In India, there are two major stock exchanges – NSE or National Stock Exchange & BSE or Bombay Stock Exchange. BSE is the oldest stock exchange in Asia & NSE is the largest in the country.
The National Stock Exchange (NSE) is a stock exchange set up in India. It was set up in November 1992, NSE was India’s first fully automated electronic exchange with a nationwide presence. It consists of 20 financial institutions including state-owned banks and insurance companies among its shareholders. Vikram Limaye is the MD & CEO of NSE.
The Headquartered of NSE is in Mumbai. NSE offers capital raising opportunities for corporations and a trading platform for equities, debt, and derivatives – including currencies and mutual fund units. It allows new listings, IPOs, debt issuances, and IDRs by overseas companies for raising capital in India.
NSE has a total market capitalization of more than US$2.27 trillion, making it the world’s 11th-largest stock exchange as of April 2018. NSE’s flagship index, the NIFTY 50, the 50 stock index is used extensively by investors in India and around the world as a barometer of the Indian capital markets. Nifty 50 indexes were launched in 1996 by the NSE.
NSE offers trading and investment in the following segments
- Mutual Funds
- Exchange-Traded Funds
- Initial Public Offerings
- Security Lending and Borrowing Scheme etc.
- Equity Derivatives (including Global Indices like CNX 500, Dow Jones and FTSE )
- Currency Derivatives
- Commodity Derivatives
- Interest Rate Futures
- Corporate Bonds
The National Stock Exchange of India Limited (NSE) commenced trading in derivatives with the launch of index futures on 12 June 2000. The futures and options segment of NSE has made a global mark.
In the Futures and Options segment, trading in NIFTY 50 Index, NIFTY IT index, NIFTY Bank Index, NIFTY Next 50 index and single stock futures are available. Trading in Mini Nifty Futures & Options and Long term Options on NIFTY 50 are also available. NSE is the first Indian exchange to launch global indices.
On 3 May 2012, the National Stock exchange launched derivative contracts (futures and options) on FTSE 100, the widely tracked index of the UK equity stock market. This was the first of its kind of an index of the UK equity stock market launched in India. FTSE 100 includes 100 largest UK listed blue-chip companies and has given returns of 17.8 percent on investment over three years. The index constitutes 85.6 percent of the UK’s equity market cap.
On 10 January 2013, the National Stock Exchange signed a letter of intent with the Japan Exchange Group, Inc. (JPX) on preparing for the launch of NIFTY 50 Index futures, a representative stock price index of India, on the Osaka Securities Exchange Co., Ltd. (OSE), a subsidiary of JPX.
In August 2008, currency derivatives were introduced in India with the launch of Currency Futures in USD–INR by NSE. It also added currency futures in Euros, Pounds, and Yen. The average daily turnover in the F&O Segment of the Exchange on 20 June 2013 stood at ₹419.2616 billion (US$6.1 billion) in futures and ₹273.977 billion (US$4.0 billion) in options, respectively.
Interest Rate Futures
In December 2013, stock exchanges in India received the approval from SEBI for launching interest rate futures (IRFs) on a single GOI(Government of India) bond or a basket of bonds that will be cash-settled. NSE will launch the NSE Bond Futures on highly liquid 7.16 percent and 8.83 percent 10-year GOI bonds. Interest Rate Futures were introduced in India by NSE on 31 August 2009, one year after the launch of Currency Futures. NSE became the first stock exchange to get an approval for interest-rate futures, as recommended by the SEBI-RBI committee.
On 13 May 2013, NSE launched India’s first dedicated debt platform to provide a liquid and transparent trading platform for debt-related products.
The Debt segment provides an opportunity for retail investors to invest in corporate bonds on a liquid and transparent exchange platform. It also helps institutions who are holders of corporate bonds. It is an ideal platform to buy and sell at optimum prices and help Corporates to get adequate demand when they are issuing the bonds.
Trading Schedule of NSE
Trading on the equities segment takes place on all days of the week (except Saturdays and Sundays and holidays declared by the Exchange in advance). The market timings of the equities segment are:
- Pre-open session:
- modification Open: 09:00 hrs
- modification Close: 09:08 hrs
- Regular trading session
- Normal/Retail Debt/Limited Physical Market Open: 09:15 hrs
- Normal/Retail Debt/Limited Physical Market Close: 15:30 hrs
Exchange-Traded Funds and Derivatives on NSE
The following products are trading on NIFTY 50 Index in the Indian and international Market:
- 7 Asset Management Companies have launched exchange-traded funds on NIFTY 50 Index which is listed on NSE
- 15 index funds have been launched on NIFTY 50 Index
- ULIPs have been launched on NIFTY 50 Index by several insurance companies in India
- World Indices
Derivatives Trading on NIFTY 50 Index:
- Futures and Options trading on NIFTY 50 Index
- Trading in NIFTY 50 Index Futures on Singapore Stock Exchange(SGX)
- Trading in NIFTY 50 Index Futures on Chicago Mercantile Exchange(CME)
NSE has taken huge strides in technology in these 20 years. In 1994, when trading started, NSE technology was handling 2 orders a second. This increased to 60 orders a second in 2001. Today NSE can handle 1,60,000 orders/messages per second, with infinite ability to scale up at short notice on demand, NSE has continuously worked towards ensuring that the settlement cycle comes down. Settlements have always been handled smoothly.
NSE is a Stock exchange in India which was established for providing Nation Wide Facility for equity, debt instruments & hybrid instruments. It ensures equal access to investors all over the country through an appropriate communication network.
This blog on NSE was to make you aware of the concept, history, and technological advancement with time. Our company WealthBucket is a CA/CS Firm providing various services related to Mutual Funds like investing in Large Cap Mutual funds, Equity Funds, Debt Funds, etc.
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