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Stock markets in india

Introduction

In general, the financial market divided into two parts, Money market and capital market.
Securities market is an important, organized capital market where transaction of capital is
facilitated by means of direct financing using securities as a commodity. Securities market
can be divided into a primary market and secondary market.

PRIMARY MARKET

The primary market is an intermittent and discrete market where the initially listed shares are
traded first time, changing hands from the listed company to the investors. It refers to the
process through which the companies, the issuers of stocks, acquire capital by offering their
stocks to investors who supply the capital. In other words primary market is that part of the
capital markets that deals with the issuance of new securities. Companies, governments or
public sector institutions can obtain funding through the sale of a new stock or bond issue.
This is typically done through a syndicate of securities dealers. The process of selling new
issues to investors is called underwriting. In the case of a new stock issue, this sale is called
an initial public offering (IPO). Dealers earn a commission that is built into the price of the
security offering, though it can be found in the prospectus.

SECONDARY MARKET

The secondary market is an on-going market, which is equipped and organized with a place,
facilities and other resources required for trading securities after their initial offering. It refers
to a specific place where securities transaction among many and unspecified persons is
carried out through intermediation of the securities firms, i.e., a licensed broker, and the
exchanges, a specialized trading organization, in accordance with the rules and regulations
established by the exchanges.

A bit about history of stock exchange they say it was under a tree that it all started in
1875.Bombay Stock Exchange (BSE) was the major exchange in India till 1994.National
Stock Exchange (NSE) started operations in 1994.

NSE was floated by major banks and financial institutions. It came as a result of Harshad
Mehta scam of 1992. Contrary to popular belief the scam was more of a banking scam than a
stock market scam. The old methods of trading in BSE were people assembling on what as
called a ring in the BSE building. They had a unique sign language to communicate apart
from all the shouting. Investors weren't allowed access and the system was opaque and
misused by brokers. The shares were in physical form and prone to duplication and fraud.

NSE was the first to introduce electronic screen based trading. BSE was forced to follow suit.
The present day trading platform is transparent and gives investors prices on a real time basis.
With the introduction of depository and mandatory dematerialization of shares chances of
fraud reduced further. The trading screen gives you top 5 buy and sell quotes on every scrip.
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A typical trading day starts at 10 ending at 3.30. Monday to Friday. BSE has 30 stocks which
make up the Sensex .NSE has 50 stocks in its index called Nifty. FII s Banks, financial
institutions mutual funds are biggest players in the market. Then there are the retail investors
and speculators. The last ones are the ones who follow the market morning to evening;
Market can be very addictive like blogging though stakes are higher in the former.

ORIGIN OF INDIAN STOCK MARKET

The origin of the stock market in India goes back to the end of the eighteenth century when
long-term negotiable securities were first issued. However, for all practical purposes, the real
beginning occurred in the middle of the nineteenth century after the enactment of the
companies Act in 1850, which introduced the features of limited liability and generated
investor interest in corporate securities.

An important early event in the development of the stock market in India was the formation
of the native share and stock brokers 'Association at Bombay in 1875, the precursor of the
present day Bombay Stock Exchange. This was followed by the formation of
associations/exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). In
addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to
recede into oblivion during depressing times subsequently.

Stock exchanges are intricacy inter-woven in the fabric of a nation's economic life. Without a
stock exchange, the saving of the community- the sinews of economic progress and
productive efficiency- would remain underutilized. The task of mobilization and allocation of
savings could be attempted in the old days by a much less specialized institution than the
stock exchanges. But as business and industry expanded and the economy assumed more
complex nature, the need for 'permanent finance' arose. Entrepreneurs needed money for long
term whereas investors demanded liquidity – the facility to convert their investment into cash
at any given time. The answer was a ready market for investments and this was how the stock
exchange came into being.

Stock exchange means any body of individuals, whether incorporated or not, constituted for
the purpose of regulating or controlling the business of buying, selling or dealing in
securities. These securities include:

(i) Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a like
nature in or of any incorporated company or other body corporate;

(ii) Government securities; and

(iii) Rights or interest in securities.

