Learn: stock market and IPO basics

They are stock market indices: the Sensex tracks 30 large companies on BSE, the Nifty 50 tracks 50 large companies on NSE. When people say 'the market rose 1%', they usually mean one of these.

FIIs (or FPIs) are foreign institutional investors such as overseas funds. DIIs are domestic institutional investors such as Indian mutual funds, insurers and pension funds. Their daily buying and selling often explains big market moves.

The 'fear gauge'. It measures how much traders expect the Nifty to swing over the next 30 days. A rising VIX means traders expect bigger moves, in either direction.

A Nifty futures contract traded at GIFT City in Gujarat almost round the clock. Its price before 9:15 am hints at whether Indian markets may open higher or lower.

Companies are grouped by size (market value). Large caps are the biggest 100, midcaps the next 150, smallcaps the rest. Smaller companies usually rise and fall more sharply.

The count of shares that rose (advances) versus fell (declines). If the Nifty is flat but 2,700 shares fell and 850 rose, most investors actually lost money that day.

Price levels where buyers (support) or sellers (resistance) have tended to step in before. They are analysts' observations, not guarantees.

The maximum a share is allowed to rise or fall in one day, set by the exchange. A stock 'in upper circuit' has only buyers left at the limit price.

A short session at the end of the day that sets the official closing price of shares from collected orders, meant to make closing prices fairer.

The Multi Commodity Exchange, where gold, silver, crude oil and other commodities trade as futures. MCX gold prices differ from jewellers' shop rates, which add GST and making charges.

Mainly because of dollar demand and supply: oil imports, foreign investors buying or selling Indian shares, and RBI action. A weaker rupee makes imports costlier and exports more competitive.

Price divided by earnings per share. A P/E of 30 means investors pay ₹30 for every ₹1 of yearly profit. Compare it only with similar companies.

An initial public offering is the first time a company sells its shares to the public. After the IPO, the shares trade on NSE and BSE like any other stock.

The company sets a range, say ₹660–693. Investors bid within it; the final price is usually the top of the band. Retail investors can tick 'cut-off' to accept whatever final price is set.

You apply in fixed bundles called lots. If the lot is 21 shares and the top price is ₹693, the minimum application is 21 × ₹693 = ₹14,553.

In a fresh issue the company creates new shares and keeps the money. In an OFS, existing owners sell their shares and the money goes to them, not the company.

Big institutions that buy a part of the issue one working day before it opens. Half their shares are locked for 30 days and the rest for 90 days, so their lock-in end dates can bring selling.

The issue is split by investor type: QIBs (mutual funds, insurers, foreign funds), NIIs or HNIs (individuals applying above ₹2 lakh) and retail (up to ₹2 lakh). Each quota has its own subscription number.

Investors applied for 10 shares for every share on offer. When retail is oversubscribed, lots are allotted by a computerised lottery, so many applicants get nothing.

An unofficial price quoted by dealers before listing. It is unregulated, not recognised by SEBI or the exchanges, and often wrong. Treat it as gossip, not data.

When you apply, the money is only blocked in your bank account, not taken. If you get no shares, the block is released; if you do, only the allotted amount is debited.

The Red Herring Prospectus is the official offer document. Look at the use of proceeds, how much is OFS, debt levels, profit history, pending legal cases and how the price compares with listed peers.

SME IPOs are small companies on the NSE Emerge or BSE SME platforms, with bigger minimum lots and thinner trading. They carry higher risk than mainboard IPOs.