Categories of stock market
Primary market coves new public issues of all categories of securities, including G-sec, bonds and equity/preference capital.

Secondary market, which deals with already issued securities of all types. Transactions of the secondary market are carried out through one of the authorised stock exchanges, where the traded security is listed.
The Primary Stock Market

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, debentures or Rights Issues) 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 or more collecting banks within a prescribed span of time, represented by the dates of opening of the issue and closing of the issue.

Secondary Stock Market
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 Exchanges, 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.