The visibility of the company increases as well. The company gets listed on the stock exchange after IPO and this provides an opportunity to even a common man to invest in the company. Through IPOs, companies issue shares to the public and in turn receive funds that are used for various purposes. Share market plays a vital role in aiding the companies to raise capital for expansion and growth. Also called as auction market wherein all transactions happen via the exchange. OTC markets are informal markets wherein two parties agree on a particular transaction to be settled in future.Įxchange traded markets are highly regulated. Secondary market operates through over the counter (OTC) and exchange traded market. The shares bought in the primary market can be sold in the secondary market. Price of a share can be based on Fixed price or Book building issue Fixed price is decided by the issuer and mentioned in offer document Book building is where the price of an issue is found out based on the demand from the investors. Issue is public when the allotment of shares is made to more than 200 persons Issue is private when the allotment is made to less than 200 persons. The issue can be either through public or private placement.
A company or government raises money by issuing shares in the primary market by the process of IPO.
Share market is categorized into two namely: After linking your bank account with these accounts, you can start your investment journey. You can open demat account online easily through a simple process. So to start investing or trading, you have to open a demat account and trading account with a broker. Brokers act as an intermediary between the stock exchange and the investors. These are the two major stock exchanges in India and are regulated by SEBI (Securities and Exchange Board of India). Where all these buying and selling happens? NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). What are they? Bull market is one where the prices of stocks keep rising and the bear market is where the prices keep falling. You would have always heard people talking about bull market and bear market. We will read more about IPO under Primary Market. The process by which company issues shares is called Initial Public Offer (IPO). and for this reason it raises money from public. Why at all a company sells it shares to the public? A company requires capital or money for its expansion, development, etc. Long term investment will nullify the fall in price. Sometimes the price can rise and sometimes it can fall. There are various factors that affect the price of a share. You can get profit by selling the shares in the market. As the company grows, the price of your share too will increase. You can plan your investment strategy based on the time you need money.īy buying share, you are investing money in the company. If you start investing at a young age and stay invested for a long time, the rate of return will be high. Investing in shares allows you to fulfill your dreams like higher education, buying a car, building a home, etc. This allows you to sell ABC share anytime you want. 200 each of ABC company, then you become a shareholder of ABC. Share represents a unit of ownership of the company from where you bought it. Firstly, let us learn what is share market? Share market is where buying and selling of share happens.
New to stock market? I will take you through the world of share market in this article.
#Define share how to
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