All about the Indian Stock Market and Investment.
                     All about the Indian Stock 
Market and Investment
Foreword
• There are two groups of investors: those who know about the prospects 
for investment in India and those who don't. 
• India may look like a small dot to someone in the U.S. but you will find 
the same stuff you would expect from any promising market after closer 
inspection. 
Introduction to Indian Stock Market
Much of Indian stock market trading takes place on its two stock exchanges: 
the Bombay Stock Exchange (BSE) and the NSE. The BSE has existed since 
1875. 
The NSE, on the other hand, was founded in 1992 and began to trade in 
1994. Both exchanges, however, follow the same system for trading, trading 
hours and settlement process.
Source: Google Images
A look towards BSE & NSE
• The BSE had 5,518 listed companies as of February 2020, while the 
competitor NSE had around 1,799 listed companies as of 31 Dec 2019. 
• Of all the companies listed on the BSE, only about 500 firms make up 
more than 90 per cent of their market capitalization; the rest of the 
crowd is extremely illiquid. 
Source: Google Images
Similarities and Dissimilarities
• BSE is the older stock market but in terms of value the NSE is the growing 
stock market. 
• The NSE, instead, is a more liquid market. They are both equal in terms of 
market value, at around $2.3 trillion.
Source: Google Images
How market works?
• Trading at both exchanges takes place in an open book of electronic 
boundaries, in which the trading machine allows order matching. 
• There are no market makers, and the whole mechanism is order-driven, 
ensuring that investor-placed market orders are automatically matched 
to the appropriate limits. Buyers and sellers therefore remain 
anonymous. 
Advantages
• The benefit of an order-driven market is that the show of all purchase 
and sale orders in the trading system provides greater clarity.
• Nevertheless, there is no assurance that directives will be followed, in 
the absence of market leaders.
Timing
• Equity spot markets follow a rolling settlement by T+2. Which means any 
trade which takes place on Monday is resolved by Wednesday. 
• All stock market trading occurs by 9:55 a.m. And 3:30 p.m., Indian 
Standard Time, Monday through Friday (+ 5.5 hours GMT). 
Indexes
• Sensex and Nifty are the two popular Indian market indexes. 
• Sensex is the oldest stock market index; it comprises shares of 30 
companies listed on the BSE, which account for about 47 percent of the 
free-float market capitalization of the index. 
• Established in 1986, it provides time series data from April 1979 onward.
Source: Google Images
Other Indexes
• Another index is the Normal and Weak CNX Nifty; it includes 50 shares listed on the 
NSE, representing around 46.9 per cent of its free-float market capitalization. 
• It was established in 1996 and provides time series data from July 1990 onwards. 
Source: Google Images
Market Regulation
• The ultimate responsibility for stock market growth, regulation and supervision 
rests with the Securities and Exchange Board of India (SEBI), which was established 
as an independent authority in 1992. 
• Since then, SEBI has continuously tried to develop market rules in line with best 
practice in the industry. It retains considerable power to impose fines on market 
participants, if a violation occurs.
Source: Google Images
Who can Invest?
• One should be registered either as a foreign institutional investor (FII) or as one of 
the sub-accounts of one of the registered FIIs for making portfolio investments in 
India. The market regulator, SEBI, concedes both approvals. 
• Global institutional investors consist primarily of mutual funds, pension funds, 
endowments, sovereign wealth funds, insurance firms, banks and money 
management firms.