Debt Market vs. Equity Market
                     Debt Market vs. Equity Market: 
What's the Difference?
What is the equity market?
The equity markets compromise investment in the shares of a 
company. These shares can be subscribed through the IPO or 
through the open markets. It is important to understand that the 
investment in equities is considered to be a high-risk high-
return scenario. 
Source: www.fisdom.com
Investment in equity market?
Investment in equities requires a thorough market 
understanding and analysis of various factors like demand and 
supply of the shares, market capitalization and position of the 
company in the industry or the sector, financial as well 
technical analysis of the stocks, etc.
Source: www.fisdom.com
Key players in equity market?
The key players in the equity markets are the trader, brokers, 
retail and institutional investors. The various trades in the 
equity markets include intraday trading, Buy Today Sell 
Tomorrow (BTST), or position trading. 
Source: www.fisdom.com
What is Debt Market?
Debt markets on the other hand are investment instruments 
with lower risks. This market includes debt instruments like 
bonds or debentures that are issued by the government or 
corporates.
Source: www.fisdom.com
Important Feature of Debt Market
An important feature of the debt markets is the stable source of 
income in the form of interests to the investors and also the 
security of their initial investment as compared to the equity 
markets. 
Source: www.fisdom.com
Risk Free
Investors can use the debt instruments as a perfect hedge for 
the risks involved in the equity markets. 
For example, investing in risk-free government bonds or 
sovereign bonds can reduce the overall risk of the portfolio and 
also provide a stable source of income to the investors till the 
bonds are redeemed. 
Source: www.fisdom.com
Comparison on Returns
The returns from equity markets can be highly volatile due to 
various factors like market fluctuations, company performance, 
macro, and microeconomic factors, etc.
The returns from debt markets are stable and regular unlike 
that from equity markets.
Source: www.fisdom.com
Comparison on Risk
The risk of investment in equity markets is quite high 
The risk of investing in debt markets is quite low, especially in 
the case of government-backed securities. 
Source: www.fisdom.com
Comparison on Taxation
Dividends received from equities are taxed in the hands of the 
investor at the applicable slab rates. STCG and LTCG are 
taxed at 15% and 10% respectively.
Interest received from debt instruments along with STCG is 
taxed at the applicable slab rates of the investor. 
Source: www.fisdom.com
Comparison on Ownership
Investment in shares provides the ownership and voting rights 
to the investor
Investment in debt instruments like bonds or debentures 
makes the investor a creditor of the issuer (government or 
creditor)
Source: www.fisdom.com