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National Stock Exchange
Most of the families rely on stock market for their bread and butter. Stock market is the playground for those who have a keen eye for rising and falling businesses. Everything be it government or private sector is related somehow or the other to stock market. Seeing opportunity and demand of the stock market, National Stock Exchange of India came in to existence in 1992. This is the fully automated trading system that gives easy access to investors to all over country. It is based in Mumbai.
Market capitalisation of NSE is approximately US$2.27+ trillion and it is therefore it is ranked 11th on the World’s largest Stock Exchange in 2018.Nifty 50, launched in 1996 by National Stock Exchange is used as a barometer of capital markets in India and is found credible not only in India but by investors all over the country
Despite NSE’s extensive use, stock market only generates the 4% of GDP( Gross Domestic product)/ of Indian economy, unlike USA that constitute 70% of the total GDP. The reason accounted for so little contribution through stock market is the that thousand of companies in spite of being listed do not trade on NSE and BSE. Rest of the investors are unorganised and invest without particular discipline.
It was reported by Economic times that in 2018 almost 6 crore (60 million) people invested in stocks in India through mutual funds or direct purchase of equities. Yet the estimated percentage, reported Bimal Jalan Committee, barely reaches the 1.3 % of the population of India in contrast to 10% of China and 27% in USA.
National Stock Exchange
Before the launch of NSE the membership for trading was confined to a particular broker group but with the help of NSE any with experience, fulfil minimum financial requirements and qualification is allowed to trade. NSE has made it possible for a client to access the price information at any location even in remote areas, without hassle. Earlier the price information was only disclosed to the selected people. Under the supervision of SEBI, NSE was able to separate management and ownership in stock exchange. Not only that but NSE has also provided the electronic depository accounts for trade settlement instead of paper which has made the investing and transacting easy and in time.
NSE was created at the command of Indian government, by leading financial institutions of India to establish transparency in capital market of India. These well known domestic investors that played the key role NSE formation are: Stock Holding Corporation of India Limited, IDFC limited , IFCI Limited, State Bank of India, Life Insurance Corporation of India. The global investors who played the key role in NSE formation are:
PI opportunities Fund, SAIF II SE investments Mauritius Limited, GS Strategic Investment Limited, Aranda Investment (Mauritius) Limited, and Gagil FDI Limited.
Frequently Asked Questions (FAQ)
In what segments does NSE offers investments?
The segments in which NSE offers investments and trading are:
- Mutual funds, equities, Indices, Exchange Traded Funds, Initial Public offerings, Security Borrowing and Lending Scheme are to name a few.
- Currency derivatives, equity derivatives, interest rate futures, commodity derivatives, debt etc.
What is meant by Interest Rate Futures (IRFs)?
SEBI in December 2013 gave approval to exchanges to launch IRFs (interest Rate Futures) on either single GOI bond or more than one GOI bond to be settled by cash.IRFs were introduced inIndia in 2009 by NSE which was right after the launch of Currency Futures. It also became the first to get approval for IRFs, which came SEBI-RBI recommended. 8.83% and 7.16 % highly liquid NSE BOND futures will be offered for GOI bonds for ten years. The launch was appreciated by market participants who favour cash settlement on products and availability on single bond.
What is Debt Market in context with NSE?
NSE is credited with launching debt platform in 2013 which offers a transparent and liquid platform for products related to debt.
This is an opportunity for retail investors who can take advantage of debt platform for investing in corporate bonds. This is a unique platform that allows buying and selling at optimum price and gives adequate exposure to corporate bonds at the time it is
What is National Security Depository Limited (NSDL) used for?
National Security Depository Limited is a unique platform that gives investors the privilege of transferring or holding bond and shares securely using a electronics method. This has proven beneficial as it has reduced the paper load required for certificates and prevents forgery of certificates and transactions of fraudulent nature that had cursed the stock market in India. NSE is extensively courted by investors both internationally and nationally because of it transparency in trade, NSDL security, low priced transactions and efficiency in dealing.
How does NSE performs trade and how has technology helped in its growth?
National Stock exchange employs the most updated application for conducting its trade business. They deals with billions of messages every day and has a response time of sub millisecond.
When the NSE was launched in 1994, even then it used state of the art technology. But was only handling 2 messages a second which in 2001 reached 60 orders a second and now it is hard to imagine but it deals with 1,60,000 orders per messages per second. It has relentlessly worked to bring down the settlement cycle to T+2/T+1 from T+3.
What are the advantages of listing in NSE?
NSE presents the companies who are being ready to list with major exchange with big option. It provides high trade transparency and promotes trading using technology of the highest order. This helps in boosting confidence of investor by boosting visibility in said market. The use of technology makes the process fast and efficient producing accurate prices and greater liquidity.
What is there in Dalal Street stock market?
The area in Mumbai famous for housing Bombay Stock Exchange (BSE), one of the world’s largest stock exchange, as well as some influential financial institutions.
After the BSE’s move to this are this became famous as the Dalal in Marathi mean broker, and it became the first stock exchange to receive recognition by Indian Government.
These days Dalal Street can be interchangeable called Indian Financial sector like that of USA’s Wall Street.
When was Bombay Stock exchange launched?
Bombay stock exchange was established in 1875 and has the honour of being the largest and first securities market. The BSE is in league with NYSE (new York Stock Exchange), Japan exchange group, NASDAQ, London stock exchange etc. BSE has played an important role in developing capital markets, including debt market for retail, and also helps in developing
When and by whom was National Stock Exchange was found?
Under the guidance of then Prime Minister P.V. Narsimha Rao and Finance Minister Manmohan Singh, exchange was created as a company in 1992 and was awarded the status of stock exchange in 1993 as per Securities Contract Act 1956. NSE started operation in June in 1994 in the WDM (Wholesale Debt Market) and in the equities in 1994 in the month of November. However the operations in the derivative segments began in 2000. NSE has 3000 leased lines and 2500 VSAT in more than 2000 Indian cities. It is the first exchange that offers electronic services for trading, equity derivative, debt control, cleaning and settlements in Capital market etc. Thereby reaching out and connecting the entire investor base all over country.
What is the significance of new Nifty logo launched by NSE?
The New Logo aims to strengthen its position as leader in the space index. It also symbolises innovation in developing indices for the purpose of investment in both retail as well as institutional segment, as implied by Limaye in an interview. Vikram Limaya is the chief executive and managing director of NSE.
The upward rising graph is depicted by ‘N’ in the logo, signifying momentum and growth, the logo also points at the direction for Indian equity/capital markets.
For promoting the new logo for NIFTY ETF, NSE has invested heavily in ICC Cricket World Cup advertising market, enlightening the audience with the advantages of Nifty 50 ETF investment plan.
In domestic stock market Nifty indices gives tough competition to BSE indices.
Nifty 50 ETF scores Rs 69000 crore at Assets Under Management (AUM) in 2019 of March end, thereby doubling to 15000crore in one year.
What does National Stock Exchange aims to achieve?
National Stock exchange was founded with the objective to;
- Facilitate trading of securities of all types all over the country
- Establishing the communication network for trading and giving access to the investors across the nation equally
- Creating an electronic platform for transparent, efficient and fair securities market for the investors with ease of access
- To indulge in small settlement cycles
- Competing with the standards and benchmarks set by the international market.