Capital Market: Primary Market

• Concept and Definition

• Importance
• Types/Segments
• Intermediaries
• Primary Market
• Issue Mechanism
• IDRs, ADRs, GDRs, ECBs
NSE
 Capital Market
• A capital market can be classified into primary and
secondary markets.
• The primary market is meant for new issues and the
secondary market is one where outstanding issues are
traded.
• In other words, the primary market creates long-term
instruments for borrowings, whereas the secondary
market provides liquidity through the marketability of
these instruments.
• The secondary market is also known as the stock market.
 Instruments

Instruments

Equity Debt Derivatives

 What are Securities?

1. Equity Shares
2. Preference Shares
3. Debentures / Bonds
4. Mutual Fund Units
5. Government Securities
6. Others

What are not Securities?

1. Fixed deposit with banks or companies
2. Insurance policies
3. Provident Fund / Public Provident Fund
 Equity
• Who will issue or raise funds?
• Public Limited Co. or Private Limited Co.
• How to issue? (Method)
 Domestic Issues
• Domestic Equity issues by — Corporates
(primary issues) — Financial intermediaries
(secondary issues)
• Debt instruments by — Government (primary
issues) — Corporates (primary issues) —
Financial intermediaries (secondary issues)
 External issues
• External Equity issues through issue of —
Global Depository Receipts (GDR) and
American Depository Receipts (ADR)
• Debt instruments through — External
Commercial Borrowings (ECB)
 Others
• Other External Borrowings Foreign Direct
Investments (FDI) — in equity and debt form
Foreign Institutional Investments (FII) — in the
form of portfolio investments Non-resident
Indian Deposits (NRI) — in the form of short-
term and medium-term deposits.
 Primary Market

➢ New issues market where Company/ institutions raise funds or

capital from public by issuing new securities.

➢ Objective: To raise capital.

➢ Two major types of issuers of securities:

- Corporate Entities (Companies)

- Government (Central and State)

➢ Major types of Issues in Primary Market:

- Public Issue
- Preferential Issue
- Rights Issue
- Bonus Issue
 Primary Market -Objectives

New
Projects

Expansion of
Up-gradation Objects existing
of Issue projects/
modernization

Diversification

➢ Objects of the issue and intended utilization of funds

→ Given by issuers in the Offer Document
 Intermediaries to an Issue
• Merchant Banker (book running lead manager (BRLM) to an
issue)
• Registrar to the Issue
• Bankers to the Issue
• Underwriters to an issue
• Portfolio Managers
• Depositories (NSDL)
• Depository participants
• Custodians
• Debenture Trustees
• Investment banks
 Merchant Bankers: Services
• Project counseling
• Loan syndication
• Issue management
• Underwriting of public issues
• Consultants or advisers to the issue
• Portfolio management
• Advisory services relating to mergers and acquisitions
• Offshore finance
Registrar to an Issue
The role of the
registrar is to
finalize the list of
eligible allottees,
ensure crediting
of shares to the
demat accounts of
the eligible
allottees, and
dispatch refund
orders.
 Bankers to an Issue
• Banker to the Issue means any bank so named in the
prospectus to collect money as subscription against
security.
• Every banker to an issue shall maintain the following
records with respect to :— (a) the number of
applications received, the names of the investors, the
dates on which the applications were received and
the amount so received from the investors.
• It is now mandatory to issue all new initial public
offerings (IPOs) in dematerialized form as they are
compulsorily traded in dematerialized form.
 Underwriters to an Issue
• The person or institutions underwriting a
public issue of shares or debentures are called
underwriters. Underwriters may be
individuals, partnership firms or joint stock
companies.
• Their primary responsibility is to evaluate the
risk associated with an investment, in order to
determine an appropriate price for the IPO.
 Modes of Public issues

Issues

Rights Bonus Private

Public Issues
Issues Issues Placements

Preferential Qualified
IPO FPO Issue Institutional
Placement

Fresh Issues Offer for sale Fresh Issues Offer for sale
 IPO
• Initial Public Offering (IPO) refers to the
process where private companies sell their
shares to the public to raise equity capital
from the public investors.
• The process of IPO transforms a privately-held
company into a public company.
• This process also creates an opportunity for
smart investors to earn a handsome return on
their investments.
 Types of IPO
• There are two common types of IPO.
• They are-
• (1) Fixed Price Offering (FV Rs.10)
• Yes. Rs.50 per share
• (2) Book Building Offering
– Price band (Rs.100 to Rs.120)

•
 Under Subscription and Over
Subscription
• Under Subscription takes place when the
number of securities applied for is less than
the number of shares made available to the
public.
• Oversubscription is when the number of
shares offered to the public is less than the
number of shares applied for.
 Follow-on public offer (FPO)
• A follow-on public offer is the issuance of shares
after the company is listed on a stock exchange.
• An FPO is done to raise additional capital or to
reduce existing debt.
 IPO Vs FPO
S.No. Particulars IPO FPO

The first issue of shares Issuance of shares by a company to

1. Meaning
by a company raise additional capital after IPO

Price is market driven and

Fixed or variable price
2. Price dependent on the number of shares
range
increasing or decreasing
Increases because the
Number of shares increases in
company issues fresh
3. Share capital dilutive FPO and remains the same in
capital to the public for
non-dilutive FPO
listing.
Cheaper in most cases because the
4. Value Expensive value of the company is getting
further diluted.
5. Risk Riskier Comparatively less risky
Status of the An unlisted company An already-listed company issues an
6.
company issues an IPO FPO
 Modes of Capital Issuances

• Initial Public Offering.

• Done by unlisted company.
• Fresh issue of securities/ offers its existing securities for sale/ Combination of both.
• Securities issued for the first time to the public.
• Paves way for listing and trading of the issuer’s securities in the Stock Exchange(s).

• Further Public Offer / Follow-on Offer.

• Done by already listed company.
• Fresh issue of securities / Offer for sale of securities to public.

• Done by already listed company.

• Issue of securities to its existing shareholders (as on a Record date).
• Record Date is fixed by the issuer.
• The rights offered in a particular ratio to the number of securities held by existing
shareholders as on the record date.
 Modes of Capital Issuances

• Done by already listed company.

• Issue of shares to existing shareholders (as on a record date).
• Existing shareholders need not make any payment for “Bonus” shares.
Bonus Issue • Shares are issued out of the company’s free reserve or share premium
account.
• Issued in a particular ratio to the number of securities held on record
date.

• Done by already listed company.

• Issue of shares / convertible securities (like warrants) to a select group of
Preferential persons.
Issue • Subject to prescribed norms such as minimum pricing, minimum public
shareholding and lock-in.

• Qualified Institutional Placement.

• Done by already listed company.
QIP • Issue of shares / convertible securities (like warrants) to Qualified
Institutional Buyers (QIBs).
• Subject to prescribed norms such as minimum pricing and minimum
public shareholding.
 IPO - Initial Public Offering
➢ Process of a company to be publicly listed and traded company.
➢ IPO: Fresh issue of shares / Offer for Sale of shares by existing investors/ Combination of both.
➢ Process of IPO is as follows:

Issuer files an Offer Document in prescribed format with Securities and Exchange Board of
India (SEBI), Stock Exchanges and the Registrar of Companies (ROC) for listing on the
stock exchanges

Issuer receives observations from regulatory authorities

After complying with all observations, issuer can open the offer inviting general public to
invest in the IPO subject to stipulated timelines

Post successful completion of the Offer the shares of the company are traded on the
stock exchange(s) where the shares are listed.
 IPO: Case Study
Bharti Hexacom IPO Timeline

IPO Open Date Wednesday, April 3, 2024

IPO Close Date Friday, April 5, 2024
Basis of Allotment Monday, April 8, 2024
Initiation of Refunds Wednesday, April 10, 2024
Credit of Shares to Demat Wednesday, April 10, 2024
Listing Date Friday, April 12, 2024
Cut-off time for UPI mandate 5 PM on April 5, 2024
confirmation
 Bharti Hexacom IPO Lot Size
Investors can bid for a minimum of 26 shares and in multiples
thereof. The below table depicts the minimum and maximum
investment by retail investors and HNI in terms of shares and
amount.
Application Lots Shares Amount

