The National Stock Exchange (NSE) is one of the leading stock exchanges in India. It plays a very important role in the country’s financial landscape. The NSE was founded in 1992 and has grown rapidly to become one of the largest and one of the most technologically advanced stock exchanges in the world. It serves as a platform for buying and selling various financial instruments, including equities, derivatives, currencies, and debt securities. It impacts India’s economy, investment landscape, and financial markets deeply. As such, the NSE stands as a pivotal institution for India’s growth towards economic development. – (What is NSE)
The NSE, established in 1994, was initiated by the Indian government to enhance transparency in the country’s capital market. Formed by a consortium of prominent financial institutions and based on recommendations from the Pherwani Committee, this stock exchange features a diverse range of shareholding from both domestic and international investors. – (What is NSE)
It was also the first stock exchange in India to implement electronic trading facilities, which helped unify investors across the nation onto a single platform.
As of April 11, 2023, the total market capitalization of the NSE stands at approximately USD 3.26 trillion, ranking it 9th among the largest stock exchanges globally. – (What is NSE)
In contrast to the USA, where corporate trading constitutes about 70% of the GDP, this figure in India is only around 12-14%. Within the corporate sector, approximately 7,800 companies are listed, with about 4,000 actively trading on Indian stock exchanges. Consequently, stock exchange trading contributes a mere 4% to the country’s GDP. – (What is NSE)
The NSE was founded with the clear aim of carrying out the following functions: Establishing a national trading platform for equities, debt, and hybrid instruments. Ensuring fair access for investors throughout the country through a robust communication network. Utilizing electronic trading systems to offer investors a fair, efficient, and transparent securities market. Facilitating quicker settlement cycles, implementing book entry settlement systems, and adhering to the latest international standards for securities markets. – (What is NSE)
Like other major stock exchanges today, the NSE operates on an order-driven market rather than a quote-driven one. It features a fully automated screen-based trading system known as the National Exchange for Automated Trading (NEAT).
Every order that NEAT receives is given a unique identifier. If an immediate match isn’t found, the order is placed in an order book, where the sequence for matching is determined by price-time priority.
When two orders enter the system, the one with the better value takes precedence, and among orders with the same price, the older order is prioritized.
Order matching occurs by comparing the most favorable buy order, which has the highest price, with the best sell order, which has the lowest price. Sellers aim to sell to buyers offering the best price, and vice versa. While orders can be partially matched until the entire order is fulfilled, matches are always based on the passive value of the order, not the active price at which the match takes place. – (What is NSE)
NSE trades securities in Whole Sale Debt and Capital Market Segments.
1) Whole Sale Debt Market Division
The first section of the NSE is the Whole Sale Debt Market, which provides traders with a platform to trade various fixed-income instruments. This includes Certificates of Deposit, Bonds, Commercial Paper, Treasury Bills, Central Government Securities, and other related securities.
2) The Capital Market Division
The Capital Market Segment of the NSE allows traders to engage in the trading of securities such as debentures, equity shares, exchange-traded funds, preference shares, and retail government securities. – (What is NSE)
Trading on this stock exchange in India is conducted through an electronic limit order book, where a trading computer handles order matching. This process operates without the involvement of specialists or market makers, relying solely on the orders placed by participants.
When investors submit a market order, it is automatically paired with a limit order, allowing both buyers and sellers to maintain their anonymity in the market.
Moreover, an order-driven market enhances transparency for investors by showcasing every buy and sell order within the trading system. Orders on the NSE are executed through stockbrokers, who typically offer clients an online trading platform.
A select group of institutional investors can utilize the “direct market access” feature to enter their orders directly into the trading system.
Trading in the equities segment of the NSE occurs throughout the week, excluding Saturdays, Sundays, and other holidays recognized by the stock exchange. The trading schedule is as follows:
Pre-opening Session –
Order entry begins at 9:00 AM
Order entry ends at 9:08 AM
Regular Session –
The market opens at 9:15 AM
The market closes at 3:30 PM
The National Stock Exchange’s primary index is the Nifty50, which accounts for about 63% of the total market capitalization listed on the exchange. This index encompasses roughly 12 sectors of the economy, represented by 50 different stocks.
