Financial Fix | Back to Basics

By Irshad Mushtaq

IPO (Initial Public Offering): An IPO is the process by which a private company becomes public by offering its stocks to the public for the first time. A company that goes through an IPO will subsequently have its shares traded on the open market.

Primary Market: This is where new securities are issued and sold for the first time. IPOs occur in this market. Investors buy directly from the issuing company.

Secondary Market: After the securities are sold in the primary market, they trade on the secondary market, which is essentially the stock market where investors buy and sell from each other.

Why Shares Are Listed on a Stock Exchange:

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To give a company access to capital from a wider base of investors.
To provide liquidity, allowing investors to buy and sell shares easily.
To give the company an opportunity to enhance its profile and credibility.

Shares in Islamic Countries:

Yes, shares are listed in Islamic countries, including Saudi Arabia, Malaysia, Indonesia, and the UAE. These countries have their own stock exchanges, such as the Saudi Stock Exchange (Tadawul), Bursa Malaysia, Indonesia Stock Exchange, and Dubai Financial Market.

Shariah-Compliant Shares in India:

Shariah-compliant shares are those that comply with Islamic law. This generally means the companies do not deal in areas such as alcohol, gambling, pork-related products, interest-based financial services, etc.
The number of Shariah-compliant shares in India can vary, and there are indices such as the S&P BSE Shariah index that track the performance of Shariah-compliant stocks.
The exact number of Shariah-compliant shares in India would require current market analysis since the list can evolve with changing business practices and market dynamics.

Muslim Investment in Stock Market:

Muslim investors are encouraged to invest in the stock market if the shares are Shariah-compliant, meaning these stocks comply with Islamic finance principles.
They need to avoid companies that generate income from forbidden (haram) sources in Islam.
Shariah-compliant investing involves a halal investment strategy, and many Islamic countries have frameworks and Shariah boards to evaluate which stocks meet these criteria.
Investing in the stock market can help in wealth growth, saving for retirement, or achieving certain financial objectives while adhering to religious guidelines.

Muslims should consider these criteria and consult with financial advisors familiar with Islamic finance to navigate the investment landscape according to their ethical, religious, and economic requirements.

The writer is entrepreneur partner , M I Securities ,Sharekhan Email:[email protected]

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