NSE INDIA

NSE INDIA

September 12, 2022 Off By Alex Mathew

What is NSE?

National Stock Exchange of India Limited is the leading financial exchange in India, with its headquarters in Mumbai. Since its incorporation in 1992, it has evolved into a sophisticated, automated, electronic system that offers trading facilities to investors across the nation.  According to the metric of its trading volume, this exchange system ranked fourth globally in 2015. This stock exchange commenced operations in 1994 at the request of the Indian government in an effort to increase the capital market’s transparency. This stock exchange was established by a group of top financial institutions in accordance with the Pherwani Committee’s recommendations, and it included diversified shareholding assets from both international and domestic investors.

It was also the first stock exchange in the nation to implement electronic trading services, permitting the integration of investors from throughout the nation into a single base. As of 2022, total market capitalization of all the companies listed on NSE India exceeded $3 Trillion, placing it eleventh on the list of the world’s largest stock exchanges.

In contrast to the United States, where the corporate sector accounts for over 70% of the country’s GDP, this sector in India accounts for only 12-14% of India’s total GDP. In this corporate sector, over 7800 companies are listed, with approximately 4000 trading on Indian stock exchanges. Thus, stock exchange trading accounts for only 4% of the nation’s gross domestic product.

Click here to know more about stock exchanges in India.

How Does NSE Stock Exchange Work?

This stock exchange in India executes transactions using an electronic limit order book where order matching is performed by a trading computer. This entire process is solely driven by orders, which means that when investors place market orders, they are automatically matched with limit orders. Thus, dealers and buyers enjoy the advantage of anonymity in this market.

In addition, an order-driven market provides investors with greater transparency by displaying every buy and sell order in the trading system. Customers submit these orders on the NSE through brokers that frequently facilitate internet trading. Few institutional investors can utilise this “direct market access” capability, which allows them to make orders directly into the trading system.

The NSE market’s equities section trades five days a week, excluding Saturdays, Sundays, and other holidays announced by the stock exchange. The timing of the market is as follows:

Pre-Opening Session

  1. Begins at 9:00 a.m. 
  2. Closes at 9: 15 a.m.

Regular session

  1. The market opens at 9.15 a.m
  2. The market closes at 3.30 p.m

National Stock Exchange’s flagship index is the Nifty50, which accounts for around 63% of the total market capitalization of its listed companies. This index represents approximately 12 economic sectors with 50 changeable equities.

Benefits of Listing With NSE of India

There are numerous advantages to listing on the NSE,  among them are the following:

  1. Visibility- Investors can readily access the trading system’s top buy and sell orders, as well as the total number of shares available for a transaction. It allows investors to easily measure the market’s depth.
  2. Leading Marketplace- The level of trading activity on this stock exchange serves to reduce its cost, hence reducing the trading costs for investors. Additionally, the automated trading system of the exchange helps to preserve investor transparency and consistency.
  3. The largest Exchange In The Nation – The NSE National Stock Exchange is the country’s largest exchange in terms of trading activity, and its market capitalisation exceeds $2.25 Trillion.
  4. Fast Pace Transactions- The speed with which orders are handled on this exchange enables investors to obtain the best prices. On May 19, 2009, for instance, the stock market reported 11,260,392 deals, which was its greatest daily total. With the aforementioned advantages, the NSE National Stock Exchange is a favourable venue for conducting market transactions.

Investing Segments

NSE offers investment and trading in the following markets:

  • Equity – This is a volatile asset class that enables investors to maximise their investment profits. Mutual Funds, equities, indices, Exchange Traded Funds, Security Lending and Borrowing schemes, Initial Public Offerings, and other types of assets are included in equity investment.
  • Equity Derivatives – Global indices such as Dow Jones, CNX 500, etc., commodity derivatives, currency derivatives, interest rate futures, and other derivatives are traded on this stock market. The NSE began trading derivatives in 2002 with the introduction of index futures. In 2011, it also introduced derivative contracts on the two most-watched indices in the world: the Dow Jones Industrial Average and the S&P 500. As a result, this exchange has made amazing progress in the trade market in terms of stock derivatives.
  • Debt- This form of investment pool is comprised of several Mutual Funds, Exchange Traded Funds, etc., whose fundamental asset holdings consist of various long- and short-term bonds, corporate bonds, securitized products, etc. On 13 May 2013, the NSE Stock Exchange debuted the nation’s first debt platform to give investors a transparent and liquid trading platform for all debt-related items.

Major Indices In this Exchange System

The index of a stock market is established by selecting a group of stocks that represent the entire market or a specific part of it. The following are the most prominent broad market indices comprised of liquid stocks listed on this stock exchange:

  • Nifty 50 index 
  • Nifty 100 index 
  • Nifty Next 50 index
  • Nifty Midcap 50 Index
  • Nifty Smallcap 250 index

FAQs

  1. What are the best stocks to buy today on NSE?

As per market capitalization, here are a few of the top stocks listed on the National Stock Exchange.

  • Reliance
  • TCS
  • HDFC
  • Infosys
  • Kotak Mahindra
  • ICICI Bank