The market has two layers. In the primary market, a company issues new shares and receives the money. In the secondary market, investors trade those shares among themselves, and the company is not involved.
| Primary market | Secondary market | |
|---|---|---|
| Who sells? | The company (or selling shareholders) | An investor who already owns the shares |
| Who receives the money? | The company (or the selling shareholder) | The selling investor |
| Typical event | IPO, FPO, rights issue | Everyday trading on the NSE and BSE |
More ways to raise money in the primary market
- IPO — the first public offer of shares by a company.
- FPO (Follow-on Public Offer) — a further public offer by a company that is already listed.
- Rights issue — an offer of new shares to existing shareholders, usually at a set ratio and price.
'FPO' simply means a company that is already public issues more shares. A 'rights issue' gives existing owners the first chance to buy new shares, so they can avoid being diluted.
Fictional example: after its IPO, Sunrise Motors Ltd later needs more money and makes a follow-on public offer. Both the IPO and the FPO happen in the primary market. Trading of its shares the next day on the NSE or BSE happens in the secondary market.
IPO simulator
A company raises money by selling new shares to the public at a fixed issue price.
100
1 Cr
3×
500
Issue price per share
₹100
Capital wanted ÷ shares offered
Total demand
300 Cr shares
Subscription: 3×
Your expected allotment
166 shares
Oversubscribed 3×, so allotment is scaled back
Why you may not get all the shares you asked for
When an issue is oversubscribed, shares are allotted proportionally. Here you applied for 500 shares but demand was 3× the supply, so roughly 33% of applications are met.
An IPO moves money into the company — this is the primary market. Once the shares list and trade between investors, that is the secondary market.
A company raising money does not tell you whether its shares are good value. That judgement depends on the business, the price and your own goals — always educational context here, never a recommendation.