What Is a Market Maker?
A market maker is a participant who is always ready to both buy and sell a security, continuously quoting prices. They're the reason you can usually buy or sell a liquid stock instantly — there's someone on the other side waiting.
The problem they solve
Without a market maker, you'd have to wait until another ordinary investor happened to want the exact opposite of your trade. For thinly traded securities that could take a long time. A market maker bridges the gap by standing ready to trade at any moment, providing liquidity.
How they earn money: the spread
A market maker quotes a slightly lower buy price (the bid) and a slightly higher sell price (the ask), pocketing the small difference — the bid-ask spread. They make tiny margins on huge volumes. Their presence is what keeps spreads tight on liquid stocks and wide on illiquid ones.
Where you see them in India
Market makers are especially important for less-liquid instruments — many ETFs and SME-segment stocks rely on designated market makers to stay tradable. For heavily traded large caps, the sheer number of participants provides natural liquidity without one.