Primarily there are two types oI stock markets the primary market and the secondary

market. This is true Ior the Indian stock markets as well. Basically the primary market
is the place where the shares are issued Ior the Iirst time. So when a company is
getting listed Ior the Iirst time at the stock exchange and issuing shares this process
is undertaken at the primary market. That means the process oI the Initial Public
OIIering or IPO and the debentures are controlled at the primary stock market. On the
other hand the secondary market is the stock market where existing stocks are brought
and sold by the retail investors through the brokers. It is the secondary market that
controls the price oI the stocks. Generally when we speak about investing or trading at
the stock market we mean trading at the secondary stock market. It is the secondary
market where we can invest and trade in the stocks to get the proIit Irom our stock
market investment.
Now these are the broadest classiIication oI the stock markets that is true Ior any
country as well as India. But the Indian stock markets can be divided into Iurther
categories depending on various aspects like the mode oI operation and the
diversiIication in services. First oI the two largest stock exchanges in India can be
divided on the basis oI operation. While the Bombay stock exchange or BSE is a
conventional stock exchange with a trading Iloor and operating through mostly oIIline
trades, the National Stock Exchange or NSE is a completely online stock exchange
and the Iirst oI its kind in the country. The trading is carried out at the National Stock
Exchange through the electronic limit order book or the LOB. With the immense
popularity oI the process and online trading Iacility other exchanges started to take up
the online route including the BSE where you can trade online as well. But the BSE is
still having the oIIline trading Iacility that is carried out at the trading Iloor oI the
exchange at its Dalal Street facility.
Apart Irom these classiIications there are also diIIerent types oI stock market in India
and the classiIication is made on the type oI instrument that is being traded at the
market. Both the Bombay Stock Exchange and the National Stock Exchange have
these types oI stock markets.
Equity market or the cash segment The Iirst type oI market is the equity market or
the cash segment where stocks are traded. In this type oI trading the buyers oI the
stocks book a buying order with a bid price and the order is executed through the
broker at a negotiated ask price oIIered by the sellers at the market. In most cases the
deal is closed or the stocks are brought at the best available ask price. In this type oI
trading the buyer pays the entire amount oI the value oI the stocks that is determined
by multiplying the number stocks with the current price oI the stock. Once the buyer
pays the entire amount along with the brokerage and taxes oI the transaction the
stocks are deposited to the DP account oI the buyer.
Derivative Market In the derivative market trading is done mainly through two
instruments the Future contract and the Option contract. In both these types oI
contracts the stocks are bought and sold in lot. The number oI stocks Ior each lot
depends on the valuation oI the stock and the valuation oI the lot is determined by the
number oI the stocks in a lot multiplied with the current market price oI the stock. For
trading in derivative market you have to buy either the Iuture contract or the option
contract. In a Iuture contract you are bound to close the deal within a speciIic time and
at a Iixed arte. While in case oI option contract you can also choose to ignore the
contract.

O Primary markets, also known as new issuance markets, are arenas in which securities are created.
A security is an entity such as a stock that is sold through financial markets. Primary markets allow
securities to be purchased in large quantities by entities such as companies, banks and underwriting
groups. ndividual buyers or mutual fund managers must wait for securities to reach the secondary
market to make purchases. Primary markets exist for stocks, bonds and energy.
SLock MurkeL
O Primary stock markets are an important business tool for start-up companies that do not have a lot of
financial backing. Small and medium businesses are permitted to enter the primary market and sell
stock to raise the funds needed to successfully begin doing business. Primary markets allow
companies to contact underwriting firms or larger companies to offer a predetermined number of
securities at a fair price. This is the PO, or nitial Public Offering, of these companies. Once
adequate funds are raised through the primary market, businesses are allowed to enter the
secondary market and sell stock to consumers. Third-party governing bodies oversee all primary
market securities sales.
onds MurkeL
O Bonds are loans in the guise of securities that, like stocks, are sold on both secondary and primary
markets. A bond allows its creator to borrow money from the market. For instance, an issuer creates
$1 million in bonds and sells those bonds to a group of underwriting banks, with the agreement to
buy the bonds back after five years at a particular mature value. The issuer receives $1 million. To
make a profit on the bonds, the issuer must use the loan of $1 million to make more than that
amount. Bonds sold on the primary market are, like stocks, offered to underwriters first, and are
often loans used to fund fledgling business ventures. Primary market bonds are sold in large
amounts such as $5,000, whereas secondary market bonds are sold in amounts closer to $100.
nergy MurkeLs
O Energy markets are not financial, but rather abstract arenas in which companies buy and sell
emission allowances. The European Union energy market has annual primary market sales for such
transactions. Each year companies throughout the European Union are allotted a predetermined
amount of energy emission allowances. f a company believes it will not need as many energy
allowances as it is allotted, it is permitted to sell excess allowances to other companies through a
primary energy market. Similarly, companies that believe they will need more energy emission
allowance than what they have been allotted are able to buy allowances through the primary market.


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