Secondary Market

So, our previous topic was IPO as a retail investors,

Now, is the time to begin with today's topic.

What is that topic?

That is Secondary Market,

So, let's begin with that.

Hello, friends,

Welcome to Learn Vern.

My name is Yash,

I have come here to teach you What is a Stock Market?

You have in this course understood some of the basic things as to what a stock market is.

We were discussing the IPO, we have already studied about What is an IPO?

Now, What is the process after an IPO?

So, this will begin always with the Secondary Market,

Now, Why is the Secondary Market that important?

So, you had invested in an IPO with its base price  of 100, and you got it's subscription, now How will you get the profit?

So, today we have to discussion about this particular thing only,

As to How you will earn money?

Or somebody else wants to earn.

So,this is basically dependent upon the secondary market, so we will begin with the Secondary Market today.

Let's go!

The first thing is that the secondary market is such a place, considering it may be a base, a big market place, a place where trading occurs.

A simple example for it can be Vegetable Mandis, here whoever goes you or me, there everybody will have to buy or sell, that means you can sell vegetables or you can buy them also.

So, the secondary market is also such a place.

Where buying and selling happens, but what is the thing that is being bought and sold?

Here there is buying and selling of the "Shares".

Suppose that you were allotted the IPO and now the company is also listed, now is the time of profit and loss, how ?

Suppose, the issue size was at 100 rupees, now sellers, Who are these sellers?

There is always an intention with the sellers, there is always a tendency of the seller that at what price they have purchased they will only sell at a higher rate than that.

And there should be no need for selling at a lower rate.

So, we both were allotted on the issue size of 100 , and  what we did is that, we kept it for selling at the rate of 120,

Ok!.

So it's not that, up till now What we have done? We have just done the bidding, and ask for the opening amount. I want to sell my shares at this rate, if anyone is ready then come to me and take the shares.

So, when will this be completed?

When any buyer will come at that price and therefore the demand will also come, he will think that this 120 is a fair price as in future it's valuation will increase even more, if his intention will be there, then only your shares would be sold at 120.

Meaning you earned a profit of 20 percent.

Now, you sold your shares to him.

Now, assume that a third person comes to you and buys a share from you, and goes away. Now the profit and loss that he will get is dependent upon him.

So, it is his risk reward now.

If , he has bought the shares without carefully understanding, then it is his look out, as your work is done.

Ok!

Soz let's discuss this exchange. What are exchanges?

It is the same place, where we do trading,

There are two of them

I have already told you about it.

Who are they?

NSE, National Stock Exchange.

BSE, Bombay Stock Exchange.

The work of both of them is the same, that is to perform the buying and selling of the shares.

Meaning to mobilise the Investors, for buying and selling.

What is the difference?

It is about Participation,

NSE, is such a place where Volume Participation, meaning there are lot of trading volume, and that also actively,

Oldest, is BSE, that is the old one is Bombay Stock Exchange.

After that comes the big screen based system, in which you can see the price, you will not have to phone anyone. This kind of system was brought by NSE, so people found it more preferable. That is why, you should do on NSE.

So, the main thing is because of this only there is a lot of trading volume here.

So, exchanges can be formed by you and also me, but there should be a person who always maintains regulations on it. Why?

Because there in money of the investors, and if that money is lost, then the government will have to take all the responsibilities,

So, they have appointed the SEBI, who is a non governing body, as I have told you earlier, it works as watchdog for the market, regulate the people, that there is no fraudulent activities,  and there is no illegal functioning,

So, SEBI is above us, who comes above all of us, and watches the activities of people.

So, the second player that we studied is Exchange, that is NSE or BSE, so it is not like I want to buy and I will go directly and purchase the shares, what happens always? Id i give you a simple example, if you want to buy something online, so it is not possible that you will just google something, and ask to deliver it,  you should have any retail person for that, so for us the retail person job is done by Exchange,

So, if you have to buy anything online, that time  you can not directly purchase anything, you have to use a particular bank account, or Gmail account, or use any online account, and give its preference, so these are the things.

Here, we have the intermediaries between Whom,

Between Exchange and the retailers, or the clients like us, or between any public, or the participants, they are called intermediaries.

In normal words, it is called a broker.

So, you know the job of a broker, that is who complete the work in between the two individuals, and in between charge some commision, for it.

So, if you want to buy some shares from the exchange or you want to sell, so What is necessary to have? It is necessary to have an account of a Broker,

It is also called Demat Account.

Why is the Demat Account important?

How is the Demat Account formed?

We will study all of that in the upcoming lectures.

Lastly, our player that is left is clients.

So, we got SEBI, then Exchange and even the Brokers, so it's not that all the three will just sit, if they want to earn money, so at last what do they want to have? They are the clients,

From whom, What can they do?

They can buy or sell, and take turn over charges or brokerage charges.

So, these are some of the players from our secondary market.

So, we will discuss them briefly a little more.

What is the main work of SEBI?

That I have told you, that is to protect the interest of the investors, and bring a hold of everyone under rules and regulations.

What is the work of Exchange?

The work of Exchange is to provide a platform, where; What can you do?You can do trading, meaning buy and sell there.

Ok!

Next, What came in?

Brokers and Sub brokers, McDonald's you all must be knowing as everyone wants Burger and many other things, do Mc Download is a foreign company from the US but it is expanded till here in India, or any other franchise of foreign country, but it is far away there, but it came up till here, How but?

That is people took the franchise, meaning a broker is established by going to a big city like Mumbai, so What is the work of this Bombay broker?

He has to create a client base for let's say Ahmedabad, Delhi, so it is impossible for him to go door to door, so what happens here?

That it appoints a person under him, so he will give a brokership card and give him a membership to work for him, that you go and bring me some clients.

So, this is the work of brokers and sub brokers.

Sub brokers, meaning an intermediary person between the clients and broker, who does our work of buying and selling.

Now, it is the time for Demat Account. What is a Demat Account, do you know one thing as to What you used to do earlier? When you have to see the amount in your bank account, for that you were supposed to visit the bank to print the pass book, so before demat account there used to be physical shares, that is there were copies of papers, so you might be knowing, that papers physical copy is a very risky thing, because assume that it got lost, torn or rat nibbles it, or water spills at home, so there are chances of these things to happen.

So, in physical shares there are a lot of chances to lose them.

So, when SEBI was enacted properly, so What did they do ?

They brought up an act, where if people want to buy any share so it is compulsory for them to have a demat account, nobody will be given any physical shares ever, Why?

To save them from all such issues.

So, with the Depository Act, the work of Demat Account was started with it. So that it is not time taking in deliveries and people's work becomes smooth and easy.

Now, your work has become easy only ?

You don't have to go to the bank for passbook printing, now whatever bank you have you can just directly log in, put your up id and can see your balance, that much is the money in my bank.

So, same things happen also with the Demat account, where you go through a broker and open a demat account, here you can easily keep a watch as you bought this share, so my portfolio has this share lying around.

So, the work of demat account is this itself, to keep the online securities safe, now who opens them, there are two depositories one is NSDL, and the second one is CDSL, these are bodies that are bonded with Exchange, and does the work of opening the account at Exchange, through the brokers by becoming an intermediaries that you can open your account here, your depositories will be safe with us.

If you have any doubts or queries,then you can post that in the comment section, and in this way your questions will reach us, and your comment will reach the other learners, the result of which, it will help in creating discussion of queries and solutions.

So, don't forget to post your comment in the discussion box.