INTRODUCTION:
A Stock Exchange is defined as “a marketplace, where financial securities (fungible and tradeable financial instruments used to raise capital in public and private markets) issued by companies are bought and sold.”
Located in India’s financial heart is the leading stock exchange of the country known as – The National Stock Exchange of India Limited (NSE). NSE was established in 1992 and is the first dematerialized electronic exchange in the country.
NSE, which trades in the currency of Indian Rupee, is the largest financial market of India, and its ups and downs are credited with being the means through which billions of dreams and ambitions are realized and fulfilled. At the international level also NSE has emerged as the global leader and has been ranked the fourth largest exchange in the world in cash equities by number of trades for 2 consecutive years now, world’s second largest exchange in cash market trades and one of the top three exchanges in index and stock derivatives volumes.
PAST TO PRESENT: HISTORY, PURPOSE AND OBJECTIVES
The origin of the National Stock Exchange of India lies in the recommendations of the M J Pherwani Committee (1991) .
NSE was incorporated in November 1992 as a tax – paying company and then established as a stock exchange recognized under the Securities Contracts (Regulations) Act, 1956, under P V Narasimha Rao as the Prime Minister of India and Manmohan Singh as the Finance Minister of India.
In June 1994 NSE began operations in the Wholesale Debt Market (WDM). The capital market (equities) segment of the NSE commenced operations in November 1994, and operations in the derivatives segment commenced in June 2000. Since 2000 many other derivatives have been launched and several reforms have been initiated.
NSE also played a significantly instrumental role in the creation of National Securities Depository Limited (NSDL) in August 1996. NSDL allows investors to retain and transfer the securities held by them electronically – which remarkably increased the appeal of the Indian Stock Market to investors. NSE also pioneered the commencement of Internet Trading in February 2000.
NSE’s trading platform is connected to more than 2 lakh terminals located in more than 2000 towns and cities across the country.
NSE has set several benchmarks and covered several milestones over these years. It has been fully established as a trading facility for all types of securities (including equity, debt instruments and hybrids) while simultaneously also ensuring equal access to investors all over the country through pertinent communication network. It is also credited with providing a fair, efficient and transparent securities market (bourse) using electronic trading systems.
LOCATION
The corporate office of NSE is located in Mumbai, Maharashtra while it has 6 other branch offices located in the following cities –
- Ahmedabad , Gujarat ii) Chennai , Tamil Nadu iii) Mumbai , Maharashtra
- iv) Delhi v) Hyderabad, Telangana vi) Kolkata , West Bengal
PRODUCTS, INDICES AND TOP COMPANIES
NSE deals in various products which are as mentioned below :
| EQUITIES | DERIVATIVES | FIXED INCOME & DEBT |
| EQUITY Market | Equity Derivatives | Corporate Bonds |
| Exchange Traded Funds | Commodity Derivatives | Electronic Debt Bidding Platform (EBP) |
| Indices | Currency Derivatives | Negotiated Trade Reporting Platform |
| Mutual Funds | Interest Rate Derivatives | Non Competitive Bidding in Government Securities |
| Security Lending & Borrowing Scheme | Tri-party Repo | |
| Soverign Gold Bond | ||
| Initial Public Oferring (IPO) | ||
| Institutional Placement Program (IPP) | ||
| Offer for Sale |
A stock index in simple words is defined as “an indicator that measures something”. In financial markets, indices “consist of a hypothetical portfolio of securities representing a particular market or segment of it.”
Mentioned below are some of the most important broad market indices of NSE:
- Nifty 50 index
- Nifty 100 index
- Nifty Next 50 index
- Nifty Midcap 50 index
- Nifty Smallcap 20 index
- CNX 100
- CNX Nifty Junior
The top companies listed at NSE with regard to market capitalization are as follows:
- Reliance Industries Limited
- Tata Consultancy Services Limited (TCS)
- Hindustan Unilever Limited (HUL)
- HDFC Bank Limited
- Infosys Limited
- Kotak Mahindra Bank Limited
- Bharti Airtel Limited
FUNCTIONING AND OPERATIONS
Management and Board of Directors
The managing director (MD) and Chief Economic Advisor of NSE is Mr. Vikram Limaye who took charge on 17 July 2017. NSE’s Board of Directors consists of 8 Directors.
