(NSE) is leading stock exchange In India. And it is located at Mumbai. But NSE is set up by leading institutions. To provide modern full automated screen based electronic trading system. See NSE IPO. Moreover, NSE was first exchange in country. For better understand see National Stock Exchange of India. Hence, for more details see Securities and Exchanges Board of India.
Introduction of National Stock Exchange (NSE)
National stock exchange was first formed in November 1992 as taxpaying company. Therefore NSE moved into wholesale debt market and capital market in 1994. And in June 2000 NSE started derivatives market. Moreover, NSE also engages in Internet trading, exchange traded funds (ETF).
NSE was well known by banks, insurance companies. And also financial institute and other financial mediators. Probably, NSE board members consist of senior executives from institutions and professionals. Hence, they do not trade directly or indirectly on exchange.
However, it started India’s first volatility index in 2008. Probably, NSE was also first India exchange to begin current and interest rate futures exchanges. In addition, In India it was first stock exchange to get fully automated electronics. And it is also second major stock exchange in India.
Therefore it offered easy trading facility to investors. And to spread across length and breadth of country. Moreover, it has set up facilities to serve for securities industry. But in terms of system, practices and procedures. However, In 1993 NSE was recognized at stock exchange under Securities Contract Act 1956.
Similarly, NSE has play role in reforming Indian Securities market. In terms of microstructure, trading volumes and market practices. Therefore NSE is nationwide automated screen based trading system. It is latest, most modern and technology driven exchange. And it offers you trading facility in variety of financial instruments. It consists of equities, debentures, government securities and derivative products.
In addition, such as index futures, index options, stock futures. Other like stock options, interest rate futures etc. Moreover, NSE is largest stock exchange in India. But in terms of equity traded value, debt and derivative products.
Features of National Stock Exchange
NSE is used mainly for spot trading or cash trading. Probably, when you do spot trade you will complete buy or sell immediately. However, when you sell you will get price for stock at that moment in time. Therefore another large component of NSE is trading of futures and options. And it also called derivative trading. But this derivative stock is like bet between two parties.
Let’s say you have stock that value at 10 per share. And you will afraid it will go down. But another investor agrees to buy your shares at that price. Therefore this derivative trading also called futures trading. Hence, this type of trading is another feature of NSE with day-to-day trading.
However, other stocks that are traded on NSE are mutual fund, public offerings and debt. Like BSE, NSE has its own index of stocks that trader and investors watch. And there are 50 diverse stocks in NSE. Therefore this index is known as NIFTY 50. Hence, National Stock Exchanges (NSE) contains 50 shares.
Functions of National Stock Exchange
However, National stock exchange provides platform for investors and traders. Because, to buy and sell shares in planned manner with some rules and regulations. Therefore if you order to buy or sell of any scrip can be place with minimum tick size. Because, these exchange takes place only at market hours. Hence, settlement of any transaction to receive money or share. It will take place only after two days of trade (T+2).
Origins of NSE
NSE of India was set up by Government of India on recommendation of Pherwani Committee in 1991. In addition, In April 1993 it was recognized as stock exchange under Securities Contracts Regulation Act 1956. For detail list of Nifty component companies. Further, you can read complete post here to get a better understanding Nifty explained
Objectives of National Stock Exchange
Similarly, it ensures equal access to all investors over country through correct communication network. And it enables shorter settlement cycles and book entry settlement. But it establishes nationwide trading facilities for all types of securities. View functions of Nse and Bse.
Exchange supports more than 3000 VSAT terminals making NSE largest private wide network in country. Therefore it was recently unity known as stock exchange by Department of Company Affairs. But traded instruments are treasury bills, government security and bonds issued by public sector companies.
NSE Index or NIFTY
Nifty is major stock index in India introduced by National Stock Exchange. Moreover, Nifty or NSE Index is popular companies listed in Index. Similarly, each company is part of Index has its own weightage in value. Therefore value of nifty index is weighted average of price of these 50 companies. So Nifty index is bit broader than Sensex.
