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OTC:
OVER THE COUNTER MARKET.
OTCEI, or Over the Counter Exchange of India:
Approved by the Government of India in 1989, it came into operation in 1991. It has no particular marketplace or stock exchange floor. In OTC, buyers and sellers operate on negotiable prices acceptable to both. Inactive issues, less liquid shares, issues with limited public holding, and issues listed with the OTC comprise the OTC market. The objectives of the OTC are liquidity, fixed and fair price, simplified process of buying and selling, quick disposal of orders, and a cheaper method of public sale of new issues.It is a ringless exchange, located in a number of places in a city, and many large towns, interlinked by a computer network. The investor has to go to one such counter, watch the quotations on electronic display board, and make deal at a very reasonable price. He is not price-blind; he knows exactly at what price the transaction has been made.The General Insurance Corporation has set up a number of counters all over the country. The promoters of OTCEI were ICICI, UTI, IFCI, IDBI, SBI Capital Markets, Canbank Financial Services, LIC, and GIC.
Oridnary Share:
Equity share with full voting rights and entitlement to dividends, rights, and bonus issues.
Other Income:
Apart from income from a company's normal activities, profit may accrue on other heads, such as interest income, investment income, profit from sale of assets other than INVENTORY, gain on foreign exchange transactions, rent income, etc.
Out of the Money Option:
Contract on a share whose current market price is lower than the strike price of a call option, or above the striking price of a put option. See IN THE MONEY.
Out-of-Favour Industry or Shares:
Owing to the changing economic climate of a country, some industries, once quite profitable, may fall into evil times and languish. Their shares then become unpopular with the investors. Passenger cars and TV manufacturing do not at the moment hold out high prospects of profit, and their shares have fallen. Out-of- favour shares tend to have low P/E RATIO. CONTRARIANS often pick up such shares in the expectation of a change in the situation, resulting in an appreciation of the price of such shares.
Outcry Market:
The commodity market, where every deal has to be shouted out, and the outcry is to be heard to be believed.
Outside Broker:
Broker who is not a member of the stock exchange.
Over the Counter Market or OTC Market:
Local name OTCEI, or Over the Counter Exchange of India; a market where shares which are not listed on the stock exchange are traded. These shares are traditionally those of smaller companies which do not fulfil the listing requirements of a stock exchange; however, companies which prefer to have their shares traded on this market may do so. A perfectly legal market. See also OTCEI.
Overbought:
Term used in TECHNICAL ANALYSIS to indicate a sharp rise in the price of a share or shares as a result of hectic buying by investors and speculators in the hope of further rise. An overbought share or market is prone to an imminent CORRECTION, as there are few buyers left to push the price up any further.
Overcapitalization:
Having more capital than a company needs for business. If it is a leveraged company, it will have an unnecessarily high interest burden; also, its profits, by way of dividends, will be thinly spread among the shareholders. The remedy lies in paying off long-term debts or investment or buying back the company's own shares from the market.
Overheated Market:
A stock market situation in which too mucvh money is chasing too few shares, leading to sharp price rises, and frequent GAPS. This is the last phase of a bull cycle and it usually portends an imminent onset of a bear cycle.
Oversold:
A term used in TECHNICAL ANALYSIS to indicate that the price of a share or shares has fallen too fast as a result of excessive selling and there are few sellers left. An oversold share or market is prone to an imminent rise in price. An oversold situation can be detected by a GAP in which the opening price is considerably below the closing price of the previous trading day.
Oversubscribed Issue:
When there are more shares applied for than are to be issued. In such cases a minimum number of shares, say, 100 shares, is allotted to lucky applicants whose names may come up in the drawing of lots, where the odds depend upon the number of shares applied for, i.e., the larger the application, the better the odds. In a bull market, good public issues tend to get oversubscribed, sometimes more than 97 times (e.g., Tata Honeywell). See HOT ISSUE.
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