The document discusses the primary and secondary stock markets. The primary market is where companies issue new stock to raise funds through processes like initial public offerings (IPOs). The secondary market is where previously-issued stocks are traded on exchanges like the BSE and NSE. The document outlines the steps companies take for an IPO, including appointing an investment bank, filing with regulatory agencies, setting a price band for public subscription, and listing on an exchange. It also describes how individuals can apply for shares during an IPO's subscription window by using a demat account and applying through online or offline means.

2. By Ankit Patidar

3. Outline
 Types Of Stock Market

4. Introduction To Primary
•Primary Market
1. Primary market is a market wherein corporates issue
new securities in order to raise funds. The company
which issues its shares is called issuer and the process
of issuing shares to public is known as public issue or
Initial Public Offer (IPO). This entire process involves
various intermediaries such as Merchant Banker,
Bankers to the Issue, Underwriters, and Registrars to the
Issue. All these intermediaries are registered with SEBI.
 Steps to be followed by companies going for an IPO

5. •Steps to be followed by companies going for an IPO
1. The company appoints a merchant banker for the IPO
process. The merchant banker assists the company in the
IPO process.
2. The company has to apply to SEBI with a registration
statement. This statement has details about the business of
the company, reason for coming out with an IPO and the
financial details of the company.
3. Once SEBI receives the registration statement, it decides
whether the company should be allowed to go for an IPO or
not.
4. After the company gets initial approval from SEBI, it needs
to prepare the Draft Red Herring Prospectus (DRHP).
DRHP is a document which consists of information about
the business of the company and the industry that it
operates in. This document gets circulated to the public. It
includes details such as estimated size of the IPO ,

6. 5. The company now has to advertise about the IPO through TV and print
advertisements in order to build awareness about the company and its IPO
offering. This process is called as the IPO road show.
6. The company or the issuer of the IPO has to decide the price band between
which the company would like to go public. For example, the company has
decided a price band of Rs 200-205. So, if an investor wishes to invest in the
IPO, he can choose to buy shares at a price anywhere between 200 and 205.
7. After the price band is fixed, the company has to officially open the window so
that public can subscribe for shares. The subscribers can bid for an IPO within
the price band decided by the company. This is also called as Book Building.
8. After the subscribing window is closed (which is generally open for 2-3 days),
the price point at which the issue gets listed is decided. The shares are then
listed on the respective stock exchanges.

7. •Process To Apply An IPO
1. The subscriber compulsorily needs a DEMAT account to apply for an IPO. He
also needs to apply for ASBA (Applications Supported by Blocked Amount)
through the bank to which he has linked his trading and DEMAT account.
2. One can apply for an IPO offline as well as online.
3. In offline mode, the subscriber needs to collect the IPO form from the stock
broker and submit the duly filled form. The broker will then submit the form to
your bank to which you have linked the trading account.
4. In online mode, one can directly login to net banking services of the bank to
which he has linked his trading account and apply for the IPO.

8. • SECONDARY MARKET
The secondary market is where the securities
issued in primary market are bought and sold on the
stock exchanges - Bombay Stock Exchange (BSE),
National Stock Exchange (NSE) and others. BSE
and NSE are the most widely traded exchanges in
India with a market capitalisation of Rs 1,25,18,954
crore and Rs 12,282,127 crore respectively.

9. •Key Takeaways
1. Primary market is a market wherein corporates issue
new securities in order to raise funds.
2. The secondary market is where the securities/shares
issued in primary market are bought and sold on the
stock exchanges.
3. The company which issues its shares is called issuer
and the process of issuing shares to public is known
as public issue or Initial Public Offer (IPO).
4. Any individual who subscribes for an IPO needs to
compulsorily have a DEMAT account. He also needs
to apply for ASBA.

10. •Stock
A stock (or a share) is an
ownership interest in the underlying
business. If you are the owner of the
stock, you own a proportionate stake of
the company whose stock you own. For
E.g. if you own 1000 shares in HDFC
Bank, you own 0.00003955% (No. of
shares you own / No. of shares of HDFC
bank in issue) of the bank.

11. Types of Stocks

12. Growth
Companies that consistently manage to grow their profits faster than their
industry peers are called growth stocks. Their faster growth is generally the
result of some sustainable competitive advantages. Since they need to
constantly fund their growth, they typically pay out little or no dividends. The
investors are rewarded from appreciation in stock price. Since competitors can
emulate them and eliminate their competitive advantage, growth stocks are
more risky than some of the categories we discuss next.
Value
Stocks available at a significant discount to their intrinsic value fall under this
category. These are sound businesses in sectors that are not favored by the
market presently. Some of them pay a significant share of their profits as
dividend or resort to share buybacks when their shares are out of favor.
Dividend
These are companies that generate significant amount of cash in the
business and do not have enough profitable opportunities to deploy the
cash. So, they return most of it to the shareholders in the form of

13. Cyclical
These are companies whose profits are linked to economic cycles. They
report significant profits when economic growth is strong and struggle to
report profits when economic growth slows down. Typical examples are
commodity companies in metals, cement, oil & gas etc.
• Information Sources On Stock
An investor can gather information on the stock from various sources. Some
of them are mentioned below:
1. Red Herring Prospectus (RHP)
2. Annual Reports
3. Quarterly Results
4. Investor Presentations
5. Earnings conference Calls
6. Management Interviews In Print/Tv