Investing: The Basics

Primary vs. Secondary Markets

The “stock market” is actually two markets. The primary market is where new securities are created and sold for the first time — the proceeds go directly to the issuing company or government, through instruments like IPOs, FPOs, rights issues, QIPs, and bond issuances. The secondary market is where existing securities are subsequently traded between investors — the issuer receives nothing from these trades. This guide walks through the IPO process (DRHP, book-building, investor categories, ASBA/UPI applications, and the T+3 listing timeline mandatory since December 2023), explains why the secondary market’s liquidity is essential to making the primary market attractive to investors in the first place, and flags the unregulated “grey market” that operates around IPOs as something to understand but approach with caution.