Stock Market Explained | Share Market | What is IPO ? | Sensex | Nifty
Stock Market, Share Market, What is IPO?, Sensex, Nifty. What are the basic concepts behind all these?
Sensex has gone up by 100 points, and NIFTY has gone down. So what is the meaning of this?
In this blog, we will discuss all the things in such a way that the person who has not heard of these things for the first time will understand it and can go online without any help and invest in the share market. Let's understand this with an example.
Assume, there is a Pani Puri corner in Laxmi Nagar, Delhi. And you have such a formula for making Pani Puri which is liked by many people Now as soon as you set up your stall, all your Pani Puri gets sold within an hour And you went home with your profit. One day you thought if the people are liking it so much so I should try to make as many as possible and make seating arrangements for more people by opening a shop then more money can be earned but for all these things and shop. will need an arrangement of money. So if you have money then you can invest And if you don't have it then you have to take a loan from your friends and family. So what you did is you took a loan and invested it and when your business started running smoothly then you paid back the amount. But after this, too people aren't stopping, they are liking your product more than ever Now you are thinking that if people are liking it so much Then why not start selling in the whole of Delhi. Profit will be much good. But now you will need very much money because you have to buy shops in Delhi, employ people and your friends aren't able to arrange this much money. So you have one option that you go to a bank for the money. The first thing is that you may or may not get a loan from the bank and the second thing. If you'll get a loan then you've to pay 12 to 13% of interest and your EMIs will also start from the next month. itself and it takes time to build up a business. The EMI of the bank will be on your head when you are thinking of implementing the plan in Delhi And this may also happen that instead of increasing the profit you end up decreasing it. In this case, there's one more option in the market i.e. angel investor These angel investor doesn't give you money as a loan and you don't have to give it back. But they will take shares of your business in exchange for the money That means a partnership in your business. Assume you made a deal that you will get 1 crore Rs for a 10% partnership so then whatever you'll earn you have to give 10% of that to an angel investor Angel investors don't need to work with you but they'll invest money and will take 10% from your profit by just sitting at home. Now you have made your name in Delhi and people are liking your product very much After this, you thought that we should expand it to more states, so it will take more money in this case. And this much money will be out of angel investor's hand In this case, the venture capitalist can help you.
Venture capitalists
Venture capitalists are a type of companies whose work is to find startups and businesses, provide them with the funds And buy their shares. Venture capitalists have the capability of investing a big amount Now you'll say your product is also going great and you too have a very good idea Where can we find these angel investors and venture capitalists? You have to make a search and hire a good financial advisor or investment banker They will make you a very good file and take you to the next level If your business has the capability then you'll get the funds And these angel investors and venture capitalists don't just give their money Your revenue details get checked thoroughly and you have to give a proper presentation. Assume, you took money from an angel investor by giving 10% shares And took money from venture capitalists by giving 10% shares after this too your product is not stopping, people are demanding more and more. Now you are thinking of taking it to an international level and opening up branches all over India. And the money that will be needed for this will not be in the hands of investors or venture capitalists in this case, you'll have to go public for money in exchange for your shares. Whenever a company goes public for raising money for the first time is called an IPO,
IPO ( Initial Public Offering )
initial Public Offering The company whose name has public limited in its name means the company has taken money from the public in exchange for shares and you can buy its shares in the market. You started the Pani Puri business alone but your product had the capability and all the people are earning from it. You gave them a partnership And all of them are earning. So that's why in business your product should have power more than money. And the IPO that you bring doesn't mean that you'll go to people and announce a loudspeaker There's a process for IPO.
First, you've to hire an underwriter or an investment banker He will review your company profile, how much fund is needed, and how many shares you'll give After that, he will check eligibility, etc like there's eligibility that your daily turnover should be more than 10 lakhs and there are many more things They check these things. After checking all these things, you've to do the registration and your file will get approved by SEBI Your IPO will not come without the approval of SEBI. After that, you have to put an application on a stock exchange You've to do the pricing of the shares that you've thought of putting in IPO You'll have to decide its price. Like when Paytm launched its IPO then the value of its 1 share was 2150 Rs. And they raised 18300 crores of a fund by this. If you are launching an IPO then it's all up to you How much do you want to fix the value of your shares? But you shouldn't fix it very high because if people aren't taking it, 90 % of them aren't taking your shares then your IPO will not move forward. It costs 6 to 7 crores in launching IPO Marketing and other fees will go all waste.
