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Stock Exchanges in India

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 ExchangeHeadquartersYear of EstablishmentCurrent Status
Bombay Stock Exchange (BSE)Mumbai1875Permanent
National Stock Exchange of India (NSE)Mumbai1992Permanent
Calcutta Stock Exchange (CSE)Kolkata1908Permanent
India International Exchange (India INX)Gujarat2017Valid till Dec 28, 2019
Metropolitan Stock Exchange of India ltd.Mumbai2008Valid till Sep 15, 2019
NSE IFSC Ltd.Gujarat2016Valid till May 28, 2020
Madras Stock ExchangeChennai1937Closed in 2015
Inter-connected Stock Exchange Ltd.Mumbai1998Closed in 2014
OTC Exchange Of IndiaMumbai1990Closed in 2015
Bangalore Stock Exchange (BgSE)Bangalore1963Closed in 2014
Ahmedabad Stock ExchangeAhmedabad1894Closed in 2018
Cochin Stock ExchangeKochi1978Closed in 2014
Madhya Pradesh Stock ExchangeIndore1919Closed in 2015
Saurashtra Kutch Stock ExchangeRajkot1989Closed in 2013
Mangalore Stock ExchangeMangalore1984Closed in 2014
Vadodara Stock ExchangeVadodara1990Closed in 2015
Bhubaneswar Stock ExchangeBhubaneswar1989Closed in 2015
Coimbatore Stock ExchangeCoimbatore1991Closed in 2013
Delhi Stock Exchange AssociationNew Delhi1947Closed in 2017
Guwahati Stock ExchangeGuwahati1983Closed in 2015
Jaipur Stock ExchangeJaipur1989Closed in 2015
Lucknow City Stock ExchangeLucknow1978Closed in 2015
Ludhiana Stock Exchange AssociationLudhiana1983Closed in 2014
Pune Stock ExchangePune1982Closed 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 ExchangeClosing Year
Ahmedabad Stock Exchange2018
Delhi Stock Exchange2017
Bombay Commodity Exchange Limited (BCEL)2016
Cotton Association of India (CAI)2016
Gauhati Stock Exchange2015
Jaipur Stock Exchange2015
Madhya Pradesh Stock Exchange2015
Madras Stock Exchange (MSE)2015
OTC Exchange of India2015
Pune Stock Exchange2015
UP Stock Exchange2015
Vadodara Stock Exchange2015
Bangalore Stock Exchange 2014
Cochin Stock Exchange2014
Inter-connected Stock Exchange of India2014
Ludhiana Stock Exchange2014
Bhubaneshwar Stock Exchange2005

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

  1. Independence Matters: Unlike some global counterparts, Indian stock exchanges operate independently, free from market makers or specialists. This autonomy enhances efficiency and fairness.
  2. 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.
  3. 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.
  4. 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

  1. Market Reputation: The mere act of being listed elevates a company’s market reputation, contributing to the perceived value of its securities.
  2. 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.
  3. 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.
  4. 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

  1. Direct Investment: Dive headfirst into the world of stocks, bonds, and commodities by directly purchasing them.
  2. 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)

  1. Legacy of 1875: Established in 1875, the BSE stands as the oldest stock exchange in Asia, showcasing Mumbai as its home.
  2. 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.
  3. Sensex Soars High: The BSE’s performance index, Sensex, reached its zenith in June 2019, touching an impressive 40312.07.

National Stock Exchange (NSE)

  1. Demutualized Dynamo: Born in 1992 in Mumbai, the NSE pioneered the demutualized electronic stock exchange model in India.
  2. 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.
  3. 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!

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