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What Is Primary Market And Secondary Market?
Stock Market Trading | July 28

What Is Primary Market And Secondary Market?

In the financial market, new securities are regularly issued to the public. There are numerous financial products and services available to suit the individual needs of the public. These financial products are traded on the capital market, which is classified into two interdependent segments:

·         Primary Market

·         Secondary Market

Let us understand the meaning of both the terms:

Meaning of Primary Market

When the investors invest in securities by purchasing it directly from the public, it is called primary market. In this market, the company sells its securities which can be shares, bonds, etc. to the public for the first time. The company generally sells its securities in the primary market via Initial Public Offering (IPO).

Meaning of Secondary Market

A secondary market is a place where the securities of the companies are traded after they have been offered to the public in the primary market. The price of the securities (shares) keeps on fluctuating and never remains constant. Secondary markets are generally the stock markets like National Stock Exchange (NSE) or Bombay Stock Exchange (BSE).

After understanding the meaning of both the terms, let us understand the difference between primary market and secondary market.

Difference Between Primary Market and Secondary Market

Primary and Secondary market are very different from each other. In the primary market, the buyer can purchase the securities directly from the company when it brings the new issue. However, this is not the case in the secondary market. In the secondary market, the buying and selling of shares are between the investors through stock exchanges. There is no role of issuing company in the secondary market. The primary market becomes secondary market when the shares allotted by the company directly to the investors are listed on the stock exchanges for buying and selling.  

After knowing the difference between the primary and secondary markets, it is important to know who trades in the primary and secondary market.

Who Trades In Primary and Secondary Capital Markets?

The investors in primary and secondary markets are different from each other because they have different expectations and purposes. The secondary market investors purchase the securities only after the holders of security in the primary market sell them. In the primary market, investors invest in companies by applying for the IPO either for long term investment or for listing gains. On the other hand, the secondary market investors include traders and short/long term investors.

Conclusion

Indira Securities is a renowned name in providing financial services. We provide services to investors who are looking to invest in primary market as well as secondary market. By opening a demat account with us, an investor can apply for Initial Public Offering (IPO) and become a participant in the primary market. Not only this you can invest and indulge in regular trading in secondary markets by having a demat account with us. We guide our client on “How to Identify Growth Stocks”.  Reach us via email or call for any further information.

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