Finance

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Everything to know about gratuity and its calculation

Gratuity is a significant employee benefit that recognises years of service and loyalty towards an organisation. It serves as a gesture of appreciation and financial security for employees, especially when they retire or leave the company. Understanding how gratuity is calculated is essential for both employers and employees. Here is an extensive guide to gratuity, covering its definition, eligibility criteria, and the method for calculating gratuity.

By shedding light on this valuable aspect of employee compensation, you can make enlightened decisions regarding your financial future. 

What is gratuity?

Gratuity is a statutory benefit provided to employees by their employers as a token of gratitude for their service. The Payment of Gratuity Act 1972 is responsible for its governance and applies to organisations employing 10 or more employees.

Gratuity eligibility

To be eligible for gratuity, you should have completed at least five years of continuous service with the employer. However, gratuity may be payable before five years in cases of death or disability of the employee.

Calculating gratuity

The formula for calculating gratuity is as follows:

Gratuity Amount = (Last drawn salary * 15/26) * (Number of years of service)

Here, the 'last drawn salary' refers to the basic salary and the allowance of the employee. Factor 15*26 is derived from 15 days of salary for each completed year of service, assuming a 26-day working month.

Importance of Gratuity Calculator

Calculating gratuity manually can be tedious, especially considering partial years of service. A Gratuity Calculator simplifies the process by providing accurate and instant results. Employees and employers can use online Gratuity Calculators to determine the amount quickly.  

Tax implications

Gratuity is exempt from taxes up to a specific limit. For government employees, the entire gratuity amount is tax-free. For non-government employees covered under the Payment of Gratuity Act, the exempted amount is the following:

20 lakh

Actual gratuity received

15 days' salary for each completed year of service, based on the last drawn salary

Impact of compound interest

Employees can invest their gratuity to earn interest and secure their financial future. A compound interest calculator helps determine the potential returns on investments over time.

Conclusion

Gratuity is a valuable employee benefit that recognises loyalty and long-term service. By understanding how gratuity is calculated, employees can assess the financial benefits they may receive upon retirement or leaving their job. The importance of investing the gratuity amount wisely cannot be overstated. By using these calculators, you can explore investment options and secure your financial future with smart financial planning.

Overall, gratuity is a valuable financial cushion, fostering a sense of financial security and appreciation among employees for their dedicated service to their organisations.

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An overview of Nifty Futures

The Nifty 50 is an Indian Stock Market index that mirrors the performance of the 50 largest and most actively traded companies enlisted on the National Stock Exchange (NSE). It is an important investor benchmark and provides valuable insights into the overall market trends and sentiment. Whether you are a beginner investor or a seasoned market participant, understanding the Nifty 50 can be beneficial in making informed investment decisions.

1. Significance of Nifty Futures:

Nifty Futures today play a crucial role in the financial markets as they provide participants with a means to hedge their portfolios, speculate on market movements, and manage risk. These contracts allow investors to gain exposure to the broader market without physically owning individual stocks. By trading Nifty Futures, you can take positions in the direction in which you believe the Nifty 50 index will move, either long (buy) or short (sell).

2. Trading mechanism:

Nifty Futures are traded on the National Stock Exchange (NSE) and follow a standardised contract size, maturity, and expiry dates. These contracts have predefined lot sizes, typically representing a specific number of Nifty 50 index points. The contracts can be bought or sold during the exchange’s trading hours.

3. Price determination:

Factors such as the spot price of the Nifty 50 index, interest rates, market sentiment, and demand and supply dynamics influence the price. Nifty Futures’ prices depend on a continuous auction process on the exchange. The bids and offers from buyers and sellers should match to arrive at a fair price for trading the contracts.

4. Relationship with the Share Market:

Nifty Futures are closely related to the performance of the Nifty 50 index, which represents the performance of 50 large-cap companies in the Indian Share Market. As the Nifty 50 index moves, the prices of Nifty Futures contracts also fluctuate. Traders and investors often use Nifty Futures to indicate the overall market sentiment and direction.

The movement of the Nifty Futures price can reflect the sentiment of market participants and provide insights into the expected movement of the index.

