Highlights: 1. Market to be choppy. 2. Book profit at regular intervals.
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Who decides the price of an issue?
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1. INVESTMENT BASICS
2. SECURITIES
3. PRIMARY MARKET
3.1 ISSUE OF SHARES
3.2 FOREIGN CAPITAL ISSUANCE
4. SECONDARY MARKET
5. DERIVATIVES
6. DEPOSITORY
7. MUTUAL FUNDS
8. MISCELLANEOUS
9. CONCEPTS & MODES OF ANALYSIS
10. RATIO ANALYSIS |
Indian primary market ushered in an era of free pricing in 1992. Following
this, the guidelines have provided that the issuer in consultation with
Merchant Banker shall decide the price. There is no price formula stipulated
by SEBI. SEBI does not play any role in price fixation. The company and
merchant banker are however required to give full disclosures of the
parameters which they had considered while deciding the issue price. There
are two types of issues, one where company and Lead Merchant Banker fix a
price (called fixed price) and other, where the company and the Lead
Manager (LM) stipulate a floor price or a price band and leave it to market
forces to determine the final price (price discovery through book building
process).
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