| Definition |
Market where new securities are issued and sold for the first time. |
Market where previously issued securities are traded among investors. |
| Purpose |
To raise capital directly from investors. |
To provide liquidity and marketability to existing securities. |
| Issuer's Role |
Company directly receives the funds from investors. |
Issuer is not involved; trading occurs between investors. |
| Participants |
Companies, government bodies, and initial investors. |
Retail and institutional investors, traders, brokers. |
| Price Determination |
Fixed or discovered through book building during issue. |
Determined by supply and demand in the market. |
| Regulation |
Heavily regulated during issue by authorities like SEBI. |
Ongoing regulations apply through stock exchanges. |
| Intermediaries |
Merchant bankers, underwriters, and registrars. |
Brokers and dealers facilitate transactions. |
| Frequency |
Occurs occasionally when a company needs capital. |
Occurs continuously during market hours. |
| Examples |
IPO, FPO, Rights Issue, Private Placement. |
Buying or selling shares on NSE, BSE, or other exchanges. |
| Ownership Transfer |
First-time transfer from company to investor. |
Transfer between investors; no new ownership created. |
| Risk Level |
Higher due to lack of trading history. |
Lower due to historical data and active trading. |
| Objective |
To raise fresh funds for expansion or operations. |
To provide exit options and liquidity to existing investors. |
| Settlement |
No formal exchange settlement; allotment takes days. |
Settled through exchange systems like T+1/T+2 basis. |
| Visibility |
Less transparent; limited investor participation. |
Highly transparent with real-time price updates. |
| Liquidity |
Low liquidity; depends on subscription. |
High liquidity due to continuous trading. |
| Market Control |
Controlled by the issuing company and regulators. |
Controlled by market participants and forces. |
| Revenue to Company |
Company earns capital from the issue. |
Company earns nothing from trades between investors. |
| Documentation |
Prospectus and offer documents required. |
Minimal documentation; order and trade confirmations. |
| Investment Opportunity |
Entry point for long-term investors at issue price. |
Opportunities for traders and investors to buy/sell at market price. |
| Market Examples (India) |
SBI Cards IPO (2020), LIC IPO (2022). |
Daily trading of Reliance, TCS, Infosys on NSE/BSE. |
| Control of Pricing |
Set by issuer and underwriters. |
Set by investor demand and market behavior. |
| Duration of Activity |
Limited to the time of issue. |
Ongoing as long as the security is listed. |
primary market vs secondary market