CH 5: CAPITAL MARKETS – SEBI – PART 3

Stock Exchanges:

In India we have 18 official stock exchanges, the largest of which are the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). SEBI holds the resposibility of development, regulation and supervision of the stock market. 

The BSE, Asia’s first stock exchange, was established in 1875. BSE is one of the world’s fastest stock exchanges, with a median trade speed of 6 microseconds. More than 5500 companies are publicly listed on the BSE.

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Stock Exchanges

The NSE, on the other hand, was founded in 1992 and started trading in 1994, as the first demutualized electronic exchange in the country. It was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system which offered easy trading facility to the investors spread across the length and breadth of the country. IDBI is the main promoter of this exchange.

Market Indexes in India

Sensex and Nifty are two of the prominent market indexes in India.

The Sensex, also known as S&P BSE Sensex or S&P Bombay Stock Exchange Sensitive Index or BSE 30, is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange.

The S&P CNX Nifty or Nift 50 or simply Nift is NSE’s benchmark stock market index for Indian equity market. It is owned and managed by India Index Services and Products (IISL), which is a wholly owned subsidiary of the NSE Strategic Investment Corporation Limited. Nifty includes 50 shares listed on the NSE, which represent about 62 per cent of its free-float market capitalization.

Depositories

A depository is an entity which helps an investor to buy or sell securities such as stocks and bonds in a paper-less manner. Securities in depository accounts are similar to funds in bank accounts.

The Depository Act of 1996 paved the way for the establishment of the two depositories in India, namely National Securities Depository Limited (NSDL) which is promoted by the National Stock Exchange, Industrial Development Bank of India and Unit Trust of India among others. The other depository is the Central Depository Services Limited (CDSL) which is promoted by the Bombay Stock Exchange Bombay Stock Exchange, State Bank of India, Bank of India among others.

The Securities and Exchange Board of India is responsible for the registration, regulation and inspection of the depository.

References:

  • “Principles & Practices of Banking”, Tata McGraw-Hill, New Delhi.
  •  Times of India, Economic Times.
  • “Indian Economy “, Sankarganesh Karuppiah, Kavin Mukul Publications.

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