What is DJIA/Dow Jones?
The DJIA is also called as DOW, Dow Jones. DJIA is one of the oldest stock market indexes in USA. DJIA stands for Dow Jones Industrial Average. Like any other stock market index, DJIA also an indicator of overall performance of the stock market. The DJIA is composed up of 30 top companies and industry leaders from different sectors traded daily in New York Stock Exchange or NASDAQ.
DJIA is created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow in 1896. DJIA is criticized for being a price-weighted average. Since it gives high-priced stocks more value than their counterparts while computing DJIA. I.e the stock with $20 price has more influence on DJIA than a $10 stock. Read more
What is NASDAQ?
The NASDAQ is an American stock exchange. It is located in New York City, United states. NASDAQ is the largest electronic stock exchange in United States and first electronic stock exchange in the world. NASDAQ stands for National Association of Securities Dealers Automated Quotations.
NASDAQ lists over 3,200 companies from different sectors of industry including non-us companies. NASDAQ was started in 1971 by National Association of Securities Dealers. Presently NASDAQ is owned by NASDAQ OMX Group. Read more
BSE NSE list of Holidays 2009
The following table contains BSE and NSE holidays list. BSE/NSE declares holidays for all major festivals, Independence Day (August 15th) and republic day (January 26th). Saturdays and Sundays are weekly holidays.
Diwali is celebrated on Ashwayuja Bahula Amaavaasya. Usually it comes in the month of October/November. This day is considered as a precious day for starting a new business and extending an existing business. Lakshmi (Goddess of wealth) Puja is carried out on this day to favor their businesses. Muhurat trading is held on BSE and NSE on the day of Diwali (Laxmi Puja) for half an hour/an hour. This time it falls on Saturday but still Muhurat trading will be held on October 17th 2009 from 6:15 PM to 7:45 PM.
On this day most of the traders/investors buy at least a few quantity of shares. Most of the people believe that they would get benefited from the trades done on that day. In 2008, in spite of all the negative news of recession Sensex went up sharply.
What is IPO?
IPO stands for Initial Public Offering. As the name suggests it’s the process wherein a company goes to public for the first time for raising money by offering ownership in the company. In this process a private limited company becomes Public Limited Company.
The main aim of coming to IPO is to raise funds for expanding the business. The structure of a public limited company is different from that of a privately held company. Once it becomes public it must disclose its financial reports on a regular basis (In most cases, Quarterly) to public. It has to appoint share holders elected directors who take key decisions of business. But if the promoter holds major percentage he still can influence the decisions. Read more
Advantages and Disadvantages of IPO/Public limited Companies
The following are the advantages of a public limited company
No cost of capital: It does not need to pay interest on the capital raised from Public. Even it doesn’t need to repay the capital. Only in case of liquidation/bankruptcy it needs to pay the residual amount after paying bank loans, debentures, preferential shares etc.
Huge amounts can be raised: It can raise huge amount of capital by going to public which may not be possible otherwise.
Brand Value: Company’s brand value will get increased because people come to know about the company very well.
Correct Valuation: Since the share price reflects the company’s financial healthiness it would become easy to arrive at a price in case of mergers and acquisitions.
The following are the disadvantages of Public limited company
Disclosure of information: Once a company becomes public it has to disclose so much information to public on regular intervals. This includes share holding pattern, quarterly and annual financial statements, profiles of directors etc. Because of this restriction companies will always be under pressure to perform and show profits in every quarter. This, some times, doesn’t allow the management to take bold steps which may yield long term benefits but less profits in short term. Read more
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