What are the factors to consider investing in primary market?
Answers
Things to know before investing in the primary market
Prior to the IPO, investment bankers fixed the price of shares after doing extensive work to determine the value of the company.
The initial public offering or IPO is a process where a company issues shares to the public for the first time to raise funds for the development of its business, upcoming projects etc. In simple words, this means that a company is selling part of its ownership or shareholding before being listed on the stock exchange with ownership or ownership in the primary market. In this way, the company raises the money through the IPO route from the investors, which gets deposited directly into the company account after the allocation of the shares.
These stocks are then listed on public stock exchanges generally at the National Stock Exchange (NSE) and Bombay Stock Exchange. After allocation of shares, the exchange dates the date. Shares are traded for working days (Monday to Friday), after being listed in India's major two exchanges (NSE and BSE). The listing time for the first time is usually at 10 o'clock. It is called the secondary market for those shares. After listing, if an investor buys 100 shares of this company, then investors are buying those shares from any other investor and not from that company. After receiving IPO money, the company does not get any funds from buying and selling its shares on the stock exchange, also called secondary market. Transaction in the stock exchange is procuring and selling shares from one investor to another investor.
Prior to the IPO, investment bankers fixed the price of shares after doing extensive work to determine the value of the company. After the IPO, the financial market decides how to determine the cost of the company's shares by adjusting on the previous performance and expected future performance, the development of that company and the business.