The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Ltd (NSE) are
the two primary exchanges in India. In addition, there are 22 Regional Stock Exchanges.
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However, the BSE and NSE have established themselves as the two leading exchanges and
account for about 80 per cent of the equity volume traded in India. The NSE and BSE are
equal in size in terms of daily traded volume. The average daily turnover at the exchanges has
increased from Rs 851 crore in 1997-98 to Rs 1,284 crore in 1998-99 and further to Rs 2,273
crore in 1999-2000 (April - August 1999). NSE has around 1500 shares listed with a total
market capitalization of around Rs 9, 21,500 crore.

The BSE has over 6000 stocks listed and has a market capitalization of around Rs 9, 68,000
crore. Most key stocks are traded on both the exchanges and hence the investor could buy
them on either exchange. Both exchanges have a different settlement cycle, which allows
investors to shift their positions on the bourses. The primary index of BSE is BSE Sensex
comprising 30 stocks. NSE has the S&P NSE 50 Index (Nifty) which consists of fifty stocks.
The BSE Sensex is the older and more widely followed index.

Both these indices are calculated on the basis of market capitalization and contain the heavily
traded shares from key sectors. The markets are closed on Saturdays and Sundays. Both the
exchanges have switched over from the open outcry trading system to a fully automated
computerized mode of trading known as BOLT (BSE on Line Trading) and NEAT (National
Exchange Automated Trading) System.

It facilitates more efficient processing, automatic order matching, faster execution of trades
and transparency; the scrip's traded on the BSE have been classified into 'A', 'B1', 'B2', 'C', 'F'
and 'Z' groups. The 'A' group shares represent those, which are in the carry forward system
(Badla). The 'F' group represents the debt market (fixed income securities) segment. The 'Z'
group scrip's are the blacklisted companies. The 'C' group covers the odd lot securities in 'A',
'B1' & 'B2' groups and Rights renunciations. The key regulator governing Stock Exchanges,
Brokers, Depositories, Depository participants, Mutual Funds, FIIs and other participants in
Indian secondary and primary market is the Securities and Exchange Board of India (SEBI)
Ltd.

Brief History of Stock Exchanges

One of the oldest stock markets in Asia, the Indian Stock Markets have a 200 years old
history.

18th Century East India Company was the dominant institution and by end of the century,
busuness in its loan securities gained full momentum

1830's Business on corporate stocks and shares in Bank and Cotton presses started in
Bombay. Trading list by the end of 1839 got broader

1840's Recognition from banks and merchants to about half a dozen brokers

1850's Rapid development of commercial enterprise saw brokerage business attracting

more people into the business

1860's The number of brokers increased to 60

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1860-61 The American Civil War broke out which caused a stoppage of cotton supply
from United States of America; marking the beginning of the "Share Mania" in
India

1862-63 The number of brokers increased to about 200 to 250

1865 A disastrous slump began at the end of the American Civil War (as an example,
Bank of Bombay Share which had touched Rs. 2850 could only be sold at Rs.
87)

Pre-Independance Scenario - Establishment of Different Stock Exchanges

1874 With the rapidly developing share trading business, brokers used to gather at a
street (now well known as "Dalal Street") for the purpose of transacting
business.

1875 "The Native Share and Stock Brokers' Association" (also known as "The
Bombay Stock Exchange") was established in Bombay

1880's Development of cotton mills industry and set up of many others

1894 Establishment of "The Ahmedabad Share and Stock Brokers' Association"

1880 - 90's Sharp increase in share prices of jute industries in 1870's was followed by a
boom in tea stocks and coal

1908 "The Calcutta Stock Exchange Association" was formed

1920 Madras witnessed boom and business at "The Madras Stock Exchange" was
transacted with 100 brokers.

1923 When recession followed, number of brokers came down to 3 and the Exchange
was closed down

1934 Establishment of the Lahore Stock Exchange

1936 Merger of the Lahoe Stock Exchange with the Punjab Stock Exchange

1937 Re-organisation and set up of the Madras Stock Exchange Limited (Pvt.)
Limited led by improvement in stock market activities in South India with
establishment of new textile mills and plantation companies

1940 Uttar Pradesh Stock Exchange Limited and Nagpur Stock Exchange Limited
was established

1944 Establishment of "The Hyderabad Stock Exchange Limited"

1947 "Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks
and Shares Exchange Limited" were established and later on merged into "The
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Delhi Stock Exchange Association Limited"

Post Independance Scenario

The depression witnessed after the Independance led to closure of a lot of exchanges in the
country. Lahore Estock Exchange was closed down after the partition of India, and later on
merged with the Delhi Stock Exchange. Bnagalore Stock Exchange Limited was registered in
1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable
state till 1957 when they applied for recognition under Securities Contracts (Regulations)
Act, 1956. The Exchanges that were recognized under the Act were:

