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INTRODUCTION • BSE full form stands for Bombay Stock Exchange. It is the oldest stock exchange in India as well as Asia. Bombay Stock Exchange was established by PremchandRoychand in 1875 and is currently headed by Shri Sundararaman Ramamurthy (Managing Director & CEO).
What is Bombay Stock Exchange • The Bombay Stock Exchange is one of the largest securities markets. It is located on Dalal Street, Mumbai and lists over 6000 companies. • BSE has contributed significantly to developing and shaping India's capital markets. Through BSE, investors get the opportunity to trade in equities, mutual funds, debt instruments, etc. • It also offers capital market trading services that include investor education, risk management, clearing, settlement, and many more.
How Does BSE Work • Financial transactions in BSE are done online through an electronic trading system. Market orders can be directly placed in BSE online without the requirement of external specialists through direct market access. Due to the absence of such limit orders, the focus is shifted from buyers/sellers to the total value of transactions in a day. • Trading in the BSE share market has to be done through a brokerage agency against a stipulated charge. However, direct investment access is given to certain preferential investors making large transactions in the BSE stock market. BOLT- Bombay Online trading platform is used by this stock exchange for efficient trading.
Trade in Stock Market • Stock trading involves buying and selling of shares in a certain company. If you own certain stocks and shares of a company, it translates to you owning a piece of the firm. A professional or an individual who trades on behalf of a financial firm will be known as a stock trader. Stock traders are broadly classified into three categories - informed, uninformed, and intuitive traders. • A few of the most common traders include swing traders, day traders, momentum traders, and buy and hold traders.
What are the advantages of Stock trading • An individual trader will buy and sell via brokerage or an agent. On the other hand, institutional traders are mostly employed by investmentcompanies. Stock traders provide liquidity to the markets, and employ several methods and styles for defining their strategies. Stock trading has two main types - individual stock trading and institutional stock trading. • Stock traders are different from stock investors. Stock traders tradeequity securities, whereas stock investors utilize their own funds to purchase securities. The stock investor's primary goal is to produce interestincome or to profit from the increase in value, also termed as capital gains.
Stock Broker • Stockbrokers are individuals who buy and sell stocks and other securities for retail and institutional clients, through a stock exchange or over the counter, in return for a fee or a commission. Institutional stockbrokers work with fund managers and other financial institutions, but there are also retail investors.
What are SENSEX and NIFFTY • Sensex was meant to denote the most popular market index of 30 companies listed under the Bombay Stock Exchange. • The component companies listed in this index today are some of the biggest companies in this country with the most actively traded stocks. • Companies included under it are selected by S&P BSE Index Committee based on the following five criteria – • Companies have to be listed under the Bombay Stock Exchange in India. • It must consist of large or mega-cap stocks. • It has to be relatively liquid. • It must generate earnings from core activities. • Companies must contribute to keep the sector balanced with the country’s equity market.
How is SENSEX Calculated • BSE modifies Sensex share composition from time to time to ensure that it reflects the current conditions of the stock market. At first, the index was calculated based on a weighted methodology of market capitalization. • However, since 2003, this calculation method was reformed and now integrates a free-float capitalisation method. • This free-float method is an alternative of market-capitalisation method, where instead of a company’s outstanding shares, the number of shares available for sale under it is used to calculate the index. This method, thus, does not integrate restricted stocks (ones held by company insiders) which are not for sale.
What is SEBI • SEBI stands for Securities and Exchange Board of India. It is a statutory regulatory body that was established by the Government of India in 1992 for protecting the interests of investors investing in securities along with regulating the securities market. SEBI also regulates how the stock market and mutual funds function. • Objectives of SEBI • Following are some of the objectives of the SEBI: • 1. Investor Protection: This is one of the most important objectives of setting up SEBI. It involves protecting the interests of investors by providing guidance and ensuring that the investment done is safe. • 2. Preventing the fraudulent practices and malpractices which are related to trading and regulation of the activities of the stock exchange • 3. To develop a code of conduct for the financial intermediaries such as underwriters, brokers, etc.
How to get Successful in Stock Market • The first & one of the best share market tips is to identify your investment goals. You may be looking to fund your children’s education, or you may need money for your wedding. Additionally, you can invest your money to buy an asset or simply grow your money. • After this, you have to decide the time in which you want to achieve this goal. This time can be short-term, medium-term, or long-term. If you want to earn higher returns in less time, you have to take higher risks because higher risk generates high returns.
