comp study of bse and nse.docx

8/12/2019 comp study of bse and nse.docx

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CHAPTER 1:

INTRODUCTION TO STOCK EXCHANGES

A stock exchange is a form ofexchange which provides services

forstock brokers andtraders to tradestocks,bonds, and othersecurities.

Stock exchanges also provide facilities for issue and redemption of

securities and other financial instruments, and capital events including

the payment of income anddividends. Securities traded on a stock

exchange includeshares issued by companies,unit trusts,derivatives,

pooled investment products andbonds.

To be able to trade a security on a certain stock exchange, it must

belisted there. Usually, there is a central location at least for record

keeping, but trade is increasingly less linked to such a physical place, as

modern markets areelectronic networks,which gives them advantages of

increased speed and reduced cost of transactions. Trade on an exchange

is by members only.

The initial offering of stocks and bonds to investors is by definition done

in theprimary market and subsequent trading is done in thesecondary

market. A stock exchange is often the most important component of

astock market. Supply and demand in stock markets are driven by

various factors that, as in allfree markets, affect the price of stocks(seestock valuation).

There is usually no compulsion to issue stock via the stock exchange

itself, nor must stock be subsequently traded on the exchange. Such

trading is said to be off exchange orover-the-counter. This is the usual
http://en.wikipedia.org/wiki/Exchange_(organized_market)http://en.wikipedia.org/wiki/Brokerage_firmhttp://en.wikipedia.org/wiki/Trader_(finance)http://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Security_(finance)http://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Shareshttp://en.wikipedia.org/wiki/Unit_trusthttp://en.wikipedia.org/wiki/Derivative_(finance)http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Listing_(finance)http://en.wikipedia.org/wiki/Electronic_networkshttp://en.wikipedia.org/wiki/Primary_markethttp://en.wikipedia.org/wiki/Secondary_markethttp://en.wikipedia.org/wiki/Secondary_markethttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Stock_valuationhttp://en.wikipedia.org/wiki/Over-the-counter_(finance)http://en.wikipedia.org/wiki/Over-the-counter_(finance)http://en.wikipedia.org/wiki/Stock_valuationhttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Secondary_markethttp://en.wikipedia.org/wiki/Secondary_markethttp://en.wikipedia.org/wiki/Primary_markethttp://en.wikipedia.org/wiki/Electronic_networkshttp://en.wikipedia.org/wiki/Listing_(finance)http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Derivative_(finance)http://en.wikipedia.org/wiki/Unit_trusthttp://en.wikipedia.org/wiki/Shareshttp://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Security_(finance)http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Trader_(finance)http://en.wikipedia.org/wiki/Brokerage_firmhttp://en.wikipedia.org/wiki/Exchange_(organized_market)


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way thatderivatives andbonds are traded. Increasingly, stock exchanges

are part of a global market for securities.

Functions of Stock Exchange:

We discuss about major functions of stock exchange under these

headings:-

Providing a ready market: The organization of stock exchangeprovides a ready market to speculators and investors in industrial

enterprises. It thus, enables the public to buy and sell securities

already in issue.

Providing quoting market prices: It makes possible the determinationof supply and demand on price. The very sensitive pricing mechanism

and the constant quoting of market price allows investors to always be

aware of values. This enables the production of various indexes which

indicate trends etc.

Providing facilities for working: It provides opportunities to Jobbersand other members to perform their activities with all their resources

in the stock exchange.

Safeguarding activities for investors: The stock exchange renderssafeguarding activities for investors which enables them to make a fair

judgment of securities. Therefore directors have to disclose all

material facts to their respective shareholders. Thus innocent investors

may be safeguard from the clever brokers.
http://en.wikipedia.org/wiki/Derivative_(finance)http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Derivative_(finance)


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Operating a compensation fund: It also operate a compensation fundwhich is always available to investors suffering loss due due the

speculating dealings in the stock exchange.

Creating the discipline: Its members controlled under rigid set of rulesdesigned to protect the general public and its members. Thus this

tendency creates the discipline among its members in social life also.

Checking functions: New securities checked before being approvedand admitted to listing. Thus stock exchange exercises rigid controlover the activities of its members.

Adjustment of equilibrium: The investors in the stock exchangepromote the adjustment of equilibrium of demand and supply of a

particular stock and thus prevent the tendency of fluctuation in the

prices of shares.

