In this paper, nodal prices for real and reactive power have been obtained formulating social welfare based approach. The reactive power cost of generators has been incorporated in the model as reactive power support has been identified as an important ancillary service in the electricity market and it can not be neglected. The generator's capability curve has also been incorporated in the model. The impact of FACTS controllers has also been considered in the model formulation taking their cost function into account. The constraints for incorporation of bilateral transactions along with the pool transactions have been incorporated in the hybrid electricity market model. Mixed integer non-linear programming approach has been formulated for hybrid electricity market model. The optimal location of FACTS devices have been obtained using integer variable in the mathematical model. The proposed approach has been tested on IEEE 24-bus Reliability Test System (RTS).