Similarly, Nifty are indices of stock market. Moreover, Nifty is an indicator of all major companies listed on NSE. However, nifty goes up when stock price of companies on NSE goes up. And it market goes down nifty also goes down. Hence, nifty is an indicator of 50 top major companies on national stock exchange (NSE). Therefore, nifty is made up of fifty companies from 24 different sectors.
However, index contains 50 shares from different sectors on basis of their capitalization. And there are some common shares which find their place both in NSE and BSE. Because NIFTY depends on rise and fall on price movement of shares. See role of national stock exchange and also importance of national stock exchange.
NSE benchmark stock market index is Nifty 50. And it is largest single financial product in India. But it has 50 well known and good performing companies. You must know that it may change if any company does not perform well. Hence, for more details see NIFTY 50. For more details see difference between stock market and share market.
However, NIFTY has convert for two words National and FIFTY. Therefore fifty words are used because index consists of 50 active trade stocks from various sectors. Probably, NIFTY is also known as CNX NIFTY or NIFTY50. You can check eligibility criteria for selection & maintenance of NIFTY stocks
In addition, Nifty is managed by India Index services and products ltd (IISL). It is joint venture of NSE and CRISIL. Because, CNX is short form of CRISIL & NSE. Hence, Nifty is made up of fifty companies from 24 different sectors. To get detailed information you can read what is NIFTY and SENSEX. To have better understanding of these terms and other basic terms used in stock market. You can look Stock Market terms and definitions.
S&P CNX Nifty: NSE main index consist of well diversified 50 stock indexes for 24 sectors of economy.
CNX Nifty Junior: it consists of 50 stocks. Moreover S&P CNX nifty and CNX nifty junior make up 100 most liquid stocks in India.
India VIX: India VIX is volatility index based on NIFTY index option prices.
CNX100: CNX 100 is diversified 100 stock indexes with 35 sector of economy. And it owned by India Index Services & Products Ltd. (IISL)
S&P CNX Defty: S&P CNX Nifty is measured in dollars for performance indication to foreign institutional investors, off-shore funds etc.
S&P CNX 500: companies are disaggregated into 71 industry indices. But Industry weightage in index reflect industry weight age in market. Check NSE S&P CNX 500 companies list
CNX MIDCAP: it captures movement and act as benchmark of midcap companies. And with minimum 3 year operation and positive net worth.
NIFTY MIDCAP 50: It consists of stocks with average market capitalization ranging from Rs.1000Cr to 5000Cr. But excluding those in S&P CNX NIFTY and which is not part of derivative segment. Hence, apart from these NSE also have different sectoral indices. See NIFTY Index & how to trade Nifty.
Different indexes working in NSE are:
- Bank nifty (comprising of banking stocks)
- CNX IT (Information Technology Companies’ Like the TCS, Infosys etc)
- CNX Nifty Junior (group of second most liquid stocks)
- CNX Midcap (Midcap companies)
E.CNX Small Cap, etc (Small Cap Companies)
S&P CNX Nifty
S&P CNX Nifty is stock market index and benchmark index for Indian equity market. Probably, CNX ensures common branding indices. And it reflects identities of both promoters. Such as NSE and CRISIL (Credit Rating and Information Services of India Ltd). Therefore ‘C’ stands for CRISIL, ‘N’ stands for NSE and X stands for Exchange or index. Hence, S&P prefex belongs to US-based standard & poor financial information services. See best 50 stocks listed on NSE.
However, IISL is India’s first specialized company focused upon index as core product. But IISL has marketing and licensing agreement with standard & poor for co-branding equity indices. Hence, CNX name stand for CRISIL NSE Index. Check list of stocks of CNX IT sector index.