Maintenance of liquidity: The bank and insurance companies purchaselarge number of securities from the stock exchange. These securities

are marketable and can be turned into cash at any time. Therefore

banks prefer to keep securities instead of cash in their reserve . This it

facilities the banking system to maintain liquidity by procuring the

marketablesecurities.

Promotion of the habit of saving: Stock exchange provide a place forsaving to general public. Thus it creates the habit of thrift and

investment among the public. This habit leads to investment of funds
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incorporate or government securities. The funds placed at the disposal

of companies are used by them for productive purposes.

Refining and advancing the industry: Stock exchange advances thetrade , commerce and industry in the country. it provides opportunity

to capital to flow into the most productive channels. Thus the flow of

capital from unproductive field to productive field helps to refine the

large scale enterprises.

Promotion of capital formation: It plays an important part in capitalformation in the country. its publicity regarding various industrial

securities makes even disinterested people feel interested in

investment.

Increasing Govt. Funds: The govt. can undertake projects of nationalimportance and social value by raising funds through sale of its

securities on stock exchange.


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CHAPTER 2:

NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE) is stock exchange located inMumbai, India. It is the 11th largest stock exchange in the world by

market capitalisation and largest in India by daily turnover and number of

trades, for both equities and derivative trading. NSE has a market

capitalisation of more than US$1 trillion (67,637.81 billion) and 1,665

companies listed as of December 2012.Though a number of other

exchanges exist, NSE and the Bombay Stock Exchange are the two most

significant stock exchanges in India and between them are responsible for

the vast majority of share transactions. The NSE's key index is the S&P

CNX Nifty, now known as the NSE NIFTY (National Stock Exchange

Fifty), an index of fifty major stocks weighted by market capitalisation.

NSE is mutually owned by a set of leading financial institutions, banks,

insurance companies and other financial intermediaries in India but its

ownership and management operate as separate entities.There are at least

2 foreign investors NYSE Euronext and Goldman Sachs who have taken

a stake in the NSE. As of 2006, the NSE VSAT terminals, 2799 in total,

cover more than 1500 cities across India. In 2011, NSE was the third

largest stock exchange in the world in terms of the number of contracts

(1221 million) traded in equity derivatives. It is the second fastest

growing stock exchange in the world with a recorded growth of 16.6%.

The National Stock Exchange (NSE) is India's leading stock exchange

covering various cities and towns across the country. NSE was set up by

leading institutions to provide a modern, fully automated screen-based


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trading system with national reach. The Exchange has brought about

unparalleled transparency, speed & efficiency, safety and market

integrity. It has set up facilities that serve as a model for the securities

industry in terms of systems, practices and procedures.

NSE has played a catalytic role in reforming the Indian securities market

in terms of microstructure, market practices and trading volumes. The

market today uses state-of-art information technology to provide an

efficient and transparent trading, clearing and settlement mechanism, and

has witnessed several innovations in products & services viz.

demutualisation of stock exchange governance, screen based trading,

compression of settlement cycles, dematerialisation and electronic

transfer of securities, securities lending and borrowing,

professionalisation of trading members, fine-tuned risk management

systems, emergence of clearing corporations to assume counterparty

risks, market of debt and derivative instruments and intensive use of

information technology.

Origins

The National Stock Exchange of Independent India was set up by

Government of India on the recommendation of Pherwani Committee in

1991. Promoted by leading financial institutions essentially led by IDBI

at the behest of the Government of India, it was incorporated in

November 1992 as a tax-paying company. In April 1993, it was

recognized as a stock exchange under the Securities Contracts

(Regulation) Act, 1956. 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


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1994, while operations in the Derivatives segment commenced in June

2000.

Markets

Currently, NSE has the following major segments of the capital market:

Equities

Equities Indices Mutual Funds Exchange Traded Funds Initial Public Offerings Security Lending and Borrowing SchemeDerivatives

Equity Derivatives (including Global Indices like S&P 500, DowJones and FTSE )

Currency Derivatives Interest Rate FuturesDebt

New Debt Segment Retail Debt Market Wholesale Debt Market Corporate Bonds


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Equity Derivatives The National Stock Exchange of India Limited (NSE)

commenced trading in derivatives with the launch of index futures on 12

June 2000. The futures and options segment of NSE has made a mark for

itself globally. In the Futures and Options segment, trading in S&P CNX

Nifty Index, CNX IT index, Bank Nifty Index, Nifty Midcap 50 index

and single stocks are available. Trading in Mini Nifty Futures & Options

and Long term Options on S&P CNX Nifty are also available. The

average daily turnover in the F&O Segment of the Exchange during

2009-10 was ` 72,392 crore (US $ 16,097 million)

