Equity market in India:-
Stock is the type of equity security with which most people arefamiliar. When investors (savers) buy stock, they become owners of a"share" of a company's assets and earnings. If a company is successful,the price that investors are willing to pay for its stock will often rise andshareholders who bought stock at a lower price then stand to make acapital profit. If a company does not do well, however, its stock maydecrease in value and shareholders can lose money. Stock prices are alsosubject to both general economic and industry-specific market factors. The equity market is classified as :-
(a) Primary market(b) Secondary market
(a) Primary market:-
The primary market provides the channel for creation of newsecurities through the issuance of financial instruments by publiccompanies as well as government companies , bodies and agencies.
Features of primary markets are:
This is the market for new long term capital. The primary market isthe market where the securities are sold for the first time. Thereforeit is also called the New Issue Market (NIM).
In a primary issue, the securities are issued by the company directlyto investors.
The company receives the money and issues new securitycertificates to the investors.
Primary issues are used by companies for the purpose of setting upnew business or for expanding or modernizing the existing business.
The primary market performs the crucial function of facilitatingcapital formation in the economy. The primary market issuance is done either through public issue orprivate placement . A public issue does not limit any entity in investingwhile in private placement , the issuance is done to select people. Interms of Indian Companies Act , 1956 as issue becomes public if it