And it also builds a bad reputation for the company that's why you've to keep the share rate such that people will subscribe to your shares. That's why companies bring IPO in such times When a market is up and the purchasing power of the people is high You may have seen that IPOs weren't coming during the COVID and those which were about to come were put on hold Sometimes companies launch 1 lakh shares in IPO And the buyers are 5 lacks, in this case, the public gets IPO in a lottery system After raising money from IPO the company gets to work and starts making its profit after that whether the share market will go up or down or the share of that company will fluctuate The company doesn't have anything to do with it. If it wants to be in the share market again then it had to do it through an IPO When a company brings an IPO for the second time then it's called FPO Now you'll say that we have seen in movies and news that when a company shares fluctuate, the owners start panicking See, the company gets affected but not directly It gets affected indirectly The price of the company's shares reflects the overall reputation of the company When they will take money from the market for any work, the current rate is a type of a base for any company. The second thing is if a company takes a loan from the bank Then it puts its shares as a security with the bank. Assume you've deposited 1000 Rs shares in Bank then according to that the bank will give you 600 to 650 Rs a loan Now due to any reason, the price of the shares falls then the bank will ask the company to give them more shares because the price of the shares has fallen That's why company owners get panicked if the price of the shares goes down There's one more thing when the company brings IPO again which is called FPO At that time, it will not be able to fix the rates of the shares. The base of FPO will be the rates at that particular time. See, the company raises funds by bringing IPO and gets busy in their work but the public that has bought the shares of IPO waits for the company to earn profit and they will get benefit from that. But there is one more way if you failed to buy shares at the time of IPO, the people who've bought the shares at the time of IPO, you can bargain and buy the shares from them The place where all this bargaining happens is called the stock exchange.
Stock Exchange
In 1875, a person named Prem Chand started the Bombay Stock Exchange, where an area gets decided And people used to gather there and bargain. And used to buy or sell the shares among them through papers. This was getting very famous and the government after seeing its success brought a computerized system in 1992 for the whole process which is called National Stock Exchange in the coming days, BSE also made its system computerized. And nowadays it's as if you can buy or sell shares by just clicking on your mobile Nowadays there are many exchanges like Jaipur Exchange, and Kolkata Exchange But NSE and BSE are very famous. Both of them are in Mumbai. Now you'll say, how the money is invested in this.
What's the meaning of Sensex going up by 100 and NIFTY going down. We will discuss all these things further but before that understand one thing If you want you can do your research in the share market and buy whatever you want. But there are many effective ways where you can buy multiple shares from multiple sectors like Index Fund. See, Index Fund is a type of mutual fund that replicates an established benchmark index. When you invest money in that index then that money gets invested in different companies in that index and giving you a more diversified portfolio than if you are buying individual stocks. There are some such indexes like NIFTY50.NIFTY100 etc If we talk about the current scenario then according to a report, India has seen a growth of more than 210% in the manufacturing sector. Its contributors are from all the domains like automobiles, chemicals, construction, consumer goods, fertilizers, pesticides, healthcare equipment, oil and gas, paper and jute, pharma, industrial manufacturing, metals, telecom, and textiles. The Indian government has also supported the manufacturing industry through the Make in India campaign because the government wanted to decrease the dependency on other countries. This is quite a good push for the sector which has benefitted the manufacturing sector. To become a part, either invest in individual stocks or invest in a bucket of stocks means NIFTY India Manufacturing Index has provided a 14.5% of annualized return in the last 10 years. NAVI mutual funds launched an NFO Navi NIFTY India Manufacturing Index Fund on August 12th, 2022 The funds' proposed expense ratio for a direct plan is 0.15% and 1 % for the regular plan. This fund gives you a chance to invest in India's manufacturing industries. You can get access to invest in the manufacturing industry through this fund. Hurry up! NFO is closing on August 23rd, 2022. You can use platforms like Kotak Cherry, ICICI Direct MF Utility, Paytm Money, Groww, IND Money, and Kuvera Or you can contact your financial advisor. As were discussing the Bombay Stock Exchange, and National Stock Exchange You may have heard that today Sensex has gone up by 100 points and NIFTY