National Stock Exchange of India explained

National Stock Exchange of India
Type:Stock exchange
City:Mumbai, Maharashtra
Country:India
Owner:Various group of domestic and global financial institutions, public and privately owned entities and individuals[1]
Currency:Indian rupee
Listings:2,266 (January 2024)[2]
Mcap: (July 2024)[3]
Logosize:250px

National Stock Exchange of India Limited (NSE) is one of the leading stock exchanges in India, based in Mumbai. NSE is under the ownership of various financial institutions such as banks and insurance companies. It is the world's largest derivatives exchange by number of contracts traded and the third largest in cash equities by number of trades for the calendar year 2022.[4] It is the 8th largest stock exchange in the world by total market capitalization,[5] as of May 2024. NSE's flagship index, the NIFTY 50, is a 50 stock index that is used extensively by investors in India and around the world as a barometer of the Indian capital market. The NIFTY 50 index was launched in 1996 by NSE.[6]

History

National Stock Exchange was incorporated in the year 1993 to bring about transparency in the Indian equity markets. NSE was set up at the behest of the Government of India, based on the recommendations laid out by the Pherwani committee in 1991[7] and the blueprint was prepared by a team of five members (Ravi Narain, Raghavan Puthran, K Kumar, Chitra Sankaran and Ashishkumar Chauhan) along with R H Patil and SS Nadkarni who were deputed by IDBI in 1992.[8] Instead of trading memberships being confined to a group of brokers, NSE ensured that anyone who was qualified, experienced, and met the minimum financial requirements was allowed to trade.[9]

NSE commenced operations on 30 June 1993 starting with the wholesale debt market (WDM) segment and equities segment on 3 November 1994. It was the first exchange in India to introduce an electronic trading facility.[10] Within one year of the start of its operations, the daily turnover on NSE exceeded that of the BSE.[11]

Operations in the derivatives segment commenced on 12 June 2000.[12] In August 2008, NSE introduced currency derivatives.[13]

NSE EMERGE

See main article: NSE EMERGE. NSE EMERGE is NSE's new initiative for Small and medium-sized enterprises (SME) & Startup companies in India.[14] These companies can get listed on NSE without an Initial public offering (IPO). This platform will help SME's & Startups connect with investors and help them with the raising of funds.[15] In August 2019, the 200th company listed on NSE's SME platform.[16]

Markets

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 global mark. In the Futures and Options segment, trading in the NIFTY 50 Index, NIFTY IT index, NIFTY Bank Index, NIFTY Next 50 index, and single stock futures are available. Trading in Mini Nifty Futures & Options and Long term Options on NIFTY 50 are also available.[17] The average daily turnover in the F&O Segment of the Exchange during the financial year April 2013 to March 2014 stood at . Nifty 50 is an important stock market index comprising the 50 largest publicly traded companies on the NSE in India. [18]

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 index of the UK equity stock market launched in India. FTSE 100 includes the 100 of largest UK-listed blue-chip companies and has given returns of 17.8 percent on investment over three years. The index constitutes 85.6 per cent of UK's equity market cap.[19]

On 10 January 2013, the National Stock Exchange signed a letter of intent with the Japan Exchange Group, Inc. (JPX) on preparing for the launch of NIFTY 50 Index futures, a representative stock price index of India, on the Osaka Securities Exchange Co., Ltd. (OSE), a subsidiary of JPX.[20]

Moving forward, both parties will make preparations for the listing of yen-denominated NIFTY 50.[21] On 13 May 2013, NSE launched India's first dedicated debt platform to provide a liquid and transparent trading platform for debt-related products.[22]

Market statistics

Stakeholders

The key domestic investors which hold a stake in NSE include Life Insurance Corporation, State Bank of India, India Infoline Limited and Stock Holding Corporation of India Limited. Key global investors include Gagil FDI Limited, GS Strategic Investments Limited, SAIF II SE Investments Mauritius Limited, Aranda Investments (Mauritius) Pte Limited, Veracity Investments Limited, Crown Capital Limited and PI Opportunities Fund I.[41]

Subsidiaries

Financial literacy

NSE has collaborated with several universities like Gokhale Institute of Politics & Economics (GIPE) - Pune, Bharati Vidyapeeth Deemed University (BVDU) - Pune, Guru Gobind Singh Indraprastha University - Delhi, RV University[43] - Bangalore, the Ravenshaw University of Cuttack and Punjabi University - Patiala, among others to offer MBA and BBA courses. NSE has also provided mock market simulation software called NSE Learn to Trade (NLT) to develop investment, trading, and portfolio management skills among the students.[44] The simulation software is very similar to the software currently being used by the market professionals and helps students to learn how to trade in the markets. NSE also conducts online examinations and awards certification, under its Certification in Financial Markets (NCFM) programs.[45] NSE has set up NSE Academy Limited to further financial literacy.

