Primary Market provides an opportunity to the issuers of securities, Government and corporation to raise the resources to meet their requirement of investment. It is also known as new issue market. Capital raising purpose company sell his stock in primary market and this transaction between securities issuer and buyer (public).
Capital raise resource via IPO, Rights issue,Preferential Allotment and Private placement, it is also Primary Market.
IPO : Company want to raise capital for growth and company sell stock first time in public it is known as Initial Public Offer. Initial Public Offer also known as Primary Market.
Example : Company or Government securities like private company Tata, Birla, Reliance and Government company like ONGC, BHEL those are all first time enter in capital raising via IPO.
Rights Issue : Company wants to raise extra capital purpose issue Rights Issue share. So company invite the existing share holders to purchase additional shares.
Preferential Allotment : Preferential basis company allotted shares or securities to a selective group of Investors.
Private Placement : Private Placement is the opposite of the Public Issue. Private Placement share sale on the open market and the capital raising purpose sale of securities small numbers of selective investors. Investor involved Private Placement usually Pension Fund, Mutual Fund, Insurance Company and Bank.
Once complete Initial Public Offer via company sell the stock, after the company shares buy and sell done by public in Secondary Market. After completion of Primary Market company share listed Secondary Market in stock exchange like National Stock Exchange (NSE), Bombay Stock Exchange (BSE).