Retail (Min) 1 26 ₹14,820

Retail (Max) 13 338 ₹192,660

S-HNI (Min) 14 364 ₹207,480

S-HNI (Max) 67 1,742 ₹992,940

B-HNI (Min) 68 1,768 ₹1,007,760

 Bharti Hexacom IPO Subscription
Status (Bidding Detail)
Category Subscription (times)
QIB 48.57
NII 10.52
bNII (bids above ₹10L) 12.27
sNII (bids below ₹10L) 7.00
Retail 2.83
Total 29.88
 NII: Non-Institutional Investors

❑ Indian individual residents

❑ HUFs
❑ NRIs
❑ HNIs
❑ Any trusts, societies or companies that bid
for more than Rs. 2 Lakhs worth of shares
 How to apply in Public Issue?

ONLINE MODE
- Application Supported by Blocked Amount.
ASBA - Facility provided by Self Certified Syndicate Banks (SCSBs)
- Full Bid Amount blocked in the bank account of the bidder.

- For → a) Retail Individual Investors.

UPI in ASBA b) Shareholders bidding in Shareholders Reservation
Portion up to Rs.2,00,000/-.
- Application via UPI facility of Sponsor Bank.
3-in-1 Account - Applying in IPO through 3-in-1 account (demat, trading and bank
account).

OFFLINE MODE
- To open a Demat Account first.
Filled Form - Investors may obtain Application Form from Stock Broker/ Sponsor
Bank/ Exchange Website.
- Form submitted to Stock Broker/ Sponsor Bank.
 Information in Offer Document
About the Company:
Financials
Management and Promoter
- Business: Company’s business Section
model, strategies and - Company's income
manufactured products/ process/
services. statement and balance sheet.
- Background and the
- History and Corporate Matters: experience of the company’s - Understand company’s past
Material events taken place in management team. performance and growth
company’s history and other potential.
corporate matters

Litigation and Dispute

matters
Risk Factors

- Litigations in which the

- Risks associated with the issuer company,
business, industry etc. subsidiary(ies), group
company(ies), promoter(s) are
involved.
 Information in Offer Document

Objects of the Issue

Capital Structure

- Basic purpose of the company for going

- Capital formation of the company, public and / or raising funds.
- Existing shareholders and their
percentage shareholdings etc.
- Informs how the funds will be utilized.

Managements discussions and Analysis

Basis for Issue Price of financial conditions and results of
operations
- Helps understand the basis for pricing - Information related to the strength of
the company's business plan, recent
developments, performance etc.
- Comparison with other listed entities in
the same / similar segment. - Performance analysis with qualitative
and quantitative measures.
 Other key Sources of Information for Analysis

Minutes of the
ROC Filings made by
meetings of the Board /
Research Reports the Company since
Shareholders of the
Inception;
issuer company

Collaboration
Industry Reports; Agreements/Sharehold Credit Ratings;
ers Agreements

Third Party
Techno Economic
Reports/certification on
Viability Reports etc.
project;
 Price Discovery of Shares in a Public
Offering

Mode of Price
Type of Issue
Discovery

Fixed Price
issue
IPO
Book Building More
Issue common
mode of IPO
 Price Discovery of Shares in a Public
Offering - Fixed price issue
Fixed price issue:
Price at which the securities are offered and will be allocated is fixed by Company along with Merchant
banker

Fixed price is printed in the Offer Document, usually along with reasoning behind the price at which
shares are offered.

Demand for the securities offered is known only after the closure of the issue.

50% of the shares offered are reserved for applications below Rs. 2 lakh and the balance for higher
amount applications.
 Book Building
• The book building is basically an auction of
shares.
• Book building essentially means that the
‘book is being built.’
• This helps the investor to know the market
price.
• It offers investors the opportunity to bid
collectively.
• It then uses the bids to arrive at a consensus
price.
 Price Discovery of Shares in a Public
Offering
Book Built Issue:

Floor Price: Lower

Company may offer end of Price Band
a maximum of Price Band is
Cap Price: Higher
20% price band in independent of Face
end of Price Band
which one can bid Value (FV) of shares.
for shares. Eg: Rs.100/- to
Rs.120/-

Investors must
specify:
Issuance Price
discovered on the - Number of shares
basis of demand at they want to buy.
various price levels - Price they are
(within Price band) willing to pay per
share (within the
price band).
 Price Discovery of Shares in a Public
Offering
Stages in Book Building:
Company who is planning an IPO appoints the Lead Merchant banker(s) as “Book Runner”.

