(PDF) What is primary market?

Introduction
What is primary market?
Generally, the personal savings of the entrepreneur along with contributions from friends and
relatives are pooled in to start new business ventures or to expand existing ones.
However, in the case of capital-intensive or big ventures, this may not be possible since the
entrepreneur (promoter) may not be able to pull in his share of contribution (equity), which
may be substantial, even after taking out a term loan from a Financial Institution/Bank. As a
result, capital access is a big restriction for starting or developing businesses on the internet.
Instead of relying on the minimal investments of a small group of friends and family, the
investor has the option of collecting funds from the general public around the country/world
by issuing) shares in the company. For this reason, the promoter can issue an offer document
outlining the track record, the organisation, the scope of the project, the business model, and
other pertinent information.
If the investor is satisfied with the proposed enterprise, he will invest and thereby become a
shareholder. Also minimal sums available with a vast number of people can be converted into
usable resources for corporations by consolidation. The primary market is a market where
companies sell new shares in order to raise funds for long-term capital needs.
The businesses that sell their shares are referred to as issuers, and the act of selling shares to
the general public is referred to as a public issue. Various intermediaries are involved in this
operation, including Merchant Bankers, Bankers to the Issue, Underwriters, and Registrars to
the Issue, among others. Both of these intermediaries are licenced with SEBI and must follow
the rules in order to protect investors.
As a result, the Primary Market is the market that allows issuers (government companies or
corporations) to collect money through the issuing of new securities. Securities (financial
instruments) may be sold at face value or at a discount / premium in a variety of ways, including
shares, debt, and so on. They can be sold in both the domestic and foreign markets.
Features of primary market includes
• The firm issues the shares directly to the holders.
• The capital is received by the firm, which then issues new shares to the investors.

• Companies use primary markets to launch new projects or businesses, as well as to
extend or modernise existing ones.
• The primary market plays a critical role in the economy by fostering capital
accumulation.
Objectives
• To determine the relationship between primary and secondary stock and debt indexes
and the number of initial public offerings (IPOs) of internal and external equity and
debt securities.
• To investigate the effect of secondary market benchmarks on primary market stock and
debt problems.
• To assess the effect of currency volatility on ECB and FCCB main market securities.
• To determine the effect of GDP on DEFTY and CBI.
• To provide a connection between primary and secondary market benchmarks.o
Primary market is further divided into equity and debt market
1. Equity market
Simply put, equity is a portion of a company's ownership. A claim on the company's assets
and profits is known as equity. Your ownership share in the business grows as you buy
more shares. It doesn't matter whether you say bonds or equity; they all mean the same
thing.
Holding a company's stock entails being one of the multiple investors (shareholders) of the
company, with a claim (albeit normally minor) for all the company owns. Yes, this means
you legally own a sliver of any piece of furniture, trademark, and deal the corporation has
ever produced.
A stock certificate is the physical representation of a stock. This is a sheet of paper that
proves you own the property. Today, shares are kept secure in dematerialized form, i.e. in
electronic form. This is done to make trading of the shares smoother. If an individual had
to sell their shares in the past, they had to personally take the certificates down to the
brokerage.

Trading is now as simple as a mouse click or a phone call, making life simpler for all. Being
a shareholder of a public corporation does not imply that you have a voice in how the
company operates on a daily basis. The company's management is responsible for
increasing the firm's valuation for its owners. In the event that this does not occur,
shareholders will agree to have the management fired, at least in principle. Individual
investors like you and me don't buy enough stock to have a significant impact on the
business.
2. Debt market
The debt market is concerned with securities that have a steady stream of revenue. Any
financial environment in which debt securities are traded is referred to as the debt market.
Mortgages, promissory notes, bonds, and Certificates of Deposit are also examples of debt
instruments.
• A debt market creates a structured marketplace in which these forms of debt can be
exchanged easily by parties that are involved.
• It creates a variety of fixed-income financial instruments and encourages their
trading.
• Reduce the government's borrowing costs and allow the mobilisation of capital at a
fair rate.
• Increase the number of funding options available to both public and private sector
programmes, and reduce the reliance on institutional finance.
• Increased wealth mobilisation by releasing illiquid retail investments like gold.
• Assist with the development of a dependable yield curve.
• The debt market is known by various names depending on the types of debt
instruments traded.
• The debt market can be referred to as a bond market if it primarily deals with the
trade of corporate bond issues.
• The loan market can be referred to as a credit market if the primary target of trade
is mortgages and notes.
• The market is referred to as a fixed income market when fixed prices are associated
with debt instruments.

