Stock exchange

A stock exchange, securities exchange is a facility where stock brokers and traders can buy
and sell securities, such as shares of stock and bonds and other financial instruments.

Stock exchanges may also provide facilities for the issue and redemption of such securities and
instruments and capital events including the payment of income and dividend

Securities traded on a stock exchange include stock issued by listed companies, unit trusts,
derivatives, pooled investment products and bonds.

Stock exchanges often function as "continuous auction" markets with buyers and sellers
consummating transactions at a central location such as the floor of the exchange.

Many stock exchanges today use electronic trading, in place of the traditional floor trading.

To be able to trade a security on a certain stock exchange, the security must be listed there.

Usually, there is a central location at least for record keeping, but trade is increasingly less linked
to a physical place, as modern markets use electronic networks, which give them advantages of
increased speed and reduced cost of transactions. Trade on an exchange is restricted to brokers
who are members of the exchange.

In recent years, various other trading venues, such as electronic communication networks,
alternative trading systems and "dark pools" have taken much of the trading activity away from
traditional stock exchanges.

Initial public offerings of stocks and bonds to investors is done in the primary market and
subsequent trading is done in the secondary market.

A stock exchange is often the most important component of a stock market. Supply and demand
in stock markets are driven by various factors that, as in all free markets, affect the price of
stocks.

There is usually no obligation for stock to be issued through the stock exchange itself, nor must
stock be subsequently traded on an exchange. Such trading may be off exchange or over-the-
counter.

This is the usual way that derivatives and bonds are traded.

Increasingly, stock exchanges are part of a global securities market. Stock exchanges also serve
an economic function in providing liquidity to shareholders in providing an efficient means of
disposing of shares.
Stock market
A stock market, equity market or share market is the aggregation of buyers and sellers (a loose
network of economic transactions, not a physical facility or discrete entity) of stocks (also called
shares), which represent ownership claims on businesses; these may include securities listed on
a public stock exchange as well as those only traded privately.

Examples of the latter include shares of private companies which are sold to investors through
equity crowd funding platforms. Stock exchanges list shares of common equity as well as other
security types, e.g. corporate bonds and convertible bonds.

Size of the market

Stocks are categorised in various ways. One way is by the country where the company is
domiciled. For example, Nestle and Novartis are domiciled in Switzerland, so they may be
considered as part of the Swiss stock market, although their stock may also be traded on
exchanges in other countries, for example, as American depository receipts (ADRs) on U.S.
stock markets.

As of mid 2017, the size of the world stock market (total market capitalization) was about
US$76.3 trillion. By country, the largest market was the United States (about 34%), followed by
Japan (about 6%) and the United Kingdom (about 6%). These numbers increased in 2013.

As of 2015, there are a total of 60 stock exchanges in the world with a total market capitalization
of $69 trillion. Of these, there are 16 exchanges with a market capitalization of $1 trillion or
more, and they account for 87% of global market capitalization. Apart from the Australian
Securities Exchange, these 16 exchanges are based in one of three continents: North America,
Europe and Asia.

Trade in stock markets means the transfer for money of a stock or security from a seller to a
buyer. This requires these two parties to agree on a price. Equities (stocks or shares) confer an
ownership interest in a particular company.

Participants in the stock market range from small individual stock investors to larger trader
investors, who can be based anywhere in the world, and may include banks, insurance
companies, pension funds and hedge funds. Their buy or sell orders may be executed on their
behalf by a stock exchange trader.

Some exchanges are physical locations where transactions are carried out on a trading floor, by a
method known as open outcry. This method is used in some stock exchanges and commodity
exchanges, and involves traders shouting bid and offer prices. The other type of stock exchange
has a network of computers where trades are made electronically. An example of such an
exchange is the NASDAQ.
A potential buyer bids a specific price for a stock, and a potential seller asks a specific price for
the same stock. Buying or selling at the market means you will accept any ask price or bid price
for the stock. When the bid and ask prices match, a sale takes place, on a first-come, first-served
basis if there are multiple bidders or askers at a given price.

The purpose of a stock exchange is to facilitate the exchange of securities between buyers and
sellers, thus providing a marketplace. The exchanges provide real-time trading information on
the listed securities, facilitating price discovery.

