kii 0219ne nin indn o2ws

1. STOCK MARKET
Offer For Sale(OFS), Right Issue of Share , Bonus Issue of Share , Private Placement ,
Secondary Market ,Indices – Sensex and Nifty, Bull and Bear Market.
By Ankit Goswami B.Sc. Mathematics (Hons) 1st year

2. Offer For Sale (OFS)
 If a promotor or shareholder with more than 10% of the share capital of the company
wants sell his shares quick.
 Conditions:
Company should be in top 200 in terms of market capitalization.
2.5% shares should be reserved for mutual funds and insurance companies
and 10% for retail investors.
Mandatory to inform stock exchanges two banking days prior to OFS.
In this, the company sets the minimum floor price. Buyers cannot bid below that.
It requires minimal paperwork from investor.
Steal Authority of India , IRCTC used OFS mechanism and SEBI introduced this
mechanism in 2012.

3.  Company raises money by
selling its securities for the
first time.
 Made by unlisted company.
 Opens for 3 to 10 days.
 Increases share capital.
 Shares are sold by existing
shareholders to the public.
 Only top 200 companies are
allowed.
 Opens for only 1 day.
 Transfer of ownership

4. Right Issue of Share
 If a company wants to ease debt burden or expand business / they need new funds. Then
they give rights to their existing shareholders to buy new shares in preference to their existing
share holding.
 Gives pre-emptive right to buy new shares at a price less than market price.
 It increases share capital of the company.
 Invitation through notice , have to response
within 15-30 days else assumed declined.
Benefit to company ?
Fast source for raising fund at low cost(no ads).
Shareholders ownership do not dilute.
RIL in may 2020 had share price around 1400 Rs. offered to existing
share holders at 1247 Rs. in 1:15. Total amount right issue made was 54,125 crores Rs.

5. Bonus issue of Share
If a company is making profit but do not have funds to pay dividend to the share holders.
Additional shares are issued to existing share holders without charging anything.
These are allotted in proportion to existing shareholding e.g. 1:20
Do not provides new funds to the company.
Increases total no. of shares issued by the company – reduces market price of shares.
 What is benefit to shareholders?
Shareholders receive increased dividend on their shareholding
after bonus issue.
Right issue Bonus issue
 Provides a right to existing Companys’s accumulated profit and
shareholders to buy new reserves are converted into shares.
additional shares.
 Issued for a price to existing Issued free of cost to existing
shareholders. shareholders.
 Raises additional funds. Do not create additional funds.

6. Private Placement
 Securities are not sold directly to public
to pre-selected investors and institutions.
 In India , the number should not exceed to
200 persons in aggregate. Rich investors are
invited to participate including banks ,
mutual funds and insurance companies.
 Participants apply through private placement form and companies should allot
securities within 60 days from the receipt of applicant money.
 No public advertising , use of media , marketing channels or agents can be used to
inform about the private placement offer.
 Compared to IPO it has few regulatory requirements.
 Example : goldman sachs approached warren buffet to offer 5 % stake in 2008 in the
backdrop of sub-mortage crises.

7. SECONDARY MARKET
 COMPANY ISSUED SHARES 35-40 YEARS AGO AND WE WANT THEM NOW BUT HOW?
Wait for FPO,OFS. / we will find sellers who
wants to sell that company’s shares.
It helps you to facilitate your transactions.
If you are a buyer then helps you to meet seller
and if you are a seller helps you to meet buyer.

8.  Stock market deals in the shares, debentures, bonds and other securities already
issued by listed companies and government organization.
 Securities Exchange Board of India (SEBI) regulates Indian stock market. It makes
rules and regulations to protect interest of investors.
 It does not buy or sell securities on its own. It provides infrastructure.
 It is considered as important barometer to gauge the growth of organization and
economic conditions of a nation.
 It provides complete information about the prices and volumes of securities traded
every day and a ready and continuous market(high liquidity).
 Transactions are conducted only among the members in stock exchanges for listed
securities in a transparent manner(to ensure safety in dealings).
List of Indian Stock Exchanges :
 Bombay Stock Exchange(BSE)
 Calcutta Stock Exchange(CSE)
 India International Exchange(India INX)
 Indian Commodity Exchange(ICEX)
 Multi commodity Exchange of India(MCX)
 National Commodity and Derivatives Exchange(NCDEX)
 National Stock Exchange of India(NSE)

9. Stock Market Indices
 Over 7,462 companies are listed in BSE and NSE i.e. impossible to monitor.
Just like we have index in books similarly in stock market index tells about the
market view and direction.
 It helps the investors to make rational decisions.
SENSEX :
 Index of Bombay stock exchange.
 SENSEX: sensitive and index (introduced by Mr. Deepak Mohan in 1986).
 Oldest index of India of top 30 largest and most frequently traded stocks
listed in BSE.
 Reflects movement of Indian Stock Market. SENSEX Increases means the
prices of the underlying 30 stocks have increased and vice-versa.
 Used to understand overall trends in Indian stock market.

10.  Base value was 100 already crossed 58,000.
 Investor can buy directly the stock of the constituent companies
in the SENSEX Or easy way to invest through Index Mutual Funds.
They invest in the same companies as in index.
NIFTY :
 Bench mark index of National Stock Exchange.
 Blend of two words i.e. National Stock Exchange and Fifty.
 NIFTY is an index based on 50 largest most liquid companies listed on
NSE of India.
 Managed by India Index Service and Products Ltd.(IISL)
 It is reconstituted every six months based upon the performance of
company’s stock over the period. On this basis companies are added
or removed from the list of NIFTY fifty.
 Similarly as SENSEX, reflect movement of Indian Stock Market.

11.  Base value was 1000 already crossed 17,000.
 Like SENSEX can buy 50 shares in the same proportion as they exist in the
Index or is to buy Nifty Index Mutual Funds.
 NIFTY covers companies across 24 sectors and thus is a broader market index
than SENSEX which covers 13 sectors.
Bull Market and Bear Market
The words bull and bear are metaphors of a stock market taken from how a bull
and bear attacks their opponents. A bull pull its horns up in the air when it
attacks, A bear pull its paws downwards while attacking its opponent.
 A bull market is a state in stock market where prices of index show an uptrend.
 Bull market as a rise of 20% or more in stock prices from a recent low or 52 week
low and said to be confirmed when 50-day moving average of stock or index
crosses the 200-day moving average. This is called as golden cross.
 Bear Market is a opposite phase, prices in stock market continue to decline over
a period of time.

12.  Stock prices or index falls 20% or more from a recent peak or 52 week high, and is said to
be confirmed when the 50 day-moving average of the stock or index falls below the 200-
day moving average . This also called death cross.
Bull Market
 Investor is optimistic with high
confidence.
 In bull market state economy is
generally strengthening.
 Economy and industries are
flourishing so increase in
employment opportunities and
also rise in GDP.
 Investors take long positions and
make profit when the prices rise
up beyond the contracted price.
Bear Market
 Investor is pessimistic with low
confidence in the market.
 In bear market state economy is
generally weakening.
 Economy is sluggish due to which
production gets affected and this may
cause unemployment.
 Supply is higher than the demand
leading to fall in prices of securities.
 Investors take short positions.