Investors give their bids for these shares to “Syndicate Members”. Bids have to be entered within the specified
price band. Investor can revise a bid before the book closes.

Syndicate members input the orders into an “Electronic Book” through process called “Bidding”.

Book normally remains open for a period of 5 days or as prescribed by the regulations

On closure of the book building period, the Book Runner evaluates the bids on the basis of the demand at various
price levels.

Book runners and the issuing Company decide the final price at which the securities shall be issued.

Finally allocation of securities is made to the successful bidders. Money gets unblocked in bank accounts of rest of
the bidders.
 Price Discovery of Shares in a Public
Offering
Illustration of Book Building issue:
➢ Price band = Rs. 20.00 (Floor Price) to Rs. 24.00 (Cap Price) per share
➢ Total available shares (issue size) = 3,000 shares.
➢ Company received five bids from bidders as mentioned below:
Bid Quantity Bid Price (Rs.) Cumulative Bid Quantity Subscription
500 24 500 16.67%
1,000 23 1,500 50.00%
1,500 22 3,000 100.00%
2,000 21 5,000 166.67%
2,500 20 7,500 250.00%

➢ Price discovery is a function of demand at various prices.

➢ Highest price at which the issuer is able to issue the entire size of 3000 shares is the price
at which the “book cuts off” = Rs. 22.00.

➢ The issuer, in consultation with the Book Running Lead Manager will finalize the issue price
at or below such cut-off price, i.e., at or below Rs.22.00.

➢ Valid Bids: All bids at or above this issue price and cut-off bids (allowed for retail
investors only) and they are considered for allocation in the respective categories.
 Book Building v/s. Fixed Price Issue

Features Fixed Price Process Book Building Process

Pricing - Price at which securities are - Price at which securities will be
offered /allotted is known in offered/allotted is not known in advance
advance to the Investor. to the investor.

- An indicative price range is known.

Cut off price - Price is fixed in this process. - Only the Retail Individual Bidders are
permitted to bid at a cut off price which
makes the application valid irrespective
of any discovered issue price with in
the price band.

Demand - Known only after the closure of - Demand can be known everyday as the
the Issue. book is built.
 Process Flow : Fixed Price Method

Receipt of In-
Issuer Appoints
Lead Manager files Principle Approval
SEBI Registered
Draft Prospectus from Stock
Intermediary Due Diligence
with SEBI/Stock Exchange and
except Syndicate
Exchange observations from
Member
SEBI

Applicant submits
application form to
Determination of Filing of
Intermediary for
Issue period & Prospectus with Issue Opens
uploading on Stock
Issue Price ROC
Exchanges
platform

Completion of Post
Issue Closes
Issue Compliances
Allotment/Allocation in Book Built Issue
In case an issuer company makes an issue of 100 per cent of the
net offer to public through 100 per cent book building process:
1. Not less than 35 per cent of the net offer to the public shall be
available for allocation to retail individual investors;
2. Not less than 15 per cent of the net offer to the public shall be
available for allocation to non institutional investors i.e.,
investors other than retail individual investors and qualified
institutional buyers;
3. Not more than 50 per cent of the net offer to the public shall
be available for allocation to qualified institutional buyers.
 IDRs/ADRs
• Indian Depository Receipts (IDRs)
• An IDR is an instrument denominated in Indian rupees in the
form of a depository receipt against the underlying equity of
issuing company to enable foreign companies to raise funds
from the Indian capital market.
• The Companies Act was amended in 2002 to permit foreign
companies to offer shares in the form of depository receipts
in India.
 Private Placement Market
• Private placement refers to the direct sale of
newly issued securities by the issuer to a small
number of investors through merchant
bankers. The number of investors can go only
up to 49.
 Rights Issue
• Incase of rights issues, all shareholders of the
issuer company as on the record date are
eligible, provided if he/she/it: (a) is holding
shares in dematerialized form and has applied
for entitlements. (b) is not a renounce to the
issue. (c) applies through a bank account
maintained with SCSBs
 Retail Investors
• A retail investor is one who can bid in a book-
built issue or applies for securities for a value
of not more than ₹ 2,00,000.
 Anchor Investors
• Anchor investors are qualified institutional buyers that buy a
large chunk of shares a day before an IPO opens. They help
arriving at an approximate benchmark price for share sales
and generate confidence in retail investors.
• An anchor investor shall make an application of a value of at
least Rs.10 crore in the public issue.
• The Adani Power IPO in July 2009 was the first issue in the
country to attract investors under the anchor investor
scheme. The six anchor investors were T Rowe Price, AIC,
Ecofin, TPG (through CLSA), Legg Mason, and Sundaram MF.
SKS Micro Finance attracted 36 anchor investor in its IPO issue
in August 2010.
 Secondary Market
• Concept and importance
• Trading in Secondary Market (Online) (OTC and
NSE/BSE)
• Trading Methods
• Role of Intermediaries (Brokers and Sub-brokers)
• Stock Exchanges
• Stock Indices (Nifty and Sensex)
 Indian Capital Market - Overview