In addition, see list of stocks of S&P CNX nifty. Moreover, S&P CNX Nifty covers 23 sectors of economy. And it offers investment managers exposure to Indian market in one portfolio. However, S&P CNX Nifty stocks represent about 62.9% of free float market capitalization of stocks listed at NSE.
Similarly, S&P CNX Nifty index is free float market capitalization weighted index. Probably, index was initially calculated on full market cap methodology. And from 26 June 2009 computation was change to free float methodology. Therefore, base value of index has been set at 1000 and base capital of Rs 2.06 trillion. Hence, For S&P CNX Nifty all prices are in Indian Rupees.
Therefore, Nifty 50 is diversified 50 stocks index accounting for 12 sector of economy. Because, it used for various purposes. Such as benchmarking fund portfolios, index funds and index based derivatives.
S&P CNX Nifty companies list of India
- ACC Limited
- Adani Ports & SEZ Limited
- Ambuja Cements Ltd.
- Asian Paints Ltd
- Axis Bank Ltd.
- Bajaj Auto Ltd.
- Bank of Baroda
- Bharat Petroleum Corporation
- Bharti Airtel Ltd.
- Bosch Ltd.
- Aurobindo Pharma Ltd.
- Cipla Ltd.
- Coal India Ltd.
- Reddy’s Laboratories Ltd.
- GAIL (India) Ltd.
- Grasim Industries Ltd.
- HCL Technologies Ltd.
- HDFC Bank Ltd.
- Hero MotoCorp Ltd.
- Hindalco Industries Ltd.
- Hindustan Unilever Ltd.
- Housing Development Finance Corporation Ltd.
- ITC Limited
- Indian Oil Corporation
- Indiabulls Housing Finance
- ICICI Bank Ltd.
- IndusInd Bank Ltd.
- Infosys Ltd.
- Kotak Mahindra Bank Ltd.
- Larsen & Toubro Ltd.
- Lupin Limited
- Mahindra & Mahindra Ltd.
- Maruti Suzuki India Ltd.
- NTPC Limited
- Oil & Natural Gas Corporation Ltd.
- PowerGrid Corporation of India Ltd.
- Bharti Infratel
- Reliance Industries Ltd.
- State Bank of India
- Sun Pharmaceutical Industries Ltd.
- Tata Consultancy Services Ltd.
- Tata Motors Ltd.
- Tata Power Co. Ltd.
- Tata Steel Ltd.
- Tech Mahindra Ltd
- UltraTech Cement Ltd
- Eicher Motors
- Yes Bank Ltd
- Zee Entertainment Enterprises Ltd.
- Tata Motors (DVR)
S&P CNX Defty
However, it is U.S. dollar denominated index based on S&P CNX Nifty. Because, this index was develop to provide benchmark of Indian Stocks to international investors. And it provide with an instrument for measuring returns on their equity investment in Dollar terms. But this ensures risk arising is covered through S&P CNX Defty.
Calculation of S&P CNX Defty
S&P CNX defty calculate are done using S&P CNX Nifty index. Therefore S&P CNX Nifty index calculated on NEAT trading System of NSE. Moreover, data is pulled from market participants. Such as leading nationalized banks, private Indian banks and foreign exchange broker. But these pull data is regularly updates per minute.
Similarly, it depends on market volatile it updated more than 1000 in a day. However, closing value of S&P CNX Defty is based on simple average of U.S.dollar / Rupee. Hence, exchange rates received during last half an hour of trading on NSE. And it applied to closing value of S&P CNX Nifty.
S&PCNX Defty = S&P CNX Nifty at time t* Exchange rate as on base date
Exchange Rate at time t
Finally, arbitrageurs exist in both markets. However, arbitrageur is an investor who plays in both markets. But it actually keeps the share prices balanced. It means Company may have share price of 10 Rs in BSE. And price of 10.50INR on the NSE. Hence, arbitrageurs make the profit when prices converge. See Nifty 50 companies list. For more details view Nifty 50 stocks weightage list.