Working
Trading at NSE can be classified under two broad categories –
- Wholesale Debt Marker (WDM)
Wholesale Debt Market segment deals in fixed income securities such as treasury bills, public sector unit bonds, commercial paper, public sector unit bonds, certificate of deposit etc. Institutions and corporate bodies enter into high value transactions in these financial instruments mentioned above.
- Capital Market (CM)
Capital Market segment is the segment where securities such as shares, preference shares , debentures etc. are traded after being initially offered to the public in the primary market and/or listed on the stock exchange.
Players
There are largely two kinds of players in NSE
- Trading members
Membership of NSE Clearing is open to corporate entities, limited liability partnerships, partnership firms and individuals who fulfill the various eligibility criteria laid down by SEBI and NSE.
- Participants
All entities desirous of settling and carrying out the settlement trades in corporate bonds are known as participants. Some of the major participants include – Depositories, Trading members, Clearing members, Clearing banks , Securities Exchange Board of India.
Initiatives and Innovations
NSE has taken up several initiatives like –
- Financial Deepening and Household Finance Research Initiative – The NSE-IFF Research Initiative on Financial Inclusion is a joint venture of the National Stock Exchange of India (NSE) and IFMR Finance Foundation (IFF). The Initiative invites academics and scholars to submit research proposals for projects in the domain of Financial Inclusion.
- NSE EMERGE is NSE’s new initiative for Small and medium-sized enterprises (SME)& Startup companies in India.[11] These companies can get listed on NSE without an Initial public offering (IPO). This platform will help SME’s & Startups connect with investors and help them with the raising of funds.
- NSE – NYU Stern School of Business Initiative for the Study of Indian Financial Markets
NSE has been a lead innovation driver in the financial market sector of the country and has a lot of praiseworthy distinctions in its name like –
- Setting up the first clearing corporation – “National Securities Clearing Corporation Limited” (NSCCL) in India which is now known as NSE Clearing Limited.
- Co-promoting and setting up of the first depository of India, known as the National Security Depositories Limited (NSDL) .
- Setting up NIFTY 50 – the benchmark Indian stock market index
- Launched Commodity Derivatives segment, go Bid Mobile app for government securities and Tri-Party Repo of Corporate Debt Securities
- Became the first exchange in India to offer trading in Currency Futures
Technology
The screen-based trading at NSE is run with state-of-the-art technology. World class technology systems facilitate the demand for capacity, reliability and performance efficiently while dealing in huge volumes of trade transactions.
BENEFITS AND LIMITATIONS
Benefits
NSE has emerged as the leading stock exchange market in the country due to its numerous benefits, some of which are as follows –
- The fair, efficient and transparent running of NSE grants the investors a lucid understanding about the functioning of the stock exchange. It helps investors to gauge the market’s depth easily
- NSE is a comprehensive marketplace and provides to investors the option to deal in various different types of securities ranging from stock to derivatives.
- NSE has a nationwide reach which has penetrated all parts of the country – making it possible for people from different parts of the country to become a participant in the exchange market in different capacities. It has thus made possible wider accessibility to stock market.
- NSE has twenty-four investor-service centers in various cities across the country to cater to the needs of investors.
- The automated screen-based training leads to a robust and quick process leads to fast and easy trading.
- NSE provides huge number of employment opportunities directly and indirectly.
Limitations
Despite being the largest and most efficient stock exchange market in the country NSE has some limitations , few of which are as follows :
- The brokerage commission reduces the total profits of the investor if a financial intermediary is hired for the investment
- Various legal Formalities need to be completed to start trading at NSE which sometimes maybe time consuming.
CONCLUSION:
The financial market is the backbone of any country’s economy. It is the most significant institution and functional vehicle for the economy of the country to flourish.
NSE has been continuously playing a major role in the economic transformation of the nation while positively influencing savings, capital formation and growth of the nation.
NSE has made it possible it possible for people from all walks of life to invest and earn. It also provides employment opportunities to millions of people directly and indirectly. Its fair and efficient functioning has built peoples trust in the institution of NSE while setting up several benchmarks through its journey of many years.
Thus it can be said NSE has rightly earned the tag of being the largest and most transparent stock exchange market in the country.
By-
JUHI VIJAY