The New York Stock Exchange (NYSE) is a physical exchange, with a hybrid market for placing
orders electronically from any location as well as on the trading floor. Orders executed on the
trading floor enter by way of exchange members and flow down to a floor broker, who submits
the order electronically to the floor trading post for the Designated Market Maker ("DMM") for
that stock to trade the order. The DMM's job is to maintain a two-sided market, making orders to
buy and sell the security when there are no other buyers or sellers. If a spread exists, no trade
immediately takes place – in this case the DMM may use their own resources (money or stock)
to close the difference. Once a trade has been made, the details are reported on the "tape" and
sent back to the brokerage firm, which then notifies the investor who placed the order.
Computers play an important role, especially for program trading.

The NASDAQ is a virtual exchange, where all of the trading is done over a computer network.
The process is similar to the New York Stock Exchange. One or more NASDAQ market makers
will always provide a bid and ask price at which they will always purchase or sell 'their' stock.

NSE- NATIONAL STOCK EXCHANGE OF INDIA

The National Stock Exchange of India Limited (NSE) is the leading stock exchange of India,
located in Mumbai. The NSE was established in 1992 as the first demutualized electronic
exchange in the country. NSE was the first exchange in the country to provide a modern, fully
automated screen-based electronic trading system which offered easy trading facility to the
investors spread across the length and breadth of the country. Vikram Limaye is Managing
Director & Chief Executive Officer (MD & CEO) of NSE.

National Stock Exchange 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 index was launched in 1996 by the NSE. However,
Vaidyanathan (2016) estimates that only about 4% of the Indian economy / GDP is actually
derived from the stock exchanges in India.

Unlike countries like the United States where nearly 70% of the GDP is derived from larger
companies and the corporate sector, the corporate sector in India accounts for only 12-14% of the
national GDP (as of October 2016). Of these only 7,800 companies are listed of which only 4000
trade on the stock exchanges at BSE and NSE. Hence the stocks trading at the BSE and NSE
account for only around 4% of the Indian economy, which derives most of its income related
activity from the so-called unorganized sector and households.
Economic Times estimated that as of April 2018, 60 million (6 crore) retail investors had
invested their savings in stocks in India, either through direct purchases of equities or through
mutual funds. Earlier, the Bimal Jalan Committee report estimated that barely 1.3% of India's
population invested in the stock market, as compared to 27% in USA and 10% in China.

NSE was mainly set up in the early 1990s to bring in transparency in the markets. Instead of
trading membership being confined to a group of brokers, NSE ensured that anyone who was
qualified, experienced and met minimum financial requirements was allowed to trade. In this
context, NSE was ahead of its times when it separated ownership and management in the
exchange under SEBI's supervision. The price information which could earlier be accessed only
by a handful of people could now be seen by a client in a remote location with the same ease.
The paper-based settlement was replaced by electronic depository-based accounts and settlement
of trades was always done on time. One of the most critical changes was that a robust risk
management system was set in place, so that settlement guarantees could protect investors
against broker defaults.

NSE was set up by a group of leading Indian financial institutions at the behest of the
government of India to bring transparency to the Indian capital market. Based on the
recommendations laid out by the Pherwani committee, NSE has been established with a
diversified shareholding comprising domestic and global investors. The key domestic investors
include Life Insurance Corporation of India, State Bank of India, IFCI Limited, IDFC Limited
and Stock Holding Corporation of India Limited.

The exchange was incorporated in 1992 as a tax-paying company and was recognized as a stock
exchange in 1993 under the Securities Contracts (Regulation) Act, 1956, when P. V. Narasimha
Rao was the Prime Minister of India and Manmohan Singh was the Finance Minister. NSE
commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The capital
market (equities) segment of the NSE commenced operations in November 1994, while
operations in the derivatives segment commenced in June 2000. NSE offers trading, clearing and
settlement services in equity, equity derivatives, debt and currency derivatives segments. It was
the first exchange in India to introduce electronic trading facility thus connecting together the
investor base of the entire country. NSE has 2500 VSATs and 3000 leased lines spread over more
than 2000 cities across India.

