Share Market: Things to Know Before Investing in Money.
Okay, I assume you’ve read the past article about basic requirements to get into Share Market. You might or might not know things like the primary and secondary markets. So, let’s get into the general insight of Share Markets. This article will act as a guideline to help you sustain and stay safe in the share market:
Primary Market (IPO/FPO/RIGHT SHARE)
So, talking about Primary Market, this is how you would want to start your investing journey. The primary market is the safest and has the lowest risk and high rewards.
There are three types of shares in the share market IPO, FPO and Right Share.
IPO (Initial Public Offerings) being the safest and the lowest costing share, which costs you Rs.100 or even Rs.10 per kitta/unit. You need to invest a minimum of Rs.1,000 for 10 kittas/units of Rs.100 per kitta or 100 kittas/units of Rs.10 per kitta. Usually, even if you apply for more kittas, you get to invest only Rs.1000 due to the IPO getting oversubscribed.
FPO (Further Public Offering) is when a company has already published its IPO and wants more cash. Here, they issue FPO whose value will be higher than IPO. Although the price of FPO depends on the value of the share in the secondary market, still it will cost you lesser than that of the secondary market.
The company issues the right share when it wants to increase its capital and offer more shares to its shareholders. In the right share, you get extra shares of the same company. But you have to pay Rs100 per unit of the share, unlike Bonus shares the company distributes for free to their shareholders.
Secondary Market
Now, this is where it gets tricky. Secondary Share Market isn’t as easy as the Primary market. You’re reading this article so you might be new to the market; try to stay away from the secondary market for some time.
So the Secondary market is where you buy and sell shares listed in the Nepal Stock Exchange (NEPSE). They list the shares here that you get to buy from the Primary market after being sold to the investors. Prices of the shares in the secondary market will vary according to the present market value of the share in the NEPSE. For selling and buying a share you will need a broker account and should contact a brokerage firm. The final price while selling will be deducted by a little for tax and broker commission.
