Stock exchanges in India – The world of finance pulsates with energy on the trading floors of stock exchanges. In India, this financial heartbeat is regulated by the Securities and Exchange Board of India (SEBI), ensuring a structured and transparent marketplace. Let’s embark on a journey to unravel the intricate workings of stock exchanges in India and explore the benefits, mechanisms, and major players that shape the nation’s financial landscape.
Stock exchanges in India
The following table shows the types of stock market indices in India
| Name of the Stock Exchange | Headquarters | Year of Establishment | Current Status |
| Bombay Stock Exchange (BSE) | Mumbai | 1875 | Permanent |
| National Stock Exchange of India (NSE) | Mumbai | 1992 | Permanent |
| Calcutta Stock Exchange (CSE) | Kolkata | 1908 | Permanent |
| India International Exchange (India INX) | Gujarat | 2017 | Valid till Dec 28, 2019 |
| Metropolitan Stock Exchange of India ltd. | Mumbai | 2008 | Valid till Sep 15, 2019 |
| NSE IFSC Ltd. | Gujarat | 2016 | Valid till May 28, 2020 |
| Madras Stock Exchange | Chennai | 1937 | Closed in 2015 |
| Inter-connected Stock Exchange Ltd. | Mumbai | 1998 | Closed in 2014 |
| OTC Exchange Of India | Mumbai | 1990 | Closed in 2015 |
| Bangalore Stock Exchange (BgSE) | Bangalore | 1963 | Closed in 2014 |
| Ahmedabad Stock Exchange | Ahmedabad | 1894 | Closed in 2018 |
| Cochin Stock Exchange | Kochi | 1978 | Closed in 2014 |
| Madhya Pradesh Stock Exchange | Indore | 1919 | Closed in 2015 |
| Saurashtra Kutch Stock Exchange | Rajkot | 1989 | Closed in 2013 |
| Mangalore Stock Exchange | Mangalore | 1984 | Closed in 2014 |
| Vadodara Stock Exchange | Vadodara | 1990 | Closed in 2015 |
| Bhubaneswar Stock Exchange | Bhubaneswar | 1989 | Closed in 2015 |
| Coimbatore Stock Exchange | Coimbatore | 1991 | Closed in 2013 |
| Delhi Stock Exchange Association | New Delhi | 1947 | Closed in 2017 |
| Guwahati Stock Exchange | Guwahati | 1983 | Closed in 2015 |
| Jaipur Stock Exchange | Jaipur | 1989 | Closed in 2015 |
| Lucknow City Stock Exchange | Lucknow | 1978 | Closed in 2015 |
| Ludhiana Stock Exchange Association | Ludhiana | 1983 | Closed in 2014 |
| Pune Stock Exchange | Pune | 1982 | Closed in 2015 |
Former Stock Exchanges in India
There were many stock Exchanges in India which are now closed for one of other reasons. The list of these stock exchanges and their year of closing is listed in the table below.
| Former Stock Exchanges in India | |
| Former Stock Exchange | Closing Year |
| Ahmedabad Stock Exchange | 2018 |
| Delhi Stock Exchange | 2017 |
| Bombay Commodity Exchange Limited (BCEL) | 2016 |
| Cotton Association of India (CAI) | 2016 |
| Gauhati Stock Exchange | 2015 |
| Jaipur Stock Exchange | 2015 |
| Madhya Pradesh Stock Exchange | 2015 |
| Madras Stock Exchange (MSE) | 2015 |
| OTC Exchange of India | 2015 |
| Pune Stock Exchange | 2015 |
| UP Stock Exchange | 2015 |
| Vadodara Stock Exchange | 2015 |
| Bangalore Stock Exchange | 2014 |
| Cochin Stock Exchange | 2014 |
| Inter-connected Stock Exchange of India | 2014 |
| Ludhiana Stock Exchange | 2014 |
| Bhubaneshwar Stock Exchange | 2005 |
Understanding the Essence of Stock Exchanges
The essence of a stock exchange lies in being a dynamic marketplace where financial instruments dance to the tunes of buyers and sellers. In India, this stage is set by SEBI, the guardian ensuring fair play and investor protection.
