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Stock Market In India Research Team | Posted On Friday, January 04,2019, 02:51 PM

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Stock Market In India



What is stock market in India?

Stock market is a place where shares of public listed Companies are traded. A stock exchange like BSE and NSE is a platform where buyers and sellers trade in stocks and derivatives (options and futures). The participants in the stock market like stock brokers must be registered with SEBI.

The stock market in India is also known as share market or equities market. The stock market is regulated by The Securities and Exchange Board of India (SEBI), that looks into the workings of the stock market and devises guidelines for fair trading, thereby protecting the rights of investors. Companies list on the stock exchange to draw funds. With equity, the Company can easily finance the business.

SEE ALSO: Simple Tips To Invest In The Stock Market

Stock Market In India

Stock market basics:

Stocks can be bought or sold online, as well as offline. To participate in the trading process, an individual must have a demat and trading account. The demat and trading account can be linked to your bank account to facilitate trading.  This enables the easy transfer of money to buy stocks.

You have the primary market and the secondary market. Companies raise funds in the primary market through private placement. Then there is the initial public offer or IPO where Companies list shares on stock exchanges for the very first time.

After the Company goes public, the shares can be traded in the Secondary Markets also called stock markets. Stock Exchanges facilitate seamless buying/selling of shares by enabling transactions, electronically. You can buy/sell shares in seconds.

SEE ALSO: How To Invest In Stock Market With Little Money?

Financial Instruments traded in stock market:

There are four major financial instruments that are traded in the stock market. They are:

  • Bonds:  a contract between a company and an investor where the company agrees to pay monthly interest on borrowed amounts with return of principal on maturity.
  • Shares:  a share is an equity stake in a company. It is part-ownership of a Company.
  • Mutual funds: Mutual Funds are collective investment schemes (CIS). The money you and other investors put in is pooled together and invested in equity, debt or a mix of both, depending on the type of mutual funds.
  • Derivatives: A derivative is a financial instrument whose value depends on the underlying asset. This could be a commodity like gold or silver, currency USD vs Rupee pair or even stocks.

SEE ALSO: Types of Order in Stock Market

Major Stock Exchanges in India:

  • NSE: the NSE or the National Stock Exchange is one of the main stock exchanges in India. It is located in Mumbai. There are about 1,600 companies listed under the NSE. The NSE devised an automated electronic trading system which is an online platform, where the investors trade in shares across India.
  • BSE: BSE stands for Bombay Stock Exchange that was established in 1875 in Mumbai. It is Asia’s oldest stock exchange. More than 5,000 Companies are listed on the BSE. Initially trades were carried through an open outcry system or floor trading system. This system was replaced by a fully automated screen based trading system known as the BOLT (BSE Online Trading). BSE is the world’s 10th largest stock exchange.

SEE ALSO: Trading pattern of the Indian Stock Market

Other Stock exchanges:

There are a total of 23 stock exchanges in India with the NSE and the BSE being the largest. 

  • UP stock exchange, Kanpur
  • Vadodara stock exchange, Vadodara
  • Meerut stock exchange, Meerut
  • Mumbai stock exchange, Mumbai
  • Coimbatore stock exchange, Coimbatore
  • National stock exchange, Mumbai
  • Over the counter stock exchange of India
  • Ahmadabad stock exchange, Ahmadabad
  • Bangalore stock exchange, Bangalore
  • Bhubaneswar  stock exchange, Bhubaneswar
  • Calcutta stock exchange, Kolkata
  • Cochin stock exchange, cochin
  • Delhi stock exchange, Delhi
  • Guwahati stock exchange, Guwahati
  • Hyderabad stock exchange, Hyderabad
  •  Jaipur stock exchange, Jaipur
  • Canara stock exchange, Mangalore
  • Ludhiana stock exchange, Ludhiana
  • M.P stock exchange, Indore
  • Magadh stock exchange, Patna
  • Pune stock exchange, Pune
  • Capital stock exchange Kerala Ltd, Thiruvanathapuram

Market Regulations:

SEBI, the capital market regulator was established in 1992. The overall responsibility of development, regulation and supervision of the stock market, rests with SEBI which functions as an independent authority. SEBI has laid regulatory guidelines to promote fair trading practices and end malpractices and corruption in the system. It enjoys vast powers of imposing penalties on market participants, in case of a breach.

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