Ravi discovered that stock exchanges served as specialized platforms where companies listed their shares for trading. They acted as vibrant marketplaces where buyers and sellers engaged in transactions, impacting capital flow and influencing the wealth of individuals and nations.
Example: The New York Stock Exchange (NYSE) is an iconic example of a stock exchange. Established in 1792, it has a long history and is the largest exchange globally by market capitalization.
Fact: The NYSE is located on Wall Street in Manhattan, New York City, and has over 2,800 listed companies, including well-known giants like Coca-Cola, IBM, and Walmart.
Major Stock Exchanges Globally: Crucial Players
Ravi learned that major global stock exchanges, such as NASDAQ in the United States, the London Stock Exchange (LSE) in the UK, and the Tokyo Stock Exchange (TSE) in Japan, played pivotal roles in the world economy.
Example: NASDAQ, founded in 1971, was the world's first electronic stock market. It's known for listing many technology-based companies like Apple, Microsoft, and Amazon.
Fact: The London Stock Exchange, established in 1801, is one of the oldest exchanges globally and lists around 2,000 companies from over 60 countries.
India's Financial Hubs: NSE and BSE
Ravi was captivated by the Indian stock market and its primary players, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Example: The NSE, established in 1992, is renowned for its electronic trading system, providing speed and transparency. In contrast, the BSE, founded in 1875, is steeped in history and tradition, being Asia's oldest exchange.
Fact: The BSE's iconic SENSEX is one of India's most tracked stock market indices, comprising 30 of the largest and most actively traded stocks on the BSE.
Initial Public Offering (IPO): From Private to Public
Ravi discovered that companies undergo an IPO to transition from private to public entities, raising capital by selling shares to the public.
Example: Companies like Alibaba, Facebook, and Google conducted notable IPOs to enter the stock market and gain access to public funding.
Fact: Saudi Aramco's IPO in 2019 became the world's largest, raising $25.6 billion, eclipsing Alibaba's record.
The IPO Journey: A Detailed Process
Ravi delved into the meticulous IPO process, involving steps from selecting investment bankers, preparing prospectuses, gaining regulatory approval, to offering shares at a predetermined price.
Example: Uber's IPO in 2019 was highly anticipated, although its initial valuation fell below expectations due to concerns about profitability.
Fact: In 2020, Snowflake's IPO made headlines for being the largest software IPO in history, soaring on its debut.
NSE Listing Process: Rigorous Standards
Ravi learned about the stringent financial and operational requirements companies must meet to list on the NSE.
Example: Reliance Industries, India's largest company, went through a complex listing process, meeting NSE's stringent criteria.
Fact: Infosys became the first Indian company to list on NASDAQ in 1999, a significant moment for India's IT industry.
Empowering Investors: Knowledge and Growth
Ravi realized that comprehending the IPO process empowered investors to make informed choices, participating in the growth of new companies and potentially reaping investment rewards.
Example: Retail investors eagerly participate in IPOs to acquire shares of companies they believe in, like Airbnb or DoorDash in recent years.
Fact: In 2008, Visa's IPO set a record as the largest in U.S. history, raising $17.9 billion.