Debt vs equity
What is the purpose of issuing stock to a company? Why will the creators distribute money
to tens of thousands of individuals while they could keep all of the profits for themselves?
The explanation for this is that any business would need to collect funds at some stage.
Companies may either borrow money from others or collect money by selling a portion of
the business, a process known as stock issuance.
Issue of stock, on the other hand, is referred to as equity funding. It is advantageous for the
company to issue stock so it eliminates the need for the company to repay the money or
make interest charges along the way. The only thing the owners get in exchange for their
investment is the expectation that their shares will one day be worth more than they paid
for them. The initial public offering (IPO) is the first public listing of a stock that is sold by
a private corporation.
It's critical that you consider the difference between debt and equity finance for a company.
When you buy a mortgage fund like a loan, you are given a refund on your money (the
principal) as well as promised interest payments. For an equity fund, though, this is not the
case. By being a shareholder, you take on the burden of the corporation failing - just like a
small business owner isn't guaranteed a profit, neither is a shareholder.
Your claim on properties as a business owner is smaller than that of creditors. This means
that if a corporation goes bankrupt and is liquidated, you as a creditor will not get much
funds until the banks and bondholders have been paid; this is known as absolute priority.
Shareholders can make a lot of money if a corporation succeeds, but they can still risk their
whole investment if the company fails.
Risk
When it comes to individual securities, it's important to remember that there are no
promises. Many businesses do not pay dividends, although others do. Even for companies
that have historically paid dividends, there is no requirement to do so. Without dividends,
a stock's growth in the free market is the only way for an individual to benefit.
On the drawback, any stock could go bankrupt, rendering your investment worthless. While
risk can seem to be all negative, it does have a positive side. Taking on more risk
necessitates a higher return on investment. Stocks have traditionally outperformed other

portfolios such as shares and savings deposits because of this. Stocks have traditionally
provided a 10-12 percent annual return on investment over the long term.

Review if literature
With the founding of the first stock exchange in India in Bombay in 1857, the Indian capital
market for equity and corporate debt also dates back to the colonial era. Many Indian businesses
used debentures as a source of capital throughout the colonial era (Roy, 2000). In 1991,
limitations on the pricing of new issues were lifted, as were restrictions on companies' ability
to approach the stock market for funds. The government permitted Indian companies with a
strong track record to issue debentures in international capital markets starting in 1992.There
was some development in the bond industry after 1991, with the launch of several new and
creative forms of bonds (Sen and Vaidya, 1997). Banks and financial institutions are supposed
to be more successful in tracking than arm's-length lenders in the face of information
asymmetry. It will be better than arm's-length debt because private debt holders are more likely
to be alerted by tracking and screening, and private debt is normally senior to public debt in
terms of maturity order (Welch, 1997). When it comes to financial markets, the literature has
stressed the benefit of managed debt, such as bank borrowing, in terms of lowering
informational and tracking costs as opposed to easily available debt (Rajan, 1992).In reality,
previous studies have acknowledged the presence of bureaucratic sluggishness in state-owned
financial institutions, which have found that countries with higher government ownership of
banks are associated with lower financial development and lower growth of per capital income
and productivity and that the lending behaviour of state-owned banks is politically determined
(La porta, Lopez-de-Silanes and Shleifer, 2002; Sapienza, 2004)
The Researcher looks over some previously published work on the topic. Books, periodicals,
news articles, and websites are used to study the related literature. The below is a systematic
analysis: -
Anshuman jaswal: He concentrated on India's main financial markets. In the next two to three
years, primary stock markets are forecast to expand exponentially. The Securities Exchange
Board of India (SEBI), India's stock market regulator, has announced that initial public
offerings (IPOs) and offer for sale (OFS) would be used to enable more firms to sell shares and
lure institutional buyers. As a result of improving economies and recent regulatory
developments, new equity collected is predicted to double from 2014 to 2018. He estimates
that new IPOs would increase retail penetration in the industry by at least 25%.
Richa gupta, deepti goelthey: concentrated primarily on the capital market because it is critical
to the Indian economy's development. It deals in long-term equity and debt shares, as well as

