Secretarial Practice · Ch 12 — Stock Exchange
Major Stock Exchanges in India and Market Indices
Major Stock Exchanges in India and Market Indices
India today has two dominant, nationwide stock exchanges, both headquartered in Mumbai, along with a handful of smaller regional and specialised exchanges.
Bombay Stock Exchange (BSE). Established in 1875, the BSE is Asia's oldest stock exchange and one of the oldest in the world. It began as an informal gathering of brokers under a banyan tree in Mumbai and grew into 'The Native Share and Stock Brokers' Association' before becoming India's first stock exchange to be granted permanent recognition under the Securities Contracts (Regulation) Act, 1956. Its benchmark index is the S&P BSE SENSEX ('Sensitive Index'), based on the 30 largest and most actively traded, financially sound companies listed on the BSE across key sectors of the economy.
National Stock Exchange of India (NSE). Incorporated in 1992 and commencing trading in 1994, the NSE was set up on the recommendation of a government committee to bring fully electronic, screen-based trading to the entire country and remove the earlier system's dependence on a physical trading floor and a small circle of brokers concentrated in one city. It rapidly became India's largest stock exchange by trading volume. Its benchmark index is the NIFTY 50, based on the 50 largest and most liquid companies listed on the NSE, again spread across major sectors.
Market (stock) indices. An index is a single number, computed from the (typically free-float market-capitalisation-weighted) prices of a representative basket of shares, that summarises the overall direction of the market. When the Sensex or Nifty rises, it signals that, on balance, the prices of the large, representative companies in the basket have gone up, and vice versa. Besides the two headline indices, both exchanges also publish sector-specific and broader-market indices (for example, indices tracking banking shares, IT shares, or mid-cap and small-cap companies), which investors use to judge the performance of a particular segment of the market rather than the market as a whole. …
The benchmark index of the Bombay Stock Exchange, based on 30 large, financially sound and actively traded companies drawn from key …
The benchmark index of the National Stock Exchange, based on 50 large, liquid companies drawn from major sectors — used, like the Sensex, as a barometer …