An Introduction To The Indian Stock Market !

Most trading in the Indian stock market occurs through its two exchanges – the Bombay Stock Exchange and the National Stock Exchange. The BSE has been in existence since 1875, but the NSE was founded in 1992 and started trading in 1994. Both follow the same rules and mechanisms, and both list most of India’s major firms.

Trading takes place between 9:15 am and 3:30 pm, Monday through Friday, Indian Standard time. Trades are settled two business days after they’re made.

Trading at the exchanges takes place through an open electronic limit order book in which the computer matches orders. The process is order-driven, meaning the best limit orders are automatically matched with market orders, so buyers and sellers remain anonymous. All orders take place through brokers.

Sensex and the S&P CNX Nifty are India’s two main market indexes. Sensex, the oldest for equities, includes 30 firms listed on the BSE that represent about 45% of the index’s free float market capitalization. The Nifty has 50 shares listed on the NSE, representing about 62% of its free-float market capitalization. The Securities & Exchange Board of India regulates the country’s stock market.

India started allowing outside investments in the 1990s. Foreign investments are either foreign direct investments or foreign portfolio investments. FDIs allow investors to participate in the company’s day-to-day operations; FPIs do not. India’s government determines FDI limits, and has set different ceilings over the years.

Foreign investors must register as a foreign institutional investor or as a sub-account for one of the FIIs. They can invest directly into any stock listed on an exchange.

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