Share Market

The Indian capital market is divided into two broad categories, the primary market and the secondary market. Primary market is the market for new shares that are generally introduced via the initial public offer route. Secondary market is the one where trading between the shares already issued in the primary market takes place.

Stock exchanges provide a platform to facilitate trading in these secondary shares. However, the shares have to be first listed on a stock exchange. In India, National Stock Exchange, commonly known as NSE, is the largest stock exchange of the country. It ranks third in the world in terms of volume of transactions. The head office of NSE is located in Mumbai. It is also known as Rashtriya Share Bazaar in Hindi.

NSE was initially established as a tax-paying company by the leading financial institutions of the country and later on acquired the status of a stock exchange in 1993. It was recognized under the Securities Contracts (Regulation) Act, 1956.

NSE commenced its operations in the wholesale debt market. Gradually, its entry into the capital market was a major breakthrough for companies who enlisted themselves on the stock exchange to create a vast pool of equity funds to finance their expansion plans. Moreover, the investor segment also got aware of the number of companies in the country thereby allowing them to diversify their investment. Today NSE provides trading services in new instruments like derivatives and mutual funds.

NSE provides a fully computerized screen-based trading system that has automated operations. This eliminated the role of brokers significantly, which in turn, erased the brokerage fees and thus lowered the cost of trading multifold. The system also gave an opportunity to small investors to trade in the market. Now, trading has become a part-time profession for many people, including housewives. The technology behind the trading system has added mobility into the system and so investors simply log on to their trading account, study the market movement real-time, and trade accordingly from any place.

NSE has a large network across the country for trading in all types of securities. It follows shorter settlement cycles and book entry settlements. It also has an online portal that provides exhaustive information on its listed companies, market trends, market movements in other stock exchanges, latest regulatory changes affecting the financial market, and many such details relevant for trading decisions. For a novice, it also has a dedicated link providing conceptual information about the market.