On 29 August 2011, National Stock exchange launched derivative

contracts on the worlds mostfollowed equity indices, the S&P 500 and

the Dow Jones Industrial Average. This was the first time that derivative

contracts on global indices are available in India. This is the also the first

time in the world that futures contracts on the S&P 500 index were

introduced and listed on an exchange outside of their home country,

USA. The new contracts include futures on both the DJIA and the S&P500, and options on the S&P 500. The first day volumes at the close of

trading on 29 August 2011 at 15:30, on the 2 indices in futures and

options contracts was nearly Rs 122 crores (1220 million).

On 3 May 2012, The National Stock exchange launched derivative

contracts (futures and options) on FTSE 100, the widely tracked index of

the UK equity stock market. This was the first of its kind for an index ofthe UK equity stock market to be launched in India. FTSE 100 includes

100 largest UK listed blue chip companies and has given returns of 17.8

per cent on investment over three years. The index constitutes 85.6 per


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cent of UKs equity market cap. NSE recorded a volume of 500 crores

(5000 million) on the 1st day of trading.

Currency Derivatives In August 2008 currency derivatives were

introduced in India with the launch of Currency Futures in USD INR by

NSE. It also added currency futures in euro, pounds and yen. Interest

Rate Futures were introduced for the first time in India by NSE on 31

August 2009, exactly one year after the launch of Currency Futures.

Debt Market on 13 May, 2013 NSE launched India's first dedicated debt

platform to provide a liquid and transparent trading platform or debt

related products.

NSE became the first stock exchange to get approval for interest rate

futures, As recommended by SEBI-RBI committee, on 31 August 2009, a

futures contract based on 7% 10 Year Government of India (Notional)

was launched with quarterly maturities.

Exchange Traded Funds on NSE

ETFs launched on NSE Exchange Traded Funds are essentially Index

Funds that are listed and traded on exchanges like stocks. An ETF is a

basket of stocks that reflects the composition of an Index, like S&P CNX

Nifty. The ETFs trading value is based on the net asset value of the

underlying stocks that it represents.

ETF Schemes launched on NSE

Equity Gold


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Debt World Indices

In recent times, Exchange-traded funds (ETFs) have gained a wider

acceptance as financial instruments whose unique advantages over

mutual funds have caught the eye of many an investor. These instruments

are beneficial for Investors that find it difficult to master the tricks of the

trade of analyzing and picking stocks for their portfolio. Various mutual

funds provide ETF products that attempt to replicate the indices on NSE,

so as to provide returns that closely correspond to the total returns of the

securities represented in the index.

Certifications

NSE also conducts online examination and awards certification, under its

programmes of NSE's Certification in Financial Markets (NCFM).

Currently, certifications are available in 32 modules, covering different

sectors of financial and capital markets, both at beginner and advanced

levels. The list of various modules can be found at the official site of

NSE India. Branches of the NSE are located throughout India. NSE has

been offering a short-term course called NSE Certified Capital Market

Professional (NCCMP) since August 2009.


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Benefits of Listing on NSE

A premier marketplace

The sheer volume of trading activity ensure that the impact cost is loweron the Exchange which in turn reduces the cost of trading to the investor.

NSE's automated trading system ensure consistency and transparency in

the trade matching which enhances investors confidence and visibility of

our market.

Visibility

The trading system provides unparallel level of trade and post-trade

information. The best 5 buy and sell orders are displayed on the trading

system and the total number of securities available for buying and selling

is also displayed. This helps the investor to know the depth of the market.

Further, corporate announcements, results, corporate actions etc are also

available on the trading system.

Largest exchange

NSE is the largest exchange in the county in terms of trading volumes.

During the year 2010-2011, NSE reported a turnover of 35, 77,412 crores

in the equities segment.

Unprecedented reach

NSE provides a trading platform that extends across the length and

breadth of the country. Investors from 191 centers can avail of trading


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facilities on the NSE Trading Network. The Exchange uses the latest in

communication technology to give instant access from every location.

Transaction speed

The speed at which the Exchange processes orders, results in liquidity

and best available prices. The highest number of trades in a day of

11,260,392 was recorded on May 19, 2009.