At present, certifications are available in 46 modules, covering different sectors of financial and capital markets, both at the beginner and advanced levels. The list of various modules can be found at the official site of NSE India. In addition, since August 2009, it has offered a short-term course called NSE Certified Capital Market Professional (NCCMP).[46]

Criticism and controversies

Market manipulation

See also: 1992 Indian stock market scam, Harshad Mehta and Ketan Parekh. The Indian stock exchanges BSE and NSE have witnessed several corruption scandals.[47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57] [58] [59] [60] At times, the Securities and Exchange Board of India (SEBI) has barred several individuals and entities from trading on the exchanges for stock manipulation, especially in illiquid smallcaps and penny stocks.[61] [62] [63] [64] [65] [66] [67] [68]

Market operators illegal activity

Market operators continue to operate in the Indian stock market, albeit within a regulatory framework aimed at ensuring transparency and fairness. Market operators are individuals or entities that actively engage in buying and selling securities to influence their prices for profit. They operate through various strategies, such as arbitrage, short selling, high-frequency trading, front running, churning, scalping, wash trading, spoofing, and layering, often leveraging sophisticated technology and large capital. Regulatory bodies like the Securities and Exchange Board of India (SEBI) oversee market activities to curb malpractices such as insider trading, price rigging, and market manipulation. SEBI has implemented measures, including surveillance systems, to detect and penalize unethical practices. Despite these regulations, market operators exploit loopholes to gain an edge, necessitating continuous vigilance and regulatory updates. Market operators in India often use the "pump and dump" strategy, despite strict regulations against such practices. The "pump and dump" scheme involves artificially inflating the price of a stock (pump) through false or misleading positive statements. Once the price has been significantly raised, the operators then sell off their holdings (dump) at the inflated prices, leading to a sharp price decline and substantial losses for other investors who bought in at the higher prices. Their activities have continued to impact market volatility, liquidity, and price discovery, playing a significant role in the dynamics of the Indian stock market.Uppal, Jamshed Y., and Inayat U. Mangla. “Market Volatility, Manipulation, and Regulatory Response: A Comparative Study of Bombay and Karachi Stock Markets.” The Pakistan Development Review, vol. 45, no. 4, 2006, pp. 1071–83. . Accessed 30 May 2024.[69] [70] [72]

NSE co-location scam

See main article: NSE co-location scam.

On 8 July 2015, Sucheta Dalal wrote an article on Moneylife alleging that some NSE employees were leaking sensitive data related to high-frequency trading or co-location servers to a select set of market participants so that they could trade faster than their competitors. NSE alleged defamation in the article by Moneylife. On 22 July 2015, NSE filed a suit against the publication.[73] However, on 9 September 2015, the Bombay High Court dismissed the case and fined NSE in this defamation case against Moneylife.[74] The High Court asked NSE to pay to each journalist Debashis Basu and Sucheta Dalal and the remaining to two hospitals. The Bombay High Court has stayed the order on costs for a period of two weeks, pending the hearing of the appeal filed by NSE.[75]

The board also passed orders against 16 individuals including former managing directors and CEOs Ravi Narain and Chitra Ramakrishna ordering them to disgorge 25% of their salaries during that period along with interest. All money is to be paid into the Investor protection and education fund. These individuals have also been debarred from the markets or holding any position in a listed company for a period of five years.[76]

