A stock exchange allows investors to invest in the stock market whereas it allows companies to introduce their stocks in the market. In simple words, it provides the entire ecosystem to trade that includes brokers, investors, and demat accounts. A demat account holds the securities in electronic format and it is mandatory to open a demat account to trade in the stock market. Many brokers have introduced free Demat account online for encouraging investors to trade digitally.
Any fluctuations or major event in the stock market has a major impact on the investors. For instance, the domestic stock market was in an optimistic situation recently. The spike in oil prices decreased, which relieved investors concerning inflation.
- The MidCap index saw a rise of 75.57 points. With approximately an increase of 0.29%, it ended at 25,895.35
- On the other hand, the SmallCap rose to 175.96 points. It settled at 29,474.63 after an increase of 0.60%.
- The volatility index decreased by 5.48 % and hit 18.31 on NSE.
Major stock exchange in India
NSE
The National Stock Exchange is India’s leading stock exchange. In 1992, NSE was recognized as the first dematerialized Indian electronic exchange. It was the first automatic screen-based trading system that facilitated investors to engage in easy trading.
BSE
Established in 1875, the Bombay Stock Exchange is one of the two most important large Indian stock exchanges. The primary goal of BSE is to offer transparent transactions of mutual funds, equities, currencies, etc.
NSE IFSC
The Registrar of Companies, Gujarat, incorporated the NSE International Exchange on November 26th, 2016. The National Stock Exchange of India Limited (NSE) owns the NSE IFSC as a subsidiary company. The SEBI approved the NSE IFSC for establishing an internal exchange in Gujarat International Finance Tech City.
INX
In 2017, the India International Exchange Limited started operating in Gujarat. It is a subsidiary of the BSE. Also, it is the nation’s first International Financial Services Center. INX provides a single-segment approach for any asset, i.e., currencies, equities, commodities, etc.
How does the stock exchange work?
A stock exchange is basically a platform that allows trading in stocks, derivatives, bonds, and various other financial instruments. In India, the stock market functions as per the rules and regulations of the Securities and Exchange Board of India (SEBI). Investors can invest in stock exchanges through SEBI registered stock brokers who offer online trading platforms. In exchange, they charge annual maintenance charges, custodian fees, transaction charges, and some other demat account fees.
Functions and Objectives of Stock Exchange
Maintaining Liquidity
One of the advantages of the stock market is to ensure that the market is ready for the purchase and sale of securities. Therefore, investors feel confident that they can encash their investments whenever they want.
Ensuring the safety of transactions
The stock market includes companies only after verifying their authenticity. Therefore, only authentic securities are traded on the stock exchange. Moreover, all companies must operate as per the SEBI rules. Hence, it ensures transactional safety while dealing in a stock exchange.
Contributes to economic growth
The stock exchange has a process of disinvestment and reinvestment, which is helpful in a productive investment proposal. The stock exchange ensures economic growth and capital formation through the sale and purchase of various companies’ securities.
Provides scope for speculation
The stock exchange allows the credible scope of speculation to ensure liquidity and demand and supply of securities. Stock exchanges offer speculation within specific provisions of the law in a controlled manner.
Indicates the state of the economy
Stock exchanges are indicative of a nation’s economic condition. Any major or minor changes are reflected through real-time share prices. Therefore, it acts like a country’s economic barometer.
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