So let’s dive right in and start with the basics.
Sabse pehle ye jaante hain ke primary aur secondary markets hoti kya hai. Primary market use kehta hain jahan par aapka financial asset jaise ki shares sabse pehle issue hota hai. Jab koi company first time securities ka issue karti hai - ye process primary markets me hota hai.
First time securities issue kayi forms me ho sakti hain- it could be an Initial Public offering or IPO for short. It could be rights issue of shres. Kabhi kabhi companies do a bonus issue of stocks. There could also be offers for sale. Mode of issue jo bhi ho, agar ye fresh issue hai aur funds long-term capital creation ke goal ke liye use honge, then the market is primary market.
On the other side we have secondary market. Ise hum commonly stock market bolte hain, jahan stock exchange par listings hoti hain. Secondary market me hum shares, bonds, debentures, options, futures, commercial papers aur treasury bills jaise financial assets buy aur sell karte hain. Secondary market me trading short aur long-term - dono ke liye hi ki jaa sakti hai.
Now that you have an idea of primary and secondary markets, aap soch rahe honge ke inhe basic form aur nature ke alawa bhi inme koi difference hai?
Primary aur secondary market ek doosre se kaafi different hain aur inn differences ke baare me hum ab detail me baat karenge.
Sabse pehle consider kariye the nature of the trades. Primary market me aap zara sochiye ke aap kis tarah ke transactions karte hain? Kyuki ye traades company aur public ke beech hote hain, they are more direct. Koi bhi aur trader ya investor involved nahi hota - company apne shares offer karti hai, aur aap khareed lete hain. Simple. Lekin secondary market me trades indirect hote hain. This means ke aapke trades directly company ke saath nahi hote, balki doosre traders ke saath hote hain. Aap stock exchange pe jaakar doosre traders ke se stocks khareedte hain ya doosre traders or investors ko stocks bechte hain. Is case me stock exchange, stockbroking platform aur doosre trader ya investor ki involvement rehti hain.
Doosra paramter jiske basis pe primary aur secondary market different hote hai is the element of financing. Jab aap primary market me company ko directly apna paisa dete hain in return for shares or ownership, aapka paisa directly company ko fund karta hai. Ussi paise ke badle me aapko securities issue ki jaati hain. Iska sabse common aur simple example IPO hai.
Lekin secondary market me sirf trading hoti hai. Kyuki aise transactions me company involved hi nahi hoti, inn transactions se company ko koi funds nahi milte, so the element of financing is missing.
Ek transaction me kon kon involved hai - ye bhi primary aur secondary market me major difference hota hai. Primary market me company prospective investors ko assets issue kar rahi hai, toh do parties involved hoti hai: ek vo company jo funds raise kar rahi hai and another is the set of interested investors who are willing to purchase them. Secondary market me, on the other hand, company ki koi involvement nahi hoti. Buying aur selling of stocks or other assets means only the buyers and sellers are involved. Inme included hote hain retail investors aur traders, institutional investors aur traders.
Another parameter to differentiate between primary and secondary market is the number of trades possible in each. Simple si baat hai: primary market me sirf initial shares issue hote hain - for the very first time. So the only trade that happens in a primary market is this: company issues the asset and investors buy them
Secondary market me kayi tarah ke transactions hote hain - assets kayi baar khareede aur beche jaate hain, kayi baar same trader ya investor assets badalte hain. Yahan transactions par koi limit hi nahi hoti!
Another difference between primary market and secondary market lies in the nature of asset prices. Primary market me shares ya doosre assets ka price fixed hota hai. Company uss price pe offer karti hai aur investors khareedte hain. Lekin secondary market me toh saara funda hi price change ka hota hai. Aisa isliye ke secondary market me shares ke prices market forced, demand, supply, economic changes, political factors se influence hokar change hote rehte hain. Iss price change ko predict karke hi traders intraday profits kamate hain aur investors long-term investments karte hain with the ultimate goal of earning profit!
Jab hum baat profits ki kar hi rahe hain, toh let us look at the profits in both the markets. Dono hi markets me Jab bhi koi trade kiya jaata hai, toh uska maqsad profit hota hai. Fark ye hai ke primary markets me ye profit funds ke form me issuing company ke paas jata hai - basically because they are the sellers in this situation. Aur secondary markets me traders profit kamate hai by the sale or purchase of shares.
Dono markets me sirf players involved hi different nahi hote, balki intermediaries bhi different hote hain. Kaise? Jab primary market me company apne shares issue karti hai, toh underwriters intermediaries hote hain. Underwriters ka kaam hota hai shares ki pricing karna aur shares issuing ka process sambhalna. In fact, agar ek company apne shares puri tarah nahi sell kar paati toh underwriters bache hue shares khareed bhi leta hai. On the other hand, secondary market me intermediary hote hain stockbrokers ya depository participants, jo ki traders ko shares khareedne aur bechne me madad karte hain.
Toh ab aapne jaan liya ke primary aur secondary market me kya fark hota hai. Ofcourse, dono hi markets aapas me connected bhi hain- jo shares aap pehli baar primary market me khareedte hain, unhe aap baad me secondary markets me sell bhi kar sakte hain. In both the markets, the key to profits is ke aap thorough research karke hi transactions aur trades karein!