How to trade?

Nifty Futures offer investors and traders an avenue to participate in the Stock Market by speculating on the future direction of the Nifty 50 index. Investors can effectively utilise these instruments in their investment strategy by understanding the significance of Nifty Futures, the trading mechanism, and the price determination process.

Final words

Trading derivatives such as Nifty Futures involves risks and careful consideration, research, and risk management before engaging. Stay informed about Nifty Futures prices and the broader market trends. Consider taking suggestions from a financial advisor or a qualified professional for further guidance. 

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How do Home Loan EMI calculators help you plan repayments?

Home Loans and Equated Monthly Instalment or EMI calculators have revolutionised how you approach Loan applications. These calculators have become invaluable tools in personal finance, providing potential homebuyers with a comprehensive understanding of their financial commitments. You can effortlessly calculate your monthly instalments by inputting key variables such as Loan amount, interest rates, and tenure.

This empowers you to make investment decisions based on your financial capabilities and preferences. Moreover, these calculators let you explore different scenarios, adjusting parameters to find the most suitable repayment plan. Ultimately, Home Loan and EMI calculators have simplified the complex homeownership process, promoting financial literacy and assisting you in making intelligent choices.

An EMI calculator is an invaluable tool when planning your Home Loan repayments. It simplifies calculating EMIs and provides crucial insights into your repayment schedule. Let us explore how an EMI calculator helps effectively:

 Understanding EMIs and their significance

Before understanding the benefits of an EMI calculator, grasp the concept of EMIs. They are fixed monthly payments made towards Loan repayment, comprising both principal and interest components. They are crucial in your financial planning, allowing you to effectively budget and manage your monthly expenses.

 Accurate and instant EMI calculations

An EMI calculator eliminates the need for manual calculations, ensuring accuracy and saving time. It swiftly generates the EMI amount by entering the Loan amount, interest rates, and tenure. This instant calculation provides accurate information, enabling better financial decision-making.

 Planning for affordability and budgeting

The Home Loan calculator helps determine the EMI amount that fits within your budget. Adjusting parameters such as tenure and interest rates allow you to explore different scenarios and find a repayment plan that aligns with your financial capabilities. This lets you plan your monthly expenses and ensure your Home Loan EMIs are manageable.

 Assessing long-term financial commitments

A Home Loan is a major financial commitment spanning several years. An EMI calculator lets you visualise your Loan's long-term impact, providing a detailed repayment schedule. It breaks down each EMI into principal and interest components, helping you understand the gradual reduction in balance over time.

 Preparing for interest rate fluctuations

Interest rates can fluctuate over the tenure of your Home Loan, impacting your EMIs. A Home Loan EMI calculator helps you analyse the effect of interest rate changes on your repayment schedule. By entering different interest rates, you can evaluate the potential increase or decrease in your EMIs. This information prepares you for any financial adjustments that may be required in response to fluctuating interest rates.

 Conclusion

An EMI calculator simplifies your Home Loan repayments. An EMI calculator lets you make informed decisions and effectively manage your Loan by providing accurate and instant EMI calculations.

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Facts to know about Nifty Futures

Nifty Futures is an important aspect of the Derivatives market. They are essentially Futures contracts listed on Nifty. They let you trade in the share market since the Nifty represents the market and economy. Trading in Nifty Futures offers several benefits for the investor. It helps them take a consolidated view and dodge stock risks.

It also lets them hedge the risks with index futures. However, to enjoy such perks, the investor needs to consider a few factors:

1.      The Futures’ spread

Usually, Futures trade at a spread over the spot price. In most cases, the current cost of funds determines the monthly spread over the spot price. This is also called the carry cost, wherein the Futures quote at a premium. Now, do not buy Nifty Futures when the share price is at a steep premium to the spot index. This is because it could be a case of overpricing.

Also, avoid buying Nifty Futures at a discount, as it shows signs of aggressive Futures selling. So, understand the reasoning behind the spread before trading. It saves you from risks in the long run.

