What is NSE?
Established in 1992, the National Stock Exchange of India Limited (NSE) is the first dematerialised electronic exchange institution in the Indian stock market. NSE was the first modern, transparent, and fully automated platform, facilitating seamless electronic trading. It is one of India’s premier exchanges and ranks fourth globally in terms of the trading volume metrics.
The first stock exchange successfully integrated all the investors under a single roof supporting equity, derivatives, and debt instruments. This feat was possible since it was the first stock exchange in India, providing electronic trading facilities.
What is the benchmark index of the National Stock Exchange of India?
S&P CNX Nifty (Nifty 50) was introduced as the benchmark index of NSE in 1996. The CNX Nifty signifies the weighted average of the top 50 companies across 17 sectors.
With a base period of November 1995, NIFTY50 has a base value of 1000 and a base capital of Rs. 2.06 lakh crore (USD 27.28 billion). The stocks included in the NIFTY50 represent a significant portion of the NSE market capitalisation as they contribute to over 50 percent of stocks traded in the exchange in the last six months.
What is the trading process of the National Stock Exchange of India?
The trading process is based on market orders. Computer terminals match these orders, and there is no involvement of market makers. The investor directly places a market order and is allotted a unique trading number. The trading computer then matches it with a limit order instantaneously. Both the buyer and seller remain anonymous during the entire transaction.
If a match is not found, the order is added to a list. The order sequence is determined on price-time precedence. The exchange prioritises the order with the best price. If two orders are at par, then the one with the earlier timestamp is matched first in such cases.
Benefits of the trading process of the National Stock Exchange of India
– The order driven mechanism provides objectivity and invokes investor confidence in both buyers and sellers.
– The entire procedure being automated offers transparency and efficiency in executing trade transactions and processing settlements
– The volume of trading activity on the stock exchange incentivises buyers and sellers to participate, which results in higher liquidity.
Functions of NSE
– To establish an accessible trading facility for investors across the nation dealing with debt, equity, and other asset classes.
– To act as an equal opportunity communication channel for all interested investors
– To establish a trading platform that meets the global standard for financial exchange markets.
– To enable the book-entry settlement system and allow shorter periods for trade settlements.
NSE Listing Benefits
Easy to gauge the market depth
There is a lot of trading and post-trading information provided on the platform. Moreover, you can also look up the top buyers and sellers effortlessly. The total number of securities available and the top buy and sell orders are visible for each transaction. Thus, NSE provides comprehensive visibility of the market depth.
Transparency
There is a large volume of trading activity bringing down the impact cost. Thus, the burden of trading expenses on investors is less. Also, the trading system is automated, which boosts visibility and transparency in trading.
Trade statistics
The listed companies are provided trading statistics each month. They are highly beneficial for tracking the performance and the market sentiments of the company.
Investment Segments
National Stock Exchange of India includes the following investment segments within its fold–
Equity
Such investments include equities, mutual funds, indices, and others.
Equity derivatives
Derivates trading on the NSE began with the launch of index futures in 2002. Subsequently, the Dow Jones Industrial Average and S&P 500 were launched in 2011 on this platform. With these methods, the exchange made remarkable traction in equity derivates trading.
Debt
The core asset holding in such investment comprises various short-term and long-term bonds, security products, and more.
The NSE launched India’s first debt platform on 13th May 2013. It aimed to provide investors with a digital, transparent, and liquid platform for all the debt-based instrument trading.
Conclusion
The National Stock Exchange is India’s leading stock exchange offering everything from exchange listings to trading services, clearing and settlement services, indices, and more.
If you are planning to trade on the National Stock Exchange of India or have any other queries related to it, feel free to reach out to us. We would love to guide you through the entire process.
