Basics of Indian Stock Market

The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Ltd. (NSE) are the two premier exchanges in India. You can find detailed information about these exchanges on their websites, www.bseindia.com and www.nseindia.com respectively.
The NSE and BSE are equal in size in terms of daily traded volume. The average daily turnover at these premier Indian exchanges grew nine fold to more than Rs. 77 billion in the nine year period between 1998 and 2007. Most key stocks are traded on both the exchanges and an investor can buy them on either.

BSE’s primary index is the BSE sensex comprising thirty stocks. Correspondingly, NSE has the S&P NSE 50 Index (Nifty) which consists of fifty stocks, respectively, are selected from different sectors. BSE Sensex is the older and more the widely followed index of the two, not the least because it embeds a longer history.

Both the exchanges have fully computerized systems of trading, respectively known as BOLT (BSE On Line Trading) and NEAT (National exchanges automated trading), which facilitate efficient order processing, automatic machine, faster execution of trades and transparency.
The scrip traded on the BSE have been classified into “A”, “B”, “B2”, “S”, “T” and “Z” groups. The “A” group represents those shares which are in the carry forward system .The “F” group represents the debt market (fixed income securities) segment. The “Z” group scrip are the blacklisted companies. The “G” group represents government securities.

The key regulator governing India’s stock exchanges, brokers, depositories, depository participants, mutual funds, foreign institutional investors (FIIs) and other participants in India’s secondary and primary markets is the Securities and Exchanges Board of India Ltd (SEBI).
Working of the Indian stock markets If you want to buy / sell shares from the stock market, you have to first place your order with a broker.

Depository

A Depository is an organization responsible for maintaining an investor’s securities in the electronic form. In India, there are two depositories, namely National securities Depository Ltd. (NSDL) and Central Depository Services Ltd. (CDSL).

Depository Participant (DP)

The market intermediary through whom investors can avail of depository services is called depository participant (DP). As per SEBI regulations, DPs are organization involved in the business of providing financial services such as Banks, brokers, custodians and financial institutions.

Why people Invest

Everybody wants to save and invest. You invest to make your money grow so that it will shield you against inflation. If your invested money gives returns that are more than the rate of inflation, only than you have a surplus. You can invest in fixed deposits, bonds, gold, property, mutual funds or in shares of companies. Investment decisions should be based on your risk profile, available savings and time horizon.You should always remember that risks and returns are directly proportional to each other, namely the higher the risk, higher the returns.

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