NSE was also instrumental in creating the National Securities Depository Limited (NSDL) which
allows investors to securely hold and transfer their shares and bonds electronically. It also allows
investors to hold and trade in as few as one share or bond. This not only made holding financial
instruments convenient but more importantly, eliminated the need for paper certificates and
greatly reduced the incidents of forged or fake certificates and fraudulent transactions that had
plagued the Indian stock market. The NSDL's security, combined with the transparency, lower
transaction prices and efficiency that NSE offered, greatly increased the attractiveness of the
Indian stock market to domestic and international investors.

Markets

NSE offers trading and investment in the following segments

Equities
 Equities
 Indices

 Mutual Funds
 Exchange Traded Funds
 Initial Public Offerings
 Security Lending and Borrowing Scheme etc.

Derivatives
 Equity Derivatives (including Global Indices like CNX 500, Dow Jones and FTSE )
 Currency Derivatives

 Interest Rate Futures

Debt
 Corporate Bonds

Nifty 50 Components

List of 50 companies that form part of NIFTY 50 Index as in April 2018.

Company Name Symbol Sector

Adani Ports & SEZ Limited ADANIPORTS Services - Shipping
Asian Paints Ltd ASIANPAINT Consumer Goods
Axis Bank AXISBANK Banking
Bajaj Auto BAJAJ-AUTO Automobile
Bajaj Finance BAJFINANCE Financial Services
Bajaj Finserv BAJAJFINSV Financial Services
Bharti Airtel BHARTIARTL Telecommunication
BPCL BPCL Energy - Oil & Gas
Cipla CIPLA Pharmaceuticals
Coal India COALINDIA Metals
Dr. Reddy's Laboratories DRREDDY Pharmaceuticals
Eicher Motors EICHERMOT Automobile
GAIL GAIL Energy - Oil & Gas
Grasim Industries GRASIM Cement
HCL Technologies HCLTECH Information Technology
HDFC HDFC Financial Services
HDFC Bank HDFCBANK Banking
Hero MotoCorp HEROMOTOCO Automobile
 Company Name Symbol Sector
Hindalco Industries HINDALCO Metals
Hindustan Unilever HINDUNILVR Consumer Goods
HPCL HINDPETRO Energy - Oil & Gas
ICICI Bank ICICIBANK Banking
Indiabulls Housing Finance IBULHSGFIN Financial Services
IndusInd Bank INDUSINDBK Banking
Infosys INFY Information Technology
IOC IOC Energy - Oil & Gas
ITC Limited ITC Consumer Goods
Kotak Mahindra Bank KOTAKBANK Banking
Larsen & Toubro LT Construction
Lupin Limited LUPIN Pharmaceuticals
Mahindra & Mahindra M&M Automobile
Maruti Suzuki MARUTI Automobile
NTPC Limited NTPC Energy - Power
ONGC ONGC Energy - Oil & Gas
PowerGrid Corporation of India POWERGRID Energy - Power
Reliance Industries RELIANCE Energy - Oil & Gas
State Bank of India SBIN Banking
Sun Pharmaceutical SUNPHARMA Pharmaceuticals
Tata Consultancy Services TCS Information Technology
Tata Motors TATAMOTORS Automobile
Tata Steel TATASTEEL Metals
Tech Mahindra TECHM Information Technology
Titan Company TITAN Consumer Goods
UltraTech Cement ULTRACEMCO Cement
United Phosphorus Limited UPL Chemicals
Vedanta VEDL Metals
Wipro WIPRO Information Technology
Yes Bank YESBANK Banking
Zee Entertainment Enterprises ZEEL Media & Entertainment

BSE- BOMBAY STOCK EXCHANGE

Bombay Stock Exchange was founded by Premchand Roychand. He was one of the most
influential businessmen in 19th-century Bombay. A man who made a fortune in the stockbroking
business and came to be known as the Cotton King, the Bullion King or just the Big Bull. He
was also the founder of the Native Share and Stock Brokers Association, an institution that is
now known as the BSE.
While BSE Ltd is now synonymous with Dalal Street, it was not always so. The first venue of
the earliest stock broker meetings in the 1850s was in rather natural environs - under banyan
trees - in front of the Town Hall, where Horniman Circle is now situated. A decade later, the
brokers moved their venue to another set of foliage, this time under banyan trees at the junction
of Meadows Street and what is now called Mahatma Gandhi Road. As the number of brokers
increased, they had to shift from place to place, but they always overflowed to the streets. At last,
in 1874, the brokers found a permanent place, and one that they could, quite literally, call their
own. The new place was, aptly, called Dalal Street (Brokers' Street).

