Share Market Basics.

Initial Public Offerings are a way by which the company raises capital for its operations. This is the only stage in which the company gets money in return for giving a part of its ownership to the public. The issuer who wants to offer an IPO first files detailed information as per SEBI rules and gives out a subscription offer.

Initial Public Offering (IPO) happens when a fresh unlisted company offers its share to the public. This is guided and monitored by Securities Exchange Board of India (SEBI). Most companies filing for a IPO are fresh companies looking for capital to expand its operations. Investors in these companies generally take a large risk in investing in these companies since there is a mighty chance that the IPO might fail and investors loose a lot of money in the process.

The process of applying for a IPO is very easy these days with the advent of DEMAT accounts and online trading options. Legally an IPO is open for minimum of 3 days upto 21 days except for those which are underwritten by India financial institutions which is open for 10 days. Usually we have to file an application for the IPO and send is along with the payment usually in Demand Drafts, Online Fund Transfer or Cheques. With an online trading account with ICICI or others, its easy to apply for one and have the funds transfered directly from your ICICI bank account linked to your DEMAT account.

Unlike the Technical Analysis, the fundamental analysis deals with the price of a particular company stock with respect to its financial status and numbers in the balance sheets. It is a analysis based on the company as a business which may make profit or has the strong potential to make profits in foreseeable future. This does not make predictions based wholly on the numbers of a company, but based on the market, the economy and other realistic statistical data like

• Daily share trade volume
• Stock Pricing

Evaluation of the market by careful analysis of trends and stats like prices, trading volumes and industry news to identify stock movement patterns is usually called Technical Analysis. Unlike other analysis, this type of analysis does not take the financial part of a company a a metric.

We all know the stock market is a collection of numbers and graphs, Technical Analysis identifies patterns in these numerics. In the past these technical analysts held a tight hold over the market prices that they were able to control prices with their predictions. These days with the advent of online stock accounts called DEMAT Accounts and other services which allow easy entry to the market, these analysts have lost a lot of their shine.

Complex softwares are also being used to interpret numbers better by the analysts. The major area of study includes:

• Price movements
• Trading Volumes

and the patterns formed with these analysis include:

• Head and Shoulder Formations
• W Formations
• Resistance levels and
• Moving Averages

This is done by the careful analysis by the experts with a lot of experience in the market trands and they use their capabilities to predict possible upward price changes in particular stocks or other financial instruments. This prediction might be a short term trend or a seasonal movement of the stock.

These days with a lot of data available online for access by everyone, market technical analysis is gaining popularity with individual investors, who rightly think that the past performance of a stock tells a lot about its future promise. These days there are many a investor who do their successful trading based purely on analysis of numbers than know about the company.