Prajna Capital - An Investment Guide

In the last decade or so, the stock market has moved towards paperless trading. For investors, who used to burdened with reams of stock certificates, a demat account has become a necessity. Not having a depository or demat account has now become the biggest entry barrier to investing in equities. It is no wonder that more and more entities (commodities futures and spot market) are moving to the dematerialised form of trading. A demat or 'dematerialised' account holds shares in electronic form, thus saving you the bother of holding shares in paper form. DEPOSITORY FUNCTIONS A depository is similar to a bank. It holds shares, which belong to investors, in electronic form. The investor has to open an account with the depository, through a Depository Participant ( DP ). The DP is an intermediary between the depository and the investor. In India, there are two depositories, viz., National Securities Depository and Central Depository Services. A number of banks (HDFC Bank, ICICI Bank...

FALLING stock prices have left many employees in a sticky situation, mainly vis-a-vis their employee stock option plan (ESOP). The market price for the options, in several cases, is lower than the conversion price. Since this may have a bearing on employee morale, some firms have been considering the prospect of repricing their employee stock options. Market regulator Sebi allows the repricing of options if the exercise price becomes less than the market price. Recently, companies such as Jain Irrigation, India Infoline, Dish TV and Geojit Securities have repriced their Esops. Jain Irrigation had issued Esops at prices between Rs 447 and Rs 560 in 2005. However, with the current market price of Rs 340, it will reprice its stock options at the ruling market price in addition to a discount of Rs 52.20. India Infoline, for example, has cleared a proposal to reprice the Esops issued in 2007 at Rs 88 to Rs 45.3, early this year. Dish TV, cleared a proposal to reprice Esops at Rs 36.10...