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1. PRIMARY MARKET
VS
SECONDARY MARKET

2. Security Analysis | Primary Market v/s Secondary Market Presentation
CONTENTS

Primary Market
Meaning
What is new Issue market ?
IPO
Book Building

Secondary Market
Meaning
Stock Exchange
SEBI

3. Security Analysis | Primary Market v/s Secondary Market Presentation
Primary Market
Primary market is a market for raising fresh
capital in the form of shares and debentures.
It allows for the formation of capital in the
country and the accelerated industrial and
economic development.
Public limited companies who are desirous of
raising capital funds through the issue of
securities approach this market.
The Public limited and government companies
are the issuers and individuals, institutions and
mutual funds are the investors in this market.

4. Security Analysis | Primary Market v/s Secondary Market Presentation
NEW ISSUE MARKET
Meaning :



It refers to the set-up which
helps the industry to raise the
funds by issuing different types
of securities.
These securities are issued
directly to the investors (both
individuals as well as institutional)
through the mechanism called
primary market or new issue
market.
The securities take birth in this
market.

5. Security Analysis | Primary Market v/s Secondary Market Presentation
FUNCTIONS OF NEW ISSUE MARKET



The main function of new issue market is
to facilitate transfer resources from
savers to the users.
It plays an important role in mobilizing the
funds from the savers and transferring
them to the borrowers.
The main function of new issue market can
be divided into three service functions:
1. Origination.
2. Underwriting.
3. Distribution.

6. Security Analysis | Primary Market v/s Secondary Market Presentation
METHODS OF FLOATING NEW ISSUES
The various methods which are used in
the floating of securities in the new
issue market are:




Public issues.
Offer for sale.
Placement.
Right issues.

7. Security Analysis | Primary Market v/s Secondary Market Presentation
Public issues or Initial public offering (IPO)
When a company makes public
issue of shares for the first
time, it is called Initial public
Offer.
The company has to appoint
underwriters in order to
guarantee the minimum
subscription.
An underwriter is generally an
investment banking company.
The underwriter agrees to pay
the certain price and buy a
minimum number of shares, if
they are not subscribed by the
public.

8. Security Analysis | Primary Market v/s Secondary Market Presentation
E-IPO
The companies are now
allowed to issue capital to
the public through the online system of the stock
exchanges. For making such
on-line issues, the companies
should comply with the
provisions contained in
Chapter 11A of SEBI(
Disclosure and Investor
Protection) Guidelines,

9. Security Analysis | Primary Market v/s Secondary Market Presentation
Book-Building/Price Band



It is a process used for marketing a
public offer of equity shares of a
company.
Book building is a process wherein the
issue price of a security is determined
by the demand and supply forces in the
capital market
The Price at which securities will be
allotted is not known in advance to the
investor. Only an indicative price range
is known. (Also called price band and it
should not be more than 20% of the
floor price).

10. Security Analysis | Primary Market v/s Secondary Market Presentation
Secondary Market



The secondary market is that
market in which the buying and
selling of the previously issued
securities is done.
The transactions of the
secondary market are generally
done through the medium of
stock exchange.
The chief purpose of the
secondary market is to create
liquidity in securities.

11. Security Analysis | Primary Market v/s Secondary Market Presentation
What are the products dealt in
Secondary Markets ?





Equity shares.
Debentures.
Government securities.
Bonds.
Commercial Papers.

12. Security Analysis | Primary Market v/s Secondary Market Presentation


The primary focus of risk
management by SEBI has been to
address the market risks,
operational risks and systemic
risks.
SEBI has been continuously
reviewing its policies and drafting
risk management policies to
mitigate these risks, thereby
enhancing the level of investor
protection and catalyzing market

13. Security Analysis | Primary Market v/s Secondary Market Presentation




Step 1.
to trade
Investor / trader decides
Step 2. Places order with a
broker to buy / sell the required
quantity of respective securities
Step 3. Best priced order
matches based on price-time priority
Step 4. Order execution is
electronically communicated to the
broker’s terminal

14. Security Analysis | Primary Market v/s Secondary Market Presentation




Step 5. Trade confirmation slip
issued to the investor / trader by
the broker
Step 6. Within 24 hours of
trade execution, contract note is
issued to the investor / trader by
the broker
Step 7.
Pay-in of funds and
securities before T+2 day
Step 8. Pay-out of funds and
securities on T+2 day

15. Security Analysis | Primary Market v/s Secondary Market Presentation
Different between primary
market and secondary market
Primary market




In primary markets,
securities are bought by
way of public issue
directly from the
company.
New issue are available in
primary market.
The primary is a
middlemen.
New issue of common
stock;bonds and
preferred stock are sold
Secondary
market
 In Secondary



market share are traded
between two investors.
Securities usually bought
and sold through the
secondary market.
The secondary market are
broker and dealer.
The secondary market
stock and bonds issues
are sold to the public.

16. Security Analysis | Primary Market v/s Secondary Market Presentation
Conclusion
The lack of an advanced
and vibrant capital
market can lead to
underutilization of
financial resources. The
developed capital market
also provides access to
the foreign capital for
domestic industry. Thus
capital market definitely
plays a constructive role
in the over all
development of an
economy.

17. Security Analysis | Primary Market v/s Secondary Market Presentation
Group Members :
Name :
Roll. No
Pankaj Bali
58(FM.12.56)
Udesh Poojary
22(FM.12.22)
SIES College, Nerul,
Navi Mumbai
S.Y.Bfm
: