY MARKET WITH EXAMPLE?

ANS: The secondary market is commonly referred to as the “stock market”. This includes the New York
Stock Exchange (NYSE), Nasdaq, and all major exchanges around the world. The defining characteristic of
the secondary market is the investors trade among themselves. This is, in the secondary market,
investors trade previously issued securities without the issuing companies involvement.

For example, if you go to buy Amazon (AMZN) stock, you are dealing only with another investor who
owns shares in Amazon. Amazon is not directly involved with transaction.

Q.3) WHAT IS IPO AND FPO IN SHARE MARKET?

ANS: All the business entities need fund flow to finance their day to day operations. Therefore, for
raising funds for the business there are two ways i.e. in the form of equity or through debt which
represents the borrowed capital of the company. In equity, the entity approaches various individuals to
sell its shares at a fixed price and when it is done for the first time it is referred to as IPO. While on the
other hand, when the shares are offered for sale for the subsequent public contribution it is referred to
as FPO.

It is very important and beneficial to have a basic knowledge of IPO and FPO which if often used in the
stock market. Also, let us discuss IPO & FPO.

IPO Definition:
IPO is an abbreviation of Initial Public Offer. When a company is going for a process of getting listed on
the stock exchange and publicly traded, IPO is the first public offering, it is the main source of the
company in acquiring money from the general public to finance its projects and the company allots
shares to the investors in return.

FPO Definition:
FPO is an abbreviation of a follow-On Public Offer. The process of FPO starts after an IPO. FPO is a public
issue of shares to investors at large by a publicly listed company. In FPO, the company goes for the
further issue of shares to the general public with a view of diversifying its equity base. A prospectus is
offered by the company.

With the expansion and growth of a company, it is likely to make further issues of stock with the help of
FPO but there are many companies whose IPO is there only public offer.

Q.4) WHY IS FPO ISSUED?

ANS: A company generally needs a follow on offering to raise ‘additional capital’ for various reasons and
this goal is achieved by conducting a dilutive FPO where new shares are offered and money is generated.

Q.5) WHAT HAPPENDS IF FPO IS NOT FULLY SUBSCRIBED?

ANS: FPO prices are often lowered in such cases in order to ensure the issue is fully subscribed by
investors, even if it results in the issuing company not raising the expected capital. The affected
company has another option. Before the FPO process commences, they can get into an agreement with
their underwriters stating that the latter would be required to buy unsold shares in case of under
subscription.

Just to refresh your memory, companies usually hire an investment bank as their underwriters during an
FPO process. Underwriters help companies evaluate the right FPO valuation. Hope springs eternity and it
is no different in the world of FPOs either. Companies always hope that the dark clouds float away
eventually and that the FPO price goes up on the offer day. Such scenarios can happen too because FPO
share prices are determined by a host of external factors.

Q.6) WHAT ARE THE OBJECTIVES OF RIGHT ISSUE?

ANS: Right Shares means shares that are issued to the existing equity shareholders by virtue of their
shareholders. Issue of right share means the issue of further shares by a company to its existing equity
shareholders in proportion to the shares held by them in the company.
Sec62 of the Companies Act, 2013 makes it obligatory for companies regarding the further issue of
shares to offer new shares to existing equity shareholders in the first instance. Further, the total number
of shares should not be more that the authorized share capital of the company.

The existing equity shareholders enjoy a right to either subscribe to these shares or sell there rights or to
reject the offer. In case the shareholder rejects the right shares the company can offer these shares to
the public.

Objectives of issue of right shares are as follows:

1. The objective of issue of right shares is to increase the subscribed capital of the company.
2. Another objective of issue of right shares is to comply with the statutory provision of the
Companies Act, 2013 on the issue of shares by an existing company.
3. The popular objective of issue of right shares is to offer shares at a price lower that the market
price to the existing shareholders.

Q.7) WHAT KIND OF RIGHT IS GIVEN IN CASE OF RIGHT ISSUE?

ANS: The right provided under the right issue of shares is statutory right to the shareholders to
subscribe new share in the company in proportion to their existing holding. However, unless and until
the board offers the right issue, the pre-emptive right of the shareholder does not exist. When a
company needs additional capital and keeps the voting rights of the existing shareholders
proportionately balanced, the company issues rights shares. The issue is called so as it gives the existing
shareholders a pre-emptive right to buy new shares at a price that is lesser than market price. The Rights
issue is an invitation to the existing shareholders to buy new shares in proportion to their existing
shareholding.

