Introduction Stock market is a type of secondary market where the transactions of old and existing shares and securities are made.About SharesShares refer to the shared capital of the company.It represents the portion of the ownership of the shareholder in the company and also describes the right of the holder to the specified amount of the share capital of the company.Capital of a CompanyTo be established under Company Act, every company has to prepare a detailed document, which is called MOA (Memorandum of Association).
Therefore, it is regarded as Constitution of the Company.To deal with the internal issues of the company, another document is prepared called Articles of Association (AOA).Under MOA apart from other information, company also declares its maximum capital and on behalf of this capital it raises more funds in Capital Market.
Declared capital is known as Authorize Capital.Issued Capital – It is that part of Authorized Capital for which shares are issued.It is either equal to or less than authorized capital.Subscribed Capital – It is that part of issued Capital which is subscribed by the public.Oversubscription: Number of shares is 100 crores and demand is high.
Types of SharesPublic Issue or Equity ShareIssued for all.Preference ShareThe holders of such shares get the dividend first.Bonus ShareWhen dividend is given in the form of shares instead of cash.Sweat Equity ShareThese are specific type of shares issued only for the employees of the company on behalf of their Extra-Ordinary achievements on behalf of Company.Blue – Chip SharesThose companies that have strong fundamentals and business models as well as profit making are known as blue-chip companies and their shares blue chip shares.Alpha – SharesLargely transacted shares are called Alpha Shares.Right IssueIt is issued only for old and existing shareholders.It is one of the ways to raise funds.Indian Stock ExchangesAt national level there are 4 important stock exchangesBombay Stock Exchange (BSE)It was established in 1875At present 7,300 companies are listed with it.National Stock Exchange (NSE)It was established in 1992, on the recommendation of Pherwani Committee.At present 2,300 Companies are listed with it.Over the Counter Stock Exchange of India (OTCEI)It is the Stock Exchange of Small Companies which are not established on the pattern of NASDAQ (National Association of Securities Dealors Automated Quotations).
NASDAQ is in USA.Multi Commodity Exchange (MCX-SX)It has got permission to function in share and securities in 2017.Commodity Exchange in IndiaUnder Commodity Exchange, more than 90 primary products like – Gold, Silver, Metals, Food Grains, Pulses etc are transacted through Electronic mode of delivery.There are 4 important Commodity Exchanges in India:MCXIt is the largest commodity exchange in the country.It is in MumbaiNCDXNational Commodity and Derivative ExchangeIt is in MumbaiNMCENational Multi Commodity ExchangeIt is in AhmedabadICEXIndian Commodity ExchangeIt is in Gurgaon.Stock Exchange for Crude OilNYMEXBrentRegulators of Commodity ExchangeForward Market Commission (FMC)It is regulator of Commodity Exchange.Other Regulators:IRDA – Insurance Regulator Development AuthorityTRAI - Telecom SectorPFRDA – Provident FundShare IndexThese are prepared to track the fluctuations in the prices of shares and for the purpose various types of indices are prepared, but some of them are very sensitive, like in India sensitive indices are:SENSEX – belongs to BSENIFTY – belongs to NSESENSEXIt is based upon the value of 30 blue chip companies listed under BSE.It was started in 1986 with base 100At present its value is around 49,398.29 (19th Jan, 2020)250 to 3 Lakh crore transactions per day.NIFTYThere are 50 companies listed in NIFTYImportant MiscellaneousSEBIBull/BearCredit RatingsDepositoryADR/GDRVCFZero Coupon BondsMerchant BanksMutual FundsSEBISecurity and Exchange Board of IndiaIt is an Autonomous body, was established in 1988 but got statutory status in 1992.Headquarter is at Mumbai.Chairman – Ajay Tyagi (Jan, 2020)Its main function is to regulate capital market, control the activities of share brokers, stock exchanges and to protect the interests of investors.
Bull/Bear/StagBull/Bear – these are share market speculators, those who think stock will go up and start purchasing stock called Bull, and the trend of market is called Bullish, the reverse is called Bearish.Their activities are also termed as Liwali/Bikwali (in Hindi) Credit RatingsIt’s a mechanism to evaluate the financial position and credit worthiness of an individual, company or of a country.In India following agencies are involved:CRISILICRACAREONCRACIBILInternational credit rating companies:S & P (Standard and Poors)MoodyFitch Rating DepositoryIt is a kind of database where shares and securities are maintained in electronic format or D-mat form.In India there are 2 depositories:NSDL – National Stock Depository LimitedCDSL – Central Depository Securities LimitedShares of all the listed companies are handled or stored by these two.
