Industrial Securities Market:
The Industrial securities market refers to the market for shares and bonds of the existing companies, as well as those of new companies.
This market is further divided into New Issue Market (NIM) and Old Issue Market. The New Issue Market is also called Primary Market. Likewise, the Old Issue Market is also called Secondary Market or Stock Exchange.
However, it is important to emphasize that the New Issue Market and Stock Exchange are inter-linked and work in conjunction with each other. Although they differ from each other in the sense that the New Issue Market deals with ‘new securities’ issued for the first time to the public and Stock Exchange deals with those securities which have already been issued once to the public.
(i) Primary Market:
The primary market is concerned with the floatation of new issues of shares or bonds. The firms floating new issues to raise funds may be new companies or existing companies planning expansions. The Merchant Banking Division of a commercial bank is asked by the company to advise on the viability Of floatation of an issue before an issue is actually floated in the market.
The stock issuing company also approaches the institutional underwriters like LIC, UTI, ICICI and IDBI, to ensure the marketability of an issue. The underwriters like LIC and UTI purchase securities from the New Issue Market to hold these in their own asset portfolio.
In Indian capital market, there are two main ways of floating new issues:
(a) Public issues, and
(b) Rights issues.