providing funds for more than five years for long-term needs. The stock market's value cannot
be overstated for a developing economy like India, which needs large amounts of capital to
build solid infrastructure.
Sabarinathan: He primarily concentrated on the interaction between financial markets and
economic growth. The Securities and Exchange Board of India (SEBI), which is responsible
for the smooth operation of the Indian securities industry, is expected to allow a variety of firms
to sell shares to the public in the primary market. In fiscal year 2013-14, 38 IPOs raised
RS.1204 crore, compared to RS.6,497 crore raised in fiscal year 2012-13 by 33 IPOs. To
protect investors' interests and ensure the growth of the stock industry, the Indian securities
market has expanded exponentially in terms of sizes, new products, and financial services.
Siddhartha sankar saha, mitrendu narayan roy: They mostly concentrated on corporate
financing, which is generated by public offerings on the primary capital market. The public
offering is the company's principal stream of funding from the primary stock sector. Original
and subsequent capital issues of securities such as preferred shares, preference shares,
debentures, or bonds may be made in the primary market by public issues and rights issues.
The results of the study indicate that the Regression Analysis test has a substantial effect on
currency volatility in the ECB and FCCB's capital. In the Indian primary sector, capital raised
by preference shares and capital generated in limited sizes has no major effect on mobilisation.
Karamjit kaur, rajneesh: They concentrated on India's capital market results. There are two
types of capital markets: main and secondary. The growth rate of the country is seen in capital
market. The economic effect on India's primary markets is discussed in this article. The capital
market displays the output of both the main and secondary markets. The term "initial public
offering" refers to where a company sells shares to the general public for the first time (IPO).
Trading of shares takes place on the secondary exchange. Rather than purchasing shares
directly from the issuing firm, investors purchase them from another investor.
Mr n gopinathan, Dr s s rau: They have concentrated their efforts on FIIs (foreign institutional
investors) who want to invest in Indian securities. They prioritised FII because they believe it
is playing an increasingly important role in the Indian stock market, with net investment
increasing in recent years. They mentioned whether or not FIIs have been the most dominant
investor party in the domestic market.

Faiza nisar ali: He has focused on the significance of the Indian stock market. He had mostly
concentrated on the issue of primary and secondary capital markets. In this, he discussed
mainly on the public companies offer shares for public subscription for the first time as well as
the secondary securities market.
Samir k. barua, v. Raghunathan, Jayanth r. Varma indian institute of management: They
conducted a study of research in the Indian stock market over the previous fifteen years, from
1977 to 1992. To begin, they gathered data on the work performed on the fields of their
institutions from a variety of universities. They discovered that each organisation produces
about 0.1 unit of work per year. They believe that with increased access to libraries and
computational power, further analysis will be accomplished in the near future.
Niranjan chipalkatti: He had focused primarily on the goals of India's banking sector
deregulation. Banks, on the other hand, could have straightforward activities disclosures, he
had discovered.
Gonal basangouda, Kulkarni prasad, and Hiremathchetan v: They had looked at what was going
on in the provided industry. They carried out research in Goa to find out what influences
affected investors' decisions to invest in different IPOs and how they judge them. The focus of
this research was on the relationship between each variable within those variables.
In his article ‘Investments in IPOs in the Indian Capital Market,' published in Bimaquest,
Arwah Arjun Madan (2003) concludes that in the long run (five years after listing), the return
on IPOs falls precipitously; returns are found to be negative from the second to the fifth year
after listing.
According to Anand Adhikari (2010), “New Listings –Pied Pipers of the Primary Market,”
published in Business Today, companies with unusual business models were classified in 2009-
10, making their investors wealthy.
Atul Mehra (2010) writes in Business Today, "IPO Boom," that promoters are rushing to go
public because they don't want to be left out.
Journal of Finance's article "Value Discovery in Initial Public Offerings and the Position of the
Lead Underwriter" concludes that the price discovery phase of initial public offerings (IPOs)
is based on a special dataset. Also for hot IPOs, the first quote entered by the lead underwriter
in the five-minute preopening window explains a significant portion of the initial returns.

Hundreds of quotations are entered during these five minutes, resulting in a significant amount
of learning and price exploration. The lead underwriter monitors the quoting behaviour of other
market makers, especially wholesalers, and adjusts his own quotes accordingly. The initial
returns and the time of day when trading have a clear positive connection start in an ipo.
In their article “Market Price Decision of Indian Investors,” published in The Indian Journal of
Commerce, Ansari Abdul Aziz and Jane Samiran (2009) hypothesised that logical traders use
both fundamental and technical research as stock selection methods, contradicting the view of
finance theorists.
In his article “Changing Contours of Capital Flows to India,” published in Economic and
Political Weekly, Bhupal Sing (2009) noted that the advent of portfolio equity inflows was the
most striking characteristic of transition in cross-border capital flows to emerging market
economies during the 1990s.It was also reported that portfolio investing in India began in 1993
with FIIs making equity and debt investments in Indian stock markets, as well as the
IndianCorporate's global offerings of ADRs and GDRs. The turnover of FIIs accounts for a
large portion of stock cash division turnover. The securities have a high propensity for asset
price fluctuations.
B. Chowdhry and V. Nanda wrote an article in the Journal of Financial and Quantitative
Analysis titled "Stabilization, Syndication, and Pricing of Initial Public Offerings." find out
that in the after-market trading of an IPO, the underwriting syndicate compensates uninformed
buyers ex post for the unfavourable selection cost they face in bidding for IPOs by standing
ready to buy back shares at the sale price ("price stabilisation"). Ex ante compensation is
dominated by underpricing. The explanation for this is that stabilisation makes use of ex post
information about investor demand, while underpricing requires exante data. However,
liquidity and syndication costs limit the use of stabilisation, resulting in any underpricing in
the end. We construct a model that formalises this intuition and produces a number of analytical
implications.
Dhananjay Rakshit concluded in his article "Capital Market in India and Abroad –A
Comparative Study," published in the Indian Journal of Accounting in December 2008, that
the Indian market continues to be favoured by foreign investors, with the only source of concern
being the high studied volatility.

