While investing in the share market, we buy the stocks of a company from another investor. Similarly, while selling, the stock held by us is sold to other investors. Generally, in the stock market, an investor buys and sells stock from another investor. This process is understood as a share market in a common language. But do you know that these are secondary markets and before that, the company’s stock comes into the market?
Whenever a company brings its stock to the common people for the first time, this process is called an IPO. In this process, the investors buy the stocks of the company for the first time. When the IPO of any company comes into the stock market for the first time, it is called the primary market. After which the stocks of the company come back into the market.
In the second round of investing, investors offer the company’s stock to other investors. Offering stocks of the company in this process is called secondary sharing or secondary offering. The market in which this process takes place is also called the secondary market. In this, one investor buys or sells shares from another investor. Shares are offered in the secondary market for the first time after the IPO.