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Introduction to Indian Stock Market

Indian Stock Market

Introduction to Indian Stock Market

Hello Readers, in our previous post we have told you about the Brexit. If u have not gone through it, then you can read it here and today we are going to give you a brief knowledge about Indian Stock Market.

History of Indian Stock Market:

Before liberalization, Indian economy was highly restricted  due to the high tariff rates, licensing system etc.. which makes stock trading in Indian nearly impossible. After considering all the issues, the Government of India had introduced Economic Policies in 1991 to create a balance. Despite of introduction of new policies, because our financial markets was unstructured, so the scope was confined to bonds, equity, commodity markets, insurance, pensions and mutual funds. In order to maintain balance in security market, a regulatory authority named SEBI was introduced and first electronic exchange- National Stock Exchange market was set up. This led to regularize investments , mobilization of resources,etc. Indian stock market is one of the oldest stock market in Asia. It dates back from 18th century when East India Company used to transact the loan securities. The first trading was done in 1830’s in corporate stock and bank shares and cotton presses in Bombay.

What is stock market?

Stock market is a place where buyers and sellers of stocks come together, physically or virtually to facilitates  the issue and redemption of securities and other financial instruments including the payment of income and dividends. Participants in the market can be small individuals or large fund managers who can be situated anywhere. Investors place their orders to the professionals of a stock exchange who executes these buying and selling orders. As the trading can be done only by the broker or any member who do have a seat in the exchange .In this trading of both listed as well as unlisted securities  takes place. It is different from stock exchange because it includes all the national stock exchanges of the country. For example, we use the term, “the stock market was up today” or “the stock market bubble. Indian stock market is just like a dot for the US . Most of the trading was done on the Two Stock Exchanges:

1) Bombay Stock Exchange (BSE)-1875

2) National Stock Exchange (NSE)-1994

Almost all the significant firms are listed on the both the stock exchange. NSE enjoy a dominant share in spot trading & almost a complete monopoly in derivatives with 98% share in stock market.

Hey, for more basic information regarding GST, Ewaybill, Visit our previous post through on the below links

Both the exchanges compete for the smooth flow that reduce the cost and leads to market efficiency & innovation. The arbitrageurs regularly keep an eye over the price on both the exchanges with in a very tight range. The entire process of trading in stock market is order driven which means the market order which is placed by the investor is automatically matched with the best limit orders. As a result, buyers and sellers remain anonymous and also result in more transparency as a buy and sell orders are consistently displaying on the system.

Equity spot market follow the T+2 rolling settlement. This means if the trade took place on Monday then it will be settled on Wednesday.

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Prakrati Jindal ( Team Itslyf)

Indian Stock Market

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