In the grand scheme of things India may not be on the same scale as the US and UK stock markets, but if you look closely you will see that it does carry many credentials that make it a promising market. Just because it doesn’t carry the same level of size, doesn’t mean it isn’t worth your time. If you approach the Indian stock market the right way, there is no doubt that there is profit to be found.
BSE and NSE
The large majority of trading in the India stock market takes place via the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The BSE is the oldest Indian stock market, having its roots all the way back in the late 1800s, while the NSE is the new kid on the block having launched in 1992. Even though the two definitely have differences in age, their trading mechanisms are fairly similar in terms of both trading hours and settlement processes. However, in terms of firms listed, the BSE leads the way by offering over 3000 more than its rival NSE.
It doesn’t matter which Indian stock market you opt for, whether that be the BSE or NSE, you will be making exchanges via an open electric limit order book. It is also worth noting that the entire-process of the Indian stock market is order-driven; so don’t expect market makers or specialists to populate this trading arena. This means that market orders placed will be auto-matched with the best limit orders, ensuring increased anonymity for traders involved, even if there are no guarantees with regards to an order going through. If you are an institutional investor you can also take advantage of a Direct Market Access (DMA) approach to trading.
Two indexes play a key role in the Indian stock market, that being Sensex and Nifty. Sensex qualifies as the older of the two and includes 30 firms on the BSE, representing over 40% of the indexes free-float market capitalisation. The Nifty is larger with over 50 shares listed, while it also provides time series data from July 1990 to this very day.
Those who want to trade on the Indian stock market will have safety on their minds. Regulation of the Indian stock market is the responsibility of the Securities and Exchange Board of India (SEBI), which was founded around the time of the inception of the NSE. SEBI has continuously worked to improve the security of the Indian stock market and in the process has made sure that it is one of the most highly regulated exchanges in the world.
The Indian stock market definitely qualifies as an emerging market, with it being a vehicle for future growth within the nation. It offers an alternative form of investment realm for international investors, as more are seemingly taking up the exchange due to its stable growth. If you are looking to add international options to your portfolio, the Indian stock market should be something that you seriously consider.