Read the following passage and answer the question.

AAMA Solar Limited is searching options to raise ₹2,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned financial consultancy firm, Laxmi Pvt. Ltd. for suggesting options for the same. Laxmi Pvt. Ltd. suggested a list of options to the board of directors. It was decided that for the immediate requirement of ₹150 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company ₹500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of investing subscription from the public by making a direct appeal to investors to raise capital. It was further decided to raise capital to the tune of ₹650 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise ₹700 crores through the online system of the stock exchange by entering into an agreement with the exchange.

In which type or market only buying of shares is possible as shares cannot be sold here?

Primary market

The correct answer is option 1- Primary market.

In the Primary market only buying of shares is possible as shares cannot be sold here.

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.