"Tall, Bold, and Beautiful?" was the title of an article written by Dhruv Gogoi in 2010.
According to a study published in Businessworld, Coal India's initial public offering (IPO) has
boosted high expectations among investors.
According to the Eanst & Young, Institutional Investor IPO poll, 2009, IPOs in these emerging
markets will demonstrate recovery from the economic downturn by the end of the year,
according to a report published by FE Bureau in The Financial Express.
According to the survey of more than 300 institutional investors, India and Brazil are the most
likely to lead the turnaround in terms of new ways entering the local capital market by the end
of 2009. IPO activity in the last two quarters shows that markets are recovering quickly,
especially in India, China, and Brazil, which are emerging economies. The resurgence of IPO
interest has been fueled by a stable government and a thriving sensex.
In his article "IPOs: More Misses Than Hits," published in the Dalal Street Investment,
Jagannadham Thunuguntla (2011) pointed out that the age-old concept of knowing the business
and sticking to the basics should be respected. Allow the buyer to be mindful that the investor
would assign a value to his hard-earned cash. Investor education and understanding are needed,
and the relationships should be based on a steady income rather than being wealthy overnight.
Jain, B. A., O. Kini (1994), in their article “The Post-Issue Operating Performance of IPO
Firms”, published in Journal of Financepoint out that the change in operating performance of
firms as they make the transition from private to public ownership. A significant decline in
operating performance subsequent to the initial public offering (IPO) is found. Furthermore,
there is a substantial positive relationship between post-IPO operating success and original
entrepreneurs' equity retention, but no relationship between post-IPO operating performance
and the degree of initial underpricing.
By contrasting the post-issue operational performance of venture capitalist-backed IPOs with
a matched sample of non-venture capitalist-backed IPOs, Jain, B. A., and O. Kini (1995) wrote
an essay in Managerial Decision Making titled “Venture Capitalist Participation and the Post-
Issue Operating Performance of IPO Firms.”We discover that venture capitalist-backed IPO
firms outperform non-venture capital-backed IPO firms in terms of post-issue operating
efficiency. Furthermore, as shown by the higher valuations at the time of the IPO, the market
continues to understand the importance of venture capitalist surveillance. Finally, we discover

that proxies for the efficiency of venture capitalist monitoring are linked to post-issue
operational success in a positive way.
In their book, “The Stock Market –Theories and Evidence”, IFCAI Publication, Hyderabad,
James H. Lorie, Peter Dodd, and Mary Hamilton, Kimpton(1997), found out that the valuation
of a corporation's stock is calculated by assumptions about potential profits and the rate at
which those earnings are discounted In an ideal future, all shares will pay a fixed rate of return equal
to the actual rate of return on stock.
Companies going public, especially young companies, face a market that is subject to sharp
fluctuations in valuations, according to Jay R. In their essay "Initial Public Offerings,"
published in the Contemporary Finance Digest in 1998, Ritter and colleagues. Particularly in
stable business environments, pricing transactions can be challenging because insiders are
likely to have more insight than prospective outside buyers. To address these future issues,
market actors and regulators demand that material details be disclosed.
In their article “Capital Market: Trends in India and Abroad –Impact of IPO Scam on Indian
Capital Market,” published in the Souvenir, All India Accounting Conference, November,
S.D.School of Commerce, the authors discuss the “Capital Market: Trends in India and Abroad
–Impact of IPO Scam on Indian Capital Market.”, Ahmadabad, Jignesh B. Shah and Smita
Varodkar concluded that the latest IPO Scam shows that even a highly advanced system would
not deter malpractices. But steps should be taken by SEBI to restrict such IPO Scam byapplying
know your customer (KYC) and unique identification number to market players and investors.
In their article "Indian Primary Market –A Review," published in the International Journal of
Contemporary Business Studies, K. C. John Sasi Kumar concluded that IPO success has been
positive for investors. For a healthy and stable fund, retail investors should turn to the IPO
market. Despite the fact that recent economic developments have delayed the process of IPO
issuance, both the economy and IPO activity are expected to rebound quickly.
In her article “IPOs:More Misses Than Hits,” published in the Dalal Street Investment Journal,
Madhumita Gosh, Vice President (PM & Research) Unicon Financial Intermediaries, pointed
out that in the recent past, a majority of IPOs have underperformed because they are valued
higher than the fundamentals. This is mostly due to promoters' greed, who inevitably try to
price their problem at a much higher price. In such situations, merchant bankers' roles are called