Q.8) WHAT IS MCX?

ANS: The full form of MCX is Multi Commodity Exchange of India limited. MCX is India’s first commodity
derivatives exchange facilitating online trading of commodity derivatives transactions. Commencing
operations in 2003, MCX operates under the purview of the Securities and Exchange Board of India
(SEBI).

MCX operates in the same manner as the Bombay Stock Exchange (BSE) and the National Stock
Exchange (NSE), offering commodity derivative contracts across segments including agriculture
commodities, metals and energy among others.

Q.9) What is the difference between BSE & NSE?

ANS: BSE Stands for ‘Bombay Stock Exchange’, and NSE Stands for ‘National Stock Exchange’.
Although everybody understands that both BSE & NSE is something related to securities such as stock
shares and bonds, what is the exact definition of the stock exchange?

Difference between BSE & NSE:

1. NSE is the biggest stock exchange in India, while BSE is the oldest stock exchange in India.
2. The BSE was established in 1875, while the NSE was established in 1992.
3. The benchmark index for the NSE is the Nifty, While for the BSE it is Sensex.
4. Global Rank is 11th and 10th.
5. BSE promotes trading in equity, debt instruments, mutual funds, currencies, derivatives, while
NSE promote trading equity, equity derivatives, debt and currency derivatives segments.
6. The vision of BSE is to ‘Emerge as the premier Indian Stock Exchange with best in class global
practice in technology, products innovation and customer service’, while NSE’s vision is to
‘continue to be a leader, establish global presence, facilitate the financial well being of people’.
7. The BSE’s sensex comprises of 30 companies, while NSE’s Nifty comprises of 50 companies.

CONCLUSION:

Both the stock exchanges, NSE & BSE, are an important part of Indian Capital Market. Everyday,
hundreds of thousands of brokers and investors trade on these stock exchanges. And both are
established in Mumbai, Maharashtra, and SEBI (Securities and Exchange Board of India) recognized.

Ans. 10) The Domestic mutual funds of UTI Mutual Fund, provides portfolio management services to
institutional clients and high net worth individuals like Employee Provident Fund Organisation, National
Skill Development Fund, Postal Life Insurance, and manages retirement funds viz. NPS, offshore funds
like Shinsei UTI India Fund, and alternative investment funds catering to a diverse group of individuals,
institutional investors, banks, trust, and NRI’s.

KEY FACTS ABOUT UTI AMC:

 According to CRISIL, UTI AMC is the largest AMC in Indian in terms of total AUM, seventh-largest
AMC in India in terms of mutual fund QAAUM with Rs. 1,542.3 billion, and also has the largest
share of monthly average AUM amongst top ten Indian AMC coming from B30 cities.
 The management fees from domestic mutual funds account for 72.7% of the total income of the
company.
 UTI AMC has established the first mutual fund in India and has been in the asset management
industry for more than 55 years with a strong history and proven track record in mutual fund
industry with strong brand recognition.
 UTI AMC has 11 million live folios accounting for 12.8% of client base managed by the Indian
mutual fund industry.
  UTI AMC has a national footprint with 163 UTI Financial Centres, 273 Business Development
Associates and Chief Agents and 33 other Official Points of Acceptance. UTI AMC also has
approximately 51,000 Independent Financial Advisors.
 UTI AMC has four sponsors SBI, LIC, PNB and BOB each of which has the Government of India as
a majority shareholder. UTI AMC also has global asset management company T. Rowe Price
International Ltd as one of its major stakeholders with a 26% stake in the Company.
 As of September 30, 2019, UTI AMC manages 178 domestic mutual funds schemes, comprising
equity, hybrid, income, liquid, and money market funds.

UTI AMC IPO DETAILS:

IPO opening Date Sep 29, 2020
IPO Closing Date Oct 1, 2020
Issue Type Book built Issue IPO
Face Value Rs. 10 per equity share
IPO Price Rs. 552 – 554 per equity share
Market Lot 27 shares
Min order Quantity 27 shares
Listing At BSE,NSE
Issue size 38,987,081 Eq shares of 10/- (aggregating up to Rs. 2,159.88cr)