India's largest domestic investor Life Insurance Corporation of India has once again come to government's rescue by subscribing 70% of Hindustan Aeronautics ₹4,200 crore Initial Public Offering (IPO).

Which market is being reflected in the above case?

Primary Market

The correct answer is Option (3) → Primary Market.

The market being reflected in the above case is the Primary Market.

In the primary market, companies issue new securities (like IPOs) to raise capital. Here, the Life Insurance Corporation of India (LIC) subscribing to 70% of Hindustan Aeronautics' ₹4,200 crore IPO shows an investment in newly issued shares, which is characteristic of the primary market.

The primary market is also known as the new issues market. It deals with new securities being issued for the first time. The essential function of a primary market is to facilitate the transfer of investible funds from savers to entrepreneurs seeking to establish new enterprises or to expand existing ones through the issue of securities for the first time. The investors in this market are banks, financial institutions, insurance companies, mutual funds and individuals. A company can raise capital through the primary market in the form of equity shares, preference shares, debentures, loans and deposits. Funds raised may be for setting up new projects, expansion, diversification, modernisation of existing projects, mergers and takeovers etc. Only buying of securities takes place in the primary market, securities cannot be sold there.