Stock Exchange serves as a medium where financial instruments like Stocks, Bonds, and Commodities are traded.
It is a platform where buyers and sellers come together to trade the financial instruments at a specific time under defined guidelines by Exchange and SEBI. Only listed companies on stock exchanges are allowed to trade.
By using the trading terminals provided by stockbrokers, Investors can place their orders directly into the trading system.
Let us see some benefits of listing on the Stock Exchange:
Raising Capital: Companies who require funds for the business can issue shares and accumulate funds for operating with less hassle compared to other ways of fundraising.
Brand value creation: The brand value of the company increase as people start trading in the company as it is available to trade on the stock exchange.
Liquidity: Listing on a stock exchange will boost the liquidity as it is readily available in the market compared to non-listed companies.
Fair Price: The price quoted on the stock exchange tends to represent the real value of the stock after factoring in all parameters. Stock price move based on Supply and Demand which is open for valuation. By this transparency, investors are assured of fair value and try to acquire them whenever there is huge demand.
Major Stock Exchanges in India
There are 2 major stock exchanges in India, Namely
Bombay Stock Exchange (BSE)
National Stock Exchange (NSE)
Bombay Stock Exchange (BSE): BSE was founded in 1875 in Mumbai at Dalaal Street; it is the oldest and first stock exchange in Asia. The market capitalization or total value of all the shares of all the securities traded on BSE is USD 2.22 trillion as of 2nd September 2021.
Sensex is the benchmark index of BSE and it is derived from the words sensitive and index. Sensex comprises 30 stocks.
National Stock Exchange (NSE): National Stock Exchange (NSE) was founded in 1992 and is in Mumbai. The electronic trading platform was first introduced by the NSE, which led to the removal of the paper-based system; NSE was established to eliminate the monopoly of BSE in the Indian Stock Market.
The market capitalization or total value of all the shares of all the securities traded on NSE is USD 3.14 trillion as of 2nd September 2021.
Nifty is the abbreviation of National Stock Exchange 50. It is the benchmark index of NSE comprising 50 stocks.
Stock Exchanges influence the country’s financial sector; this will further signify economic growth.
All major stock exchanges are closely integrated; if one market starts falling we can see the same effect in other exchanges worldwide.