Bombay

Calcutta

Madras

Ahmedabad

Delhi

Hyderabad

Bangalore

Indore

Many more stock exchanges were established during 1980's, namely:

Cochin Stock Exchange (1980)

Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982)

Pune Stock Exchange Limited (1982)

Ludhiana Stock Exchange Association Limited (1983)

Gauhati Stock Exchange Limited (1984)

Kanara Stock Exchange Limited (at Mangalore, 1985)

Magadh Stock Exchange Association (at Patna, 1986)

Jaipur Stock Exchange Limited (1989)

Bhubaneswar Stock Exchange Association Limited (1989)

Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989)

Vadodara Stock Exchange Limited (at Baroda, 1990)

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Coimbatore Stock Exchange

Meerut Stock Exchange

At present, there are twenty one recognized stock exchanges in India which does not include
the Over The Counter Exchange of India Limited (OTCEI) and the National Stock Exchange
of India Limited (NSEIL).

A Share market/stock markets is an open market for fiscal operations such as trading of a
firm's share and derivatives at a fixed cost. These securities are further listed on a stock
exchange. A Share market does not offer any corporeal service and is not a separately owned
business entity.

It was in 1875 that the Indian Share Market first started functioning. The first share trading
association in India was known as the Native Share and Stock Broker's Association, only to
become the Bombay Stock Exchange (BSE) later on. This trading association started off its
operations with around 318 members.

Main components of Indian Share Market

Bombay Stock Exchange (BSE)

Bombay Stock Exchange is known to be the oldest stock exchange in the entire Asian region.
If someone wants to know about the history of the India share market, it becomes
synonymous with the history of the Bombay Stock Exchange. It started functioning in 1875
with the name 'The Native Share and Stock Broker's Association'. Under the Securities
Contracts (Regulation) Act, 1956, the association got its recognition as a stock exchange in
1956. When it started, it was just an association of persons but with the recognition it got
transferred to a corporate and demutualised entity.

Trading items in Bombay Stock Exchange -

Equity or Shares

Derivatives (Futures and Options)

Debt Instruments

The main index of BSE is known as the BSE SENSEX or simply SENSEX
(Sensitivity Index). It is an index which comprises of 30 financially sound company scrips,
with an option to be reviewed and modified from time-to-time. The index calculation is based
on the 'Free-float Market Capitalization' methodology. Leading bourses like the Dow-Jones
also follow this methodology. Currently the Sensex is hovering around the 17,000 mark, all
expected to touch 20K by 2010. But then volatility has its important role to spoil the entire
game.
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National Stock Exchange (NSE)

National Stock Exchange (NSE) is considered to be the leader in the stock exchange scenario
in terms of the total volume traded. The market capitalisation the National Stock Exchange

touched about $921.31 billion at the end of May 2009. The National Stock Exchange
received the recognition of a stock exchange in July 1993 under Securities Contracts
(Regulation) Act, 1956. The products that are traded in the National Stock Exchange are:-

Equity or Share

Futures (both index and stock)

Options (Call and Put)

Wholesale Debt Market

Retail Debt Market

NSE has a fully automated screen based trading system which is known as the NEAT system.
The transactions are carried on with speed, efficiency, and are all transparent. The risk
management system of the National Stock Exchange is world class and can be considered as
the benchmark for other bourses.

The leading index of NSE is known as Nifty 50 or just Nifty. It comprises of 50 diversified
benchmark Indian company scrips and is constructed on the basis of weighted average market
capitalization method.

Regulatory Authority of Indian Share Market

SEBI or Securities and Exchange Board of India is the market watchdog and has the
responsibility of protecting the investors' interests, develops regulatory norms and helps in
the development of the securities market in India.

Trading Pattern of the Indian Stock Market

Indian Stock Exchanges allow trading of securities of only those public limited companies
that are listed on the Exchange(s). They are divided into two categories:
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Types of Transactions
The flowchart below describes the types of transactions that can be carried out on the Indian
stock exchanges:

Indian stock exchange allows a member broker to perform following activities:

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Act as an agent,

Buy and sell securities for his clients and charge commission for the same,

Act as a trader or dealer as a principal,

Buy and sell securities on his own account and risk.

