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Capital Market.
Primary and Secondary Markets
The capital market has two connected parts:
Primary Market (New Issuers): Companies raise capital from investors through Initial Public Offerings (IPOs), debt or equity sales, or rights issues.
Secondary Market (Stock Market): Investors buy and sell existing shares or instruments, providing liquidity to the market. Stock exchanges facilitate trading and settlement.
In short, companies raise capital in the primary market, and investors trade those securities in the secondary market.
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Primary and Secondary Markets: Interconnected and Interdependent
A thriving secondary market boosts capital formation and primary market growth. This assures primary market investors of a continuous market where they can liquidate their investments.
Key Players:
Primary Market:
Merchant bankers
Financial institutions
Mutual funds
Individual investors
Foreign institutional investors (FIIs)
Secondary Market:
Mutual funds
Financial institutions
Foreign institutional investors (FIIs)
Stock exchanges
Stockbrokers
Individual investors
Capital Market Intermediaries:
Registrars and Transfer Agents
Custodians
Depositories
These intermediaries provide essential infrastructure services to both markets, supporting their smooth operation.
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