Download 64554415 Investors Attitude Towards Primary Market Brijender PDF

Title64554415 Investors Attitude Towards Primary Market Brijender
Tags Securities (Finance) Capital Market Initial Public Offering Financial Capital
File Size647.3 KB
Total Pages61
Table of Contents
                            “Investors Attitude towards
primary market”
MASTER OF BUSINESS ADMINISTRATION
	ORGANIZATION HISTORY
HOW TO BE WATCH FUL OF IPO BOOM
THE EVALUATION PROCESS
	The business
	The Company
		The promoter
	The lock in
	The finances
	The Risk
	The objects
	The Fine Print
	The Price
	The Hype
	The broker
                        
Document Text Contents
Page 1

A

Project Study Report

On

“INVESTORS ATTITUDE TOWARDS
PRIMARY MARKET”

Undertaken at

Submitted to the

International School of Informatics & Management
(Affiliated to Rajasthan Technical University)

the partial fulfillment of the degree of

MASTER OF BUSINESS ADMINISTRATION
(2010-2012)

Submitted To: Submitted By:
Ms. Tripti Bisawa Ronak Agrawal

MBA 4th Semester

Page 30

A NEW CONCEPT OF IPO MARKET—BOOK BUILDING

SEBI guidelines defines Book Building as "a process undertaken by which a

demand for the securities proposed to be issued by a body corporate is elicited and

built-up and the price for such securities is assessed for the determination of the

quantum of such securities to be issued by means of a notice, circular, advertisement,

document or information memoranda or offer document".

Book Building is basically a process used in Initial Public Offer (IPO) for

efficient price discovery. It is a mechanism where, during the period for which the IPO

is open, bids are collected from investors at various prices, which are above or equal to

the floor price. The offer price is determined after the bid closing date.

As per SEBI guidelines, an issuer company can issue securities to the public

though prospectus in the following manner:

1. 100% of the net offer to the public through book building process

2. 75% of the net offer to the public through book building process and 25% at the

price determined through book building. The Fixed Price portion is conducted

like a normal public issue after the Book Built portion, during which the issue

price is determined.

The concept of Book Building is relatively new in India. However it is a common

practice in most developed countries.

Difference between Book Building and Public Issue

In Book Building securities are offered at prices above or equal to the floor prices,

whereas securities are offered at a fixed price in case of a public issue. In case of Book

Building, the demand can be known everyday as the book is built. But in case of the

public issue the demand is known at the close of the issue.

The book building process:

Page 31

The company approaches lead manager for IPO

The company and lead manager suggest a price band at which shares are to be offered

Application are invited

Based on demand for the shares a certain price is established by promoters and the lead
manger

The allotment is made on the basis of the market clearance price

Post issue the price stabilization is undertaken by the lead manager.

WHAT SEBI DID TO ENCOURAGE RETAIL INVESTOR

SEBI has announced a series of measures to encourage retail participation in the

primary market. This is perhaps the first instance where the market regulator has got the

timing of reform measures spot on.

Coming close on the heels of the hugely successful Maruti IPO, these measures

should arouse retail interest in some of the big public offers expected in the near future

— BPCL, Idea Cellular, TCS and Nalco. The principle of these changes seems to be

that greater participation of retail investors in the primary market is possible only when

they have a reasonable chance of making gains, certainly not the case earlier. To enable

such participation, Sebi has adopted a two-fold approach. First, the market watchdog

has made sure that retail investors actually get an allotment in book-built IPOs. Hence,

the 10% increase in the allocation for retail investors. But more significant is the change

in the definition of what constitutes retail — from those applying for up to 1,000 shares

to applications for shares worth Rs 50,000 or less. This would ensure that ‘retail’ is

Page 60

QUESTIONNAIRE

Q1) General Information
1. Name ____________________________ 2. Age

______________

3. Occupation

a) Businessman b) Serviceman

c) Professional d) Any other

4. Annual Income

a) Rs.50000 to 1 Lac b) Rs.1 Lac to 3 Lacs

c) Above Rs.3 Lacs

Q2) Which age group do you belong?

18 - 30 30 - 45 45 - 55 above 55

Q3) Have you ever invested in stock market?

Yes No

Q4) If yes, in which type of market?

Primary Market Secondary Market

Q5) What is the source of information regarding primary market?

News Broker TV Internet Any

other

Q6) In which of the following you would like to invest your money?

Private Co. Govt. Co. Semi Govt. Any other

Q7) How much % of your income you invest yearly?

0-20% 20-35%

35-50% 50% & above

Q8) In which sector you like the invest the money?

Insurance Infrastructure Telecom

IT Sector Any Other

Q9) How much is your portfolio?

Rs.10000 – 50000 Rs.50000 – 1 Lac Above 1 Lac

Q10) For how much period you would prefer to invest?

Short term Long term (5 & above)

Q11) Investing in primary market is risky or not?

Yes No

Q12) If yes, then how much risky in this?

Page 61

Highly Moderately Lower

Q13) How much return has been earned from primary market?

10% – 50% 50%-100% 100%-150% 150% - 200%

Q.14 What criteria you used to invest in any IPO?

Past Experience Company Result Any Other

Q.15 From where you get to know about these criteria?

Share Broker Newspaper Magazine

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