Types Of Share Markets
Now that we understand the stock market meaning, one key aspect of stock market basics is that one can trade on one of two market segments. In other words, there are two types of share markets in India. These are primary markets and secondary markets.
1. Primary Share Markets
A primary share market is a place where a company first gets registered with the goal of raising money and issues a certain amount of shares. The goal of being publicly listed on a primary stock exchange is to raise money. This where a company gets registered to issue a certain amount of shares and raise money. If the company decides to sell its shares for the first time, this is known as an initial public offering.
2. Secondary Market
Once a company’s new securities have been sold in the primary market, they are then traded in the secondary stock market. On the secondary market, investors get the opportunity to exit their investment and sell off their shares. Transactions on the secondary market mostly comprise trades where one investor chooses to buy shares from a separate investor at the prevailing market price.
Based on whatever prices the two parties agree to set or the prevailing market price, one investor will buy shares from another on a secondary market. Typically investors conduct these transactions through a broker or other such intermediary who can facilitate this process. Brokers offer these trading opportunities at different plans.