Basic of indian primary market, jagorans related to share market and it's basic knowledge, process of ipo and key share market terms

1. Primary market & pitching terminology

2. Primary market
Primary Market is that part of the capital markets which deals
with the issuance of new securities, like Shares, Debentures and
other securities which are sold for the first time with the idea of
accumulating long term capital. In primary market
companies(issuers)sell shares directly to public(investors)
• The surplus units in an economy are called investors.
• The deficit units are called issuers.

3. Issue of shares
• Initial Public Offerings(IPO)
• Follow-on Offering(FPO)
Two additional ways through which listed local firms can sell
shares without floating a public issue:-
• IPP(Institutional Placement Processes)
• OFS(Offer for sale)

4. IPO
A company needs to prepare itself for an IPO and usually sets up an IPO
team in the company for ensuring coordination of all IPO related
activities. The company has to appoint a Credit rating agency to grade
the IPO.E.g-CARE(Credit analysis and research ltd.)
Intermediaries Involved in an IPO:-
Investment Bankers
Syndicate Members
Underwriters
Registrars to an issue and Share Transfer Agents
Bankers to an Issue

5. Intermediaries
Investment bankers-They act as advisors to the issuers and take the company
through the IPO process.
Syndicate members-They procure bids for an IPO from institutional and retail
investors. Brokers registered with SEBI work as syndicate members for an IPO.
Underwriters-They agree to subscribe to the securities that are not subscribed to by
the public or shareholders in case of issue of securities. In exchange of this undertaking
they are paid commission. They can be merchant bankers or stock brokers or another
registered underwriters.
Registrars coordinate with bankers for completion of process. Preparation of
documents are done by them.STAs help the investors in effecting transfers of shares.
Bankers collects application along with application money.

6. FPO&QIP
When an already listed company makes either a fresh issue of
securities to the public or an offer for sale to the public, it is called
FPO.
QIP(Qualified Institutional Placements)
When a listed issuers issues equity shares or securities convertible
in to equity shares to Qualified Institutional Buyers it is called QIP.

7. ADRs,GDRs,IDRs
Depository receipts(DRs) are financial instruments that
represents shares of a local company but are listed and traded on
a stock exchange outside the country.DRs are issued in foreign
currency,usually dollars.
DRs are called American Depository Receipts(ADRs) if they are
listed on a stock exchange in the USA such as New York stock
exchange. If the DRs are listed outside the US, they are called
Global Depository Receipts(GDRs)
When DRs are issued in India and listed on stock exchanges here
with foreign stocks as underlying shares these are called Indian
Depository Receipts(IDRs)

8. Market Phases
Bull Phase-A bull phase in the market is a phase marked by rising
prices of stocks due to abundance of buyers and relatively few
sellers. Consequent to the push in the price of stocks upwards the
indices also rise. This is when the market is said to be showing
confidence in economy. Volume of shares traded also is usually
high and number of companies entering the primary market is
also on the rise.

9. Bear Phase-A bear phase in the market is when the market is
weak or where the stock prices are falling indicating the
dominance of sellers. As there are more sellers and lesser buyer in
the phase, the price of stocks are pulled down. The indices also
show a down trend.Thus,a bear phase shows lack of confidence in
general in market.

10. Pitching Terminologies
1. Impact cost-A measure of market liquidity
2. Beta
3. Earning Per Share(EPS)-EPS measures the profitability of a company on a per share basis.
For example assume a certain company with 1000 shares outstanding generates a profit
of Rs.200000/-. Then the earnings on a per share basis would be: 200000/1000=200
4. Price Earning(P/E)-current stock price /EPS
5. Book Value-Book value is also the net asset value of a company, calculated as total
assets minus intangible assets (patents, goodwill) and liabilities.
6. Return on Equity-Return on equity (ROE) is a measure of profitability that calculates how
many dollars of profit a company generates with each dollar of shareholders' equity. The
formula for ROE is: ROE = Net Income/Shareholders' Equity. ROE is sometimes called
"return on net worth."
7. Sideways/Range bound
8. Consolidation
9. Accumulation/Distribution

11. Pitching Terminologies
12. Bid
13. Ask/offer
14. Blue chip stocks
15. Dividend-This is a portion of a company’s earnings that is paid to shareholders, or
people that own that company’s stock, on a quarterly or annual basis. Not all company’s
do this.
16. Hedge-A strategy or an attempt in reducing the risk of adverse price movements of
assets.
17. Market capitalization-The total value in INR of all of a company's outstanding
shares. It is calculated by multiplying all the outstanding shares with the current market
price of one share. It determines the company's size in terms of its wealth.
18. Portfolio

12. Pitching Terminologies
19. Insider trading-Insider trading is buying and selling of securities by a person who has
access to information of company which is not public. It is an illegal activity and unfair with
other investors. One of the indicators of insider trading is spike in stock price before any
major announcement by the company.
20. FIIs and DIIs
21. Block deal/Bulk deal-A deal in which a minimum quantity of 5 lakh shares or
minimum value of transacted shares is Rs 5 crore through a single transaction window of the
stock exchange is called a block deal. The single transaction window provided by NSE and
BSE is open only for 35 minutes.
22. Bulk deal- This is a trade, where total quantity bought or sold is more than 0.5% of the
number of equity shares of a listed company.
Bulk deal can be transacted by the normal trading window provided by brokers throughout
the trading hours in a day. Bulk deals are market driven and take place throughout the
trading day.

13. Pitching Terminologies
23. Bonus Issue
24. Stock split-A stock split is a corporate action where the company
sub-divides the face value of the stock into a smaller denomination.
The market capitalization of the company however remains the
same.
25. Buy back of share-The company offers to buy back its shares from
the shareholders in certain cases. This is carried out when the
company feels that the company is over capitalized.
26. Face value-Face value is the nominal value of a security stated by
the issuer. For stocks, it is the original cost of the stock shown on
the certificate. For bonds, it is the amount paid to the holder at
maturity.