Market Basics

Electronic trading

Electronic trading eliminates the need for physical trading floors. Brokers can trade from
their offices, using fully automated screen-based processes. Their workstations are connected
to a Stock Exchange's central computer via satellite using Very Small Aperture Terminus
(VSATs). The orders placed by brokers reach the Exchange's central computer and are
matched electronically.

Exchanges in India

The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) are the
country's two leading Exchanges. There are 20 other regional Exchanges, connected via the
Inter-Connected Stock Exchange (ICSE). The BSE and NSE allow nationwide trading via
their VSAT systems.

Index

An Index is a comprehensive measure of market trends, intended for investors who are
concerned with general stock market price movements. An Index comprises stocks that have
large liquidity and market capitalization. Each stock is given a weight age in the Index
equivalent to its market capitalization. At the NSE, the capitalization of NIFTY (fifty selected
stocks) is taken as a base capitalization, with the value set at 1000. Similarly, BSE Sensitive
Index or Sensex comprises 30 selected stocks. The Index value compares the day's market
capitalization vis-à-vis base capitalization and indicates how prices in general have moved
over a period of time.

Execute an order

Select a broker of your choice and enter into a broker-client agreement and fill in the client
registration form. Place your order with your broker preferably in writing. Get a trade
confirmation slip on the day the trade is executed and ask for the contract note at the end of
the trade date.

Need a broker
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As per SEBI (Securities and Exchange Board of India.) regulations, only registered members
can operate in the stock market. One can trade by executing a deal only through a registered
broker of a recognized Stock Exchange or through a SEBI-registered sub-broker.

Contract note

A contract note describes the rate, date, time at which the trade was transacted and the
brokerage rate. A contract note issued in the prescribed format establishes a legally
enforceable relationship between the client and the member in respect of trades stated in the
contract note. These are made in duplicate and the member and the client both keep a copy
each. A client should receive the contract note within 24 hours of the executed trade.
Corporate Benefits/Action.

Split

A Split is book entry wherein the face value of the share is altered to create a greater number
of shares outstanding without calling for fresh capital or altering the share capital account.
For example, if a company announces a two-way split, it means that a share of the face value
of Rs 10 is split into two shares of face value of Rs 5 each and a person holding one share
now holds two shares.

Buy Back

As the name suggests, it is a process by which a company can buy back its shares from
shareholders. A company may buy back its shares in various ways: from existing
shareholders on a proportionate basis; through a tender offer from open market; through a
book-building process; from the Stock Exchange; or from odd lot holders.

A company cannot buy back through negotiated deals on or off the Stock Exchange, through
spot transactions or through any private arrangement.

Settlement cycle

The accounting period for the securities traded on the Exchange. On the NSE, the cycle
begins on Wednesday and ends on the following Tuesday, and on the BSE the cycle
commences on Monday and ends on Friday. At the end of this period, the obligations of each
broker are calculated and the brokers settle their respective obligations as per the rules, bye-
laws and regulations of the Clearing Corporation. If a transaction is entered on the first day of
the settlement, the same will be settled on the eighth working day excluding the day of
transaction. However, if the same is done on the last day of the settlement, it will be settled
on the fourth working day excluding the day of transaction.

Rolling settlement

The rolling settlement ensures that each day's trade is settled by keeping a fixed gap of a
specified number of working days between a trade and its settlement. At present, this gap is
five working days after the trading day. The waiting period is uniform for all trades. In a
Rolling Settlement, all trades outstanding at end of the day have to be settled, which means
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that the buyer has to make payments for securities purchased and seller has to deliver the
securities sold. In India, we have adopted the T+5 settlement cycle, which means that a
transaction entered into on Day 1 has to be settled on the Day 1 + 5 working days, when
funds pay in or securities pay out takes place.

What are the advantages of Rolling Settlements?

As mentioned earlier, this is the system practiced in developed countries. Pay outs are quicker
than in weekly settlements, and investors will benefit from increased liquidity. The other
benefit of the modified system is that it keeps cash and forward markets separate. In the
current system, the trader has five days to square off his transaction which leads to a high
level of speculation as people even without funds tend to "play" the market. During volatile
markets, especially in a bearish market, this often leads to a payment problem which has
dogged the Indian stock exchanges for a long time. It provides for a higher degree of safety,
and once mechanisms such as futures and stock-lending become popular, it would result in
quality speculation and genuine investor interest.