into question, as they often fail to provide adequate counsel to promoters until the market has
been lost.
In his paper, ‘Of Primary Concerns,' published in the Businessworld in 2010, Mahesh Nayak
points out that initial public offerings (IPOs) have increased in size and reached their own brave
new world. He goes on to say that raising capital in India's thriving economy is not a one-time
event; if a business does not establish strong relationships with investors and pays them well,
it will not be able to return to them when it has to raise money in the future.
In their article “Pricing of Initial Public Offerings: Indian Experience, with Equity Issues,”
published in Portfolio Management, Research Series in Applied Finance, the ICFAI Journal of
Applied Finance, M.S.Narasimhan and L.V.Ramana concluded:
• There is a degree of homogeneity in the degree of underpricing through time intervals.
• Premium issues are underpriced to a greater degree than they were on the first trading
day.
• The time period between the bid day and the first trading day has no bearing on
underpricing.
• They also concluded that, despite the freedom given to them to operate at suboptimal
prices to derive a gratification of the issue being fully subscribed, companies selling
their stock at a premium tend to play it safe, despite the possibility that the issue being
fully subscribed could be a major factor in deciding the pricing method.
Minakshi Malhotra (1997) pointed out in her article “FreePricing of Equity:-The Indian
Experience,” published in the Journal of Accounting and Finance Spring, 1997, that the time
immediately after the implementation of free pricing saw charging of a very high premium
over par prices, in contrast to what CCI might have proposed. As shown by the price behaviour
of premium issues after a six-month period, the majority of the issues failed to pass the
consumer test of success.
In their article “IPO underpricing, problem process, and size” published in the Social Science
Research Network E-Library, Nitish Ranjan and T P Madhusoodanan pointed out that IPOs in
India have yielded irregular returns in the very short term. The unusual behaviour may also be
a result of price mistakes during the problem process. If the process is fixed price or book
construction, the issues are underpriced; we found that smaller issues are more likely to be
underpriced than larger issues. We develop a model of homogeneous investor values to

demonstrate that size is a significant factor and that underpricing is inversely proportional to
size. A signalling equilibrium does not occur in the presence of knowledgeable buyers, and
optimally high value firms do not signal their value as vigorously as lower value firms.
Despite such aggressiveness, the lower value firm ends up leaving money on the table, while
the high value firm issue doesn’t leave money on the table. The model can explain hot (cold)
markets by increased (decreased) sensitivity of the uninformed investor to the signaling by the
firm. The chance of a high/low value company issuing an IPO is often influenced by the
hot/cold markets, as determined by the broader economy.
In his article “IPOs: More Misses Than Hits,” published in the Dalal Street Investment Journal,
Prithvi Haldea, CMD, Prime Database, pointed out that IPOs in India have become a trading
instrument rather than an investment vehicle, and that the majority of people are parking their
money in such IPOs just to make a quick buck at the time of listing. So, in my opinion, they
are not people who spend capital based on the company's valuations over a long period of time.
Rajendra Kanoongu, in his article “IPOs: More Misses Than Hits”, published in the Dalal Street
Investment Journal, tated that, investors should wait for the project implementation of the
company to take place and then take a real value of stock. If they want to be listed, they should
avoid the IPO and instead purchase from the secondary market. They also listed some big
explanations for new problem underperformance, one of which is the uncertain market trend,
in which consumers are unable to determine if the pricing is correct or incorrect. Second, there
are the owners who are anticipating a benefit from the listing who want to cash out on the first
day. Finally, there were some unrealistic valuations, though I wouldn't say they were sky-high,
but they were hopeful.
In his article “IPO BOOM -Fever Pitch” published in Business Today, Rajiv Bhuva claimed
that 2010 would be a record year for IPOs due to the large number of companies offering large
problem sizes to investors.
Reena Agarwal hypothesised in her article “Allocation of initial public offerings and flipping
activity,” published in the Journal of Financial Economics, that the high trading volume in
initial public offerings is mostly attributed to “flippers” who are assigned shares in the offering
and immediately resell them. However, over the first two days of trade, flipping accounted for
just 19 percent of trading volume and 15 percent of shares sold. Institutions flip more than
supermarket consumers, and hot IPOs are tossed even more often than cold IPOs. Institutions

