Some more Basics

Hi..
So , you have expanded your company to 200 crore. You have got 50 % of shares and Rest have got 50 %.

Now , 50 % accounts for 100 crore . That means if you have released a share at a price of 10 (FaceValue) , then you have released 10 crore shares. ( 10 crore * 10 = 100 crore ) Now the equation becomes like this...

You have got 10 crore shares and the public has got 10 crore shares . Total number of shares is 20 crore.

All the public that have bought your shares are called shareholders . Now many feel they does not want the share so they are ready to sell it whereas some wanted to buy the share. Now comes the share market. SHARE MARKET is nothing but a platform for buyers and sellers to exchange the shares and that is why it is called stock exchange.

If seller is ready to sell at 10.50 and buyer is ready to buy at 10.25 then share price is determined by last traded value. If there are more number of buyers then they will buy at 10.50 also and so on. So if more people are willing to buy your share your prices will move on .. because of simple demand supply ratio.

Now if you made a profit of 40 crore then all the public would be interested in buying even at Rs 12 because total worth 240 crore divided by 20 crore shares.

I think this is enough for lesson 2.

Lesson 1-- Initial Public Offering (IPO)

Hi...

Why a company enters Stock Market ?

If you are running a company let it be Stupid Idiot Company (SIC) . You are the owner of SIC (100%) . Let your company today is worth 100 crore. Now you want money to expand your company. You can release shares of your company , let be worth 100 crore more. You will have 100 crore to do expansion . And company is now worth 200 crore. And your ownership is 50 %. You will still be the majority holder and thus you will run the company.

Releasing the Shares to public is called IPO or initial public offering.

What This Blog is About...

Hi ..

This Blog is a continuous effort of understanding the stock market and various aspects of it. I myself just started to learn what it is and how to trade. This blog is also represents what i learn and what investments i am doing right now. I want you to help in this learning process by giving your valuable comments and suggestion and also by adding your comments. Please correct me if i learned something incorrect.
Thanking you very much..