When does one deliver the shares and pay the money to broker

As a seller, in order to ensure smooth settlement you should deliver the shares to your broker
immediately after getting the contract note for sale but in any case before the pay-in day.
Similarly, as a buyer, one should pay immediately on the receipt of the contract note for
purchase but in any case before the pay-in day.

Short selling

Short selling is a legitimate trading strategy. It is a sale of a security that the seller does not
own, or any sale that is completed by the delivery of a security borrowed by the seller. Short
sellers take the risk that they will be able to buy the stock at a more favorable price than the
price at which they "sold short."

The selling of a security that the seller does not own, or any sale that is completed by the
delivery of a security borrowed by the seller, Short sellers assume that they will be able to
buy the stock at a lower amount than the price at which they sold short.

Auction

An auction is conducted for those securities that members fail to deliver/short deliver during
pay-in. Three factors primarily give rise to an auction: short deliveries, un-rectified bad
deliveries, and un-rectified company objections

Separate market for auctions

The buy/sell auction for a capital market security is managed through the auction market. As
opposed to the normal market where trade matching is an on-going process, the trade
matching process for auction starts after the auction period is over.
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If the shares are not bought in the auction

If the shares are not bought at the auction i.e. if the shares are not offered for sale, the
Exchange squares up the transaction as per SEBI guidelines. The transaction is squared up at
the highest price from the relevant trading period till the auction day or at 20 per cent above
the last available Closing price whichever is higher. The pay-in and pay-out of funds for
auction square up is held along with the pay-out for the relevant auction.

Bad Delivery

SEBI has formulated uniform guidelines for good and bad delivery of documents. Bad
delivery may pertain to a transfer deed being torn, mutilated, overwritten, defaced, or if there
are spelling mistakes in the name of the company or the transfer. Bad delivery exists only
when shares are transferred physically. In "Demat" bad delivery does not exist.

Stock & Exchange Board of India

REGULATION OF BUSINESS IN THE STOCK EXCHANGES

Under the SEBI Act, 1992, the SEBI has been empowered to conduct inspection of stock
exchanges. The SEBI has been inspecting the stock exchanges once every year since 1995-
96. During these inspections, a review of the market operations, organizational structure and
administrative control of the exchange is made to ascertain whether:

the exchange provides a fair, equitable and growing market to investors

the exchange's organization, systems and practices are in accordance with the Securities
Contracts (Regulation) Act (SC(R) Act), 1956 and rules framed there under

the exchange has implemented the directions, guidelines and instructions issued by the SEBI
from time to time

The exchange has complied with the conditions, if any, imposed on it at the time of renewal/
grant of its recognition under section 4 of the SC(R) Act, 1956.

During the year 1997-98, inspection of stock exchanges was carried out with a special focus
on the measures taken by the stock exchanges for investor's protection. Stock exchanges
were, through inspection reports, advised to effectively follow-up and redress the investors'
complaints against members/listed companies. The stock exchanges were also advised to
expedite the disposal of arbitration cases within four months from the date of filing.

During the earlier years' inspections, common deficiencies observed in the functioning of the
exchanges were delays in post trading settlement, frequent clubbing of settlements, delay in
conducting auctions, inadequate monitoring of payment of margins by brokers, non-
adherence to Capital Adequacy Norms etc. It was observed during the inspections conducted
in 1997-98 that there has been considerable improvement in most of the areas, especially in
trading, settlement, collection of margins etc.
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Dematerialization

Dematerialization in short called as 'demat' is the process by which an investor can get
physical certificates converted into electronic form maintained in an account with the
Depository Participant. The investors can dematerialize only those share certificates that are
already registered in their name and belong to the list of securities admitted for
dematerialization at the depositories.

Depository: The organization responsible to maintain investor's securities in the electronic

form is called the depository. In other words, a depository can therefore be conceived of as a
"Bank" for securities. In India there are two such organizations viz. NSDL and CDSL. The
depository concept is similar to the Banking system with the exception that banks handle
funds whereas a depository handles securities of the investors. An investor wishing to utilize
the services offered by a depository has to open an account with the depository through
Depository Participant.