Short settlement cycles

The Exchange has successfully completed more than 2800 settlements

without any delays.

Investor Rights and Obligations

Investor Rights -

Right to get Unique Client Code (UCC) allotted

Get a copy of KYC and other documents executed Get trades executed in only his/her UCC Place order on meeting the norms agreed to with the Member Get best price Contract note for trades executed Details of charges levied Receive funds and securities on time Receive statement of accounts from trading member Ask for settlement of accounts


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Investor Obligations - Under Obligation To

Execute Know Your Client (KYC) documents and provide supportingdocuments

Understand the voluntary conditions being agreed with the member Understand the rights given to the Members Read Risk Disclosure Document Understand the product and operational framework and deadlines Pay margins Pay funds and securities for settlement on time Verify details of trades Verify bank account and DP account for funds and securities

movement

Review contract notes and statement of accountRights to Remedies

Take up a complaint against member with the Exchange Take up a complaint against listed company File arbitration against member if there is dispute Challenge the arbitration award before court of lawObligation Towards Remedies

Take up complaint within reasonable time

Complaint to be supported by appropriate documents When additional information is called for provide the same To participate in resolution meetings


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Purpose, Vision & Values of NSE :

Purpose:

Committed to improve the financial well-being of people.

Vision:

To continue to be a leader, establish global presence, facilitate the

financial well being of people.

Values:

NSE is committed to the following core values :

Customer focused culture Trust, respect and care for the individual Passion for excellence Teamwork

Awards & Recognition:

NSCCL Rated CCR AAA for fourth consecutive year - 28th Dec 2011.

For fourth consecutive year CRISIL has assigned its highest corporate

credit rating of CCR AAA to the National Securities Clearing

Corporation Ltd (NSCCL). 'CCR AAA' rating indicates highest degree ofstrength with regard to honouring debt obligations. As per CRISIL the

rating reflects NSCCLs status as Clearing Corporation for NSE. The

rating also factors in NSCCLs rigorous risk management controls and

adequate settlement guarantee cover.


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CHAPTER 3:

BOMBAY STOCK EXCHANGE (BSE)

Bombay Stock Exchange is the oldest stock exchange in Asia What isnow popularly known as the BSE was established as "The Native Share

& Stock Brokers' Association" in 1875.

Over the past 135 years, BSE has facilitated the growth of the Indian

corporate sector by providing it with an efficient capital raising platform.

Today, BSE is the world's number 1 exchange in the world in terms of

the number of listed companies (over 4900). It is the world's 5th most

active in terms of number of transactions handled through its electronic

trading system. And it is in the top ten of global exchanges in terms of

the market capitalization of its listed companies (as of December 31,

2009). The companies listed on BSE command a total market

capitalization of USD Trillion 1.28 as of Feb, 2010.

BSE is the first exchange in India and the second in the world to obtain

an ISO 9001:2000 certifications. It is also the first Exchange in the

country and second in the world to receive Information Security

Management System Standard BS 7799-2-2002 certification for its BSE

On-Line trading System (BOLT). Presently, BSE are ISO 27001:2005

certified, which is a ISO version of BS 7799 for Information Security.

The BSE Index, SENSEX, is India's first and most popular Stock Market

benchmark index. Exchange traded funds (ETF) on SENSEX, are listed

on BSE and in Hong Kong. Futures and options on the index are also

traded at BSE.


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History

The Bombay Stock Exchange is known as the oldest exchange in Asia. It

traces its history to the 1850s, when stockbrokers would gather under

banyan trees in front of Mumbai's Town Hall. The location of these

meetings changed many times, as the number of brokers constantly

increased. The group eventually moved to Dalal Street in 1874 and in

1875 became an official organization known as 'The Native Share &

Stock Brokers Association'. In 1956, the BSE became the first stock

exchange to be recognized by the Indian Government under the

Securities Contracts Regulation Act.

The Bombay Stock Exchange developed the BSE Sensex in 1986, giving

the BSE a means to measure overall performance of the exchange. In

2000 the BSE used this index to open its derivatives market, trading

Sensex futures contracts. The development of Sensex options along with

equity derivatives followed in 2001 and 2002, expanding the BSE'strading platform.

Historically an open-cry floor trading exchange, the Bombay Stock

Exchange switched to an electronic trading system in 1995. It took the

exchange only fifty days to make this transition.

