The capital market which was initially controlled and organized by the Controller of Capital Issues act and then it was replaced by the Securities Exchange Board of India for the governance of capital market in India. The capital market in India is known as regulated in spheres by SEBI then and there.
The organised capital market is bifurcated into two categories viz Primary market and Secondary market.
Primary market: It is the market for the fresh issuance of securities by the new as well as existing companies, in order to raise the capital from the investors. The Primary market is further classified into many segments
Initial Public offering: As a new company registered under the Companies Act 1956 is permitted to raise the capital from the market through the abridged prospectus.
Public issue: It is another mode of raising the capital from the common public by the existing companies.
Private placement: During the issue, the larger investment houses are invited for the subscription of the issue of securities in bulk quantities at a discount price prior to the issue. After the issue, according to the investment policy of the Institutional investors, they sell them at higher price to the individual investors. This facilitates the institutional investors to book profits through the process of private placement.
Underwriting: It is another mode of issuing the securities during the issue, more particularly this mode of issue is found to be an avenue to off-load the risk of managing the issue of securities as well as to secure the issue as fully subscribed.
Secondary market: It is the market for the securities which are already available in the market, to buy and sell among the players. This is the market further classified into two different categories viz mutualisation and demutualisation of stock exchanges.
Mutualised Stock exchanges: These are the exchanges never have any distinction among the members, management and governing body of the stock exchange. These are purely administered by the members/brokers of the stock exchange, e.g.,. Traditional stock exchanges.
Demutualised stock exchanges: These are separate distinct faces among themselves. The roles and responsibilities of the brokers, governing body members and people in the management are clearly defined and performed by them without any ambiguity e.g. OTCEI, NSE and so on.
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