2.      Data on open interest

Before securing a Nifty Futures price position, conducting scientific data analysis is best. This involves looking at the open interest of Nifty Futures and its accumulation trends. This practice lets you know whether the open interest will build on the long or the short side. It also offers you a clearer view of the Nifty direction in the share market.

3.      Liquidity traps

Nifty Futures offers unmatched liquidity. Having said that, you should not fall into liquidity traps. There could be situations where you may find the volumes on the Nifty Futures vanishing upon the expiry day once the rollovers are complete. There would also be times when the spreads widen, increasing your trading risks. Therefore, be mindful of such scenarios when chasing liquidity.

4.      Multiple margin implications

When you buy or sell the contracts, you create a linear position. This is because either can lead to unlimited profits and losses on both sides. Although stop-losses are important when trading Nifty Futures, you should also consider the margins. For instance, you should pay an initial margin when taking the position. This includes the ELM and VAR margins. Brokers should collect these margins when ELM is no longer optional.

Secondly, pay Market to Market margins daily based on the price movement. So, it is wise to assess these capital allocation implications beforehand.

5.      Overnight risks

If you have opted for a long position on any Nifty Futures, you could invite the risk of overnight trading. This may further lead to losses. Thus, be aware of your exposure to overnight risks.

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What happens to the Personal Loan when the borrower dies?

A financial requirement can arise anytime. Naturally, you would turn to your savings and investments to fulfil your requirement. However, it may not be the recommended option. This is because it disturbs your long-term financial plans. You could be building a corpus to finance your Home Loan down payment. Do not let a sudden financial requirement hinder achieving your goals. Apply for a Loan instead.

Personal Loan is an excellent financing option to meet significant and sudden financial requirements. You can get the required Loan amount at a competitive interest rate for a flexible tenure. You can repay the obtained Loan amount in Equated Monthly Instalments. You should use a Personal Loan calculator to determine your EMI payable.

You would be aware of how Personal Loan repayment works. But what happens to the Personal Loan when the borrower dies?

The scenario

Once the borrower dies, a lot depends on the Loan type you have applied for. There are two types of Loans: Secured and Unsecured Loans. A Secured Loan is backed by collateral. In case of non-payment, the bank seizes the collateral. An Unsecured Loan is solely offered considering the borrower’s creditworthiness, income, and other factors. Hence, the bank cannot seize collateral for non-payment.

Secured Loans

If a Secured Loan borrower dies, the bank asks the legal heir of the collateral to repay the outstanding Loan amount. A legal heir inherits both the borrower’s assets and liabilities. If the legal heir cannot repay the Loan amount, the bank holds the authority to sell the collateral to recover the Loan amount.

Unsecured Loans

Generally, a Personal Loan is an Unsecured Loan. This means a collateral does not back it. Hence, it ensures that your assets are not at risk. If an Unsecured Loan borrower dies following two things can happen:

Co-applicant repays the Loan

The borrower can apply for a Personal Loan with a co-applicant. It often proves Personal Loan eligibility, and you can apply for a higher Loan amount. If the borrower had applied for a Loan with a co-applicant on the primary borrower’s demise, the co-applicant is liable to pay it. As a borrower, you should be mindful of this when applying for a Personal Loan with a co-applicant.

Declared as a Non-Performing Asset

If there is no co-applicant to the Personal Loan, seeing no legal way to recover it, the bank may declare it as a Non-Performing Asset. If you are a family member of the deceased borrower, you should reach out to the bank and inform them about the borrower’s demise. Upon verification, the bank writes off the outstanding Personal Loan. You can find these details highlighted in the Personal Loan documents, so read them thoroughly.

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Key Insights into the Nifty 50 Index

The Nifty 50 is one of India's most prominent stock market indices, representing the performance of the top fifty companies listed on the National Stock Exchange (NSE). This detailed article aims to provide valuable insights into the index's composition, calculation methodology, significance, and impact on investors and the overall market.

Composition of the Nifty 50

The Nifty 50 comprises 50 actively traded stocks selected based on various criteria, including market capitalisation, liquidity, and sector representation. These stocks represent diverse sectors of the Indian economy, including finance, technology, energy, consumer goods, and more. Some well-known companies in the Nifty 50 include Reliance Industries, Infosys, etc. The index is periodically reviewed and rebalanced to reflect the market's performance and evolving economic landscape accurately.

