Q.What is the primary market? Explain any four methods of raising capital in the primary market.

The primary market's defining feature is that funds flow directly to the issuer, and companies can reach investors through several distinct methods.

The primary market (New Issue Market) is the segment of the capital market where new securities are issued for the first time, and funds raised flow directly to the issuing company or government.

Four of its methods:

1. Public Issue (IPO/FPO) — the company invites the general public to subscribe through a prospectus; an IPO is the first-ever public issue by an unlisted company, an FPO is a further issue by an already-listed company.
2. Offer for Sale (OFS) — existing shareholders (often promoters) sell their already-held shares to the public/institutions; the company itself receives no fresh funds.
3. Private Placement — securities are offered directly to a select group of institutional or high-net-worth investors, rather than the general public, making it faster and cheaper but reaching fewer investors.
4. Rights Issue — new shares are offered to existing shareholders in proportion to their current holding, usually below market price, protecting their proportional ownership.

Confusing "Offer for Sale" with a fresh public issue — in an OFS the company receives no new capital at all; only existing shares change hands from one holder to another.