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Level 2 of 13 · Indian market structure

Indian Stock Market Structure

By the end you will: understand nse, bse, sebi and indices.

Now that you know what a share is, let’s meet the organisations that make the Indian market work: the exchanges (NSE, BSE), the referee (SEBI), the record keepers (NSDL, CDSL) and the people who trade. We also learn about indices like the Nifty 50 and Sensex, the "thermometers" of the market.

Start with 2.1: What is NSE (National Stock Exchange)?
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The exchanges

  1. 2.1What is NSE (National Stock Exchange)?The National Stock Exchange of India (NSE) is India’s largest stock exchange by trading volume. It is based in Mumbai and started trading…
  2. 2.2What is BSE (Bombay Stock Exchange)?BSE (formerly the Bombay Stock Exchange) is Asia’s oldest stock exchange, started in 1875 under a banyan tree on Dalal Street, Mumbai.
  3. 2.3NSE vs BSE: what is the difference?Both are SEBI-regulated exchanges where you can buy the same big companies. The main differences are size, history and which index they run.
  4. 2.4Why does India have two major stock exchanges?India has two big exchanges for historical reasons and because competition helps investors.

The regulator and record keepers

  1. 2.5What is SEBI?SEBI (Securities and Exchange Board of India) is the government body that regulates India’s stock market. It became a statutory authority…
  2. 2.6What does SEBI do?SEBI makes rules for, registers and supervises everyone in the market, and punishes wrongdoing.
  3. 2.7What is a stockbroker?A stockbroker is a SEBI-registered member of an exchange who places orders on behalf of investors.
  4. 2.8What is a depository?A depository is an organisation that holds shares electronically on behalf of investors and keeps records of who owns what.
  5. 2.9What is NSDL?NSDL (National Securities Depository Limited) is India’s first depository, set up in 1996.
  6. 2.10What is CDSL?CDSL (Central Depository Services (India) Limited) is India’s second depository, set up in 1999, originally promoted by BSE.
  7. 2.11What is an ISIN number?An ISIN (International Securities Identification Number) is a unique 12-character code that identifies a specific security worldwide.
  8. 2.12What is a stock symbol?A stock symbol (or ticker) is a short code used to identify a company on an exchange.

Indices

  1. 2.13What is a market index?A market index is a single number that shows how a group of stocks is doing overall.
  2. 2.14What is Nifty 50?The Nifty 50 is NSE’s main index of 50 large, actively traded companies from different sectors.
  3. 2.15What is Sensex?The Sensex (S&P BSE Sensex) is BSE’s main index of 30 large, well-established companies.
  4. 2.16Nifty vs SensexBoth measure large Indian companies. The Nifty has 50 stocks on NSE, the Sensex 30 on BSE.

Market participants and market moods

  1. 2.17What are market participants?Market participants are all the people and organisations that buy and sell in the market.
  2. 2.18Who are retail investors?Retail investors are individuals who invest their own money, usually small amounts, through a broker.
  3. 2.19Who are institutional investors?Institutional investors are organisations that invest large pools of money on behalf of others.
  4. 2.20What are FIIs and DIIs?FIIs (Foreign Institutional Investors, now officially FPIs, Foreign Portfolio Investors) are foreign funds investing in India. DIIs…
  5. 2.21What is a bull market?A bull market is a long period when prices are rising and investors are optimistic. A common rule of thumb is a rise of 20% or more from a…
  6. 2.22What is a bear market?A bear market is a long period when prices are falling and investors are fearful. A common rule of thumb is a fall of 20% or more from a…
  7. 2.23The journey of a share: from company to investorHere is the complete path a share takes, from the company creating it to it sitting in your demat account.