SUMMARY

Primary market- means the selling of the shares of a company, for the first time, to the
public in the country's capital markets.
Secondary market- it is a market where securities are sold for second time.

Difference between Primary market and secondary market

• Functional Difference
• Organizational difference
P.M- No tangible place and controlled by Commercial bank.
S.M.- It has physical setup and controlled by SEBI.
• Nature of contribution to finance
P.M.- Direct
S.M.- Indirect

Functions of Primary Market

1) Origination
 Investigation and analysis and processing of new proposals.
 -Preliminary investigation- careful study of the technical, economic, financial and
legal aspects
 Service of an advisory-
 Determination of class of security to be issued and price of issue in terms of
market conditions.
 Magnitude of issue
 The timing of floating an issue.
 Method of flotation.
 Techniques of selling & so on.
2) Underwriting
Method of underwriting
 Standing behind the Issue
 Outright Purchase
  Consortium Method
Types of underwriters:-
A). Institutional underwriters: - LIC, UTI, IDBI, ICICI
B). Non institutional Underwriter: - brokers

3) Distribution

Methods of floating new issue

• Right issue
• Public issue
• Private placement
• Offer for sale