The stock market is a crucial part of the Indian financial system that facilitates the trading of securities such as stocks, bonds, and derivatives. The Indian stock market consists of two primary segments – the primary market and the secondary market, which are regulated by the Securities and Exchange Board of India (SEBI).
Primary Market:
The primary market is the market where securities are issued for the first time by companies through Initial Public Offerings (IPOs) and Further Public Offerings (FPOs) to raise capital. In the primary market, companies sell their securities directly to the investors through various modes of issue like Fixed Price Issue, Book Building Issue, etc. Investors who buy securities in the primary market can become shareholders of the issuing company and have a stake in its future profits and growth.
Secondary Market:
The secondary market is the market where previously issued securities are traded between investors. The secondary market provides liquidity to the investors as they can sell their securities in the market and realize their investment. In India, the secondary market is dominated by the two major stock exchanges – the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Stock Exchanges in India:
The National Stock Exchange (NSE) is the largest stock exchange in India in terms of market capitalization and trade volumes. It was established in 1992 and is located in Mumbai. The NSE operates on an electronic trading platform called NEAT (National Exchange for Automated Trading) and offers trading in equities, derivatives, currency, and debt securities.
The Bombay Stock Exchange (BSE) is the oldest stock exchange in India and was established in 1875. It is located in Mumbai and is popularly known as the “BSE Sensex” or “Bombay Stock Exchange Sensitive Index”. The BSE operates on an electronic trading platform called BOLT (BSE Online Trading) and offers trading in equities, derivatives, currency, and debt securities.
In conclusion, the primary market and the secondary market are crucial components of the Indian stock market. The primary market allows companies to raise capital by issuing securities, while the secondary market provides liquidity to investors by allowing them to trade previously issued securities. The National Stock Exchange and the Bombay Stock Exchange are the two major stock exchanges in India that facilitate trading in various securities. The stock market is regulated by the Securities and Exchange Board of India (SEBI) to ensure transparency, fairness, and investor protection.