The Bombay Stock Exchange is the oldest stock exchange in Asia. Its history dates back to 1855,
when 22 stockbrokers] would gather under banyan trees in front of Mumbai's Town Hall. The
location of these meetings changed many times to accommodate an increasing number of
brokers. The group eventually moved to Dalal Street in 1874 and became an official organization
known as "The Native Share & Stock Brokers Association" in 1875.

On August 31, 1957, the BSE became the first stock exchange to be recognized by the Indian
Government under the Securities Contracts Regulation Act. In 1980, the exchange moved to the
Phiroze Jeejeebhoy Towers at Dalal Street, Fort area. In 1986, it developed the S&P BSE
SENSEX index, giving the BSE a means to measure the overall performance of the exchange. In
2000, the BSE used this index to open its derivatives market, trading S&P BSE SENSEX futures
contracts. The development of S&P BSE SENSEX options along with equity derivatives
followed in 2001 and 2002, expanding the BSE's trading platform.

Historically an open outcry floor trading exchange, the Bombay Stock Exchange switched to an
electronic trading system developed by CMC Ltd. in 1995. It took the exchange only 50 days to
make this transition. This automated, screen-based trading platform called BSE On-Line Trading
(BOLT) had a capacity of 8 million orders per day. The BSE has also introduced a centralized
exchange-based internet trading system, BSEWEBx.co.in to enable investors anywhere in the
world to trade on the BSE platform. Now BSE has raised capital by issuing shares and as on 3rd
May 2017 the BSE share which is traded in NSE only closed with Rs.999 .

The BSE is also a Partner Exchange of the United Nations Sustainable Stock Exchange initiative,
joining in September 2012.

BSE established India INX on 30 December 2016. India INX is the first international exchange
of India

Sensex

The term Sensex was coined by Deepak Mohini, a stock market analyst.[2][3] It is a portmanteau
of the words Sensitive and Index. The initials S&P are derived from Standard & Poor's
Financial Services LLC , an American financial services company which also rates and
analyses stock market indices such as the U.S based S&P 500, the Canadian S&P/TSX, and the
Australian S&P/ASX200 .

Calculation
The BSE has some reviews and modifies its composition to be sure it reflects current market
conditions. The index is calculated based on a free float capitalisation method, a variation of the
market capitalisation method. Instead of using a company's outstanding shares it uses its float, or
shares that are readily available for trading. Free Floating capital implies total capitalization less
Directors shareholding. As per free float capitalisation methodology, the level of index at any
point of time reflects the free float market value of 30 component stocks relative to a base period.
The market capitalisation of a company is determined by multiplying the price of its stock by the
number of shares issued by corporate actions, replacement of scrips. The index has increased by
over twenty five times from June 1990 to the present. Using information from April 1979
onwards, the long-run rate of return on the S&P BSE SENSEX works out to be 18.6% per
annum.

Constituents
As of 18 December 2017, SENSEX constitutes of 31 stocks (Tata Motors has two stocks in the list):

# Exchange ticker Companies Date Added

1 532921 Adani Ports & SEZ 21 December 2015[5]
2 500820 Asian Paints 21 December 2015[5]
3 532215 Axis Bank
4 532977 Bajaj Auto
5 532454 Bharti Airtel
6 533278 Coal India 8 August[6]
7 500124 Dr. Reddy's Laboratories
8 500180 HDFC Bank
9 500182 Hero MotoCorp
10 500696 Hindustan Unilever
11 500010 Housing Development Finance Corporation
12 532174 ICICI Bank
13 532187 IndusInd Bank 18 December 2017[7]
14 500209 Infosys
15 500875 ITC
16 500247 Kotak Mahindra Bank 19 June 2017[8]
17 500510 Larsen & Toubro
18 500520 Mahindra & Mahindra
19 532500 Maruti Suzuki
20 532555 NTPC
21 500312 Oil and Natural Gas Corporation
22 532898 Power Grid Corporation of India 20 June 2016[9]
23 500325 Reliance Industries
24 500112 State Bank of India
25 524715 Sun Pharmaceutical 8 August 2011[6]
26 532540 Tata Consultancy Services
# Exchange ticker Companies Date Added
27 500570 Tata Motors
28 570001 Tata Motors DVR 19 June 2017[8]
29 500470 Tata Steel
30 507685 Wipro
31 532648 Yes Bank 18 December 201

