Capital Market

Capital market s are financial markets where trading between suppliers and lenders happen onstocks, bonds, currencies, and other financial assets. They occur mostly in long-term securities. There are two types of capital market:

• Primary market - the market for new shares or securities.If the stock is common and the company has never offered stock before, it is called the company’s initial public offering, or IPO.

• Secondary market - This deals with the exchange of prevailing or previously-issued securities among investors.The first buyer of a stock buys in the primary market, but if he decides to sell or trade that stock, he does so in the secondary market. Only initial purchases in primary markets have a direct effect on the stock-issuing company.

The capital market is essential for the economy of a country as, allocate risk, support economic growth and maintain financial stability. The Securities and Exchange Board of India (SEBI) has the regulatory authority for Indian securities market. The importance of Capital Market in India is:

• Mobilization of savings and acceleration of capital formation

• Raising long-term capital

• Promotion of industrial growth

• Ready and continuous market

• Technical assistance

• Reliable guide to performance

• Proper channelization of funds

• Provision of variety of services

• Development of backward areas

• Foreign capital

• Easy Liquidity