Chapter 2 of 4
Your Indian-market information map
Follow money and ownership through securities, fund structures, market participants and the demat account.
In this chapter
Start with the claim you own #
An equity share is a residual ownership claim; a bond is a contractual claim under its terms. A mutual fund unit is an interest in a pooled portfolio, not direct ownership of one selected company’s share. An ETF is a traded fund structure; the exchange price can differ from its portfolio reference.
A REIT or InvIT exposes the investor to a trust structure and its assets, financing and distributions. A derivative is a contract whose exposure depends on an underlying reference. Similar-looking prices on a trading app do not make these claims equivalent.
Follow the cash in primary and secondary markets #
Fresh capital issued by a company can finance its business; a secondary-market purchase usually pays an existing seller. In an IPO, fresh issue and offer for sale can coexist, with different cash recipients.
A large issue does not mean all the money enters operations. Read the proposed use of funds and reconcile new shares with existing shares. Market capitalisation measures the equity at the quoted price, not the cash sitting in the company’s bank account.
Separate the roles around your account #
The exchange supplies the trading venue, the broker handles your order relationship, the clearing system manages settlement obligations and the depository holds securities electronically through its participants. Issuers and registrars maintain their own parts of the ownership process.
Dematerialisation converts eligible paper holdings into electronic form; rematerialisation is the reverse process. Neither transformation by itself creates a capital gain. Check account statements and security identifiers rather than treating an app screenshot as a complete record.
Look at execution rather than only last price #
Delivery purchases, intraday positions, margin-funded holdings and borrowed securities have different financing and settlement consequences. A limit order controls its limit, not certainty of execution. Thin liquidity can create partial fills and large slippage.
Foreign and domestic institutions, individuals, market makers and intermediaries can have different objectives. An institutional name in a transaction is not proof of a successful long-term thesis. Ask what the observable record actually establishes.
Hypothetical worked example
A fictional issue with two cash destinations
An IPO contains ₹300 crore of new shares and a ₹200 crore offer for sale. Gross issue size is ₹500 crore, but only the fresh-issue portion reaches the issuer before applicable expenses.
If an investor later buys ₹50,000 on the exchange, that payment goes through settlement to the seller, not automatically into the issuer’s factory expansion. Draw the two cash paths separately.
Common mistakes
- Confusing issue size with money received by the company.
- Treating every security in a demat account as the same kind of claim.
- Assuming a limit order always fills in full.
Who normally receives your payment when you buy an existing share on an exchange?
Make this chapter useful
Can you defend the reasoning?
Before moving on, answer the self-check in your own words and write why each alternative fails. Use the worked example to test that explanation. Then apply it in the module research task; keep the assumptions and the evidence that could change your answer.
Desk assignment
What to submit
Make a claim-and-cash map for one share, bond, mutual fund, ETF and REIT/InvIT; identify financing, liquidity and information sources.
Use the research ledger for dated evidence, or the module workbooks for calculations. Separate observations, assumptions and interpretation.
Sources and further reading
- NISM: Research Analyst learning topics (scope reference; independent lessons) ↗
- NSE: company integrated financial filings ↗
Further-reading references from the curriculum source list. Contract sizes, expiry calendars, settlement references, margin parameters and tax treatment can change; verify the current operative documents for the actual product. Worked figures are illustrative, not current quotes.
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General financial education. No securities recommendation, assured outcome or personal advice. Read the risk disclosures.