Stock markets in india

THE HISTORY OF BOMBAY STOCK EXCHANGE

The Bombay stock exchange traces it’s history back to the 1850s, when 4 Gujarati and 1 Parsi stock broker would gather under a banyan tree in front of mumbai’s Town hall.The location of these meetings changed many times, as the number of brokers constantly increased.The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as “The Native Share stock Brokers association.”

THE PRESENT SCENARIO

There are 19 recognized stock exchanges in India. The Bombay stock exchange (popularly known as The BSE ) and The National stock exchange (popularly known as The NSE ) are  the most prominent in terms of volume and popularity.

The Bombay Stock Exchange Popularly called “The BSE”  is the oldest stock exchange  in Asia and has the third largest number of listed companies in the world, with 4900 listed as of Feb 2010. It is located at Dalal Street , Mumbai , India . National Stock Exchange comes second to BSE in terms of popularity.

Over the decades, the stock market in the country has passed through good and bad periods. Till the decade of eighties, there was no measure or scale that could precisely measure the various ups and downs in the Indian stock market. BSE, in 1986, came out with a Stock Index-SENSEX- (SENSitive indEX) that subsequently became the barometer of the Indian stock market.

WHAT IS A STOCK MARKET INDEX?

Stock market indexes provide a consolidated view of how the market is performing. Stock indexes are updated constantly throughout the trading day to provide instant information.

The SENSEX and other indexes

The BSE  SENSEX (SENSitive indEX)is a basket of 30 stocks representing a sample of large, liquid and representative companies. The base year of SENSEX is 1978-79 and the base value is 100. The index is widely followed by investors who are interested in Indian stock markets. During market hours, prices of the index scrip, at which trades are executed, are automatically used by the trading computer to calculate the SENSEX every 15 seconds and continuously updated on all trading workstations connected to the BSE trading computer in real time

30 stocks that represent SENSEX.(Updated on 7/7/2010)

ACC Ltd. Bharat Heavy Electricals Ltd.
Bharti Airtel Ltd. Cipla Ltd.
DLF Ltd. Jindal Steel & Power Ltd.
HDFC HDFC Bank Ltd.
Hero Honda Motors Ltd. Hindalco Industries Ltd.
Hindustan Unilever Ltd. ICICI Bank Ltd.
Infosys Technologies Ltd. ITC Ltd.
Jaiprakash Associates Ltd. Larsen & Toubro Limited
Mahindra & Mahindra Ltd. Maruti Suzuki India Ltd.
NTPC Ltd. ONGC Ltd.
Reliance Communications Limited Reliance Industries Ltd.
Reliance Infrastructure Ltd. State Bank of India
Sterlite Industries (India) Ltd. Tata Consultancy Services Limited
Tata Motors Ltd. Tata Power Company Ltd.
Tata Steel Ltd. Wipro Ltd.

The BSE Sensex is not the only stock market index in India. The NSE has The NSE S&P CNX Nifty 50 index – a well diversified 50 stock index accounting for 24 sectors of the economy. While both SENSEX and NIFTY would give you an overall direction of the stock market there are other indices which track a particular sector.

For example – The NSE CNX IT Sector Index tracks companies that have more than 50% of their turnover (or revenues) from IT related activities like software development, hardware manufacture, vending, support and maintenance. So for those who are tracking the performance of IT Sector this index would become a benchmark for investing.  Yet another example is the BSE BANKEX index which tracks the banking sector shares.

WHAT’S GOOD ABOUT INDEXES

Indexes provide useful information including:

  • Trends and changes in investing patterns.
  • Snapshots, even if they are out of focus.
  • Yardstick for comparison.

KNOW IT

  • A stock market index is a statistical indicator which gives an idea about how the stock market is performing. In India the main indexes to be tracked are – The BSE SENSEX and The NSE NIFTY.
  • The SENSEX comprises of 30 companies representing different sectors and the broader NIFTY comprises of 50 companies from 24 sectors. There are many other indexes that track particular sectors of the economy. These indexes would give you an idea about how that particular sector is performing.
  • World over, there are a number of indexes as there are stock markets. DOW JONES INDUSTRIAL AVERAGE  and  NASDAQ COMPOSITE INDEX – both track US stock markets. NIKKEI 225 is the stock market index of Japan, HANG SENG index for Hong Kong, FTSE 100 For UK, KOSPI for Korea, SHANGHAI for China etc. All these indexes serve the same purpose. It gives an idea about where the financial growth of a country is headed to.

Next time you watch CNBC or NDTV Profit, watch these indexes flashing on the corner of your screen.

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7 Responses to “Stock markets in india”

J Victor

November 17, 2012 at 11:09 pm

dear ramya .
P/E alone cannot be used for making buy or sell decisions.
check these posts :
http://www.sharemarketschool.com/price-to-earnings-ratio-or-pe-ratio/
http://www.sharemarketschool.com/the-nuts-and-bolts-of-pe-ratio/

Arun Kumar

February 13, 2013 at 9:57 pm

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Alok Raj Verma

March 14, 2013 at 1:33 pm

Dear admin, Your site is Really very helpful for all. & it is really very helpful for students.
Thank you & regards

Ganesh

November 14, 2013 at 3:17 pm

Presented in simple & easily understand format. very helpfull in learning stock market.

thanks a lot admin

jojo

February 3, 2014 at 11:50 pm

very very thanxx….

S.K. Sah

June 29, 2014 at 12:26 pm

Very good information

jignesh patel

October 23, 2015 at 9:17 am

wow sir…
its very simple to understand whole concept,in simple languag,about stock market.than you very very much.

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