IPO vs Shares(Listed) – Difference between IPO and Listed Stocks in India

ipo vs shares what is difference between ipo and share

IPO vs Shares(Listed)


Without getting into a lot of technical details,
Let us understand the key difference between IPO and Listed stock (IPO vs Shares) means in very simplistic terms.
However, before going ahead, Let’s discuss the “What is Stock Market and Share Market”.

A share market is where shares are either issued/traded-in.
A stock market is the same as a share market.
The main difference is that a stock market assists you to trade financial instruments like shares, bonds, mutual funds, and derivatives.
A share market only allows the trading of shares.

The key factor is the stock exchange,
the basic platform that provides the facilities used to trade company stocks and other securities.
A stock may be bought or sold only if it is listed on an exchange.
Therefore, it is the meeting place of the stock buyers and sellers.
India’s premier stock exchanges are BSE i.e. Bombay Stock Exchange and NSE i.e. National Stock Exchange

There are two kinds of Share Market in India

  • Primary Market
  • Secondary Market

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Primary Market


Primary Market is the market where investors can buy shares directly from the issuer to raise their capital.

Here securities are issued through companies for the first time.
New stocks are offered to the public through an Initial Public Offering (IPO).
In IPO a private company is going to become a public listed company.

That means that when a company invites the public to invest in its shares.
And for better understanding, there are two types of companies, public and private companies.

Only a public limited company can invite or issue shares and not a private limited company.
In IPO a company is going to sell is the first stock in public.
Most companies are bringing the IPO to get the money through the market (Public, Mutual funds) for expanding their business model.

Let’s take one example,
Suppose, You are having a company ABC.
For running your company, you need capital, suppose you arrange money from various sources like banks, friends, mutual funds and still you need extra money then you can raise money from the public by launching IPO.
You have to be listed either at BSE or NSE.

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Secondary Market


Once new securities (shares, bonds, mutual funds, and derivatives) have been sold in the primary market,
these shares are traded in the secondary market.

That’s means, the secondary market is the place,
where stocks are traded after they are initially offered to the investor in the primary market and get listed in the stock exchange.

It is a place to trade listed equities,
while the primary market is the way for companies to enter into the secondary market.

This is to offer a chance to exit an investment and sell the shares.

This market transaction is referred to as trades,
where one investor purchases shares from another investor at the prevailing market price or at whatever price the two parties agree upon.

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