should not easily flip cold IPOs to take advantage of the underwriter's price support activities.
Flippers are rarely penalised for making explicit penalty bids.
In his article "Boom and Slump Periods in the Indian IPO Industry," published in the Reserve
Bank of India Occasional Articles, Saurabh Ghosh (2004) concluded that the Indian IPO
market underwent a dramatic swing in terms of new IPO value. Over the entire time, and
particularly during the hot period, the IPO volume series was auto correlated. This suggests
that a company's decision to go public over the past decade was influenced by the number of
other businesses that went public in the preceding months. In comparison to the IPO volume
series, the autocorrelation in the underpricing series was low .Turning to the interrelation of
volume and initial return, the empirical exercise (Granger causality test) found no significant
relation between IPO volume and initial returns during the hot and cold period This means that
Indian issuers did not make their decision to go public based on the details quality of the initial
returns. One possible explanation for these results is that, in contrast to developing countries,
Indian firms took a long time (on average more than six months) to get listed on the stock
exchange after the promoters agreed to go public. Underpricing based on market fluctuations
over a six-month (or longer) period may have caught shifting investor expectations in response
to the release of new details rather than excitement per se. As a result, Indian corporations
could have become more reliant on long-term investor sentiments whether deciding when to
launch their initial public offerings.
The Indian Equity Market has recently piqued the attention of many international investors,
according to Subhojit Banerjee and Devesh Ranjan Tripathi's article "Comparative Perspective
of Foreign Banks in India:-Strategies and Trends" published in the Indian Journal of
Accounting. With Indian capital markets outperforming their Asian counterparts, they are
quickly becoming popular investment destinations for investors from all over the world.
Stock price performance, the option between private and public funding, and the development
of capital markets in emerging economies are discussed in Subrahmanyam, A., and S. Titman's
article "The Going Public Decision and the Development of Financial Markets," published in
the Journal of Finance in 1999. In general, public finance has a high benefit if costly
information is diverse and inexpensive to obtain, and if taxpayers gain useful information at no
expense. Since the valuation of public companies is largely determined by the scale of the
public sector, there can be a positive externality correlated with going public, resulting in an
unfavourable equilibrium if very few firms go public.

Sunil Damania writes in his Dalal Street article "Primary Issues" that the primary sector has
always been a hot topic for retail investors. However, the standard of initial public offerings
(IPOs) and their problem rates have been a source of concern in recent years. As a result,
investors have lost confidence in the IPO scheme, which is a very bad sign for the economy.
The primary sector is the first move for any potential investor looking to join the market. If an
investor's first investment experience is negative, it is unlikely that they will continue to invest
in the market.
In their article“Determinants of IPO under pricing in the national stock exchange of India,”
published in the Social Science Research Network E-Library, Vaidyanathan R. and Alok Pande
(2008) pointed out that the degree of under pricing in the Indian stock markets has decreased
over time, which is good for the firmsgetting listed as under pricing is an indirect expense to
the company.
The after market in India considers the final bid price set after book building as a reliable signal
for the firm's underpricing, which is a special contribution of this report. Another important
factor that influences underpricing is the time it takes for a company to be listed, while money
invested on selling the company would not have a direct impact on its underpricing. The gains
from IPOs are also seen to be diffused within one month of the firms' listing, although on
average, the gains in one month after listing are lower than those of the industry.
ikkramanP ikkramanP ikkramanP ik In their paper “Investor's Choice on IPOs in India,”
presented at the Global Business & Management Forum (GBMF) Second International
Conference, Dhaka, Bangladesh, and K.C.JohnSasiKumar(2009) investigate the fundamental
risks and returns involved in IPO investment as well as the success of initial public offerings
over the last five years. he researcher assumes that the investments in IPOs are very safe, risk
free, and make good returns. According to the report, the returns on IPOs in the short term are
very promising.
“Can Stock Markets Allocate Resources Efficiently?” he asks in his article?”, Vineet Kohli
(2009) argues that they do. According to “An Examination of Initial Public Offerings,”
published in the Economic & Political Weekly, high prices of new stock issues are unrelated
to potential operational results. It was discovered that investors overlook the poor viability of
new problems while exaggerating their growth potential. Growth expectations at the time of
issue are not fulfilled later on. These findings have far-reaching consequences for the nature of
the financial system. A market-based financial structure, it is often argued, should be

