Say, “Let us learn about the Capital Markets in India where equity shares and debt instruments are purchased and sold”. Say, “The first two broad categories of capital markets are the Primary Market and the Secondary Market”. Explain the Primary Market as one where new, unlisted companies offer their equity shares for subscription to investors. The first issue of shares is termed as an IPO which stands for “Initial Public Offer”. The shares are issued either at par with their face value or at a premium to their face value, depending on the company’s present and potential financial situation. Follow-on issues as well as Right issues are also made through this market. Secondary market is the market where existing and listed company’s shares are purchased and sold (traded) everyday through the Stock Exchange mechanism. Presently, the two main Stock Exchanges in the country are the Bombay Stock Exchange and National Stock Exchange. Both markets are regulated by SEBI. Now explain the two market indexes. Say, “in order to gauge and express the market movements, i.e. the rise and fall of prices of the listed equity shares, the B.S.E. has devised an index which represents the variations. B.S.E. selects from time to time shares of a total of 30 companies whose price variations are averaged to show the rise and fall of the stock market. Originally, B.S.E. took the prices of 30 stocks on a particular day in the year 1978 and assigned it a value of 100. Similarly, the N.S.E. had chosen 50 shares whose prices on a particular day were given a value of 100. Since then the daily prices of the selected shares are averaged into a particular value which becomes the Sensex for B.S.E. and Nifty for the N.S.E.
