Q.Distinguish between the following:
Primary market and Secondary market

The primary market deals with new securities issued by a company to raise fresh funds directly from investors, while the secondary market deals with the buying and selling of already-issued securities among investors. Both are parts of the capital market and support each other.

The primary market (also called the new issue market) is where companies raise long-term capital by issuing fresh securities — shares, debentures and bonds — for the very first time. Methods include a public issue (IPO/FPO), rights issue, private placement and preferential allotment. The money flows directly from the investors to the company, so this market helps in capital formation.

The secondary market is where securities that have already been issued in the primary market are bought and sold among investors. This trading takes place mainly on stock exchanges such as the BSE and NSE. No new capital is raised by the company here; the market simply provides liquidity and marketability to existing securities, allowing investors to buy and sell easily.