See also

Further reading

Notes and References

  1. Web site: Shareholding. www.nseindia.com.
  2. Web site: How Many Companies are Listed in NSE and BSE - Listing Process in Stock Market . blog.shoonya.com/ . 30 July 2024 . 24 January 2024 . https://www.nseindia.com/regulations/listing-compliance/nse-market-capitalisation-all-companies . live .
  3. Web site: New Stock Or Share Listing Recent -NSE India . nseindia.com . 30 July 2024 . 3 December 2023 . https://m.economictimes.com/markets/stocks/news/4-trillion-m-cap-nse-listed-companies-market-cap-increased-17-5-cagr/articleshow/105703250.cms . live .
  4. News: NSE maintains its lead as largest global derivatives market for 4th year – Check its rank in equity segment . 28 February 2023 . Times Now . 30 January 2023 . en.
  5. Web site: Market Statistics – March 2023 – World Federation of Exchanges. Focus.world-exchanges.org.
  6. Web site: History & Milestones. Nseindia.com. 23 February 2022.
  7. News: Pherwani Committee report recommends setting up of NSE in New Bombay . 28 February 2023 . India Today . en.
  8. News: RH Patil: The man who revolutionized Indian stock market . 28 February 2023 . The Economic Times.
  9. News: National Stock Exchange to file IPO document by 2017. . The Hindu. 2017-02-26. en.
  10. News: NSE vs BSE: Where's the competition? . 28 February 2023 . mint . 26 July 2022 . en.
  11. News: NSE and NSDL: Institutions that revolutionised Indian bourses . 28 February 2023 . The Indian Express . 20 July 2016 . en.
  12. News: India@75: History of stocks in India . 28 February 2023 . Mint . 15 August 2022 . en.
  13. News: Roy . Anup . Laskar . Anirudh . Mohan . Vyas . NSE to charge trades in currency derivatives . 28 February 2023 . mint . 12 August 2011 . en.
  14. Web site: NSE launches SME exchange with first listing- Business News. businesstoday.in. 18 September 2012 . 2019-10-07.
  15. News: Raising capital: Why SME IPO may be a good choice for small businesses. 2019-06-10. The Economic Times. 2019-10-07.
  16. Web site: NSE gets 200th company listed on its SME platform. Laskar. Anirudh. 2019-08-22. Mint. en. 2019-10-07.
  17. Web site: Sanchit . Taksali . Nifty Option Chain . Investiture.in . Sanchit . 20 January 2020.
  18. https://www.forbesindia.com/article/explainers/nifty-50-stocks-list-weightage-sectors/85791/1
  19. Web site: An opportunity to trade the FTSE-100. Yoganand. D. @businessline. 19 May 2012 .
  20. News: 2013-01-10. UPDATE 1–India's NSE, Japan's JPX plan Nifty futures for Osaka. en. Reuters. Rafael . Nam . Abhishek . Vishnoi. 2023-09-08.
  21. Web site: Broad Market Indices. Nseindia.com. 23 February 2022.
  22. Web site: 2013-05-13. NSE launches debt trading platform. 2023-09-08. The Hindu Businessline. en.
  23. News: Increasing retail investor base: SEBI has a tough job ahead. 24 April 2018. Moneylife. 2 June 2011.
  24. Book: Jalan. Bimal. Jalan Committee report 2010 – Review of Ownership andGovernance of Market Infrastructure Institutions. 1 November 2010. SEBI. Mumbai. 24 April 2018.
  25. Book: Chandrasekhar. C.P.. Mallick. Sarat. A. Akriti. The elusive retail investor: How deep can (and should) India's stock markets be?. SEBI. 24 April 2018.
  26. Book: Library of Congress. Federal Research Division. FINANCIAL LITERACY AMONG RETAIL INVESTORS IN THE UNITED STATES. 30 December 2011. SEC / The library of congress. Washington DC. 24 April 2018.
  27. News: Thukral. Arun. For those who do not make much money in stocks, here's the catch. 24 April 2018. The Economic Times. 24 April 2018.
  28. Web site: 2020-03-25 . India faced 4 bear markets in 25 years; why this one is different . 2024-01-26 . CNBCTV18 . en.
  29. Web site: Bhasin . Tinesh . 2022-12-29 . Best Investment Strategies To Survive in a Bear Market . 2024-01-26 . Learn About Investment Tax Saving, and Financial Planning. . en-US.