encouraged because a bank-based system (especially one with a strong involvement of public
sector banks) does not devote capital to their most productive use. Big nonperforming assets
held by public sector banks are often quoted as proof of the bank-based system's weak
assessment. In this article, it was discovered that India's stock markets have mostly funded low-
profit companies with the anticipation of potential earnings growth. However, in the post-issue
era, both profitability and development of issuing firms have declined, indicating that this hope
has not been realised. This means that India's capital markets have been harmed by undue
optimism and low valuation.
Recent developments of equity
Since the early 1990s, the Indian stock sector has undergone a number of changes. The reforms
have been applied in a step-by-step way, focusing on international best practises and tailored
to the country's needs. The reforms were aimed at i) establishing growth-enabling institutions;
and reducing the cost of doing business. (ii) Improving the competitiveness of the stock market
by enhanced price discovery mechanisms; (iii) establishing an effective regulatory framework;
(iv) lowering transaction costs; and (v) eliminating knowledge asymmetry, thus increasing
consumer trust. These policies were intended to boost the stock market's position in resource
mobilisation by allowing corporations to raise vast amounts of capital through a range of
marketable securities.
The reform agenda was centred on institutional growth. The Securities and Exchange Board of
India, which was formed as a non-statutory body in April 1988, was granted statutory powers
to regulate the securities markets in January 1992. SEBI's dual mandate is to protect investors'
interests while also maintaining the orderly growth of the stock market.
The implementation of freepricing was the most important change in terms of the main capital
market. The Capital Issues (Control) Act of 1947 was repealed in 1992, allowing market factors
to determine the price of issues and resource distribution for competitive purposes. Issuers of
shares is able to collect capital from the public without obtaining permission from any authority
prior to making or pricing the offering. Restrictions on ownership and bonus questions have
been lifted as well. Both businesses will now price questions depending on market conditions.
The public issue norms were tightened in April 1996 to discourage dishonest firms from
entering the market without attempting to regulate issuers' rights to enter the market and openly
price their issues. Capital issuers are also expected to publish information on a variety of topics,

including their track record of sustainability, risk factors, and so on. As a result, there has been
an increase in the transparency requirements in bid materials for public and rights matters, as
well as better access to facts for investors. Improvements in disclosure requirements have
increased clarity, which also improved investor rights.
Issuers may also raise capital through the fixed price system or the bookbuilding process. Book-
building is a mechanism in which demand for proposed securities is built up and the price for
securities is determined in order to determine the quantity of securities to be sold. Book
building was implemented to increase clarity in scrips pricing and to assess the correct selling
price for securities.
Debt market
This paper tracks trends in both the government securities (G-Sec) and corporate debt markets
since the beginning of the economic reforms in the early 1990s in mapping the evolution of the
Indian debt market. The G-Sec sector reforms have been fairly systematic, addressing all facets
of institutional growth, the development of legal, payment, and settlement processes, as well
as changes in market practises. These have been followed by significant improvements in
public budgets, both at the federal and state levels. The paper offers a comparative assessment
of the government securities debt market's growth. In comparison, change in the corporate debt
market has been slow. When examining the corporate debt market's cross-country history, we
find that changes in this sector take much longer and are much more difficult to execute, owing
to the large number of issuers and the lack of an appropriate number and scale of institutional
investors. In India's corporate debt sector, the highest-rated issuers, who normally share a
preference for borrowing abroad, have a distinct advantage. The proposals for opening up the
Indian debt market must be consistent with India's calibrated commitment to capital account
liberalisation, which has contributed to the country's financial stability.
This topic is influenced by factors such as the size of the fiscal deficit, the prevalence of
inflation, and interest rate differentials. However, given the progress in developing the
government bond industry, the corporate debt market can be expected to expand in the future
as the Indian financial sector grows.

3. RESEARCH METHODOLOGY
3.1 Scope of the study:-
Knowledge on the subject was gathered from Research Journals, Trade Magazines, Bank
Annual Reports, and the Internet. I based on as recent content as possible when analysing
"primary market for corporate funding a study of equity and debt markets in india"I used a
variety of papers published in scholarly journals and trade magazines to keep up with the
latest trends in this field. We have used supplementary data from discussion pages on the
internet.
1. Statistical tools adopted:
The data was interpreted & analyzed with the help of tables, percentages, graphs & chart
presentation.
2. Sampling technique:
The technique used for this Project is based on a questionnaire which consists of about
15 general questions. This questionnaire aims to provide the data which is of most
important in nature to enable a comprehensive analysis of impact attributes
Computerization and Its Effect on the Banking Industries.
3. Limitations:
The study is limited only within Mumbai City [mainly Central Mumbai] of Maharashtra State,
because of the time & financial constraints the study is restricted to the sample size up to 50
respondents / investors of different age groups. However, it is reasonably sufficient number to
generalize the information collected. The study could not cover the legal – investment
strategies & aspects on the whole.