Today BSE is among the 10 major international exchanges in context of

market investment of the firms registered under it. The total amount of

investment dominated by the cataloged firms under BSE as on 31st

March, 2010 was USD 1.36 Trillion.


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Need of BSE

BSE is one of the factors Indian Economy depends upon. BSE has played

a major role in the development of the country. Through BSE, Foreign

Investors have invested in India. Due to inward flow of foreign currency

then, the Indian economies have started showing the upward trend

towards the development of the country.

BSE provides employment for many people. Trading in BSE is also a

business for a few, their family income depends on it, that is the reason

why when scandals occur in the stock market it not only affects the

companies listed but also affects many families. In the few extreme

cases, it is observed that the bread winner of a family tends to suicide due

to the losses occurred.

In most of major industrial cities all over the world, where the businesses

were evolving and required investment capital to grow and thrive, stockexchanges acted as the interface between Suppliers and Consumers of

capital. One of the key advantages of the stock exchanges is that they are

efficient medium for raising resources and channeling savings from the

general public by the way of issue of Equity / Debt Capital by joint stock

companies which are listed on stock exchanges.

Not to forget that the taxes and other statutory charges paid by BSE are

substantial and make a sizeable contribution to the Government

exchequer (Financial resources; funds). For example, transactions on the

stock exchanges are subject to stamp duties, which is paid to the State

Government. The annual revenue from this source ranges from Rs 75

100 crores


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With the opening up of the financial markets to Foreign Investors a

number of foreign institutional investors and brokers have established a

sizeable presence in Mumbai.

With no doubt we can clearly state without BSE, the Indian Economy

would have been a complete different story. Various companies wouldnt

have been a strong and successful as they are today and the brokers and

traders would have been elsewhere.

BSE is an asset to our country and its existence plays a vital role in many

peoples life that depends on it. Indeed, BSE has made a major

contribution to the industrial and economic development of India.


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Functions of BSE

The Stock Market is a pivotal institution in the financial system. A well-

ordered stock market performs several economic functions:

It ensures the measure of safety and fair dealing

It performs an act of magic by translating short-term investmentsinto long-term funds for companies.

It directs the flow of capital in the most profitable channels.

It induces companies to raise their standard of performance.

It offers guidance to management about the cost of capital.

Measure of Safety and Fair Dealing:

The stock exchanges operate under a regulatory framework which seeks

to protect the interest of investors. The rules, regulations, and bye-laws of

a stock exchange, which are approved by the central government, are

meant to ensure that a reasonable measure of safety is provided to

investors and transactions take place in competitive conditions which are

fair to all concerned.

Act of Magic:

Most of the investors are interested in short-term investments. The


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requirements of companies are, however, long-term in naturethey

require equity capital on a more or less permanent basis and debenture

capital for 3 to 15 years. Thanks to the negotiability and transferability of

securities, through the stock market, it is possible for companies to obtain

their long-term requirements from investors with short-term horizons.

While one investor is substituted by another when a security is

transacted, the company is assured of availability of funds.

Flow of Capital in the Most Profitable Channels:

Companies which have more profitable investment opportunities are

normally able to raise substantial funds through the stock market whereas

companies which do not have such opportunities are normally not able to

do so.

Inducement to Companies to Raise their Standard of Performance:

When the equity, capital of a company is listed on a stock exchange, the

performance of the company is reflected in the market price of the equity

stock, which is readily available for public consumption. Put differently,

the companys performance is more visible in the eyes of public. Such a

public exposure normally induces companies to raise their standard of

performance.

Guidance of Cost of Capital:

The market value of the securities of company are required for

computing its cost of capital. Such values can be obtained from stock

market quotations. Hence the stock market offers guidance on cost of

capital.


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Listing of companies

Public Limited Company.

Public Listed Company Public Non-listed Company

Listed Company means a public ltd Co which is:

Listed on any one or more recognized stock exchanges in India. Securities (shares: debentures) of such company are traded on such stock

exchanges.

Unlisted company therefore means a company whose securities are not listed on

any of recognized stock exchanges in India.

Companies get listed with Stock Exchange:

Companies get listed with Stock Exchange for following reasons:

Securities are freely transferable. -Easyliquidity of securities.

Easy availability of prices of securities. -Reputation, Image, Goodwill.

Public awareness. Moretransparency.

Helps in obtaining loans from Banks/Institutions. -Helps inmarketing its Products.


