Primary and Secondary Markets

Primary Market

A Company enters the Primary markets to raise capital. They issues new securities in Exchange for cash from an investor or buyer. If the Issuer is selling securities for the first time, these are referred to as Initial Public Offers (IPO's). Summing up, Primary Market is the means by which companies offer shares to the general public in an Initial Public Offering to raise capital.

Secondary Markets

Once new securities have been sold in the Primary Market, there should be some mechanisms exist for their resale, Secondary Market transactions are referred to those transactions where one investor buys shares from another investor at the prevailing market price or at whatever prices both the buyer and seller agree upon. The Secondary Market or the Stock Exchanges are regulated by the regulatory authority. In India, the Secondary and Primary Markets are governed by the Security and Exchange Board of India (SEBI).