Stock Markets — BSE & NSE

The National Stock Exchange (NSE) was established in 1992 based on the recommendations of the Pherwani Committee to provide a modern, screen-based trading system.

SENSEX (Sensitive Index) is the benchmark index of the BSE, comprising 30 of the largest and most actively traded stocks on the exchange.

The NSE is headquartered in Mumbai, Maharashtra, the financial capital of India.

SEBI, established in 1992, is the statutory regulatory body that oversees the functioning of stock exchanges and the securities market in India.

Nifty 50 is the flagship index of the National Stock Exchange (NSE) and represents the weighted average of 50 Indian company stocks across various sectors.

Dematerialization (Demat) is the process by which an investor's physical share certificates are converted into an equivalent number of securities in an electronic format maintained in a Demat account.

NEAT (National Exchange for Automated Trading) is the system through which trading is conducted on the National Stock Exchange.

BOLT is the computerised trading system developed by the Bombay Stock Exchange to provide a nation-wide trading platform.

Blue chip companies are large, well-established, and financially stable companies that have operated for many years and have a market reputation for quality.

Clearing Corporations (like ICCL for BSE or NCL for NSE) act as the clearing and settlement agency, ensuring the settlement of trades.

An Initial Public Offering (IPO) is the process by which a private company offers its shares to the public in a new stock issuance for the first time.

National Securities Depository Limited (NSDL) is the first and largest depository in India, providing services for the holding and trading of securities in electronic form.

A 'Bear' is an investor who believes that the market or a specific stock is heading downwards and tends to sell stocks to profit from the decline.

A bull market is a condition of a financial market in which prices are rising or are expected to rise, typically characterized by investor confidence and optimism.

Stock brokers are registered intermediaries who execute buy and sell orders on behalf of investors on the trading platform of a stock exchange.

Market capitalization is the aggregate valuation of a company based on its current share price and the total number of its outstanding stock shares.

Central Depository Services Limited (CDSL) is the second major depository in India, which allows investors to deposit securities in dematerialized form.

Circuit breakers are regulatory mechanisms used by exchanges to halt trading for a specific period if the index falls or rises beyond a pre-defined threshold to curb excessive volatility.

The BSE is historically and geographically famous for being located on Dalal Street in Mumbai.

NEAT (National Exchange for Automated Trading) is the fully automated, screen-based trading system implemented by the NSE.

Badla refers to the mechanism of carrying forward a transaction from one settlement period to the next in the stock market.

Nifty 500 is a broad-based index that represents the top 500 companies listed on the NSE based on full market capitalization.

Since 2003, the SENSEX has been calculated using the free-float market capitalization methodology, which considers only the shares available for public trading.

The ICCL (for BSE) and NCL (for NSE) act as the clearing agencies that guarantee the settlement of trades.

Merchant bankers act as intermediaries who manage the entire IPO process, including pricing, marketing, and ensuring compliance with SEBI guidelines.

As of early 2023, the Indian stock market has fully transitioned to the T+1 settlement cycle, meaning trade-related settlements happen within one business day.

A 'Bear Market' is characterized by falling share prices and typically occurs when the economy is slowing down or in a recession.

Selection for the Nifty 50 is primarily based on liquidity, free-float market capitalization, and the stock's ability to represent the economy, not just a minimum company count.

Secondary market transactions involve the buying and selling of already listed securities among investors, unlike primary markets where new securities are issued.

Face value (or par value) is the nominal value assigned to a share by the issuing company at the time of incorporation.

The SEBI Act, 1992, provides the statutory framework for the Securities and Exchange Board of India to regulate the securities market.

Insider trading is illegal as it involves trading based on confidential, non-public information that gives an unfair advantage over other market participants.

Index funds are passive mutual funds that aim to match the returns of a specific benchmark index, such as the Nifty 50 or SENSEX.

Penny stocks are small-cap companies that trade at low prices, often considered highly speculative and risky for investors.

Stock exchanges provide the infrastructure for companies to raise capital (primary market) and for investors to trade securities (secondary market), thereby ensuring liquidity.

A stock split divides existing shares into multiple shares to increase liquidity and make them more affordable, proportionally reducing the face value and share price.

The S&P BSE 500 is a broad-market index that covers about 90% of the total market capitalization of the Bombay Stock Exchange.

A Red Herring Prospectus is a document filed by a company with SEBI containing details about its business, risks, and financial information before an IPO.

Short selling involves selling borrowed shares with the expectation that the price will decline, allowing the trader to buy them back later at a lower price to return to the lender.

The IEPF is managed by the Ministry of Corporate Affairs to promote investor awareness and protect their interests by refunding unclaimed funds to rightful claimants.

ASBA is a process by which the application money remains in the investor's bank account and is only 'blocked' until the allotment process is completed.

The Nifty Dividend Opportunities 50 index aims to measure the performance of 50 companies listed on the NSE that are characterized by high dividend yield.

In T+1 settlement, the exchange ensures that the final settlement of trades is completed within one working day after the trade date.

A buyback is a corporate action where a company buys its own shares from the existing shareholders, usually to increase the value of remaining shares.

OFS is a simplified method for promoters of listed companies to sell their shares to the public to meet minimum public shareholding norms.

The Green Shoe Option allows the lead manager to allot shares in excess of the issue size to stabilize the price if the market demand is high.

The BSE SENSEX index has its base year in 1978-79, with an initial base value of 100 points.

The Dave Committee (1995) recommended the setting up of a central depository system, which led to the creation of NSDL and the concept of Demat.

An FPO is an issuance of shares to investors by a company that is already listed on the stock exchange after its initial IPO.