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How Share Market Works – What Is NSE & BSE

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How Stock Market Works

In India, much like in the global scene, companies offers a part of the share in form of stocks or shares to the general population in order to raise money for their operations or increasing capital, simply put, Stock Market is a place where the trade of these stocks are facilitated.

After the Initial Public Offering (IPO) these stock can further be traded in the stock market. The sale of the stock or securities is between the buyer and the seller, who will agree upon a certain valuation of the stocks. Security and Exchange Board of India (SEBI) regulates the functioning and trade of stocks in the share market, it has laid down guidelines under which a trade is considered valid. 

Stock Market also allows the role of a Stock Broker who assists in the process of trading stocks. According to the SEBI, only those stocks are eligible for trade which are listed in the Stock Exchange. The price or the valuation of stock are ascertained by many factors such as market condition, performance of the company, the general trend in the industry that it belongs to, political reasons, government guidelines etc.

Through this article we intend to provide ample exposure for a relatively newer investor to the elaborate investment platform that is Stock Market or Stock Exchange.

What is NSE & BSE?

The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are India’s two most important and recognized stock exchanges. These exchanges act as the market place where most of the stock trading in India takes place. While Bombay Stock Exchange is the oldest Stock exchange in India which has been around since 1875. National Stock Exchange came into being in 1992, with official trade starting in the year 1994.

Both NSE & BSE follow the same guidelines laid down by SEBI and adhere to a similar trading system which includes similar trade hours. While NSE has a total of 2003 listed companies as of 31st December 2021, BSE boasts a total of 5249 companies who have listed for stock trade as on 04th March 2022.

Competition among both this major Stock Exchange results in reduced cost of trading and keeps in check the valuation of stock in the market. With nearly every major companies listed on both the exchange, it is a crucial aspect to keep up with the each other and encourage consistent order flow.

What is Sensex & Nifty?

Sensex & Nifty are identified as the stock market index. While Sensex reflect the movement in Bombay Stock Exchange, Nifty indicates the trends in National Stock Exchange. Both Sensex & Nifty indicates the general performance of the market and in a broader sense exhibits the trend of the economy.

Sensex was identified in the year 1986 and Nifty has existed since 1996. Both Nifty & Sensex aggregates the performance or valuation of a certain number of companies listed on NSE & BSE respectively. While Nifty recognises 50 well established companies for its indicators Sensex has 30 reputable companies who are financially able and stable. These companies are recognised as being the most traded stocks and constitutes nearly every major industrial sector in India.

Stock Market provides a convenient place or platform for the general public to engage in buying or selling stock, understanding the various factors related to or affecting the stock exchanges will only benefit in the long term for any investor or trader.

What Is NSE & BSE | Best Penny Stocks | Fundamental Analysis In Share Market | How To Invest in Share Market | Types of Trading in Stock Market

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