A stock market is a place where people buy and sell shares (ownership) of companies. When you purchase a share, you become a small owner of that company.
In India, major stock exchanges include the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
🔹 Types of Stock Market
The stock market is mainly divided into two parts:
1. 📌 Primary Market (New Issue Market)
This is where companies sell shares for the first time to the public.
- Companies raise money by issuing shares through an IPO (Initial Public Offering)
- Investors buy shares directly from the company
- Purpose: To raise capital for business expansion, projects, etc.
👉 Example:
When a company launches an IPO, you apply and get shares directly from that company.
2. 📌 Secondary Market (Stock Exchange Market)
This is where already issued shares are traded among investors.
- Buying and selling happens between investors (not with the company)
- Takes place on stock exchanges like BSE & NSE
- Prices change based on demand and supply
👉 Example:
If you buy shares of Reliance Industries from another investor through NSE/BSE, it is part of the secondary market.
🔁 Key Difference (Simple View)
| Feature | Primary Market | Secondary Market |
|---|---|---|
| Shares Sold By | Company | Investors |
| Purpose | Raise funds | Trading |
| Example | IPO | Buying/selling on NSE/BSE |
| Price | Fixed by company | Changes with demand & supply |
🧠 Easy Way to Remember
- Primary = First Sale (Company → Investor)
- Secondary = Resale (Investor → Investor)