Market Regulator
SEBI

Stocks and
Commodities Other
Depositories
Derivative Intermediaries
Exchanges

Stock Brokers,
NSE, BSE, MSE, RTAs, Mutual
NSDL, CDSL
MCX etc. Funds, Investment
Advisors etc.
Stock and Commodity Exchanges
 Commodity Exchanges in India
• NCDEX, or National Commodity and
Derivatives Exchange of India, primarily deals
with agricultural commodities such as grains,
pulses, and spices.
• MCX, or Multi Commodity Exchange of India,
specializes in various commodities, including
metals, energy, and agricultural products.
 Stock Exchange
• Equity
– Cash Segment
– Derivative Segment (contract based)
▪ Debt (G sec,, Bond)
▪ Currency Derivatives (Forex market)
 Who are the Investors in Secondary Market?

• 1. Institutional Investors or Qualified Institutional

Investors (QIIs)
• Commercial banks, mutual fund houses, public financial
institutions, and foreign portfolio investors fall under this
category.

• 2. Non-institutional Investors (NIIs) / High Net Worth

Individuals (HNIs)
• Individual investors or institutions (large trusts, big companies,
and similar institutions) who are willing to invest more than ₹2
lakh are categorized as High Net Worth Individuals or Non-
institutional Investors respectively.
 Who are the investors?
• 3. Retail Individual Investors (RIIs)
• This is one of the most common categories for applying for an
IPO. Any individual investor who is willing to subscribe for
shares less than or up to ₹2 lakh belong to this category. Along
with resident Indian individuals, this category includes NRIs
and HUFs.
• 4. Anchor Investors
• This new category of investors was introduced by the market
regulator, SEBI, in 2009. It is a form of QIIs that can apply for
an IPO for a value of ₹10 crore or more through the book-
building process. Out of shares reserved for QIIs, up to 60% of
the shares can be sold to anchor investors.
 Primary v/s Secondary Market : Key Differentiation

Features Primary Market Secondary Market

Definition Securities issued first time to Trading of already issued and
the public. listed securities.

Also called as New Issue Market. Post Issue Market.

Price By Issuer Company in Supply and Demand Forces of

Determination consultation with Merchant Market.
Bankers.
Key Merchant Bankers, Bankers/ Stock Brokers and DPs.
Intermediaries Lead Managers, RTAs.
Purpose - Raise capital for - Trading of securities.
expansion, diversification, - Providing liquidity to investors.
etc. - Raising further capital for
- To seek listing of expansion.
securities.
 Terms
• Market Price (trading price/listed)-Market driven
(demand and supply)
– How ? Quote (no of shares and price)
– Buy and sell (Bid and Ask)
– Non-listed (privately negotiated)
• Market Capitalisation
– Face value Rs.10 per share (Balance Sheet / Fixed)
– Dividend paid on face value
– Market price x No of shares =
 Intermediaries

• Depository Participants (DP)

