National Stock Exchange

What is NSE?

The National Stock Exchange of India Limited is the country’s leading financial exchange, with headquarters in Mumbai. It was incorporated in 1992 and, since then, has evolved into an advanced, automated, electronic system offering trading facilities to investor across the country. In 2015, this exchange system ranked in the fourth place in the world according to the metric of its trading volume.

This stock exchange began its operations in 1994 at the behest of the Indian government to bring a level of transparency to the country’s capital market. Set up by an assembly of leading financial institutions and at the recommendations formulated by Pherwani Committee, this stock exchange comprised of diverse shareholding assets from both global and domestic investors.

It was also the first stock exchange in the country to introduce electronic trading facilities, thus facilitating the integration of investors throughout the country into a single base.

As of 2018, NSE had a total market capitalisation exceeding the US $2.25 Trillion, putting it in 11th place in the list of the largest stock exchanges in the world.

However, unlike the USA, where trading from corporate sector accounts for about 70% of the country’s GDP, this sector in India accounts for only 12-14% of its total GDP. Out of this entire corporate sector, around 7800 companies are listed with about 4000 among those trading at Indian stock exchanges. Thus, stock exchange trading accounts for a meagre 4% of the country’s total GDP.

How Does NSE Stock Exchange Work?

Trading through this stock exchange in India is carried out through an electronic limit order book where order matching takes place through a trading computer. This entire process does not have the interference of specialists or market makers and is driven entirely by orders; meaning that when investors place a market order, it is automatically matched with a limit order. Thus, in this market, sellers and buyers have the advantage of remaining anonymous.

Additionally, an order-driven market also offers more transparency to investors by displaying every buy and sell order in the trading system. These orders in NSE are placed via brokers who often provide the facility of online trading to customers. Few institutional investors can also avail this facility of “direct market access” where they can place their orders directly into the trading system.

NSE market trading on equities segment is carried on throughout the week, except on Saturdays, Sundays and other holidays declared by the stock exchange. The market timing is as follows –

• Pre-opening session – 

1. Order entry opens at 9.00 hours
2. Order entry closes at 9.08 hours

• Regular session – 

1. Market opens at 9.15 hours
2. Market closes at 15.30 hours

National Stock Exchange’s flagship index is the Nifty50 which represents about 63% of the total quantum of market capitalisation listed under it. This index covers approximately 12 sectors of the economy under 50 variable stocks.

Currently, the stock exchange is spearheaded by Vikram Limaye as the CEO and Managing Director and Ashok Chawla as the Chairman of the Board of Directors.

Benefits of Listing with National Stock Exchange of India – 

NSE offers several benefits of listing with it. Some of them are as follows –

• Comprehensive visibility – 

This trading system is efficient in providing various trade and post-trade information. Investors can easily look up the top buy and sell orders on the trading system, along with the total number of securities available for a transaction. It helps investors to gauge the market’s depth easily.

• Makes for a premier marketplace – 

The volume of trading activity in this stock exchange helps to lower the impact cost on it, which decreases the expenses of trading for investors. Additionally, the exchange’s automated trading system helps to maintain transparency and consistency with an investor.

• Biggest exchange in the country – 

In terms of trading volume, the NSE National Stock Exchange is the country’s largest exchange with its market capitalisation exceeding $2.25 Trillion.

• Fast transactions – 

The pace at which orders are processed in this Exchange helps investors to avail the best prices. For instance, on May 19th 2009, the stock exchange recorded 11,260,392 trades, which was its highest number in a day.

• Trade statistics – 

Listed companies can avail the provision of receiving trade statistics each month, to help track the performance of companies listed on the exchange.

Thus, with the above benefits, NSE National Stock Exchange makes for a favourable facility to conduct market transactions.

Investment Segments – 

NSE offers investment and trading in the segments mentioned below –

Equity – 

This comprises of a volatile class of assets which helps investors to maximise the returns from investments. Equity investment consists of several types of assets, namely, Mutual Funds, equities, indices, Exchange Traded Funds, Security Lending and Borrowing Scheme, Initial Public Offerings, etc.

Equity Derivatives – 

Derivatives traded under this stock exchange includes Global indices like Dow Jones, CNX 500, etc., commodity derivatives, currency derivatives, interest rate futures, etc. The NSE market started derivative trading in 2002 with the launch of index futures. In 2011, it also launched derivative contracts on the world’s most-followed index – Dow Jones Industrial Average and S%P 500.

Thus, this exchange has made remarkable headway in the trade market as far as equity derivatives are concerned.

Debt – 

This type of investment pool consists of various Mutual Funds, Exchange Traded Funds, etc. where the core asset holdings comprise of different long and short term bonds, corporate bonds, securitised products, etc.

NSE Stock Exchange launched the country’s first debt platform on 13th May 2013 to provide investors with a transparent and liquid trading platform for all debt-associated products.

Major Indices in this Exchange System – 

A stock market’s index is created by choosing a collection of stocks that represent the whole market, or a specific segment of it. Following are some of the most important broad market indices, consisting of the liquid stocks that are listed on this stock exchange –

• Nifty 50 index
• Nifty 100 index
• Nifty Next 50 index
• Nifty Midcap 50 index
• Nifty Smallcap 250 index
• India Vix index

NSE also consists of other indices like thematic, strategy, hybrid and fixed income indices.

Top 10 Companies Listed Under this Stock Exchange According to Market Capitalisation – 

With these listed companies and more, the National Stock Exchange is a premier marketplace that enables efficient trading, boosting visibility and providing high liquidity of assets with accurate prices.