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In order to list securities of a company & get its shares traded on any recognized

stock exchanges, the Public Ltd Company may either come out with a public issue

(i.e. to offer further securities to public) or make an offer for sale of existing

securities to public. This can be done by issuing of Prospectus & Complying with

all The Provinces of Company Act 1956.

Each stock exchange has its own criteria for listing securities which should also be

met.

Eg: If company intends to get listed its securities in Bombay Stock Exchange,

Mumbai post issue capital (paid up capital after proposed public issue) of such

companies should be Rs. 10 Crores at least.

The Company enters into a listing agreement with concerned stock exchange & on

receipt of permission from concerned Stock Exchange, company is listed and

securities are thereafter traded on such stock exchange.


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Trading and settlements

Trading:

Each Stock Exchange has listed and permitted securities that are traded on it. Thereare two ways of organizing the trading activity.

Open Outcry System: Under the open outcry system traders shout and resort to

signals on the trading floor of the exchange which consists of several notional

trading posts for different securities. A member (or his representative) wishing to

buy or sell a certain security, reaches the trading post where the security is traded.

Here, he comes in contact with others interested in transacting in that security.Buyers make their bid and sellers make their offers and bargains are closed at

mutually agreed-upon prices. In stock where jobbing is done, the jobber plays an

important role. He stands ready to buy or sell on his account. He quotes his bid

(buying) and asks (selling) prices. He provides some stability and continuity to the

market.

Screen Based System: In the screen-based system the trading ring is replaced by

the computer screen and distant participants can trade with each other through the

computer network. A large screen based trading system (a) enhances the

informational efficiency of the market as more participants trade at a faster speed;

(b) permits the market participants to get a full view of the market, which increases

their confidence in the market; and (c) establishes transparent audit trails.

Settlement:

The settlement of transactions is done on a settlement period basis. Earlier, the

settlement period on the Indian Stock Exchanges was 7 days, but now it is T+1

settlement. T+1 includes the day of trade and an additional day. During a


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settlement period, buying and selling transactions in a particular security can be

squared up. Square off is a same day settlement cycle. At the end of settlement

period, transactions are settled on net basis. Since the settlement period used to be

7 days and the settlement is for the net position, most of the transactions are

squared within the settlement period. Clearly these transactions are motivated by a

desire to profit from price variations within the settlement period.

Traditionally, trades have been settled by physical delivery. This means that the

securities have to physically move from the seller to the sellers broker, from the

sellers broker to the buyers broker (through the clearing house of the exchange or

directly), and from the buyers broker to the buyer. Further the buyer has to lodge

the securities with the transfer agents of the company and the process of the

transfer may take one to three months. This leads to high paperwork cost and

creates bad paper risks.

To mitigate the cost and the risks associated with the physical delivery, settlement

in the developed securities market is mainly through electronic delivery facilitated

by depositories. A depository is an institution which immobilizes physical

certificates (of securities) and effect transfers of ownership by electronic book

entry. A beginning in the direction of electronic delivery has been made in India

with the establishment of the National Securities Depository Limited (NSDL),

Indias first depository, in 1996. As NSDL expands its operations and as new

depositories come into being, settlement will progressively be done more by

electronic delivery and less by physical delivery


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Figure and facts:

Both are the stock exchange recognized by SEBI(Securities and Exchange Board

of India).

The NSE and BSE are equal in size in terms of daily traded volume. The average

daily turnover at the exchanges has increased from Rs 851 crore in 1997-98 to Rs

1,284 crore in 1998-99 and further to Rs 2,273 crore in 1999-2000 (AprilAugust

1999). NSE has around 1500 shares listed with a total market capitalization of

around Rs 9,21,500 crore (Rs 9215-bln). The BSE has over 6000 stocks listed and

has a market capitalization of around Rs 9,68,000 crore (Rs 9680-bln). Most key

stocks are traded on both the exchanges and hence the investor could buy them on

either exchange.

Anyone can deal in securities by any of the exchange. A person need to open a

demat account to buy and sell securities in any of the exchange.

Indexes:

SENSEX (Sensitive index):-

This index is comprised of 30 of the largest and most actively-traded stocks on the

BSE.

Other index in BSE are; BSE 500, BSE 100, BSE 200, BSE PSU, BSE MIDCAP,

BSE SMLCAP, BSE BANKEX, BSE Teck, BSE Auto, BSE Pharma, BSE Fast

Moving Consumer Goods (FMCG), BSE Consumer Durables (SYMBOL: Cons

Dura), BSE Metal.

