1. Primary Market

The primary market is the market where new securities are issued by companies to raise fresh capital. Investors buy shares directly from the issuing company, and the funds raised go to the company itself. Initial Public Offerings (IPOs), Follow-on Public Offers (FPOs), Rights Issues, and Private Placements are key instruments of the primary market. Its main objective is capital formation for expansion, investment, and debt reduction.

2. Secondary Market

The secondary market is the market where already issued securities are traded among investors. The company does not receive any funds from these transactions. It operates through stock exchanges such as BSE and NSE and provides liquidity, price discovery, and transparency to securities, enabling investors to buy and sell shares easily.

 Key Differences 

1. The primary market deals with new issue of securities, while the secondary market deals with trading of existing securities.
2. The primary market aims at raising capital, whereas the secondary market ensures liquidity and market efficiency.
3. Transactions in the primary market occur between company and investors, while in the secondary market they occur between investors.
4. Prices in the primary market are issue prices, while prices in the secondary market are market-driven.
5. The primary market is occasional and limited, whereas the secondary market is continuous and ongoing.