      2. Calculation methodology

The index is computed using a free-float market capitalisation-weighted methodology. This means that the weightage of each stock in the index is determined by its market capitalisation and the portion of shares available for public trading (free float). Stocks with higher market capitalisation and larger free float have a higher weightage in the index.

Nifty 50 today is calculated in real-time during market hours, considering the prices of the constituent stocks. The base year for the index is 1995, with the base value set at 1000.

       3. Significance and market impact

The index holds significant importance in the Indian financial market. It acts as a benchmark for the overall market sentiment and provides a snapshot of the performance of the top 50 companies. It is widely tracked by market participants, including institutional investors, traders, and retail investors. Changes in the Nifty 50 index can significantly impact investor sentiment, market liquidity, and trading activities.

Also, derivative contracts, such as Nifty futures and options, are actively traded based on the Nifty 50. This allows investors to hedge and speculate on the index's performance.

       5. Investment and trading opportunities

Like the Sensex today, the Nifty 50 offers market participants various investment and trading opportunities. Exchange-traded funds (ETFs) and index funds are available that replicate the index's performance, allowing investors to gain exposure to the Nifty 50 as a whole. Moreover, investors can analyse the index's constituent stocks, identify potential investment opportunities, and construct diversified portfolios.

Traders can profit from the price movements in the Nifty 50 through futures and options contracts, leveraging the index's liquidity and volatility.

       6. Impact of Nifty 50 on investors

For investors, tracking the Nifty 50 can provide valuable insights into the overall market trends and sentiment. The index performance can guide investment decisions, asset allocation strategies, and portfolio rebalancing. Investors can use the Nifty 50 as a benchmark to evaluate the performance of their investments and compare them against market returns.

Conclusion:

Understanding the Nifty 50 is crucial for investors seeking exposure to the Indian Stock Market. Keeping abreast of its performance and incorporating its insights into investment strategies contribute to informed decision-making, risk mitigation, and better outcomes.

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How To Open Damat Account Online - ICICI Direct

Opening a demat account is a simple and hassle-free process. One can open a demat account online at https://www.icicidirect.com/services/account-opening/open-demat-account.

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What is ETF (Exchange Traded Funds) - ICICI Direct

What is ETF (exchange-traded funds) - Learn about the meaning, features, benefits, and how to invest in them. To invest in ETF, visit https://www.icicidirect.com/exchange-traded-funds-etf.

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Steps To Trade in Commodity - ICICI Direct

Learn the procedures of trading in the commodity market. One can Start trading commodity futures to diversify their investment portfolio at https://www.icicidirect.com/commodities-market.

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Different Ways To Invest In Equity - ICICI Direct

Invest in Equity - Learn about the different ways to invest in equity with ICICI Direct. One can begin investment journey with ICICI Direct at https://www.icicidirect.com/share-market-today.

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How To Invest in Mutual Funds - ICICI Direct

Invest in a mutual fund - Learn about the step to invest in a mutual fund with ICICI Direct. One can start investment journey with ICICI Direct at https://www.icicidirect.com/mutual-funds.

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Reasons to open a Demat Account

Also known as a Dematerialised or Demat Account, it holds securities electronically. In other words, it allows investors to store their investments digitally rather than in physical certificates. It gives them instant access to it. Given the increasing popularity, more people are interested in knowing what a Demat Account is. They also wish to know the benefits of opening one. So, here are other reasons why doing so is wise:

Convenience

A notable benefit of a Demat Account is convenience. It discards the need for physical certificates and the associated paperwork. Investors can buy and sell securities online, which saves a lot of time and effort. With the account, investors can easily track their investments, view their holdings, and monitor the performance of their portfolio in real time. All information is available to the investors in one go.

      2. Reduced risks

Dematerialisation of securities reduces the risks associated with physical securities, such as theft, forgery, and damage. It also eliminates the chances of delayed delivery or non-receipt of securities. In addition, the account facilitates faster settlements, which reduces the risk of price volatility.