The BSE Sensex is the older and more widely followed index.


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NIFTY (NATIONAL FIFTY):-

This index is comprised of 50 of the largest and most actively-traded stocks on the

BSE.

NSE also set up as index services firm known as India Index Services & Products

Limited (IISL) and has launched several stock indices, including: S&P CNX Nifty,

CNX Nifty Junior, CNX 100 (= S&P CNX Nifty + CNX Nifty Junior), S&P CNX

500 (= CNX 100 + 400 major players across 72 industries), CNX Midcap

(introduced on 18 July 2005 replacing CNX Midcap 200).

Basic between BSE and NSE

Both are stock exchange of India. NSE has around 1500 shares listed whereas the BSE has over 6000 stocks

listed.

NSE has capitalization of around Rs 9,21,500 crore (Rs 9215-bln). The BSEhas market capitalization of around Rs 9,68,000 crore (Rs 9680-bln).

NSE index is caleed as NIFTY whereas BSE index is SENSEX.

NSE has 50 companies for NIFTY whereas BSE has 30 companies forSENSEX.


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Comparison chart of NSE and BSE

BSE NSE

Number of

listed

companies:

5,163 (as of late 2012) 1,810 (as of June 2010)

Market

capitalization

of listed

companies:

USD 1.2 trillion (as of Dec2012)

USD 0.99 trillion (as of Sep2013)

Main Index: BSE Sensex S&P CNX Nifty

Index value: 19,900 (as of Sep 2013) 5,889 (as of Sep 2013)

Location: Mumbai, India Mumbai, India

Claim to fame: Oldest stock exchangein Asia.

Largest stock exchangein India in terms of dailyturnover and number oftrades.

Key Person: Mr Ashish Chauhan (MD &

CEO)

Ms Chitra Ramkrishna

(Managing Director andCEO)

Website: www.bseindia.com www.nseindia.com

Geographical

spread:

Presence in 417 cities Presence in 1,486 cities

Number of

members:

951 (Oct 2007) 1,009 as on March 2007

Established in: 1875 1992

Name: formerly Bombay StockExchangeLimited; nowsimply BSE

National Stock Exchange


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BSE NSE

Number of listed

companies:

5,163 (as of late 2012) 1,810 (as of June 2010)

Market

capitalization of

listed companies:

USD 1.2 trillion (as of Dec2012)

USD 0.99 trillion (as of Sep2013)

Main Index:BSE Sensex S&P CNX Nifty

Index value: 19,900 (as of Sep 2013) 5,889 (as of Sep 2013)

Claim to fame: Oldest stock exchange in Asia. Largest stock exchange in Indiain terms of daily turnover andnumber of trades.

Key Person: Mr Ashish Chauhan (MD &CEO)

Ms Chitra Ramkrishna(Managing Director and CEO)

Website: www.bseindia.com www.nseindia.com

Geographical

spread:

Presence in 417 cities Presence in 1,486 cities

Number of

members:

951 (Oct 2007) 1,009 as on March 2007

Established in: 1875 1992

Name: formerly Bombay StockExchangeLimited; now simplyBSE

National Stock Exchange


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DIAGRAMATIC PROJECTION OF THE DIFFERENCE OF BSE AND

NSE

Comparison of Trade Value of BSE and NSE:

NSE

BSE


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COMPARISON OF MARKET CAPITALISATION OF NSE AND BSE

BSE 1627

NSE : 1588


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INVESTOR STOCK EXCHANGE PREFERENCE

NSE : 58%

BSE : 36%

OTHERS : 5%


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REASON FOR PREFERRING NSE

0

1

2

3

4

5

6

LIQUIDITY BRAND VALUE TRUST DIVERSIFIED

SERVICES


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CLIENT SATISFACTION

0

1

2

3

4

5

6

7

8

9

NSE BSE BOTH


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CONCLUSION

Stock market is something which you cannot predict what is going to happen in the

market tomorrow without analysis. So it is always preferable to0 go for some

professional help if you wish to invest in Indian stock market. We should also be

acquainted with the concept of NSE and BSE.

BSE and NSE are both major stock exchanges in India. But there are difference

between NSE and BSE. Investors invest their money in order to reap huge benefits

form markets from their investment. But nobody can predict the market as we have

already discussed. Also growth of these stock exchanges is decided by our

countries growth. But we should be aware that it requires a lot of patience.

comp study of bse and nse.docx

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