The National Stock Exchange of India (NSE), established in 1994, stands as the country’s leading financial exchange, headquartered in Mumbai. As a state-of-the-art, automated electronic trading platform, it offers investors a wide array of securities across India. By 2021, NSE ranked fourth globally in trading volume and has been instrumental in modernizing India’s capital markets. The NSE, along with the Bombay Stock Exchange (BSE), plays a significant role in shaping the Indian financial ecosystem.
What is the National Stock Exchange?
Launched under the recommendations of the Pherwani Committee, the NSE aimed to enhance transparency and efficiency within the Indian capital market. As the first exchange in India to introduce electronic trading, it revolutionized how investors accessed the market, offering nationwide reach through a unified platform. The Securities and Exchange Board of India (SEBI) regulates NSE’s operations, ensuring transparency and investor protection.
As of April 11, 2023, NSE’s market capitalization was approximately USD 3.26 trillion, ranking it as the ninth-largest stock exchange globally. Despite this, the corporate sector in India contributes only around 12-14% to the nation’s GDP, with stock market trading accounting for a modest 4%.
Key Functions of National Stock Exchange
- Nationwide Trading Network: Provides a unified platform for trading in equities, debt, and hybrid instruments.
- Equal Access: Ensures equitable access to investors across the country, similar to the BSE.
- Efficient Trading Systems: Offers an electronic trading system that enhances transparency, fairness, and efficiency.
- Faster Settlement Cycles: Promotes speedy, reliable settlements, adhering to international standards enforced by SEBI.
Key Features of National Stock Exchange
NSE operates the National Exchange for Automated Trading (NEAT), a fully automated screen-based trading system that ensures transparency by assigning a unique order number to every transaction. Orders are matched based on price-time priority, with the best buy and sell orders paired automatically.
The NSE’s flagship index, Nifty50, accounts for 63% of the total market capitalization and represents 12 key sectors of the Indian economy.
Market Segments of National Stock Exchange
The NSE offers trading across two primary market segments:
- Wholesale Debt Market (WDM): Deals in fixed-income instruments like Bonds, Commercial Paper, Treasury Bills, and Government Securities.
- Capital Market (CM): Covers trading in equity shares, debentures, exchange-traded funds (ETFs), and more.
How National Stock Exchange Works
Trading on NSE follows an electronic limit order book system, entirely driven by investor orders without interference from market makers. This order-driven market guarantees transparency, allowing buyers and sellers to remain anonymous.
Orders are placed via brokers, often through online trading platforms, making it easier for both retail and institutional investors to participate. This system is comparable to that of the BSE, where similar transparency is ensured.
Trading Hours at National Stock Exchange
- Order entry opens: 9:00 AM
- Order entry closes: 9:08 AM
- Market opens: 9:15 AM
- Market closes: 3:30 PM
Benefits of Listing with National Stock Exchange
- Comprehensive Visibility: NSE provides investors with easy access to trade and post-trade data, allowing better market depth analysis.
- Premier Marketplace: Like the BSE, NSE’s high trading volume helps reduce impact costs, benefiting investors with lower trading expenses.
- Largest Exchange in India: NSE’s market capitalization exceeds USD 3.26 trillion, making it the largest exchange, surpassing the BSE.
- Fast Transactions: NSE’s efficient order processing allows investors to secure the best available market prices.
- Trade Statistics: Monthly statistics provide companies valuable insights into their exchange performance, similar to the reporting practices followed by BSE-listed companies.
Investment Segments at National Stock Exchange
NSE offers a wide range of investment options across various asset classes:
- Equity: Stocks, mutual funds, ETFs, and initial public offerings (IPOs) are available for trading.
- Equity Derivatives: Includes trading in global indices like the Dow Jones and S&P 500, along with currency derivatives and interest rate futures.
- Debt: Includes mutual funds and bonds, catering to both short- and long-term investment preferences.
Major National Stock Exchange Indices
The Nifty50 is one of the most widely recognized indices. However, NSE hosts several other important indices:
- Nifty100
- Nifty Next 50
- Nifty Midcap 50
- Nifty Smallcap 250
- India VIX
Top 10 Companies Listed on NSE by Market Capitalization
| Company Name | Market Capitalization (₹ Crore) |
|---|---|
| Reliance Industries | 15,72,897 |
| TCS | 11,94,095 |
| HDFC | 9,25,371 |
| Infosys | 5,90,454 |
| ICICI Bank | 6,06,433 |
| SBI | 4,69,702 |
| Bajaj Finance | 3,52,243 |
| Kotak Mahindra Bank | 3,50,014 |
| Larsen & Toubro | 3,24,624 |
| Axis Bank | 2,60,734 |
NSE EMERGE
NSE EMERGE is a specialized platform introduced by the National Stock Exchange to assist Small and Medium Enterprises (SME IPO) in raising capital through Initial Public Offerings (IPOs). It provides a gateway for emerging businesses to access a larger pool of investors while giving investors a chance to participate in high-growth companies. Similar to BSE’s SME platform, NSE EMERGE has become an essential avenue for fostering innovation and supporting the expansion of India’s economy.
Conclusion
The National Stock Exchange (NSE) is not just a trading platform but a pivotal driver of India’s economic growth. From its early beginnings to its rise as a global financial hub, NSE has continually adapted to the needs of both investors and businesses. Offering unparalleled opportunities for capital raising, wealth creation, and investment diversification, NSE, alongside the BSE, forms the backbone of India’s capital market, under the vigilant regulation of SEBI.