      3. Low-cost

Maintaining a Demat Account is relatively inexpensive than holding physical securities. Investors are not required to pay stamp duty or transfer fees associated with physical securities. The charges for maintaining the account are also meagre. This makes it an affordable option for small investors.

      4. Investment diversification

The account allows investors to diversify their portfolios. It lets them invest in securities such as stocks, bonds, Exchange-Traded Funds, and Mutual Funds. This diversification helps spread the risk across different types of investments, which is an essential factor in investment planning.

      5. Easy transfer of securities

Transferring securities from one Demat Account to another is quick and easy. Investors can transfer securities electronically without the need for physical paperwork. This makes it convenient for investors to buy and sell securities without hassles or inconvenience.

      6. Access to IPOs

Investors with a Demat Account opening can easily access Initial Public Offerings. IPOs are new securities issued by companies when they go public. They allow investors to invest in a new company at an early stage. With the account, investors can easily apply for IPOs online. They enjoy a relatively quicker and more convenient investment process.

Documents needed to open a Demat Account:

These days, opening a Demat Account involves a straightforward process. You can easily do so online. You need to visit the Depository Participant’s website and upload the following documents:

PAN Card

Aadhaar Card

A cancelled cheque

Bank statement for the last six months

Signature on a blank, white piece of paper

A coloured passport-sized photograph

Note that the signature you submit should match the one on your PAN card. Also, the photograph you provide should be recent.

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Reasons to invest in Sovereign Gold Bonds

Indians are the highest consumer of gold after China. The penchant for gold is multidimensional in Indian households. It is considered a status symbol and represents generational wealth. This makes it the ideal choice or ornament for possession and investment purpose. Despite the demand, India does not have many gold reserves, ironically. The supply is satiated through imports. As a result, it affects the macro fundamentals of the economy.

This consecutively affects the currency. The Indian government proposed the issuance of Sovereign Gold Bonds to address this issue. The Reserve Bank of India issues it periodically at the ongoing gold price. You can make an SGB application for a minimum of a gram and multiples. Investing in such precious metals is an intelligent way for future gains. Let us understand why this investment approach makes sense:

Affordable

When you buy and sell jewellery physically, you incur making charges. You need to pay them each time you change the gold form. Another alternative is holding them as bars and coins. However, you may incur costs related to storage, Insurance, safety, etc. These issues get eliminated with Bonds. You could hold them as share certificates or in your Demat Account.

Tax-efficient

Gold is a non-financial asset. Hence, you may need to pay short-term capital gains tax when you sell it within three years. If you sell it after three years, it is classified as long-term capital gains. Hence, you get taxed at 10% without indexation or 20% with the indexation benefit. You also need not go through such taxation when you hold gold as Government Bonds.

In such a case, it comes with an eight-year tenure and is redeemable after five years. However, you attract capital gains at the actual rates when you sell SBGs in the secondary market.

Collateral usage

Gold is an excellent way to acquire credit. It was used as an asset for pledging security. The same is possible with gold Bonds traded today. They are collateral, and the Loan-to-Value ratio is like ordinary Gold Loans. The Reserve Bank of India prescribes this often. However, granting such credit against SGBs is up to the discretion of financial institutions. Ensure to check its availability.

Interest-bearing

No regular assured income exists when gold is held physically or as Exchange-Traded Fund. You only gain when the gold market price of gold is high. Contrarily, types of Bonds dealing with gold pay an annual interest of 2.5% to investors. If the gold prices go up, you gain from the price appreciation. Also, there are no risks as the Indian government regulates interest payments and principal redemption.

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What are the various sectors of the stock market?

Everyone recommends stock market investments if you have ever sought investment advice from loved ones or a qualified financial professional. It is an enormous source of wealth creation. Stock investments earn you decent returns and allow you to enjoy high liquidity. Investing is also easy as you only need to open Demat and Trading Accounts. Open both on priority to get started with your investment journey.

