HISTORY OF NATIONAL STOCK EXCHANGE (NSE) OF INDIA
National Stock Exchange (NSE) of India was set up by the government of India upon recommendation of Pherwani committee of 1991 which was promoted by leading financial institutions led by the Industrial development bank. Currently, it is the 11th largest stock exchange worldwide by market capitalization and the largest in India via daily turn overs.NSE India was incorporated as a tax paying corporation in November 1992 and recognized as stock exchange under the securities contracts Act in the year 1956. It started its operation in the Wholesale Debt market segment in June 1994 while its Capital market segment begun in June 2000.Though National Stock exchange of India is a legal entity on its own, it is co-owned mutually by leading financial institutions, banks, insurance companies and financial intermediaries. This exchange usually operates on an electronic market that permits trading to be mainly automated on the systems with sophisticated software programs and interfaces that aid potential investors to transact and research. Trading of this stock only occurs fro Monday to Friday only. There have been a milestone of events that have taken place in this NSE of India, they include:
- 12th June, 2000 – Started trading in derivatives with launch of index futures.
- August, 2008 – Introduction of currency derivatives with launch of currency future in USD.
- 31st August, 2009 –Added currency futures of Euros, pounds and yen. Further introduced interest rate futures.
- 29th August, 2011- Launched derivative on contract on world’s most followed equity.
- 3rd May, 2012- Launched derivative contracts on FTSE 100.
There were several objectives for the formation of NSE India. These are:
- To establish a global trading facility for all types of securities.
- To facilitate a equal access to investors by providing an appropriate communication network.
- To meet international benchmark and standards.
- To enable shorter settlement cycles and book entry settlements.
SIGNIFICANCE OF NATIONAL STOCK EXCHANGE (NSE) IN INDIAN CAPITAL MARKET.
There are a lot of benefits that have accrued from this Indian stock. These benefits are discussed below:
- Source of information for investors’ investments decision – NSE publishes notice about brokers, traders and investors. These notices are essential for determining investment strategies on the side of investors.
- Reveals de-listed companies- NSE can let potential investors know de-listed companies so as to stop investing in them to avoid future loss of in investments.
- Makes investors aware of suspension stocks and hence make decisions wisely.
- Makes idle money and saving s productive by bringing together lenders and borrowers.
- Educates people about higher profits in shares and bonds, how and when to buy shares and bonds.
- Facilitates good management of companies through periodic performance reports and daily market reports it issues.
HOW NSE OF INDIA WORKS- ONLINE STOCK TRADING
Online stock trading has taken a deep root in India. Approximately 8 million transactions are carried out daily on NSE of India. To participate in on line stock trading, one should open an online stock trading account. There are several online accounts that enable one to trade online. The following procedures are hence followed in order to start online trading:
- Choose an appropriate online broker.
- Open an online account for online stock trading for beginners along with a depository account as demanded. Hint: Trader needs to have bank account that supports online transactions.
- Use the username and password provided to carry out online trading.
TIPS TO INVEST IN STOCK STOCKS (NSE) OF INDIA
Investing stock may look simple when in real sense it is complex and unpredictable. There are several tips that should be employed before one invests in stocks especially when one is a beginner in stock investment. These tips include:
- Manipulation of a budget for investment; One should not invest all the money in stock because in the event of loss, he/she suffers a great deal.
- Know which to invest; Investors need to understand profit yielding stocks of which they should choose to invest in them.
- Understand market trends; this will provide chances and assumptions of what time to invest in and what time are not favorable for investment.
The set up of stock market is a vital tool in an economy. Through the stock market exchange, vital data about investment, performance of countries economy, investment activities, profits of firms & investors and risk bearing confidence are revealed. India has accrued benefits from its NSE due to its early set up of NSE.