Primary Market
Primary Market is the market which facilitates the issue of new shares or bonds both of private and public sector companies. The operations are regulated by SEBI. It facilitates in price discovery of the shares to be launched. Mainly, the investment banks act as underwriters and after analyzing lot of factors, and in consultation with the concerned company decides the opening price range of stocks that will be launched shortly. It assures ready funds for business expansion, modernization, etc and is the transaction directly between the investors and the company.
Initial Public Offer IPO
IPO is the term used to denote the process when any share is available in the Primary Market for the very first time, then onwards; they are traded in the secondary market.
Main functions of primary market
- It provides liquidity to the companies.
- It is an attractive way to channelize the savings of the households.
- The basic cycle of channelizing money from those have to invest to those who need it is established.
- It provides for easy access to the securities market to new investors.
Main players of primary market
- Issuers of shares or the company
- Underwriter or Investment banker
- General public who invests