Depository Participant: The market intermediary through whom the depository services can
be availed by the investors is called a Depository Participant (DP). As per SEBI regulations,
DP could be organizations involved in the business of providing financial services like banks,
brokers, custodians and financial institutions. This system of using the existing distribution
channel (mainly constituting DPs) helps the depository to reach a wide cross section of
investors spread across a large geographical area at a minimum cost. The admission of the
DPs involves a detailed evaluation by the depository of their capability to meet with the strict
service standards and a further evaluation and approval from SEBI. Realizing the potential,
all the custodians in India and a number of banks, financial institutions and major brokers
have already joined as DPs to provide services in a number of cities .

Advantages of a depository services:

Trading in demat segment completely eliminates the risk of bad deliveries. In case of transfer
of electronic shares, you save 0.5% in stamp duty. Avoids the cost of courier/ notarization/
the need for further follow-up with your broker for shares returned for company objection No
loss of certificates in transit and saves substantial expenses involved in obtaining duplicate
certificates, when the original share certificates become mutilated or misplaced.

Lower interest charges for loans taken against demat shares as compared to the interest for
loan against physical shares. RBI has increased the limit of loans availed against
dematerialized securities as collateral to Rs 20 lakh per borrower as against Rs 10 lakh per
borrower in case of loans against physical securities. RBI has also reduced the minimum
margin to 25% for loans against dematerialized securities, as against 50% for loans against
physical securities. Fill up the account opening form, which is available with the DP. Sign the
DP-client agreement, which defines the rights and duties of the DP and the person wishing to
open the account. Receive your client account number (client ID).
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This client id along with your DP id gives you a unique identification in the depository
system. Fill up a dematerialization request form, which is available with your DP, Submit
your share certificates along with the form; write "surrendered for demat" on the face of the
certificate before submitting it for demat) Receive credit for the dematerialized shares into
your account within 15 days.

A Share market/stock markets is an open market for fiscal operations such as trading of a
firm's share and derivatives at a fixed cost. These securities are further listed on a stock
exchange. A Share market does not offer any corporeal service and is not a separately owned
business entity.

It was in 1875 that the Indian Share Market first started functioning. The first share trading
association in India was known as the Native Share and Stock Broker's Association, only to
become the Bombay Stock Exchange (BSE) later on. This trading association started off its
operations with around 318 members.

Main components of Indian Share Market

Bombay Stock Exchange (BSE)

Bombay Stock Exchange is known to be the oldest stock exchange in the entire Asian region.
If someone wants to know about the history of the India share market, it becomes
synonymous with the history of the Bombay Stock Exchange. It started functioning in 1875
with the name 'The Native Share and Stock Broker's Association'. Under the Securities
Contracts (Regulation) Act, 1956, the association got its recognition as a stock exchange in
1956. When it started, it was just an association of persons but with the recognition it got
transferred to a corporate and demutualised entity.

Trading items in Bombay Stock Exchange -

Equity or Shares

Derivatives (Futures and Options)

Debt Instruments

The main index of BSE is known as the BSE SENSEX or simply SENSEX (Sensitivity
Index). It is an index which comprises of 30 financially sound company scrips, with an option
to be reviewed and modified from time-to-time. The index calculation is based on the 'Free-
float Market Capitalization' methodology. Leading bourses like the Dow-Jones also follow
this methodology. Currently the Sensex is hovering around the 17,000 mark, all expected to
touch 20K by 2010. But then volatility has its important role to spoil the entire game.

National Stock Exchange (NSE)

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National Stock Exchange (NSE) is considered to be the leader in the stock exchange scenario
in terms of the total volume traded. The market capitalisation the National Stock Exchange
touched about $921.31 billion at the end of May 2009. The National Stock Exchange
received the recognition of a stock exchange in July 1993 under Securities Contracts
(Regulation) Act, 1956. The products that are traded in the National Stock Exchange are:-

Equity or Share

Futures (both index and stock)

Options (Call and Put)

Wholesale Debt Market

Retail Debt Market

NSE has a fully automated screen based trading system which is known as the NEAT system.
The transactions are carried on with speed, efficiency, and are all transparent. The risk
management system of the National Stock Exchange is world class and can be considered as
the benchmark for other bourses.

The leading index of NSE is known as Nifty 50 or just Nifty. It comprises of 50 diversified
benchmark Indian company scrips and is constructed on the basis of weighted average market
capitalization method.

Regulatory Authority of Indian Share Market

SEBI or Securities and Exchange Board of India is the market watchdog and has the
responsibility of protecting the investors' interests, develops regulatory norms and helps in
the development of the securities market in India.