Secondary Market is a financial marketplace where investors buy and sell previously issued securities such as stocks, bonds, debentures, and mutual fund units. Unlike the primary market, where securities are issued for the first time by companies to raise capital, the secondary market provides a platform for trading existing securities among investors. This enhances liquidity and ensures that investors can easily convert their investments into cash.

The main function of the secondary market is to facilitate continuous trading, enabling fair price discovery based on demand and supply. Prices in the secondary market fluctuate due to market conditions, company performance, investor sentiment, and global economic factors. These markets operate through recognized stock exchanges such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) under the regulation of the Securities and Exchange Board of India (SEBI).

The secondary market can be broadly divided into two segments — the auction market (where trading happens on stock exchanges) and the over-the-counter (OTC) market (where securities are traded directly between parties). Both segments ensure transparency, standardization, and investor protection through strict compliance and surveillance mechanisms.

Investors use the secondary market to achieve goals such as wealth creation, portfolio diversification, and liquidity management. It also serves a critical economic role by promoting capital formation and reflecting the overall health of the economy. However, investors should conduct proper research, assess risk tolerance, and make informed decisions before trading.

In summary, the secondary market acts as a vital link in the financial ecosystem by enabling efficient capital flow, fostering investor confidence, and supporting long-term market stability.