Money Market:
The money market refers to a segment of the financial market where short-term borrowing and lending of funds take place. It deals with the trade of highly liquid and low-risk financial instruments with maturities of less than one year. The main participants in the money market are financial institutions, such as banks, mutual funds, pension funds, and government entities. The primary purpose of the money market is to provide a platform for the efficient management of short-term liquidity needs.

Capital Market:
The capital market, on the other hand, is a segment of the financial market where long-term securities are traded. It deals with the issuance and trade of long-term debt and equity instruments, such as bonds, stocks, debentures, and other derivatives. The main participants in the capital market are investors, companies, and governments. The primary purpose of the capital market is to facilitate the transfer of funds from those who have surplus capital to those who need it for long-term investment purposes.

Differences:

1. Nature of Instruments:
- Money Market: It deals with short-term debt instruments, such as Treasury bills, commercial paper, certificates of deposit, and short-term government securities.
- Capital Market: It deals with long-term debt and equity instruments, such as bonds, stocks, debentures, and preference shares.

2. Maturity Period:
- Money Market: The instruments traded in the money market have a maturity period of less than one year.
- Capital Market: The instruments traded in the capital market have a maturity period of more than one year.

3. Risk and Return:
- Money Market: The money market instruments are considered to be low-risk investments with relatively lower returns.
- Capital Market: The capital market instruments carry higher risk and offer potentially higher returns.

4. Participants:
- Money Market: The participants in the money market are primarily financial institutions, such as banks, mutual funds, and pension funds.
- Capital Market: The participants in the capital market are investors, companies, and governments.

5. Purpose:
- Money Market: The money market provides a platform for short-term borrowing and lending to meet immediate liquidity needs.
- Capital Market: The capital market facilitates long-term investment and capital raising for businesses and government entities.

In summary, the money market deals with short-term borrowing and lending of funds with low-risk instruments, while the capital market focuses on long-term investment and trading of debt and equity instruments. The money market caters to short-term liquidity needs, while the capital market supports long-term financing and investment activities.