The Bombay Stock Exchange and the National Stock Exchange are India's two major stock exchanges. Innumerable companies are listed on both stock exchanges. You can choose to invest in any and earn better returns. You can find stocks belonging to various sectors in the stock market. Following is the list of sectors listed on the stock exchanges:

Financial sector

The financial sector is typically the highest-earning sector on the stock exchange. Commercial banks, investment banks, financial service companies, Insurance companies, and Asset Management Companies list their stocks here. Given the thriving economy, investing in the financial sector is a smart move.

Healthcare sector

It is emerging to be the most popular sector in the stock market. It includes pharmaceutical producers, healthcare service providers, medical device manufacturers, biotech, and Insurance companies. In the post covid phase, innumerable investors have invested in the healthcare sector because the government and companies are investing in its development, causing its stock prices to rise.

Energy sector

It is said to be the strongest sector of the stock market. It includes companies producing, refining, and distributing energy resources like oil, petroleum, and natural gas. These companies' stock prices witness drastic changes due to the constantly changing demand and supply of resources.

Real estate sector

This is another popular sector of the stock market. It involves companies that are either into constructing or marketing real estate. If you observe the real estate market going strong, consider investing in its stocks to earn reasonable returns. You can also invest in companies linked to the construction of properties, such as steel. For example, you can check Tata steel share price and consider buying its stocks.

Given the strong real estate market, the steel demand will likely be high, translating to a reasonable share price. This allows you to realise excellent profits.

Consumer staples sectors

Food products, beverages, and tobacco are typical examples of consumer staples. The demand for these products is high and continuous. Most of the leading companies in the stock market belong to this sector. Hence, investing in the staple consumer sector is a good idea.

Consumer discretionary sector

This typically includes companies that are into retail, e-commerce, and luxury goods. The demand for consumer discretionary is rising. You should consider investing in them to earn significant profits.

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Things to know about the Lumpsum Calculator

When it comes to investing in funds, there are two primary methods: Systematic Investment Plans and Lumpsum Investments. The latter involves investing a large sum of money at once in an investment channel. It is a feasible option when you have excess investible capital. In any case, you need to make specific calculations.

This is when a Lumpsum Calculator comes in handy. It is a helpful tool that guides you in organising and making sound decisions about your Lumpsum Investments. So, here are some essential things to know about it:

What is a Lumpsum Calculator?

A Lumpsum Calculator is an online financial planning tool. It estimates your future returns and the appropriate repayment amount for your existing loans. However, people mainly use it to assess their investment decisions to make an informed call on the same. To compute accurate values, the calculator uses a mathematical formula. Let us take an example of a mutual fund investment where you would like to estimate the returns.

(Current investment amount multiplied by the annual return rate divided by the investment tenure in years) + (the annual compound interest rate multiplied by the investment tenure in years).

Benefits of using the Lumpsum Calculator

Using the calculator reaps many benefits. Besides the apparent convenience, it helps you in the following ways:

Offers accuracy

A Lumpsum Calculator provides you with the final numeric output of your investment. It saves you from errors related to manual calculations. As long you enter the correct details, you get accurate results instantly. You can also estimate the returns of your existing Lumpsum Mutual Fund Investments once you open a Demat Account.

      2. Allows you to make a sound decision

Whether investments or Loans, you need to make the right moves. However, the same requires forethought and extensive calculations. By using the calculator, you can pre-evaluate your decisions. It assists you in making well-informed decisions more effectively.

      3. Estimates your corpus size upon maturity

Mutual Funds come with their own set of market-linked risks. This further affects your returns, making it difficult for you to assess the size of your corpus upon maturity. In such cases, you can use the calculator for clarity. It provides the closest possible estimates of your future corpus based on the years of compounding you provide.

       4. Easy to use

You need not be an investment expert or mathematician to use the tool. You only need to enter the key data points specified in the tabs. Once done, the calculator automatically gives you the results within no time. Considering this, even first-time investors can avail of it.

       5. Free of cost

The most beneficial aspect of the calculator is that it is free of any charges. Most Mutual Fund providers offer it on their websites and apps as a complimentary service. This way, anyone may use it when required. It is readily available to everyone interested in investing.

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How to check the IPO allotment status?