• Depositories (NSDL and CDSL)
• Brokers
• Sub-brokers
• Share Transfer Agents
 Secondary Market
• The open outcry trading system, prevalent till 1995,
was replaced by the on-line screen-based electronic
trading.
• Three new stock exchanges at the national level were
set up in the 1990s. These were: the Over the
Counter Exchange of India (1992), the National Stock
Exchange of India (1994), and the Interconnected
Stock Exchange of India (1999).
 Listing of Securities
• Listing of securities or shares on the stock
market or stock exchange is a process where
the shares of a company become available to
the public.
• A listed security is traded in an exchange.
 Listing of Securities
• A company has to list its securities on the exchange so
that they are available for trading.
• A company can seek listing on more than one stock
exchange.
• A company seeking listing of its securities on the stock
exchange is required to file an application, in the
prescribed form, with the Exchange before issue of
Prospectus by the company, where the securities are
issued by way of a prospectus or before issue of Offer for
Sale, where the securities are issued by way of an offer
for sale.
 BSE Listing Criteria
• The minimum post-issue paid-up capital of the
applicant company (hereinafter referred to as "the
Company") shall be Rs. 10 crore for IPOs & Rs.3 crore
for FPOs; and
• The minimum issue size shall be Rs. 10 crore; and
• The minimum market capitalization of the Company
shall be Rs. 25 crore (market capitalization shall be
calculated by multiplying the post-issue paid-up
number of equity shares with the issue price).
 NSE: Listing Criteria

• Incorporation
• Post Issue Paid Up Capital
• Track Record
• Other Listing Conditions
• Disclosures
 NSE
• The Issuer should be a company
incorporated under the Companies Act
1956 / 2013 in India.
• The post issue paid up capital of the
company (face value) shall not be more
than Rs. 25 crore.
 Over The Counter Exchange of India (OTCEI)

• Over The Counter Exchange of India can

be defined as an exchange without a
specified trading floor."
• It does not have a market place physically and
the market is spread across the country through
counters. All the counters are connected through
a computer network and transactions takes place
through satellite Communication.
 BSE
• Established in 1875, BSE (formerly known as Bombay
Stock Exchange), is Asia's first & the Fastest Stock
Exchange in world with the speed of 6 micro seconds
and one of India's leading exchange groups.
• High frequency data
• No. of Listed Companies in BSE: Total 5,309 listed
companies on BSE, with a market capitalisation of
₹37,636,886.59 Cr.
 NSE
• NSE was incorporated in 1992. It was recognised as a stock
exchange by SEBI in April 1993 and commenced operations in
1994 with the launch of the wholesale debt market, followed
shortly after by the launch of the cash market segment.
• Launched index options based on the NIFTY 50 Index (then
known as S&PCNX NIFTY) for trading.
• Launched single stock futures and options on listed securities
in 2001
• No of listed companies as on 31st March 2024: 2379
 Stock Market Index
• The stock market index is the most important
indices of all as it measures overall market
sentiment through a set of stocks that are
representative of the market.
 Functions of an Index
• To serve as a barometer of the equity market.
• To serve as a benchmark for portfolio of
stocks.
• To serve as underlying for futures and options
contracts.
 Market Capitlisation
• Holding pattern (investors category)
• MC= MP x No. of shares outstanding
• Large Cap (Big) (Market Capitalisation)
• Small Cap (Small)
• Mid Cap
 NSE: Free Float
• Shares held by founders/directors/acquirers which have
control element
• Shares held by persons/ bodies with "Controlling Interest"
• Shares held by the Government(s) as promoters/acquirers
• Holdings through the FDI route
• Strategic stakes by private corporate bodies/ individuals
• Equity held by associate/group companies (cross-holdings)
• Equity held by Employee Welfare Trusts
• Locked-in shares and shares which would not be sold in the
open market in normal course
 Free Float Market Cap

The free-float method excludes locked-in

shares, such as those held by insiders,
promoters, and governments.
 Methodologies for Calculating the Index