Currently, the stock exchange is led by Vikram Limaye as the CEO and Managing Director, with Ashok Chawla serving as the Chairman of the Board of Directors. – (What is NSE)
NSE provides numerous advantages for companies looking to list. Here are some key benefits:
Comprehensive Visibility
This trading platform efficiently delivers a wealth of trade and post-trade information. Investors can easily access the top buy and sell orders, as well as the total number of securities available for transactions.
A Premier Marketplace
The high trading activity on this stock exchange helps reduce the impact cost, which in turn lowers trading expenses for investors. Moreover, the exchange’s automated trading system ensures transparency and consistency for all investors.
The Largest Exchange in the Country
In terms of trading volume, the NSE stands as the largest exchange in the country, boasting a market capitalization that exceeds $2.25 trillion.
Rapid Transactions
The speed at which orders are processed on this exchange enables investors to secure the best prices. For example, on May 19, 2009, the stock exchange recorded an impressive 11,260,392 trades, marking its highest daily total.
Trade Statistics
Listed companies receive monthly trade statistics, which assist in monitoring the performance of companies on the exchange.
With these advantages, NSE serves as an excellent platform for conducting market transaction – (What is NSE)
NSE provides opportunities for investment and trading in the following segments:
Equity:
This segment includes a dynamic class of assets that allows investors to enhance their returns. Equity investments encompass various asset types such as Mutual Funds, stocks, indices, Exchange Traded Funds, Security Lending and Borrowing schemes, and Initial Public Offerings, among others. – (What is NSE)
Equity Derivatives:
The derivatives available on this stock exchange include global indices like the Dow Jones, CNX 500, commodity derivatives, currency derivatives, and interest rate futures. The NSE began trading derivatives in 2002 with the introduction of index futures. In 2011, it expanded its offerings by launching derivative contracts based on the highly regarded Dow Jones Industrial Average and S&P 500. As a result, this exchange has made significant progress in the equity derivatives market. – (What is NSE)
Debt:
This investment category includes various Mutual Funds, Exchange Traded Funds, and more. The primary asset holdings consist of both long- and short-term bonds, corporate bonds, and securitized products. On May 13, 2013, NSE launched the country’s first debt platform, aimed at providing investors with a transparent and liquid trading environment for all debt-related products.
A stock market index is created by choosing a collection of stocks representing the whole market or a specific segment.
Following are some of the most critical broad market indices, consisting of the liquid stocks that are listed on this stock exchange –
NSE also includes other indices like thematic, strategy, hybrid and fixed-income indices. – (What is NSE)
Company Name | Market Capitalisation (in Rs. Crore – approx numbers) |
Reliance | 1572897 |
TCS | 1194095 |
HDFC | 925371 |
Infosys | 590454 |
Kotak Mahindra | 350014 |
ICICI Bank | 606433 |
Bajaj Finance | 352243 |
SBI | 469702 |
Larsen | 324624 |
Axis Bank | 260734 |
With these listed companies and more, the National Stock Exchange is a premier marketplace that enables efficient trading, boosting visibility and providing high liquidity of assets with accurate prices. – (What is NSE)
The National Stock Exchange (NSE) is a prime example of India’s economic progress and its commitment to improving financial markets. By providing a robust and technologically advanced platform for trading various financial instruments, the NSE has transformed the way investors, traders, and businesses engage with the Indian capital market. Its role in enhancing liquidity, price discovery, and investor participation has been essential in shaping India’s financial landscape and positioning the country as a significant player in the global financial scene. As India’s economy continues to grow, the significance of the NSE is expected to rise, making it an essential institution for investors, regulators, and market participants. -(What is NSE)
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3-1-309/310, Tara Kaushalya Nivas,
Nimboliadda, Kachiguda, Hyderabad-500027
Contact: +916300169336
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Mumbai Office:
C/o.15B,5B, 1st Floor, Royal Industrial Estate,
Sewree Wadala Road No.26, Wadala(West),
Mumbai-400031
@2023 4R Investments. All right reserved.
Website by Vrinda Techapps