  30. Web site: SEBI | Annual Report 2021-22. www.sebi.gov.in.
  31. News: 50% mutual funds get redeemed within a year. Is long-term investing dead?. Nikhil. Agarwal. The Economic Times . 24 May 2023.
  32. Web site: SEBI | Study - Analysis of Profit and Loss of Individual Traders dealing in Equity F&O Segment. www.sebi.gov.in.
  33. News: Sebi study suggests 89% retail traders in equity F&O suffered losses in FY22. The Economic Times . 25 January 2023.
  34. News: 9 in 10 derivative traders lose money: Sebi study. The Times of India . 26 January 2023.
  35. Web site: Reserve Bank of India - RBI Bulletin . 2024-04-19 . www.rbi.org.in.
  36. Web site: Mutual funds attract 6% of household savings in FY23, shows RBI data . 2024-04-29 . Business Standard.
  37. Web site: Reserve Bank of India - Household Financial Savings . 2024-04-19 . www.rbi.org.in.
  38. Web site: Reserve Bank of India - RBI Bulletin . 2024-04-29 . www.rbi.org.in.
  39. Web site: Reserve Bank of India - Household Financial Savings . 2024-04-29 . www.rbi.org.in.
  40. Web site: Indians prefer fixed deposits to equities, MFs for investment: Sebi Survey . 2024-04-29.
  41. Web site: NSE Shareholding Pattern (For the quarter ended on December 31, 2022) . 25 March 2023 . nseindia.com.
  42. Web site: Group Companies . 30 March 2023 . NSE.
  43. Web site: NSE Academy Limited collaborates with RV University for Post Graduate Certification Program-date=25 October 2023.
  44. News: NSE to spread financial literacy. Patnaik. Santosh. The Hindu. 2017-02-26. en.
  45. News: 29 November 2012 . NSE ties with deemed University to offer pg diploma in financial markets . EduTech . dead . https://web.archive.org/web/20130311143734/http://www.edu-leaders.com/content/nse-ties-deemed-university-offer-pg-diploma-financial-markets . 11 March 2013.
  46. Web site: Home . NCFM(Bhandarkar Road, Pune). https://web.archive.org/web/20121122060836/http://www.puneeducation.in/NCFMBhandarkar-Road-Pune . 22 November 2012 .
  47. News: How India's trading queen and mystery guru engulfed NSE in scandal . The Economic Times .
  48. News: The fall of NSE: Corruption or hubris? . The Economic Times . Rangan . MC Govardhana .
  49. News: BSE Sensex drops as corruption scandal weighs . Reuters . 25 November 2010 .
  50. Web site: SEBI penalises BSE, NSE for 'laxity' in Karvy fraud case . 13 April 2022 .
  51. News: Trading 'queen' and mystery guru: Strange tale engulfs NSE in scandal . Business Standard India . 21 March 2022 .
  52. Web site: "Who'll Invest in India if Scams Like This Happen?": Judge in NSE Case .
  53. Web site: Chitra Ramkrishna arrested; CBI grills former NSE CEO in co-location scam after SEBI's mysterious yogi report . 7 March 2022 .
  54. News: How India's trading queen and mystery guru engulfed NSE in scandal . The Economic Times . 11 January 2023 . 11 January 2023 . https://web.archive.org/web/20230111193659/https://economictimes.indiatimes.com/markets/stocks/news/how-indias-trading-queen-and-mystery-guru-engulfed-nse-in-scandal/articleshow/90343226.cms?from=mdr . live .
  55. News: The fall of NSE: Corruption or hubris? . The Economic Times . Rangan . MC Govardhana . 11 January 2023 . 11 January 2023 . https://web.archive.org/web/20230111193659/https://economictimes.indiatimes.com/markets/stocks/news/the-fall-of-nse-corruption-or-hubris/articleshow/69154289.cms . live .
  56. News: BSE Sensex drops as corruption scandal weighs . Reuters . 25 November 2010 . 11 January 2023 . 11 January 2023 . https://web.archive.org/web/20230111193700/https://www.reuters.com/article/idINIndia-53153120101125 . live .
  57. Web site: SEBI penalises BSE, NSE for 'laxity' in Karvy fraud case . 13 April 2022 . 11 January 2023 . 21 September 2022 . https://web.archive.org/web/20220921192656/https://www.businesstoday.in/latest/corporate/story/sebi-penalises-bse-nse-for-laxity-in-karvy-fraud-case-329647-2022-04-13 . live .