How Does the Stock Exchange Work?
A Peek Behind the Curtains
The Indian stock exchange operates as a unique ecosystem, driven by transparent transactions and facilitated by dedicated brokers.
Transaction Mechanism
- Independence Matters: Unlike some global counterparts, Indian stock exchanges operate independently, free from market makers or specialists. This autonomy enhances efficiency and fairness.
- Order-Driven Symphony: The trading process is order-driven, orchestrated by an electronic limit order book. This automated system ensures that buyers and sellers find their perfect match efficiently.
- Brokers as Conductors: Brokers, akin to conductors in an orchestra, play a vital role in executing trades. All orders, whether from institutional giants or retail enthusiasts, find their way through these intermediaries.
- Direct Market Access (DMA): Investors hold the baton with DMA, a system allowing them to place orders directly through the trading terminals provided by brokers. This direct interaction enhances transparency and efficiency.
Benefits of Listing with Stock Exchanges
Unlocking Opportunities Through Listing
Listing on a stock exchange opens doors to a plethora of opportunities for companies, investors, and the public.
Importance of Listing
- Market Reputation: The mere act of being listed elevates a company’s market reputation, contributing to the perceived value of its securities.
- Capital Generation: Companies can tap into the stock exchange market to generate capital by issuing shares. This avenue provides a cost-effective way to keep operations running smoothly.
- Credibility Beyond Words: Listed companies enjoy increased credibility in the financial realm. This credibility translates into faster credit approvals and more favorable terms from lenders.
- Collateral with Confidence: Lenders readily accept listed securities as collateral, providing companies with faster credit approvals and favorable terms.
Investment Methods
Navigating the Seas of Investment
Investing in the Indian stock exchange offers various routes, each catering to different risk appetites and preferences.
Ways to Invest
- Direct Investment: Dive headfirst into the world of stocks, bonds, and commodities by directly purchasing them.
- Indirect Investment: For those who prefer a diversified approach, mutual funds, index funds, and exchange-traded funds (ETFs) provide a well-balanced investment portfolio.
Major Stock Exchanges in India
The Pillars of Indian Finance
Two behemoths dominate the Indian stock exchange scene: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Bombay Stock Exchange (BSE)
- Legacy of 1875: Established in 1875, the BSE stands as the oldest stock exchange in Asia, showcasing Mumbai as its home.
- Market Capitalization Marvel: As of April, the BSE boasts an estimated market capitalization of $4.9 trillion, with over 6000 companies proudly listed under its banner.
- Sensex Soars High: The BSE’s performance index, Sensex, reached its zenith in June 2019, touching an impressive 40312.07.
National Stock Exchange (NSE)
- Demutualized Dynamo: Born in 1992 in Mumbai, the NSE pioneered the demutualized electronic stock exchange model in India.
- Marching in Trillions: As of March 2016, the NSE commanded a market capitalization of US$ 4.1 trillion, earning the title of the 12th largest stock exchange globally.
- NIFTY 50’s Global Reverberation: NSE’s performance index, NIFTY 50, reverberates across the globe, serving as a key indicator for investors gauging the Indian capital market.
Conclusion
In this comprehensive guide, we’ve peeled back the layers of complexity surrounding stock exchanges in India. From understanding the intricate mechanisms that govern trades to exploring the benefits of listing and the major players influencing the market, this journey provides valuable insights for investors at every level.
As we navigate the diverse investment methods and delve into the histories of BSE and NSE, it becomes evident that these stock exchanges are not just financial hubs; they are the beating hearts of India’s economic growth. Whether you’re a newcomer or a seasoned investor, the key to success in the stock exchange arena lies in understanding, adapting, and embracing the ever-evolving rhythm of the market. Happy investing!