A STUDY OF INDIAN STOCK MARKETS & THEIR OPERATIONS

Indian Stock Market

An organized market place, either corporation or mutual

organization

Members of the organization gather to trade company stocks or other securities

Not all stock transactions take place on a stock

exchange

Companies traded on a stock exchange Listed Companies not traded on a stock exchange Unlisted

Major Stock Exchanges in India

Once a company's public offering is complete, it gets listed in a stock exchange. Currently there are 25 stock exchanges in India:

Bombay Stock Exchange (BSE) National Stock Exchange (NSE) 23 Regional Stock Exchanges

Overall guidelines for the marketplace are established

by the Securities and Exchange Board of India (SEBI)

Bombay Stock Exchange (BSE)

Established in 1875, earlier known as the Native Share and Stock Brokers Association oldest stock exchange in Asia

Includes 5000 listed companies across 296 cities and towns Total market capitalization around Rs. 71 trillion Ranked around 4th in terms of annual transactions After compensating for inflation, the BSE has averaged a 15.8% annual return when measured by Sensex, the most popular stock index in India, over the last 20 years.

BSE Mechanism

Operated through a unique and proprietary computer system known as the "BSE On Line Trading System" (BOLT)

Index of the performance of the 30 largest & most profitable, popular companies listed BSE Index or Sensex

Allows investors to maintain liquidity for their investment by allowing any shareholder to sell his or her shares almost instantly

The capacity of the BOLT platform stands presently enhanced to 80 lakhs orders per day

Price Discovery Mechanism Large Private Network First in India to launch US$ version of BSE Sensex

National Stock Exchange (NSE)

India's largest Stock Exchange & World's third largest Stock Exchange in terms of transactions located in Mumbai

In April 1993, NSE was recognized as a Stock exchange under the Securities Contracts (Regulation) Act-1956

Nation-wide, fully automated screen based trading system Set up on a demutualised model

Establishing nationwide trading facility for all types of

securities

Enabling

shorter

settlement

cycles

and

book

entry

NSE Mechanism

Index of the performance of the 50 largest & most profitable, popular

companies listed NSE Index or Nifty Index

NSE Trading System - 'National Exchange for Automated Trading' (NEAT) Introduced for the first time in India, fully automated screen based trading Adopts the principle of an order driven market Trading System Order Matching Rule Reduces transaction cost Four types of Market:

Normal Market
Odd Lot Market Auction Market Spot Market