All you need to know about the Bombay Stock Exchange

The Bombay Stock Exchange (BSE India) is one of India's major financial markets. The BSE is Asia's oldest stock exchange and one of the largest in the world. Since its inception, the BSE has evolved into one of the largest marketplaces for raising capital, trading shares, bonds, and derivatives.

The BSE is headquartered in Mumbai, often referred to as the financial capital of India. The BSE is instrumental in mobilising savings for economic growth and providing investors with a structured marketplace for trading stocks, bonds, derivatives, and other securities. The BSE is regarded for its transparency, efficiency, and state-of-the-art technology.

The Journey of BSE India

The history of BSE dates back to 1855, when a small group of people started trading under a banyan tree in front of Mumbai's Town Hall. This informal setup eventually evolved into a formal organisation, and in 1875, the Native Share and Stock Brokers Association was officially established. Over time, this entity transformed into the Bombay Stock Exchange.

The BSE has witnessed the peaks and troughs of the Indian economy, including the post-independence industrial boom, the liberalisation era of the 1990s, and the digital transformation in the 21st century. The exchange has not only survived these changes but has thrived, adapting to new regulations, technology, and market demands.

The BSE stock market (exchange) offers a wide range of financial products and services, including equities, bonds, derivatives, and mutual funds. With over 5,451 companies listed, the BSE has the highest number of listed companies in the world, making it a significant player in the global financial market.

Overview of the key indices

The Bombay Stock Exchange offers several stock indices for traders and investors. The Sensex is the benchmark of BSE India, which consists of 30 of the largest and most actively traded stocks. The performance of such companies reflects the performance of Sensex and indicates the overall market sentiment.

For example, the BSE Sensex value as of 1st August 2024 is 81,867, but around six months ago, the Sensex was at 72,500. The index has moved 13% higher in six months, reflecting the bullishness or the optimistic view of the market participants about the Indian economic future. Now let’s assume that the BSE Sensex sees a correction and the index drops by 2850 points, or 3.5%, in just five trading days. Such a movement is defined as bearish from a short-term perspective.

The BSE stock indices are key indicators of the Indian financial markets performance. In addition to the Sensex, the BSE offers a range of other indices that track different segments of the market, including sectoral indices, thematic indices, and strategy indices. These indices include the BSE 100, BSE 500, BSE Midcap, BSE Smallcap, BSE Bankex, BSE Healthcare, and other key indices.

How does the BSE Online Trading Function

A Bombay Stock Exchange overview reveals that the BSE operates in a highly regulated environment, ensuring that trading practices are fair and transparent. The Securities and Exchange Board of India (SEBI) oversees the functioning of the exchange, enforcing regulations that protect investor interests and maintain market integrity.

The BSE's infrastructure is cutting-edge, with a fully automated trading platform that supports millions of transactions daily. The exchange's technology infrastructure is robust, ensuring high-speed execution and minimal downtime, which is crucial in today's fast-paced financial markets.

BSE market timings

The BSE operates from Monday to Friday, with the market opening at 9:15 AM and closing at 3:30 PM (IST). These timings include the pre-opening session, the normal trading session, and the post-closing session. The exchange also allows extended trading hours for certain securities, ensuring flexibility for investors.

How to start trading on the BSE

How to trade on BSE is a common query among new investors. Trading on the BSE is relatively straightforward, thanks to its user-friendly platforms and support systems. The two primary steps to start trading on the BSE are as follows:

• Opening a demat account and a trading account with a registered broker.
• Select stocks/type of trade (i.e., intraday, delivery, etc.) and place the order through online trading platforms or mobile apps to complete the transaction.

The advent of BSE online trading has revolutionised the way investors participate in the stock market. The BSE's online trading platforms are designed to be intuitive and accessible, catering to both novice and experienced traders. These platforms offer real-time market data, charting tools, and research reports, enabling investors to make informed decisions.

Online trading on the BSE is secure, with multiple layers of encryption and authentication to protect investor data and transactions. The exchange also offers mobile trading apps, allowing investors to trade on the go, further enhancing convenience and accessibility.

Overview of BSE-Listed Companies and Regulations

• The BSE-listed companies represent a diverse range of sectors, including finance, IT, healthcare, energy, and consumer goods. These companies are subject to strict listing requirements, ensuring that they meet the necessary regulatory and governance standards.
• BSE regulations are designed to ensure a fair and transparent market for all participants. The exchange operates under the guidelines set by SEBI, which include rules on listing, trading, settlement, and investor protection. These regulations are periodically updated to reflect changes in the market environment and to incorporate best practices.
• The BSE also offers platforms for small and medium enterprises (SMEs) and startups to raise capital and gain visibility. This inclusion of SMEs has broadened the investment opportunities for retail and institutional investors alike.

BSE vs. NSE: Key differences

While both exchanges offer similar products and services, there are key differences in terms of market share, trading volumes, and investor preferences.

• The BSE, with its long history, is seen as more traditional and is favoured by investors seeking a wide range of listed companies.
• The National Stock Exchange (NSE), on the other hand, is known for its advanced technology and higher trading volumes.

The Role of BSE in the Indian Economy

The BSE works as a major facilitator of capital formation and helps companies raise funds for expansion, innovation, and job creation. This, in turn, drives economic growth, increases employment, and enhances the overall standard of living. The BSE also contributes to the government's revenue through taxes on transactions and capital gains, playing a crucial role in the fiscal health of the nation.

The Journey of BSE’s Market Capitalisation

The market capitalization is a key metric used by investors to assess the size and health of the stock market. The BSE's market capitalization combining all the listed companies has surpassed the USD 5 trillion mark in May'24, which puts it among the top five stock markets in the world to boast a market capitalization exceeding USD 5 trillion: the USA, China, Japan, and Hong Kong. The US has a market cap of nearly USD 55.65 trillion, followed by China at USD 9.4 trillion, Japan at USD 6.42 trillion, and Hong Kong at USD 5.47 trillion.

Summing up

The Bombay Stock Exchange (BSE India) is more than just a marketplace for trading securities. With its rich history, robust infrastructure, and a wide array of products and services, the BSE continues to play a vital role in the growth and development of the Indian economy. Whether you are a seasoned investor or a novice, understanding the BSE's functioning, regulations, and offerings can help you navigate the dynamic world of stock trading and make informed investment decisions.