  58. News: Trading 'queen' and mystery guru: Strange tale engulfs NSE in scandal . Business Standard India . 21 March 2022 . 11 January 2023 . 21 September 2022 . https://web.archive.org/web/20220921232719/https://www.business-standard.com/article/markets/trading-queen-and-mystery-guru-strange-tale-engulfs-nse-in-scandal-122032100123_1.html . live .
  59. Web site: "Who'll Invest in India if Scams Like This Happen?": Judge in NSE Case . 11 January 2023 . 22 September 2022 . https://web.archive.org/web/20220922044155/https://www.ndtv.com/india-news/national-stock-exchange-case-who-will-invest-in-india-if-scams-like-this-happen-judge-asks-cbi-in-stock-exchange-manipulation-case-2812478 . live .
  60. Web site: Chitra Ramkrishna arrested; CBI grills former NSE CEO in co-location scam after SEBI's mysterious yogi report . 7 March 2022 . 11 January 2023 . 22 September 2022 . https://web.archive.org/web/20220922022110/https://www.financialexpress.com/market/cbi-arrests-former-nse-ceo-chitra-ramkrishna-in-co-location-scam-case/2452419/ . live .
  61. Web site: Sreedhar . Vidya . Rs 144 crore wrongful profit! Sebi finds stock manipulation in 5 smallcaps . The Economic Times . 24 August 2023 . 21 June 2023.
  62. News: Sebi ban pinches penny stocks . 24 August 2023 . Business Standard.
  63. News: SEBI Cracks Down on Misuse of Penny Stocks . 24 August 2023 . The Wire.
  64. News: I-T Department, SEBI begin crackdown on penny stock firms in PMO-led push . 24 August 2023 . Moneycontrol . 20 November 2017 . en.
  65. News: Rampal . Nikhil . Pump & dump: How SEBI caught Arshad Warsi & others 'manipulating' stock prices in 'finfluencer' scheme . 24 August 2023 . ThePrint . 3 March 2023.
  66. News: Sebi bans FIIs, brokers for GDR manipulation . 24 August 2023 . The Times of India . 22 September 2011.
  67. News: Fight against black money: Sebi bars 59 entities for evading taxes . 24 August 2023 . Hindustan Times . 20 August 2015 . en.
  68. News: Sebi goes after companies rigging share prices . 24 August 2023 . Business Today . 12 August 2015 . en.
  69. Goel, A., Tripathi, V. and Agarwal, M. (2021), "Market microstructure: a comparative study of Bombay stock exchange and national stock exchange", Journal of Advances in Management Research, Vol. 18 No. 3, pp. 414-442.
  70. Testing the market efficiency in Indian stock market: Evidence from Bombay Stock Exchange broad market indices . 10.1108/JEFAS-04-2021-0040 . 2022 . Elangovan . Rajesh . Irudayasamy . Francis Gnanasekar . Parayitam . Satyanarayana . Journal of Economics, Finance and Administrative Science . 27 . 54 . 313–327 . 10419/289641 . free .
  71. https://www.researchgate.net/profile/Chakrapani-Chaturvedula/publication/311446941_The_Effectiveness_of_Trade_for_Trade_Segment_as_a_Surveillance_Effort_to_Prevent_Price_Manipulation_Evidence_from_India/links/58f7a2094585158d8a6c176e/The-Effectiveness-of-Trade-for-Trade-Segment-as-a-Surveillance-Effort-to-Prevent-Price-Manipulation-Evidence-from-India.pdf [70]
  72. Prabu, A.E., Bhattacharyya, I. & Ray, P. Impact of monetary policy on the Indian stock market: Does the devil lie in the detail?. Ind. Econ. Rev. 55, 27–50 (2020).
  73. Web site: NSE files Rs 100-cr suit against Moneylife. The Indian Express. 2015-07-22. 2015-10-19.
  74. Web site: Court fines NSE Rs 50 lakh in defamation case against Moneylife. livemint.com/. 9 September 2015. 2015-10-19.
  75. News: Bombay High Court stays order imposing Rs 50 lakh cost on NSE. The Economic Times.
  76. News: Sebi bars NSE from accessing securities market for 6 months in co-location case. 2019-05-01. The Economic Times. 2019-05-01.

This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "National Stock Exchange of India".

Except where otherwise indicated, Everything.Explained.Today is © Copyright 2009-2024, A B Cryer, All Rights Reserved. Cookie policy.