• Full market capitalization method: In this method,

the number of shares outstanding multiplied by the
market price of a company’s share determines the
scrip’s weightage in the index.
• The shares with the highest market capitalization
would have a higher weightage and would be most
influential in this type of index.
 Free-float market capitalization
method
• Free-float is the percentage of shares that are freely
available for purchase in the markets. It excludes
strategic investments in a company such as the stake held
by government, controlling shareholders and their
families, the company’s management, restricted shares
due to IPO regulations, and shares locked under the
employee stock ownership plan.
• In this methodology, the weight of a scrip is based on the
free-float market capitalization. Free-float market
capitalization reflects the investible market capitalization
which may be much less than the total.
SENSEX = BSE 30 Index (MC)

Base year (Fixed) and Current year

(variable) Index multiplier
 Nifty 50
• The Nifty 50 is a diversified 50 stock index
accounting for 13 sectors of the economy. It is used
for a variety of purposes such as benchmarking fund
portfolios, index based derivatives and index funds.
• The Nifty 50 Index represents about 59% of the free
float market capitalization of the stocks listed on NSE
as on September 29, 2023.
 NSE Other indices
• Nifty 100
• Nifty 200
• Nifty 500
• Nifty Midcap
• Nifty Smallcap
• Dolex
 India Vix Index
• Volatility Index is a measure of market’s
expectation of volatility over the near term.
Volatility is often described as the “rate and
magnitude of changes in prices" and in finance
often referred to as risk. Volatility Index is a
measure, of the amount by which an underlying
Index is expected to fluctuate, in the near term,
(calculated as annualised volatility, denoted in
percentage e.g. 20%) based on the order book of
the underlying index options.
 Stock Broking
• Brokers are members of stock exchange.
• They enter into share trading transactions
either on their own account or on behalf of
their clients.
❖ Sharekhan Limited
❖ India Bulls
❖ Angel Broking Limited
❖ India Infoline Limited
 Custodial Services

• Maintaining accounts of the securities of a

client.
• Collecting the benefits/rights accruing to the
client in respect of securities
• Keeping the client informed of the actions taken
by issuer of securities
• Maintaining and reconciling records of the
services as referred above.
Global Stock Market Indices
 How to Trade: Place Order : Online (Website/
App)
Steps for Trading Online

Link your Trading, Demat and Bank Account.

Sign the IBT (Internet based trading) agreement after checking the costs involved and the
facilities provided.

Visit website of the Stockbroker / Install the Online Trading app.

Investor must login using Username and Password provided.

Some Stock Brokers also have 2-Factor verification system where additional OTP also needs
to be entered.

Check current price and volume details of stock you want to buy/ sell on Market Watch
Section of the Stock broker’s terminal.
 Types of Orders

ORDER TYPE
Limit (L) - Buy only if price falls to certain level.

Market (Mkt) - Buy/Sell at price offered on market

Stop Loss (SL) - Sell as soon as price goes below a

certain level (Trigger Price).
 Place Order : Online (Website/ App)
Market Watch Section :

➢ Allows investor to check details of the stock that he wants to buy/ sell.

➢ Information Displayed in Market Watch:

- Last Traded Price (LTP).

- Percentage change – % Change from previous day close.
- Previous day close – At what price did the stock closed the previous day.
- O.H.L.C – Open, High, Low and Close Prices.
- Volumes – How many shares are being traded at a particular point of time?
- Bid and ask price ladder.
 LTP/CLP
• Closing price of the day on NSE is the weighted average
price of the last 30 mins of trading.
• The last traded price of the day is the actual last traded price.
• The opening price is the price at which a security first trades
upon the opening of an exchange on a trading day.
• High and Low Price (52 Weeks)
 Risk Management
• The SEBI has laid down risk management
policies to mitigate market, operational and
systemic risks. Designing effective risk
management policies leads to enhancement
of investor protection and market
development.
 Rolling Settlement
• Rolling settlement is a system of settling
transactions in a fixed number of days after
the trade is agreed.
• Stock markets moved to the T + 2 system from
April 1, 2003.
 Margin Trading
• Margin trading is a form of leveraged trading which allows an
investor to invest in excess of his financial capacity by
borrowing money.
• Margin trading permits investors to buy shares by providing
50 per cent of the deal value as ‘margin,’ while borrowing 50
per cent from banks. From April 2004, the SEBI has permitted
brokers, banks, non-banking finance companies (NBFCs)
registered with the Reserve Bank, insurance companies and
financial institutions to finance margin trading—borrowing
money to part-finance stock purchases.