What are Primary markets

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A primary market issues new securities on an exchange for companies, governments and other groups to obtain financing through debt-based or equity-based securities.

An issuer/company enters the primary markets to raise capital. They issues new securities in exchange for cash from an investor (buyer). If the issuer is selling securities for the first time, these are referred to as Initial Public Offers (IPO).

For e.g.: If the promoters of a private company, say XYZ makes its shares available to investors, company XYZ is said to have entered the primary market.