India has two major Stock Exchanges where an investor or trader can do, trades One is the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE Started in 1875, NSE was founded in 1992 and started trading in 1994. Both the exchanges have the same trading mechanism, trading hours, and settlement system.
As BSE is an older stock exchange but if we compare it on the parameter of volume NSE is larger than BSE. NSE provides more liquidity. Arbitrageurs keep the prices of shares in both exchanges in a very narrow range. The trading took place in both the exchanges by order matching system by computer. When a buyer puts a buy order it will be matched by the best sell order by computer. Thus, buyers and sellers get them to execute very transparently and fairly.
An investor or trader can not place an order directly in NSE or BSE, He must have one D-Mat and trading account with a broker who is a member of the exchange in which he wants to do trade. An investor or trader must choose his stockbroker very carefully. He must prefer a well-reputed stockbroker. He should not prefer only less brokerage only he must check the reputation of the broker also. Some brokers grab clients by providing less brokerage and promise for leverage and default. An investor or trader may have very serious issues in the case of a broker’s default regarding the option tips.
The equity cash market has a T+2 settlement system. It means the suppose trading day Tuesday, then the trade will be settled on Thursday. Trading hours of both the exchanges are 09:15 to 03:30. Both exchanges trading sessions are Monday to Friday.
There are two Major indexes to check the performances of the companies listed in these exchanges. One is SENSEX which is the oldest index and includes 30 companies. Second in nifty which includes 50 companies. The Securities and Exchange Board of India is the regulator of the stock market. The Securities and Exchange Board of India was formed in 1992. Securities and Exchange Board of India lay down rules to regulate the market. It has vast powers of imposing penalties on market participants, in case of any discrepancy.
Indian government permits Foreign investors to invest through the Indian stock market. There are two types of foreign investors Foreign direct investment and foreign portfolio investment. The basic difference between the two is Control over management, FDI generally does participate in the buying and selling of Indian stocks only they don’t intend and have any control over management but on the other hand, FPI tends and has control over the management of the company. If any Foreign institution wants to trade in the Indian stock market it must get registered itself as a foreign institutional investor or having one of the sub-accounts with registered FII. Registration is given by SEBI.
The government of India sets the limit of Foreign Direct Investment and ceiling for different sectors from time to time. The government is progressively increasing the ceilings. The maximum limit of a particular foreign institution is decided by the prescribed limit for the sector it belongs to. Foreign individuals and entities can trade in Indian stock exchanges through institutional investors.