has gone down by 50 points. So what does this mean? What happens when they go up or down? See you have surely heard of TV's TRP, this device is placed on some TVs in an area that people are watching. It is not placed on all TVs Because this much is not possible that devices are put in all the TVs in India and check what they are watching That's why some samples are taken and based on that an assumption is made that what people are watching in the whole of India. In this way, TRP is decided, and because its difficult to track all the companies So what the Bombay Stock Exchange does it track the top 30 companies and predicts the market Which is given the name Sensex, and National Stock Exchange takes the sample of the top 50 companies and predicts the market which is called NIFTY Mostly this happens that the market goes where the top companies of Sensex and NIFTY are going But the market doesn't need to go where these companies are going It may also happen that Sensex is going up but the stock that you are having is going down So this may also happen. Now you may think about which companies get selected in Sensex and NIFTY, 30 big companies are selected in Sensex and 50 big companies in NIFTY Now, which are these big companies? What is the definition of a big company? How this is decided? The total number of shares of a company and their price If we multiply it, then whatever amount comes to The company whose amount is higher will be big In this way, the top 30 and top 50 are selected, and the top 30 and 50 companies in Sensex and NIFTY keeps changing. If a share of any company is going down then it gets removed from the top 30 or top 50. Now the thing is, why the value of any share is high or low? There are mainly three entities in the share market due to which the value of shares of companies gets higher or lower. The first is retail investors. The second is institutional investors, and the third is adviser rating agencies. People like you and I are called retail investors who buy or sell shares according to the market The second is institutional investors, who pick shares in the bulk of any company or a particular sector like Index Fund Or mutual funds and the third is adviser rating agencies They predict whether the economy is going up or down or which sector will boom Which sector will go down? These 3 entities decide where will the market go. You have to do research and trust only reliable sources if you want to invest in the share market. And this is a long-term game if you'll enter in share market after dreaming about Mungeri lal Then you will bear the loss for sure. And the tips we get from the market and the fake experts Don't get stuck in all this. Trust only reliable agencies and sources Otherwise, the local tips which we keep getting Don't depend on them. Let me explain to you with an example, assume I have reached 4000 people and made a list of them. Made two groups of 2000 people And divided them into two groups. Told one group that the market will go up and the market will go down to another group One thing will happen out of two. Either the market will go up or down. After this, assume the market will go up, so I will leave the group for which the prediction was wrong and the group for which the prediction was right I will move forward with it. And in that group, I will make two groups of 1000 people and do the same thing, and for the group for which the prediction will be right, I will take it and divide it in two. After doing this continuously there will be at least 250 people for whom the prediction may have been right for 4 times. They will think of me as the Guru of the share market. After that, I will tell those 250 people.
to deposit 50000 Rs and you'll become rich because I know everything about the market. Some people flee after taking money. So don't get caught up in all these matters and if you want to invest then do research or trust reliable companies If you want to invest money in the share market without any help Then all the work could be done from home itself you just need a mobile phone. For buying or selling shares in the share market Three things are needed. 1. Savings Account 2. Demat Account 3. Trading Account I will explain these 3 with an example. Assume you go to a shop And takes money from your wallet and buys a shirt And keep that shirt in a bag So your wallet is your savings account The bag in which you've kept your shirt is your Demat account And you are acting as a trading account You transfer money from your saving account to your trading account and buys shares from that And those shares get saved in your Demat account. The way that your saving account shows you the bank balance, in the same way, The Demat account shows how many shares of which company you have. You just have to type "Demat app" or "trading app", and many apps will show up Install these apps. Complete your KYC. The trading account and Demat account will open from your mobile And your savings account will also get connected. After that too if you don't understand then the customer care number will be given on that particular app, step by step process is mentioned there. If you want to take an IPO or buy or sell shares, everything will be done by that app from home.