3.2 Data types & sources:-
Both quantitative & qualitative data will be used. Primary data will be collected through
observation, structured questionnaires & semi-structured interviews using checklist & the
responses of the leading questions. Secondary data will be obtained from external sources like
Newspapers, journal, magazines, Internet, Website etc. which will be included to gather more
information for International comparisons.
3.2.1 Meaning of primary data & its importance
Primary data is information that you collect specifically for the purpose of your research
project. An advantage of primary data is that it is specifically tailored to your research needs.
A disadvantage is that it is expensive to obtain.
Primary data are information collected by a researcher specifically for a research assignment.
In other words, primary data are information that a company must gather because no one has
compiled and published the information in a forum accessible to the public. Companies
generally take the time and allocate the resources required to gather primary data only when a
question, issue or problem presents itself that is sufficiently important or unique that it warrants
the expenditure necessary to gather the primary data. Primary data are original in nature and
directly related to the issue or problem and current data. Primary data are the data which the
researcher collects through various methods like interviews, surveys, questionnaires etc.
Advantages of primary data are as follows:
• The primary data are original and relevant to the topic of the research study so the
degree of accuracy is very high.
• Primary data is that it can be collected from a number of ways like interviews, telephone
surveys, focus groups etc. It can be also collected across the national borders through
emails and posts. It can include a large population and wide geographical coverage
• Moreover, primary data is current and it can better give a realistic view to the researcher
about the topic under consideration.
• Reliability of primary data is very high because these are collected by the concerned
and reliable party.

3.2.2 Meaning of secondary data & its importance
Secondary data are the data collected by a party not related to the research study but collected
these data for some other purpose and at different time in the past. If the researcher uses
these data then these become secondary data for the current users. These may be available
in written, typed or in electronic forms. A variety of secondary information sources is
available to the researcher gathering data on an industry, potential product applications and
the market place. Secondary data is also used to gain initial insight into the research problem.
Secondary data is classified in terms of its source – either internal or external. Internal, or
in-house data, is secondary information acquired within the organization where research is
being carried out. External secondary data is obtained from outside sources. There are
various advantages and disadvantages of using secondary data.
Advantages of secondary data are following:
• The primary advantage of secondary data is that it is cheaper and faster to
access.
• Secondly, it provides a way to access the work of the best scholars all over the
world.
• Thirdly, secondary data gives a frame of mind to the researcher that in which
direction he/she should go for the specific research.
• Fourthly secondary data save time, efforts and money and add to the value of
the research study.
3.3 Population, sampling frame & sample size:-
3.3.1 Population
This is the set of maximum Investors [Male & female] to which the findings are to be
generalized.
3.3.1 Sampling frame:

In order, to perform non probability sampling, a sampling frame is constructed based
on the study area. The list of Corporate, households, etc. is generated from the selected
areas & randomly.
3.3.2 Sample size:
Sample size of 50 respondents is selected for the study to make the study meaningful
and relevant.
3.4 Study area, sample type-samplingprocedure:-
3.4.1 Study area:
The topic of primary market for corporate funding a study of equity and debt markets
in india _is generally known by all masses, but due to time constraints, the study is
bounded throughout the city of mumbai only. The reason for selecting this City is
because there are a large number of people residing & who are familiar about it as they
may invest on regular basis too.
3.4.2 Sample type & sampling procedure:
The sample type & procedure opted for this study is by prepared by circulating
Questionnaire via social media WhatsApp within the Mumbai city. The data collected is
mainly based age wise, gender wise, educational background, minimal knowledge about
Computerization and its Effect on the Banking Industries.
3.5 Data collection techniques:
For the collection of data regarding the conceptual framework, performance of the data
has been collected through Primary and Secondary Sources as follows:
1. Documentation –This involves collecting information & data from existing surveys,
reports & documents.
2. Structured Questionnaires –This will be used to collect information from

Investors & households. Questionnaires will be developed to obtain survey & statistical
data that allows an understanding with respect to the review of people investing in
Banking Industries in India & their decisions.
3. Observation & Analysis –The observation during the fieldwork will be used main
to review the issues beyond those covered in the structured & semi- structured questionnaires.
The data will be analyzed in the form of graphs, charts table format, etc. according to the age-
groups, gender wise.

bibliography
http://www.indianresearchjournal.com/wp-content/uploads/2015/09/primary-markets.pdf
https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/77578.pdf
https://niti.gov.in/planningcommission.gov.in/docs/reports/wrkpapers/wkpr_debt.pdf
https://groww.in/p/primary-market/
http://www.jcreview.com/fulltext/197-1599714084.pdf