Bombay Stock exchange

National Stock Exchange

Bombay Stock Exchange popularly know as BSE is India’s Oldest financial exchange which was established in the year 1875. It is presently headquartered in Mumbai. Since its inception, the private company has evolved into an advanced electronic automated system offering different trading facilities to investors in the stock market.

BSE is one of the largest stock exchange in the world. According to a report published in Economic times, BSE is the 10th largest stock exchange in the world and Indian stock exchange NSE stands 11th in the world.

The total market capitalization of BSE as of 2020 is $2.2 trillion as quoted here, and it based on this market capitalization BSE stands 10th in the world. Right from the inception in 1875, BSE has moved through different phases of change and now advanced a lot in different terms. The volume of trade has increased multiple folds, and it is traded largely by the foreign institutions for trading in Indian securities.

Right from the start, BSE has given importance to provide transparency in the country’s capital markets. The Exchange is backed and is run by a set of high-level financial institutions and this exchange includes a large variety of assets from not only domestic but also global investors.

Different Investment segments in National Stock Exchange (NSE)

NSE offers investment in diverse segments as mentioned before. these incluse

1. Equity
2. Equity Derivatives
3. Debt

Equity

Equity assents comprise of Mutual funds, Equity indices, Exchange-traded funds, Security lending and Borrowing schemes, and also includes Initial public offers and so on. These are a volatile class of assets and mostly traded by the investors. These help the investor to maximize the profits.

Equity Derivatives

Derivatives which are traded in Bombay Stock exchanges including but not limited to CNX 500, Dow Jones, commodity derivatives, Interest rate futures, currency derivatives and so on.

Debt Instruments and government securities 

These tools are issued by an underlying company to raise finances without giving ownership to investors. Relatively risk-free in nature, trading in debt instruments can be done in both primary and secondary market, depending upon its nature.

Various government securities such as zero-coupon bonds, floating-rate bonds, capital indexed bonds and dated securities are traded in BSE. 

Major Indices in Bombay Stock Exchange

You might have heard about Sensex, BSE IT, BSE metal and others when you look at the stock market. These are the ones, that tell about the mood of the market. these indices in genera give a general picture of the movement of the market in a particular period of time.

Indices are created by the market by collecting the stocks that represent a huge part of the market or in particular for a particular segment of market like Bank or Metal or IT. These are so categorized to understand the growth and fall of a particular segment in the country and tracking the economy.

The following the the indices that are listed in National Stock Exchange.

1. S&P BSE Auto
2. S&P BSE bankex
3. S&P BSE Capital Goods
4. S&P BSE Consumer Durables
5. S&P BSE Fast-moving consumer goods

And also BSE categorizes the companies based on capitalization into small and mid-cap. The indices that represent these different segments are BSE small-cap and BSE mid-cap index.

Bombay Stock Exchange plays a vital role in regulating financial markets of India. Market fluctuations in an economy can easily be observed through the performance of its benchmark index, which has cascading effects on the capital sector of economies all around the world.

Benefits of listing in Bombay Stock Exchange

What does BSE offer for listing with it? Below are some of the benefits that BSE has to offer which has been developed over the period of time.

Capital Generation

Companies can generate capital by listing in the company. The capital can be used for the expansion of the company. and also listed in Bombay stock exchange provides for complete structural changes and increase accountability as investors from market question the operations

Market securities can be readily sold in a financial market if it is listed in Bombay Stock Exchange, thereby sufficing the liquidity needs of both businesses and individual investors. Funds to meet any requirement of a company can be obtained through the issuance of debt and equity securities, which investors purchase for the purpose of wealth creation

Collateral guarantee

Securities issued by a company acts as a collateral guarantee at the time of availing loans. Most financial institutions accept equity shares listed in BSE as leverage against which funds can be obtained.

Volume of Trade

BSE is one of the largest traded stock markets in terms of foreign investors, and it provided a platform to reduce the cost and hence helps the investors to reduce the overall cost. And also the advanced and automated trading system helps to maintain transparency with the investors and get a sense of trust in the market operations.

Visibility

Bombay Stock Exchange has developed and advanced its trading platform over the years and this comprehensive trading system is so efficient in providing a variety of trading and post-trading information to the investors. Investors have to just look at the buy and sell orders on the trading platform and the different securities r stocks that are available on its platform for the transaction.

Fast Transactions

As highlighted before, BSE has over the years has developed an advanced platform which process orders at a rapid pace.

Trade statistics

Companies which listed their companies stock in BSE can avail the benefit of receiving the statistics of trade each month to help understand and track the performance of the stock in the exchange.

Working of National Stock Exchange

The method in which trading takes place in India is called as Electronic limit order book. This is a term which is popularly called to the process of matching a limit order with a market order in order to determine the price of the stock and its movement

There is no human interference in the general and the entire process is so automated that it happens without any person intervention. A limit order is automatically matched with a market order. When matching BUY and SELL orders and the price where both BUY price and sell price matches, their transaction takes place automatically. Hence the investor is completely anonymous. The buyer will not be able to know who sold the assets to him, or the seller will never find who bought their assets.

This process is constantly monitored by regulatory agencies to find out any discrepancies or any malpractices in order to provide just equal platform for all the investors across the country. Each and everything in BSE will proceed according to the provisions of SEBI.

This will provide additional transparency to the investors buy constantly viewing the buy and sell orders in the system. Generally, all the orders are placed via brokers who act as middlemen called as stockbrokers. Only a few investors such as Institutional investors can avail the option to directly trade with BSE, that is they get ‘Direct market access’. Remaining all has to proceed via a broker to trade in BSE.

Timings of operation of Bombay Stock Exchange (BSE)

Bombay stock exchange is open for trading for 5 days in a week, with Saturday and Sunday being an holyday. Trading is carried out through out the year except on Saturday, Sunday and official holydays informed by Exchange.

The following are the timings of the Market

• Pre-opening session

1. Order entry opens at 9.00 hours
2. Order entry closes at 9.08 hours

• Regular session

1. The market opens at 9.15 hours
2. Market closes at 15.30 hours

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