Two markets, one word
The primary market is where shares are created and sold by the company itself. Money paid there goes into the business.
The secondary market is everything afterwards — investors trading existing shares with each other. That is the NSE and BSE screen you know, and it is where your ₹5,000 went.
A company raises money once, when it issues. After that it is a spectator to its own share price.
Four doors into the primary market
The four names below are not four different products. They are four answers to one question: who is allowed to buy this issue?
An IPO is open to the public because the company is not listed yet. An FPO is the same act, done by a company already listed. A private placement and a QIP skip the public entirely and sell to selected institutions, which is faster and far cheaper to run.
Who sells, who buys, where the money lands
Tap each route. The company is only on the receiving end in some of them.
Notice what all four share: new shares exist afterwards that did not exist before.
What it costs the owners
Every rupee raised this way is paid for in ownership. Bharat Foods has one crore shares. Issue ten lakh more and there are one crore ten lakh — your ten shares are now a smaller fraction of the company than they were yesterday.
That is dilution, and it is not automatically bad. If the money buys a plant that doubles profits, a smaller slice of a bigger business is worth more. If it plugs a hole, you have simply been made smaller.
A listed company raises ₹300 crore from six institutions in a week, with no public window. What was that?
Of the four, only one is likely to ever land in front of you as a decision, and it is the one with the most noise around it.