Online Tutorial About Indian Stock Market – India’s Nse & Bse Share Markets
Author: Aditya SharmaTHE NATIONAL STOCK EXCHANGE OF INDIA (NSE)
Located in India’s financial capital Mumbai, the National Stock Exchange (NSE) is the third largest stock exchange in the world. During 31 December 2005, NSE VSAT terminals, 2799 in total, were spanning across 320 cities of India.
The NSE has been a podium for securities exchange for 14 years now! Thousand member strong, NSE provides dealing of different securities, some of them being equity, corporate debt, certificate of deposit, commercial paper, and central and state government securities. National Securities Clearing Corporation, India Index Services and Products, National Securities Depository, and NSE-IT (trading technology) are the associates of NSE. Owner of diverse financial and insurance establishments, NSE can be broadly divided into three segments:
- Wholesale debt
- Capital market (automatic screen-based dealing system)
- Futures and options (derivatives)
GENESIS OF NSE
It all began 16 years back, in November 1992, when the NSE was integrated as a tax-paying company. In April 1993, NSE was given the status of a stock exchange under the Securities Contract (Regulations) Act of 1956. A year later, in June 1994, NSE began operations in the Wholesale Debt Market (WDM), and in November that year, the Capital Market (Equities) Segment of the NSE began operations. Two years hence, in 1996, NSE became the first exchange in India to trade derivatives specifically on an equity index. In the new millennium, NSE began Indian Internet Online trading system. Today the NSE deals in online examinations and award certification. Comprising branches all over India, NSE introduced India’s first clearing corporation (National Securities Clearing Corporation Ltd.) and India’s first depository (National Securities Depository Ltd.). NSE is India’s earliest national, anonymous, electronic limit order book (LOB) exchange that deals with securities.
MARKET INDICES
NSE established an index services firm called IISL – India Index Services and products Ltd. – and opened numerous stock indices, including:
- S&P CNX Nifty
- CNX Nifty Junior
- CNX 100 (this is the total of S&P CNX Nifty and CNX Nifty Junior)
- S&P CNX 500 (this is equal to CNX 100 plus 400 major players across 72 industries)
- CNX Midcap (this replaced CNX Midcap 200 on 18 July 2005)
The other NSE Indices are:
- S&P CNX Defty
- CNX IT
- Bank IT
MARKET CAPITALISATION
Currently, NSE has four important capital market segments:
- Equity
- Futures and Options
- Retail Debt Market
- Wholesale Debt Market
MAJOR COMPANIES OF NSE
The major companies listed with the NSE are:
- Asian paints
- Dabur
- Glaxo
- Escorts
- Hindustan Lever
- Bank of Baroda
- Infosys technologies
- ONGC
- Hero Honda
- Jet Airways
The top investors of NSE are:
- Corporation Bank
- ITC
- MTNL
- ICICI Bank
- Grasim
- Biocon
- Maruti
- HDFC Bank
- Cipla
- Federal Bank
LOCATION OF NSE
National Stock Exchange of India Ltd.
Exchange Plaza
Plot No. C/1, G Block
Bandra-Kurla Complex
Bandra (E)
Mumbai 400051
BOMBAY STOCK EXCHANGE (BSE)
Having its headquarters in Mumbai, the BSE SENSEX is the stock index or SENSitive indEX of the BSE. The oldest stock exchange of Asia, the BSE SENSEX, also known as BSE 30, is the focal stock index of India. There are 4800 companies listed with the BSE. As of July 2007, the total equity market capitalization of the Bombay Stock Exchange was US$ 1.005 trillion. The Singapore Exchange has become an alliance of BSE by acquiring a strategic investment in the BSE.
GENESIS OF BSE
Way back in 1986, the BSE introduced the stock index that eventually became the most important stock index of the country. The SENSEX was based on market-capitalisation-weighted method and included stocks of some of the top financial houses. Noted financial analyst and columnist, Mr. Deepak Mohoni in the year 1990, introduced the term “BSE SENSEX” which is an acronym for Bombay Stock Exchange SENSitive indEX. Since September 2003, the SENSEX is measured on the method of free-float capitalisation.
MARKET INDICES
Apart from maintaining the BSE SENSEX, the Bombay Stock Exchange also maintains stock indices like:
- SENSEX
- MIDCAP
- SMLCAP
- BSE-100
- BSE-200
- BSE-500
The BSE gives information on the price, charting, announcements, company contact, shareholding pattern and results of the companies that are enlisted in the exchange. The Board of Directors, encompassing eminent financial professionals, Managing Director of the exchange, and the representatives of the Trading Members, maintain the overall functionality of the exchange.
BSE also gives the Beta value of the SENSEX Scrips, Beta being calculated by the formula: Beta = Co-Variance (SENSEX, Stock)/Variance (SENSEX).
While listing securities that may be from public limited companies, central government, state governments or other financial institutions, there are certain objectives followed by the BSE:
- Protect the interest of the investors by giving full disclosures
- Provide liquidity to securities
- Mobilise savings to enable economic development
BSE SENSEX OVERVIEW
The BSE SENSEX comprises thirty stocks and is a value-weighted index. The stocks listed here are the most active stocks on the BSE. The BSE SENSEX has a base value of 100. The relevant authorities update BSE SENSEX and in the process inspect and change the SENSEX, the underlying idea being that the SENSEX represents the prevailing market condition.
BSE PERFORMANCE
Since June 1990, the BSE Index has been increasing ten-fold. As per the data available, since April 1979, the long run rate of return on the BSE SENSEX has been at almost 0.52% every week, with the rate of standard deviation being almost 3.67%. The returns thus have been 27% per year. However after inflation, the figure has come down to 18% per year.
BSE COMPANIES
Given below is a catalogue of stocks listed in the BSE:
- Wipro
- ACC
- ITC Limited
- Bajaj Auto
- Larsen & Tourbo
- BHEL
- Maruti Udyog
- Bharti Airtel
- NTPC
- Cipla
- ONGC
- Dr. Reddy's Laboratories
- Ranbaxy Laboratories
- Grasim Industries
- Reliance Communications
- Gujarat Ambuja Cements
- Reliance Energy
- HDFC
- Reliance Industries
- HDFC Bank
- Satyam Computer Services
- Hero Honda Motors
- State Bank of India
- Hindalco Industries
- Tata Consultancy Services
- Hindustan Lever Limited
- Tata Motors
- ICICI Bank
- Tata Steel
- Infosys
Myself Aditya Sharma (Sr.Investment Advisor), and I work for a NRI Investment company (www.NriInvestIndia.com) that helps NRIs, PIOs and OCIs to invest in India's top mutual funds.
Here at NriInvestIndia.com we focus in delivering value service to our NRI clients when it comes to their investments in the Indian stock markets – NSE & BSE. Our equity & mutual fund investment advising is structured to suit the investment objectives of the non resident Indian investor in a long run (including PIOs and OCIs).
We at NriInvestIndia.com advise our clients to invest across various financial products viz: Mutual funds, RBI bonds, Portfolio Management Services for NRIs, Stocks & Shares, Trading Account, Dmat Account, SIPs – systematic investment plans, etc, based on your risk-return profile.
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