Volume-7, Number - 1  
Month: January - June, 2011

Primary Market Investment Decisions

Rupesh Kumar Tiwari

Shivalik Institute of Management and Research Durg-Chhattisgarh, MP-India

Page No. 25

Purpose/Aim: Capital market is the backbone of financial system of a country. It facilitates conversion of savings to investments. Capital market can be classified as primary and secondary markets. The fresh issue of securities takes place in primary market and trading among investors takes place in secondary market. Primary market is also known as new issues market. Equity investors first enter into capital market though investment in primary market. In India, massive common investors participate in the equity primary market. The number of companies offering equity through primary markets increased continuously in the post independence period till the year 1995. After 1995, there was a continuous slump experienced by the primary market offering equity till 2000. The main reason for slump is lack of investor's confidence in the primary market. After 2000, during the IT boom period in India various companies went for IP and investor's confidence in the primary market was once again revived. But the Ketan Parikh episode and the subsequent downfall of the K-10 scripts shattered the investors' belief in the market. The year 2005 passed as a historical year for the stock markets as it touched new heights and make the investors kitty bubbled by 25.4 lakh crores. Again, Indian stock market started to fall in 2008 after attaining record all time high due to general slowdown in the world's major economy. So it is important to understand the causes and needed measures for revival of investor's confidence from time to time leading to capital mobilization and investment in right avenues creating economic growth in the country.