It is also called the market for public issues. This market refers to the raising of new capital (equity or debt i.e. equity shares, preference shares or debentures) by Corporates. Newly floated companies or existing companies may tap the equity market by offering public issues. When equity shares are exclusively offered to the existing shareholders, it is called "Rights Issue". When a Company after incorporation initially approaches the public for the first time for subscription of its public issue it is called Initial Public Officer (IPO). Successful floating of a new issue requires careful planning, timing of the issue and comprehensive marketing efforts. The services of specialised institutions, like underwriters, merchant bankers and Registrars to the Issue are available for the corporate body to handle this specialised job. Underwriters are financial institutions, which undertake to secure a committed quantum of equity/debt subscribed by the public, failing which they accept these shares/bonds as their own investment. It is referred to as the issue or that part of getting devolved on the underwriters. The transactions relating to the primary market i.e. public/rights issues are not carried out through stock exchanges. However there is effective regulation of SEBI at every stage of a public issue. This is done through merchant bankers, underwriters and registrars to the issue each acting at different points. Subscriptions to the new issue are collected at specific branches of one ore more collecting banks within a prescribed span of time, represented by the dates of opening of the issue and closing of the issue.

The Secondary Market deals with the sale/purchase of already issued equity/debts by the Corporates and others. The sale/purchase of these securities are carried out at the specific Stock Exchange(s), where the companies get their public issues listed for trading. The main function of the secondary market is to provide liquidity to the listed securities by enabling a holder to easily convert the securities into cash through the stock exchanges. An individual or an Institution can either hold a portfolio of securities as a permanent investment, or he can hold a basket of securities for short-periods and engage in buying and selling them to gain from market fluctuations. The secondary market also acts as an important indicator of the investment climate in the economy. When prices of existing securities are rising and there is large trading in the existing shares, such a boom in the secondary market correspondingly signifies that new issues, if floated at that point of time would be successfully subscribed.

The stock exchange is the place where the stocks, shares and other securities are bought and sold. The organisation of stock exchange include, among others authorised stock brokers. The authorised stock broker or their authorised agents used to meet at the Stock Exchange hall during business hours to buy or sell securities. However with the advent of electronic trading, brokers can now trade from the comfort of their respective offices from different stations. Only listed securities are traded through the stock exchange. The price of securities are settled through open bids and offered on the floor of the exchange.

The first organised stock exchange in India was started in Mumbai, known as Bombay Stock Exchange in 1877. Subsequently the Ahmedabad Stock Exchange was started in 1894. The Calcutta Stock Exchange was started in 1908. At present there are 23 recognised stock exchanges in different parts of the country. The National Stock Exchange (NSC) was started in November 1992. NSC is a nation-wide trading system conforming to international standards. It was set up to provide, fair efficient and transparent security trading system at all India level. It has its central office at Mumbai. Its members all over India are linked via satellite and cables to the system. From 1996 NSC is linked up with the Internet.

Another major Stock Exchange is the Bombay Stock Exchange (BSE). BSE and NSE are the leading Stock Exchanges in the country in terms of the number of securities listed and average turnover of business conducted.

Stock exchanges in India are regulated and controlled by the Securities Contracts (Regulation) Act,1956 (ACT NO.42 OF 1956). The objects clause describes the Act as "An Act to prevent undesirable transactions in securities by regulating the business of dealing therein, by providing for certain other matters connected therewith."

The Act defines a stock exchange as under:

"stock exchange" means any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities."

The contents of the Act consist as under:

1. Preliminary, giving the scope, jurisdiction and definition of legal terms.>

2. Recognised Stock Exchanges

The chapter deals with the procedure for granting recognition of stock exchanges by the Government. Power of Stock exchanges to make rules and bye-laws, supercession of stock exchanges etc. The central government on being satisfied that the rules, bye-laws of the stock exchange ensure fair-trading and protect investor's interest grants recognition to the stock exchange.

Supervision and control of recognized stock exchanges

Stock exchanges are subject to Government supervision and control. The Securities Contracts (Regulation) Act empowers the Government to make enquiries into the affairs of a recognized stock exchange, supersede the governing body, take over properties, to suspend its business, withdraw recognition and to take complete control. Presently the Government exercises these control through a statutory authority called SEBI (Securities and Exchange Board of India).