The information on the number of shares assigned to the investor in an Initial Public Offering is part of the IPO allotment status. The registrar of the IPO handles the IPO allotment process. The public becomes aware of the allotment status on the IPO registrar’s website on the date of the IPO allotment. The calculation of IPO allotment is published by the registrar based on the allotment document.

Once the allocation completes, investors can check their IPO allotment by checking the registrar’s website.

How do IPO allotments work?

During the IPO allotment process, IPO shares are distributed by the bids made by individual investors. The allotment happens via lottery when shares are oversubscribed, it is also when there are more bids than IPO shares. Shares are assigned to your name based on the outcome. The IPO allotment procedure for large-cap IPOs typically takes one week to complete.

Investors can check the status of their applications on the registrar's website, where the allotment status gets updated.

How to find out about the IPO allotment status?

The IPO allotment process involves the offer's registrar allocating IPO shares to a bidder who has applied for an IPO subscription. For all large-cap IPOs, the full IPO allotment completes within a week of the IPO release date. With small-cap IPOs, this procedure could take longer if the subscription falls short of the required minimum.

Bidders can access the official registrar's website, the Bombay Stock Exchange or National Stock Exchange website, or both to check the status of their IPO application online. The information on the number of shares given to the investor in an IPO is available on the IPO allotment status.

When the information is made public on the IPO registrar's website on the allotment day, investors can verify the IPO's allotment status. BSE or NSE also sends email and SMS updates to bidders on the new IPO allotment status.

How long does it take to receive an IPO allotment?

Following the IPO release date, it typically takes seven days. In the event of small-cap IPOs, if the subscription threshold limit is not met, this could take longer.

Where is the status of the IPO allotment announced?

The registrar's website is updated with the IPO allotment status. To check the status of the IPO allotment, bidders should enter their PAN number or IPO allocation number. The BSE and NSE websites also include this information.

Final word

Retail investors interested in IPOs have surged because of recent IPO outstanding results. Within days of allotment, a company's shares list on the stock exchange. Depending on your risk tolerance level, the investment time horizon, and the liquidity requirement, you can either hold the shares or sell them on the listing day.

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Basics of the share market explained!

Most of them believe that investing in shares is risky. However, studies have pointed out that if you direct your money into the right shares for longer, you can beat inflation in the long run. So, if you are considering share market investments, here are some basics that might excite you.

What is it?

The share market is a platform for buyers and sellers, where they come together for specific hours during the day to trade publicly listed stocks. Share markets are primarily categorised into two types:

Primary share markets

When a company registers itself on a stock exchange for the first time, it enters the primary share market. This is mainly done to raise funds through shares and is called the Initial Public Offering.

Secondary share markets

After a company’s securities have been sold in the primary share market, they are traded on secondary markets. Here, investors can buy and sell shares among themselves at the current market prices. The transactions in this market are called trades and typically happen in the stock exchange.

What are stock exchanges?

A stock exchange is where financial instruments like Bonds, shares, etc., are traded between buyers and sellers. The activities carried out in stock markets are regulated by SEBI. While there are supposedly seven recognised stock exchanges in India, the two primary stock exchanges include:

The Bombay Stock Exchange with Sensex as its index

The National Stock Exchange with Nifty as its index

Financial instruments traded

There are four financial instruments traded on stock exchanges:

Bonds: These are issued by various companies to raise capital from the public instead of going to the bank for money.

Shares: They represent equity ownership in companies and investors who hold the shares of a particular company are called shareholders.

Derivatives: These derive their value from an underlying asset like currency, shares, commodities, etc.

Mutual Funds: It is where companies collect money from several investors and invest in a mix of assets like Bonds, stocks, etc.

How are share prices determined?

The price of a share, for example, the Zomato share price depends on the market according to the usual rules of supply and demand. So, if the company grows quickly, gets new orders, or earns excellent profits, its share prices go up. Slowly the demand for stocks grows, and investors are inclined to buy stocks at higher prices and the prices go up.

Why do companies need shares?

When companies expand their business and operations, they require extra capital. As a result, they approach the share market and offer several shares, depending on their market value, for investors to purchase. The investors then pay money to the company to buy their shares and become part owners of the said company.