HOW COMPANIES ARE LISTED ?

Initial Public Offering (IPO)

Initial Public Offer (IPO) is a process through which an unlisted Company can be listed on the
stock exchange by offering its securities to the public in the primary market. The object of an
IPO may be relating to expansion of existing activities of the Company or setting up of new
projects or any other object as may be specified by the Company in its offer document or just to
get its existing equity shares listed by diluting the stake of existing equity shareholders through
offer for sale.

New Listing

New Listing is a process through which a company which is already listed on other stock
exchange/s approaches the Exchange for listing of its equity shares. The companies fulfilling the
eligibility criteria prescribed by the Exchange; from time to time; are listed on the Exchange.

 Eligibility Criteria
 Process
 Fees
 Listing Agreement

INDUSTRIES INCLUDED IN STOCK MARKET:

The stock market is often divided into 11 major sectors representing key areas of the economy.
Within each sector, there are a number of different publicly traded companies that share the same
broad focus. Investors interested in gaining exposure to a specific area of the economy, or
implementing a sector-rotation strategy to position their portfolio, may want to consider
exchange-traded funds (ETFs) in the sector of their choice.

In this article, we’ll take a look at the 11 sectors of the stock market and various ETFs that can be
used to gain exposure to them.

1. Financials
The financial sector consists of banks, investment funds, insurance companies and real estate
firms, among others. In general, the majority of the revenue generated by the sector comes from
mortgages and loans that gain value as interest rates rise

2. Utilities

The utilities sector consists of electric, gas and water companies as well as integrated providers.
In general, the sector generates consistent recurring income by charging consumers and
businesses that provide higher-than-average dividend yields..

3. Consumer Discretionary

The consum er discretionary sector consists of retailers, media companies, consumer service
providers, apparel companies and consumer durables. In general, these companies benefit from
an improving economy when consumer spending accelerates.

4. Consumer Staples

The consumer staples sector consists of food and beverage companies as well as companies that
create products consumers are unwilling to cut from their budgets. In general, these companies
are defensive plays capable of withstanding an economic downturn.

5. Energy

The energy sector consists of oil and gas exploration and production companies, as well as
integrated power firms, refineries and other operations. In general, these companies generate
revenue that’s tied to the price of crude oil, natural gas and other commodities.

6. Healthcare

The healthcare sector consists of biotechnology companies, hospital management firms, medical
device manufacturers and many others. In general, the sector is considered to be both a growth
opportunity and defensive play since people will always require medical aid.

7. Industrials

The industrial sector consists of aerospace, defense, machinery, construction, fabrication and
manufacturing companies. In general, the industry’s growth is driven by demand for building
construction and manufactured products like agricultural equipment.

8. Technology

The technology sector consists of electronics manufacturers, software developers and

information technology firms. In general, these businesses are driven by upgrade cycles and the
general health of the economy, although growth has been robust over the years
9. Telecom

The telecom sector consists of wireless providers, cable companies, internet service providers
and satellite companies, among others. In general, these companies generate recurring revenue
from consumers, but some subsets of the industry are facing rapid change.

10. Materials

The materials sector consists of mining, refining, chemical, forestry and related companies that
are focused on discovering and developing raw materials. Since these companies are at the
beginning of the supply chain, they are vulnerable to changes in the business cycle.

11. Real Estate

The real estate sector consists of companies invested in residential, industrial, and retail real
estate. The main source of revenue for these companies comes from rent income and real estate
capital appreciation. As a result, this sector is sensitive to interest rate changes.